Jet Electronics, Daman V. The ACIT., Cent.Circle-2, Surat

ITA 1669/AHD/2005

• Counselvise Citation: [2009] 114 COUNSELVISE.COM (IT) 7726 (ITAT-AHMEDABAD)
• Duration Of Justice: 4 year(s) 1 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 24-07-2009
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 15-07-2009
• Assessment Year: 2002-2003
• Appeal Filed On: 24-06-2005
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: D S CHAUDHARY
• Keywords: Bogus purchase; Retrospective amendment; Corroborative evidences; Set aside
• Section: 43B

Judgement Text

IN THE INC O ME TAX APPELLATE TRIBUNAL, B - BENCH, AHMEDABAD . BEFORE : SHRI T.K.SHARMA, JUDICIAL MEMBER , AND SHRI D.C.AG RAWAL , ACCOU NTANT MEMBER. ITA NO. 1669/AHD/2005 (ASSESSMENT YEAR 2002 - 03) JET ELECTRONICS, PLOT NO .53/38, RINGANWADA, BH FIREFORCE ST ATOIN, DAMAN (U.T) VERSUS THE ASST. COMMISSIONER OF INCOME - TAX, CENTRAL CIRCLE 2, SURAT. (APPELLANT) (RESPONDENT) ITA NO. 1866/AHD/2005 (ASSESSMENT YEAR 2002 - 03) THE ASST. COMMISSIONER OF INCOME - TAX, CENTRAL CIRCLE 2, SURAT. VERSUS JET ELECTRONICS, PL OT NO.53/38, RINGANWADA, BH FIREFORCE STATOIN, DAMAN (U.T) (APPELLANT) (RESPONDENT) FOR THE ASSESSEE : SHRI SUNIL TALATI, AR FOR THE DEPARTMENT : SHRI D.S.CHAUDHARY, DR ORDER SHRI T.K.SHARMA, JUDICIAL MEMBER : THESE ARE TWO APPEAL S , O NE FILED BY THE ASSESSEE AND THE OTHER FILED BY THE REVENUE ARE AGAINST THE ORDER DT.24.5.2005 OF THE COMMISSIONER OF INCOME - TAX (APPEALS) II, AHMEDABAD FOR THE ASSESSMENT YEAR 2002 - 03. SINCE COMMON ISSUES ARE INVOLVED BOTH THESE APPEALS ARE NOW DISPOSED OF BY THIS COMMON ORDER FOR THE SAKE OF CONVENIENCE. 2. IN ASSESSEES APPEAL (ITA NO.166/AHD/2005) THE FOLLOWING ISSUES HAVE BEEN RAISED. ( 1) CONFI RMATION OF THE DISALLOWANCE OF R S.2,96,014 ON ACCOUNT OF LABOUR CHARGES PAID TO A GROUP CONCERN M/S.GAYLORD ELELCTRONICS PRIVATE LTD. (2) CONFIRMATION OF THE DISALLOWANCE OF 50% OF EXPENDITURE ON RS.33,454 INCURRED ON THE TELEPHONE INSTALLED AT RESIDENCE OF THE PARTNERS. (3) CONFIRMATION OF THE PAYMENT OFRS.25,083 BEING THE EMPLOYERS CONTRIBUTION TO PROVIDEN T FUND PAID BEYOND THE DUE DATE. ITA NO. 1669 /AHD/2005 2 3. THE ASSESSEE CARRIED OUT BUSINESS IN MANUFACTURING OF C - OS MADE OUT OF PLASTIC. THE FIRST ISSUE RELATES TO DISALLOWANCE OF LABOUR CHARGES PAID TO A GROUP CONCERN NAMELY M /S . GAYLORD ELECTRONICS PRIVATE LTD. IT WAS CLAI MED THAT THE SAID CHARGES WERE PAID FOR SUPERVISION AND CHECKING THROUGH THEIR EMPLOYEES OF ( A) MATERIALS SENT TO ASSEMBLERS, (B) FITTINGS OF SCREWS , (C) PLACEMENT OF PRESSURE PADS, SILICON PAPER, SILICON COATING, SHIELDS, LEADER TAPES, HUB, LOCK AND ROLLE RS , (D) THICKNESS, SMOOTHNESS AND OUT AND INNER DIMENSIONS OF HOUSINGS , (E) TORQUE TEST TO CHECK MOVEMENT OF HUB AND ROLLERS TO DETECT INTERRUPTION IN MOVEMENT OF TAPE, IF ANY , (F) TO FIND OUT BREAKAGE. 