TaxTMI 
TaxTMI 
2019 (11) TMI 331
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....e opening balance for the year under consideration. By no means can the opening balance be considered as unexplained cash credit and addition can be made U/s 68 for the year under consideration. As such, Ld. CIT(A) was not justified in confirming the addition made by the Ld. AO to the tune of opening balance for the year under consideration. As such, the addition made is fit to be deleted. 3. For that for the year under consideration there was an additional sundry creditors for Rs. 65,29,356/-. Due to certain mishaps reasons we were unable to furnish complete details of the sundry creditors as such, as a matter of fact, this amount was duly disclosed by us under IDS scheme wherein the assessee disclosed Rs. 1 Crore under the head business income. Disclosure was made thereby wherein taxes as due was paid. As such, Ld. CIT(A) was not justified in confirming the addition made to this amount as unexplained cash credit. 4. For that the amount of sundry creditors was duly disclosed in our books of account and the same has not been written off for the year under consideration. As such, Ld.AO was not justified in making the addition for the same amount for the year under consideration.....
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....sion of Coordinated Bench of Ranchi Tribunal in the case of M/s Gulf Steel & Minerals Vs ITO Ward 1(4) Jamshedpur, in ITA No.57/Ran/2016, order dated 04/05/2018 and in the case of Swapan Kumar Sarkar Vs ACIT Circle 3 Jamshedpur, in ITA No.05/Ran/2017, order dated 15/02/2019. Accordingly, ld. AR submitted that the appeal of the assessee may kindly be allowed. 6. On the other hand, ld. DR relied on the orders of authorities below. 7. With regard to ground Nos.1 to 4, the assessee has agitated the addition of sundry creditors. After considering the submissions of both the parties and perusing the entire material available on record along with the orders of authorities below as well as the case relied upon by the ld. AR of the assessee, we find in this case that the lower authorities have disallowed only sundry creditors for want of verification but the corresponding purchase, sales and net profit declared by the assessee have been accepted by the authorities below. Our this view is supported by the decision of coordinate bench of the Tribunal in the case of M/s Gulf Steel & Minerals, ITA No.57/Ran/2016, A.Y.2010 2011, order dated 04.05.2018, wherein the Tribunal has observed as unde....
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.... been accepted by the AO. I also find that there were sundry debtors of equal amount in the Balance sheet which shows that in this trade there remain outstanding sundry creditors and debtors. When purchase was accepted as genuine then the sundry creditors cannot be treated as bogus. vii) Regarding applicability of provisions of section 68, I find that the appellant has brought substantial material on record to show that these are sundry creditor for purchases paid in subsequent years and that part of the purchases from the very parties were already accepted by the Assessing Officer. Evidently, the creditors were held to be bogus on the ground that enquiry letters under sec. 133(6) of the Act were received back unserved with the remarks 'not known' leaving the Assessing Officer to conclude ITA No.57/Ran/16 that the appellant has failed to discharge his onus of proving the capacity of the creditors and genuineness of the transactions. Apparently, in my opinion, the Assessing Officer has not appreciated the facts of the case in its entirety. This is a case, where the books are not outrightly rejected, there is no adverse inference drawn regarding quantum of purchases or sa....
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....liability as envisaged under section 41(1) of the Act for the assessment year under consideration. ix) In view of above discussed legal and factual position, I am of the considered view that the sundry creditors of Rs. 4,29,02,130/- cannot be treated as bogus sundry creditors and cannot be added to the income of the appellant. Accordingly, the impugned addition made by the AO is hereby directed to be deleted and thus, these grounds of the appeal of the appellant are allowed." Being aggrieved by this order of Ld. CIT(A) Revenue is in appeal before us. 12. Before us Ld. DR vehemently relied on the order of AO whereas Ld. AR submitted that the AO has made further addition of Rs. 4,29,02,130/- from Sundry Creditors. It is submitted that these creditors stood in the books of the company and the amount was never written off. The purchases of goods from these parties have been accepted to be genuine. There was no evidence to suggest that no liability to sundry creditors was payable. The details of these Sundry creditors were filed. The AO has also accepted that the payments to these parties were made by bearer cheques. However, as per the AO that payment by bearer cheques causes a s....
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.... sundry creditors have been added as total income of the assessee. In our considered view the action of the AO for making the addition of the sundry creditors without disallowing the purchases is based on wrong interpretation of Income Tax Laws. The sundry creditors can be added as income under section 41(1) of the Act once it is written off in the books of accounts. In the instant case the same has not been written off and very much reflecting in the books of the assessee. Therefore in our considered view the sundry creditors reflecting in the books of accounts cannot be disallowed and added to the total income of the assessee. In the instant case, the balances of many of the sundry creditors were outstanding coming from earlier years. Payments were made to some or the creditors during the year. The said payments have been accepted by the AO which means genuinity of the payments to these creditors as well as the genuinity thereof till last year have not disputed by the AO. In the instant case the firstly the AO has not specifically invoked the provisions of section 41 (1). Further in any case no such addition can be made u/s 41. In this connection we are putting our reliance in th....
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....able. It was held that the onus had wrongly been shifted by the revenue on the assessee. It was held that the liability existed since tile assessee had shown the liabilities outstanding in its balance sheet. Therefore, there was no occasion to treat the said amount as taxable under section 41 (1) and if department intends to assess the same by applying the provisions of section 41 (1), then the onus will be on the revenue to show that the liability which is appearing in the balance sheet has ceased finally and there is no possibility of the revival of the liability. Hence, addition could not be sustained under section 41(1). The said judgment of the Tribunal was confirmed by Delhi High Court on 23-12-2011 In the case of National Insulated Cable Co. v. ITO ITA No. 421/Del/2011 dt. 8-7-2011 (Del 'E'-Trib) it was held that the fact that the creditors were old creditors brought forward from earlier years has not been disputed by the department. These creditors have not been introduced during the year under consideration. There is no evidence or material on record to establish that the assessee liability to pay the amount to the creditors have been ceased during the year under....
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....is a finding of fact recorded by the Commissioner (Appeals) that the credit balance appearing in the accounts of assessee, did not pertain to the year under consideration, under these circumstances, the assessing officer was not justified in making the impugned addition u/s 68 and as such no fault could be found with the order of the Tribunal which had endorsed the decision of Commissioner (Appeals). In Mahabir Prasad Prem Chand Jain v. ITO (1988) 40 Taxman 35 (Del- Trib )(Tax Mag), it was held that amounts found in the books of assessee were in existence much prior to the beginning of the accounting period corresponding to the relevant assessment year and the same could not, therefore, be treated as the income of assessee earned during the relevant previous year. In Nuchem Ltd. v. Dy. CIT (2004) 87 TTJ (Del-Trib) 166, it was held that revenue had failed to prove that the amounts were credited to the books of account of the assessee in the year under consideration. These amounts were brought forward from earlier years and it is settled law that the addition under section 68 could be made only if the amount was credited in the accounts of the assessee in the relevant financial year.....