TaxTMI 
TaxTMI 
2016 (2) TMI 1408
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....see had undertaken the construction work of Railway Department and P.W.D. In respect of the above ground, the observation of the AO was that the assessee had shown an amount of Rs.63,23,855/- as "sundry creditors". The AO has mentioned that the accounts of the assessee were audited under section 44AB of the Act and the said figure was reported as per Schedule-3 of the audit report by the auditors. The AO has thereafter mentioned the names of the parties as under: Sl. No . Name of the parties Outstanding amount in the books of the assessee Outstanding amount in the books of the parties Remarks 1. M/s. Anchal Steels 8,32,484/- Nil Copy of account/audit report filed 2. M/s.Jai Bhawani Traders 10,57,687/- Nil No such party exists 3. M/s. Prakash Traders 1,90,530/- - No such party exists 4. M/s. Sanjay Steel Traders 13,76,170/- Nil Copy of a/c filed 5. M/s. National Steels 8,64,821/- Nil Copy of account/audit report filed 6. M/s. S.B. Sharma 4,37,419/- Nil Copy of account filed 7. M/s. Kanhaiya Traders 4,85,442/- - No such party exists 8. M/s. Agarwal Traders ....
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....total addition of Rs. 60,15,897/-, the FAA has discussed the party-wise transaction. He has expressed an opinion that the addition u/s.68 could only be made when the conditions of the said section are not satisfied. Ld CIT(A) has thereafter arrived at a conclusion that since the issue was not of a 'cash creditor', but the issue pertained to the 'sundry creditors', therefore, a reasonable addition was required to be made considering the book results of the assessee. According to him, net profit rate of 5% was accepted in the past by the revenue department. Hence, on the balance amount, he has computed the net profit @5% thus arriving at the figure of Rs. 3,83,088/- as per the following paragraph: "Having concluded that the action of the AO in making addition of the amount of difference is not justified, the other aspect of the case about the unverifiability of the creditors also deserves to be considered. Although the difficulty on the part of the appellant to get the amount of outside parties verified cannot be ignored, it is the bounden duty of the appellant to prove the transactions undertaken by him. 1 have also taken note of the fact that the enquiry le....
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.... compilation filed before us has further revealed that the AO has not cross examined the entries passed by those parties respectively in their books of account. The difference was stated to be due to wrong mention of opening and closing balance. Otherwise, the transactions recorded in the respective accounts were duly matched with the accounts of the assessee. We have also been informed that the respective reconciliations submitted has not been doubted by the Assessing Officer. The assessee has also furnished bills of the purchases made by those parties and in support, photocopies of bills have also been filed. The transactions carried out during the financial year and recorded in the respective accounts have matched with each other. In the light of above factual background, we have made an observation in the Court that the AO was under confusion whether the nature of transaction was to be added u/s.68 of I.T. Act or not. When the AO was aware that the parties were supplying material and purchases have been made then there was no reason as to why he had invoked the provisions of section 68 of the I.T. Act. This question remained un-answered even by the representative of the Revenue....
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....assessee has furnished the capital account and on that basis, the AO has found that there was a peak credit as on 20.3.2006 amounting to Rs. 4,67,600/-, which was held as unexplained investment by the assessee by invoking the provisions of section 69B of the I.T. Act, 1961. 12. When the matter was carried before the first appellate authority, the ld CIT(A) has granted relief as follows: "I have considered the written submission of the appellant. The appellant contended that there was difference of Rs. 15,000/- in calculation of peak investment of 20.03.2006, which is clearly verifiable from the peak investment chart prepared by the AO in para 4 of the assessment order. The claim of the appellant is found to be acceptable. In support of the opening cash balance of Rs. 86,325/-, the appellant submitted before me a copy of his balance sheet as on 31.03.2005, which is also stated to be filed before the AO. The balance sheet of 31.03.2005 submitted by the appellant is an evidence of the opening cash balance and I do not see any reason to reject the same. In view of this, the claim of the appellant deserves to be accepted. Therefore, out of the addition of Rs. 4,67,600/- made....