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TMI Blog2014 (4) TMI 934X X X X Extracts X X X X X X X X Extracts X X X X ..... adictions in AO's approach in giving treatment to the closing balances of sundry debtors - The opening balances which could be verified from the books of accounts of the assessee cannot be added in current year's income as done by the AO – the AO was not justified in making addition u/s 68 or u/s 69 of the Act – Decided against Revenue. - ITA No.5134/Del/2011 - - - Dated:- 5-12-2013 - G D Agrawal, VP And A D Jain, JJ. For the Appellant : Shri Sanjay Malik, Adv. For the Respondent : Smt Keyur Patel, Sr. DR ORDER:- PER : A D Jain This is department s appeal for Assessment Year 2008-09 against the order dated 24.08.2011, passed by the CIT (A), Muzaffarnagar, contending that the Ld. CIT (A) has erred in deleting the addition of Rs. 34,51,095/-, made by the Assessing Officer u/s 68 of the IT Act on account of unexplained sundry debtors. 2. The facts of the case as available from the record are that the assessee is an individual deriving income from trading of medicines in the name and style of M/s Manish Kumar Co. Return declaring income of Rs.1,37,750/- was filed on 10.11.2008. During the course of assessment proceedings, it was gathered by the A.O. that ther ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ,650/- 10. M/s Raman Medical Agency Rs. 60,136/- 11. J.P. Pharmaceuticals Rs.3,06,048/- 12. M/s Roded Pharmaceuticals (P) Ltd, Rs.4,25,407/- Rs.21,58,029/- 2.4 Hence it was inferred by the A.O. that the debtors were not true and correct. It has been mentioned by the A.O. that the assessee vide notice dated 04.08.2010 was already informed that in seven cases of debtors the enquiry letters sent on 23.07.2010 by speed post had been received back unserved. Thus it was held by the A.O. that the debtors were not verifiable. It has further been mentioned by the A.O. that in the case of debtor M/s Krishna Distributors the balance shown by the assessee was at Rs.65,509/- but as per party's books the same was shown as Nil. In the case of M/s Raman Medical Agency the party had intimated that no business was done during the year. 2.5 In response to the above show cause notice, it was contended that the debtors could not be said to be not genuine solely on the ground that the notices were neither complied with nor received back unserved. Regarding the difference in closing balance of the de ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... al Agency Rs.3,96,092/- Copies of sale invoice issued have been furnished. According to the A.O. this did not confirm the balance as on 31.03.2008. 2.10. Further for the following reasons debit balances shown by the assessee were held by the A.O. as not true and correct. (i) That during the period 04.08.2010 to 28.10.2010 the assessee could not obtain confirmations from the debtors and furnish the same. (ii) The assessee admitted by filing the copies of account in 10 cases that business still continued. Then what prevented him to obtain from these debtors confirmations as on 31.03.2008. (iii) The assessee was asked to furnish afresh address if changed. However, he chose not to furnish the afresh addresses. (iv) The assessee did not state that he had any dispute with any of the debtors resulting in non-cooperation in furnishing confirmation either to him or to the department. 2.11 In view of the above facts it was held by the A.O. that the assessee deliberately did not obtain and furnish confirmed copies of account of the debtors. According to the A.O., it was not a case where the business was closed down and the debtors were not cooperating. The be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... here were, definitely, business transactions with such debtors. The assessee had filed confirmation letters of the debtors before the Assessing Officer and where there were non-compliance the Assessing Officer did not summon the parties, for which, the assessee had duly made a request to the Assessing Officer; and that the Assessing Officer held the debtors to be bogus without conducting necessary inquiries. The Ld. CIT (A), while asking for a remand report from the Assessing Officer, had specifically asked him to justify the addition of bogus sundry debtors as cash credit u/s 68 of the Act. In the remand report, as observed by the Ld. CIT (A), the Assessing Officer indirectly admitted the provisions of Section 68 of the Act having been wrongly applied. He, however, sought to invoke the provisions of Section 292B of the Act and sought the addition to be taken as having been made under the provisions of Section 69 of the Act, none of which were not accepted by the Ld. CIT (A). 7. The department maintains that in the facts of the case, the Ld. CIT (A) should have either investigated the matter himself or should have directed the Assessing Officer to do so and that the matter requir ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... department and such approach could not be taken merely on the basis that the outstanding balances of sundry debtors could not be verified. Be it as may, since 'cash-in-hand' could not be treated as income in appellant s hands by any stretch of imagination either u/s 68 or u/s 69 of the I.T. Act, the addition made by the A.O. does not stand. It is noticed that there are inherent contradictions in A.O's approach in giving treatment to the closing balances of sundry debtors. The opening balances which could be verified from the books of accounts of the appellant cannot be added in current year's income as done by the A.O. Further, as pointed out by the appellant in the written submissions and rejoinder, even the replied of the parties were not taken in proper perspective which have been elaborated in the preceding paras which are not repeated again individually. The appellant has further furnished confirmed copies of accounts, copies of bills, G,R., copy of details of VAT, letters from transporter regarding confirmation of goods delivery which had shifted the 'onus' from assessee onto asserted by the A.O. in his assessment order. Unless the A.O. is able to controvert so many ..... X X X X Extracts X X X X X X X X Extracts X X X X
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