TaxTMI 
TaxTMI 
2020 (1) TMI 955
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..... During the course of assessment proceedings, the AO noted that on a total turnover of Rs. 7.72 crores, the assessee has shown a GP of Rs. 24.02 lakhs which is 3.10% as against the total turnover of Rs. 3.40 crores with GP of 15.87 lakhs which comes to 4.67% in the preceding assessment year. According to the AO, no substantial reasons with evidences were furnished by the assessee to justify the fall in the GP rate. Therefore, in order to verify the actual trading results, the AO asked the assessee to produce the details of purchases and job work along with confirmations in respect of sundry creditors. From the various details furnished by the assessee, the AO noted that the following amounts were payable to three sundry creditors as on 31st March, 2014 the details of which are as under:- Sr. No. Name of the Party Amount 1. M/s Say my Choice Rs. 11,14,675/- 2. M/s Inder Chand Shashi Kant Rs. 28,67,614/- 3. M/s Ganapati Impex Rs. 8,35,472/- 4. He, therefore, asked the assessee to provide address, furnish confirmations from the said parties or, alternatively, produce the bills along with supporting evidences that the material has been received and to prove that ....
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.... of the Hon'ble Allahabad High Court in the case of CIT vs. Pancham Dass Jain, 205 CTR 444, he submitted that the Hon'ble High Court in the said decision has held that the provisions of section 68 cannot be attracted to the outstanding sundry creditors being purchases made by the assessee on credit where the department has accepted the purchases, sales as also the trading results disclosed by the assessee. 9. Referring to the decision of the Hon'ble Delhi High Court in the case of CIT vs. Ritu Anurag Aggarwal (2010) 2 taxmann.com 134, he submitted that the Hon'ble High Court in the said decision has held that when there was no disallowance for corresponding purchase, no addition could be made u/s 68 of the Act where the creditors' outstanding related to purchases and trading results were accepted by the AO. 10. Referring to the decision of the Hon'ble Punjab & Haryana High Court in the case of PCIT vs. Kulwinder Singh reported in 298 CTR 389, he submitted that the Hon'ble High Court in the said decision has held that the provisions of section 68 are not attracted to amounts representing purchases made on credit. 11. Referring to the decision of the coordinate Bench of the Tribun....
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....cer and the ld.CIT(A) and the paper book filed on behalf of the assessee. We have also considered the various decisions cited before us. We find the AO, in the instant case, invoking the provisions of section 68 of the IT Act, 1961, made addition of Rs. 48,17,761/- in respect of the following three creditors:- Sr. No. Name of the Party Amount 1. M/s Say my Choice Rs. 11,14,675/- 2. M/s Inder Chand Shashi Kant Rs. 28,67,614/- 3. M/s Ganapati Impex Rs. 8,35,472/- 16. The reason for making the addition was that the assessee did not furnish any bills, confirmations from the aforesaid parties, subsequent bank statements reflecting the payments and also failed to discharge the onus of proving that the material/stock has been received and put to use and was reflected either in sales or in closing stock with supporting evidence. We find the ld.CIT(A), after calling for a remand report from the AO and rejoinder of the assessee to such remand report, sustained the addition. While doing so, he observed that the assessee could not substantiate the genuineness of the transaction with the aforementioned three parties and the claim of genuineness of the creditors cannot be al....
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.... It would be worthwhile to mention that the aforesaid creditors shown in the books of accounts, are the sundry creditors, from whom as per the assessee, he had made purchases. They are thus the creditors. The Tribunal found that even if it is accepted that the books were rejected, significantly the Assessing Officer had not disallowed the purchases from those creditors nor the trading results have been disturbed. In this behalf, learned counsel for the assessee also drew our attention to the orders of the AO, as per which the assessee had shown the total turnover of Rs. 1,03,44,054/-, on which gross profit rates declared was 68.94% as compared to sales of Rs. 21,18,994/- in the previous year. The AO accepted the aforesaid figures and categorically observed as under: "The GP rate as well as the sales has been substantially increased during the year in comparison to the last year. Sales trading results are not disturbed." 3.This finding of AO remained undisturbed before the CIT(A) as well and has been accepted by the ITAT. Proceeding on this basis, the ITAT observed that the sales, purchases as well as gross profits as disclosed by the assessee have been accepted by the Assessing....
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....alance sheet. The assessee is a road contractor. He received material for the construction of the road. The amounts in question represented purchases made on credits. The provisions of Section 68 of the Act are clearly not attracted to amount representing purchases made on credits, as is also held in 'CIT Vs. Pancham Dass Jain', 205 CTR 444 (All). The assessee raised this issue by way of written submissions (APB 37 to 160, relevant portion at para-5, on page 43) dated 10.05.2014 filed before the CIT(A). The ld. CIT(A) has, however, not addressed this grievance at all and merely upheld the addition made under Section 68 of the Act. On behalf of the assessee, a comparative chart of net profit rate of the assessee for the assessment years has been filed before us. In the earlier years also, no such addition was made. For the assessment year 2007-08, under scrutiny assessment, the assessment was made at 8%. The position remained much the same for the assessment year 2008-09. The year under consideration is assessment year 2009-10. The material supplied to the assesseee by the concerned department is part of the assessee's turnover. The net profit rate of the assessee for the year und....
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.... the Revenue. There will be no order as to costs." 21. We find the Delhi Bench of the Tribunal in the case of ITO vs. Swati Housing & Construction (P) Ltd., while dealing with an identical issue, has observed as under:- "15. Lastly in so far as addition on account of sundry creditors are concerned, Ld. DR submitted that all the sundry creditors remained unverified even in response to enquiries made by the AO u/s 133(6). AO at page 5 of the assessment order has clearly mentioned that assessee has not filed any supporting bills/ vouchers or books of accounts. Accordingly, he submitted that such an addition has to be made u/s 68 and in support he relied upon the following judgment of Hon'ble Karnataka High Court in the case of Rekha Krishna Raj Vs. ITO [2013] 215 Taxman 159/33 taxmann.com. 16. On the other hand, Ld. Counsel for the assessee submitted that assessee has filed copy of ledger account of the sundry creditors which gives the opening and closing balances as well as bill numbers, details of payment made and additions made during the year. Ld. AO without even verifying the books of accounts or the records as produced before him has made the entire addition u/s 68 when....