TaxTMI 
TaxTMI 
TaxTMI 
2025 (7) TMI 669
X X X X Extracts X X X X
X X X X Extracts X X X X
....Sundry Creditors with respect to Turnover as compared to Preceding year, iii Large increase in Sundry Creditors and reduction in Business Income as compared to preceding year. 3. The assessee is engaged in the trading activity of M.S. Steel. The AO issued various issues u/s 142(1) of eh Act, from time to time which were complied with and after considering the submissions made, the assessment was completed u/s 143(3) at a total income of Rs. 3,05,48,790/- by making following additions/disallowances: (i) Rs. 74,55,681/- as interest on loans (ii) Rs. 23,76,398/- disallowance u/s 14A (iii) Rs. 2,07,10,000/- Unexplained & Unverified Sundry Creditors. 4. Against such order, the assessee filed an appeal before the Ld. CIT(A) who has partly allowed the appeal of the assessee wherein the addition on account of sundry creditors and 14A stood deleted and disallowance of interest was set aside to the file of the AO that certain directions to recalculate the disallowance. 5. Against this order, the Revenue is in appeal before us and assessee has filed the Cross Objection. The Revenue has taken following grounds of appeal: 1. Whether the Ld. CIT(A) erred in facts and circumstances i....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ed that the additional evidences as admitted by Ld. CIT(A) deserves to be ignored and the additions deleted by Ld. CIT(A) are to be restored. 10. On the other hand, Ld. AR of the assessee supports the order of the ld. CIT(A) and submits that in case of the creditors M/s K.D. Sales Corporation, the AO himself observed that during the year purchases of Rs. 99,232/- were made from this party and the remaining amount of Rs. 9,00,768/- was the opening balance. Since purchase made in the year under appeal as well as in preceding year was not doubted, therefore, the outstanding balance at the end of the year should not be treated as unexplained. With regard to the other creditor of M/s Evergreen and Steel & Metal Co., who was the agent and it was agreed between the assessee and this party that in case against the supplies made, payments were not made by M/s S.S. Trading Co., the balance lying in the account of M/s Evergreen would be used against the payment due from M/s S.S. Trading Co. Assessee also filed an agreement in this regard, thus, the Ld. AR requested that the Ld. CIT(A) after considering this facts has rightly deleted the addition, which order deserves to be uphold. 11. Heard....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... agency agreement, the objection of Ld. AO was that above agency agreement does not bear any stamp of both the guarantor firm and the assessee company. The confirmation of above entities is adversely commented for the reason that confirmations bear neither the PAN's and nor the rubber stamp of the confirming party. Taking the first objection first, it is submitted that the agency agreement under comment had been made on the letter head of M/s Evergreen Steel and Metal Company (Guarantor) with the appellant company. The signature appended by each of the above parties shows the name of the entity through typed particulars for which the signing parties have put their respective signatures. If that be the case, since, the parties represented by the signing person is clearly defined, there is no legal requirement to fix the rubber stamp. The objection taken by the Ld AO based on the so-called technical deficiency could have been resolved if the Ld. AO had issued notice to the guarantor entity for verification of the factual situation. The address of the guarantor entity appears on the letter head. In view of the fact that the Ld. AO did not opt to make. verification, the objection....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ose outstanding of Rs. 10,00,000/- has been shown and of M/s Evergreen Steel and Metal Co. from whom amount of Rs. 2,68,60,000/- has been received out of which Rs. 71,50,000/- has been paid back, accordingly Rs. 1,97,10,000/- had remained unverified and the provision of section 68 is clearly attracted in this case. B. Decision: in relation to the addition of Rs, 10, 00,000/- the transaction during the year was only Rs. 99,232/- and taking into account the development during the remand proceedings, this addition under section 68 is directed to be deleted In relation to the addition of Rs. 1,97,10,000/- on careful consideration of the evidence brought on record during the remand proceedings, the addition is not warranted. The AO is directed to delete the addition. This ground is allowed. In the result, the appellant is partly allowed." 13. From the perusal of the observations made by Ld. CIT(A), we find that the Ld. CIT(A) has discussed the issue at length with respect to the evidences filed including the agency agreement between the assessee and M/s Evergreen Steel & Metal Co. according to which it was agreed between the parties that in the event M/s S. S. Trading Co. failed ....