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TMI Blog2014 (9) TMI 200X X X X Extracts X X X X X X X X Extracts X X X X ..... tity of creditors and creditworthiness of the transaction, the AO was directed to make addition in the year of receipt – the order of the CIT(A) is upheld – Decided against revenue. Bogus liability of sundry creditors disallowed – Held that:- CIT(A) has noted that the creditors namely, Mahalaxmi Pipe Suppliers, Dhaval Steel, were outstanding since 01-0-2004 and in case of Patel Hardware, assessee had made purchases in A.Y. 2006-07 and 2007-08 - the addition u/s. 41(1) can only made when the creditor confirms the waiving for all dues receivable and in the year in which the creditor waives of the debts - Revenue has not brought any material to demonstrate that the creditors waived off the amounts due to him nor have they brought any material to controvert the findings of CIT(A) – the order of the CIT(A) is upheld – Decided against revenue. Bogus liability of unsecured loan disallowed – Held that:- Assessee shown the liability of unsecured loans which has been stated to be from ex-partners - CIT(A) has given a finding that the Assessee has not been able to furnish the addresses or whereabouts of the persons claimed to be ex-partners nor has furnished any proof like partnership d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... irst take up Revenue s appeal in ITA No. 2797/Ahd2010 4. The grounds raised by the Revenue read as under:- 1. On the facts and in the circumstances of the case and in law, the Ld. CIT(A), Surat has erred in deleting the addition of ₹ 1,87,18,267/- made on account of unaccounted money shown as booking deposit. 2. On the facts and in the circumstances of the case and in law, the Ld. CIT(A), Surat has erred in deleting the addition of ₹ 2,32,474/- made on account of disallowance of bogus liability in respect of sundry creditors. 3. On the facts and in the circumstances of the case and in law, the Ld. CIT(A), Surat has erred in deleting the addition of ₹ 3,10,000/- made on account of disallowance of bogus liability in respect of unsecured loan. First ground is with respect to deletion of addition of ₹ 1,87,18,267/-. 5. During the course of assessment proceedings, AO noticed that in the proprietary concerns namely Akshar Corporation and Akshar Enterprise, Assessee has shown booking deposits of ₹ 95,16,443 ₹ 96,62,169 respectively aggregating to ₹ 1,87,18,267/-. Assessee was asked to furnish the addresses of persons, thei ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dentity of the person from whom an amount is received, the genuineness of the transaction and the creditworthiness of the said person. In the instant case, the appellant has completely failed to discharge the onus cast upon him u/s. 68 by not even able to establish the identity leave aside the genuineness of the transaction and the creditworthiness of the creditor since, no PAN, confirmation, bank statement, I.T. details, proof of sale, etc., have been submitted and accordingly, the addition to the extent of ₹ 4,60,540 as given in the above table, is hereby sustained being the amount received in the year under consideration as unexplained cash credits u/s. 68 of the Act. As regards the balance amount of addition of ₹ 1,87,18,067 (i.e. ₹ 1,91,78,607 - ₹ 4,60,540) the appellant has submitted that the said booking advances were received in the earlier years and not in the year under consideration and accordingly, the addition for the same cannot be made during the year under consideration. However, it is a fact on record that the appellant has not at all discharged the onus cast upon him u/s. 68 of the Act, in respect of these booking advances also. Further, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... any proceeding under this Act by way of appeal and hence, even in the present case, the AO would be able to re-open the assessment of the appellant or the respective partnership firms, of the earlier years, to tax the booking advances in the year of their receipt, as per the directions given herein before, in view of the provisions of section I50(1) of the Act. As a result the addition for booking advance from customers to the extent of ₹ 4,60,540 is sustained in the current year and the balance addition made in the current year is deleted subject to the above directions and accordingly, the ground of appeal no. (i) stands partly allowed for statistical purpose. 