TaxTMI 
TaxTMI 
2025 (11) TMI 1379
X X X X Extracts X X X X
X X X X Extracts X X X X
....he Assessing Officer under section 143(3) of the Income Tax Act, 1961 [hereinafter referred to as "the Act"] dated 19.12.2019 for the Assessment Year 2017-18. 2. Facts of the Case 2.1 The assessee is a partnership firm engaged in the business of real estate development. The assessee filed its original return of income for the year under consideration on 26.10.2017 declaring a total loss of Rs. 2,02,342/-. The case of the assessee was selected for scrutiny assessment through CASS on the ground that the assessee was engaged in real estate business with high closing stock, higher turnover reported in the service tax return as compared to income disclosed in the ITR, and large investment in immovable properties as compared to the total in....
X X X X Extracts X X X X
X X X X Extracts X X X X
....he extent of Rs. 5,00,000/- and the difference arose for other reasons. However, the Assessing Officer was not satisfied, as no corroborative evidence was filed and even the creditor's balance sheet did not support the assessee's contention. Accordingly, the difference of Rs. 5,00,000/- was treated as unexplained purchase expenditure and added to the income under section 69C of the Act. Similarly, in the case of A J Bricks, the assessee attributed the difference of Rs. 6,99,600/- to nonaccounting of three bills owing to a rate dispute. However, the Assessing Officer noted that such explanation was not supported by bills, confirmations, or proper evidence, and therefore the difference was added as unexplained expenditure under section 69C. I....
X X X X Extracts X X X X
X X X X Extracts X X X X
....erned. The learned CIT(A), therefore, dismissed the appeal of the assessee and upheld the assessment order of the Assessing Officer in toto, thereby confirming the total addition of Rs. 13,05,600/-. 2.8 Aggrieved by the order of CIT(A), the assessee is in appeal before us raising following grounds: 1. The learned CIT(A) erred in law and on facts of the case by treating difference in balance of sundry creditors as unexplained purchases and thereby making addition of Rs. 13,05,600/- to the returned income. 2. Your Appellant, therefore, prays to delete the said addition of Rs. 13,05,600/-. 3. The appellant reserves the right to add, alter or amend any of the grounds of appeal. 2.9 During the course of hearing, ....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... rates and hence were not recorded in the books for the year under consideration. It was pointed out that ultimately the dispute was settled, and the said liability was recognised in the subsequent financial year, i.e., in March 2018, corresponding to Assessment Year 2018-19. Thus, the assessee argued that there was no claim of such purchase in Assessment Year 2017-18, and therefore the difference could not be treated as unexplained purchase expenditure in this year. 2.12 As regards Prahladbhai Ashabhai Prajapati Prop. Jay Shree Chamunda Transport, the assessee explained that the difference of Rs. 1,06,000/- was similarly on account of three disputed bills, namely Bill No. 27 dated 31.10.2016 for Rs. 12,000/-, Bill No. 36 dated 31.12.201....
X X X X Extracts X X X X
X X X X Extracts X X X X
....n the findings recorded by the Assessing Officer in the assessment order and by the learned CIT(A) in the appellate order. 4. We have heard the rival submissions and carefully considered the orders of the lower authorities, the written submissions of the assessee, and the material placed before us. The limited controversy in the present appeal is whether the addition of Rs.13,05,600/-, sustained by the learned CIT(A) on account of differences in the balances of three creditors, namely M/s Rai Granite & Ceramic (Rs. 5,00,000/-), M/s A.J. Bricks (Rs. 6,99,600/-), and Prahladbhai Ashabhai Prajapati Prop. Jay Shree Chamunda Transport (Rs. 1,06,000/-), is justified under section 69C of the Act. 4.1 The Assessing Officer proceeded on the ba....
X X X X Extracts X X X X
X X X X Extracts X X X X
...., in absence of any expenditure having been incurred, the question of treating the difference as unexplained expenditure under section 69C does not arise. 4.4 In respect of M/s A.J. Bricks, the difference of Rs. 6,99,600/- is traceable to three bills which were admittedly disputed by the assessee on account of rate differences. The assessee has demonstrated, with the help of ledger extracts, that these bills were not recorded in its accounts during the year under consideration but were ultimately recognised in the subsequent financial year when the dispute was settled. This factual explanation is borne out of the comparative ledgers of both the assessee and the creditor, which were placed before the lower authorities and again reiterated....