ATM FORGINGS Vs. COMMISSIONER OF INCOME TAX

JUDGEMENT

(1.) THIS order shall dispose of I.T.A. Nos. 598 and 618 of 2008 as both the appeals arise out of the common order dated February 27, 2008, relating to the assessment year 2002 -03. However, the facts are being taken from I.T.A. No. 598 of 2008. I.T.A. No. 598 of 2008 has been preferred by the assessee under section 260A of the Income -tax Act, 1961 (in short, "the Act"), against the order dated February 27, 2008, annexure P. 1 passed by the Income -tax Appellate Tribunal, Amritsar Bench, Amritsar (in short, "the Tribunal"), arising out of I.T.A. No. 91/ASR/2006 for the assessment year 2002 -03. Both the appeals were admitted on August 6, 2009, to consider the following substantial question of law:

(2.) BRIEFLY , the facts necessary for adjudication of the controversy involved, as available on record, may be noticed. The assessee was engaged in the business of manufacture and sale of hand tools and had shown gross profit of Rs. 1,41,23,368 on sales of Rs. 10,32,07,794 which worked out to 13.7 per cent. as against gross profit of Rs. 1,03,72,313 on sales of Rs. 7,59,09,692 at the rate of 13.7 per cent. of the last year. The Assessing Officer, vide order dated March 28, 2005, annexure P. 3 made an addition on account of goods purchased from two parties, M/s. Rajiv Electrics Trading Co. and Krishna Hardware and Mill Store. Depreciation on machinery purchased from these two parties was also disallowed. Thus, the total addition aggregating to Rs. 29,92,104 was made by the Assessing Officer to the total income of the appellant. The Commissioner of Income -tax (Appeals) (CIT(A)), vide order dated January 31, 2006, annexure P. 2 partly allowed the appeal on account of purchases made from the abovementioned two parties and also granted relief in respect of depreciation of machinery purchased from them. The appellant as well as the Revenue filed appeals before the Tribunal. Vide order dated February 27, 2008, annexure P. 1, the Tribunal accepted the appeal of the Revenue by maintaining the order of the Assessing Officer holding that the purchases made from the two firms were bogus. The Tribunal dismissed the appeal of the assessee in view of the above finding by setting aside the order of the Commissioner of Income -tax (Appeals) granting partial relief to the appellant. On the question of depreciation, the Tribunal remanded back the matter to the Commissioner of Income -tax (Appeals) with a direction to decide the issue by recording a specific finding. Hence, the present appeals by the assessee.

(3.) LEARNED counsel for the respondent -Revenue on the other hand sup -ported the order passed by the Tribunal.