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TMI Blog2016 (2) TMI 191X X X X Extracts X X X X X X X X Extracts X X X X ..... nder consideration subject to the conditions contained in the statute being fulfilled – Decided against Revenue. Addition of carting expenses - CIT(A) restricted the addition - Held that:- CIT(A) while granting relief has noted the expenditure to be essential for the normal business activity of the Assessee and that the labour engaged in the process needs to be paid in cash and their names address and confirmations for the entire expenditure cannot be expected from the Assessee. He accordingly restricted the disallowance to ₹ 1 lac as against 3,62,785/- made by the A.O. Before us, no fallacy has been pointed out in the findings of ld. CIT(A). In view of these facts, we find no reason to interfere with the order of ld. CIT(A)– Decided against Revenue. Addition on account of bogus purchases - CIT(A) deleted the addition - Held that:- CIT(A) while deleting the addition has noted that Assessee had furnished the copy of purchase bills, the details of payment made to those parties and sales being made out of the said purchases. He has also noted that there is no evidence to suggest that the payments made were reverted back to the Assessee. He accordingly deleted the additi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... erred in deleting the addition of ₹ 2,39,958/- made by the Assessing Officer on account of Bogus/ Purchases. 4. On the facts and in the circumstances of the case and in Law, the Ld.CIT(A)-III,Surat has erred in deleting the addition of ₹ 7,94,011/- made by the Assessing Officer on account of difference in the balance. 1 st ground is with respect to deletion of addition on account of bogus/non existing liabilities. 4. On perusing the Balance sheet of New Amar Lignite and Amar Enterprises, the proprietary concerns of Assessee, A.O noticed that Assessee had shown liability of ₹ 74,46,993/- and ₹ 1,12,99,526/- respectively under the head truck rent payable . He also noticed that for the year under consideration the truck rent debited to the Profit and Loss account of the two concerns was ₹ 44,02,485/- and ₹ 1,13,11,871/- respectively. The Assessee was asked to prove the genuineness of liability. The submissions of the Assessee were not found acceptable to the A.O in view of the fact that Assessee did not provide confirmation letters, inability of the Assessee to furnish the address or telephone numbers of the persons to whom the truc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... persons but those persons were not paid directly by the appellant but the collective amount would be given to the manager of the appellant who would make the payment to various persons on different dates. I have also gone through the copies of truck rent payment and find that it mentions the names of the persons, truck numbers, weight of material, amount paid to the said persons and complete details are available in this case. It is also seen that the appellant was having business with Baroda Rayon Corporation supplying coal and transport services to the company. The financial condition of the company became weak and the company could not make payment to a number of creditors. This issue of outstanding truck rent was also considered in proceedings for AY 2003-04 and the appellant's explanation was considered and accepted. I am also inclined to agree with the appellant that if the outstanding liabilities are considered as bogus the GP would increase to 163% which is unimaginable. Therefore on this ground also the liabilities cannot be added to the total income. I have also gone through the complete details and find that the appellant had maintained sufficient primary and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed on record the copy of the aforesaid decision. He thus supported the order of ld. CIT(A). 7. We have heard the rival submissions and perused the material on record. The issue in the present case is about making addition of on account of non existing liability. We find that ld. CIT(A) while deleting the addition has noted that he has gone through the copies of truck rent payment and it mentioned the name of the persons, truck numbers, weight of material, amount paid to such persons and the complete details. He has also given a finding that on the verification of the LRs, he found them it to be duly stamped and acknowledged by the buyers of the material transported by the Assessee and vouchers were maintained in respect of payment to respective truck owners. He has further given a finding that the addition could not have been made either u/s. 68 or Section 41(1) of the Act as the provisions of those sections were not applicable to the facts of the case. Before us, Revenue could not controvert the findings of ld. CIT(A). We further find that Hon ble Gujarat High Court in the case of CIT vs. Bhogilal Ramjibhai Atara (supra) has observed as under:- We are in agreement with th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... not file the confirmation letters nor provided their addresses. He therefore considered the carting expenses to be non verifiable and accordingly disallowed 25% of expenditure amounting to ₹ 3,62,875/-. Aggrieved by the order of A.O., Assessee carried the matter before ld. CIT(A) who restricting the disallowance to ₹ 1 lac by holding as under:- Before me, the Id. AR submitted that the appellant incurred carting expenses in M/s Amar Enterprise for ₹ 14,51,500/- in respect of unloading of coal from the trucks at the site of the customer namely BRC. paid to unskilled labours as soon as work of unloading is finished by them at site. Entire expenses were supported by vouchers. The appellant paid unloading majuri to labors @ ₹ 450/- per truck. I have gone through the details. I find that the carting expenses are in respect of loading an unloading of coal transported by the appellant and the labor engaged for the process would have to be paid in cash and names and addresses or confirmations from them cannot be expected to be furnished by the appellant. This expenditure is essential for the normal business activity of the appellant and the AO's action ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... both accounts were squared up. I have considered the submissions. It is seen that the appellant had furnished copy of purchase bill and details of payments made to the two parties and sales have also been made against the said purchases. Merely, because notice u/s 133(6) of the Act was not served on these two parties would not make the entire purchases bogus. There is no evidence to suggest that the payment made reverted back to the appellant and therefore addition on this account is directed to be deleted. 14. Aggrieved by the order of ld. CIT(A), Revenue is now in appeal before us. 15. Before us, ld. D.R. supported the order of A.O. On the other hand ld. A.R. reiterated the submissions made before A.O and ld. CIT(A). 16. We have heard the rival submissions and perused the material on record. We find that ld. CIT(A) while deleting the addition has noted that Assessee had furnished the copy of purchase bills, the details of payment made to those parties and sales being made out of the said purchases. He has also noted that there is no evidence to suggest that the payments made were reverted back to the Assessee. He accordingly deleted the addition. Before us, no ..... X X X X Extracts X X X X X X X X Extracts X X X X
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