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TMI Blog2012 (5) TMI 608X X X X Extracts X X X X X X X X Extracts X X X X ..... iscrepancy in figures at the assessment stage. The Ld. Commissioner of Income Tax (Appeals) has erred in deleting the addition of ₹ 1,22,52,846/- on account of unexplained creditors ignoring the fact that none of the creditors examined at the stage of assessment proceedings, could confirm the amount to be received from the assessee. Even at the stage of remand report, the creditors did not adduce any cogent evidence except stating that the money due from the assessee belonged to their respective neighbors / other villagers. Revenue s appeal 3. Apropos first ground regarding deletion of addition of ₹ 11,84,861/-. On this issue Assessing Officer noted that alleged consignment transactions are the own trading of assessee. And the quantum of such purchase / sale of these consignment is actually is ₹ 3,49,90,459/- and ₹ 3,38,05,598/- respectively. Assessing Officer inquired as to why resultant closing stock of goods received on alleged consignment transactions were not reflected in the closing stock. Assessee responded that the detail of closing stock filed on record is only in respect of own stock of the firm. Detail of consignment stock is encl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Tax (Appeals) noted that he has discussed in para 9 and 9.1 (infra), this premise is factually not correct. Moreover, no material defect has been noted in the accounts maintained by the assessee. Ld. Commissioner of Income Tax (Appeals) further observe that the discrepancy in the figures has also been explained by the assessee at the assessment stage itself and this explanation has not been found to be incorrect. Accordingly, he held that the addition appears to be uncalled for and accordingly deleted. 5. Against the above order the Revenue is in appeal before us. 6. We have heard the rival contentions in light of the material produced and precedent relied upon. We find that Ld. Commissioner of Income Tax (Appeals) has given a finding that the premise of the Assessing Officer the consignment sales are, in fact, sales made by the assessee on his own account is factually not correct. The discrepancy in the figures has also been explained by the assessee at the assessment stage itself and this explanation has not been found to be incorrect. Under the circumstances, we do not find any infirmity in the order of the Ld. Commissioner of Income Tax (Appeals) and accordingly, we uphol ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2 iii) Balaji Milk Products 743484 Total 19,80,733/- No explanation could be offered by the assessee in this regard. As such creditors to the extent of ₹ 19,80,733/- further remains unverified and unsubstantiated. As such, these creditors are also held to be bogus creditors. Accordingly, an amount of ₹ 19,80,733/- is added to the taxable income of the assessee being bogus creditors u/s. 68 of the IT Act. Net addition on account of bogus creditors (alleged consignment vendors and aforestated three vendors) therefore works out to ₹ 1,22,52,846/- (Rs. 10272113 + 1980733). 8. Before the Ld. Commissioner of Income Tax (Appeals) assessee submitted that the milk purchases/ sales were made directly to the consumers on consignment basis, through transactions recorded in the accounts of consignment purchases/sales. Commission earned on such sale is ₹ 6,58,053/- which has been credited separately to P L a/c. It was further submitted that the adverse inference has been drawn in the matter of 13 vendors. Notices issued u/s. 133(6) in 6 c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... /131 were sent during the remand stage. The statement of several creditors were recorded on oath u/s. 131 of the IT Act. As a result of the above inquiries from the creditors, the Assessing Officer has concluded that almost all the purchases from the above creditors were done in cash and the accounts were kept by the assessee only, creditors being illiterate. It was also reported that they have confirmed the supplies made and credit balances in round figures. Further, one of the creditors viz. M/s Jai Mata Pithi Corner against whom cash balance of ₹ 2233/- is outstanding did not respond to notice u/s. 133(6) of the IT Act. In his rejoinder the assessee has stated that the vendors have accepted having supplied milk and milk products directly to the consumers on instructions of the assessee and also to the assessee. They have also confirmed the outstanding amount. It was also stated that the identity of these suppliers has been established and they have also accepted the fact that their dues were outstanding against the assessee. Hence, the addition made by the Assessing Officer was requested to be deleted. Considering the above, Ld. Commissioner of Income Tax (Appeals) held a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Ld. Commissioner of Income Tax (Appeals) has given a finding that addition made by the Assessing Officer is primarily based on the statements recorded by the Assessing Officer u/s. 131 and also on the fact that in some cases notice u/s. 133(6) was returned unserved. He also found that Assessing Officer has noted particularly Sh. Hazi Nazar was illiterate and the copy of account was confirmed by one Sh. Rajesh; copy of account in the case of Sh. Insaf Ali was affirmed