TaxTMI 
TaxTMI 
TaxTMI 
2015 (3) TMI 799
X X X X Extracts X X X X
X X X X Extracts X X X X
.... (Act) were initiated against assessee. As seen from the assessment order, even though search proceedings were conducted on 29-01-2009, in response to notice u/s.153A (date of issue not mentioned in the order) assessee filed returns on 12-11-2010. Even though the Assessing Officer states that notices were issued and explanations were called for, the order indicates that the case was heard only on one day i.e., 24-12-2010 and orders have been passed on 31-12-2010. Assessing Officer made various additions in the orders in the respective years not based on any incriminating material or seized material but on the basis of assessee's claims in P&L A/c. Assessing Officer made an addition of Sundry Creditors balances at the end of the year in each of the assessment years from AY.2003-04 to 2006-07. Assessing Officer also made addition of advances against sales received by assessee in AY.2003-04 to 2006-07. In addition, above two, in the AY.2006-07, Assessing Officer also made addition on the commission received to an extent of Rs. 26,61,915/- and disallowance of fuel charges to an extent of Rs. 31,06,169/- in AY.2009- 10. 4. Before the CIT(A), since Assessing Officer has not given op....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ing the observations of the Assessing Officer, deleted addition by stating as under: "4.4 The observations of the Assessing Officer and the written submissions of the appellant are perused. As could be seen from the gist of the information related to the sundry creditors, the appellant company has the opening balance of sundry creditors that stood at Rs. 24,01,329 as on 01.04.2002 as against the closing balance of Rs. 32,37,070 on 31.03.2003, with a further credits of Rs. 57,37,067 taken place, while the amounts of Rs. 43,58,593 being the debits for the year under reference under the same head. While making the addition, the Assessing Officer has confined himself to the closing balance of the sundry creditors and treated the entire closing balance of sundry creditors as unexplained credits and accordingly added to the total income of the appellant. The methodology adopted by the Assessing Officer prima facie suffers from certain deficiencies as much as the entire closing balances of the sundry creditors cannot be treated as the unaccounted credits as the closing balances always have opening balances embedded in them. Further, what matters for the year under reference is the total ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....peal is treated as allowed". 7. We have considered the rival contentions and perused the details available on record. We agree with the observation of the Ld.CIT(A) that the methodology adopted by the Assessing Officer prima facie suffers from certain deficiencies. Entire closing balance cannot be treated as un-accounted credits without examining what was received during the year. Moreover, these are all trade credits and arising out of Books of Accounts, out of the running accounts on account of purchases and payments made over a period of time. Further, the closing balances have been confirmed by the parties. In view of this, there is no merit in Revenue's contentions. We uphold the order of CIT(A) and reject the Revenue's contentions in the respective assessment years. Even though Revenue raised as Ground No.5, the issue of not having any incriminating material which Ld.CIT(A) also considered, we are of the opinion that there is no need for adjudicating this issue on legal principles alone when on facts, no addition can be made out of the closing credit balances when purchases/ other transactions were accepted. Whether there is incriminating material or not, Assessing O....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... of view of unexplained credits by the Assessing Officer, in case of failure of the assessee to explain them, as against treating the entire closing balance of the creditors as the unexplained credits. This indicate that the additions made by the Assessing Officer are on wrong premises and wrong basis, as such, do not have the merit to sustain the additions made on presumptive basis. Coming to the report of the Assessing Officer as well as the Addl.CIT on the genuineness of the transactions of advances received by the appellant, it may be relevant to mention that this office has forwarded the annexures containing. the details of the creditors against advances as well as the confirmations which are connoting the nature of the transactions and if the Assessing Officer is not satisfied with the creditworthiness of such creditors, it was for the Assessing Officer to go after the creditor and examining of the same. The mere absence of details as enumerated in their reports will not be the ground for making the additions, that too by treating the entire closing balance of the creditors, in a search related case as in the case of the appellant. 5.5 Provisions of sec.68 stipulate that the....
X X X X Extracts X X X X
X X X X Extracts X X X X
....is no merit in order of Assessing Officer and CIT(A) in confirming the same as these are not cash credits per se. 10.1 However, in the case of M/s.Shalimar Plywood assessee has received an amount of Rs. 4,50,000/- in the year 2002-03 relevant to AY.2003-04 which according to assessee's statement filed before us was continuing upto 31-03-2005. Whether it was subsequently adjusted or returned has not been placed before us. Therefore, we are of the opinion that this amount can be examined whether it is trade credit or cash credit. Likewise, in the case of M/s.Yousuf & Co., assessee received on 18-10-2003 the amount was also continuing till 31-03-2005 being Rs. 1,37,180/-. In the case of M/s.Sekhar Plywood also amount of Rs. 1,01,360/- received on 28-03-2005 was also continuing as such till 31-03-2006. In the case of M/s.Kavita Hardwar amount received on 27- 03-2005 of Rs. 2,05,700/- was also continuing as closing balance. In the case of M/s.Vikram Plywood amount received on 18-03-2005 Rs. 3,50,000/- and on 21-03-2005 Rs. 1,68,794/- were also continuing as closing balances. In the case of M/s.Ajay Laminates amount received on 14-03-2005 of Rs. 3,49,875/- and in the case of K.Bhask....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... assessee explained that assessee has received advance from the above parties in the financial year 2005-06 and the services were rendered in accounting year relevant to AY.2007-08. It was further submitted that assessee has accounted for the receipt of commission in that year and claimed the TDS in that year. The matter was remitted to the Assessing Officer and Assessing Officer has accepted the same in his report. However, the CIT(A) was of the opinion that assessee has mentioned AY.2005-06 also wherein it was supposed to have received commission of Rs. 24,35,341/-. Therefore, he directed the Assessing Officer to examine the issue. 12. On considering the facts placed on record, we are of the opinion that there is no dispute with reference to accounting of the commission of Rs. 26,61,915/- in the AY.2007-08, during which year assessee has rendered services and accounted as income. The TDS claim also pertains to AY.2007-08. Considering these facts, we do not see any reason to sustain the addition in AY.2006-07, just because the other parties have deducted TDS on advance amounts paid. In view of this, CIT(A) order stands modified. Assessee's ground is allowed. The addition is d....
X X X X Extracts X X X X
X X X X Extracts X X X X
....4.3.09 705563 To M RameshKu CSH 297653 2 24.3.09 705562 To M RameshKu CSH 241538 3 24.3.09 705565 To M RameshKu CSH 240255 4 24.3.09 705568 To M RameshKu CSH 217902 5 24.3.09 705569 To M RameshKu CSH 240255 6 24.3.09 705572 To M RameshKu CSH 280853 7 24.3.09 705570 To M RameshKu CSH 247043 8 24.3.09 705567 To M RameshKu CSH 309902 9 24.3.09 705566 To M RameshKu CSH 274748 10 24.3.09 705564 To M RameshKu CSH 303165 11 24.3.09 705561 To M RameshKu CSH 244575 12 25.3.09 705563 Ramesh Kumar CLG 208280 Total 3106169 5.6 As could be seen from the above information, the appellant could not substantiate the reasons for booking the expenditure by raising the bills on single day and by paying the amounts to the extent of Rs. 28,97,889 on a single day and in cash thereby the genuineness of the transaction. The abnormality of the transaction raised the doubts and the payments by cash had confirmed the same. It is not known how and what prompted the appellant to raise the bills on the same day and paid the amount on a single day to the extent of Rs. 28,97,889, by cash, to be a case where suc....