TaxTMI 
TaxTMI 
2026 (9) TMI 242
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.... income as per 26AS and books. 4. That the Learned Lower Court erred in making addition of Rs 13,35,356/- on account of alleged Difference with 26AS without bringing on record any evidence that the difference was income of the appellant. 5. That Learned Lower Court erred in giving notice for disallowing expenses of Rs. 1,03,61,521/- of sundry creditors whose confirmations were not received by him 5 but made addition of Rs 2,06,55,949/- u/s 68. 6. That when confirmations of sundry creditors were e-filed by appellant no addition should have been made of Rs 2,06,55,949/- 7. That the Learned Lower Court erred in legal aspects of case in confirming the addition amounting to Rs. 2,06,55,949/- u/s 68 relating to Sundry Creditors even though no sum of money was received by them. 8. That when all books of accounts were e-filed as required in the notice rejecting the books of accounts is bad in law. 9. That when the income returned was more than the profit estimated by the Ld. A.O., 9 the Learned Lower Court confirming the addition made amounting to Rs 8,75,820/-is bad in law. 10. That the order passed is against the merit, circu....
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....nd genuineness of transaction in all cases. He held that the identity is not established only by filing ITR and PAN, similarly furnishing of bank statements does not prove the creditworthiness of the creditors and the completion of paper work by filing of confirmation does not establish the identity and creditworthiness of parties or the genuineness of transactions. He noted that since the assessee had failed to explain anything as far as creditworthiness of the parties and genuineness of transactions are concerned, it was hit by the provisions of section 68 and ld. Assessing Officer thought it fit to make an addition of Rs. 2,06,55,949/- in respect of the balances standing in the name of nine of these sundry creditors. Finally, the ld. Assessing Officer asked the assessee to produce the books of accounts alongwith bills and vouchers. In response, while the ld. Assessing Officer uploaded the ledgers, it submitted that most of the vouchers were at the Mumbai office and therefore, it asked for ten days' time to produce the same. However, the ld. Assessing Officer pointed out that the case was to be barred by limitation before then and the same could not be allowed. Accordingly, the a....
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.... creditors while addition was made under section 68 of the sum being purchases made from these parties. The reliance placed on the judgment of the Hon'ble Apex Court in the case of Kale Khan Mohammad Hanif vs. CIT (1963) 50 ITR 1 (SC) was misplaced because no sum of money had been received by the assessee. It was submitted that for the suppliers who were not responded to notices under section 133(6), the ld. Assessing Officer was empowered to issue summons under section 131 but could not have made the addition in the absence of any money being received from the parties by the assessee. He placed reliance on various case laws wherein the Courts had held that only because the parties had not responded to notices of the Department, addition could not be made in the hands of the assessee. With regard to the rejection of the books of accounts, the assessee submitted that the assessee had been given inadequate time to submit the details called for by the ld. Assessing Officer. The assessee had already declared a net profit of 9.87% as is business results and the ld. Assessing Officer had reduced it by deducting the amount of income tax of Rs. 24,16,884/- from the same. It was submitted t....
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....esultant addition was therefore, the logical consequence of non-verifiable records. Accordingly, on all three issues, the appeal of the assessee was dismissed. However, the assessee was given relief on other grounds of appeal and the appeal came to be partly allowed. 5. The assessee is aggrieved with this order of the ld. CIT(A) and has accordingly come before us. Sh. Ashwani Kumar, C.A. (hereinafter referred to as the ld. AR) submitted before us a reconciliation of Form 26AS with the books of account. It was submitted that there was difference between the amounts given in the Form 26AS and the amount given in the income tax returns, because in the case of two parties namely office of Executive Engineer, NISM Project Division-1 and Directorate of Construction Services and Estate Management, the amounts on which the tax was deducted was inclusive of the figures of service tax, whereas the amounts disclosed by the assessee in its income tax returns were exclusive of the figures of service tax, as the service tax did not constitute the income of the assessee. However, in the books of accounts of the assessee, service tax was reflected separately. On allegation that no documentary p....
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....ue. In any case, it was submitted that the show cause notice issued by the ld. Assessing Officer was on account of expenses claimed to the extent of Rs. 1,03,61,521/- and thereafter addition had been made under section 68 for Rs. 2,06,55,949/- which was clearly bad in law. Accordingly, it was prayed that the addition was fit to be deleted. 6. On the issue of production of books of accounts, it was submitted that the assessee had uploaded its books of account on 20.12.2018 alongwith these 73 ledgers have been e-filed. However, since the appellants main work was being carried out in Mumbai hence some vouchers were to be obtained from there, for which 10 days' time was requested. The ld. Assessing Officer did not grant the necessary time and wrongly held that the details of expenses had not been furnished when the complete ledgers had been e-filed. Accordingly, it was submitted that there was no basis to reject the accounts and apply net profit rate of 8%. Furthermore, it was submitted that after making the disallowance, the ld. Assessing Officer had estimated the net profit at Rs. 65,76,018/- but the net profit disclosed by the assessee in his return was already Rs. 81,09,777/- wh....
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....ack to the file of the ld. Assessing Officer so that the assessee may demonstrate to ld. Assessing Officer regarding the receipt of service tax amount and its subsequent deposit with the Service Tax Authorities, so as to reconcile the difference the amount paid to it by Directorate of Construction of Service and Estate Management and the office of the Executive Engineer, NISM Project Divisoin-1 with the amounts declared by it in its income tax return, as having been received from these parties. Accordingly, ground nos. 3 and 4 are held to be allowed for statistical purposes. 9. Ground nos. 4, 5, 6 & 7 relate to the disallowance of Rs. 2,06,55,949/- under section 68 of the Act. We notice from the submissions made that the assessee was initially issued a show cause notice for disallowing expenses of Rs. 1,03,61,521/-, but subsequently, the disallowance was made of Rs. 2,06,55,949/-. Thus, prima facie it appears that the disallowance was made by the ld. Assessing Officer without giving the assessee adequate opportunity to the assessee to explain its case which would in turn render the additions made to be bad in law. We further notice that having issued a show cause notice for disa....
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....s 'in the sundry creditors (udhar Khareed Khata)' are referable to purchases of sarees on cash basis. As the purchases have been held to be genuine and accepted as such the credits that remained outstanding in such account cannot be treated to have remained unexplained. The balance appearing in this account, which included the disputed addition also, is the sum total of purchases that remained unpaid at the end of the year. As the genuineness of such purchases has not been disputed, rather, the same has been accepted, the credits stand fully explained and no adverse inference is called for, either on fact and law." 10. Thus, once the appellant purchases, sales and trading results have been accepted by the AO, as they have been in this case, because no dispute has been raised with regard to the same, the purchases shown in his books stands automatically accepted. Thereafter, if certain purchases are stated to be made on credit, the credit cannot be doubted without first doubting the purchases. It is entirely possible that the assessee may have made purchases from some other parties than claimed. It is also possible that the assessee may have made purchases from the same parties w....