TaxTMI 
TaxTMI 
TaxTMI 
2016 (5) TMI 28
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.... for the assessment proceedings by filing the required information despite giving enormous opportunities of hearing. In the absence of any details from the assessee, the Assessing Officer has completed the assessment u/s 144 of the Act, ex-parte based on the information available on record. During the course of assessment proceedings, the Assessing Officer noticed that the assessee has shown creditors in his books of accounts. Therefore, requested to furnish the confirmation letters from the creditors. In response to notice, the assessee has filed confirmation letters in respect of 12 trade creditors and for the remaining creditors no confirmation has been filed. In the absence of confirmation letters, the Assessing Officer was of the opinion that the assessee has not proved the genuineness of the transactions and also creditworthiness of the creditors. Therefore, made additions of Rs. 1,02,50,870/-. 3. The Assessing Officer noticed that the gross profit declared by the assessee for the year under consideration is quite less, when compared to the nature of business carried out by the assessee. Therefore, requested to furnish the complete details to sales and purchase along with op....
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....s not considered the confirmation letters filed during the course of assessment proceedings. Similarly, the assessee further submitted that in respect of estimation of suppressed sales is concerned, the Assessing Officer has estimated the suppressed sales for the month of Nov'07, Jan'08, Feb'08 & Mar'08, based on his own analysis of the financial results without any materials to show that there was a suppression of sales. The financial results for the period should be considered in total and not for a particular month. Though there is a reduction in the sales price when compared to the purchase price for the month, it was happened because of sales of non moving and obsolete items and also cut lengths. Therefore, the selling price of the product naturally will be less when compared to the average purchase price of the product. For this reason, the Assessing Officer cannot estimate the suppressed sales turnover based on the selling price of the good stock. As regards the disallowance of expenditure, the assessee submitted that it has furnished bills & vouchers in respect of freight charges along with lorry freight receipts. In respect of other expenditure like salary, stationery expe....
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....d which can be verified from the books of accounts maintained by the assessee. Similarly, the CIT(A) deleted the additions made by the Assessing Officer towards suppressed sales and related gross profit by holding that additions cannot be made for the part of the period based on the financial results of the remaining period, by holding that the sale price declared by the assessee is less than the purchase price. The CIT(A) further held that it is obvious in certain cases that the sale price may be less than the purchase price, because of various reasons in the business. In the present case, the assessee contention is that it has sold obsolete and non moving stock and also cut lengths, therefore, the price of these product is always less when compared to the purchase price. To avoid further losses in the business, he sold goods at price which is less than the purchase price. For this reason, the Assessing Officer cannot estimate the turnover based on the purchase price. With these observations, he directed the Assessing Officer to delete the additions. Aggrieved by the CIT(A) order, the revenue is in appeal before us. 7. The Ld. D.R. submitted that the CIT(A) failed to consider the....
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....s and also reconciled the difference shown in the debtors books of accounts to its books of accounts. During the course of hearing, the assessee has filed a paper book, wherein submitted the ledger account copies of the respective creditors along with confirmation letters issued by the parties. On perusal of the confirmation letters issued by the assessee, we find that in the case of two parties, where there was a difference in closing balances, the assessee has explained the difference in closing balance and submitted that the difference in balances in sundry creditors is not closing balance and it is opening balance difference. Therefore, the Assessing Officer cannot make additions towards opening balance difference during the year under consideration. We find force in the arguments of the assessee for the reason that on perusal of such confirmation letters and also reconciliation furnished by the assessee, we noticed that the creditors have been explained before the Assessing Officer and also explained the reasons why the difference is appeared in the creditors' balance. The CIT(A) after considering the submissions made by the assessee rightly deleted the additions. We do not se....