TaxTMI 
TaxTMI 
2015 (2) TMI 896
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....ions during the assessment proceedings nor produced the depositor before the A.O. as desired by him. 3. That the Commissioner of Income Tax(A) has erred in law and on fact in deleting the addition of Rs. 40,97,400/- without appreciating the fact that the assessee was unable to file copy of contract note, purchase and sales bills issued by the broker and to prove genuineness of the transaction, therefore, Assessing Officer, treated the transaction as non genuine and sham and income declared on these transactions treated as income from other sources and made addition on the basis of copy of account submitted by the assessee to the A.O. 4. That the Commissioner o Income Tax (A) has erred in law and on facts in deleting the addition of Rs. 42,35,231/- made u/s 41(1) without appreciating the fact that the assessee was unable to file confirmation of accounts and to prove the genuineness of the transactions before the A.O. The Commissioner of Income (A) has admitted the additional evidence in contravention of rule 46A. 5. That the order of Commissioner of Income Tax (Appeals)-l, Kanpur being erroneous, in law and on facts deserves to be vacated and that the order of the Assess....
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....t was paid by the assessee during the impugned assessment year, but the Assessing Officer, without any reason, has treated this payment to be penalty. 5. With regard to the purchase and sales made to the sister concern, it was contended that the Assessing Officer has picked up few purchases and drawn his conclusion. It was also contended that if the comparative figures of purchases for whole year are examined, the entire picture would be different. A comparative chart was filed before the ld. CIT(A) with respect to the purchases made from its sister concern. It was further contended that even the purchases made from the sister concern were on higher rates in comparison to other parties as alleged by the Assessing Officer. The explanations furnished by the assessee were examined by the ld. CIT(A) and being convinced with the explanations of the assessee, the ld. CIT(A) has deleted the disallowance, having observed that the additions made on account of OTS of electricity charges and purchases at higher rate from the sister concern, are contrary to the facts and have been made by ignoring the available documents and books of account of the assessee. 6. Aggrieved, the Revenue has....
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....the Assessing Officer on account of purchases from the sister concern is also contrary to the facts. The ld. counsel for the assessee has further placed heavy reliance upon the order of the ld. CIT(A). 10. Having given a thoughtful consideration to the rival submissions and from a careful perusal of the orders of the authorities below and the documents placed before us, we find that the Assessing Officer has made the disallowance of Rs. 2 crores mainly on two reasons - one is with regard to the payment of OTS to the Electricity Department i.e. UPSEB and the alleged inflated purchases made from the sister concern. 11. With regard to the OTS of electricity charges with UPSEB, we find that it was done as per policy of the Electricity Department and in most of the cases when substantial arrears of bills are there, the Department goes with the scheme of OTS, but that OTS does not mean that it is in the nature of penalty, etc. In the instant case, OTS was done for a sum of Rs. 26,43,370.79 which were to be paid in four instalments and the assessee has paid the same accordingly within the impugned assessment year. The interest accrued thereon at Rs. 39,650.21 was also paid. Therefore, ....
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....g in view the regular consumption of electricity by the appellant from year to year as a part of its business/manufacturing activity and UPSEB being established/identified body, stands verified as a matter of Government record. The scheme on OTS under consideration was a general scheme of UPSEB for which the appellant has followed orders of the respective authorities namely; U.P. Electricity Regulatory Commission, Executive Engineer, Electricity Distribution, Hamirpur and others. The quantum of OTS amount has been determined by Dy. General Manager, Electricity Distribution Division, Banda vide office memorandum dated 5.11.2003, in response to orders of U.P. Corporation and others on the representation of the Chamber of Steel Industries for revision of electricity rates. Pending decision on such representation, the appellant got relief vide order of the U.P. Electricity Regulatory Commission and such electricity dues were paid as determined by the electricity authority, as noted above. There is a certificate of the concerned Executive Engineer stating that the OTS amount relates to electricity dues and it has no penalty component. 10. The AO has hastily concluded and presumed tha....
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....r concern is also contrary to fact and same is not supported by direct indirect material or evidence. All the more, this issue becomes irrelevant for the purpose of rejecting the manufacturing account of the appellant during the year as considered and addition made by AO on this ground is contrary to facts based on partial/incomplete data and inappropriate method for this purpose, as discussed above. 12. Since the above two additions are contrary to facts and have been made by ignoring the available documents material and books of account of the appellant hence same are liable to be rejected and deleted (Rs.1,99,13,677/- as calculated by AO, and more so addition of Rs. 2,00,00,000/- made by AO @ G.P. Rate 2.67% in the manufacturing division). I find that the decision in the cases of Pandit vs. CIT 26 ITR 159 and Trivedi vs. CIT 158 ITR 705, 711-12 is applicable where it was held that - "the court will interfere where the AO has failed to exercise his judgment reasonably, or there are no circumstances justifying recourse to the First proviso to sub section (1) or to sub section (2)." 13. So far as admission of additional evidence by the ld. CIT(A) in violation of provisions....
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....herefore, the assessee credited Rs. 68 lakhs in the account of Shri. Ashok Kumar and Rs. 37 lakhs in the account of Shri. Har Kishore Gupta and debited the account of M/s Hans Castings Pvt. Ltd. Thereafter, the assessee made sale of goods to these parties in the subsequent assessment year, as such, the advance received from these two customers was for normal business transactions. It was further contended before the ld. CIT(A) that the Assessing Officer did not appreciate these facts and made addition of Rs. 1.05 crores under section 68 of the Act, as income from undisclosed sources. The ld. CIT(A) re-examined the claim of the assessee and has noted that the said amount was received as advance towards close of the financial year and the transactions of sale have been completed in the next year. As such, these advances were in the nature of purchase advance by the parties and the transaction has been completed in due course, for which necessary documents, entries, etc. in the form of sale bills and transport bilties in respect of both the parties were filed. The ld. CIT(A) has also observed that the Assessing Officer himself has noted in the assessment order that copies of account o....
