TaxTMI 
TaxTMI 
2021 (10) TMI 218
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....cumstances of the case. 2. The Commissioner of Income tax (Appeals) erred in confirming the addition under Section 68 of the sundry creditors amounting to Rs. 2517730/- standing to the credit of Sridhar & Co as undisclosed sundry credits of the current year. 2.1 The Commissioner of Income tax (Appeals) ought to have appreciated that as per the accounts of the Appellant, there was a debit balance of Rs. 13,38,163 due from very same entity M/s. Sridhar & Co and the resultant amount was a debit balance of Rs. 10,61,462.24 receivable from Sridhar & Co. Hence, the credit entry which was part of the transactions with M/s. Sridhar & Co not be assessed in isolation as unexplained credit. 2.2 The Commissioner of Income tax (Appeals) ought to h....
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....ppreciated that the movement of the transaction whereby Sreenivas Leather Pvt. Ltd. transferred the liability for purchase of goods to M/s. V. Sreenivas & Co with the corresponding debit as due from Sreenivasa Leather Pvt. Limited. Again, V Sreenivasa & Co had transferred this amount of Rs. 22,41,030/- with the corresponding debit in favour of V. Sreenivas & Co as a credit transferred to the Appellant (shown due to M/s. Chandilya Traders) is balanced by the corresponding debit in favour of V. Sreenivasa & Co and the fact that debit has been realized would show that the credit cannot be added as unexplained credit. 5.3 The Commissioner of Income-tax (Appeals) ought to have appreciated that the liability accrued in respect of purchase of le....
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....larly, the AO noticed that the assessee has maintained ledger account in the name of inoperative account and carried a balance of Rs. 10,09,223/-. Since, no details were filed to justify credits in books of accounts of the assessee, the AO has treated the same as cessation of liability and added back to the total income of the assessee. The assessee carried the matter in appeal before the first appellate authority, but could not succeed. The ld. CIT(A) for the reasons stated in his appellate order, sustained addition made by the AO towards sundry creditors for non-furnishing of confirmation letters and other evidences and has also confirmed addition towards cessation of liability. Aggrieved by the CIT(A) order, the assessee is in appeal bef....
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....cannot be considered as cessation of liability. Therefore, he submitted that to verify these facts, the matter may be set aside to the file of the AO. 5. The ld. DR on the other hand strongly supporting order of the AO & the ld. CIT(A) submitted that the assessee has brought out new facts which were not before the AO as well as the CIT(A). Therefore, on this basis the appeal cannot be set aside to the file of the AO. She further submitted that the assessee could not file confirmation letter from creditors before the AO and the ld. CIT(A) and said lapse is continued even before the Tribunal. Therefore, it is amply clear that the assessee has failed to discharge her onus to prove liability shown in books of accounts and hence, the AO was rig....
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....the time of assessment proceedings, which is evident from the finding given by the ld. AO that he went on to make additions only for non-submission of confirmation letters. Therefore, to ascertain the facts with regard to nature of liability and genuineness of such transactions, the matter needs to be re-examined by the AO. As regards, addition towards liability in the name of M/s. Sridhar & Co., it was the explanation of the assessee that there was a credit and debit balance in the same party account, if both balances are netted off, then there is no difference as claimed by the AO. The assessee has filed ledger accounts of debit and credit balances. The fact needs to be verified. Hence, we set aside the issue of addition towards sundry cr....