4. WE HAVE HEARD BOTH THE PARTIES. WE FIND THAT SIM ILAR ISSUE HAS BEEN DECIDED BY THE ITAT,AHMEDABAD BENCH - D IN ASSESSEES OWN CASE FOR THE ASSESSMENT YEAR 2001 - 02 IN ITA NO.2891/AHD/2004 DT.17.10.2008 IN FAVOUR OF THE ASSESSEE AND FOR THE REASONS DISCUSSED THEREIN VIDE PARAGRAPH 6 THE TRIBUNAL HAS DELETED SIMILAR ADDITION , WHICH IS REPRODUCED AS UNDER . 6. WE HAVE HEARD THE RIVAL SUB MISSIONS AND PERUSED THE ORDERS OF THE LOWER AUTHORITIES AND THE MATERIAL AVAILABLE ON RECORD. IN THE INSTANT CASE, THE ASSESSEE CLAIMED DEDUCTION FOR LABOUR CHARGES OF RS.2,2 2,948/ - PAID TO GAYLORD. THE ASSESSEE IS A MANUFACTURER OF COMPACT DISK, HOUSING PLASTIC COVERS AND JEWEL BOXES. THE FIRST THREE ITEMS WERE USED FOR MAKING AUDIO CASSETTES AND THE LAST ONE IS USED FOR PACKING COMPACT DISK. DURING THE YEAR UNDER CONSIDERATI ON, THE SAID AMOUNT WAS PAID TO THE SISTER CONC ERN AS IT WAS FORMERLY ENGAGED IN THE SAME WORK AS WAS DONE BY THE ASSES S EE. THE A.O DISALLOWED THE DEDUCTION T O THE ASSESSEE AS THE ASSESSEE C OULD NOT PRODUCE THE EMPLOYEES OF GAYLORD WHO SUPERVISED THE WORK FOR THE ASSESSEE AND THAT THE PAYMENT WAS MADE AFTER A GAP OF LONG PERIOD OF TIME. ACCORDING TO THE A.O, LABOUR PAYMENTS CANNOT BE KEPT OUTSTANDING FOR SUCH A LONG PERIOD OF TIME AND THAT THE SISTER CONCERN GAYLORD WAS A DORMANT CONCERN AND THE PAYMENT WAS MADE TO THEM BY THE ASSESSEE TO AV OID PAYMENT OF TAX. IN APPEAL, THE LD. CIT(A) CONFIRMED THE SAME. IN TH E FACTS AND CIRCUMSTANCES OF THE CASE, IN OUR CONSIDERED OPINION, THE A.O H A S NOT BROUGHT ANY MATERIAL ON RECORD TO SHOW THAT THE PAYMENT MADE TO THE SI S TER CONCERN WAS EXCESSIVE AS COMPARED TO THE PAYMENT ON WHICH SUCH SE RVICES WERE AVAILABLE IN THE MARKET TO THE ASSE SSEE. NO MATERIAL HAS BEEN BROUGHT ON RECORD BY THE REVENUE TO SHOW THAT THE PAYMENT MADE BY THE ASSE S SEE WAS NOT G E NUINE OR THAT IT WAS BOGUS. THE PAYMENT WAS MADE BY THE ASSESSEE TO THE SISTER CONCERN AGAINST ITA NO. 1669 /AHD/2005 3 THE BILL BY ACCOUNT PAYEE CHEQUE. THUS, THE GENUINENESS OF TH E PAYMENT MADE IS ALSO NOT IN DO UBT. IN THE ABSENCE OF ANY EVIDENCE TO SHOW THAT THE ASSESSEE TRIED TO EVADE PAYMENT OF T AX BY SHOWING ANY