TaxTMI 
TaxTMI 
2015 (11) TMI 790
X X X X Extracts X X X X
X X X X Extracts X X X X
....cumstances of the case, in deleting the addition of Rs. 23,24,948/- made by the AO on account of unverified sundry creditors." 4. "Ld. Commissioner of Income Tax (Appeals) erred, in law and on the facts and circumstances of the case, in deleting the addition of Rs. 4,17,685/- made by the AO on account of unvouched imports from Concord Asia Co " 5. Ld. Commissioner of Income Tax (Appeals) erred, in law and on the facts and circumstances of the case, in deleting the addition of Rs. 4,01,948/- out of the addition of Rs. 4,23,098/- made by the AO on account of unvouched expenses." 6. Ld. Commissioner of Income Tax (Appeals) erred, in law and on the facts and circumstances of the case, in entertaining the details which were not submitted during the assessment proceedings and not admitted as evidence u/r 46A of the I.T.Rules." 2. Briefly stated, the facts of the case are: during the processing of income tax return filed by the assessee for the Assessment Year 2006-07 u/s 143(1) of the Income Tax Act, 1961, for short "the Act", declaring an income of Rs. 1.46,578/-, the case of assessee was put under scrutiny and consequently, the notice was served upon the a....
X X X X Extracts X X X X
X X X X Extracts X X X X
....(Rs.1,862/-) and Ms. U. G. Polychem P. Ltd. (Rs.68,612/-). Thus, it was apparent that assessee company had fabricated sundry creditors to accommodate the income from undisclosed sources and consequently, a balance sum of Rs. 24,25,269/- was added back to the net profit. 6. Vide questionnaire dated 18.08.2008 and 22.10.2008, the assessee company was asked to furnish original bills for verification in respect of electricity generator to explain the expenses debited to P & L account - Electricity and generator (Rs.62,086/-), testing charges Rs. 1,50,557/-, telephone expenses Rs. 75,828/- and miscellaneous consumables and packing material not covered under LP-7 Rs. 1,345,627/-. On failure of assessee company to furnish original bills for verification, a sum of Rs. 4,23,098/- has been added back to the net profit. 7. Vide questionnaire dated 22.10.2008, the assessee company was required to furnish invoice no.CAC-2005-06/246 dated 15.01.2006 for US$9396.73 (Rs.4,17,685/-) in respect of this import purchases. However, on failure of assessee company to furnish the aforesaid documents, a sum of Rs. 4,17,685/- has been added back to the net profit. Consequently, addition of Rs. 54,59,4....
X X X X Extracts X X X X
X X X X Extracts X X X X
....Rs. 7,44,000/- while treating various cash deposits into bank account as unexplained cash deposits by making following observations: "The third ground relates to addition of Rs. 7,44,000/- on account of cash deposits into bank treated by the AO as unexplained. In this regard, the appellant has stated that these cash deposits with their bank i.e. Central Bank of India, Badarpur was made periodically, on various dates out of cash withdrawals made by them amounting to Rs. 7,98,450/- on different dates leaving cash in hand of Rs. 94,783/-. It has been stated that such cash withdrawals were regularly made from the bank to meet immediate needs of expenditure from time to time on account of non availability of cash with the appellant. It has also been stated that all transactions of the company such as sales and purchases are made through bank and the only sale in cash made by the appellant 'company is of Rs. 333/- It has further been explained that these deposits are made in cash and the expenditure is met by both directors out of Imprest Accounts available in their hands. The appellant has objected to the observation of the AO that these deposits are from "unexplai....
