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TMI Blog2010 (8) TMI 1004X X X X Extracts X X X X X X X X Extracts X X X X ..... -style-name:"Table Normal"; mso-tstyle-rowband-size:0; mso-tstyle-colband-size:0; mso-style-noshow:yes; mso-style-priority:99; mso-style-parent:""; mso-padding-alt:0cm 5.4pt 0cm 5.4pt; mso-para-margin-top:0cm; mso-para-margin-right:0cm; mso-para-margin-bottom:10.0pt; mso-para-margin-left:0cm; line-height:115%; mso-pagination:widow-orphan; font-size:11.0pt; font-family:"Calibri","sans-serif"; mso-ascii-font-family:Calibri; mso-ascii-theme-font:minor-latin; mso-hansi-font-family:Calibri; mso-hansi-theme-font:minor-latin; mso-fareast-language:EN-US;} table.MsoTableGrid {mso-style-name:"Table Grid"; mso-tstyle-rowband-size:0; mso-tstyle-colband-size:0; mso-style-priority:59; mso-style-unhide:no; border:solid windowtext 1.0pt; mso-border-alt:solid windowtext .5pt; mso-padding-alt:0cm 5.4pt 0cm 5.4pt; mso-border-insideh:.5pt solid windowtext; mso-border-insidev:.5pt solid windowtext; mso-para-margin:0cm; mso-para-margin-bottom:.0001pt; mso-pagination:widow-orphan; font-size:11.0pt; font-family:"Calibri","sans-serif"; mso-ascii-font-family:Calibri; mso-ascii-theme-font:minor-latin; mso-hansi-font-family:Calibri; mso-hansi-theme-font:minor-latin; mso- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... should not be treated as bogus. In response, it was submitted that due to shortage of funds the liability was not paid. No documentary evidence to show that the purchases had, in fact, been made from M/s. ATL were filed. The Assessing Officer further examined Mrs. Anita H. Joshi, proprietor u/s 131 of the Income Tax Act, 1961. She deposed that she had filed return of income upto A.Y. 2001-02 but the books of account for and from F.Y. 2001-02 onwards were not traceable. It was admitted that the extracts of the accounts of the assessee were filed to the Income tax Department on the basis of rough records maintained by her and after obtaining information from the assessee. The books of account, bills of purchase of goods, sale bills and the sales made to the assessee were not produced even when it was promised to be produced by 3.2.2006. This statement of Mrs. Anita H. Joshi was recorded in the presence of the assessee. The Assessing Officer then proceeded to record statement of the assessee on oath u/s 131 of the Income Tax Act, 1961, the relevant portion of which was reproduced on page 3 of the assessment order. In response to question no.3 suggesting that the transactions with the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 377; 1,60,502/-. Relevant discussion as given in I have gone through the facts of the case from the assessment order as also the written submissions filed, the remand report of the Assessing Officer and the rejoinder of the appellant. In the statement recorded on oath u/s 131 of the Income Tax Act, 1961, the assessee had agreed to the above additions on the basis of finding made by the Assessing Officer. The assessee s wife from whom the purchases were effected had filed return u/s 44AF and 44AD for the A.Y. 2001-02 to 2003-04 on 22.8.2006 which are clearly barred by limitation. In her solemn statement recorded on 2.2.2006 she deposed that she had filed her return of income upto A.Y. 2001-02 and the books of account for and from A.Y. 2001-02 were not traceable and available with her. It was also accepted by her that she filed the extracts of the accounts of the assessee when called for by the Assessing Officer on the basis of information from the husband Shri H.L. Joshi. The auditors have not disclosed these transactions which they were required to disclose in the audit report u/s 40A(2)(b) of the Income Tax Act, 1961. There is no documentary evidence that any goods had infact ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on account of any purchases made but on account of advance amount paid. This credit amount lying in the Debtors ledger was credited to appellant s creditor account where the opening balance was already ₹ 5,78,914/- (cr) and further ₹ 1,61,054/- was not on account of any bogus purchases but just a transfer entry from the debtor s account to creditor s account. In view of the above, the addition of ₹ 1,61,054/- out of ₹ 3,21,556/- is deleted. 