TMI Blog1996 (10) TMI 123X X X X Extracts X X X X X X X X Extracts X X X X ..... n employee who misplaced the papers and left the service abruptly with the ulterior motive to put the assessee into embarrassing situation and hardships. The learned counsel for the assessee explained on the basis of the petition and affidavit that this unintentional delay occurred due to unavoidable circumstances and reasons which in fact, were beyond the control of the assessee. The learned departmental representative raised no objection to the condonation of delay. After hearing both the parties and after considering all the facts and circumstances of the case, we condone the delay and admit the appeal. 3. The undisputed facts of the case in brief are that in the previous year ending on 30th June, 1985 relevant to the assessment year 1986-87 the assessee received two bills, one dated 15-6-1985 from New Bharat Equipment Manufacturing Co. of Rs. 1,84,900 and the other dated 25-6-1985 from Pioneer Peaker Products for Rs. 1,73,600 totalling to Rs. 3,58,500. The goods supplied against these bills were received by the assessee on 1-7-1985 and the said goods were exported by the assessee on 3-7-1985. Since the assessee had received and exported the materials in the accounting year c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ails :--- " The Assessing Officer has disallowed purchases amounting to Rs. 3,58,500 which were not made during this year. It was admitted at the time of hearing that the purchases related to earlier year and bills were also received during earlier year although payments were made during this year. As the appellant maintains its accounts on mercantile basis, the Assessing Officer rightly disallowed the purchases, liability of which became determined in the earlier year. This disallowance amounting to Rs. 3,58,500 is, therefore, confirmed." 6. Being further aggrieved by the order of the CIT(A) the assessee has preferred this appeal to the Tribunal. The learned counsel for the assessee Sri S.K. Tulsiyan, Advocate filed a paper book containing 53 pages and submitted that both the purchases under consideration undoubtedly pertain to the previous year relevant to the assessment year 1986-87, but since the delivery of material was received in the previous year relevant to this assessment year, the purchases were recorded in the books of account of this assessment year. He also pointed out that even if purchases are recorded in the books of account of last year, these purchases would ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ered the rival contentions, the relevant facts and material placed on record. It is noticed that the addition of Rs. 3,58,500 was made in the assessment and was sustained in appeal merely on the ground that the assessee maintains its accounts on mercantile basis. We notice that the Assessing Officer has not incorporated the explanation of the assessee and has failed to go into the details of the matter and the CIT(A) has completely missed and ignored the facts on one hand and the explanation of the assessee on the other. Most vital and relevant facts in nutshell are that the assessee recorded purchases in this year on the basis of delivery and export of goods but did not debt its purchases in the last year, i.e., the year ended on 30th June, 1985 and accordingly did not show and include the same in the closing stock as on 30th June, 1985. The department has not challenged and controverted these facts. Therefore, in our opinion, the addition or the disallowance on account of purchases cannot be sustained as such merely on the ground that the assessee is following mercantile system of accounting. Then, as it is not the case of the Revenue that these purchases are also included in the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt years 1986-87 and 1987-88, there would have been no revenue loss too to the department. It is also observed that the CIT(A) has completely brushed aside the consideration as the whether the assessee has been following his method of accounting constantly and regularly. We find that the assessee has been following this method of accounting consistently and regularly as it is admitted by the CIT in his order under section 264 dated 10-3-1994. The relevant extracts from his order are quoted as under :--- " The assessee has produced two bills dated 27-3-1991 and 30-3-1991 for Rs. 31,875 and Rs. 4,11,415 respectively relating to the assessment year 1992-93. These bills although dated prior to 31-3-1991, the goods were delivered in the month of April and accordingly necessary entries both relating to purchases and sales were reflected in the assessment year 1992-93." " On the basis of the method regularly followed by the assessee the purchases of the last week of the previous accounting year shown in assessment year under consideration." " This assessee is following this system of accounting for last several years up to the current year." Having verified the facts and having co ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
