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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 ..... ent 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 enclosed separately. The said stock will not refle ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a 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 uphold the same. 7. Apropos second issue deleting the ad ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 cases were received back unserved. Out of 13 vendors, four, who were served with notices u/s. 133(6) of IT Act presented themselves before the Assessing Officer. All such persons have stated on oath in their respective statement that they have dealt with the assessee in milk items. It was stated that these vendors generally collect ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , 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 as under:- "9. I have considered submissions of the appellant, report of the Assessing Officer and have also gone through the assessment order. It is seen that the 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 these persons have confirmed the outstanding balances. Some of them have accepted having supplied milk/milk products directly to the consumers on instructions of the assessee while others have accepted having supplied these items directly to the assessee. Thus, Ld. Commissioner of Income Tax (Appeals) noted that it was not correct to say tha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... urchases", 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 sales have, thus, been understated. Ld. Commissioner of Income Tax (Appeals) observed that while this single discrepancy was not sufficient to reject the books of account completely, it certainly needed further inquiries. Hence, assessee was given an opportunity to explain this discrepancy. Assessee admitted that the gross sales of milk, paneer etc. to Apollo Hospital shown in the consignment account was ₹ 21,65,485/-. Sale of milk amounting to ₹ 12,21,082/-, which was on his own account has also been included in the consignment sale, instead of the P&L account. Sale of paneer etc. worth ₹ 9,44,403/- was made on consignment basis. Purchase of milk, sold to Apollo Hospital w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt 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 sale of milk amounting to ₹ 12,21,082/-, made to Apollo Hospital have not been credited to the P&L account while the corresponding purchase of this milk has been debited. 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. Under the circumstances, the enhancement/addition made by the Ld. Commissioner of Income Tax (Appeals) is cogent one and based on sound principles. Accordingly, we affirm the order of the Ld. Commissioner of Income Tax (Appeals). 15. Apropos ground no. 3 - addition of ₹ 2,07,960/- being 50% of total expenditure of ₹ 415920/- - Gas Cylinder On this issue an amount of ₹ 4,15,920/- has been claimed under the head 'Gas Cylinder' expenses. Assessee was asked to furnish the supporting bills/ vouchers of the expenses clubbed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ccordingly, 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 to explain as to where the diesel expenses incurred for the running of truck were being debited and reflected in the accounts. Assessing Officer held that on the facts of the case, it cannot be said that the truck was not used during the year so that depreciation need to be disallowed. Rather, this is a case where the truck was actually and undoubtedly used for the business purposes, without which the assessee could not achieve the turnover of approximately seven crores. However, the corresponding expenses are not reflected in the accounts maintained by the assessee. Hence, on the facts and circumstances of the case, total diesel expenses of the year was estimated at ₹ 1.00 lac and which was added to the taxable income of the assessee. 20. Upon assessee's appeal Ld. Commissioner of Income Tax (Appeals) confirmed the addition. 21. We have heard the rival conte ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ment 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 stated that all the supply of khoya to the assessee was without any bill and he used to receive payment in cash only. These facts mentioned by Sh. Ashok Kumar have not been rebutted by the assessee. Hence, Ld. Commissioner of Income Tax (Appeals) held that purchases of ₹ 34260/- have been reflected in the books does not make any difference as first, this explanation was not furnished before the Assessing Officer and secondly the addition on estimate basis has been made for unaccounted purchases. This addition was, therefore, confirmed. 24. Against the above order the assessee is in appeal before us. 25. We have heard the rival contentions in light of the material produced and precedent relied upon. We find that Assessing Officer has made the addition by referring to the statement of Shri Ashok Kumar. Ld. Commissioner of Income Tax (Appeals) has given a finding that such ..... X X X X Extracts X X X X X X X X Extracts X X X X
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