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2016 (2) TMI 123 - AT - Income TaxAddition on suppression of closing stock - Held that:- As find from the stock reconciliation statement submitted by the Learned AR which was filed based on the directions from the Bench to the Learned AR, that the stock statements contain both raw materials and finished goods and there was absolutely no quantity difference between what has been submitted to the bank vis- a- vis the audited balance sheet filed along with the return except in respect of Dried Slag of 520.6 MT which is a scrap item and which was omitted to be shown in the stock statement submitted to the bank but duly considered in the audited balance sheet. In view of this, we find that there is absolutely no scope for making any addition in the sum of ₹ 1,49,66,105/- towards suppression of closing stock. - Decided against revenue Disallowance u/s 37 - penal interest paid to the bank due to non-fulfillment of conditions stated in the loan agreement - CIT(A) deleted the addition - Held that:- The assessee had merely paid penal interest for not fulfilling a stipulated condition in the loan agreement which is only compensatory in nature. The banks in such a case are entitled to charge extra rate of interest which would be reimbursed to the borrower (assessee) as and when the stipulated conditions are fulfilled. We hold that the assessee had not committed any offence prohibited by any law and hence does not come under the ambit of Explanation to section 37 of the Act - Decided against revenue Subsidy received from Government of West Bengal towards incentive on Building and Pollution Control Devices - capital v/s revenue receipt - Held that:- Subsidy received is capital in nature and accordingly, the ground raised by the revenue is dismissed. - Decided against revenue Addition towards difference in debtors - Held that:- We find that the stock statements and debtors balances were submitted to the bank based on unaudited figures in order to review the situation of availability of drawing power in cash credit facility availed from the bank by the assessee. We agree to the fact that the debtors balances are bound to undergo changes pursuant to the statutory audit conducted and the list of balances of debtors are not disputed by the revenue. If there is any doubt, the Learned AO could have obtained direct information from the concerned debtors u/s 133(6) or any other means provided in the Act. We hold that there is no scope for making this addition - Decided against revenue Addition made u/s 68 - CIT(A) deleted addition - Held that:- We find from the said bank statements of share applicants, the immediate source of credit appears to be some cheque realizations and not cash deposits. We also find from the break up of loans and advances given by the share applicants, the assessee’s name is reflected which is evident from the ledger copy of “advance for share” filed in the paper book. Since the Learned AO had raised a preliminary objection that the bank statements and the break up details of loans and advances were not produced before him as claimed by the assessee, we deem it fit and appropriate, in the interest of justice and fairplay, to set aside this issue to the file of the Learned AO to decide this issue afresh in accordance with law after going through all the documents available on record. The assessee is given liberty to file fresh evidences and documents in support of its contentions before the Learned AO - Decided in favour of revenue statistical purposes. Addition on account of bogus purchases - Held that:- As find that the assessee had given reasonable explanation before the lower authorities that the proprietor of Shakti Trading Company had expired and their business is closed in the last known address with the assessee and no subsequent transactions were made with the said supplier. We find that the Learned AO had treated this purchase as bogus only on the limited ground that his notice u/s 133(6) of the Act could not be served on the supplier in the address given by the assessee. In our opinion, this alone cannot be the deciding factor for treating the purchases as bogus. Nothing prevented the Learned AO from making the verification from the bankers of the assessee as to whether the payments made by the assessee through account payee cheques had indeed been credited only to the account of the supplier or not. We find that the payments made to the supplier has been accepted as genuine by the Learned AO. Then the scope for disputing the purchases made from supplier is lost. Hence we don’t find any infirmity in the order of the Learned CIT-A in this regard - Decided against revenue
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