TMI Blog2018 (6) TMI 1313X X X X Extracts X X X X X X X X Extracts X X X X ..... ng adequate opportunity of being heard to the assessee accordingly, this ground of Revenue’s appeal is allowed for statistical purposes. Disallowance on account of leave encashment under section 43B - Held that:- In the instant case it is evident from the order of the Ld. CIT(A) that the assessee has not made actual payment of the said amount of leave encashment. As per the provisions of the section 43B of the Act, claim of leave encashment is allowed only in payment basis. If the assessee has not made the actual payment, it is not entitled for deduction under section 43B. We do not find any error in the order of the Ld. CIT(A) and accordingly we uphold the same. The ground of the appeal of the assessee is rejected. Disallowance under section 14A - Held that:- The contention of the assessee of utilization of owned interest free funds for investment in shares of sister concern will become relevant only when the disallowance of interest attributable to investment in assets capable of yielding exempted income has been made, while computing the disallowance of ₹ 1,39,462/-. Since no such details have been furnished before us by either of the party, thus in the interest of J ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 10,23,79,206/-after making following disallowance : ( i) Disallowance of the purchases of ₹ 87,59,437/- made from Reliable Metal India. ( ii) Disallowance of ₹ 15,66,869/- on account of leave encashment u/s 43B of the IT Act. ( iii) Disallowance of the interest of ₹ 1,39,462/- u/s 14A r.w. Rule 8D of the IT Act. 4. Aggrieved, the assessee filed appeal before the Ld. CIT(A), who deleted the disallowance of ₹ 87,59,437 for purchases from M/s Reliable Metal (India), but upheld the other two disallowances made under section 43B and section 14A of the Act. Aggrieved with the order of the Ld. CIT(A), both the Revenue and the Assessee filed appeal before the Tribunal raising the grounds as reproduced above. 5. The Ground Nos. 1 and 2 of the appeal of the Revenue relate to the addition of ₹ 87,59,437 deleted by the Ld. CIT(A), which was made by the Assessing Officer on account of unverifiable purchase made from M/s Reliable Metal (India). 6. Facts in respect of the issue in dispute are that the information was received by the Assessing Officer from the Maharashtra VAT Department that the Assessee received non genuine bills o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hi High Court in the case of CIT versus Sunrize Tooling Systems Private Limited (2014) 361 ITR 206 (Delhi). The Ld. CIT(A) concluded that all the primary documents supporting the purchase were filed by the assessee and therefore assessee discharged its onus to substantiate the purchases, whereas the Assessing Officer has relied only on the finding of the Maharashtra VAT Authorities. The relevant finding of the Ld. CIT(A) is reproduced as under: 4.2.11 During the appeal proceedings the AR has made a detailed submission which has been reproduced at para 3 above. He has also relied upon on the decision of Hon ble High court of Delhi in the case of CIT vs. Sunrise Tooling System Pvt. Ltd., (2014) 361 ITR 206 (Delhi) wherein Hon ble High Court dismissed the department s appeal against order of Hon ble ITAT deleting the addition made on account of certain purchases admitted (later reiterated) by one of the Directors as an accommodation transaction. 4.2.12 It is noted here that the facts of the appellant s case are similar to those in the case of CIT Vs. Sunrise Tooling Systems Pvt. Ltd. (Supra). In the present case appellant has made available the documentary evidences whic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... red to the earlier years. In the present case, the AR has submitted that the goods purchased from reliable Metal (India) were sold by the appellant to 4 parties as listed in the assessment order itself. He has also stressed that in the said transaction involving purchase of goods from Reliable Metal (India), the appellant has made a profit of ₹ 2.99 lacs. Therefore, to assume that the appellant concealed any profit or any income by entering into bogus purchase transaction involving Reliable Metal (India) was baseless. 4.2.15 I note that the AO has examined the stock register. The AR has filed the copy of the same in the paper book. The said register contains details of the supplier alongwith quantitative details of the material purchased. The register also contains details of the customers to whom sales have been made. The register also contains details of the quantitative details of the material with invoice number etc. These factors show that the appellant has tried to doubly establish the genuineness of the purchases in the background of the findings of the Maharashtra VAT authorities. To that extent the onus of the appellant in this regard has been very well dischar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rofit of about ₹ 2.99 lacs. Considering all these factors the addition of ₹ 87,59,437/- made by the AO is hereby deleted. 