ITO, WD-40(1), KOLKATA, KOLKATA vs. SHRI MANTU SAHA, KOLKATA

ORDER

PER J.SUDHAKAR REDDY, AM:

Rs.13,96,79,183/- which has been inflated by the assessee in his P & L A/c as Rs.15,17,97,642/-. Hence, the difference of Rs.1,21,18,459/- is added back to the G.P. accordingly enhancing the N.P. to the same extent.”

1. “ That in fact and circumstances of the case, Ld. CIT(A) erred in allowing full relief by deleting the addition of Rs. 1,21,18,459/- against inflated purchases specially when the assessee in the course of assessment proceedings, fails to produce corroborative purchase bills for major portion of local purchase from the Hat chasi.

2. That in fact and circumstances of the case Ld.CIT(A) erred in allowing full relief when the assessee, in spite of being provided several opportunities of being heard and submit proper evidence in support of his claim, failed to furnish the same. 3. That the appellant craves the leave to add, alter, modify, include or delete any grounds of appeal.”

4. After hearing the rival contentions and perusing the papers on record including 145 pages of paper book filed by the assessee, we find no infirmity in the order of the First Appellate Authority for the following reasons :- i)the books of account was audited u/s 44AB of the Act. ii)The AO had verified the books of accounts and the relevant documents as well as purchases during the course of assessment proceedings and has not pointed out any error or omission in the same. The assessee had produced evidence before the AO in Shri Mantu Saha A.Y.2011-12 3 support of its purchase and no addition was made. The AO was of the view that the purchase of wheat from local farmers from 7th April to 12th June, 2010 was at a cost which is much lesser than what is charged by Food Corporation of India whereas it was the cost which was more than what is charged by Food Corporation of India after this date. Such observation by the AO, in our view, does not warrant averaging and applying the purchase price. iii) Based on the cost price of purchases from 07.04.2010 to 12.06.2010, the AO cannot hold that this is the cost of wheat for the entire year and thereafter, averaging the same and treating the difference income, as unexplained purchase. iv) The ld. Counsel for the assesee’s contention that it is to make purchase of wheat at the market determined price and that the AO has not brought out any evidence to demonstrate inflation in purchase price by the assessee, in comparison to such market determined rates. v) the addition made by the AO was merely on surmises and conjectures and without any basis.

Under the circumstances we uphold the following factual finding of the ld. CIT(A).:

4.2. I Appellant's submission and facts available on; record is carefully considered Assessment record was called for and perused. On perusal of assessment record, It is seen that all the purchase and sale details, bills etc. that were called for by A.O., were produced. As is seen from order sheet entry details, A.O. had called for one sample purchase and sales bill for each month which has been produced. No defects in book on any bills were pointed out. Therefore, there was no basis for taking purchase price for only a part of the year; to arrive at average purchase price, when all the purchase bills called for, were produced and. without cross-checking the authenticity of purchase or even pointing out comparable case to support purchase price assumed. Purchase price of any commodity, including agricultural commodity is unlikely to be constant over the year. Theref6re there was no basis for adopting the purchase price only from a part of the year, when the purchase price was lowest to arrive at an average purchase price for the entire 'year, to work out estimated purchase inflation without pointing out any defect in books of account and without citing any comparable case. Notwithstanding, the method adopted by the AO in computing the average price for purchases by averaging the purchase price of 8000 quintals of FCI purchases with 97737 quintals of local purchases is peculiar and lacks Shri Mantu Saha A.Y.2011-12 4 logic. In view of the above facts, A.O.’s addition made on account of purchase inflation is without any basis and cannot be sustained. Therefore, the addition made is deleted and the appeal is allowed. “

The ld. DR could not controvert these findings.

Order pronounced in the Court on 18 .10.2017.