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TMI Blog2015 (2) TMI 896X X X X Extracts X X X X X X X X Extracts X X X X ..... f assessee. Unexplained cash credit under section 68 - CIT(A) deleted the addition - Held that:- As before the Assessing Officer, the assessee has furnished complete details in support of its contention that the amounts were received by M/s Hans Castings Pvt. Ltd. on account of business transaction and the same amount was debited to the account of M/s Hans Castings Pvt. Ltd. and credited to these parties. It was also contended that in the subsequent assessment year, the sales were effected, but the Assessing Officer did not appreciate these facts and made addition under section 68 of the Act, having treated the credit entry as unexplained; whereas the ld. CIT(A) has appreciated all the evidence filed before the lower authorities and was of the view that the said credits have been in the nature of purchase advances through banking channels, therefore, no addition under section 68 of the Act is called for. - Decided in favour of assessee. Non genuine transaction - assessee was unable to file copy of contract note, purchase and sales bills issued by the broker and to prove genuineness of the transaction - Held that:- The basis for addition of ₹ 40,97,700/- was on account o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... w and on fact in deleting the addition of ₹ 2,00,00,000/- made on account of lower Gross Profit rate by admitting additional evidence in contravention of provision of Rule 46A also not appreciating the fact that the assessee has made purchase of raw material and sold finished goods to specified persons covered u/s 40A(2)(b). 2. That the Commissioner of Income tax (A) has erred in law and non facts in deleting the addition of ₹ 1,05,00,000/- made u/s 68 without appreciating the fact that the assessee did not file the confirmation of deposits/loan/transactions during the assessment proceedings nor produced the depositor before the A.O. as desired by him. 3. That the Commissioner of Income Tax(A) has erred in law and on fact in deleting the addition of ₹ 40,97,400/- without appreciating the fact that the assessee was unable to file copy of contract note, purchase and sales bills issued by the broker and to prove genuineness of the transaction, therefore, Assessing Officer, treated the transaction as non genuine and sham and income declared on these transactions treated as income from other sources and made addition on the basis of copy of account submitted by t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d assessment year were also duly explained to the ld. CIT(A) by filing written submissions. The details of power and fuel expenses were also filed before the Assessing Officer. It was further contended before the ld. CIT(A) that vide letter dated 2.1.2009 that the Electricity Department has clearly certified that payment of 26,43,371/- and interest of ₹ 39,650.13 aggregating to ₹ 26,83,021.13 was towards regular electricity charges and it was not paid towards any irregularity or penalty. It was also contended that as per the policy of the Electricity Department, OTS was made and the settled amount was paid by the assessee during the impugned assessment year, but the Assessing Officer, without any reason, has treated this payment to be penalty. 5. With regard to the purchase and sales made to the sister concern, it was contended that the Assessing Officer has picked up few purchases and drawn his conclusion. It was also contended that if the comparative figures of purchases for whole year are examined, the entire picture would be different. A comparative chart was filed before the ld. CIT(A) with respect to the purchases made from its sister concern. It was further co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ld. counsel for the assessee has further invited our attention to the order of the ld. CIT(A), with the submission that a detailed chart was placed before the lower authorities, but the Assessing Officer has not examined the position of whole year; whereas the ld. CIT(A) has examined the details of purchases made from the sister concern and from the outside parties also and has observed that the average rate of purchases from others was at ₹ 12,956/- per MT against ₹ 11,198/- per MT from the sister concern. Therefore, there was no purchase at inflated rate from the sister concern. The additions made by the Assessing Officer on account of purchases from the sister concern is also contrary to the facts. The ld. counsel for the assessee has further placed heavy reliance upon the order of the ld. CIT(A). 