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TMI Blog2018 (9) TMI 1312X X X X Extracts X X X X X X X X Extracts X X X X ..... n u/s 68 the Assessing Officer has to satisfy himself that the sum credited in the books of the assessee are unexplained. or the explanation offered by him is not satisfactory. In the present case we observe that assessee has received huge amounts as fee for providing services to these parties and therefore, payments received from these companies cannot be termed as ingenuine. The Assessing Officer in his order has not doubted the creditworthiness, identity or genuineness of transactions. He has made the addition only due to difference in amounts relating to two companies and for remaining two companies he had made addition as the notices issued to them u/s 133(6) had returned back. This action of Assessing Officer is not justified as the differences in balances confirmed in two companies cannot be termed as unexplained credits without doubting the identity, creditworthiness and genuineness of transactions. Moreover, only the difference has been added back u/s 68 whereas transactions has not been doubted. This difference coulc have been due to debit or credit notes. Moreover, the Assessing Officer did not confront these confirmations to assessee. Therefore, no addition could have b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing relied upon by him in making addition in the hands of the appellant. 2. At the outset, Learned A. R. submitted that assessee is engaged in the service sector as a service providing company and it provides training to various candidates for becoming a service agent sponsored by various insurance companies and in return the assessee gets fee from these insurance companies. It was submitted that during the year under consideration during assessment proceedings the Assessing Officer observed that as per Form-26AS the receipt from various parties was to the extent of ₹ 1,99,40,645/- whereas the assessee had declared in its profit loss account an amount of ₹ 1,27,76,402/- only and therefore, the assessee was show caused to explain the same. It was submitted that the bills raised by the assessee at the end of the earlier year i.e. financial year 2008-09 were acknowledged by some of the insurance companies during the year under consideration and they had credited the commission and had deducted TDS in the year under consideration and for which detailed statement of bills related to earlier years were submitted and our attention was invited to pages 6 to 9 of the pap ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dition on account of balance outstanding to their credit u/s 68 of the Act. Learned A. R. submitted that the said addition u/s 68 cannot be made as all the parties are well established insurance companies and all the payments were received through cheques for services to be rendered and therefore, the addition was not warranted. Reliance in this respect was placed on an order of Hon'ble Orissa High Court in the case of Aurobindo Sanitary Stores vs. CIT 2005-(IT3)-GJX-0127-ORI. Further reliance was placed on an order of Delhi Tribunal in the case of DCIT vs. Divine International [2012] 134 ITD 148-TDEL. Without prejudice Learned A. R. submitted that merely because of non furnishing of reply by insurance companies, the addition cannot be made and reliance was placed on the judgment of Hon'ble Supreme Court in the case of Orissa Corporation wherein the Hon'ble Court has held that if the notice issued u/s 133(6) returns back unserved, the assessee cannot be held liable and addition cannot be made for credits standing in their names. Learned A. R. submitted that Lucknow Bench of the Tribunal in the case of Astha Infra Heights Pvt. Ltd. relying on the judgment of Hon'ble ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ak-up of which is placed at page 56 of the paper book. For the sake of completeness, the break-up of debtors as on 31/03/2009 is reproduced below: 1. Aviva Life Insurance Co. 25,110 2. Bharti Axa Insurance Co. 9,34,300 3. Birla Sun Life Insurance Co. 20,55,911 4. HDFC Standard Life Insurance Co. 1,94,775 5. ING Vysys Life Insurance Co. 2,43,750 6. Met Life Insurance Co. 2,80,490 7. Reliance Life Insurance Co. 30,00,000 8. TATA AIG Life Insurance Co. 2,97,000 These sundry debtors include all those companies for which the assessee had claimed that the bills were raised by the assessee to these companies at the end of earlier year. The amount of sundry debtors as on 31/03/2009 tallies with the amount of bills raised at the close o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ance companies to file confirmation and without confronting the assessee with the differences in confirmations from ICICI and MAX Life, held the credits to be unexplained u/s 68 of the Act and made addition accordingly. We find that all these companies are big companies whose identity, creditworthiness and genuineness cannot be doubted as all the payments were received through cheques which is verifiable from pages 56 to 81 of the paper book where the copy of account of these companies, as appearing in the books of the assessee, are placed. For making addition u/s 68 of the Act, the Assessing Officer has to satisfy himself that the sum credited in the books of the assessee are unexplained. or the explanation offered by him is not satisfactory. In the present case we observe that assessee has received huge amounts as fee for providing services to these parties and therefore, payments received from these companies cannot be termed as ingenuine. The Assessing Officer in his order has not doubted the creditworthiness, identity or genuineness of transactions. He has made the addition only due to difference in amounts relating to two companies and for remaining two companies he had made ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed on the given addresses of the creditors. Grievance of the Assessing Officer was that none of the creditors had appeared before him and no written submission/confirmation was filed before him. Assessee has provided complete list of names, addresses and total amount so far as sundry creditors are concerned to the Assessing Officer and after that it is the responsibility of the Assessing Officer to use Revenue Machinery available to him to enquire, find out, investigate and accordingly take the matter to its logical conclusion. This has also been discussed by various judicial pronouncements. The Co-ordinate ITAT Lucknow Bench in ITA No.659/LKW/2016 on the similar issue referred to the judgment of the Hon'ble Apex Court in the case of CIT vs. Orissa Corporation Pvt. Ltd., 159 ITR 78 and observed and held as follows:- we also find that the Apex Court has held in the case of CIT vs. Orissa Corporation Pvt. Ltd. (supra) that if the Assessing Officer issues notice under section 133(6), it is his duty to bring the process to logical conclusion and non-response of such person cannot be held against the assessee. We find that from the entire findings of the Assessing Officer no ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mit those additional evidences after confronting the same before the Assessing Officer to ascertain the veracity of those evidences. Instead of doing this exercise, ld. CIT(A) has summarily rejected the additional evidences placed before him under rule 46A on baseless and frivolous reasons which goes against the principles of natural justice. 14. Taking totality of facts and records into consideration, we find that complete names, addresses, amounts were provided by the assessee including entire confirmation from these creditors as appearing from pages 7 to 99 of the paper book filed before us. Ld. CIT(A) has also not given a clear cut finding on the issue and has simply accepted the version of the Assessing Officer and the Assessing Officer, without taking procedure initiated by him under section 133(6) to a logical conclusion, has held the assessee liable for non-production of creditors, which is not warranted within the purview of tax legislation. 15. In view of the matter and on the basis of analysis and examination of the facts and records hereinabove, we set aside the order of the ld. CIT(A) and allow the appeal of the assessee. 6. Keeping in view these fact ..... X X X X Extracts X X X X X X X X Extracts X X X X
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