TaxTMI 
TaxTMI 
2024 (2) TMI 272
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....gned order dated 13/03/2020 was received by the assessee on 22/06/2020, and the present appeal was filed by the assessee on 28/01/2022. The learned Authorised Representative ("learned AR") submitted that due to the pandemic situation and the lockdown implemented in the State of Maharashtra, the assessee could not file the present appeal within 60 days from the date of receipt of the impugned order. We find that vide order dated 10/01/2022, passed by the Hon'ble Supreme Court, in M.A. no.21 of 2022, in M.A. no.665 of 2021, in Suo-Motu Writ Petition (Civil) no.3 of 2020, the limitation period for filing the appeal was extended upto 29/05/2022. In view of the above, since the present appeal has been filed within the extended time granted by the Hon'ble Supreme Court during the Covid period, therefore there is no delay in filing the present appeal and we proceed to decide the same on merits. 4. In its appeal, the assessee has raised the following grounds:- "1) The Order is bad in law and also on the facts of the case. 2) The Order is bad in law as it is against the express provision of the Circular No. 19/2019 dated 14th August 2019 which provides for compulsory issue of a com....
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.... of the appellant and his standard in the society. 8) On the facts and in circumstances of case and in law, the Ld. CIT(A) erred by confirming an Ad Hoc addition of Rs. 50,000/- on account of various expenses which were allegedly not fully verifiable. 9) On the facts and in circumstances of case and in law, the Ld. CIT(A) erred in not following the ratio of jurisdictional ITAT and the High Court, according to which only profit element embedded in the alleged bogus purchases can be taxed and not the whole of the alleged bogus purchases. 10) The Ld. CIT(A) has erred on the facts of the case by not appreciating the effect of the "addition in totality" on the resulting rate of Gross Profit which, under normal circumstances, is highly unrealistic in any line of business activity. 11) The Ld. CIT(A) has erred in law by not adopting the theory of contemporary correlation by ignoring the inevitable consequences, incidents and corollaries which must inevitably have flowed when an imaginary state of affairs has been treated as real. 12) The above grounds of appeal are supplementary or complimentary to the other grounds of appeal and not to the exclusion of any other ground of appea....
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....e assessee. Being aggrieved, the assessee is in appeal before us. 10. We have considered the submissions of both sides and perused the material available on record. In the present case, it was noticed that the assessee had made purchases from the parties whose names appear in the list of Hawala parties declared by the Sales Tax Department. Notices issued under section 133(6) by the AO to said entities were also not complied with by the said parties. The AO made an addition of the entire amount of the alleged bogus purchases made from the said supplier. We find that before the lower authorities, the assessee was unable to produce the parties. The assessee also failed to produce any supporting documents in the form of delivery challan, lorry receipts, or stock register in support of such purchases. Therefore, from the material available on record it is evident that the assessee has failed to prove the genuineness of the purchases made from the supplier. However, at the same time, the Revenue has not doubted the sales declared by the assessee. Further, it cannot be doubted that without the purchase of material, the assessee cannot carry out the sales. Therefore, it appears to be a ca....
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....ial available on record. During the year under consideration, an amount of Rs. 66,74,029 was shown as sundry creditors in the balance sheet of the assessee. During the assessment proceedings, notices under section 133(6) of the Act were issued to the sundry creditors, however, there was no compliance from these parties. In support of its submission, the assessee provided the ledger extracts and submitted that the payments have been made through the banking channel. The assessee also furnished the sample bills of such parties evidencing the purchases made. However, in the absence of a response from these parties in compliance to notice issued under section 133(6) of the Act as well as the non-production of such parties by the assessee, the addition was made by treating the balance sundry creditors as unexplained. 15. From the perusal of the ledger account of these parties in the books of the assessee, we find that the assessee made the purchases during the year and also made the payment. Accordingly, the balance outstanding was shown as sundry creditors in its balance sheet, which was added by the AO. Therefore, it cannot be disputed that the addition of outstanding trade creditors....
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....section 68 of the Act, more so when the purchase has been accepted as genuine and a deduction therefor has been allowed. In all other cases including the case of a credit representing the sale proceeds of an asset, the provisions of section 68 are applicable and it is for the assessee to prove satisfactorily the nature and source of the monies. ...." 16. We find that in Smt. Madhu Solanki v/s ITO, ITA No. 974/Bang/2009, the coordinate bench of the Tribunal, vide order dated 09/08/2021, after considering the aforesaid decision held that the AO cannot make an addition of trade creditors under section 68 of the Act when the purchases made during the year and payments made during the year have been accepted. The relevant findings of the coordinate bench, in the aforesaid decision, are reproduced as under:- "15. Similar view has been expressed by Hon'ble Delhi High Court in the case of CIT vs. Ritu Anurag Agarwal reported in 2009 (7) TMI 1247 as under:- "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 soles, purchases as well as gross profits as disclosed by the assessee ha....
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.... case of Sureshkumar T Jain. Under these set of facts, we are of the view that the AO could not have made addition of trade creditors u/s 68 of the Act." 17. Therefore, respectfully following the aforesaid decisions, since in the present case the purchases made by the assessee and the payment made during the year have not been disputed by the AO in respect of the parties shown as sundry creditors, we are of the view that the addition in respect of the balance sundry creditors is not sustainable. Accordingly, the AO is directed to delete the same. As a result, ground no. 6 raised in assessee's appeal is allowed. 18. Grounds no. 7 and 8, raised in assessee's appeal, pertain to ad hoc addition of Rs. 75,000 on account of lower household withdrawal and addition of Rs. 50,000 on account of various expenses. 19. The brief facts of the case pertaining to this issue, as emanating from the record, are: During the assessment proceedings, it was observed that some expenses, such as conveyance, staff welfare, stamp duty, sundry expenses, diesel and truck, debited in the profit and loss account are incurred in cash and proper bills and vouchers are not maintain. Accordingly, the AO made an a....