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TMI Blog2017 (1) TMI 1001X X X X Extracts X X X X X X X X Extracts X X X X ..... ated order for the sake of convenience. First we take up Revenue's appeal in ITA No.1933/Kol/2012. 3. Facts in brief are that assessee is a partnership firm and acting as stockist of lottery tickets of M/s Tiger Associates (MTA for short). The assessee for the year under consideration filed its return of income declaring total income of Rs. 29,97,712/-. Thereafter the case was selected under scrutiny and accordingly notice u/s. 143(2) was issued and assessment was completed u/s. 143(3) of the Act at a total income of Rs. 7,62,59,520/- after making certain addition / disallowance. 4. First issue raised by Revenue in this appeal is that Ld. CIT(A) erred in deleting the addition made by AO for Rs. 6,75,99,557/- on account of difference in opening balance of sundry creditor namely MTA. 4.1 The assessee in the immediate previous financial year has shown MTA as creditor for Rs. 6,99,16,984/- as on 31.3.2007 which was brought forward as opening balance to the year under consideration as on 01.04.2007. The Income Tax Inspector was deputed to verify the figure of sundry creditor as discussed above in the course of assessment proceedings. The IT Inspector in turn submitted that MTA has m ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... find any mistake in the Appellant's accounting system. Even Best & Co. by not debiting the Appellant did not reduce the liability. In the event of any dispute the liability would fall on the Appellant on the date when they accepted the bill and challan. Their argument about the return of goods sold till the draw date does not reduce the liability of the Appellant. On careful consideration on the order passed by the AO, arguments submitted by the AR and confirmation of the party. AO is directed to delete the addition of Rs. 6,75,99,577.00. This ground is allowed." Being aggrieved by this, Revenue has come up an appeal before us. 6. Before us Ld. DR for the Revenue has filed written submission, which is reproduced below:- 1. The AO made an addition of Rs. 6,75,99,577/- on account of difference in the opening balance as on 01.04.2007 with that of its principal, Tiger Associates. The figures as reported by M/s. Tiger Associates as opening balance at Rs. 80,051.50(Cr.) for WB State and Rs. 22,37,355.50 (Dr) for other state and as per the records of the assessee the corresponding figures are Rs. 80,051.50 (Dr) for WB state and Rs. 6,99, 16,984/- for other states. It is also to brin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... owards the alleged liability of the former to the latter and an immediate credit entry of Rs. 7,20,74,2881- on 01.04.2007 on account of the alleged transfer of liability to M/s. Tiger Associates? It is reiterated that the copy of ledger account of the assessee sent by M/s. Best & Company on 09.03.2012 has not shown any such entries. iv) The AO during the course of assessment was not supplied with any details of sundry creditors for Rs. 9,43,82, 663/- as on 31.03.2008 as evident from his observation made in the order dated 30.12.2010 at para-2 of page-4. Similarly during the course of remand proceedings the assessee failed to furnish the details of sundry creditors as on 31.03.2008 shown at Rs. 9,43,82,663/-. Through the breakup of sundry creditors as on 31.03.2007 was produced before the AO and the AO observed that credit balance of Rs. 6,99,16,984/- was shown in the name of M/s. Tiger Associates out of a total liability of Rs. 7,33,79,571/-. The said liability of Rs. 6,99,16,984/- was not confirmed by M/s. Tiger Associates in their letter dated 15.12.2010 as no such debit entry for Rs. 6,99,16,984/- was found in the ledger account of the assessee firm. 4. It was hence conclude ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... company there is no reason to accept the assessee's claim that any liability to M/s. Best & Company or M/s. Tiger Associates to the tune of Rs. 6,99,16,984/- as on 31.03.2007 did actually exist and that its liability to M/s. Best & Company as on 01.04.2007 was transferred to M/s. Tiger & Associates. Accordingly the entire liability of Rs. 6, 77,59,680/- [Rs. 6, 99,16,984/- - Rs. 22,37,355/- + Rs. 80051/-} and not Rs. 6,75, 99, 577/- wrongly calculated by the Ld. A.O should be treated as bogus credit created by the assessee. " There are no such transactions and/or entries shown to evidence that even any liability of M/s. Best & company was transferred to M/s. Tiger & Associates as on 01.04.2007. 5. In the respect it is submitted that the CIT(A) deleted such addition solely and exclusively relying on the reply of M/s. Best & Co. by acknowledging the system and account without going into questions raised by the AO in the remand report. It seems that the CIT(A) acted in haste in concluding that there was no difference between the assessee's accounts with that of Best & Co. In fact the AO has raised four pertinent points which were neither countered by the appellant in thei ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , therefore, no disallowance can be made. However on merit as well we find that the MBC has confirmed the value of the tickets sold to the assessee which is exactly matching as shown in the books of account of the assessee. To the contrary, Ld. DR has not brought any defect in the confirmation received from MBC. Simply assessee has booked the sundry creditor liability with MTA out of ignorance cannot form the basis for the addition of such sundry creditor. Similarly what policy is being adopted by MBC for recognizing the sales Revenue has no bearing to the facts of the case. On perusal of the ledger of MTA, we find that the accounts were settled in the year under consideration. In view of the above, we find no reason to interfere in the order of Ld. CIT(A). We hold accordingly. Hence, this ground of Revenue is dismissed. 