BOGUS EXPENSES, IN OUR CONSIDERED OPINION, THE LD. CIT(A) O UGHT TO HAVE DELETED THE ADDITION MADE BY THE A.O. WE, CONSEQUENTLY, SET ASIDE THE ORDER OF THE LD. CIT(A) AND DIRECT THE A .O TO DELETE THE ADDITION OF RS.2,22,948/ - ON ACCOUNT OF LABOUR CHARGES PAID TO GAYLORD . RESPECTFULLY THE ABOVE DECISION, THE FACTS IN THE PRESENT CASE BEING IDENTICAL, WE SET ASIDE THE ORDER OF THE LEARNED CIT(A) AND DIRECT THE ASSESSING OFFICER TO DELETE THE IMPUGNED ADDITION OF RS.2,96,014 PAID TO GROUP CO NCERN M/S.GAYLORD ELECTRONICS PRIVATE LTD. 5. THE SECOND ISSUE IN THE ASSESSEES APPEAL IS AGAINST CONFIRMATION OF DISALLOWANCE OF 50% OF THE EXPENDITURE OF RS.33,454 INCURRED ON TELEPHONES INSTALLED AT THE RESIDENCE OF THE PARTNERS. 6. HAVING HEARD BOTH SIDES, WE HAVE CAREFULLY GONE THROUGH THE IMPUGNED ORDERS OF THE AUTHORITIES BELOW. WE FIND THAT THE ASSESSING OFFICER HAD MADE DISALLOWANCE OF R S.33,454 ON ACCOUNT OF TELEPHONE EXPENSES IN RESPECT OF RESIDENTIAL TELEPHONE . THE LEARNED CIT(A) FOUND THAT THE ASSESSING OFFICER HAS DISALLOWED THE ENTIRE EXPENDITURE WITHOUT APPRECIATING THE NEEDS OF BUSINESS. THEREFORE, HE REDUCED THE DISALLOWANCE TO 50%. CONSIDERING THE FACTS AND CIRCUMSTANCES OF THE CASE AND SINCE ADMITTEDLY THE EXPENDITURE IN QUESTION REL ATES TO RESIDENTIAL TELEPHONE, IN OUR CONSIDERED VIEW, 25% DISALLOWANCE OUT OF THE TOTAL EXPENSES WOULD BE REASONABLE. WE, THEREFORE, SET ASIDE THE IMPUGNED ORDER OF THE LEARNED CIT(A) AND DIRECT THE ASSESSING OFFICER TO MAKE DISALLOWANCE OF 25% OUT OF ABO VE EXPENSES. 7. THE THIRD ISSUE IN THE APPEAL OF THE ASSESSEE RELATES TO CLAIM OF THE ASSESSEE THAT PAYMENT OF RS.25,083 BEING THE EMPLOYERS CONTRIBUTION TO PROVIDENT FUND PAID BEYOND THE DUE DATE. ITA NO. 1669 /AHD/2005 4 8. IN THE ASSESSMENT ORDER, THE ASSESSING OFFICER HAS DISALLOWED RS.22,118 U/S.36(1)(9V). IN THE IMPUGNED ORDER, THE LEARNED CIT(A) CONFIRMED DISALLOWANCE OF RS.25,083 BEING THE EMPLOYEES CONTRIBUTION TO THE PROVIDENT FUND PAID BEYOND THE DUE DATE. BEFORE US, LEARNED COUNSEL OF THE ASSESSEE CONTENDED THAT THE CORRECT AMOUNT IS RS.25,083 BEING EMPLOYERS CONTRIBUTION TO THE PROVIDENT FUND. THE SAME SHOULD NOT BE DISALLOWED AS THE OMISSION OF SECOND PROVISO AND AMENDMENT OF FIRST PROVISO TO SECTION 43B HAS RETROSPECTIVE EFFECT. IN THE RECENT PAST IN THE CASE OF ITO, WARD 8(1) V. SAKET PROJECT LTD IN ITANOS.1990 AND 1991/AHD/2006, THE TRIBUNAL HAS RESOLVED A SIMILAR ISSUE AND HAS HELD AS UNDER : 4. THE GIST OF THESE DECISIONS ARE THAT WHERE EMPLOYER, WHILE