TaxTMI 
TaxTMI 
2016 (7) TMI 240
X X X X Extracts X X X X
X X X X Extracts X X X X
....umstances of the case, ld. CIT(A) is correct in deleting the addition U/s. 68 on account of bogus liabilities amounting to Rs. 2,93,67,494/- despite the failure on the part of the assessee to furnish necessary details and documentary evidences to justify its claim. 3. Whether on the facts and in the circumstances of the case, ld. CIT(A) is correct in deleting the addition U/s. 68 on account of bogus liabilities amounting to Rs. 10,56,92, 541/- despite the failure on the part of the assessee to furnish necessary details and documentary evidences to justify its claim. 4. Whether on the facts and in the circumstances of the case, ld. CIT(A) is correct in deleting the addition towards purchase suspense amounting to Rs. 25,73,43,604/- in spite of the fact that the assessee failed to prove the genuineness of the parties and their identities. " 3. The brief facts of Ground No. 1 are that the assessee is a private limited company engaged in the business of trading in chemicals. During the course of assessment proceedings, the Learned AO called for the complete details of current liabilities and provisions vide questionnaire issued on 12.10.2010 showing the name and add....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... CORPORATION 1,19,150 YOG PETRO PVT. LTD 1,00,000 OUTSTANDING LIABILITIES 3,29,986 10,62,38,834 The Learned AO for want of proper details to be furnished by the assessee concluded the following :- - that the assessee had failed to substantiate the genuineness and veracity of the alleged transactions with credible documentary evidences and complete postal addresses. - that since the assessee has not even provided the PAN, the existence of these parties is doubted. - that further , for getting credits from any person or concern, physical existence of such person or concern as well as genuineness of transactions, as a result of which outstanding balances stood in their books, have to be proved. It was not ascertainable as to how the credit balances appeared in the names of the aforesaid parties in the assessee's books. This fact alone puts a big question mark on the genuineness of the alleged transactions. - that the assessee has failed to produce the copy of bank statement or any other credible documentary evidence whatsoever in this regard. - that notices u/s 133(6) and summons u/s 131 of the Act could not be ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....by these parties. For want of details from the side of the assessee, the Learned AO brought the balances of the aforesaid parties to the tune of Rs. 2,93,67,494/- to tax as unexplained cash credit u/s 68 of the Act treating the same as bogus liabilities. 3.2. The brief facts of Ground No. 3 are that wherever the assessee had furnished the complete postal address of the creditors, the Learned AO made independent enquiries by sending notices u/s 133(6) of the Act and found that the closing balances did not match in the following cases :- Sl.No Name of the Party Closing Balance as per reply ( in Rs.) Closing Balance as per assessee's books ( in Rs.) Difference in closing balance ( in Rs.) 1. Adani Enterprise Nil 57,33,829 57,33,829 2. Bhageria Dyechem 6,82,022 23,73,740 16,91,718 3. Shubham Chemicals & Solvents Nil 8,348 8,348 4. Century Plyboard (India) Ltd 64,033 47,49,484 46,85,451 5. Dishman Pharmaceuticals & Chemicals Ltd 21,75,000 3,76,059 17,98,941 6. Rishi Karan Logistics Pvt. Ltd 6,86....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... Repurchase of 395MT Caustic Soda Flakes sold to Kutch Chemical Industries Ltd, and invoice not received. 75,05,000 3. Kutch Chemical Industries Repurchase of 2645MT Caustic Soda Flakes sold to Kutch Chemical Industries Ltd, and the invoice not 60,06,000 Received 4. Kutch Chemical Industries Repurchase of 1286MT Caustic Soda Flakes sold to Kutch Chemical Industries Ltd, and invoice not received 2,44,34,000 5. Bloom Decor Ltd Repurchase of 155MT Phenol sold to Bloom Decor Ltd, and the invoice not Received 1,16,25,000 6. Dujodwala Products Ltd Repurchase of 350MTPhenol sold to Dujodwala Products Ltd, and the invoice not received 2,62,50,000 7. Golden Laminates Ltd Repurchase of 350MT Phenol sold to Golden Laminates Ltd, and the invoice not received 1,38,75,000 8. Bharat Insecticides Ltd Repurchase of 100 MT Phenol sold to Bharat Insecticides Ltd, and the invoice not received 75,00,000 9. Hemani Organics & Chemicals Ltd Repurchase of 65MT Ph....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... Learned AO ought not to have made any addition in respect of opening balance of sundry creditors u/s 68 of the Act as admittedly, only the credits during the year alone , if at all, could be subjected to tax as deemed income u/s 68 of the Act. It was also argued with specific reference to the decision of the co-ordinate bench of Ahmedabad Tribunal in the case of DCIT vs Alidhara Taxpro Engineers Pvt Ltd reported in (2011) 43 SOT 1 (Ahm.) wherein it was held that neither provisions of section 68 nor provisions of section 41(1) of the Act could be applied even when the credits were old being carried forward from earlier years and the liability still continued to exist in the Balance Sheet. The assessee also tried to explain that some of the liabilities were required to be adjusted against certain debit balances appearing as sundry debtors in the balance sheet and many of such adjustments had already been made in subsequent years. The Learned CIT(A) also observed that assessee had given detailed explanation with specific references to various annexures filed before him in respect of all such credit entries appearing in the books of account and most of which were being carried forward....
X X X X Extracts X X X X
X X X X Extracts X X X X
....oods sold and had not accounted for such purchases in their books of accounts by debiting the purchases account and crediting the account of the assesse company, nothing could be found as recorded in their books of accounts. The reason for crediting purchase suspense account in the books of assessee company was explained that as and when the materials sold were lifted by the buyers , the purchase suspense account would get adjusted and in order to keep track of the lifting of materials by the concerned parties. Hence it was argued that under no circumstances, the same could be treated as deemed income in the hands of the assessee u/s 68 of the Act. The Learned CIT(A) appreciated the contentions of the assessee and deleted the additions made on account of sundry creditors as bogus liabilities and on account of purchase suspense. Aggrieved , the revenue is in appeal before us. 5. The Learned DR argued that lot of additional evidences were filed before the Learned CIT(A) by the assessee and prayed for one more opportunity to be given to the Learned AO for his verification. In response to this, the Learned AR reiterated the various submissions made by the assessee before the Learned....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ng the year ended 31.3.2008 and on the day of settling the accounts for a particular consignment, purchase suspense account is debited and respective party which has established the letter of credits for the import of assessee is credited. (v) The details of letter of credits established by third parties for the imports of assessee together with copy of agreement between assessee and the third party , sales invoices and bond transfer agreements were furnished before the lower authorities. (vi) Further , the delivery of some of the sales made by assessee were not taken by the buyers because of the falling prices due to global recession and sales were cancelled and the materials were re-purchased by assessee from such parties. We find that the assessee had filed complete details and workings of the aforesaid transactions with regard to ground no. 4 raised by the revenue before us including the note on re-purchase of materiasl from the parties to whom materials were sold. These are enclosed in pages 183 to 213 of the paper book. 6.1. The Learned DR argued that most of the details were filed and explained in detail by the assessee before the Learned CIT(A) and t....