2014 (12) TMI 92

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....2009 and was duly recorded in the books of accounts of M/s Key Dee Traders, the supplier, from whom the assessee had purchased the stocks. 3. That the order of the CITCA) is based in disregard of the facts on record and the learned CIT(A) has further erred while sustaining the addition on such evidence, which had not provided to the assessee for its rebuttal. 4. That the learned CITCA) has failed to 'appreciate that, it is not for the assessee to explain the source of credit in the books of its suppliers and that no addition could have been sustained on the basis of extraneous considerations. 5. That in any case and without prejudice the learned CITCA) has erred in confirming the order without to providing to the assessee a valid and proper opportunity and has thus erred in placing reliance on the untested testimony and the evidence which had not confronted to the assessee for its rebuttal. 6. That the Ld. CIT(A) has further erred in sustaining the interest levied u/s 234B and 234C of the Act, which interest was not leviable. It is therefore prayed that the order of assessment and the order of CIT(A) be kindly set aside and the addition made and sustained of Rs. 54,....

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....ash purchases for violation of provisions of section 40A(3) of the Act. The above additions were made by holding as under: "Thus the amount of Rs. 54,39,222/- is the unexplained investment in the purchases of goods, which is not recorded in the books of account and liable to be added under section 69 of the Income Tax Act, in case no explanation is offered or explanation offered by the assessee is unsatisfactory . The assessee was required to explain why this amount is not to be added. The assessee has stated that he has made no payment to M/s Key Dee Traders, MZR and total amount was outstanding as on the date of the year ending on 31.03.2007. The assessee further stated that payments of Rs. 46,00,000/- were made in the month of March, 2009 by cheques. But the contention put forth by the assessee appears to be an afterthought tactics, in order to avoid consequential action enumerated in the LT. Act. It is unreasonable to think that M/s Key Dee Traders, MZR, has a debtor (assessee) with balance of Rs. 54,39,222/- and it forgot to include, the name of such debtor in it's audit report. The truth is that only after it received the payments, the A/c of the assessee has been squa....

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....d M/s Kay Dee Traders sold goods to aforesaid HUF at Rs. 64,31 ,232/- and in lieu of sales effected, it received cheques amounting to Rs. 19 lac and Rs. 27 lac. Thus it is clear that the cheques were issued on behalf of Sandeep Agarwal & Sons by the appellant and these cheques had nothing to do with the payments as alleged by the appellant against purchases made by it. Thus there is no doubt that the contention of the appellant regarding payments made in the month of March, 2009 is nothing but a cooked up story and the payment against purchases were apparently made outside the books of account. Regarding the appellant's argument that the addition made by the A.O. is not covered u/s 69 of the I.T. Act as the purchases are not 'investment', it is observed that merely by not quoting the appropriate section, the A.O's action does not get nullified. It is primary onus of the appellant to establish the genuineness and authenticity of its transaction with its sundry debtors and sundry creditors. It was the basic requirement to get the balances of the parties verified at the time of audit. The appellant had not carried out the desired exercise under the law. Secondly, wh....

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....e addition u/s 40-A (3) of the Income Tax Act, 1961, whereas the addition of Rs. 5439222.00 has already been made u/s 69 of the of the Income Tax Act, 1961, which related to double taxation. Before the Assessing Officer the evidences, which were placed before him, that no payment in cash has been made during the year under consideration. The written submissions were also filed before the Assessing Officer on 26th November, 2009, which are as hereunder: "Regarding query no. 4, for addition u/s 40A(3) 20% of cash payment against the liability of M/s. Kay Dee Traders because no payments were made to him in cash as mentioned in reply to your query no. 3. " The facts of the case and submissions made by the appellant have been carefully considered. It is observed that in the preceding paras it has been held the payment against purchases were in fact made outside the books which were apparently cash transactions. However, such cash payments have been made completely outside the books of account and hence the additions in respect of complete unaccounted payment is being sustained, there remains no valid ground for making the disallowance u/s 40A(3) of the Act. The A.O. is not justified ....

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.... 8. Referring from Ld. CIT(A)'s order, Ld. A.R. submitted that Ld. CIT(A) had in fact accepted the argument of the assessee that these were not cash purchases and that is why he has deleted the disallowance u/s 40A(3) of the Act. 9. Ld. D.R. on the other hand submitted that during assessment proceedings purchases were examined by the A.O. and seller of goods was also examined and on examination of books of account of M/s. Kay Dee Traders, the seller the A.O. had found that M/s. Kay Dee traders had shown the sales made to assessee as cash sales. It was submitted that A.O. in his remand report has clearly held that these payments relate to sale made by M/s. Kay Dee Traders to M/s. Sandeep Agarwal and Sons (HUF) and, therefore, he argued that after thoroughly examining the facts and circumstances, Ld. CIT(A) has confirmed the addition. Arguing upon revenue's appeal, Ld.D.R. heavily relied upon the order of A.O. whereas Ld. Sr. counsel relied upon the order of Ld. CIT(A). 10. We have heard rival parties and have gone through the material placed on record. We find that Ld. CIT(A) has confirmed the addition on the basis of remand report submitted by A.O. and Ld. CIT(A) held that p....