CREDITING THE SALARY TO THE ACCOUNT OF, OR WHILE PREPARI NG THE SALARY SHEET OF AN EMPLOYEE , DEBITS A SUM, AN EMPLOYEE CHOOSES TO DEPOSIT IN HIS PF ACCOUNT, AND RETAINS THAT SUM WITH HIM HUT DOES NOT PAY TO THE PF ACCOUNT OF THE EMPLOYEE MAINTAINED BY PF AUTHORITIES UNDER PF ACT WITHIN GRACE PERIOD AFTER DUE DAT ES AS PROVIDED IN THE PF ACT THEN SUCH SUM WILL BE TREATED AS INCOME OF THE ASSESSEE AS PER SECTION 2(24) (X) READ WITH SECTION 36(1) (VA). IT MEANS THAT THE ASSESSEE WOULD NOT HE ALLOWED A DEDUCTION OF SUCH SUM FROM THE PROFIT AND LOSS ACCOUNT AS PART OF THE SALARY BECAUSE SUCH SUM IS NOT PAID EITHER TO THE EMPLOYEE OR TO THE PF AUTHORITIES. THE QUESTION OF DEDUCTION WOULD ARISE SUBSEQUENTLY WHEN ASSESSEE PAYS THE SUM AFTER DUE DATES AND GRACE PERIOD. THE REASON APPARENTLY IS THAT THE ASSESSEE SHOULD NOT B E ALLOWED DOUBLE DEDUCTION, ONE AS PART OF THE SALARY WHICH HE DEBITS IN THE P/I. ACCOUNT WHILE CREDITING GROSS SALARY TO THE ACCOUNT OF THE EMPLOYEE FROM WHICH THEIR CONTRIBUTION TO PF IS DEDUCTED BY THE EMPLOYER, AND OTHER U/S 43B WHEN HE MAKES THE PAYME NT OF SUCH EMPLOYEES CONTRIBUTION TO THE PF ACCOUNT MAINTAINED BY 1W AUTHORITIES. THIS REQUIRES VERIFICATION. WHERE IT IS EMPLOYERS CONTRIBUTION, THERE IS NO CONTROVERSY. PAYMENT MADE BY EMPLOYER AS THEIR CONTRIBUTION SHOULD BE ALLOWED AS PER SECTION 43B I.E . DEDUCTION SHOULD BE ALLOWED IF PAYMENT TO PF AUTHORITIES IS MADE BEFORE FILING THE R ETURN AS PER TIME PROVIDED U/S. 1 39(1) FOR F ILING THE RETURN. EMPLOYEES CONTRIBUTION DEDUCTED BY THE EMPLOYER FROM THEIR SALARY AND PAID WITHIN GRACE PERIOD PROVIDE D IN THE RESPECTIVE STATUTE WILL HE TREATED AS IF THE ASSESSEE HAS MADE THE PAYMENT OF THE THIS PART OF THE SALARY TO THE EMPLOYEES. THE EMPLOYER IS TREATED AS A TRUSTEE OF SUCH SUM DEDUCTED FOR ONWARD PAYMENT TO PF ACCOUNT AND IS REQUIRED TO DEPOSIT THE SAME WITH THE PF AUTHORITIES WITHIN THE GRACE PERIOD. IF HE DOES NOT DO SO I. ITA NO. 1669 /AHD/2005 5 T. ACT PROVIDES TO TREAT SUCH SUM AS EMPLOYERS INCOME WHICH IS QUITE LOGICAL. IF HE DOES NOT PAY EITHER TO THE EMPLOYEE OR TO THE PF AUTHORITIES THEN IT WOULD BE HIS INCOME AND HE HAS TO PAY TAX THEREON. ONCE HE PAYS TO THE PF AUTHORITIES BUT AFTER DUE DATES AND GRACE PERIOD THEN IT IS NO LONGER EMPLOYEES CONTRIBUTION. PAYMENT OF EMPLOYEES CONTRIBUTION MADE AFTER GRACE PERIOD PARTAKES THE CHARACTER OF EMPLOYERS CONTRIBUTION AN D WOULD BE THEN GOVERNED BY SECTION 43B. IT IS BECAUSE IF EMPLOYEES CONTRIBUTION IS NOT PAID WITHIN GRACE PERIOD IT WOULD BECOME EMPLOYERS INCOME WITHIN THE MEANING OF SECTION 2(2 4)(X) READ WITH SECTION 36(1) (V A) ( OR IT IS EQUIVALENT TO SAYING THAT SAL ARY TO THIS EXTENT IS NOT ALLOWED AS DEDUCTION.) ANY PAYMENT AFTER GRACE PERIOD WILL BE MADE BY THE EMPLOYER (ASSESSEE) OUT OF HIS INCOME AND HENCE IT IS EQUIVAL ENT TO EMPLOYERS CONTRIBUTION. 