10. Having given a thoughtful consideration to the rival submissions and from a careful perusal of the orders of the authorities below and the documents placed before us, we find that the Assessing Officer has made the disallowance of ₹ 2 crores mainly on two reasons - one is with regard to the payment of OTS to the Electricity Department i.e. UPSEB and the allege ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the manufacturing account. However, the said loss in the manufacturing account is attributable to payment of ₹ 26,43,370/- paid to UPSEB, Hamirpur towards one time settlement (OTS), The AO has disallowed I and rejected the said payment by saying that - It was additional levy of electricity charges against irregularities in consumption of electricity and it might be a penalty levied by electricity department . 9. It can be seen that the AO has not questioned the payment to electricity department on this issue. In any case UPSEB being Government Body and the payment of electricity charges could not be held to be unverifiable keeping in view the regular consumption of electricity by the appellant from year to year as a part of its business/manufacturing activity and UPSEB being established/identified body, stands verified as a matter of Government record. The scheme on OTS under consideration was a general scheme of UPSEB for which the appellant has followed orders of the respective authorities namely; U.P. Electricity Regulatory Commission, Executive Engineer, Electricity Distribution, Hamirpur and others. The quantum of OTS amount has been determined by Dy. General Manager ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... parties rather than picking up stray bills of the parties. In fact, comparison of a few bills will not give complete picture of purchases and the AO was required to take up the total purchase price for this purpose. It can be seen that the conclusion arrived by AO s faulty and contrarily the purchases made by appellant from sister concern are at lower rate in comparison to other parties. The chart is given in the paper book on page 41 and 42 which is derived and prepared on the basis of books of account and quantitative details which were available before the AO for this purpose. Thus, the addition made by AO on account of purchases from sister concern is also contrary to fact and same is not supported by direct indirect material or evidence. All the more, this issue becomes irrelevant for the purpose of rejecting the manufacturing account of the appellant during the year as considered and addition made by AO on this ground is contrary to facts based on partial/incomplete data and inappropriate method for this purpose, as discussed above. 12. Since the above two additions are contrary to facts and have been made by ignoring the available documents material and books of accou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Assessing Officer has made an addition of ₹ 1.05 crores having noted the credit entries in the books of account of the assessee on account of unexplained cash credit under section 68 of the Act, as the assessee could not prove the identity and capacity of the creditor, Shri. Ashok Kumar and Shri. Har Kishore Gupta. 16. The assessee preferred an appeal before the ld. CIT(A) with the submission that Shri. Ashok Kumar had made payment of ₹ 68 lash and Shri. Har Kishore Gupta had made payment of ₹ 37 lakhs to the assessee as advance for purchases. Since these amounts were received by the assessee s sister concern, M/s Hans Castings Pvt. Ltd., therefore, the assessee credited ₹ 68 lakhs in the account of Shri. Ashok Kumar and ₹ 37 lakhs in the account of Shri. Har Kishore Gupta and debited the account of M/s Hans Castings Pvt. Ltd. Thereafter, the assessee made sale of goods to these parties in the subsequent assessment year, as such, the advance received from these two customers was for normal business transactions. It was further contended before the ld. CIT(A) that the Assessing Officer did not appreciate these facts and made addition of ₹ 1.0 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eover, the transaction was effected through banking channels. It was further contended that the Assessing Officer has himself observed in his order that the payments were in fact made through M/s Hans Castings Pvt. Ltd. and the assessee has credited to its account these amounts and debited to the account of M/s Hans Castings Pvt. Ltd. Since the assessee has not received this amount from these two parties, there cannot be any addition under section 68 of the Act in the hands of the assessee. 19. Having carefully examined the orders of the lower authorities, we find that before the Assessing Officer, the assessee has furnished complete details in support of its contention that the amounts were received by M/s Hans Castings Pvt. Ltd. on account of business transaction and the same amount was debited to the account of M/s Hans Castings Pvt. Ltd. and credited to these parties. It was also contended that in the subsequent assessment year, the sales were effected, but the Assessing Officer did not appreciate these facts and made addition under section 68 of the Act, having treated the credit entry as unexplained; whereas the ld. CIT(A) has appreciated all the evidence filed before the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d. CIT(A) re-examined the claim of the assessee in the light of assessee s contention and has noticed from the copy of account filed before the Assessing Officer and also filed before him that there are two entries of 20,000 and 10,000 shares on 20.2.2004 and it has been explained by the ld. counsel for the assessee that the Assessing Officer has missed the entry of 10,000 shares resulting into calculation mistake. Complete set of vouchers, bills, contract notes and ledger accounts were properly examined by the ld. CIT(A). Accordingly, the addition was deleted by the ld. CIT(A). 