TaxTMI 
TaxTMI 
2013 (12) TMI 943
X X X X Extracts X X X X
X X X X Extracts X X X X
..... On scrutiny of the accounts, it revealed to the AO that assessee assessee has shown trading liabilities. He deputed an Inspector to find out genuineness of the entities against whom trading liabilities have been shown. The AO while reproducing the explanation of the assessee, has noticed the trading liability, which read as under: "The movement of sundry creditors is given as per chart given hereunder: Name of party Balance as on 01.04.2006 Transactions during the yr Balance as on 31.03.2007 1. Durga Enterprises 1,68,77,629/- NIL 1,68,77,629/- 2. Monica Enterprises NIL Purchases on 31.03.07 - 38,05,500/- 38,05,500/- 3. Raj Industrial Corpn. 30,49,488/- - - Payment made during the year - 13,47,710/- 17,01,778/-" 4. The ld. AO has made addition of all these three alleged trade liabilities by observing that they are bogus. He determined the taxable income of the assessee at Rs.3,57,14,214/-. 5. On appeal ld. CIT (A) found that against the name of Durga Enterprises, a trading liability of Rs.1,61,25,279/- has been shown by the assessee at ....
X X X X Extracts X X X X
X X X X Extracts X X X X
.....e. at Rs.1,61,25,279/-. According to the assessee the opening balance was at Rs.168,77,629/-. It had made a payment of Rs.7,52,350/- during the year and thus the closing balance was on Rs.1,61,25,279/-. There was a dispute with the party and the assessee has ultimately settled, the dispute with the party. It has written back the liability at the close of the account for the next AY i.e. 31st March 2008. The return was filed on 30th September 2009. This amount of Rs.1,59,19,279/- was offered for tax. The ld. CIT (A) has observed that since assessee has written back Rs.1,59,19,299/- and added in the total income for AY2008-09, no separate addition with regard to the alleged trade liability of Durga Enterprises deserves to be made. 13. On due consideration of the facts and circumstances. We do not find any error in the order of the ld. CIT (A). The AO has not visualized the complete facts. He has started the investigation in the month of September 2009, assessee has written back substantial amount appearing against the name of Durga Shakti on 31st March 2008. It has filed the return in the month of September 2009. This amount has already been offered for tax. The assessee relied u....
X X X X Extracts X X X X
X X X X Extracts X X X X
....made through account payee cheque. A sum of Rs.29,09,187/- was made by online bank transfer, the AO failed to find out any defects in these details. The ld. DR submitted that on the inspection of inspector, this concern was not found at the address given. We have duly considered this contention of the ld. DR and perused alleged report of the inspector reproduced on page 2 of the assessment order. From the report, it reveals that ld. inspector made an inquiry from shop no. B-590 and they told that at B-591 there was never any office in the name of Monica Enterprises. The inspector has not recorded the name to whom he has contacted, whether he has conducted inquiry at shop no. B-591 i.e. the address of Monica Enterprises etc. Ld. AO did not make sufficient efforts, more so the alleged liability has already been discharged by the assessee by making payment through banking channel. Therefore, after taking into consideration the detailed order of ld. CIT (A) we do not find any error in her finding on this issue. 15. The next item is an addition of Rs.3049488/-, from perusal of the record, it revealed that a sum of Rs.3049488/- is the opening balance appearing against the name of Raj ....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... & Haryana High Court in the case of CIT Faridabad Vs. G.P. International Ltd. reported in 186 Taxman 229. He also relied upon the judgment of Hon'ble Supreme Court in the case of CIT Vs. Sugauli Sugar Works (P) Ltd. reported in 236 ITR 518. The ld. counsel for the assessee also shown us a certificate of the bank dated 5th September 2008, pointing out that cheques have been cleared in favour Raj Industrial Corporation, the collecting bank is Allahabad Bank and NIT Faridabad. On the other hand ld. DR relied upon the orders of revenue authorities below. 18. We have duly considered the rival contention and gone through the record carefully. From perusal of the record, it revealed that AO sought to tax this outstanding trading liability on the ground that it is bogus, hence it is an unexplained cash credit. Section 68 of the IT Act provide that where any sum is found credited in the books of an assessee maintained for any previous year, and the assessee offers no explanation about the nature and source thereof or the explanation offered by him is not, in the opinion of the AO, satisfactory, the sums so credited may be charged to income tax as the income of the assessee of that previ....