TaxTMI 
TaxTMI 
2019 (7) TMI 746
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....ing confronted, at the time of assessment proceedings the assessee could not furnish the details of the creditor and failed to discharge his onus to prove the genuineness of the sundry creditor. The assessee having failed to discharge his onus of proving the genuineness of the liability, the said amount was added by the Assessing Officer. 2. Addition made on the issue of unexplained loan: A loan of Rs. 11,00,772/- from Himmatsingha Auto Finance had been shown as a liability of the balance sheet of his proprietorship concern i.e. S.M. Enterprise. On being confronted, at the time of assessment proceedings the assessee could not furnish any evidence in support of this and failed to discharge his onus to prove the genuineness of the loan. Accordingly, Rs. 11,00,772/- was treated as undisclosed investment of the assessee and added back to the total income by the AO." 3. Ground No. 1 and 2 raised by the Revenue relates to addition of Rs. 1,70,73,828/- under the heard of current liabilities and Rs. 11,00,772/- on account of unexplained loan. 4. Assessing officer made the impugned addition based on preponderance of probability'. In this regard the relev....
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.... undisclosed investment and accordingly Rs, 1100722 is added to the total income." 6.. Aggrieved, by the order of the AO, the assessee carried the matter in appeal before the learned CIT(A), who has deleted the addition made by AO observing the following: "4.2. In appeal before me the appellant has submitted that the current liabilities and provisions [sundry creditor] are genuine. The AO cannot make addition of the entire sundry creditors only because the appellant could not furnish details on the date of hearing. 4.3. On consideration of the matter, I find that the AO has added back the entire current liabilities and provisions [sundry creditor] of the appellant only because the appellant could not produce the necessary details. Therefore, on the basis of "Preponderance of Probability" he has treated the entire amount of current liabilities and provisions [sundry creditor] as the own investment of the appellant. In my opinion just because details are not produced the current liabilities and provisions [sundry creditor] of the appellant cannot transform into the own investment of the appellant. In my opinion non submission of details is not sufficient enough t....
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.... out of the appellate order dated 09-06-2017 passed by the Ld. Commissioner of Income Tax (Appeals)-1, Guwahati who reversed the action of the Ld. Assessing Officer, the additions made in respect of current liabilities and secured loan from Himmatsingha Auto Finance. It is an admitted fact that in pursuance of his trading transactions in coal under the name and style of "S.M. Enterprise", the assessee had disclosed amounts in the sum of Rs. 1,70,73,828/- under the head "Current Liabilities" which comprised of Rs. 1,10,513.55 from Hind Marketing Corporation, Rs. 85,66,900/- on account of Loading & Unloading expenses on purchase, Rs. 83,47,532/- on account of Truck Freight payable and TDS payable of Rs. 15,175/- in the final accounts which was construed as undisclosed investment by the Ld. Assessing Officer. The learned Counsel stated that it is an admitted fact that the bifurcation of such outstanding liabilities was provided in Schedule F of the audited accounts filed before the Ld. Assessing Officer. It was also explained that there was a debtor amount of Rs. 2,46,51,199/- which is outstanding on this account and is the source of this liability. It is not in dispute that in the in....
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.... his activities, the assessee had incurred liabilities on account of labour and truck payments on account of purchase in the nature of "Current Liabilities" on purely business considerations and made payments subsequently and at the end of the 31st day of March, 2009, such amounts as shown in the final accounts remained outstanding. This is not a unique feature of the business of the assessee for the instant assessment year. He however nevertheless conceived that genuineness of the "Current Liabilities" could not be established on considerations not germane to the issue in dispute. This is a misnomer in the circumstances of the case. Further, the amount of Rs. 1,70,73,828/- disclosed on account of "Current Liabilities" by the assessee were actually an outstanding amount to be paid on account of labour and truck owners and were paid subsequently. As the said sum of Rs. 1,70,73,828/- was a mere outstanding amount against purchase and hence, provisions of section 69 of the Act do not come into play, inasmuch as the purchase recorded in the accounts were not disputed. The amounts outstanding were shown in the balance sheet as 'Current Liabilities' as on 31-03-2009. Theref....
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....t pointed out any flaw in the transactions made during the relevant previous year, then there was no scope as per immutable accountancy principle to disbelieve the closing balance arrived at. In the circumstances, the conclusion reached by the Ld. Assessing Officer was based on subjective perceptions of conjecture and surmise and the observations made were not in consonance with the facts of the case and thus, by resorting to such addition without disputing the genuinity of the transactions, he acted prejudicially in terms contrary to law. In the instant case, therefore the impugned addition of Rs. 1,70,73,828/- made under the head "Current Liabilities" by the Ld. Assessing Officer has been rightly deleted by ld CIT(A). As a result, the addition made in the present context in the sum of Rs. 1,70,73,828/- has no legs to stand upon. That being so, we decline to interfere with the order of Id. C.I T.(A) deleting the aforesaid addition. His order on this addition is, therefore, upheld and the grounds of appeal of the Revenue are dismissed. 11. We note that assessee had received secured loans from Himmatsingha Auto Finance wherein the outstanding balance in the sum of Rs. 11,00,772/-....
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....ved such loans to stand testimony to their irrefutable and impeccable character. In the circumstances, the conclusion reached by the Ld. Assessing Officer was based on subjective perceptions of surmise and conjecture and the findings rendered therein and were not in consonance with the facts and the Ld. Commissioner (Appeals) acted aptly by considering appropriate factors absolutely germane to the issue in applying the settled parameter by deleting the impugned addition. That being so, we decline to interfere the order passed by the learned CIT(A), hence, his order on this issue is hereby upheld and the grounds of appeal raised by the Revenue is dismissed. 12. Now we shall take Cross Objection filed by the assessee which relates to addition based on estimating the net profit @ 1% to the tune of Rs. 8,41,663/- 13. We have heard both the parties and perused the material available on record, we note that ld CIT(A) has passed the order estimating the net profit @ 1% to the tune of Rs. 8,41,663/- "The appellant had admitted a turnover of Rs. 21,71,66,250/- on which he admitted net profit of Rs. 13,30,000. The net profit rate of the appellant works out to 0.61%. The AO opi....