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....hat the amounts were received by M/s Hans Castings Pvt. Ltd. on account of business transaction and the same amount was debited to the account of M/s Hans Castings Pvt. Ltd. and credited to these parties. It was also contended that in the subsequent assessment year, the sales were effected, but the Assessing Officer did not appreciate these facts and made addition under section 68 of the Act, having treated the credit entry as unexplained; whereas the ld. CIT(A) has appreciated all the evidence filed before the lower authorities and was of the view that the said credits have been in the nature of purchase advances through banking channels, therefore, no addition under section 68 of the Act is called for. 20. We have carefully examined the order of the ld. CIT(A) and we find that the ld. CIT(A) has adjudicated the issue in proper perspective in the light of evidence in the form of bilties and bills, etc. available before him. We, therefore, find no infirmity in his order on this issue and we confirm the same. 21. Apropos ground No.3, it is noticed that during the course of assessment proceedings, the Assessing Officer has noticed from schedule 'K' that the assessee has declare....
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..... During the course of hearing, the ld. D.R. could not point out any mistake or defect in the order of the ld. CIT(A); whereas the ld. CIT(A) has categorically held that there was a calculation mistake on the part of the Assessing Officer, as he has not properly appreciated the complete evidence in the form of set of vouchers, bills and contract notes placed before him. The ld. CIT(A) himself has observed that there were two entries of 20,000 and 10,000 shares on 20.2.2014 and the Assessing Officer has missed one entry of 10,000 shares. The ld. counsel for the assessee has categorically submitted that this addition was made on account of calculation mistake on the part of the Assessing Officer which was re-examined by the ld. CIT(A) in the light of evidence already available before the Assessing Officer. Since the addition was made on account of calculation mistake, which was rectified by the ld. CIT(A), therefore, no interference is called for in his order. 24. Having carefully examined the orders of the lower authorities, we find that the basis for addition of Rs. 40,97,700/- was on account of nonavailability of details of 10,000 shares held by the assessee. This mistake was p....
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....The copy of account filed before the AO and also filed before me in the paper book (page 74-75) shows that there are two entries of 20,000 and 10.000 shares on 20.2.2004 and it has been explained by the Ld. AR that the AO has missed on the entry of 10,000 shares resulting in calculation mistake. The said ledger account was filed and was available before AO also. The complete set of vouchers, bills and contract notes have also been filed in the paper book relating to these transactions. (c) The findings of the AO are confused where he has concluded that- "Therefore, the income of Rs. 4,90,71,150/- as declared is treated as income from other sources. A sum of Rs. 40,97,700/- being difference between total receipt as per assessee at Rs. 5,31.68.850/- and income declared at Rs. 4,90,71,150/- under the head other sources is added to the total income of the assessed''. However, AO has added Rs. 40,97,700/- only in the computation of income. (d) It is on record that the statement of account of the broker was filed before the AO and the address of the share broker alongwith his PANo. was also filed during the assessment proceedings. The arithmetical mistake made by AO in tota....
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....herefore. I find no reason and no rational for addition of Rs. 40,97,700/- made by AO as above. Under the circumstances, the AO is directed to delete the addition of Rs. 40,97,700/- and Ground No. 4 of appeal is allowed." 25. Since the ld. CIT(A) has properly adjudicated the issue and we do not find any infirmity therein, we confirm his order. 26. Apropos ground No.4, it is noticed that the Assessing Officer has made addition of Rs. 42,35,231/- for the reason that the assessee has not made payment in two accounts till 31.3.2004, having invoked the provisions of section 41(1) of the Act. 27. The assessee preferred an appeal before the ld. CIT(A) with the submission that the details of sundry creditors were filed before the Assessing Officer and from the details, the Assessing Officer has noticed a credit balance of Rs. 13,00,044/- in the name of M/s Rohit Enterprises and Rs. 26,35,187/- in respect of M/s Shiva Trade, the suppliers of the assessee, from whom assessee made purchases. Copy of the ledger account was also filed before the Assessing Officer, in which it was evident that the purchases were made in the month of March, 2004 through different purchase bills. It wa....
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....so suffering from Kidney disorder. In addition to this, Ground No. 6 of appeal is also relevant that the short time was available in the assessment proceedings where period of limitation was cut short by three months as per amendment in the Act. In view of above facts, the additional evidence furnished by appellant is liable to be admitted. 29. Even without considering the documents and evidence filed in this behalf, it can be seen that the addition made by AO u/s 41(1) of the I.T. Act is legally unsustainable for the reason that the credit amounts in the name of the parties can cease to exist only when first they are accepted to be genuine credits. Once such credits of the parties are accepted, the same can be liable to be taxed u/s 41(1) either when the concerned parties have foregone the claims or that the said liability has been met in any other way. Both conditions are not available in this case. The decision in the case of CIT vs. Silver Cotton Mills Company Ltd. 2002 (Guj.) 125 Taxman, where it was held that "for the purpose of adding any amount u/s 41(1), there should be either remission of the liability by the concerned creditor so that the liability with regard to maki....