5. IN THIS CONTEXT WE REFER TO THE DECISION OF HONBLE DELHI HIGH COURT IN CIT VS. P.M. ELECTRONICS 220 CTR 635(DEL) WHEREIN THEIR LORDSHIPS OF DELHI HIGH COURT HELD THAT PAYMENT MADE BY THE ASSESSEE TO PF ACCOUNT (WHETHER IT IS EMPLOYER CONTRIBUTION OR EMPLOYEE CONTRIBUTION) WOULD BE CONSIDERED FOR DEDUCTION AS P ER SECTION 43B. THERE CANNOT BE ANY DISPUTE WITH THIS PROPOSITION PROVIDED ASSESSEE IS NOT ALLOWED DOUBLE DEDUCTION WHICH ISSUE WAS NOT CONSIDERED IN THIS DECISION AS APPARENTLY IT WAS NOT BEFORE THEM. 6. RESPECTIVELY FOLLOWING ABOVE DECISIONS WE RESTORE THE MATTER TO THE FINAL ASSESSING OFFICER TO VERIFY WHETHER THE ASSESSEE IS BEING ALLOWED DOUBLE DEDUCTION, ONCE IN THE P/L ACCOUNT WHILE MAKING PAYMENT OF SALARY TO THE EMPLOYEES AND SECOND AS DEDUCTION U/S 43B WHEN PAYMENT IS MADE TO PF AUTHORITIES. DED UCTION ONLY ONCE HAS TO BE ALLOWED IN CA SE PAYMENT OF BOTH, EMPLOYEES CONTRIBUTION AS WELL AS EMPLOYERS CONTRIBUTION) IS FINALLY MADE TO THE PF AUTHORITIES WITHIN THE TIME LIMIT PROVIDED U/S 43B. IN CASE OF EMPLOYEES CONTRIBUTION, IF PAID AFTER GRACE PE RIOD, NO DEDUCTION FROM SALARY WOULD BE ALLOWED, OR IF ALLOWED, THE SAME WOULD BE TREATED AS INCOME FIRST U/S 2(24)(X) READ WITH SEC. 36(1) (VA) AND THEN CONSIDER THE CLAIM OF PAYMENT U/S 43B IF PAID TO PF AUTHORITIES WITHIN TIME LIMIT PROVIDED U/S.43B LIK E EMPLOYERS CONTRIBUTION. IN VIEW OF THE ABOVE, WE SET ASIDE THE IMPUGNED ORDER OF THE LEARNED CIT(A) IN THIS REGARD AND RESTORE THE MATTER TO THE FILE OF THE ASSESSING OFFICER TO DECIDE THE ISSUE AFRESH AS TO THE PAYMENT OF PF IN THE LIGHT OF THE AFORES AID DECISION OF THE TRIBUNAL AFTER ASCERTAINING THE CORRECT AMOUNT OF PF PAID. ITA NO. 1669 /AHD/2005 6 9. IN THE RESULT, THE APPEAL OF THE ASSESSEE SHALL BE TREATED AS ALLOWED FOR STATISTICAL PURPOSES. 10. IN REVENUES APPEAL (ITA NO.1866/AHD/2005) GROUNDS NO.1 AND 2 RELATES TO DELETION OF THE ADDITION MADE ON ACCOUNT OF BOGUS PURCHASES FROM 1 . NAME OF PARTAIES. AMUNT 2 . M/S.AMAR ELECTRRONICS INDUSTRIES 1,07,588 3 . M/S.REGAL INDUSTRIES 1,13,880 4 . M/S.RISHI INDUSTRIES 1,48,790 5 . M/S.ROHINI INDUSTIRES 1,09,865 6 . M/S.MIKU TRADERS 1,41,400 11. HAVING HEARD BOTH SIDES, WE