5. From the above undisputed facts, it is evident that the assessee failed to file any documentary evidence to show the veracity of the claim of the purchase from his wife s concern (ATL)). The said concern is a non filer of return from the AY 2001- 02 on wards. There are no books of accounts of the said concern too for the relevant years. Though some in time barred returns are filed in the year 2006 for the said years, they are not backed by the book entries. The sale tax returns filed by the said concern is not a clinching evidence and in the absence of valid purchase or sale bills, the said returns are rightly rejected by the Revenue. Considering the above factual position we find that the assessee failed to disch ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the assessee filed the present appeal with the relatable grounds. During the proceedings, Ld Counsel for the assessee brought to our attention the bills signed by Mr S L Joshi and also on the quotation of the assessee for demonstrating the services rendered to the assessee. On the other hand, Ld DR relied on the orders of the revenue. 9. We have heard the parties and perused the sample bills, quotation etc placed in the paper book for evidencing the rendering of the services to the assessee by Sri S L Joshi, who was looking after the site supervision. Further, we have examined if the AO made out any case of excessive or unreasonable after bringing comparable as per the provisions of section 40A(2) of the Act and found it is not the case of the revenue. Considering the voluminous amount of paper work presented before, the services rendered by the brother SL Joshi need not be doubted. Considering the above, we find that the claim of the assessee has to be allowed and the order of the CIT(A) has to be reversed in this regard. Accordingly, this part of the grounds are allowed. 10. Addition of ₹ 2,80,476 u/s 41(1) of the Act: In this regard, it was mentioned that it is part ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e he would not have offered this amount for taxation. This proposal is jut to escape from penalty u/s 271(1)(c ) and future prosecution proceedings. The further comments of the assessee on the remand report were called for when the submission already made by the appellant were reiterated. It was additionally submitted with reference to the cessation of liability of ₹ 4,21,038/- that the assessee had paid ₹ 1,03,300/- to Kiran Electrotechnic on 21.8.2003 vide account payee cheque. Copy of the bank statement was enclosed. Further the account of M/s Switchon Electricals was reconciled in F.Y. 2004-05 and the assessee had written back and offered to tax ₹ 32,229/- in A.Y.2005-06 as against ₹ 37,273/- taxed by the Assessing Officer in order u/s 143(3) which was passed subsequent to the filing of return of income for A.Y. 2005-06. It was further stated that the assessee had written back ₹ 2,80,476/- in the A.Y. 2006-07 and reduced the same while computing the total income for A.Y. 2006-07 as the same had already been taxed in order u/s 143(3). The details of ₹ 2,80,476/- was as under: Name of the party Rupees ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ame while computing the total income for A.Y. 2006-07 as the amount had already been taxed by the Assessing Officer in the A.Y. 2003-04. On account of the admission of the assessee whereby he reduced the written back amount from the computation of income for the A.Y. 2006-07 and the discussion made above, the addition of ₹ 2,80,476/- is confirmed. 12. Aggrieved with the above decision of the CIT(A), the assessee filed ground 3 of the appeal before us. Further, aggrieved with the relief given to the assessee the revenue is in appeal vide the ground 7 of the appeal. During the proceedings, the assessee filed a written note stating that the AO invoked the provisions of section 41(1) of the Act and according to the said provisions, the AO cannot treat the said amounts as income of the assessee or deem them as case of remission or cessation of liabilities, where the said amounts were not written of by the assessee in the books of the assessee. During the proceedings before us, the assessee filed case laws to support view including the Pune bench decision in the case of M/s Atidab Concrete Pipes and Products Pune vide ITA no 1017/Pn/2002 to support the above. Further, counsel s ..... X X X X Extracts X X X X X X X X Extracts X X X X
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