TaxTMI 
TaxTMI 
2017 (2) TMI 907
X X X X Extracts X X X X
X X X X Extracts X X X X
....ndry creditors and required evidences during the course of assessment proceedings and remand report proceedings . iii) Whether on the fact and circumstances of the case, the Ld. CIT(A) was correct in deleting the addition of Rs. 35,38,559/-/- made on account of unaccounted sales without appreciating the fact that the assessee failed to produce required evidences during the course of assessment proceedings and remand report proceedings . iv) Whether on the fact and circumstances of the case, the Ld. CIT(A) was correct in deleting the addition of Rs. 41,41,309/-/- made on account of unaccounted purchases without appreciating the fact that the assessee failed to produce documentary evidences during the course of assessment proceedings and remand report proceedings." 3. During the course of hearing, revenue has made an application dated 11/03/2015 for admission of an additional ground of appeal. The additional ground raised by the revenue is as under:- "whether these CIT (A) has erred in admitting additional evidence in this case is the conditions as stipulated in rule 46 (1) was not satisfied in this case and no order in this regard was passed and further that the e....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ase is that assessee is a private limited company furnished its income tax return on 31st of October 2007 declaring a profit of Rs. 50300/-. The company is engaged in the business of trading in jewellery. To support its return of income, the company submitted the audited annual accounts of the company along with the tax audit report. During the course of assessment proceedings, the Ld. assessing officer stated that assessee has not produced the books of accounts which were relied upon by the tax auditor and therefore he rejected the return of the assessee and held that in case of jewellery trade the gross profit rate varies between 6 to 8% and net profit rate varies between 4 to 5% and in the absence of the book and non-confirmation from sundry creditors to the net profit rate at 5% on sales of Rs. 1 247 0519/- and estimated the net profit of the company at Rs. 6 23525/-. As the assessee did not produce the books of accounts, The Ld. assessing officer was of the view that assessee has failed to prove the genuineness of the sundry creditors as on the close of the year and therefore he added a sum of Rs. 4 519950/- on account of the sundry creditor....
X X X X Extracts X X X X
X X X X Extracts X X X X
....et profit, without appreciating the fact that the assessee has failed to produce complete books of account during the course of assessment proceedings and remand report proceedings. The Ld. departmental representative relied upon the orders of the Ld. and assessing officer and stated that when the books of accounts were not produced before the Ld. assessing officer during the course of assessment proceedings and also notices under section 133 (6) of the income tax act were not responded. Against this, the Ld. authorized representative submitted that the books of accounts were produced before the assessing officer in remand proceedings and further the additional evidences were submitted and merely because some of the creditors could not reply to the Ld. and assessing officers notices it cannot be used against the assessee when the confirmation of them supported by the books of account is produced. 8. We have carefully considered the rival contentions and also perused the relevant evidences produced before us. The Ld. 1st appellate authority has deleted the above addition as under:- "4.9 Estimation of Net profit at Rs. 6.23.525/- :- As per the assessment order, during assessment p....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ly one register cannot be a ground for addition as held by the Hon'ble Delhi High Court in CIT v. Smt. Poonam Rani (2010) 192 Taxmann 167. As regards the purchase vouchers, it is submitted by the Id. AR that except for the purchases from M/s Peeyar Manufacutring and M/s Diam Circle all other purchases during the year were made from individual household customers who have sold their personal jewellery to the assessee. It is submitted that since individual customers do not carry any personal invoice/challan etc., submitting them is not possible. !t is submitted that the AO was provided with the names and address of these customers to enable him to confirm these transactions and the AO has not made any adverse comments on this. As regard, the purchase bill for M/s Diam Circle, it is submitted by the Id. AR that non-production of only one bill cannot be basis for addition. The Id. AR has relied upon the decision in the case of Shanker Exports v. Addl. CIT (2010) 132 TTJ 107 (JP) in this regard. Further, it is submitted that the AO ignored the part payment made to this party of Rs. 1,99,000/- by the assessee by account payee cheques. Further, the confirmation' ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....g officer of estimate of the net profit on adhoc basis where the books of accounts of the assessee are audited and no particular defects were pointed out by the Ld. assessing officer, which is patent and glaring. In fact, he has also sustained the addition of Rs. 1 lakh for the reason that assessee has not been able to produce the stock register for diamond and stones and other minor shortcomings as mentioned in his order. The Ld. departmental representative could not point out any infirmity in the order of the Ld. Ld. 1st appellate authority. Therefore, we confirm the finding of the Ld. CIT (A) in deleting the addition of Rs. 5 23525/- on account of rejection of the books of accounts by the Ld. and assessing officer and estimating the net profit. In the result ground No. 1 of the appeal of the revenue is dismissed. 10. Ground No. 2 of the appeal of the revenue is against the deleting the addition of Rs. 4519950/- made on account of the sundry creditors without appreciating the fact that the assessee has failed to prove the genuineness of the sundry creditors and required evidence during the course of assessment proceedings and remand report proceedings. The Ld. depart....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... assessee and no addition in this regard is justified. In this regard, no adverse comment has been made by the AO in the remand report. On careful examination of the matter, I find that the assessee has discharged its onus of proving the identity, source and genuineness of the above sundry creditors. On the other hand, the AO has not made any adverse comment in this regard in the remand report. Considering the above, the disallowance made by the AO u/s 41 by treating the above sundry creditors cessation of liability is arbitrary and cannot be legally or factually justified. The said addition is, therefore, deleted. " 12. We have noted that the Ld. CIT (A) deleted the addition when the assessee has submitted the confirmation of the sundry creditors, which were duly submitted before the Ld. assessing officer during the assessment proceedings and further submitting the copies of invoices and bills for purchase from the creditors to prove the genuineness of the transactions. The assessee also produced confirmation for payments made to some of the creditors and legal notices issued by the some of the sundry creditors towards outstanding amounts and therefore there was no cessation of a....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... submitted that the gold in question was issued by the assessee to CVM for job work. The re- confirmation from M/s CVM in this regard had-been submitted by the assessee along with copy of challan and receipt and receipt voucher as well as labour bills for job work- done which had been duly forwarded to the AO during the remand proceeding. The AO has not made any adverse comment on the basis of any independent enquiry or verification in this regard. In the remand report, the AO has simply mentioned that reconfirmation and other evidences produced by the assessee are an after-thought. On careful consideration of the matter, I find that the impugned disallowance is not backed by any material finding and cannot be sustained. On the other hand, the appellant has submitted necessary documentary evidence and explanation clarifying the matter. The said disallowance is, therefore, deleted." 15. the Ld. CIT appeal has deleted the above addition because the difference in the account has arisen due to the one transaction of 5.820 grms of the gold of Rs. 3893850/- which is wrongly shown by the party as sales instead of being accounted for issue of finished job material. For this reason, ....