TaxTMI 
TaxTMI 
2016 (7) TMI 240
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....e 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 address, opening balance, details of transactions, closing balance and nature ....
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....ary 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 issued as the assessee did not discharge his primary onus to furnish the proper and complete postal addresses. In fact, by not submitting the proper addresses and details like Suspense account , the assessee has prevented the department from making any independent verification of these parties. - that it appears that the assessee has unilaterally shown all these parties as his creditors in....
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....see'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 6,86,214 10,35,606 3,49,392 7. PEC Ltd 25,66,32,508 44,10,63,362 8,04,75,506 8. Ketus Enterprises 2,45,580 1,78,105 67,475 9. B.R. Agrotech Nil 16,00,000 16,00,000 10. ACME Solvents Pvt. Ltd Nil 25,00,000 25,00,000 11. Ashok Alco Chem Ltd Nil 2,96,761 2,96,761 12. Elpee Overseas Pvt. Ltd Nil 2,53,321 2,53,321 13. Surbhee polymers Pvt. Ltd Nil 52,68,000 52,68,000 14. Vinision Chemical Nil 9,63,799 9,63,799 10,56,92,541 Based on the above, the Learned AO observed that the assessee had booked bogus sundry creditros in the name of these parties and the assessee could not reconcile the differences in balances. Here the Learned AO observed that the assessee had only proved the existence....
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.... 65MT Phenol sold to Hemani Organics & Chemicals Ltd, and the invoice not received. 48,75,000 10. Sahastraa Exports Ltd Repurchase of 75 MT Phenol sold to Sahastraa Exports Ltd, and the invoice not 56,25,000 Received 11. Shubham Chemicals & Solvents Ltd Repurchase of 250MT Phenol sold to Shubham Chemicals & Solvents Ltd, and15000000 the invoice not received. 1,87,50,000 12. Sundek India Ltd Repurchase of 200MT Phenol sold to Sundek India Ltd, and the invoice not Received 15,00,0000 13. Aarem Chemicals Ltd Repurchase of 450MT Phenol sold to Aarem Chemicals Ltd, and the invoice not received 3,37,50,000 14. BR Agrotech Ltd Repurchase of 40MT Solvent C9 sold to BR Agrotech Ltd, and the invoice not received 16,00,000 15. Ketul Chem Pvt.Ltd Repurchase of 40MT Toluene sold to Ketul Chem Pvt. Ltd and the invoice not received 37,40,000 16. ACME Solvents Pvt.Ltd Repurchase of 50MT Isopropyl Alcohol sold to ACME Solvents sold to ACME Solvents Pvt. Ltd and the invoice not received. 25,00,000 17. Premier Solvents Pvt. Ltd Repurchase of 16MT Butyl 9,92,000 Acetate sold to Premier Solvents Pvt. L....
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....ed to such accounts and most of such entries had already been rectified by April 2010 and much before the case had been taken up by the Learned AO and hence it cannot be said that the assessee did not offer any explanation. The assessee also tried to argue that various case laws relied upon by the Learned AO were rendered in the context of section 68 of the Act. In the instant case, whether at all the provisions of section 68 of the Act could be invoked keeping in view the fact that most of the credits are being carried forward from earlier year and the mistakes committed were duly rectified subsequently. Accordingly he assailed the reliance placed on various decisions by the Learned AO. It was also mentioned that all the credits are either in respect of purchases made or in respect of expenses incurred and all of which are supported by bills and challans and payments in all the cases have been made by Account Payee Cheques only and hence applicability of provisions of section 68 of the Act would not arise. It was also argued before the Learned CIT(A) that certain debit balances of sundry creditors were also added by the Learned AO as bogus liabilities which were pointed out before....
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....om the Learned AO. In rejoinder, the Learned DR stated that the Learned AO had only stated in his remand report, due to paucity of time, he is not able to look into the various additional details filed by the assessee and accordingly the Learned DR re-emphasized the argument that the matter requires to go back to the file of the Learned AO. 6. We have heard the rival submissions and perused the materials available on record including the detailed paper book filed by the assessee. From the bare perusal of the details filed in the paper book, it is very clear that the Learned AO had even treated the debit balances of sundry creditors as unexplained cash credit u/s 68 of the Act by treating them as bogus liabilities. We find that there is an arithmetical error committed by the Learned AO thereby making excess addition of Rs. 3 crores towards storage charges payable (FSWAI). We also find from the details in the paper book and the arguments of the Learned AR that the assessee had heavily transacted with a Public Sector Undertaking, a Government of India Enterprises, M/s PEC Ltd. The details of transactions with PEC Ltd are as follows:- (i) Assessee has been importing material from ov....
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....ued that if the Learned AO had not utilized the opportunity of verification (as stated by the Learned AR) in the remand proceedings, then the Learned CIT(A) ought to have verified the same in detail and then granted relief to the assessee, if warranted. Just because the Learned AO had not remarked in the remand report, the Learned CIT(A) cannot brush aside his duties contemplated in section 250(4) of the Act. We find lot of force in the arguments of the Learned DR on this aspect. For the sake of convenience, the provisions of section 250(4) of the Act are reproduced below:- Section 250 - Procedure in appeal (4) The Commissioner (Appeals) may, before disposing of any appeal, make such further inquiry as he thinks fit, or may direct the Assessing Officer to make further inquiry and report the result of the same to the Commissioner (Appeals). 6.2. Though we find that the Learned CIT(A) had referred to various annexures in his appellate order which would amount to his verification, but on perusal of the details filed before us, we find that there are certain details such as Suspense Accounts, which assessee himself had admitted in the narration that details of credits are not avai....