TMI Blog2012 (9) TMI 258X X X X Extracts X X X X X X X X Extracts X X X X ..... he Excise duty being the part of the turnover in accordance with the provisions of the I.T.Act to be allowed to the assessee. Further, outstanding balance to M/s.T cannot be denied as unexplained credit u/s.68 for holding certain purchases as bogus. Arrangement which is allowable under law by Excise authorities has been misconstrued to the extent that the very sales which has been accepted as genuine by the authorities below including the excise duty component as was taken care of under the Excise Duty Act was for purchases only. In view of aforesaid, addition made on account of bogus purchases is directed to be deleted - Decided in favor of assessee - ITA No.486/CTK/2011 - - - Dated:- 25-6-2012 - Shri K.K. Gupta, and Shri K.S.S. Pra ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pporting evidences in regard to transaction made with M/s.Tirupati Steel Enterprises for the purchases shown by the assessee at Rs. 2,26,92,982 along with opening balance which was brought forward from previous year i.e. F.Y.2006-07 of Rs. 1,24,77,426 which totals to Rs. 3,30,05,137 was held to be unexplained and accordingly the Assessing Officer treated the total transaction of Rs. 3.30,05,137 as bogus purchases and added back the same to the total income of the assessee. 3. Aggrieved the assessee appealed before the first appellate authority. It was submitted by the assessee appellant before him that in para 5-1 of the Asst. Order the Learned Asst. Commissioner of Income Tax has charged that the assessee has intentionally not provided f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... intention of manipulation by the Assessee. Further in para 5VII VIII the Learned Asst. Commissioner of Income Tax has discussed all about the plot of land in the name of MIs, Tirupati Steel Enterprises at Kalunga, Rourkela and tried to establish that no business activity was being carried out at that plot. The assessee never mentioned that the materials were lifted or delivered from the plot of land in question. This is the presumption of the Learned Assessing Officer. He during the course of hearing never questioned where from the goods were delivered. In fact goods sold by M/s. Tirupati Steel Enterprises were directly sent from the party from whom M/s. Tirupati Steel Enterprises had purchased the materials. Photocopy of all the purchas ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... wing cash regularly from his bank account. The application of section 69A as unexplained money is also ipso-tacto wrong. The Hon ble P H High court in the case CIT vs Leader Valves Pvt. Ltd.(2006), 285 ITR 435 has held that purchases made by the assessee could not be treated as bogus as the consumption stood fully proved and trading results of the assessee have been accepted. The finding of the tribunal is finding of fact and no question of law arises. The assessee relied on the decisions in the case of CIT v. M.K.Brothers (163 ITR 249)(Guj), Balaji Textile Industries (P) Ltd v. Income-tax Officer [49 ITD (Bom) 177)] and Industrial Trading Co. v. Income-tax Officer (50 TTJ (Bangalore) 177. The learned CIT(A) inspite thereof negated the cl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he learned CIT(A) separately. A mere perusal of the order of the Assessing Officer and that of the CIT(A) would lead to a finding that the disallowance has been made without appreciating the actual fact that the sole criteria for availing CENVAT credit has been misconstrued by these authorities. The Income-tax authorities cannot prevail upon the Excise Duty authorities for the purpose of holding a particular purchase as bogus which Excise authorities allowed on the basis of allowing the CENVAT credit to the extent that the turnover has been accepted both by the Excise authorities as well as I.T.authorities. He also pointed out that the disallowance of these purchases would increase the closing stock therefore would have been rendered to tax ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed balance being on raw material being the purchase from M/s.Tirupati Steel Enterprises at Rs. 1,49,652. This clinches the issue in favour of the assessee to the extent that the assessing authorities have accepted the Excise duty being the part of the turnover in accordance with the provisions of the I.T.Act to be allowed to the assessee. It was not the case of the Assessing Officer that the sum of Rs. 3.30 Crores were Excise duty retained by the assessee for which no purchases were made. This is why the learned CIT(A) allowed the reduction of Rs. 1.24 Crores being the opening balance owed to M/s.Tirupati Steel Enterprises. Further the ledger copy account of M/s.Tirupati Steel Enterprises revealed goods sold to it amounting to Rs. 13,12,155 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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