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TMI Blog2016 (2) TMI 791X X X X Extracts X X X X X X X X Extracts X X X X ..... mination of the issue with respect to differences in the books of accounts of the assessee with respect to sale/debtors and purchases/creditors vis-à-vis balances as appearing in the books of the purchasing/selling parties , with the direction to AO to grant proper and adequate opportunity as per law , to the assessee to explain the differences in sale/debtors and purchase/creditors as appearing in the books of accounts of the assessee vis-à-vis balance as appearing in the books of accounts of the purchasing/selling parties in accordance with the principles of natural justice as enshrined in doctrine of audi alteram partem. - Decided in favour of revenue for statistical purposes. Disallowance u/s. 194H r.w.s 40(a)(ia) on account of brokerage amount - CIT(A) allowed the claim - Held that:- As observed from the orders of the CIT(A) that these expenses of brokerage expenses amounting to ₹ 1,19,089/- were incurred by the assessee in the preceding year and expenses were booked by the assessee in its books of accounts in the preceding year while due taxes has been deducted at source in the relevant assessment years and paid to the credit of the Revenue and the balances are appea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r cross examination of parties before the Assessing Officer. (ii) On the facts and the circumstances of the case and in law, the ld. CIT(A) erred in accepting the assessee s authorized representative reconciliation statement produced before him even though debtors and creditors are reconciled together, inspite of the facts that assessee maintains separate accounts for debtors and creditors and hence reconciliation should also have been separate for both the accounts. (iii) On the facts and in the circumstances of the case and in law, the ld. CIT(A) erred in deleting the disallowance u/s. 194H r.w.s 40(a)(ia) on account of brokerage amount is inclusive of c/f balance of earlier years without appreciating the fact that if even if it is so, the assessee was not able to substantiate his claim of sundry creditors by producing the said parties. (iv) The appellant prays that the order of the Ld. CIT(A) on the above grounds be set aside and that of the A.O. be restored. (v) The appellant craves leave to amend or alter any grounds or add a new ground. 3. The brief facts of the case are that the assessee has received income from salary and from business ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sessee shown the debtors of ₹ 13,13,940/- as against party confirmed that they have received 42,54,521/-. Therefore, as per party debtors remained to be Rs.13,09,938/- is treated as bogus debtors shown by assessee. Synthetic Colour Chem. 2,34,631/- 2,34,631/- Nil Assessee shown the debtors of ₹ 13,12,860/- as against party confirmed that they have received ₹ 24,06,407/- (including brought forward) and shown as the debtors of ₹ 6,56,897/-. Therefore, the excessive debtors shown by the assessee of ₹ 6,55,963/- is to be added to the total income of the assessee. Purchases as per assessee Name of the party Sale as per assessee Purchase as per party Difference Remarks Synthetic Colour Chem 99,74,097/- 94,54,897/- 5,14,260/- Assessee shown the creditor of ₹ 15,78,484/- as against party shown the balance payable of ₹ 5,14,260/-. Therefore, the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rokerage amount paid 1. Apex Company 14,328/- 2. Bharat Sheth 14,450/- 3. Hemant Shah 9,827/- 4. Jaisujhbhai Doshi 8,480/- 5. Jasmine Sanghve 18,675/- 6. Kanu D. Patel 6,232/- 7. Mahendra Doshi 9,735/- 8. Mitesh Vora 7,274/- 9. Shree Nath Enterprises 14,490/- 10. Viral Jasani 15,548/- Total 1,19,089/- 4. Aggrieved by the assessment orders dated 28.12.2011 passed u/s 143(3) of the Act by the AO, the assessee filed the first appeal before the CIT(A) and submitted that the assessee has given all the details to reconcile the balances and proper opportunity was not given to the assessee to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and paid the taxes on the profits made on the transactions with the above party. Since the statement of account is not tallying, assessee should not be taxed twice. The assessee prays your honor to look into the matter and give justice to the assessee. After considering the rival stand, it is found that the AO did not examine and analyse the various entries in the ledger account, which was produced by the appellant before the A.O. during the assessment stage. I have also taken into consideration the Reconciliation Chart given by the appellant. The CIT(A) observed that the AO has not examined and analysed the various entries in the ledger account which was produced by the assessee before the AO during the course of assessment proceedings . The CIT(A) referred to the reconciliation chart submitted by the assessee and the information received by the AO u/s. 133(6) of the Act directly from purchasing/selling parties in respect of transactions, the differences in sales/debtors are :- i) Adarsh Chemicals (Sec) ₹ 14,73,101 ii) Vardhaman Chemicals ₹ 13,09,938 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ase parties vis- -vis balances appearing in the books of accounts of the assessee. The Ld. DR submitted that no cross examination was asked by the assessee before the AO or the CIT(A) . While on the other hand, the ld. counsel of the assessee submitted that these addition of ₹ 45,03,226/-were made on account of debtors/creditors while the sale and purchase are duly included in the books of accounts of the assessee and it has led to double taxation. The ld. Counsel relied upon the decision of ITA No. 619/Kol/2015 in the case of Ply Palace v. ITO to contend that these additions cannot be made with respect to ₹ 45,03,226/- being difference in the sale/purchase and consequently in debtors/creditors in the balances as appearing in the books of accounts of the assessee vis- -vis balances appearing in the books of sale/purchasing parties as it will lead to double taxation. The ld. Counsel reiterated the submissions as made before the authorities below. The ld. Counsel of the assessee submitted that these amounts of ₹ 1,19,089/- are opening balances as per schedule G in the audited accounts in the sundry creditors and TDS was duly deducted in the relevant years and h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s were not forwarded by the CIT(A) to the AO under Rule 46A of Income Tax Rules, 1962 for examination/remand report . Even the CIT(A) has observed that the AO has not analysed and examined the various entries in the ledger accounts . The CIT(A) has allowed the appeal on the ground that the AO should have summoned these parties as well the assessee and recorded their statement on oath and allowed the cross-examination to the assessee before drawing adverse inference against the assessee but as per the facts as emerging from the orders of the authorities below, the assessee has not asked for the cross examination before the AO and the CIT(A) and rather the assessee has submitted before the AO that its accounts are correct.No such evidence has been brought on record by the assessee before us to substantiate that the assessee asked for the cross examination of these four purchasing/selling parties .The assessee has relied upon the decision of Kolkatta Tribunal in the case of Ply Palace v. ITO in ITA no. 619/Kol/2015 , but the facts of the said case were different as in the said case the difference in the debit balance shown of ₹ 1,36,815/- with respect to debtor was explained vis ..... 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