2023 (5) TMI 623

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....tenance of Addition of Rs.9,91,425/- u/s 40(A)(3). 2. The Ld. Commissioner of Income Tax (Appeals) has erred in enhancing the initial addition of Rs.1,63,55,491/-. Observations made, inference drawn and findings recorded for so doing are against the facts, arbitrary, illegal and at any rate highly excessive." 3. It is noted that this appeal was earlier heard by ITAT and order was passed ex-parte vide order dated 17.10.2019. Subsequently, in MA No.41/Del/2020, vide order dated 05.03.2021, the same was recalled to enable the assessee an opportunity to argue the case. Subsequently to this recall, this appeal has been heard by us. 4. Brief facts of the case are that the assessee company is engaged in the business of processing and trading....

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....of totally payment of Rs.1,63,55,491/- is disallowed on account of unverified payment. The assessee's response was that all payments are below 20,000/-, however, the Assessing Officer was of the opinion this cannot be co-related as suppliers did not maintain any books of accounts. Hence, he disallowed 10% of the total purchase amounting to Rs.1,63,55,491/-. 5. Against this order, the assessee appealed before the Ld. CIT(A). 6. The Ld. CIT(A) has not only confirmed the addition but also enhanced the same. The Ld. CIT(A) was of the opinion on the issue of addition of Rs.16,35,549/- proposed to enhance the same on the ground that although the assessee has maintained own books of accounts however, these were not co-related with the books main....

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....n without specifically bringing out how the credit balances of suppliers against purchases made from them could be deemed as remission or cessation of liability in terms of section 41 of the Act. The Ld. Commissioner of Income Tax (Appeals) has further noted that the persons involved are small time butchers who collected meat from various places and supplied in a very crude operation. They were mostly uneducated and illiterate. It was also stated before the Assessing Officer that they could be examined by sending Inspector at their given addresses for which assessee was prepared to bear the cost. But the Assessing Officer did not choose to do so. The Ld. Commissioner of Income Tax (Appeals) has further noted that books of accounts were acce....