TMI Blog2012 (10) TMI 412X X X X Extracts X X X X X X X X Extracts X X X X ..... e produced - assessee had made total purchases of Rs. 1,33,39,325/- and there was a carry forward opening balance of Rs. 2,04,050/-. During the period, the assessee made payments of Rs. 1,26,09,000/- and the balance amount has been shown as trade creditor of Rs. 9,34,275/-. A confirmatory letter from M/s Oriental Leathers has also been filed alongiwth copy of account showing payments having been made to the party. The ITI’s report cannot stand in view of the above evidence - addition correctly deleted - I.T.A No. 843/Mds/2011 & C.O. No. 100/Mds/2011 - - - Dated:- 4-10-2011 - DR. O.K. NARAYANAN, AND SHRI HARI OM MARATHA, JJ. Department by : Shri T.N.Prakash, JCIT/DR Assessee by : Shri S.Sridhar, Advocate O R D E R PER HARI OM MARATHA, JUDICIAL MEMBER: The appeal by the Revenue and the cross objection by the assessee are directed against the order of the ld. CIT(A). Coimbatore, dated 23.2.2011, pertaining to assessment year 2007-08. 2. In Revenue s appeal, following grounds have been raised: 1. The order of the learned Commissioner of Income-tax (Appeals) is against facts and circumstances of the case. 2. The learned CIT(A) erred in deleting the disa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eted the entire additions made by the Assessing Officer. Now, the Revenue is aggrieved. 5. We have considered the rival submissions and have perused the entire material available on record. The assessee carries on the business as a leather tanner under the trade name G.R. Leathers as a proprietary concern. The assessment order was passed on 31.12.2009 determining total income of Rs. 79,24,328/-. After hearing both sides, we have found that the disallowances on account of trade creditors standing in the names of M/s Mohamed Co., M/s Yanam Abdul Kathar and M/s V.Mohamed Ibrahim, totalled to Rs. 13,22,090/. It was found that the assessee had done no business with them during the financial year 2006-07 relevant to assessment year 2007-08. The balances viz. Rs. 5,99,799/-, Rs. 4,55,769/- and Rs. 2,66,522/-, respectively, represent only opening as balances as on 1.4.2006. The account copies of the parties as appearing in the books of account of the assessee for assessment year 2005-06, 2006-07 and 2007-08 confirm the submission of the assessee. So, it is clear that no new amount had been credited by the assessee in their accounts during the assessment year under consideration. Ther ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... plication of TNGST Act, in this context is paramount, in as much as the goods so sold by them to the appellant are, by virtue of II Schedule to the TNGST Act, are taxable at the point of first sale in the state, meaning thereby that the appellant has purchased the said goods from registered dealers in the state. In other) words, it is proved that the said parties are real persons. 7. After considering the rival submissions, we have found that the Assessing Officer, in his order, has mentioned that copies of sales tax returns revealed that Shri Pachamuthu has done business transactions/turnover exceeding Rs. 2 crores during the financial year 2006-07. However, no enquiries regarding his sources, bank accounts were made. No attempt was made by the Assessing Officer to find out his business address in the light of adverse report of ITI. The assessee had purchased goods worth Rs. 1,00,48,000/- from M/s Sabari Leather Exports. The Assessing Officer has not made any comments regarding the purchases made by the assessee. The trade creditor is on account of purchase transactions made during the year. The assessee made payments of Rs. 84,50,000/- during the year but surprisingly, the Ass ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ry was closed, that local enquiry revealed that this tannery was closed from 2007, that it could not be verifiable whether the said concern was functioning even prior to 2007 and this could be treated as non-existent. This has led the IT! to give a report that the credit shown at Rs. 7,97,125/- to be rejected and added to income. The important point to be noted from the report of the ITI is that while the Proprietor of M/s Victory Tanners is Shri V. Thiagarajan, as per the heading in the report of the ITI, the ITI in his report did mention the name of Shri Nallamuthu as the Proprietor of Victory Tanners. Since the very name of the Proprietor has been wrongly mentioned, it exhibits the nature of enquiry conducted by the ITI and the credibility of the report of the ITI. Copy of the Registration certificate issued by the Commercial Tax Department, I enclosed herewith proves the name of the Proprietor as V. Thiagarajan and the existence of the above person. However, the Assessing Officer in page 5 of the order mentioned that this concern seemed to be defunct from the year 2007 itself and therefore the credit balance shown in the name of this concern should be disallowed. Copies of ..... X X X X Extracts X X X X X X X X Extracts X X X X
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