https://www.taxtmi.com/css/info/rss_sitemap/rss_feed.css?v=1746094055 https://www.taxtmi.com Business/Tax/Law/GST/India/Taxation/Policies/Legal/Corporate Tax/Personal Tax/Vat Law/Legal Information/Tax Information/Legal Services/Tax Services Tax Management India. Com / MS Knowledge Processing Pvt. Ltd. All rights reserved. One stop solution for Direct Taxes and Indirect Taxes https://www.taxtmi.com/caselaws?id=767610 https://www.taxtmi.com/caselaws?id=767610 Addition u/s 68 - Sundry Creditors who failed to respond to the notices u/s 133(6) - as argued no addition could be made under section 68 of the Act, in respect of credit balances at the end of the financial year, if, the purchases from those parties and trading results had been accepted - estimation of Net Profit @ 8% on total turnover Unconfirmed Sundry Creditors - Credit balances do not represent loans or advances taken by the assessee where creditworthiness to extent the advances are essential point for examination. Rather these represent sundry creditors for purchases and the purchases have not been called into question. Therefore, merely because some part of the expenditure for the purchases have not been met during the concerned financial year, is not ground to hold that those credits are bogus, unless it can be shown that those purchases were never made at all. As the Ld. AO has not conducted any exercise to determine the bogus nature of the purchases, in view of the decision of Pancham Dass Jain[ 2006 (8) TMI 582 - ALLAHABAD HIGH COURT] and Ritu Anurag Agarwal [ 2009 (7) TMI 1247 - DELHI HIGH COURT] the decision of the Ld. CIT(A) to delete the additions made on account of unconfirmed Sundry Creditors is upheld. Accordingly, ground no. 1 of the Department appeal is dismissed. Difference in balances reported by Sundry Creditors - As this is a matter of re-conciliation, we restore this matter back to the file of the Assessing Officer so as to give the assessee of the opportunity to re-concile the differences and order that in the event of such re-conciliation being made to satisfaction of the AO, addition should not be made on this account. This ground of appeal is allowed for statistical purposes. Estimation of net profit rate @ 8% - CIT(A) has himself recorded the fact that VAT Authorities have examined and confirmed the sales and purchases of the assessee. In the circumstances, in the absence of finding any fault in the accounts of the assessee, in our opinion the rejection of the books and estimation of the profit @ 8% would not be justified. In any case, the 8% profit is presumptive tax for civil contractors having turnover less than of Rs. 2 crores. The turnover of the assessee is over Rs. 7 crores. In the circumstances, a rate not bearing any relation to the history of the assessee s case or any comparable case cannot be justified. In the circumstances, we find it fit to delete the addition made on account of estimation of net profit and to restore the rate of net profit to that disclosed by assessee in the return. Failure of CIT(A) to consider the VAT assessment and the fact that the assessee supplied only to PSUs, which was the reason for higher estimation of income by him - As already observed that the Ld. CIT(A) has considered the VAT assessment and we observe that he has also recorded the fact of the purchases of the assessee being verifiable as they were from PSUs. However, since the estimation of income by him is at variance with these findings recorded by him in his order, the same is not maintainable. Accordingly, this ground of appeal is allowed. Case-Laws Income Tax Wed, 19 Mar 2025 00:00:00 +0530