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The Income-tax Officer Versus M/s Shri Hanuman Onion Trading Company

2017 (1) TMI 932 - ITAT NAGPUR

Unaccounted purchases - Held that:- Upon examination of the records the learned CIT(Appeals) has given a finding that the stock of red chillies lying with Best Cold Storage was out of the opening stock of the assessee and cannot be said to be an unaccounted purchase. Hence find that the above order of Learned CIT(Appeals) is cogent one and does not need any interference. - Decided in favour of the assessee - Interest free advances to Hanuman Tractors - Held that:- There is no infirmity in t .....

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evenue is directed against order of Learned CIT(Appeals)-I, Nagpur dated 29/7/2016 and pertains to assessment year 2008 - 09. The grounds of appeal read as under 1. On the facts and in the circumstances of the case, the Ld. CIT(Appeals) erred in deleting the addition of ₹ 30,87,940/- made by the Assessing Officer u/s 69 of the I.T. Act, 1961. 2. The Ld. CIT(Appeals) has erred in so deleting the addition of ₹ 30,87,940/- without appreciating the fact that despite sufficient opportunit .....

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essee to Hanuman Tractor and two others were due to business expediency and merely because it was so stated to be by the assessee. 2. Apropos the first issue relating to deleting the addition of ₹ 30,87,940/-. The brief facts on this issue leading to the disallowance by the Assessing Officer are as under : The assessee is a firm consisting of five partners. The firm derives income from trading of onion, chillies and adat etc. During the course of assessment proceedings, on perusal of the b .....

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stored in its storage. The Best Cold Storage Pvt. Ltd. furnished the details of material belonging to the assessee stored in its storage which is reproduced in para 5.1 of the assessment order. The assessee submitted before the AO that the goods kept in the Best Cold Storage belong to the assessee, the agriculturist, and the buyers and suppliers of the chillies. The assessee further submitted that they mainly play a role of facilitator in respect of others goods since they have to provide servi .....

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his reply vide letter dtd. 24.10.2010 which is reproduced in para- 5.1 on pg.no.2 and 3 of the assessment order. The AO having not been satisfied with the explanation filed by the assessee issued another letter calling for details of stock kept with the said concern. The assessee filed another submission which is reproduced in para 5.2 of the assessment order. The assessee submitted before AO that the stock lying in storage was accounted in the books and is shown in stock as is verifiable from t .....

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AO the details of opening balance, purchases, sales and closing stock. The assessee pleaded before the AO that the stock lying in Best Cold Storage Pvt. Ltd. is out of the opening stock but the AO has discarded the contention of the assessee by stating that no evidence of opening stock kept with cold storage is furnished by the assessee. The AO therefore, treated the entire stock valued at ₹ 30,87,940/- kept in the Best Cold Storage as unexplained investment in stock purchased during the y .....

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sessing Officer. The learned CIT(Appeals) further observed that AO has not taken any steps to verify the submissions of the assessee. Accordingly the learned CIT(Appeals) deleted the addition. In this regard I may gainfully refer to the following observations of the Learned CIT(Appeals): 7.2 It is not disputed that 1934 bags each of 40 kg of red chillies were lying in the Best Cold Storage. The appellant has admitted the ownership of the stock and contended that out of the 1834 bags 594 bags of .....

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07. The appellant has furnished the movement details of red chilly as per paper book no. 1. The AR of the appellant in support of his contention has submitted the audit reports for the relevant financial year 2004-05 to 2008-09, giving the quantitative details of stock as under : Asstt. Year Stock in Quintals Opening Closing 2005-06 - 1839/484 2006-07 1839/484 2517/38 2007-08 2517/38 707/00 2008-09 707/00 336/64 On perusal of the audited accounts, it is seen that the opening sock of 707.00 quint .....

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d by the appellant that the stock kept in cold storage was reflected in the opening stock, coupled with the fact that the stock as per books was more than the stock reflected in the stock statement supplied by Best Cold Storage, the AO is not justified to add the value of this stock u/s 69 carried substantial force. 7.3 The ld. AO in para-3 of the assessment order has recorded a finding hat the books of account & other relevant documents have been audited as required under the provisions of .....

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ed before the AO that the stock kept with the Best Cold Storage is out of opening stock. However, the ld. AO has not conducted any sort of verification of opening and closing stock with reference to purchase and sales to ascertain the actual stock status of the appellant and compare the same with the stock lying with the The ld. AO has also not brought out a case as to how the stock lying with the Best Cold Storage is outside the books unless he had examined the purchases and sales of chillies w .....

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tive evidence in hand is directed to deleted. 4. Against above order Revenue is in appeal before the ITAT. 5. I have heard both the counsel and perused the records. I find that upon examination of the records the learned CIT(Appeals) has given a finding that the stock of red chillies lying with Best Cold Storage was out of the opening stock of the assessee and cannot be said to be an unaccounted purchase. Hence I find that the above order of Learned CIT(Appeals) is cogent one and does not need a .....

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the assessee has debited interest of ₹ 3,91,572/- in the P&L a/c. The AO further found that the assessee has shown the debit balance of ₹ 23.20 lacs in the name of Hanuman Tractors, Nandura. This amount of loan to Hanuman Tractor is given free of interest. The AO further noted that there was debit balance of ₹ 1 lac each shown in the name of Sonal Agro Centre, Nandura and Venkatesh Traders, Nandura which is also free of interest. Thus, the AO found that the appellant has de .....

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eld as under : On careful examination of the material facts as emanated from the submissions of the AR of the appellant, it is seen that AR has mainly contended that the interest free advances to Hanuman Tractors of ₹ 23.20 lacs and ₹ 2 lacs to two other parties are given out of business expediency. The loan advanced to Hanuman Tractors as fee of interest is stated to be for its farm vehicle supply and service business. The appellant has further submitted that Sonal Agro and Venkates .....

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