2014 (1) TMI 1139 - AT - Income Tax

Supressed purchases Held that - The ld. AO has issued notice u/s 133(6) of the IT Act to M/s. Hadia Steel Limited - A perusal of the information as provided by the seller when compared to the ledger account maintained by the assessee clearly show that all the purchases made by the assessee from the said party is a continuous account - The purchase account of the assessee also clearly shows that the purchases from the said party are duly reflected in the ledger - The ld. CIT(A) has verified the reconciliation of the figures and no defect has been found. Cessation of liability Held that - The assessee is the creditor in respect of M/s. Haldia Steel Limited - It can never be said that Haldia Steel Ltd. has surrendered its claim against the assessee - The finding of ld. CIT(A) in holding that the provision of section 41(1) of the IT Act in respect of closing balance of assessee would not apply, is right. Disallowance of labour charges, loading and unloading expenses Held that - No defect in the books of account or accounts maintained by the assessee, in respect of the labour charges or loading or unloading charges have been pointed - The ld. CIT(A) was right in deleting the estimated addition made by the AO - Decided against Revenue.

Summary

Issues involved:
- Appeal against order of ld. C.I.T.(A)- Durgapur for Assessment year 2009-10.
- Ground 1: Deletion of addition on suppressed purchases and profit.
- Ground 2: Deletion of addition on cessation of liability.
- Ground 3: Deletion of addition on account of 5% of labour charges.
- Ground 4: Request for modification of grounds of appeal.

Ground 1 - Suppressed Purchases and Profit:
The Revenue contended that the assessee made undisclosed expenditures on purchases from M/s. Haldia Steel Ltd., leading to an addition of Rs.3,05,395/- and Rs.7,450/- towards profit. The ld. CIT(A) deleted these additions, citing reconciliation of accounts and potential impact on the appellant's GP. The tribunal upheld the CIT(A)'s decision, emphasizing the reconciliation of figures and lack of defects in the assessee's records.

Ground 2 - Cessation of Liability:
The AO added back Rs.15,45,045/- as a cessation of trade liability due to discrepancies between the assessee's and M/s. Haldia Steel Ltd.'s accounts. The ld. CIT(A) reversed this addition, stating that Section 41(1) did not apply as the creditor had not withdrawn the claim. The tribunal agreed with the CIT(A), highlighting that the creditor had not relinquished the claim against the assessee.

Ground 3 - Labour Charges Addition:
The AO disallowed 5% of labour charges and loading/unloading expenses due to non-compliance with TDS provisions. The ld. CIT(A) deleted this addition, and the tribunal upheld this decision, noting the absence of defects in the assessee's accounts related to these charges.

Ground 4 - Modification Request:
The Revenue sought the flexibility to add, alter, or delete grounds of appeal during the appellate proceedings. However, this request was not discussed further in the judgment.

In conclusion, the tribunal dismissed the Revenue's appeal, upholding the ld. CIT(A)'s decisions on all grounds. The order was pronounced on 10.12.2013, emphasizing the correctness of the CIT(A)'s findings and the lack of defects in the assessee's records regarding the disputed issues.