TaxTMI 
TaxTMI 
TaxTMI 
2018 (7) TMI 1892
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....t the facts and circumstances of the case. 3. That having regard to the facts and circumstances of the case, Ld. IT(A) has erred in law and on facts in confirming the action of AO in charging interest u/s. 234A, 234B and 234C of the Act. 4. That the appellant craves the leave to add, modify, amend or delete any of the grounds of appeal at the time of hearing and all the above grounds are without prejudice to each other. 3. The brief facts of the case are that the assessee filed its return declaring taxable income of Rs. 3,52,180/- on 27.9.2012. The case of the assessee was processed u/s. 143(1) of the Income Tax Act, 1961 (hereinafter referred as the Act). Later the case of the assessee was selected for scrutiny through CASS for the reasons "Large amount of Sundry Creditors". Accordingly, notice u/s. 143(2) of the Act was issued on 6.8.2013 and notice u/s. 142(1) of the Act was issued on 6.6.2014. In compliance to the notices, the AR of the assessee attended the proceedings from time to time and furnished the details. During the year under consideration, the assessee has declared income from business of fabrics and readymade garments being carried on under the name and style o....
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....e genuine neither Assessee has offered to verify the genuineness of these parties during appellate proceedings. Ld. CIT(A) observed from the Balance-Sheet, it is apparent that liability on account of sundry creditors was Rs. 6, 77,21,342/- out of which verification of 20 parties amounting to Rs. 2,78,20,495/- could not be done. When the payments are pending and Assessee is not able to give the address of these parties, it shows that liability on account of these sundry creditors .were bogus and no actual liability was existing. Assessee has also claimed that she has full and 7 final payment to these parties during AY 2013- ever, from the perusal of the ledger account submitted, it was seen at all the payments are in cash and not a single payment has been made through cheque and if parties were existing, Assessee was free to provide the addresses during appellate proceedings which however has not been done. Ld. CIT(A) further observed that in order to claim that an expenditure falls u/s 37(1), burden of proving the necessary fact in this connection is on the Assessee. Onus was on the Assessee to submit the correct addresses of parties from whom she claims to have made purchases. How....
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.... / not related / wrong address etc. Assessing Officer has discussed the details of each of the aforesaid cases in para 3.1 of the Assessment Order. Assessing Officer requested to furnish confirmation alongwith complete postal address in the case of all the 20 parties mentioned in para 3.1 of the Assessment Order. However, no reply neither any confirmation alongwith complete postal address was submitted by the Assessee before Assessing Officer. Even during the course of appellate proceedings, no details has been submitted. AR has stated that he has no addresses of any of these parties. Ld. CIT(A) further relied upon the decision of Hon'ble Delhi High Court in the case of CIT vs. La Medica, 250 ITR 575 wherein it has been held that once it is established that purchases are bogus and raw material supplier was non-existent, the issue whether the purchases were made from other parties was irrelevant and the alleged payment could be treated as income from undisclosed sources. Therefore, in view of the facts and circumstances of the case, disallowance of Rs. 3,50,94,758/- on account of sundry creditors was sustained by the Ld. CIT(A) vide order dated 01.12.2016. Aggrieved with the imp....
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....jay Proteins Ltd Vs ACIT [2015] 58 taxmann.com 44 (Gujarat) where Hon'ble Gujarat High Court held that where assessee inflated expenditure by showing higher purchase price through fictitious invoices in name of 33 fictitious parties, Tribunal was justified in disallowing 25 per cent of purchase price. 4. CIT Vs La Medica [2001] 117 Taxman 628 (Delhi)/[2001] 250 ITR 575 A (Delhi)/[2001] 168 CTR 314 (Delhi) where Hon'ble Delhi High Court held that Assessee having failed to produce evidence to prove bona fides of seller from whom it claimed to have purchased raw material, Assessing Officer treated value of raw material as assessee's income from undisclosed sources. Once it was accepted that supplies were not made by said supplier to whom payments were alleged to have been made, question of purchases having been made from some other source could not have weighed with Tribunal as a factor in assessee's favour. 6. After hearing both the parties and perusing the entire material on record, we find that the only effective issue in the present appeal is against the addition of Rs. 3,50,94,758/- made by A.O. and confirmed by Ld. CIT(A) on the ground that closing credit....
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.... be located and were not produced for examination - RAJESH P. SONI VS. ACIT 100 TTJ 892 (AHD 'D'). Section 68 cannot be applied for taxing unconfirmed sundry creditors - CIT vs.Vardhman Overseas Ltd (2012) 343 ITR 0408 (Del). Income-Cash credit-Credit purchases-Provisions of s. 68 are not attracted to amounts representing purchases made on - credit-Tribunal- has recorded a categorical finding of fact based on appreciation of materials and evidence on record that the AO has accepted the purchases, sales as also the trading result disclosed by the assessee-It has also recorded a finding that the two amounts in question represented the purchases made by the assessee on credit-Therefore, addition of said amounts could not be made under s. 68 (COMMISSIONER OF INCOME TAX vs. PANCHAM DASS JAIN 74 CCH 0623 (All HC) Income-Cash credit-Credit purchases-Provisions of s. 68 are not attracted to amounts representing purchases made on credit -Astt. CIT vs. Har Singar Gutkha (P) Ltd. 9 DTR 604(Lucknow) Construction business-Trade purchases-Assessing Officer rejecting books while deciding purchase transactions not genuine but relying on return accepting profit-Assessing Officer ought t....
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....ance sheet of the assessee go to establish that there was no cessation of the liability as held in the following judicial decisions: - 6.2 Impugned liabilities are very much payable by the assessee as and when demanded and unless it is demanded, these are bound to be shown as outstanding. The very fact that these liabilities are appearing in the balance sheet is a strong acknowledgement of the debts payable by the assessee as has recently been held in the case of CIT vs Tamilnadu Warehousing Corporation 292 ITR 310(Mad). It has also been held in the case of Ambica Mills Ltd vs CIT 54 ITR 167 (Guj) that liability shown in the balance sheet is a clear case of acknowledging the liability and such liability cannot be treated to have ceased so as to attract section 41(1). That being so, where is the question of holding the said liabilities as ceased to exist, more so when assessee herself is acknowledging the liabilities to be paid? How can a third party that too a quasi - judicial authority hold in the absence of any material that the liability is not payable by the assessee? Therefore, the addition made on the basis of the presumption does not have either factual or legal lags to sta....
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....e on presumption and that too by placing the burden wrongly on the shoulders of the assessee. Section 41(1) does not envisage any such presumption of cessation and fix the incidence of tax thereon. 6.7 In the absence of any material having been brought on record to establish that the deduction was claimed or credit balance has been remitted, addition cannot be made u/s 41 (1) in view of the following decisions: * Steel and General Mills Co. Ltd vs ClT 96 ITR 438(Del) * CIT vs Nathubhai Desha Bhai 130 ITR 238 (MP) * Liquidator, Mysore Agencies P Ltd vs Cl'I' 114 ITR 853(Karn) * K.V. Moosa Koya & Co vs CIT 175 ITR 120,124(Ker) * CIT vs Pranlal P Doshi 201 ITR 756(Guj) 6.8 The third burden which was on A.O. was to establish that cessation if at all has happened, has happened in the year under appeal. After all, liability to tax can be fixed in the year to which it pertains and to no other year. Liability to tax any ceased liability in a particular year does not depend on the action of A.O. in selecting a case in scrutiny of that year. Merely because A.O. chose to enquire about the creditors in this year and if assessee fails to establish the existence of the l....