8. Before us, the Ld. DR submitted that in view of the affidavit submitted by Mr. S.P. Dewasi, proprietor of M/s Reliable Metal India that he was engaged in issuing only paper invoices (i.e. without actual delivery of goods), to substantiate the purchases shown from him, the onus is on the assessee to substantiate that goods were actually received from M/s Reliable Metal India. He submitted that from the documents filed by the assessee, which included purchase bills and payment through banks, only indicated paper trail and no evidence of goods being delivered physically to the assessee, has been filed by assessee. According to him, sales shown by the assessee of corresponding amount of goods and confirmation of those parties, may confirm sale of goods by the assessee, but that cannot confirm that those goods were delivered to the assessee by M/s Reliable Metal India, particularly in view of the affidavit of the proprietor of said concern, that he was engaged in issuing paper bills only. According to him, in such a situation, the logical conclus ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... age 51 to 62 of the assessee s Paper Book. We have observed from these documents that:- -In these Bills, sales of stainless steel pipes (SS Pipes) and stainless steel sheets/plates (SS Sheets / Plates) is recorded. -In these bills only weight of the items in kilograms, which vary from 2575 Kgs to 9225 kgs, has been recorded and no detail as to numbers or a specification of the items is mentioned. -In the column for order number only, order number are not mentioned and only word verbal is recorded. -In these bills, the columns for dispatched by and Lorry number/goods carries number and date etc are left blank. -In the delivery challan s issued by M/s reliable metal India also no detail of Truck number or any other mode of the transport or number of items is mentioned. 11. We have also noted that in case of M/s Reliable Metal India, the Maharashtra VAT Department carried out enquiries for verifications of sales and the proprietor of the concern Sh. SP Dewasi, failed to appear before the authorities and the premises were found to be closed. On further enquiries by the Maharashtra VAT Department, he filed an affidavit before the VAT authorities in the form of a stat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 31-JAN11 4.92 MT 6.90 NTPC (RIHAND) LTD. 155540 04/01/2011 PLATES 4.93 MT 156/036 31-JAN- 11 4.93 MT 0.00 NTPC (RIHAND) LTD. 155541 04/01/2011 PLATES 5.01MT SITE FAB 5.01MT 0.00 NTPC (RIHAND) LTD. 177180 03/02/2011 PLATES 31.07MT SITE FAB 31.07MT 0.00 NTPC (RIHAND) LTD. 189249 17/02/2011 PLATES 7.16MT SITE FAB 7.16MT 0.00 NTPC (RIHAND) LTD. 189250 17/02/2011 PLATES 9.09MT 204/043 14-MAR- 11 9.09MT 6.30 NTPC (RIHAND) LTD. 146398 20/12/2010 PLATES ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 05/01/2011 PLATES 13.39 MT 150/05 24-JAN- 11 13.39 MT 19.02 POWERFEN INFRASTRUCTURE (L.L.C) FOHS 157531 06/01/2011 PLATES 18.12 MT 150/05 24-JAN- 11 18.12 MT 0.00 POWERFEN INFRASTRUCTURE (L.L.C) FOHS 157588 07/01/2011 PLATES 18.28 MT 150/05 24-JAN- 11 18.28 MT 0.00 POWERFEN INFRASTRUCTURE (L.L.C) FOHS 154257 01/01/2011 PLATES 14.41 MT 152/006 28-JAN11 14.41 MT 6.48 POWERFEN INFRASTRUCTURE (L.L.C) FOHS 177641 03/02/2011 PLATES 17.50 MT 172/07 11-FEB-11 17.50 MT 7.88 POWERFEN INFRASTRUCTURE (L.L.C) FOHS 198294 27/02/2011 PLAT ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... confirmation of the parties to whom goods have been sold and the statement of purchases and sales may establish the fact that goods are sold and delivered to those parties, however these documents cannot establish that the assessee received goods physically from M/s Reliable Metal India. In our opinion, the assessee did not discharge its onus of substantiating physical delivery of goods to the assessee. The assessee has not furnished any evidence as how the goods were transported to the assessee. The assessee has not provided any evidence of expenditure on truck or any lorry for transport of these heavy goods weighing in tons, from the premises of M/s Reliable Metal (India), either by the assessee or by M/s Reliable Metal India. From the tax invoices issued by the assessee for sale of good available in page 33 to 38, it is evident that office of the assessee at Mumbai was located on 14th Floor, Hoechet House, Nariman Point, Mumbai. It is not clear, how where the assessee could have stored the goods purchased. The assessee has also not shown before us loading and unloading expenses incurred on the purchase in question. In such circumstances, when sales have not been doubted by the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 500000.00 Sbi 18/01/2011 277332 7 Reliable Metal 1350000.00 Sbi 31/01/2011 277360 8 Reliable Metal 1094038.00 Sbi 07/02/2011 277375 9 Reliable Metal 1293586.00 sbi 10/02/2011 277388 Total 8759437.00 21. In view of aforesaid circumstances, we can safely presume that the cash corresponding to the RTGS payment must have been received back by the assessee after date of payment i.e. after 21/10/2010 and therefore goods for supplying to sales parties were purchased (i.e. 21/6/2010 to 25/06/2010) from other persons, utilizing cash. The onus is on the assessee to explain when how the cash has been paid for purchase from gray market and it is for the assessee to explain availability of cash in books of account. In such circumstances generally cash purchases are made at ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is actual payment during the year. Following my order dated 09/12/2012 in the appellant s own case for A.Y. 2009-10 and for the same reasons, this ground is rejected. 24.1 Before us the Ld. Counsel reiterated the submission made before the Ld. CIT(A), whereas the Ld. DR relied on the finding of the Ld. CIT(A). 24.2 We have heard the rival submission and perused the relevant material on record. In the instant case it is evident from the order of the Ld. CIT(A) that the assessee has not made actual payment of the said amount of leave encashment. As per the provisions of the section 43B of the Act, claim of leave encashment is allowed only in payment basis. If the assessee has not made the actual payment, it is not entitled for deduction under section 43B of the Act. We do not find any error in the order of the Ld. CIT(A) and accordingly we uphold the same. The ground of the appeal of the assessee is rejected. 25. The ground no. 3 of the appeal of the assessee relates to disallowance under section 14 A of the Act amounting to ₹ 1,39,462/-. 25.1 In the return of income filed the assessee disallowed amount of ₹ 1,39,462/-however during the assessment proceedin ..... X X X X Extracts X X X X X X X X Extracts X X X X
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