by one Sh. Shaukat and the assessee had failed to produce the remaining creditors u/s. 133(6). Ld. Commissioner of Income Tax (Appeals) in this regard further ntoed that assessee was neither confronted with the statements/ facts gathered in the course of assessment proceedings nor was given an opportunity to cross examine the person/ who had given statement before the Assessing Officer. Ld. Commissioner of Income Tax (Appeals) further found that in the course of remand proceedings, the Assessing Officer has again recorded statements of some of the suppliers and also got information u/s. 133(6). It was seen that instead of incorrect person named Thekedar Khurshid, this time right person was summoned and examined. All th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 5920/-. ii) Diesel Exp. - ₹ 1,00,000/- - lump sum against claimed in respect of:- i) Vehicle repair and maint. ₹ 65959 ii) Vehicle insurance ₹ 40923 iii) Petrol ₹ 124437 Total ₹ 231319 (4) That Ld. Commissioner of Income Tax (Appeals) has further erred in law and facts of the case while confirming addition of ₹ 317550/- alleging unaccounted Khoya purchases , in view of facts and circumstances of the case. (5) That the appellant crave to add, amend or delte any ground of appeal. 12. Apropos ground no. 1 2:- On this issue Ld. Commissioner of Income Tax (Appeals) noticed that the assessee has supplied milk, paneer etc. worth ₹ 21,65,485/- to Apollo Hospital. He has debited the purchase of milk worth ₹ 11,43,016/- in P L account as his own purchase while sale of milk has been shown as consignment sale to Apollo Hospital. The sale ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as been debited. It is not a case where both the sales and purchase have not entered the P L account. Since the purchases relating to sales have already been debited, it is the whole amount of sales and not only profit, which has to be added. Hence, Ld. Commissioner of Income Tax (Appeals) found that he did not find any merit in the claim of the assessee that only profit by applying GP rate should be added. He held that in view of these facts it is obvious that the sales have been understated by ₹ 12,21,082/-, while consignment sale on which commission income ₹ 1.94% has been shown, has been overstated by this amount. Accordingly, Ld. Commissioner of Income Tax (Appeals) held that the commission income shall accordingly be reduced by 1.94% of this amount while sales would be increased by the same amount. The net effect of this adjustment would be an addition of ₹ 12,21,082 - ₹ 23,770 i.e. ₹ 11,97,312/-. 13. Against the above order the assessee is in appeal before us. 14 We have heard the rival contentions in light of the material produced and precedent relied upon. We find that Ld. Commissioner of Income Tax (Appeals) has given a finding that the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Income Tax (Appeals) observed that on perusal of the assessment order shows that the addition has been made as the assessee had failed to furnish supporting bills/ vouchers of the expenses clubbed under this head and the expenditure under this head remained unverified. Ld. Commissioner of Income Tax (Appeals) held that in view of these facts, no interference is called for so far as this disallowance is concerned. 17. Against the above order the Assessee is in appeal before us. 18. We have heard the rival contentions in light of the material produced and precedent relied upon. We find that addition has been made by the Assessing Officer, as the assessee has not furnished the supported bills/ vouchers of these expenses. In our considered opinion, lower authorities have taken a reasonable view in this matter, which does not need any interference on our part. Accordingly, we uphold order of the lower authorities on this issue. 19. Diesel expenses of ₹ 1,00,000/- lump sum, against claimed in respect of vehicle repair and maintenance, vehicle insurance petrol expenses amounting to ₹ 231319/-. On this issue Assessing Officer noted that assessee could not be able ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Ashok Kumar failed to respond to the notices issued by the Assessing Officer. Assessing Officer noted that in the books of accounts of the assessee there is no mention of any account in the name of Shri Ashok Kumar. Under these circumstances, the addition of ₹ 3,17,550/- was being made to the taxable income on account of unaccounted khoya purchases not reflected in the books of accounts. This addition has been worked out by adopting the figure of daily purchase of 15 kg of khoya @ `58/- per kg (purchase price of ₹ 55 plus margin of profit of Shri Ashok Kumar) for the whole of the year (365 x 870) and made addition of ₹ 3,17,550/- 23. Upon assessee s appeal Ld. Commissioner of Income Tax (Appeals) noted that a perusal of the assessment order shows that this addition has been made on the basis of the statement of Shri Ashok Kumar. In the course of the assessment proceedings also summons u/s. 131 was issued to Shri Ashok Kumar who did not appear before the Assessing Officer. Assessee was confronted with the statement of Shri Ashok Kumar recorded at the time of survey. The assessee failed to offer any explanation in this regard. Sh. Ashok Kumar had categorically s ..... X X X X Extracts X X X X X X X X Extracts X X X X
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