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Pr. Commissioner Of Income Tax-Gandhinagar Versus Gujarat Spices And Oilseeds Growers Co-Op Union Ltd.

2015 (10) TMI 1764 - GUJARAT HIGH COURT

Bogus purchase of M.S. Steel - ITAT deleted the addition - Held that:- Tribunal has concurred with the findings recorded by the Commissioner (Appeals), namely, that the assessee had provided copies of bills of purchase and had also given evidence to establish that the steel reached the assessee’s factory at Anjar by way of weigh bridge receipt which showed that the steel had actually reached the assessee’s factory. The purchases made by the assessee were duly supported by various documentary evi .....

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r 2004-05. - Decided in favour of assessee. - Tax Appeal No. 661 of 2015 - Dated:- 28-9-2015 - MS. HARSHA DEVANI AND MR. A.G.URAIZEE, JJ For the Petitioner : Mr Sudhir M Mehta, Advocate ORDER PER : MS. HARSHA DEVANI 1. The appellant revenue in this appeal under section 260A of the Income Tax Act, 1961 (hereinafter referred to as the Act ) has challenged the order dated 23.1.2015 passed by the Income Tax Appellate Tribunal, Ahmedabad A Bench, Ahmedabad (hereinafter referred to as the Tribunal ) i .....

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ich the assessee had made payment to Dhruv Steel ? 2. The assessment year is 2004-05 and the relevant accounting period is the previous year 2003-04. The assessee, a cooperative society, filed its return of income for assessment year 2004-05 declaring total income of ₹ 86,349/- pursuant to the notice issued under section 153A(a) of the Act. The Assessing Officer, upon verification of record and details, noticed that the assessee had shown purchase of plant and machinery (mainly MS Steel) o .....

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made to Dhruv Steel had come back in the form of deposit to the assessee received from Vimal Marketing. In order to verify the genuineness of purchases, the Assessing Officer made inquiries from those parties from whom total purchases were shown to have been made by Dhruv Steel. It appears that the letter sent by post to two of the parties were returned with the remark not known and in respect of the other concerns, notice was served but no compliance was made. The Assessing Officer further not .....

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ns made by Dhruv Steel should not be treated as bogus. In respect thereto, the assessee submitted its detailed reply as recorded in paragraph 2.4 of the assessment order, explaining all facts with regard to supply of goods, use of steel in setting up the unit, recording of receipt of goods in the entries made in the manual register maintained at the factory gate as well as in the further register maintained by the Accounts Department. It was pointed out that the goods inward register already for .....

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cast upon the assessee to prove the genuineness of the said purchases had been duly discharged. The assessee asserted that Dhruv Steel had never denied the sales to it and that there is no legal obligation cast upon the assessee to prove source of source of purchase, nonetheless, the assessee had enclosed copies of returns of the parties which had supplied steel to Dhruv Steel to the Assessing Officer to enable him to verify at his end, as all the three parties were regular tax payers. The Asses .....

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d never denied the fact that they had made sales to the assessee and on the contrary they had confirmed the sales having been affected and that the assessee had established the identity and genuineness of the transactions made with M/s Dhruv Steel. In this factual background, the Commissioner (Appeals) was of the view that the transactions of purchase of steel from M/s. Dhruv Steel cannot be treated as non-genuine and depreciation cannot be denied as claimed in the return of income. The Commissi .....

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ments of two parties out of six parties who had sold goods to M/s. Dhruv Steel. 3. As regards observation of the Assessing Officer that purchase price paid by the assessee had come back in the form of loan from Vimal Marketing, the Commissioner (Appeals) found that the transaction between Dhruv Steel and Vimal Marketing and payment by the assessee to Dhruv Steel cannot be mixed up. The Commissioner (Appeals) after appreciating the material on record recorded the following findings:- 4. I have co .....

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llant was having deposit from M/s. Vimal Marketing. Therefore, in his view the payment made by the appellant has come back. On the other hand, the appellant has shown that the steel has been purchased from M/s. Dhruv Steel. Even in reply to notice u/s.131 by the Department, they have confirmed supply of steel to the appellant. The total purchase from Dhruv Steel during the F.Y. 2003-04 amounting to ₹ 464 lakh as against which the A.O. has considered ₹ 347 lakh as non-genuine. On peru .....

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ant s factory at Anjar by way of weigh bridge receipt. Thus, the appellant has shown that the steel has actually reached to their factory. The appellant has explained that sales made by Dhruv Steel are much more than sales made by them to the appellant and hence A.O. cannot presume that purchases made by appellant represent alleged bogus purchases of Dhruv Steel unless there was any specific evidence to that effect. In the absence of any such exercise carried out by the A.O., the addition made b .....

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ade by the appellant were not genuine, it would not have been able to construct a huge plant of oil, which is, evident from the photographs submitted by the appellant. Accordingly, on appreciation of the facts of the case of the appellant in light of the various judicial rulings relied on by the appellant, I hold that the conclusion reached as to bogus purchase of MS steel in assessment order for A.Y. 2004-05 are not justified. Accordingly disallowance made on the basis of observation in assessm .....

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ed the appeal. 5. Mr. Sudhir Mehta, learned senior standing counsel for the appellant, submitted that the Tribunal has failed to appreciate the significant facts which had been revealed during the proceedings, namely, that the proprietors of the concerns from whom M/s. Dhruv Steel, viz., the supplier of M.S. steel to the assessee, is stated to have purchased the steel, have denied having sold any such goods to M/s. Dhruv Steel as well as having signed any of the bills of the alleged sales. It wa .....

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