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TMI Blog2016 (9) TMI 1327X X X X Extracts X X X X X X X X Extracts X X X X ..... me cases, confirmation leters. We are, therefore, of the view that addition u/s 68 needs to be deleted. Disallowance u/s 41(1) - Held that:- No addition is called for u/s 41(1) of the Act with regard to the sundry creditors. See CIT vs. Bhogilal Ramjibhai Atara [2014 (2) TMI 794 - GUJARAT HIGH COURT] Disallowance of depreciation - Held that:- As regards addition on account of plant and machinery, assessee produced bills of 2,90,183/- for verification. For the remaining amount of addition towards factory building and plant and machinery assessee neither produced any evidence before the assessing authority nor ld. AR has been able to improve his case further than over the facts brought in before the assessing authority in remand report. We are, therefore, of the view that out of the disallowance of depreciation of 90,730/- assessee should be allowed depreciation on 729/- towards factory building and depreciation on plant and machinery at 2,90,183/- as per applicable rates and on the basis of date of purchases of assets. We direct the Assessing Officer to calculate the depreciation accordingly. X X X X Extracts X X X X X X X X Extracts X X X X ..... lities at ₹ 7,90,180/-. 3. Aggrieved, assessee went in appeal before ld. CIT(A) who called for the remand report from the Assessing Officer. Remand report dated 8.2.2010 was placed on record before ld. CIT(A) and after considering the same appeal of the assessee was partly allowed. 4. Aggrieved, assessee is now in appeal before the Tribunal. Assessee has raised 7 grounds of appeal but they can be summarized in three grounds assailing the order of ld. CIT(A) -(i) against rejection of books of account by applying net profit rate @ 8% , (ii) sustaining addition u/s 68 at ₹ 5,68,000/- towards unexplained cash credit and (iii) confirming disallowance u/s 41(1) of the Act at ₹ 87,500/-. 5. Ld. AR submitted that when ld. CIT(A) called for remand report extensive investigation was carried out by ld. Assessing Officer who called for all necessary information which were duly complied by the assessee and the remand report is speaking in all aspects and if one takes the overall view of the remand report, three impugned additions sustained by ld. CIT(A), need to be deleted, as the assessee has produced audited books of accounts, gave complete details including bank account ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t profit of the assessee at 8%.of total turnover i.e. ₹ 10,79,683/-. The assessee has produced audited books of accounts along with supporting documents for verification. The books of accounts produced are taste checked. This is the first year of business therefore GP/NP of earlier years are not available for comparison. During the year the GP is shown at ₹ 19,03,869/- which works out to 13.80%. 4 Regarding unexplained cash credits u/s 63 of the IT Act, letters to the depositors have been issued and from the date made available, the case-wise report is submitted as under; Sl. No. Name of the depositors Amount introduced in Rs. Mode of transaction Document produced by the assessee in paper book Remarks 1 Chandresh R. Bhadresh 4,64,000 DD No.548481, 507712,674 647 Rs.64,000, ₹ 1 lac, & Rs.3 lakh Confirmation & Ledger account PAN AKTPB5917G "Op. Bal. ₹ 2,75,000/- credit during the year by DD ₹ 4,64,000/- on three dates. The depositor has furnished confirmation, bank account copy and for land holding 8A/ 712copies.On verification thereof, the identity, genuineness & credit worthiness satisfied.. 2 Jayanti I. Bhadresh 430000 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... diff 11 Shantilal Vajibhai 70000 Cheque No.622481 BOB Rs.70,000 Confirmation & ledger account The depositor has furnished bank account copy in support of cheque issued. The transaction by bank cheque, it is accepted as genuine. 12 Sun Carting Padra 59622 Purchase material bal. Ledger account enclosed Copy of ledger account filed Sun carting It is creditor for services Copy of contra account is filed. 13 Alpesh Solanki 49000 DD UBI No.01747 dt.30.1.08 Confirmation, ledger account no. PAN The depositor has responded 133(6) letter and he has furnished copy of Union Bank Dhoraji from where DD has been issued. The transaction is genuine. 14 Amrutlal Laljibhai Bhadresha 200000 DD Dena Bank No.5650 Rs.2 lacs Confirmation, ledger account Confirmation from the depositor is received and has furnished land holding documents 8-A/7-12 which is in the joint name with Rameshbhai. The depositor is agriculturist. The transaction is genuine. 