TMI Blog2017 (11) TMI 791X X X X Extracts X X X X X X X X Extracts X X X X ..... fere with the order of CIT(A). Consequently ground no.1 raised by the revenue is dismissed. Disallowance on account of interest payment as penal in nature - whether interest was paid by the assessee for delayed payment of excise, income tax and sales tax was liable to be disallowed - Held that:- According to the AO the aforesaid payment was in the nature of penal for infraction of law. Therefore it cannot be allowed as deduction in view of the Explanation 1 to section 37(1) which provides that any expenditure incurred by an assessee for any purpose which is an offence or which is prohibited by law shall not be deemed to have been incurred for the purpose of business and no deduction on such expenses shall be allowed. The CIT(A) deleted the addition on the ground that the payment in question was not penal in nature but only compensatory for delayed payment and therefore cannot fall within the ambit of Explanation 1 to section 37. We are of the view that the conclusion of CIT(A) on this issue are correct and calls for no interference - Decided against revenue Disallowance on account of ROC expenses on increased authorized capital - addition which was a fee paid to the registrar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Ma Supply Agency -do- ₹ 25,44,000/- Not known Dholi Sati Trading Co. -do- ₹ 21,65,000/- NK U.K.Singh Purchase of slag ₹ 5,84,885/- Incomplete Address Balaji Traders Purchase of cement ₹ 18,35,000/- Not known Sri Durga Trading Co. Purchase of cement ₹ 24,30,000/- Not known Ma Tara Suppliers Distribution Purchase of cements ₹ 18,27,000/- Not known Rani Sati Enterprises Purchase of cement ₹ 18,50,000/- Not known 4. The AO was of the view that the purchase from the aforesaid parties has to be treated as bogus and the value of the purchase should be added to the total income of the assessee. The profit from trading business of the assessee was declared as follows ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Rs . 1,73,85,885 /- 6. Before CIT(A) the assessee reiterated that the contentions as put forth before the AO and further brought to the notice of AO that the gross profit declared by the assessed during the previous year was much higher than what was declared in A.Y.2006-07 and 2007-08. The assessee also brought to the notice of CIT(A) that if the addition made by the assessee is sustained the gross profit of the Assessee would be highly unrealistic. The assessee also contended that the fact that the purchasers did not respond to the notice u/s 133(6) of the Act can at best by a circumstance which can lead to rejection of books of account of an assessee and profit of the assessee can be estimated u/s 145(3) of the Act and that in any event treating the entire bogus purchases as income of the assessee would lead to absurd results. In this regard the assessee relied on the decision of ITAT Ahmedabad in the case of VR Textiles vs JCIT 11 ITR (Trib.) 478 (Ahm) and Jharkhand High Court in the case of Amitabh Construction P. Ltd. Vs Addl. CIT [2011] 335 ITR 523 (Jhar). 7. The CIT(A) on consideration of the above submissions was of the view that the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... liance on the decision of Hon ble Allahabad High Court in the case of Ganesh Rice Mills vs CIT in ITR 84 of 1990 judgment dated 01.03.2005. 10. We have perused the decision of the Hon ble Allahabad High Court and we find that the substantial question of law considered by the Hon ble Allahabad High Court was as to whether the tribunal was right in coming to the conclusion that the purchases claimed by the assessee were not genuine ignoring the quantitative account available before the Tribunal. The Hon ble Allahabad High Court confirmed the findings of the Tribunal that the purchases in question were bogus. There was no occasion for Allahabad High Court to consider whether the entire purchase should be added or income on sales estimated in the given circumstances. We are therefore of the view that the decision relied upon by the ld. DR will not support the plea of the ld. DR before the Tribunal. On the other hand, we find that the decision of Hon ble Jharkhand High Court in the case of Amitabh Construction P.Ltd. (supra) clearly supports the conclusion arrived at by CIT(A). We, therefore, find no grounds to interfere with the order of CIT(A). Consequently ground no.1 raised by th ..... X X X X Extracts X X X X X X X X Extracts X X X X
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