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TMI Blog2014 (11) TMI 66X X X X Extracts X X X X X X X X Extracts X X X X ..... t aside and the matter is remitted back to the AO for adjudication – Decided in favour of assessee. Admissibility of expenses – Applicability of judgments relied upon by assessee - Held that:- Before the CIT(A) various judgements were relied upon by the assessee in support of its contention - There is no whisper as to how these judgements are not applicable on the facts of the present case – thus, the matter is remitted back to the AO for fresh adjudication – Decided in favour of assessee. - I.T.A. No.20/Ahd/2012 - - - Dated:- 15-10-2014 - SHRI ANIL CHATURVEDI And SHRI KUL BHARAT, JJ. For The Appellant by : Shri G.C. Pipara, A.R. For The Respondent by : Shri Subhash Bains,CIT-DR ORDER PER SHRI KUL BHARAT, JUDICIAL MEMBER : This appeal by the Assessee is directed against the order of the Ld.Commissioner of Income Tax(Appeals)-XIV, Ahmedabad ( CIT(A) in short) dated 21/10/2011 pertaining to Assessment Year (AY) 2008-09. The Assessee has raised the following grounds of appeal:- 1.1 The order passed u/s.250 on 21/10/2011 for A.Y. 2008-09 by CIT(A)-XVI, Abad upholding the additions of ₹ 5,37,21,000 and disallowance of ₹ 68,05,325 made by AO is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e to furnish the confirmations of all persons except of M/s.Jupiter Business Ltd. Of ₹ 3,45,00,000/- and of M/s.Sudarshan Enterprise of ₹ 1,90,65,000/-. The AO made addition of ₹ 5,37,21,000/- u/s.68 of the Act and disallowed the expenditure amounting to ₹ 68,05,325/-. Against this, the assessee filed an appeal before the ld.CIT(A), who after considering the submissions dismissed the appeal. 3. Ground No.1.1 of the assessee s appeal is general in nature requires no independent adjudication. 4. Ground No.2.1 is against the denial of additional evidences. Apropos to ground No.2.1, the ld.counsel for the assessee had made written submissions and reiterated the statement of facts. 4.1. On the contrary, the ld.CIT-DR Shri Subhash Bains submitted that there is no infirmity in the order of the ld.CIT(A). He submitted that from the facts and circumstances of the case, it is evident that the Directors of the company have admitted the fact that the loans of ₹ 3,45,00,000/- and ₹ 1,90,65,000/- were merely entries from M/s.Jupiter Business Ltd. And M/s.Sudarshan Enterprise. He submitted that the statements were taken on oath, therefore subsequently ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... for the assessee on this issue as given in written submissions were as under:- 1. Sequence of Events: 13/03/2007 Company was Incorporated 31/03/2007 First Year of the Company ended 31/03/2008 Second Year of the Company ended 15/07/2008 Audited Balance Sheet for A.Y. 2008-09 (Page No.3 to 16 of the Paper Book) 03/12/2008 Return of Income for A.Y. 2008-09 filed (Page No.1 to 2 of the Paper Book) 20/08/2009 Notice u/s.143(2) issued 24/11/2010 Survey u/s.133A 24/11/2010 Statement of the Director recorded u/s.131 during the course of survey (Page No.21 to 29 of the Paper Book) 30/12/2010 36 Confirmation were submitted to the A.O. out of the total 39 parties (Para No.4 of the Assessment Orde4r) 30/12/2010 Assessment completed u/s.143(3) with the addition of ₹ 5,37,2 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... SOT 61 (Mum.) (Page No.58 to 61). (v) Supreme Court, 357 ITR 133, in the case of Tekram vs. CIT Where documents were of some relevance and should be looked into by High Court . 5.1. We find that the ld.CIT(A) has not admitted the additional evidences and the ld.CIT(A) has held as under:- I have carefully considered the submissions of the appellant and the report submitted by the A.O. It is noted that during the course of survey, an statement of the Directors were recorded u/s.131 of the I.T. Act. They were asked various questions during the statements and were also asked confirmation about various depositors found noted in the documents. The director Shri Devenbhai Patel in reply to Question No.17 had specifically mentioned that he is not in a position to give the confirmation in respect of the deposits of Sudarshan Enterprise and M/s.Jupiter Business Limited. It was further accepted by him that these deposits were not genuine and it was their money which has been brought as deposit. He stated that rest of the depositors were genuine and he will furnish confirmation in respect of those deposits. During the course of assessment proceedings, the appellant submitted the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oceeded to make addition in respect of two transactions apart from the addition made in the case of M/s.Hariom Industries. Subsequently, before the ld.CIT(A), the assessee made an application for admission of additional evidences. The application so filed was sent to the AO for his comments. The AO objected to admit the additional evidences and the ld.CIT(A) accepting the objection of the AO, declined to admit the additional evidences. 5.4. Before the ld.CIT(A), the assessee had relied on the judgement of the Hon ble Bombay High Court rendered in the case of Prabhavati Shah vs. CIT (231 ITR 1). Before the ld.CIT(A), the assessee filed confirmation dated 10/05/2011 and 02/05/2011 respectively from M/s.Jupitor Business Ltd. And M/s.Sudarshan Enterprise, which are enclosed at page No2.43 44 of the paper-book, wherein both the parties have confirmed the credit of ₹ 3,45,00,000/- and ₹ 2,10,00,000/- respectively in the books of accounts of the assesseecompany. The objection of the authorities below for not admitting the additional evidences was that the Directors of the company have admitted entry statement recorded on oath u/s.131 of the Act that the transactions are n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... .CIT(A) ought to have examined whether these confirmations are fabricated or genuine. In view of the facts that the Directors of the assessee-company categorically stated that these transactions are not genuine. If the transactions are genuine and it is proved so, in that eventuality such amount cannot be taxed and in case, if it is proved that the confirmations are fabricated or not genuine, otherwise created to make non-genuine transaction as genuine transaction, in that eventuality the criminal liability would be attracted under the various provisions of the Act. It is settled legal position of law that if any credit entries reflected into the account of the assessee the assessee is required to prove the identity of the creditors, genuineness of the transaction and creditworthiness of the creditors. In the instant case, out of these three ingredients, the assessee has established the identity of the creditors by furnishing the PANs and confirmation from such creditors although at the stage of CIT(A). However, the other two ingredients are required to be established by the assessee. Therefore, to meet the ends of justice, we hereby set aside the order of the ld.CIT(A) and this is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e addition by observing as under:- 3.3. Decision: I have carefully perused the assessment order and the submissions given by the appellant. It is noted that the appellant has accepted the disallowance that was proposed by the AO at the assessment stage. The A.O. has taken the correct figure of disallowance at ₹ 68,05,325/- in place of ₹ 17,80,026/- mentioned by the appellant in the acceptance letter. The plea of the appellant now that the expenditure is admissible as the development work is a continuous process cannot be accepted in view of the letter of acceptance submitted by appellant at assessment stage. The appellant has not mentioned any clarification regarding the letter. The action of the A.O. in disallowing the expenses treating them as expenses prior to the commencement of business is upheld and the ground of appeal is dismissed. 8.2. Admittedly, before the ld.CIT(A) various judgements were relied upon by the assessee in support of its contention. There is no whisper as to how these judgements are not applicable on the facts of the present case. To meet the ends of justice, the order of ld.CIT(A) is set aside on this issue and matter is restored to ..... X X X X Extracts X X X X X X X X Extracts X X X X
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