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TMI Blog2016 (12) TMI 1476X X X X Extracts X X X X X X X X Extracts X X X X ..... assing of the above said assessment order. In view of this we set aside the addition of ₹ 19.50 lakhs back to the file of the Ld. assessing officer and direct the assessee within 3 months of this order to produce the directors of the above company along with the requisite details such as the sources of funds deposited by those companies into the bank account in cash before issue of the cheques and the transaction price of purchase of shares of the companies to the satisfaction of the assessing officer to prove the identity, creditworthiness, and genuineness of the transaction of the sale of shares of futuristic Ltd by the assessee. - Decided in favour of assessee as directed Disallowance being 20% of the expenses - disallowance has been made by the Ld. assessing officer as the assessee has failed to produce the books of accounts with supporting bills and vouchers - Held that:- The assessee could not produce the books of accounts before the Ld. assessing officer and therefore the disallowance has been made by the Ld. assessing officer estimating 20% of the all the expenditure of the assessee including the opening stock as disallowable. The Ld. 1st appellate authority has ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ary of alleged accommodation entries. 6] That the assessing officer made addition of Us. 3550000/- and confirmed by the learned C1T(A] on account of sale of investment merely on the basis of suspicion without bringing any adverse material on records. 7) That genuine sale of investments held in shares of other company has wrongly been added to the income of appellant merely on the basis of evidence procured from third party without putting the evidence (bank statements etc.] for cross examination of the assessee. 8) That 20% expense of ₹ 2780187 have been disallowed on the basis of guess work and sustained by the learned CIT(A), when the accounts are audited by the chartered accountant and have been prepared by following various guidelines and accounting standards prescribed under the statute. 9) That once books of accounts have been rejected, any addition based on same set of accounts cannot be sustained. 2. Assessee is a private limited company engaged in the business of construction and investment. For the year, It filed its return of income on 19/ 11/ 2003 declaring a loss of ₹ 373570/ . No assessment was framed under section 143 (3) of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... under section 133 (6) of the income tax act through his inspector. However, the report was received from the inspector that these parties are not found in existence at the given address and therefore assessee was required to produce them in order to discharge its onus to prove their identity, creditworthiness and genuineness of the above transaction of the sale of the shares. In view of this, the assessing officer held that the above transaction is bogus and his view was further supported from the information called from the bankers of those parties wherein the bank statement received revealed that the cash has been deposited in the respective accounts, before the clearance of cheque to the assessee company. The Ld. assessing officer was also privy to the information from investigation wing that the these parties are among the group companies controlled by Sh. Ram Garg, who has carried out the business of providing bogus accommodation entries. Further during the course of assessment proceedings, the Ld. assessing officer further, came to know that the assessee has further sold sales of ₹ 16 lakhs and for those sales the assessee was asked to prove the identity , creditworthi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... idences collected by the Ld. assessing officer. 6. In response to this Ld. departmental representative submitted that the assessee has been given enough opportunity of hearing before the 1st appellate authority as well as before the assessing officer. However, it failed to comply with the condition of producing the parties before the Ld. assessing officer and hence the addition has been rightly made by the Ld. assessing officer and confirmed by the 1st appellate authority. 7. We have carefully considered the rival contentions and perused the material available before us. Undoubtedly, the assessee has sold the investment of shares in one company held by it as an investment in the past year. However, the investment have been sold to the 2 parties whose name, address, permanent account number was furnished by the assessee to the assessing officer, but the Ld. assessing officer on issue of notice under section 133 (6) of the income tax act through the inspector could not find the existence of those parties. The assessee says that these parties are in existence. However it could not produce them because of the shortage of time before the Ld. assessing officer. We are of the opinio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... been made by the Ld. assessing officer as the assessee has failed to produce the books of accounts with supporting bills and vouchers before the Ld. assessing officer. Therefore, the correctness of the claim made by the assessee remained unverified. And, therefore, the Ld. assessing officer rejected the books of accounts applying the provisions of section 145 (3) of the income tax act and disallowed 20% of those expenses amounting to ₹ 2896040/ . On appeal before the 1st appellate authority, he has granted relief to the assessee to recompute the addition based on 20% of disallowance out of purchases and other disallowances excluding opening stock of the current year, or closing stock of the previous year. Before the 1st appellate authority the appellant submitted that the books of accounts could not be produced before the Ld. assessing officer because of death of one of its key director and therefore it causes genuine hardship to the assessee, as it could not locate the books of accounts. 9. The Ld. authorized representative once again reiterated the facts stated at Para No. 4.22 of the order of the 1st appellate authority wherein it has been mentioned that due to the deat ..... X X X X Extracts X X X X X X X X Extracts X X X X
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