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TMI Blog2014 (1) TMI 398X X X X Extracts X X X X X X X X Extracts X X X X ..... istory, local knowledge and the circumstances pertaining to the assessee. Unexplained credit - Held that:- During the stage of the remand proceeding, the assessee had filed by way of affidavits confirmations from the creditors. Subsequently, three remaining creditors had also filed confirmations - The Tribunal has compared the same with the list of sundry creditors in the balance-sheet for the earlier year ending on 31 March 2007 - It has been found that the creditors have provided building material for civil construction work and road roller and JCB machine for the use of the business activities of the assessee - If some outstanding amount was left due at the end of the financial year, which was confirmed by the creditors, this could n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ear, the assessee had derived income from contract work and bank interest. An audit report under Section 44AB of the Act was filed. Since the assessee failed to produce its books of account, the Assessing Officer issued a notice to show cause why addition should not be made of unconfirmed creditors and proposed to dis-allow 50% of the expenses. Accordingly, the Assessing Officer made addition of Rs.1.25 crores as unconfirmed creditors and dis-allowed 50% of the expenses in the sum of Rs.9.16 crores. The CIT (A), in appeal, called for a remand report from the Assessing Officer. The CIT (A) by his order dated 10 February 2012 held that the Assessing Officer was justified in carrying out a best judgment assessment under Section 144 of the Ac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r appeal the assessee had declared a net profit rate of 4.5%. Moreover, the Tribunal has declined to interfere on the ground that even in the case of a best judgment assessment it is well settled that the Assessing Officer cannot act capriciously and the assessment has to be made on the basis of previous history, local knowledge and the circumstances pertaining to the assessee. On the second issue, the Tribunal has held that during the stage of the remand proceeding, the assessee had filed by way of affidavits confirmations from the creditors. Subsequently, three remaining creditors had also filed confirmations. The Tribunal has compared the same with the list of sundry creditors in the balance-sheet for the earlier year ending on 31 Marc ..... X X X X Extracts X X X X X X X X Extracts X X X X
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