TaxTMI 
TaxTMI 
2018 (10) TMI 729
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....tnership firm engaged in the business of customs clearing and forwarding agency. The return of income for the Asst Year 2013-14 was filed electronically by the assessee firm on 15.3.2014 declaring total income of Rs. 7,84,972/-. The Gross billing done by the assessee was Rs. 9,68,76,354/- which includes bill generated to parties for job expenses of Rs. 9,49,61,231/- and service charges without service tax of Rs. 17,04,860/- and service tax reimbursement of Rs. 2,10,263/- . The assessee has shown Rs. 17,04,860/- ( 9,68,76,354 - 9,49,61,231 - 2,10,263) in its profit and loss account as net income . The assessee in this regard explained that the total bill raised by the assessee predominantly includes a portion towards reimbursement of expenses like customs duty, charges to shipping companies, transportation charges etc and that only the service charges component included in the total bill would be its income. In the Balance sheet, the assessee had shown liability for expenses of Rs. 4,16,53,151/- for which details were sought by the ld AO. The ld AO observed that the assessee submitted evidence of outstanding balance of Rs. 2,90,445/- only which was payable to HDF against car loan. A....
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.... AO observed that they could not produce the books of accounts and documentary evidences. A statement was recorded from them on oath wherein they deposed that they are engaged in the work related to transportation of containerized goods from Kolkata port to various parts of Kolkata and neighbouring states ; that they do not have any truck or lorry of their own ; that they manage work from hiring trucks and lorry from the local truck owners and pay them the rent ; that they earn mainly from the commission received from the transportation of containerized goods from Kolkata port ; that their annual income was about Rs. 2 lakhs ; that they do not maintain any books of accounts ; that the assessee ( i.e. M/s Kunal Exim) would approach them for trucks as per their requirement which would be arranged by them for the assessee ; that they take the money from the assessee as and when they get the order for trucks ; that the same money is advanced to the truck owners ; that they don't remember exactly what was the outstanding amount lying with them as on 31.3.2013 ; that they could not produce any evidence of any outstanding amount lying with the assessee ; that they were working jointly und....
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.... the reply sent in response to notice u/s. 133(6) to them, Both stated, "I did not reply the said letter. Since, / do not have the idea about income tax. So on receipt of the said notice issued to me, / given it to Tushar Pandit, the Partner of M/s. Kunal Exim. He handed over the same to his Advocate and he has prepared the same and told me to put my signature on it and on good faith / signed the documents." 2.6. The ld AO treated the net transactions during the year in respect of aforesaid creditors amounting to Rs. 46,06,610/- as bogus liabilities and added the same to the total income of the assessee. 2.7. The ld CITA observed that Sri Manoj Tiwari (Rs 2,96,800/- ) ; Sri Saroj Tiwari ( Rs. 3,21,610/-) did not confirm having transactions in their individual capacity with the assessee in their statement on oath. Md. Islam (Rs 4,05,000/-) did not appear before the ld AO in response to summons u/s 131 of the Act. Accordingly, he confirmed the addition made towards liabilities standing in the names of these parties. Other than these parties, all other creditors appeared and confirmed the transactions and accordingly the balances shown in their names are to be accepted as genuin....
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....onse to notice u/s 133(6) of the Act by the ld AO except drawing suspicion without any basis. We find lot of force in the argument of the ld AR that these creditors had not deposed anything against the assessee and hence the assessee chose not to give its counter or seek for cross examination before the ld AO. We find that all those creditors had also deposed that they had not maintained books of accounts and hence they could not confirm the balance outstanding as on 31.3.2013. In these circumstances, there is nothing wrong in they being dependent on the assessee for the facts and figures which were duly confirmed by them in writing by signing the reply letter to notice u/s 133(6) of the Act. We also find that the fact of reimbursement of expenses made by the assessee is not disputed by the revenue before us and hence the corresponding liability thereon cannot be disputed. None of those creditors had denied having rendered services to the assessee. In view of the aforesaid observations in the facts and circumstances of the case, we hold that the ld CITA erred in confirming the addition made towards these liabilities in the sums of Rs. 2,96,800/- (Manoj Tiwari) ; Rs. 3,21,610/- (Sar....