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Income Tax Appellate Tribunal, KOLKATA BENCH “A” KOLKATA
Before: Shri Waseem Ahmed & Shri S.S.Viswanethra Ravi
आदेश /O R D E R PER Waseem Ahmed, Accountant Member:-
This appeal by the Revenue is directed against the order of Commissioner of Income Tax (Appeals)-Asansol dated 07.08.2014. Assessment was framed by JCIT, Range-3, Asansol u/s 143(3) of the Income Tax Act, 1961 (hereinafter referred to as ‘the Act’) vide his order dated 12.03.2013 for assessment year 2010-11. \ Shri Sallong Yaden, Ld. Departmental Representative represented on behalf of Revenue and Shri Sunsil Surana, Ld. Authorized Representative appeared on behalf of assessee.
Solitary issue raised by Revenue in this appeal is that Ld. CIT(A) erred in deleting the addition made by the Assessing Officer for ₹ 41,13,394/- being 7% of cash purchase of ₹5,87,62,766/- on account of non-availability of requisite documents.
Briefly stated facts are that assessee is a private limited company and engaged in the business of manufacturing and exporting of lac & lac products and aleuritic acid A.Y. 2010-11 ACIT Cir-3 Asl Vs. M/s Renshel Exports Pvt. Ltd. Page 2 as observed by the AO in his order. The assessee in the year under consideration has claimed purchase for ₹18,80,73,945/- in its profit and loss account. Out of said sum, purchase worth of ₹5,87,62,766/- were made in cash which was claimed to have made from the tribal people. However, assessee failed to furnish the details of the tribal people such as name, address and details of the quantity purchase, rate of purchases as well as no evidence for the purchase of such materials was furnished. Therefore, the AO in absence of documentary evidence has disallowed the purchase for ₹41,13,394/- being 7% of the total purchases and added to the total income of the assessee.
Aggrieved, assessee preferred an appeal before Ld. CIT(A) who deleted the addition made by AO by observing as under:- “8. The appellant relies on assessment order, order of CIT(Appeals) and Hon'ble ITAT in assessee’s own case for A.Y. 2003-04. The facts and circumstances of case is identical before Assessing Officer and he made a disallowance of 2%. The CIT(Appeals)confirmed the same and Hon'ble ITAT deleted the addition holding ‘since the addition is an ad hoc and estimate basis without pointing business any specific infirmities in the audited sets of accounts, the addition made by the Assessing Officer is not correct, therefore, the same is deleted.’ Since circumstances are identical and final decision is also identical, I direct Assessing Officer to delete the addition. Accordingly ground 2 stands allowed.”
Being aggrieved by this order of Ld. CIT(A) Revenue is in appeal before us on the following ground:- “
That the Ld. CIT(A), Asansol has erred in law and on facts in deleting of the addition on A/c of disallowance of ₹41,13,394/- being 7% of cash purchases worth $5,87,62,766/- made by the AO due to lack of verification. During the course of scrutiny as, the assessee has submitted that cash purchase made of sticlac, main raw material of the manufacturing company and the cash payment were made directly to tribal who used to collect sticlac from forest. On perusal of the ledger A/c it was detected that cash purchases worth ₹5,87,62,766/- have been made and payment on various dates have been made in excess of 20,000/-. The assessee could not provide the details of the persons from whom purchases were made. Also the assessee company had not maintained any register regarding the details of purchases quantity- wise, rate per KG, details of tribal people to whom payments have been made date- wise . In absence of the details as above, payment made to tribal people cannot be ascertained only from the ledger A/c of purchase produced during the scrutiny assessment Ld. CIT(A), Asansol has failed to consider the material fact mentioned above while adjudicating the issue.”
5. Before us both the parties relied on the orders of Authorities Below as favourable to them.
ITA No.1773/Kol/2014 A.Y. 2010-11 ACIT Cir-3 Asl Vs. M/s Renshel Exports Pvt. Ltd. Page 3 6. We have heard rival contentions of both the parties and perused the materials available on record. At the outset, we find that similar issue was arisen in the assessment year 2003-04 in assessee’s own case in dated 14.09.2007 wherein the Co-ordinate Bench of this Hon’ble Tribunal has deleted the addition made by Assessing Officer. The relevant extract is reproduced below:- “We have heard both the parties, perused the material available in record and the orders of the authorities below. The Assessing Officer in this case has accepted the business of the purchase to the extent of 98%. The books of accounts of the assessee are audited and the Assessing Officer has not pointed out any infirmities in the audited books of accounts by the assessee. Since the addition is an ad-hoc and alternate basis without pointing out any specific infirmities in the audited sets of accounts, the addition made by the Assessing Officer is not correct and, therefore, the same is deleted. Therefore, the appeal of the assessee is allowed.”