8. Next issue raised by Revenue in this appeal is that Ld. CIT(A) erred in deleting the addition made by AO for Rs. 21,23,616/- on account of non disclosure of income from interest. 9. The assessee has shown net profit for Rs. 51,04,328/- in its audited profit and loss account. However, AO observed from the computation of income filed by assessee that net profit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... laced. The ld. AR supported the order of the ld. CIT(A). 12. We have heard the rival contentions of both the parties and perused the materials available on record. From the aforesaid discussion, we find that AO made the addition on account of difference in the net profit shown by assessee in its profit and loss account and profit shown in the computation of income. However on perusal of audited profit and loss a/c of assessee along with computation of income, we find that assessee in its profit and loss a/c has not shown any remuneration to the partners but same was shown in the profit and loss account appropriation. However the amount shown in the computation of income was after deduction of partner's remuneration. Therefore, mismatch in figure was observed. Therefore after considering the submission of the assessee, we find no difference between amount of profit shown in the profit and loss account and in the computation of income. As such, we find no infirmity in the order of Ld. CIT(A). We hold accordingly. This ground of Revenue is dismissed. 13. Next issue raised by Revenue in this appeal is that Ld. CIT(A) erred in deleting the addition made by AO for Rs. 14,18,161/- on ac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... its sister concerns and relatives can be said to be out of the funds of the assessee which are borrowed from the Bank and such borrowed funds have been utilized in non-interest bearing loans and advances? ii) Whether there was any commercial expediency for grant of the loan to such parties and such loans were given for purpose other than business purpose? 7. In the instant case the loans and advances were given without any business consideration with a view to accommodating its sister concerns and close relatives. It has not derived any commercial benefit by advancing such loans. The Ld. CIT (A) has deleted the addition on the ground that the assessee did not advance any interest free loan to its sister concern and relatives whereas in the computation portion it was mentioned that "no interest was charged from debtors". Merely asserting that no interest bearing funds were advanced does not warrant deletion of addition which is based on strong logic. In fact there is no contradiction in this respect. It is the case of the AO that interest bearing funds were advanced to sister concern and relatives on which no interest was charged. Thus, the AO has correctly disallowed the entir ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssee was asked to give why the interest should not be charged from the said parties. Neither the assessee has filed the details of parties, nor was any interest from such parties shown in the P & L A/c. Neither the copies of the creditors, nor the Debtors were filed. Therefore, 12% interest is liable to charged from the Debtors which comes to Rs. 19,18,963/-. As the assessee has paid the bank interest of Rs. 14,18,161/- to the bank [in the immediately preceding year, an interest of Rs. 6,30,510/- was debited to the P & L A/c in the AY 2007-08 and in the AY 2006-07 a sum of Rs. 63,922/- was paid to the bank]. Thus disallowance on this account for not charging interest from relatives and associates of the partners is added to the extent of Rs. 14,18,161/-." From the above observation, we find that AO sought clarification from assessee for not charging the interest amount from debtors shown in the balance-sheet of assessee. We accordingly find that there is no dispute with regard to amount of debtor shown in the balance-sheet vis-à-vis interest free loan provided by assessee. In the absence of any specific finding with regard to diversion of fund we are not agreed with the arg ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ss Profit rate of 0.41% on gross turnover of Rs. 111,16,48,144/- determining GP at Rs. 45,57,757/- as against GP of Rs. 40,73,301/-. IT appears that the Ld. AO has not brought out any material for rejection of the Books of account and cogent reasons for adoption of GP rte at 0.41% have not been given the issue of addition ma9y kindly be considered on merit." From the perusal of remand report, it is ample clear, that there is no cogent reason for rejecting the books of account and estimating the gross profit @ 0.41%. This fact has been duly accepted by AO in its remand report. In this view of the matter, we find no reason to interfere with the findings arrived by the Ld. CIT(A). Under the circumstances, this issue of Revenue's appeal is dismissed. 22. In the result, Revenue's appeal is dismissed. Coming to assessee's appeal in ITA No. 2446/Kol/2013. 23. Sole issue raised by assessee in this appeal is that Ld. CIT(A) erred in confirming the order of Assessing Officer by sustaining the disallowance of Rs. 19,22,662/- on account of credit entries found in the books of account of assessee. 24. Assessing Officer in his assessment order observed that the credit entry in the name of M ..... X X X X Extracts X X X X X X X X Extracts X X X X
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