TaxTMI 
TaxTMI 
2022 (6) TMI 469
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....ellant on 5 December 2019 for the aforesaid assessment year: 1.0 Ground No.1: Confirming the addition On the facts and in the circumstances of the case, the Hon'ble CIT(A) has erred in law and in facts of the case confirming the addition of 100% creditors totaling to Rs. 19.85 crores as unproved creditors. 2.0 Ground No. 2: Reassessment proceedings not based on any new material facts On the facts and in the circumstances of the case, the Hon'ble CIT(A) has erred in law and in facts of the case failed to appreciate that reassessment proceedings were not based on any new material facts. 3.0 Ground No.3: Appellant has discharged the burden & proved qenuiness. Revenue has not given any evidence to discharge the burden On the facts and in the circumstances of the case, the Hon'ble CIT(A) has erred in law and in facts of the case failed to appreciate the fact that the Apex Court ruling of Sumati Dayal v. CIT relied is not applicable and Appellant has discharged the burden to prove the creditors and debtors are genuine and submitted all the necessary explanations, bank statements, ledger confirmations and documentary eviden....
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.... On the facts and in the circumstances of the case, the Hon'ble CIT(A) has erred in law and in facts of the case failed to appreciate that the aforesaid addition have not been ; made under any section of the Income Tax and non-mentioning the precise provision of law makes the impugned addition bad in law." 4. The brief facts of the case are that the assessee is a proprietor of Supriyam Diamond and is engaged in resale of cut and polished diamonds. The assessee has filed the return of income on 29/11/2014 disclosing a total income of Rs.23,76,380/- and the return was processed u/s 143(1) of the Act. The assessment was completed u/s 143(3) of the Act with the assessed total income of Rs.35,65,060/-. The Assessing officer(A.O.) has received information with respect to transactions of Supriyam Diamond being high value transfers with specific group consisting of seven entities and enquiry was conducted. The A.O. has reason to believe that the income has escaped assessment and issued notice u/s 148 of the Act. Whereas the assessee has filed a letter on 17/04/2018 to treat the return of income filed earlier as due compliance. Subsequently, notice u/s 143(2) and 142(1) of t....
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....and on merits, the assessee has proved the genuineness of transactions and submitted the detailed information of creditors outstanding balances before the lower authorities and the creditors balances are paid in the subsequent years. The Ld.AR substantiated the submissions with the voluminous paper book and judicial decisions and prayed for allowing the appeal. Contra, the Ld.DR supported the order of the C IT(A). 8. We have heard the rival submissions and perused the materials on record. The Ld.AR submitted that the CIT(A) has erred in confirming the disallowance of sundry creditors balances overlooking the factual submissions and the material information on the bills and the valid reasons for delay in making the payments to sundry creditors. The Ld.AR has argued on the merits of the case explaining the opening balances carried forward from earlier years and transactions and payments made during the current financial year. The Ld.AR demonstrated the copy of confirmation of creditors ledger accounts for F.Y.2013-14 at page 96, 97, 98 & 99-102 of the paper book . The Ld.AR emphasized that the payments were made to the creditors, which is a running account and the bills were raise....
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....g the addition On the facts and in the circumstances of the case, the Hon'ble CIT(A) has erred in law and in facts of the case confirming the addition of Rs.31,17,795 being 0.55% of closing creditors and debtors as bogus. 2.0 Ground No. 2: Reassessment proceedings not based on any new material facts On the facts and in the circumstances of the case, the Hon'ble CIT{A) has erred in law and in facts of the case failed to appreciate that reassessment proceedings were not based on any new material facts and conditions required for reassessment proceedings were not fulfilled. 3.0 Ground No.3: Appellant has discharged the burden & proved genuiness. Revenue has not given any evidence to discharge the burden On the facts and in the circumstances of the case, the Hon'ble CIT(A) has erred in law and in facts of the case failed to appreciate the fact that the Apex Court ruling of Sumati Dayal v. CIT relied is not applicable and Appellant has discharged the burden to prove the creditors and debtors are genuine and submitted all the necessary explanations, bank statements, ledger confirmations and documentary evidences; the Revenue has no....
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....s.31,17,795/-are added to the total income of the assessee. Penalty proceedings u/s.271(l)(c) of the I.T. Act, 1961 are initiated separately for furnishing inaccurate particulars of income." 14. The A.O. has made addition of Rs.31,17,795/- by estimating Gross profit(GP) @ 0.55%, treating both the sundry creditors and sundry debtors as bogus and passed order u/s 143(3) r.w.s. 147 of the Act determining the total income of Rs.66,74,870/- vide order dated 31/12/2018. Aggrieved by the order, the assessee has filed appeal before the CIT(A). The CIT(A) considered the grounds of appeal, findings in the scrutiny assessment and submissions of the assessee and has confirmed the action of the AO and dismissed the assessee's appeal. Aggrieved by the order of the CIT(A) order, the assessee has filed an appeal before the Honble Tribunal. 15. At the time of hearing, the Ld.AR submitted that the CIT(A) has erred in confirming the addition @ 0.55% of both debtors and creditors balances, where the A.O. has applied the same ratio for debtors and such impugned addition cannot be made in respect of sundry debtors. Prima facie, the A.O. has overlooked the facts that the sundry creditors are brough....