HAVE CAREFULLY GONE THROUGH THE IMPUGNED ORDERS OF THE AUTHORITIES BELOW. AS REGARDS THE PURCHASES FROM PARTIES NO.1 TO 5, IT IS THE CONTENTION OF THE ASSESSEE THAT THE ASSESSEE HAS PURCHASED COMPONENTS TO MANUFACTURE C OS. THE ASSESSEE HAS FURNISHED THE DETAILS OF THE SAID PARTIES SUCH AS PERMANENT ACCOUNT NUMBERS, SALES TAX NUMBERS, DETAILS OF BILLS, AMOUNT, TRANSPORT RECEIPT, CHEQUE NUMBERS AND AMOUNT, WHICH HAS BEEN TABULATED IN PARAGRAPH 4 ON THE IMPUGNED ORDER OF TH E LEARNED CIT(A). CONSIDERING ALL THE DETAILS FURNISHED BY THE ASSESSEE, THE LEARNED CIT(A) HAS OBSERVED THAT THE PURCHASES ARE SUPPORTED BY TRANSPORT RECEIPTS. PAYMENTS ARE MADE BY ACCOUNT PAYEE/CROSS CHEQUES. THE COMPONENTS PURCHASED ARE REQUIRED BY THE ASSESSEE IN ITS BUSINESS. THE PARTICULARS REGARDING PURCHASED SUPPLIED BY THE ASSESSEE ARE VERIFIABLE. THE CRITERIA REGARDING PAYMENTS, DELIVERY OF GOODS, AND GENUINENESS OF THE PARTIES ARE FULFILLED. ON THE BASIS OF SUCH OBSERVATION, HE CONCLUDED THAT THE PURCHASES CANNOT BE DOUBTED BECAUSE THE SAME ARE ACCOUNTED FOR AND THE SUPPORTING EVIDENCE IN THE SHAPE OF BILLS/VOUCHERS EVIDENCE OF PAYMENTS ETC., HAS BEEN PRODUCED BY THE ASSESSEE. THE LEARNED DR COULD NOT CONTROVERT THE OBSERVATIONS/CONCLUSION OF THE LEARNED CIT(A). THEREFORE, CONSIDERING THE DETAILS FURNISHED BY THE ASSESSEE, THE LEARNED CIT(A) HAS , IN OUR CONSIDERED VIEW, HAS RIGHTLY DELETED THE IMPUGNED ADDITION IN RESPECT OF THE PARTIES UNDER SL.1 TO 5. SIMILAR IS THE CASE IN RESPECT OF THE PARTY ITA NO. 1669 /AHD/2005 7 UNDER SL.6 I.E., M/S.MIKU TRADERS. THE ASSESSEE HAS PURCHASED DELRIN I., PLASTIC POWDER FROM THE SAID PARTY WHO ARE CONSIGNMENT AGENTS OF M/S.E.J.DUPONT (INDIA) LTD. THEY ARE REGISTERED UNDER THE EXCISE LAW HOLDING CENTRAL EXCISE REGISTRATION NO.DMN/VIII/1 8/1998 - 99 SELLING GOODS UNDER EXCISABLE INVOICE UNDER RULE 52AA OF THE CENTRAL EXCISE RULES,1944. THEY HAVE ALSO GIVEN DETAILS OF THEIR PURCHASES/CONSIGNMENT TRANSFERS FROM M/S.DU PONT (I) LTD., WHO ARE ASSESSED TO CENTRAL EXCISE UNDER VODODARA RANGE. THE ASSESSEE FURNISHED THE DETAILS OF SUCH PURCHASES I.E., BILL NO. AND DATE, QUANTITY, AMOUNT, DELIVERED FROM, DATE OF PAYMENT ETC. AS TABULATED IN PARAGRAPH 5 OF THE IMPUGNED ORDER OF THE LEARNED CIT(A). FROM THE DETAILS FURNISHED BY THE ASSESSEE, THE LEARNE D CIT(A) OBSERVED THAT THE ASSESSEE HAS ADEQUATELY ESTABLISHED THE GENUINENESS OF TRANSACTIONS, IDENTITY OF THE PARTY AND MODE OF PAYMENT. SUPPORTING EVIDENCE WITH REGARD TO TRANSPORT AND DELIVERY OF GOODS IS