X X X X Extracts X X X X
X X X X Extracts X X X X
....pellant in the norm.al course of business. It has been clarified that the increase in their loan accounts represents and pertains to the excess amount spent by them over and above the imprest provided for the by the company. It has also been stated that apart from the above, the appellant company has spent a total of Rs. 61,063/- in cash as detailed below: Cash expenses 54,450 Cash sales 333 Difference in cash in hand 6,280 61.063 On the basis of the above, the appellant has tabulated its total cash expenses as below: Total Imprest Account 8,50,734 Credited into loan account 1,02,546 Cash expenses 61,063 10,14,343 Thus, the appellant has argued that the total expenditure made by the company in cash comes to Rs. 10,.14,343/- as against Rs. 94,450/- assumed by the AO. As for the non production of the cash book, the appellant has reacted that this allegation is false and rather it was produced and it was the AO who refused to examine the same. It has further been stated that the production of cash book before the AO is supported by their letter dt. 11-11-08 para which has been enc....
X X X X Extracts X X X X
X X X X Extracts X X X X
....on ground No.2 aforesaid, deleting the addition of Rs. 11,17,056/- returned the following findings: "During the course of appellate proceedings it has been pointed out that the discrepancy was duly explained vide letter dt. 11-11-08 wherein 'in para 3 of the said letter it was clarified that the cash credit account with the bank and the balance in books has been duly reflected under the head "secured loan". It has been stated that this fact is also evidenced from the bank reconciliation account placed by the appellant is annexure IV in their submissions" filed during appellate proceedings which was also filed before the AO vide their letter dl:.l1-11-08. The appellant has furnished a chart showing the respective balances as on 31-03-2006 which are as below: As per balance with As on 31-03-2006 Central Bank of India 10,01,797/- (bank statement) Accounts Books Less: 11,16,341/- (Sch.'C' of Balance Sheet) Cheques issued but not 1,05,544/- Accounted for by bank 1,05,544/- As per this chart the amount of Rs. 1,05,544/- represents cheques issued but not accounted for by the bank. However, it is seen that the AO inadver....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ated 11.11.2008. From the explanation furnished by the assessee, it is also proved that the amount of Rs. 1,05,544/- represents cheques issued but not accounted for by the bank. But the A.O. inadvertently adopted the figure as 'nil' as balance with the bank as on 31.03.2006 as against the correct figure of Rs. 11,16,341/- which stands duly reflected in the balance sheet and is stated to be open to verification. The A.O. has made addition by merely holding the explanation of the assessee as not found satisfactory' without giving any reason. So, when the assessee has duly explained the amount of Rs. 11,17,056/- as secured loan and got reconciled as per bank reconciliation account placed by the appellant as Annexure IV the Ld. CIT(A) has rightly deleted the addition of Rs. 11,17,056/-. Hence, ground No.2 is determined against the appellant. 17. Ground No.3 raised by the assessee is, "as to whether CIT(A) erred in deleting the addition of Rs. 23,24,948/- made by the A.O. on account of unverified sundry creditors." The A.O. vide order dated 03.12.2008 in para 6 has made the addition of Rs. 24,25,269/- to the net profit of the assessee on the ground that the assessee has f....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... ordered to be restored to Ld. CIT(A) to examine afresh. 20. Ground No.4 of the appeal is, "as to whether Ld. CIT(A) has erred in deleting the addition of Rs. 4,17,685/- made by the A.O. on account of unvouched imports from Concord Asia Co." The A.O. at page 4 para 13 of the order categorically observed that since the assessee has failed to furnish the copies of invoice no. CAC-2005-06/246 dated 15.01.2006 for US$9396 (Rs.4,17,685/-), the same has been added to the net profits of the assessee. 21. Ld. CIT(A) in para 5.10 at page 16 of the impugned order held that during the assessment proceedings, the appellant could not furnish original bills for verification as per the assessment order. Therefore, it appears that photocopies of the same were filed. The A.O. was required to examine the issue during remand proceedings are directed by Ld. CIT(A) and stated to have not pointed out anything adverse but when invoice in question for Rs.US$9396 (Rs.417685) has not seen the light of the day nor the same has been annexed with the paper book, nor the same has been entertained in additional evidence, Ld. CIT(A) has erred in proceeding with the matter in deleting the addition merely on ....