6. Aggrieved by the order of Ld. CIT(A), Revenue is now in appeal before us. Before us, Ld. DR took us through various findings of AO and thereafter submitted that the entire booking advance has been received by the assessee in cash, has not submitted any evidence like confirmation, addresses etc. He further submitted that the assessee was granted various opportunities by the AO to submit the details but asssessee had failed to submit the details in spite of various opportunities and therefore the AO was fully ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the assessee to prove the genuineness, capacity and creditworthiness in the case of unsecured loans and in respect of creditors. The assessee was asked to prove the genuineness of the transaction as well as the liability. AO issued notice u/s. 133(6) to the three creditors namely, Patel Hardware (Rs. 56276), Dhaval Steel (Rs. 72,239/-) and Mahalaxmi Suppliers (Rs. 103959/-). AO noted that the notices were returned back by the postal authorities as the addresses were either incorrect or incomplete. He also noted that assessee expressed its inability to produce the bill etc and further no documentary evidence was submitted by the assessee to prove the genuineness of liability as well as transactions. He therefore held that the sundry creditors aggregating to ₹ 2,32,474/- were not expenses and therefore added the same to the total income. Aggrieved by the order of AO, Assessee carried the matter before Ld. CIT(A). Ld. CIT(A) after considering the submissions of the assessee deleted the addition made during the year by holding as under:- I have considered the facts of the case, the order of the AO and the submissions of the appellant. On verification of the ledger accounts of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed herein before. As a result ground of appeal no. (ii) stands allowed for statistical purpose. 9. Aggrieved by the order of Ld. CIT(A), Revenue is now in appeal before us. Before us Ld. DR took us to the findings of AO and supported his order. Ld. AR on the order hand relied on the order of Ld. CIT(A). 10. We have heard the rival submission and perused the material on record. We find that Ld. CIT(A) after considering the submission of the assessee has noted that the creditors namely, Mahalaxmi Pipe Suppliers, Dhaval Steel, were outstanding since 01-0-2004 and in case of Patel Hardware, assessee had made purchases in A.Y. 2006-07 and 2007-08. He has further held that the addition u/s. 41(1) can only made when the creditor confirms the waiving for all dues receivable and in the year in which the creditor waives of the debts. Before us, Revenue has not brought any material to demonstrate that the creditors waived off the amounts due to him nor have they brought any material to controvert the findings of Ld. CIT(A). In view of these facts, we find no reason to interfere with the order of Ld. CIT(A) and thus this ground of Revenue is dismissed. Ground No. 3 with respect to de ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Act addition could be made only in respect of amounts credited or received during the year under consideration and in the present case, the amount credited in the year under consideration works out to ₹ 12,76,450 as mentioned in the table given herein before whereas, the AO has made addition of ₹ 15,56,450 which is the closing balance as at the year end. Accordingly, the addition as made by the AO is sustained to the extent of ₹ 12,76,450 being the amount credited during the year under consideration. As regards the balance amount, it is seen that an amount of ₹ 4,00,000/- is the opening balance appearing in the name of Shri Ghyanshyambhai K. Patel and the addition for the same could be made in the year in which the said amount was received or credited in the books of accounts of the appellant. Accordingly, I hereby direct the AO to call for the detail of the respective partnership firms in which the said amount is reflected, the details and evidences relating to the partnership firms, call for the year-wise details of amounts received from the said persons, verify their source and ask the appellant to produce the said persons for examination before t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... reopening:- On the facts and circumstances of the case, and as per law the Commissioner of Income-tax (Appeals) erred in issuing directions for reopening assessments in respect of booking advances u/s. 150(1) of the Act, ignoring the impact of subsection (2) of section 150 of the Act. (III) Reopening directions for creditors of goods:- On the facts and circumstances of the case and as per law, the Commissioner of Income-tax (Appeals) erred in issuing directions under sub-section (1) of section 150 in respect of outstanding creditors ignoring the provisions of sub-section (2) of section 150. (IV) Addition u/s. 68 in case of retired partners:- (1) The Ld. CIT(A) erred in confirming addition of ₹ 12,73,450/- in respect of credits in the accounts of Shri Naranbhai Bhikhabhai Patel and Shri Ghanshyambhai Patel in respect of transfer of accumulated amount of share of profits. (2) On the facts and circumstances of the case and as per law, the Ld. CIT(A) further erred in directing reopening u/s. 150(1) of the Act, in respect of a sum of ₹ 4,00,000/- being opening balance of Shri Ghanshymbhai Patel. First ground is with respect to addition of ₹ 4,60,5 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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