TaxTMI 
TaxTMI 
2021 (7) TMI 405
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....he Introduction of additional capital during the year could not be considered genuine/ substantiated. (2) On the facts and in the circumstance of the case and in law, the Ld. CIT(A) erred in deleting the disallowance on account of unproved sundry creditor of Rs. 4,40,156/- by failing to discuss the matter in the order passed, though confirmation was not received in this case and also this matter was discussed/reported in remand report. [ iii) It is therefore, prayed that the order of the CIT(A), may be set-aside and that the order of the Assessing Officer may be restored. iv) The assessee craves to add, modify or alter any grounds during the course of appeal proceedings." 3. In addition to the above two grounds, later on, the Revenue has submitted before the Bench the revised ground of appeal, which pertains to ground no.2, originally raised by Revenue, wherein the Revenue has aggrieved by the disallowance on account of unproved sundry creditors of Rs. 4,40,160/-. The Revenue has revised this second original ground and filed the additional ground wherein the Revenue has challenged the disallowance on account of unproved sundry creditors to the tune of Rs. 96,96,244/-. The ad....
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....artners. The requisite information was filed on 24.03.2014. The new capital contribution by Santoshkumar was Rs. 11,41,500/- and by Sureshkumar Rs. 13,14,500/- which were received through cheque from M/s Twins E Power. 8. During the appellate proceedings, the ld CIT(A) had referred this matter to the assessing officer to verify the contention of the assessee. The assessing officer vide remand report dated 20.05.2016, submitted the following observations: "The assessee has furnished details and evidences of capital account of Shri Santoshkumar Nayar & Shri Sureshkumar Nayar in respect of their capital investment in the firm for Rs. 1,67,24,489/-. Break up of capital is as under: Name of Partner Opening Balance Capital Introduction Merest on Capital Remune ration Share of Proflt Withdra wals Closing Balance Santoshkumar Nayar 65,39,305 11,41,500 7,84,716 1,00,000 11,30,823 11,63,214 85,33,130 Sureshkumar Nayar 62,10,756 13,14,500 7,45,291 1,00,000 11,30,823 13,10,011 81,91,359 Total 1,27,50,061 24,56,000 15,30,007 2,00,000 22,61,646 24,73,225 1,67,24,489 Opening balance of current year is verified with assessee's return for A. Y. 2010-11 that....
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.....The undisputed facts are that whatever capital introduced by the partners in their capital account, stands explained. The opening balance does not suffer from any infirmity. Similarly, additions on account of interest, remuneration, profit and entries of withdrawals have also not been disputed. In view of all this, no addition can be made in the hand of the assessee of the total outstanding capital balance at the end of the year in the capital accounts of the partners simply because the partners have not filed their return of income. As the entries of credit and debit in the capital accounts of [ the partners has been admitted as genuine so the addition of Rs. 1,67,24,489/- being the total of outstanding capital balance of the partners in the books of the assessee was deleted by ld CIT(A). We note that Hon`ble High Court of Madras in the case of Smt. B. Jayalakshmi, [2018] 96 taxmann.com 486 (Madras), held that where Commissioner (Appeals) on basis of remand report of Assessing Officer, allowed claim of assessee, revenue was not entitled to maintain an appeal before Tribunal against said order of Commissioner (Appeals). That being so, we decline to interfere with the order of Id. ....
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....ce sheet is deleted. In regard to the sundry creditors of Rs. 1,73,80,759/-, the assessing officer made this addition for want of response from the assessee during the assessment proceedings. However, during the appellate proceedings, the AR of the assessee submitted that the requisite reply was filed on 24.03.2014. In the interest of nature justice a remand report was called for from the assessing officer. In the remand report 20.05.2016, the assessing officer has dealt with this issue at length. Enquiries u./s 133(6) of the Act were made and as a result, the assessing officer observes that in a number of cases either the notices were received back unserved or no reply was received. Similarly, in some cases there were differences in the amount outstanding. A detailed chart was prepared and was submitted along with the remand report by the assessing officer. For the sake of convenience the same chart is reproduced below: As per assessee's reply As per balance sheet as on 31.03.2010. Audit Report and Audited Accounts are available in the file of the assessee. Name Date of issue of 133(6) Reply received from '....
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....en assessee and the party and no reconciliation has been offered by the assessee in this regard. Also in the case of M/s. Bhakti Sales Agency, the account is differ by Rs. 10,150/-. The other cases of M/s Kheteshwar hardware electricals, Hasanali bhai and sons and Vijay Builders there is no discrepancy noted. On the basis of above facts and observations, it is amply clear that in many cases creditors account balances are differ from that of assessee's account. Therefore, legal inference can be drawn that the assessee has either inflated purchases or made out of books payment. In view of the above findings and from all the facts it is evident that creditors account balance of Rs. 1,73,80,759/- is very much in doubt Hence, the AO has made addition in his assessment order u/s.143(3)." When asked to give counter comments on the above observations of the assessing officer, the AR of the assessee submitted as under: "On page 2 & 3 of remand report the A.O. has given elaborate chart regarding opening balance and closing balance of each depositor. The A.O. has also given result of his enquiry under section 133(6) of the Act, upon all the depositors. Notices were served and de....
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.... Rs. 8,22,477/- v) Monica Roofing - Closing Balance is Rs. 2,53,325/- vi) Scaff World - Closing Balance is Rs. 3,40,029/- vii) Shy Engineering - Closing Balance is Rs. 1,83,478/- viii) Bhakti Sales Agencies - Difference Balance is Rs. 10,150/- In respect of all these sundry creditors, the assessing officer observed that the assessee did not file any reply. But the AR of the assessee submitted that notices were not responded by the sundry creditors but the credit entries are supported by bills. Related expenses were allowed and payments were made through cheques. Non-receipt of reply from the creditors cannot attract section 68 or Section 41(1) of the Act. I have given my careful thoughts to the rival submissions and do not agree with the contention of the AR of the assessee. The AR of the assessee was duty bound to explain the credits appearing in the books of accounts and should have produced the related bills and vouchers before the assessing officer during the remand proceedings. The assessing officer has observed no reply in respect of these creditors was filed. In the circumstances, the addition on account of these unexplained credit entries is called for. Hence, t....