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TMI Blog2021 (9) TMI 221X X X X Extracts X X X X X X X X Extracts X X X X ..... ed its return of income for the A.Y. 2009-10 on 29/09/2009 admitting a total income of Rs. 1,43,72,448/-. The A.O. completed the assessment u/s. 143(3) determining the total income of the assessee company at Rs. 6,00,34,098/- by making various additions including the addition of Rs. 3,70,35,199/- towards expenditure on transport, which is the subject matter in the revenue's appeal. 4. The facts relating to the said ground are that the Assessing Officer found that the appellant had debited an amount of Rs. 3,85,56,294/- under the head freight outward and earlier year the same was at Rs. 1,24,55,142/-. The Assessing Officer observed that increase in sales during the year when compared to last year is only 27% whereas freight outward is increased by 210%. Further, he observed that the freight expenses debited were around 1 to 21 lakhs in initial months and suddenly in the months of January, February, and March these were increases to crores and all these expenses were payable to M/s. APK Road Carriers. Therefore, the Assessing Officer held that the transactions with APK Road Carriers are not genuine and whatever the amounts recorded payable to M/s. APK Road Carriers are nothing b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d Carriers and the same is reflected in its income as confirmed by it and the income tax return filed by it, a copy of which is on record. 8.3.2 The contention of Assessing Officer in his remand report stated that the ledger copies submitted by the assessee are self made and recently prepared seems to be wrong as the same are part of books of accounts and were submitted to the Assessing Officer at the time of initial scrutiny proceedings. 8.3.4 I have verified the bill copies of transportation raised by APK road carriers and the same has the serial Number. Further, the transportation bills of APK Road lines clearly shows the details to whom the transportation is done. The Assessing Officer in his remand report has wrongly stated that the serial Nos. on the bills are not there and the details are not available. 8.3.5 The Assessing Officer in his assessment order states that the freight expenses debited were around 1 to 2 Lacs in the initial months and suddenly in the month of January, February and March, these expenses were increased in Crores. The appellant, in response to the same, states that the amount of freight debited in the month of January, February and March pertains ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e same had also been made available to the Assessing Officer. I am of the view that it has to be seen whether the services are received or not and only because the payment is delayed, it does not mean that the appellant has not incurred the expenditure or received the services. Since the services are received and ultimately the payment is made by way of account payee cheques and on which TDS is deducted and the revenue is reflected in the income of the receiver as proved by the appellant, the expenditure cannot be disallowed on this ground. 8.3.8 The Assessing Officer in his assessment order has stated the assessee has not produced the complete bank account of APK Road Carriers, but it has produced the bank account partly to its convenience. I have verified the complete ledger account with payment details and am satisfied that the transportation expenses are ultimately paid and the contention of the Assessing Officer that the payments made to APK Road Carriers on account of transportation has been received back by the appellant is not correct. 8.3.9 Further the Assessing Officer states that he had issued summons to APK Road Carriers to the address mentioned on the Invoices. But ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... same has been claimed as expenditure by the Company. In view of the above discussions, the Assessing Officer is directed to delete addition." 7. Aggrieved by the order of CIT(A), the revenue is in appeal before the ITAT. 8. The ld. DR besides relying on the order of the A.O. submitted that the assessee company in support of its claim of expenditure produced freight bills and ledger copies are self-made, therefore, the genuineness of the expenditure is doubted by the A.O. and made the addition accordingly. 9. On the other hand, the ld. AR submitted that the bills clearly indicate the name of the consignor and consignee and the amount paid to APK Road lines is duly accounted by them as can be seen from the financial statements of them and the certificates provided. Copy of APK road Carrier financial statement, form 26AS and return acknowledgment for F.Y. 2008-09, confirmation are enclosed. The accounts of APK Road Carriers for the A.Y. 2009-10 was also scrutinized by the income tax department. 10. We have considered the rival submissions and perused the material on record as well as gone through the orders of revenue authorities. The Assessing Officer observed that increase in sa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rcumstances of the case the Ld. CIT(A) erred in deleting the expenditure Rs. 1,30,80,016/- made u/s. 40A(2)(a) & (b) of the Income Tax Act, 1961." 12. As regards ground No. 1 & 2, the brief facts of the case are that the assessing Officer based on the various loose papers impounded during the Survey proceeding conducted on 21-11-2012 in the business premises of assessee noticed that the assessee company during F.Y. 2010-11 had made unaccounted purchase of 518.55 MTs of Sponge Iron M/s. Arshad Ispat, Koppal. Further Shri Gopal Agarwal, brother of Pramod Kumar Agarwal, factory in charge and authorized signatory of M/s. M.S. Agarwal Foundries Pvt. Ltd. in his sworn statement dated 19-07-2011 recorded u/s. 14 of the Central Excise Act, 1944 had accepted the same and paid an amount of Rs. 8,50,000/- on account of Central Excise Duty on such clandestine removal and unaccounted sales of MS Billets and TMT bars amounting to Rs. 68,77,022/-. 12.1. During the course of appeal proceedings, the appellant stated that the Central excise department has forcefully taken the declaration of unaccounted sales and collected the duty. The assessee company has filed an appeal against the central excis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ot evidence of unaccounted sales of assessee company. Hence addition of Rs. 1,25,18,030/- as unaccounted sales from M/s. B.S. Transcomm is deleted in the absence of any material af assessee's camp any record." 12.6. To sum up, out of the total addition of Rs. 1,93,95,052 on account of unaccounted sales, the CIT(A) gave relief to assessee of Rs. 1,90,12,002 and Rs. 3,83,050 was sustained. 13. Aggrieved, the revenue is in appeal before the ITAT. 14. We have considered the rival submissions and perused the material on record. While deleting the addition made by the AO, the CIT(A)'s categorical finding is that the A.O. during the survey proceedings of the assessee company's business premises have not collected any material from assessee company which indicate unaccounted sales and the loose papers impounded from business premises of M/s. B.S. Transcomm belong to them and assessee company cannot be held responsible for the other company's record and their statement. Therefore, we do not find any reason to interfere with the order of CIT(A) in deleting the addition made by the A.O. on account of unaccounted sales. Thus, grounds Nos. 1 & 2 raised on this issue are dismi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nnot be said that these transactions were done to reduce income tax. In view of above, it cannot be said that there is no product profile difference between MS ingots purchased from sister concern i.e. Agarwal foundries and the unrelated parties. Thus, it cannot be said that there are any excess payments made by the assessee company to its sister concern. Therefore, I hold that the A.O. is not justified in making disallowance u/s. 40A(2)(a)&(b) of Rs. 1,30,80,016/- and hence it is deleted." 6. We have considered the rival submissions and perused the material on record as well as gone through the orders of revenue authorities. The CIT(A)'s categorical findings are that "the assessing officer erred by comparing prices of two different quality product supplied by M/s. Agarwal Foundries and unrelated parties. The Assessing officer has not tried to find out the fair market value of the product. The appellant company has also produced the details of sale price of finished product manufactured using higher grade material which fetch extra margins to company. Furthermore, both M/s. Agarwal Foundries and Appellant Company are taxed at maximum rate of tax." Therefore, we do not find a ..... X X X X Extracts X X X X X X X X Extracts X X X X
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