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TMI Blog2010 (5) TMI 858X X X X Extracts X X X X X X X X Extracts X X X X ..... t Shri Rohit Panwala had admitted the issue of bogus bill and earned comission only." The assessee has filed Cross Objection (CO) raising the following grounds:- "01. That he Hon'ble Commission of Income-tax Tax has wrongly sustained the addition made of Rs. 508095/- on purchases of colour chemical from Min. Chemicals. 02. That Commissioner of Income-tax(Appeals)has wrongly sustained the addition of Rs. 440892/- on chemical purchase from Pooja Dyechem Rs. 169900/- and Abhi Dyes of Rs. 1593670/- by wrongly applying the decision of Hon'ble ITAT Ahmedabad in the case of Vijay Poteins." 2. The facts of the case are that the assessee is engaged in business of Dyeing & Printing of Art Silk Cloth. Return of income declaring total Income at Rs. nil was filed. During the course of assessment proceedings, Assessing Officer noticed that assessee has not shown work-in-progress in the closing stock as on 31-03-2003. When asked, it was explained that it is consistently following a accounting method in which goods dispatched after considering job charges are accounted for. However, Assessing Officer was of the view that assessee had claimed all the expenses made during the year under consid ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ceive its work charges. No interim payments or advances payments are received by the appellant from its customers during the pendency of the job work. The receipts from the job work are being accounted for by the appellant on completed contract method as per AS-9. The closing stock of materials used for processing of cloth, i.e. colour chemicals etc. have been duly accounted for by the appellant in accordance with AS-9. In regard to the value addition made by the appellant on the customer's cloth, which may have been at different intermediate stages of processing as on 31.3.2003, neither any opening stock nor closing stock was ever shown by the appellant. As per the principles of accounting laid down by the ICAI, under the scope of Valuation of Inventories in item 1(sub-item(b) of AS-2 (revised) the "work-in-progress" arising in the ordinary course of business of service provider" has been specifically scoped out of the said statement. Further, in the definitions provided under item 3 of the AS-2 "Inventories" have been defined as "assets (a) held for sale in the ordinary course of business (b) in the process of production for such sale" or (c) in the form of materials or supplies ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... addition on account of estimated value of work-in-progress is required to be deleted." 4. Ld.SR-DR on the other hand submitted that if assessee has spent money which has been debited in the profit & loss a/c. and to the extent the assessee does not get receipt from the principle, work-in-progress should be estimated. 5. After considering the rival submissions of the parties, we are of the view that issue is now covered in favour of the assessee by the decision of Tribunal in the case of Pratik Processors Pvt. Ltd. (supra) pronounced on 15-01-2010. Respectfully following the above order we dismiss the ground No.1 and 2 of the Revenue's appeal. 6. Ground No.3 and 4 of the Revenue's appeal and ground No.1 of assessee's CO relates to sustaining addition of Rs. 5,08,089/- on account of unproved purchased. 7. The facts of the case are that the assessee declared purchases of colour and chemicals from M/s.Pooja Dye Chem for Rs. 1,69,900/-, of Rs. 15,93,677/- from M/s.Abhi Dyes and of Rs. 5,08,095/- from M/s.Min Chemicals. During the course of assessment proceedings Assessing Officer found following facts in respect of purchases of Rs. 1,69,900/- from M/s.Pooja Dye Chem:- i) Shri Roh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . Min Chemicals was found to be pertaining to another concern. iv) No supporting evidences for material received shown as purchase from M/s. Min Chemicals has been furnished by the assessee. v) The whole of the amount outstanding as on 31/3/2003 s shown to have been paid through four sequential cheques bearing Nos.615144- 615147." The Assessing Officer gave opportunity to assessee to explain but either no explanation was furnished or whatever was stated was not found satisfactory. In respect of purchases from M/s.Pooja Dye Chem, assessee only submitted copies of bills and delivery challan and copy of bank statement in support of payment made to that party. In respect of purchases from Abhi Dyes assessee furnished bank statement showing payment to that party. In respect of purchases from M/s. Min Chemicals no confirmation was submitted except bank statement showing payment to that party. Considering that purchases from these three parties were not proved, the Assessing Officer treated these purchases as non-genuine and added the same to the total income of the assessee. 8. Ld. CIT(Appeals) observed in respect of first two parties that there are entries of goods received in the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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