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2014 (10) TMI 496 - AT - Income TaxAddition of various unexplained creditor Held that - CIT(A) rightly perused the record and information u/s. 133(6) and also gone through the statement of account of assessee in the books of M/s. Jai Traders as obtained by the AO on 25.11.2010 as well as assessee s books of account showing the account of Jai Traders, and it was found that difference is explained which arise because of the contra entry on account of return of cheques The order of the CIT(A) is upheld Decided against revenue. Cash payment u/s 40A(3) disallowed Violation of principles of natural justice - Held that - The AO made addition for cash payments noted by this party in their accounts - The bill No. 3014 was not brought on record - No copy of accounts of M/s. Mohit Traders received directly by the AO has been made available to the assessee - The assessee denied to enter into any transaction with this party and also sought opportunity from the AO to cross examine this party for making the entry of cash payments in the books of account, but the AO did not supply copy of statement of M/s. Mohit Traders to the assessee and gave no opportunity to cross examine this party - Therefore, principles of natural justice have been clearly violated in the matter - Since no incriminating material is confronted to the assessee and no cross examination of the party is allowed to the assessee, therefore, such entries in the books of account of M/s. Mohit traders cannot be read as evidence against the assessee relying upon Kishan Chand Chelaram vs. CIT, 1980 (9) TMI 3 - SUPREME Court Decided against revenue. Addition of bogus creditors Held that - The purchases are properly entered in the accounts which are supported by vouchers and payments have been made through banking channel - The address of M/s. Marvel Tea Estate India Ltd. is of Jabalpur (MP), but the AO is stated to have issued the summon at Jaipur (Raj.) - The AO accepted the books of account and no discrepancies have been pointed out in the purchase and the book results and the purchases have also been accepted by the department of VAT - The purchases are supported by vouchers and bank statement - CIT(A) specifically noted that no query has been raised regarding these creditors by the AO for holding the same to be in-genuine - such finding itself is sufficient to reject this ground of appeal of the Revenue the order of the CIT(A) is upheld Decided against revenue. Deletion of freight payment expenses Held that - CIT(A) on examination of record rightly found that for the balance amount of freight, the details are provided which is given in purchase account and was filed before the AO at assessment stage - the addition is unjustified - The accounts submitted by the assessee give party-wise payment of freight expenses the order of the CIT(A) is upheld Decided against revenue.
Issues Involved:
1. Deletion of addition on account of unexplained creditor M/s. Jai Traders. 2. Deletion of addition on account of unexplained creditor M/s. Parag Traders. 3. Deletion of addition on account of unexplained creditor M/s. Oom Murga Oil Mills. 4. Deletion of addition on account of disallowance u/s. 40A(3) for cash payment. 5. Deletion of addition on account of bogus creditors. 6. Deletion of addition on account of freight payment. Issue-wise Detailed Analysis: 1. Deletion of Addition on Account of Unexplained Creditor M/s. Jai Traders: The Revenue challenged the deletion of an addition of Rs. 3,72,000/- due to discrepancies found by the AO in the account of M/s. Jai Traders. The AO identified a difference of Rs. 3,72,000/- based on information obtained u/s. 133(6). The CIT(A) found that the difference arose due to a contra entry of Rs. 3,16,130/- related to cheque returns, which was verified through bank statements. The Tribunal upheld the CIT(A)'s decision, noting that the reconciliation provided by the assessee was accurate and no infirmity was pointed out by the Revenue. 2. Deletion of Addition on Account of Unexplained Creditor M/s. Parag Traders: The Revenue contested the deletion of Rs. 2,75,400/- out of an addition of Rs. 2,99,970/- related to M/s. Parag Traders. The AO observed discrepancies in the ledger accounts but the CIT(A) found that the AO had mistakenly referred to M/s. Viral Traders instead of M/s. Parag Traders. Upon verification, the CIT(A) confirmed that only Rs. 24,570/- remained unexplained, leading to the deletion of the remaining addition. The Tribunal agreed with the CIT(A), noting that all entries were reconciled and supported by bills/invoices except for Rs. 24,570/-. 3. Deletion of Addition on Account of Unexplained Creditor M/s. Oom Murga Oil Mills: The AO added Rs. 39,45,359/- due to differences found in the accounts of M/s. Oom Murga Oil Mills. The CIT(A) found that the assessee acted as a consignment agent for the creditor, and all transactions were regular business activities with no discrepancies. The Tribunal upheld the CIT(A)'s findings, noting that the reconciliation provided by the assessee showed no significant differences and the AO's addition was unjustified. 4. Deletion of Addition on Account of Disallowance u/s. 40A(3) for Cash Payment: The AO added Rs. 6,24,000/- based on information from M/s. Mohit Traders regarding cash payments. The CIT(A) found that the AO did not provide the assessee with the opportunity to cross-examine M/s. Mohit Traders or confront the material used for the addition. The Tribunal agreed that the principles of natural justice were violated and upheld the CIT(A)'s decision to delete the addition. 5. Deletion of Addition on Account of Bogus Creditors: The AO added Rs. 2,95,07,855/- due to non-service of summons to creditors Ruchi Soya Refiners and Marvel Tea Estate India Ltd. The CIT(A) found that the AO did not make adequate efforts to verify the creditors and ignored evidence provided by the assessee. The Tribunal noted that the AO accepted the assessee's books of accounts and purchases, and the addition was based solely on non-service of summons. The Tribunal upheld the CIT(A)'s decision to delete the addition. 6. Deletion of Addition on Account of Freight Payment: The AO disallowed Rs. 6,28,678/- out of Rs. 6,51,478/- claimed under freight expenses due to lack of evidence. The CIT(A) found that the assessee maintained two separate accounts for freight payments and provided sufficient evidence that was overlooked by the AO. The Tribunal upheld the CIT(A)'s decision, noting that the assessee had substantiated the freight expenses with proper documentation. Conclusion: The Tribunal dismissed the Revenue's appeal, upholding the CIT(A)'s decisions on all grounds. The Tribunal found that the CIT(A) had correctly appreciated the evidence and the principles of natural justice, and the AO's additions were not justified.
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