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TMI Blog2018 (3) TMI 892X X X X Extracts X X X X X X X X Extracts X X X X ..... ddition of ₹ 35,25,490/- as has been worked out by the Ld. CIT(A). The additions on account of sundry creditors raised in both the appeals are dismissed. Decided in favour of assessee Addition on account of unexplained loan - Held that:- CIT (A) has noted that the party was old lender and assessee has filed his PAN details which has been verified by the AO; copy of return of income for the current year of the said creditors which reflects his creditworthiness from the quantum of income shown by him; and the genuineness of the transaction is also proved as the transaction is through banking channel. Not only that, he has already directed the Assessing Officers of the said creditors to initiate that the scrutiny proceedings in their cases. The observation and the finding of the Ld. CIT(A) as incorporated above does not call for any interference which is based on correct appreciation of law and facts and consequently, the ground raised by the revenue is dismissed - ITA No.:- 6198/Del /2014 And ITA No.:- 6609/Del /2014 - - - Dated:- 13-3-2018 - SHRI AMIT SHUKLA, JUDICIAL MEMBER AND SHRI PRASHANT MAHARISHI, ACCOUNTANT MEMBER For The Assessee : Shri S.K. Jawarani, Adv ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he assessee. Further, AO has made addition on account of unsecured loans of ₹ 81 lacs shown in the name of Shri Brijesh Kumar Jaiswal on the ground that assessee could not furnish relevant confirmation, details and documents except for photocopy of TDS certificate and Form 16A in respect of interest paid to the said person. Since, assessee could not establish the ingredients of section 68; he therefore, added the said amount of ₹ 81 lacs. Lastly, on perusal of various heads of expenses debited in the profit and loss account, AO had observed that assessee could not produce books of accounts alongwith relevant bills and vouchers for verification and for checking the genuineness of the said expenses. Accordingly, he rejected the books of accounts and audit report alongwith the trading result by invoking the provision of section 145(3) and thereby estimating the net profit rate of 8% of the gross contract receipt from operations. The net profit rate of 8% was determined at ₹ 3,71,48,550/-. Post application of net profit rate, he has not given any deduction of depreciation or salary. Accordingly, the net income from the business was taken of ₹ 3,71,48,550/- inste ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... considered the entire facts of the case and the arguments forwarded by the appellant in this regard. The appellant had already taken substantial loans from the person in earlier years which have been accepted by the department and no adverse view was ever taken regarding the same. Perusal of TDS certificate (Form No. 16A) by which the appellant deducted tax on interest paid to Shri Brijesh Kumar Jaiswal, from whom unsecured loans were obtained by the appellant, it is observed that the certificate clearly shows the PAN of the party. The AO has not at all bothered to verify the authenticity of PAN and the fact regarding the filing of the return, by the party. During the appellate proceedings, the AO has now verified that PAN quoted by the party is genuine. Moreover, since the money has travelled to the appellant through banking channel, the genuineness of transaction cannot be doubted. Regarding the creditworthiness of Shri Brijesh Kumar Jaiswal, the copy of return filed by him shows his gross total income to the tune of ~25,80,033/-. This return has been filed by Shri Brijesh Kumar Jaiswal on 13.10.2011 with DCIT, Circle 2, Gorakhpur which is much prior to the initiation of scrutin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... had accepted the outstanding amount against four trade creditors only and reduced the addition from ₹ 1,71,03,987/- to ₹ 1,34,22,499/-. After sustaining this much amount of addition on account of sundry creditors, he further upheld action of the AO in rejecting the trading result in the books of accounts and the application of net profit rate of 8%. However, he has accepted the assessee s claim for allowing of depreciation on such an amount following the various judgments of Hon ble High Courts as well as the CBDT circular; and accordingly the addition on account of net profit rate was worked out of ₹ 35,25,490/-. Since he had already sustained the addition on account of sundry creditors which was a higher amount, he did not made separate addition in terms of application of net profit of ₹ 35,25,490/-. The case of the revenue before us is that, the outstanding trade creditors is a part of balance sheet item, therefore, separate addition can be made over and above the business income assessed by applying the net profit rate after rejecting the books of accounts, whereas the case of the assessee is that, firstly, looking to the entire gross turnover of the as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 5,25,490/- as has been worked out by the Ld. CIT(A). 8. In view of this finding, the additions on account of sundry creditors raised in both the appeals are dismissed. The grounds raised by the assessee on account of sundry creditors is treated as allowed only to the extent that addition on account of net profit rate will get sustained; and consequently revenue s ground No. 1 is treated as dismissed. 9. Lastly, coming to the addition on account of unexplained loan as raised by the revenue in ground No. 2, we find that Ld. CIT (A) has noted that the party was old lender and assessee has filed his PAN details which has been verified by the AO; copy of return of income for the current year of the said creditors which reflects his creditworthiness from the quantum of income shown by him; and the genuineness of the transaction is also proved as the transaction is through banking channel. Not only that, he has already directed the Assessing Officers of the said creditors to initiate that the scrutiny proceedings in their cases. The observation and the finding of the Ld. CIT(A) as incorporated above does not call for any interference which is based on correct appreciation of law and ..... X X X X Extracts X X X X X X X X Extracts X X X X
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