TMI Blog2016 (7) TMI 63X X X X Extracts X X X X X X X X Extracts X X X X ..... ATE FOR THE OPPONENT : MRS MAUNA M BHATT, ADVOCATE ORAL JUDGMENT (PER : HONOURABLE MR.JUSTICE KS JHAVERI) 1. By filing these appeals, the assessee has challenged the order dated 30.12.2005 passed by the Income Tax Appellate Tribunal, Ahmeabad Bench 'A' in ITA No.1823/Ahd/2000 and order dated 16.1.2008 passed by Income Tax Appellate Tribunal, Rajkot Bench, Rajkot in ITA No.359/RJT/2006 whereby both the appeals filed by the revenue were partly allowed. 2. At the time of admission of Tax Appeal No.826 of 2006, following questions of law were framed for our consideration:- (1) Whether in the facts and circumstances of the case the Income Tax Appellate Tribunal was right in law in disallowing the purchase expenditure amounting to ₹ 26,72,656/- by treating the same as bogus when admittedly corresponding sales against these very purchases have been offered and accepted for tax? (ii) Whether, in the facts and circumstances of the case the Income Tax Appellate Tribunal was right in law in not granting deduction for purchase expenditure at all when material is purchased from one and bill is obtained from another? 3. At the time of admission of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l was actually received for which payments were made, only question would be did the Tribunal err in adding 5% of the purchases and not 25% as was vehemently urged before us by the learned counsel for the Revenue. Here also, we do not find that the Tribunal has committed any error so as to give rise to any question of law. The Tribunal looking to the material noted above, retained portion of the above by giving cogent reasons. The decision of this Court in case of Sanjay Oilcake Industries {Supra] was rendered in a slightly different fact situation. In the said case, the assessee had made purchases but the parties were not traceable. They had opened the bank accounts and immediately upon credit of the cheques, withdrawn the amount by bearer cheques. On such basis, the Tribunal had held that such parties were creation of the assessee itself for the purpose of banking purchases into books of account because the purchases with bills were not feasible. The Tribunal therefore, observed that such parties became conduit pipes between the assessee-firm and the sellers of the raw materials. It was on this basis that 25% of the purchase price was added by way of income of the assessee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the purchases of the assessee company from Amber Trading Company is also to be held as bogus to the extent of URD purchases of Amber Trading Company. Hence, it is seen that the disallowance in the present case was made on this basis that to the extent of URD purchases of Amber Trading Company held to be bogus, the purchases of the assessee company from Amber Trading Company is also to be held as bogus. Now, we find that it is noted by learned CIT [A] in the above para that the A.O of the firm M/s. Amber Trading Company treated the URD purchases of M/s. Amber Trading Company as genuine. Once, the URD purchases of M/s. Amber Trading Company is accepted as genuine by the A.O of that party, the disallowance made by the A.O in this regard cannot be sustained because it has no legs to stand. Accordingly, we decide this aspect of the matter in favour of the assessee. Thus, Ground No. 3 of the revenues appeal is also rejected. These questions are, therefore, not required to be considered. 6. He has relied upon the decision of this Court in Tax Appeal No.679 of 2010 decided on 16.8.2011, wherein it was observed as under:- 7.0 In the present case also, the Commissioner of I ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... essed in spite of notice. Though essentially the conclusions of the Tribunal have the colour of factual findings, still we find that the Tribunal has not taken into consideration relevant materials and has also acted on irrelevant materials. The fact that the alleged sellers have been found to be persons with no means to effect purchases or to carry on business is a factor which does not appear to have been considered by the Tribunal in its proper perspective. Materials on record clearly establish that Chedi Lal was a petty employee of a concern of which Satya Pal Jain was a partner. In fact Satya Pal Jain was partner of M/s Medipac, one of the sister concerns of the assessed firm. On enquiries conducted by the authorities after due notice to the assessed it was found that there was no such concern called M/s Kalpana Enterprises at either 71, Canning Street, Calcutta or 479, Bartan Market, Sadar Bazar, Delhi. Additionally Chedi Lal opened the bank account with the introduction of Satya Pal Jain and the amounts were withdrawn. If the purchases were really effected from M/s Kalpana Enterprises it is not understood as to how some other person namely Inder Sain Jain (HUF) accepted that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to a question of law. This position has been succinctly stated by the Apex Court in Dhirajlal Girdharilal v. Commissioner of Income-tax, , Commissioner of Income-tax v. Daulat Ram Rawatmull, (1973) 87 ITR 349(SC). Where the Tribunal misdirects itself in law in basing its conclusions on some evidence ignoring other essential materials on record, a question of law arises. (See: Commissioner of Income-tax v. Radha Kishan Nandlal,). The answer to the question therefore, is in the negative, in favor of Revenue and against the assessee. The reference application stands disposed of. 9. In view of above observations, he prayed to dismiss these appeals. 10. Having heard learned counsel for the parties and having perused the materials on record, we are of the opinion that the entire issue is based on materials on record. This is not a case where purchases have accounted for and suppliers were not traceable or not available at the address given by the assessee. This is a case where the amount has been received back to the assessee from the suppliers of which expenditure on account of purchases accounted for in the books of account. In view of the consistent decisions of this C ..... X X X X Extracts X X X X X X X X Extracts X X X X
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