COMMISSIONER OF INCOME TAX Vs. CRESCENT EXPORT SYNDICATE

JUDGEMENT

(1.) The Court :- We have perused the order passed by the learned Tribunal. It appears that the facts of the case as narrated by the learned Tribunal are as follows:

(2.) The learned Counsel appearing for the appellant argued that the assessee is 100% export oriented firm, exporting leather goods viz. Wallets and different types of bags. The total export turnover during the year (FOB value) Rs.19,81,73,720/- and purchases shown at Rs.11,65,97,523/-. Out of the said purchase, the purchase from 15 parties amounting to Rs.83,44,822/- and the seller could not be produced in assessment, hence the A.O. disallowed the entire purchase and added Rs.83,44,822/-. In appeal, before the ld. CIT(A)-XIX, Kolkata the appellant submitted that it maintains stock book inventorised the purchase of leather, leather issued for cutting, and issued to fabricator finally for finishing the goods as per export order. The ld. CIT(A) directed the A.O to examine those books and to submit the remand report. In the remand report the A.O. has admitted 'on verification of the purchase details, it is seen that the purchases amounting to Rs.83,44,822/- made from different parties are entered in the stock register and put to the various stages of manufacturing process. The assessee also produced bills in respect of all purchase made from these 15 parties and finally the ld. CIT(A) has held 'as regards the purchase, it is seen that these were recorded in the stock register, their consumption is also recorded therein, up to the stage of final production. All these records are audited. They are produced before the Assessing Officer for examination who had not been able to point out any defect in it. Under the circumstances the purchases are considered to be genuine'. So the purchases have been held to be genuine.

(3.) It also appears that the purchases have been held to be genuine by the learned CIT (Appeal) but the learned CIT(Appeal) has invoked Section 40A(3) for payment exceeding Rs.20,000/- since it is not made by crossed cheque or bank draft but by hearer cheques and has computed the payments falling under provisions to Section 40A(3) for Rs.78,45,580/- and disallowed @ 20% thereon Rs.15,69,116/-. It is also made clear that without the payment being made by bearer cheque these goods could not have been procured and it would have hampered the supply of goods within the stipulated time. Therefore, the genuineness of the purchase has been accepted by the ld. CIT (Appeal) which has also not been disputed by the department as it appears from the order so passed by the learned Tribunal. It further appears from the assessment order that neither the Assessing Officer nor the CIT (Appeal) has disbelieved the genuineness of the transaction. There was no dispute that the purchases were genuine.