TaxTMI 
TaxTMI 
2026 (9) TMI 843
X X X X Extracts X X X X
X X X X Extracts X X X X
....SS for complete scrutiny for the reason high credits/liabilities & business expenses. Statutory notice u/s 143(2) followed by notices u/s 142(1) of the Act were issued from time to time which were duly replied. The AO observed that the assessee has shown sundry creditors of more than INR 18.00 crores however, as per the detailed filed it was found that in respect of one of the creditors namely M/s AMSEC System (Proprietor Shri Manit Verma) for which no explanation was tendered thus, the AO made the addition of INR 3,76,26,868/- i.e. closing balance appearing in the account of such party as unexplained credits u/s 68 of the Act and further invoked the provisions of section 115BBE of the Act for charging special rate of tax. Besides this, the AO has made addition on account of difference in balance of sundry creditors as per Balance Sheet and total of the list of sundry creditors as provided by the assessee. The AO has further made disallowance of INR 13,42,049/- out of certain expenditure and further made disallowance of INR 2,06,10,716/- @ 30% u/s 40(a)(ia) of the Act being paid to M/s. Aditya Infotech Ltd. on which no TDS was deducted u/s 194Q of the Act on the purchases made from....
X X X X Extracts X X X X
X X X X Extracts X X X X
....re was closing balance of INR 3,76,26,868/-. The AO has held the credit balance appearing at the closing day of the previous year in the name of the said party solely for the reason that assessee has not filed any supporting documents and the notice issues u/s 133(6) of the Act to M/s AMSEC System remained non-compiled. Accordingly, ld. CIT(A) observed that since the assessee has not filed any details therefore, the said creditor was held as bogus. 9. Before us, ld.AR for the assessee submits that books of accounts of the assessee were accepted and trading results have not been doubted. The purchases made from M/s AMSEC System have been accepted and corresponding sales have also not been doubted. The assessee has made purchases of more than INR 3.15 crores during the year from the said parties and all the bills and vouchers are available. Ld.AR submits that the case of the assessee was assessed through NFAC where books of accounts could not be uploaded however, all the information and supporting material is available with it and the same could be submitted if desired so. The AO never asked the assessee to file the bills and vouchers of the said party therefore, they were not sup....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... year under appeal as well as in preceding AYs as unexplained. It is observed that during the year under appeal, assessee has made total purchases of more than INR 3.15 crores from the said party which was duly recorded in the books of accounts and corresponding sales made, have been accepted. The AO has not raised any doubts about the purchases and sales and the stock declared by the assessee which inter-alia includes the material purchased from the said party was accepted. For the sole reason that no compliance was made in response to notice issued u/s 133(6) of the Act, closing balance of the creditor was held as unexplained credit. Once the purchases have been accepted from the said party and it is also a matter of fact that the outstanding balance have been repaid substantial in succeeding AY and the assessee has been able to demonstrate that due to fire incident, already have not been able to comply with the notices issued u/s 133(6) of the Act. 12. Before us, ld.AR for the assessee has filed additional evidences in the form of following:- (i) Copy of letter dated 26.12.2025 issued by AMSEC System transaction with the assessee from FY 2020-21 to 2025-26 upto 26.12....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ch Ltd. has collected the tax at source on the sales made to the assessee and therefore, assessee was not required to deduct the tax u/s 194Q of the Act on the payments made. For this, ld. AR for the assessee placed reliance on the CBDT Circular No.13/2021 dated 30.06.2021 wherein it is clarified that if the transaction is in purview of sales u/s (1H) of section 206 of the Act, the tax is required to be deducted u/s 194Q however, for any reason, the tax has been collected by the seller before the buyer could deduct the tax u/s 194Q, such transaction would not be qualified for tax deduction again by the buyer. Ld.AR thus, submits that in view of the aforesaid Circular, the disallowance made u/s 40(a)(ia) of the Act be deleted. 16. On the other hand, ld. Sr. DR for the Revenue vehemently submits that Circular is now filed and should not be admitted at this stage. Alternatively he requested to remand the matter back to the file of AO for making necessary verification of the facts. 17. Heard the contentions of both the parties and perused the material available on record. At the outset, it is observed that main allegation of the AO is that assessee has not deducted tax at source ....