TMI Blog2023 (10) TMI 188X X X X Extracts X X X X X X X X Extracts X X X X ..... our considered view, FAA as justified in deleting the additions made on account of non-genuine purchases. Once the purchases are held to be genuine, then there cannot be any doubt regarding manufacturing activity of the assessee. Therefore, the manufacturing expenses claimed by the assessee have to be allowed. In this view of the matter, we do not find any infirmity in the decision of learned Commissioner (Appeals). Accordingly, we uphold the same by dismissing the grounds raised by the Revenue. - SHRI SAKTIJIT DEY, VICE PRESIDENT AND DR. B.R.R. KUMAR, ACCOUNTANT MEMBER For the Assessee by Sh. V.K. Bindal, CA Mrs. Rinki Sharma, ITP For the Department by Sh. P. Praveen Sidharth, CIT(DR) ORDER Captioned appeals by the Revenue relate to the same assessee and arise out of separate orders of learned Commissioner of Income Tax (Appeals)-27, New Delhi, for the assessment years 2008-09, 2009-10, 2010-11, 2011-12, 2012-13, 2013-14 and 2014-15. 2. The major issue, which is common in all these appeals, relate to deletion of addition made of various amounts in different assessment years on account of bogus purchases from certain entities. Of course, there is a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Assessing Officer, ultimately, concluded that the entire transaction relating to the purchase of raw materials by the four Sharp group entities in Jammu is not only bogus but the sale, in turn, by those four entities to the assessee, are also bogus. Accordingly, he treated the entire purchases of raw materials by the assessee from M/s. Ambika International, M/s. Fine Aromatics, M/s. Jay Ambey Aromatics and M/s. Shiva Mint Industries, as bogus and added back to the income of the assessee in the respective assessment years, while making identical addition on protective basis at the hands of the concerned four entities. 4. The assessee contested these additions before learned first appellate authority. After considering the submissions of the assessee, in the context of fact and materials available on record, learned Commissioner (Appeals) observed that in assessments completed under section 143(3) of the Act in respect of the four partnership firms M/s. Ambika International, M/s. Fine Aromatics, M/s. Jay Ambey Aromatics and M/s. Shiva Mint Industries, the entire purchases and sales have been accepted as genuine. He further observed that the purchases have not only been duly record ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt, Jammu, the Assessing Officer has concluded that the purchases of raw material by the assessee are non-genuine. Whereas, he submitted, in course of proceedings before the departmental authorities, the assessee has furnished all supporting evidences to establish the genuineness of the purchases. He submitted, though, the Assessing Officer has placed strong reliance upon the Investigation carried out by the Central Excise Department, however, while deciding the appeals of M/s. Shiva Mint Industries, M/s. Fine Aromatics, M/s. Jay Ambey Aromatics and M/s. Ambika International, the Custom, Excise and Service Tax Appellate Tribunal (CESTAT) has passed number of orders categorically holding that the purchases made by theses parties are genuine. Thus, he submitted, once the CESTAT held the purchase made by the four Jammu based entities to be genuine, the sales made by them to the assessee cannot be considered to be non-genuine. 7. Further, he submitted, while deciding the appeals filed by the Revenue in case of M/s. Jai Ambay Aromatics, the Income Tax Appellate Tribunal has upheld the decision of learned first appellate authority in deleting the addition made on account of non-genuin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... automatically arise whether, in absence of purchase of raw materials, the corresponding sales could have been effected by the assessee?. The answer to the aforesaid question would be an emphatic no . It is also relevant to observe, while deciding the appeals filed by the four Jammu based entities, viz., M/s. Ambika International, M/s. Fine Aromatics, M/s. Jay Ambey Aromatics and M/s. Shiva Mint Industries, the CESTAT in order dated 05.12.2018 has categorically held that the purchases made by them to be genuine. In this regard, the following observations of CESTAT would be relevant: 9. We find that in this case the sole allegation against the appellant is based on the investigation conducted by Commissioner of Central Excise, Merrut, and as per the investigation, it is alleged that farmers from whom the inputs were purchased were nonexistence. Therefore, commission agents never supplied inputs to the appellant and the appellant did not manufacture the goods. Consequently, they have not sold the goods and it was alleged that the appellant has not manufactured the goods at all. 10. We further take note of the fact that, the investigation was not conducted at the end of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f. 27.02.2010. Thus, the investigation may not be in tune with the investigations conducted by the Central Excise Commissionerate Merrut-II 11. We further take of the fact that the similar issue on identical facts came up before this Tribunal in the case of Nanda Mint and Pine Chemicals Ltd. vide Final Order No. 63177 / 2018 dated 28.08.2018, wherein this Tribunal observed as under: 6. We find that in this case the sole allegation against the appellant is based on the investigation made by Commissioner of Central Excise, Merrut, and as per the investigation, it is alleged that farmers from whom the inputs were purchased were non-existence. Therefore, commission agents never supplied inputs to the appellant and the appellant did not manufacture the goods. Consequently, they have not sold the goods and it was alleged that the appellant has not manufactured the goods at all. 7. We take a note of the fact that the check post movement of trucks which were carrying inputs as well as finished goods were found entered. We further take note of the fact that the appellant has produced the evidence of the entry of all the transport vehicles i.e. trucks which have entered ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ess is very time consuming and most of these of units have closed their, factories due to withdrawal of Central Excise Duty on all Mentha products w.el 27.02.2010. Thus, the investigation may not be in tune with the investigations conducted by the Central Excise Commissionerate Merrut-II. 9. The said report also support the case of the appellant wherein it has been clearly mentioned that during the periodical checks by the departmental officers, the appellant found manufacturing the goods. Moreover, no discrepancy was found and on toll barriers it was found that the vehicles carried inputs/finished goods found entered. Moreover, the District Centre also certified the said fact. 10. We further take note of the fact that the various other departments namely Pollution Control Department, District Industries Department, Electrical Department have visited the factory of the appellant and found functioning. All these facts have not been disputed by the Revenue. As there is no corroborative evidence to show that the appellant were not manufacturing the goods, therefore, the allegation alleged in the show cause notice is not sustainable. 11. We further take note of the f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ers visited the factory premises and seen that the manufacturing process going on was evidence by them and such evidences being on record and submitted by the appellant it was the duty of the Original Authority to accept them and not to discard by saying that the Officers have not seen the goods being manufactured by their own eyes. Further, the receipt of inputs was verified by the Officers of Central Excise Department and sample of the same were also drawn and forwarded for Chemical Examination. Such evidence was also not accepted by the Original Authority, Therefore, it appears that the Original Authority was pre-determined to adjudicate the matter in the manner in which he has decided the issue and he was not just and fair and did not discharge his duty as an independent adjudicator. We, therefore, set aside both the impugned Orders-in-Original dated 29/01/2010 29/03/2011 and allow all the appeals filed by appellant. The appellant shall be entitled for consequential relief All the demand and penalties imposed are also set aside. All the Miscellaneous/Stay Applications stand disposed, as infructuous. 12. In view of the above observations, we hold that without bringing a ..... X X X X Extracts X X X X X X X X Extracts X X X X
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