AVAILABLE. BEFORE US, THE LEARNED DR COULD NOT CONTROVERT THE ABOVE. THEREFORE, CONSIDERING THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LEARNED CIT(A) IN OUR CONSIDERED VIEW HAS RIGHTLY HELD THAT THE PURCHASES IN QUESTION CANNOT BE DOUBTED AND AS SUCH, HE HAS RIGHTLY DELETED THE IMPUGNED ADDITION IN R ESPECT OF PURCHASE FROM M/S.MIKU TRADERS. WE, THEREFORE, CONFIRM THE SAME AND DISMISS GROUNDS NO.1 AND 2 OF THE REVENUE. 12. GROUND NO.3 OF THE REVENUES APPEAL IS AGAINST THE DIRECTION TO MAKE DISALLOWANCE OF R S.1,38,032 U/S.40A(3) AND DELETE THE ADDITI ON OFRS.6,90,162 MADE N ACCOUNT OF BOGUS PURCHASES FROM M/S. HARISH INDUSTRIES (RS.3,34,042) AND M/S.SUPER SHINE INDUSTRIES (RS.3,56,120). 13. HEARD BOTH THE PARTIES. ADDITION OF RS.6,90,162 WAS MADE BY THE ASSESSING OFFICER WHICH REPRESENTED PURCHASES O F RS.3,34,032 FROM M/S.HARISH IND. AND RS.3,56,120 FROM M/S. SUPERSHINE INDUSTIRES ON THE GROUND OF NON - FURNISHING OF INFORMATION. IN APPEAL, THE ASSESSEE CONTENDED THAT THE PURCHASES SHOULD NOT BE DOUBTED. IN THE ALTERNATIVE THE ASSESSEE SUBMITTED THAT AT THE MOST THE DISALLOWANCE CAN BE RESTRICTED TO 20% OF THE PURCHASES U/S.40A(3) OF THE ACT AS THE PAYMENTS ARE MADE BY BEARER CHEQUES. THE LEARNED CIT(A) VERIFIED ITA NO. 1669 /AHD/2005 8 THE DETAILS FURNISHED BEFORE HIM AND HELD THE PURCHASES AS GENUINE. HOWEVER, CONSIDERING THE FACT THAT THE PAYMENTS HAVE BEEN MADE THROUGH BEARER CHEQUES, BY APPLYING THE PROVISIONS OF SECTION 40A((3), THE LEARNED CIT(A) DIRECTED DISALLOWANCE OF 20% OF SUCH PURCHASES . THE LEARNED DR COULD NOT CONTROVERT THE FINDING OF THE LEARNED CIT(A) THAT PUR CHASES IN QUESTION IS GENUINE. THEREFORE, THE ENTIRE EXPENDITURE CANNOT BE DISALLOWED. HOWEVER, SINCE THE PAYMENTS WERE MADE THROUGH BEARER CHEQUES, THE LEARNED CIT(A) IN OUR CONSIDERED VIEW, IS JUSTIFIED IN DISALLOWING 20% OF SUCH PURCHASES IN VIEW OF THE PROVISIONS CONTAINED IN SECTION 40A(3). WE, THEREFORE, FIND NO INFIRMITY IN THE IMPUGNED ORDER OF THE LEARNED CIT(A). WE UPHOLD THE SAME AND DISMISS GROUND NO.3 OF THE REVENUE. 14. IN THE RESULT, THE APPEAL OF THE REVENUE IS DISMISSED. THIS ORDER IS PRO NOUNCED IN OPEN COURT ON DT. 24.07.09 SD/ - SD/ - ( D.C.AG RAWAL ) ACCOUNTANT MEMBER. (T.K.SHARMA) JUDICIAL MEMBER DATE: 24.07.09 (H.K.PADHEE) SENIOR PRIVATE SECRETARY. COPY OF THE ORDER FORWARDED TO : 1. THE ASSESSE E 2. THE ASSESSING OFFICER 3. THE CIT CONCERNED. 4. THE CIT(A) CONCERNED. 5. THE DR, AHMEDABAD 6. GUARD FILE (IN DUPLICATE) TRUE COPY, BY ORDER, DEPUTY.REGISTRAR.