15 Amrutlal V. gohel 150000 DD No.507713 SBS Rs.3.50 lacs & DD No.177987 BOB ₹ 2 lacs Ledger account & confirmation filed PAN ABUPG9635Q The depositor is assessed to tax and has complied to the letter u ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... urnished. Prestress wire ind. 3,27,932 6. Ranchhodlal S Parmar ₹ 48,200; on cross verification, one letter is filed stating that the amount is outstanding. The assessee has furnished ledger account copy but no supporting evidence filed 7. Ratlam Wire pvt.itd. Rs, 8000; Transaction material purchase. Assessee to tax PAN AABCR8178G copy of ledger account is filed. It is running account, 8. Morar stone supplier ₹ 15,875; material purchase. Confirmation of account is filed. Assessed to tx at PAN AADFM2064R. 9. Suresh Hiralal Mali ₹ 39,300; Simple letter is filed by the assessee but no supporting bills or work done is furnished till date. 10 Sun Transport Rs -5991 It is running account for transportation of goods, ledger account copy is filed. Submitted, Yours faithfully, Income Tax Officer Ward 3(2} Baroda. 9. Now we proceed ahead to adjudicate the grounds in the light of remand report dated 8/12-03-2010 taking the first ground wherein books of account were rejected and profit was estimated @ 8%. Ld. CIT(A) has confirmed the addition for estimation of net pfotit @ 8% by observing as under :- 2.3. I have considered the submissions of the learned Authori ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g evidence in respect of amount of ₹ 48,200/- in the name of Ranchhodla! S. Parmar, for an amount of Rs,39,300/- in the name of Suresh Hiralal Mali were produced even during the course of remand proceedings. Copies of bills were subsequently filed in respect of the above before the undersigned subsequent to Remand Report. However, apart from facts these bills and vouchers cannot be admitted as there were neither filed during the course of assessment proceedings nor during the course of remand proceedings and there is no justification offered for the same. No respectability is attached to these vouchers filed at this stage particularly when payments are paid in cash in respect of these bills. Looking into these facts it is to be held that books of accounts are not reliable and therefore rejection of the same is upheld. Similarly, estimating the net profit @ 8% is also as proper on the facts and the case.The first ground is therefore rejected. 10. We observe that assessee has produced audited books of account along with supporting documents for verification and the same were test checked. Assessment being of the first year there was no possibility of GP/NP rate of earlier year ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s accepted as genuine. 3. Alpesh Solanki 49000 DD UBI No.01747 dt.30.1.08 Confirmation, ledger account no. PAN The depositor has responded 133(6) letter and he has furnished copy of Union Bank Dhoraji from where DD has been issued. The transaction is genuine. 4. Amrutlal Laljibhai Bhadresha 200000 DD Dena Bank No.5650 ₹ 2 lacs Confirmation, ledger account Confirmation from the depositor is received and has furnished land holding documents 8-A/7-12 which is in the joint name with Rameshbhai. The depositor is agriculturist. The transaction is genuine. 5. Bhupatbhai Solanki 49800 DD No.022747 UBI ₹ 49800 Confirmation & ledger account The depositor has filed confirmation and copy of bank account. He has stated that the amount was withdrawn from bank account ₹ 50,000 on 28.1.06 and given cash of ₹ 49800 to the firm and the said amount is received back by him on 3.4.07. The deposit is genuine. 16. From going through the above observations of ld. Assessing Officer it is amply proved that all the impugned transactions of cash credits are duly explained and identity, genuineness and creditworthiness of each of them are proved in the form of bank a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... undoubtedly a curious case. Even the liability itself seems under serious doubt. The Assessing Officer undertook the exercise to verify the records of the so called creditors. Many of them were not found at all in the given address. Some of them stated that they had no dealing with the assessee. In one or two cases, the response was that they had no dealing with the assessee nor did they know him. Of course, these inquiries were made ex parte and in that view of the matter, the assessee would be allowed to contest such findings. Nevertheless, even if such facts were established through bi-parte inquiries, the liability as it stands perhaps holds that there was no cessation or remission of liability and that therefore, the amount in question cannot be added back as a deemed income under section 41(c) f the Act. This is one of the strange cases where even if the debt itself is found to be non-genuine from the very inception, at least in terms of section 41(1) of the Act there is no cure for it. Be that as it may, insofar as the orders of the Revenue authorities are concerned, the Tribunal not having made any error, this Tax Appeal is dismissed." 20. Respectfully following the judgm ..... X X X X Extracts X X X X X X X X Extracts X X X X
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