23. Now the Revenue is in appeal before the Tribunal and has placed heavy reliance upon the order of the Assessing Officer. During the course of hearing, the ld. D.R. could not point out any mistake or defect in the order of the ld. CIT(A); whereas the ld. CIT(A) has categorically held that there was a calculation mistake on the part of the Assessing Officer, as he has not properly appreciated the complete evidence in the form of set of vouchers, bills and contract notes placed before him. The ld. CIT(A) himself has observed that there were two entries of 20,000 and 10,000 shares on 20.2.2014 and the Ass ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... -6 which is reproduced as follows :- As a matter of fact, the assessing officer has made calculation mistake in calculating the number of shares sold by the appellant by 10,000 Shares, In fact the assessee had not only purchased 2,00,000 Shares, but also sold 2,00,000 shares, thus there was no question of any stock of shares at the end of the year. The number of shares purchased and sold by the assessee is clearly mentioned in the 'Purchase Sale A/c of shares as well as in the A/c of share-broker filed during the course of assessment proceeding. Under these circumstances, basis for addition made by the Assessing officer becomes nonexistent and, therefore, the addition deserves to be deleted. The copy of account filed before the AO and also filed before me in the paper book (page 74-75) shows that there are two entries of 20,000 and 10.000 shares on 20.2.2004 and it has been explained by the Ld. AR that the AO has missed on the entry of 10,000 shares resulting in calculation mistake. The said ledger account was filed and was available before AO also. The complete set of vouchers, bills and contract notes have also been filed in the paper book relating to these transacti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dition deserves to be deleted . (f) In view of the above situation, I am inclined to consider the additional evidence filed by the appellant which has been looked into by me, were prima-facie no defect and irregularities are found in the said documents. In view of facts and circumstances noted above, it is clear that the addition made by AO is without any basis and same is based on wrong premises due to calculation mistake. The basic details of sale and purchase of shares and necessary documents for the same by way of copy of account of the share broker was filed before the AQ and books of account were produced before him and verified as noted in the first para of the assessment order. The same have been accepted by AO, therefore. I find no reason and no rational for addition of ₹ 40,97,700/- made by AO as above. Under the circumstances, the AO is directed to delete the addition of ₹ 40,97,700/- and Ground No. 4 of appeal is allowed. 25. Since the ld. CIT(A) has properly adjudicated the issue and we do not find any infirmity therein, we confirm his order. 26. Apropos ground No.4, it is noticed that the Assessing Officer has made addition of ₹ 42,35,23 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ction and nature of transaction by noting that the trading goods of the appellant have been sold/purchased. Under the circumstances, without any material and evidence on record, and unless books of account of the appellant are rejected, the transaction appearing in the books of the appellant cannot be ignored in absence of any basis and reason for rejecting the same. In any case, all the necessary documents and transactions have been filed before me in the paper book which prima-facie seem to be in order. The same are also liable to be admitted as additional evidence, under the facts and circumstances of the case noted above that one of the directors was suffering from Cancer who has sadly passed away in due course and the other director was also suffering from Kidney disorder. In addition to this, Ground No. 6 of appeal is also relevant that the short time was available in the assessment proceedings where period of limitation was cut short by three months as per amendment in the Act. In view of above facts, the additional evidence furnished by appellant is liable to be admitted. 29. Even without considering the documents and evidence filed in this behalf, it can be seen that th ..... X X X X Extracts X X X X X X X X Extracts X X X X
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