TaxTMI 
TaxTMI 
TaxTMI 
2014 (9) TMI 622
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....f the Income Tax Act, 1961, in respect of balances of sundry creditors, alleging the same to be different from the confirmations of the parties in question and ignoring the explanation, reconciliation and submission, which is arbitrary, unjustified and bad in law. 3. The ld.CIT(A) has erred in law and facts of the case in confirming the addition of Rs. 6,79,87,117/- u/s 41(1) of the Income Tax Act, 1961, ignoring the details submitted and the onus discharged by the assessee, in respect of balances of sundry creditors, on account of the parties in question allegedly not responding to the notices issued u/s 133(6), which is arbitrary, unjustified and bad in law." 3. The facts of the case are that the assessee derives income from construction of civil work of commercial and residential buildings. For the year under consideration, the assessee filed the return declaring total income at Rs. 5,35,45,570/-. The total turnover of the assessee was Rs. 92.89 crores. During the course of assessment proceedings, the Assessing Officer found that there are sundry creditors amounting to Rs. 25,92,00,075/- as on 31st March, 2009. On detailed verification, he found that in respect of four credito....
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....informed by the parties and as per assessee's books of account, he referred to page 6 of the assessment order and pointed out that the Assessing Officer compared the balance in the parties' account as on 31st March, 2009 with the balance in the assessee's books of account as on 31st March, 2011. It would be evident from the heading of the column at page 6 of the assessment order. He stated that the reconciliation for the difference was given before the CIT(A). However, the CIT(A) did not consider the same and just sustained the addition without any justification. In respect of four parties with whom no transaction took place in four years, he submitted that merely because in the four years' time no transaction took place, it does not conclusively prove that the liability has ceased. In support of this contention, he relied upon the decision of Hon'ble Apex Court in the case of CIT Vs. Sugauli Sugar Works (P.) Ltd. - [1999] 236 ITR 518. He further submitted that the Assessing Officer has relied upon the decision of Hon'ble Apex Court in the case of T.V. Sundaram Iyengar and Sons Ltd. (supra). However, the facts of the assessee's case are altogether differ....
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....r:- "Held, that if a commonsense view of the matter were taken, the assessee, because of the trading operation, had become richer by the amount which it transferred to its profit and loss account. The moneys had arisen out of ordinary trading transactions. Although the amounts received originally were not of income nature, the amounts remained with the assessee for a long period unclaimed by the trade parties. By lapse of time, the claim of the deposit became time-barred and the amount attained a totally different quality. It became a definite trade surplus. The assessee itself had treated the money as its own money and taken the amount to its profit and loss account. The amounts were assessable in the hands of the assessee." 8. From the above, it is evident that in the said case, the amount had become time barred and moreover, the assessee had transferred the amount to profit & loss account. In the case of the assessee, admittedly, no amount is transferred to the profit & loss account. Moreover, in respect of most of the amounts, there is no finding by the Assessing Officer that the amount has become barred by limitation. On the other hand, it has been pointed out by the assesse....
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.... will allow adequate opportunity of being heard to the assessee before giving effect to our order. 10. Ground No.4 of the assessee's appeal reads as under:- "The ld.CIT(A) has erred in law and facts of the case in confirming the disallowance of Rs. 1,40,557/- incurred in respect of pooja expenses on which FBT was paid, alleging the same as non business expense and ignoring the submission and justification submitted, which is arbitrary, unjustified and bad in law." 11. We have heard the arguments of both the sides and perused relevant material placed before us. The facts of the case are that during the accounting year relevant to the assessment year under consideration, the assessee incurred expenditure of Rs. 2,81,113/- under the head 'Pooja Expenses'. The Assessing Officer disallowed 50% of the Pooja expenses holding 50% to be non-business expenditure. The Assessing Officer himself admitted "However, keeping in view the prevailing Indian customs and traditions some expenditure on pooja is necessary for smooth business operations and making employees happy to boost their productivity". That the turnover of the assessee is more than Rs. 92 crores and the Pooja expense....
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....used relevant material placed before us. From a perusal of the remand report, it is evident that during remand proceedings, the Assessing Officer considered all the bills and vouchers and then he found only few mistakes. It would be worthwhile to reproduce the relevant portion of the remand report:- "II Disallowance of Rs. 1,03,24,302/- on account of unvouched expenses (Ground-4) The AO has mentioned 50 bills of Building material purchased and 14 bills of consumables and has stated that corresponding bills were not produced. Accordingly, 3% of total expenses Rs. 34,41,43,399/- working out to Rs. 1,03,24,302/- has been disallowed as not genuine expenses. The assessee's objections to the above addition is that the vouchers bills were asked to produce only on 23-12-2011 and there was hardly sufficient time because it was the fag end and more time was required for producing such voluminous data. This fact is confirmed from order sheet entry dated 23-12-2011 which reads as under: "Sh. Manish Kr. Singh, CA appeared. Asked to file following:- 1) Produce stock register of materials - for all sites. 2) Vouchers (in original) of consumable stores. 3) Ledger A/c of job work bills f....
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....n current year. * In view of the 3 mistakes in the expenses relating to building materials and consumables, detected in the remand proceedings, which has been done without any time-constraints, the assessee cannot be totally absolved of the findings of the AO w.r.t. non-genuine or inflated expenses. However, quantum of disallowance will have to be decided on merits and in any case the same cannot be less than the mistakes detected in remand proceedings." 17. From the above, it is evident that the Assessing Officer has mentioned "The assessee has submitted the bills of all the parties for building material purchased and consumables along with copy of some ledger accounts and bank statements". After verification of all the bills, he found that the expenses to the extent of Rs. 40,08,279/- are last year expenses but the same are already added back to the profit in the computation of income by the assessee itself. Apart from earlier year expenses, only two discrepancies were noted by him, one for Rs. 2,93,924/- and another for Rs. 2,23,590/-. In our opinion, when during remand proceedings, all bills and vouchers have been produced and have been examined by the Assessing Officer and t....