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TMI Blog2020 (1) TMI 955X X X X Extracts X X X X X X X X Extracts X X X X ..... ber And Ms Suchitra Kamble, Judicial Member For the Assessee : Shri Shaantanu Jain, Advocate For the Revenue : Shri S.N. Meena, Sr. DR ORDER PER R.K. PANDA, AM: This appeal filed by the assessee is directed against the order dated 30th October, 2018 of the CIT(A)-10, New Delhi relating to assessment year 2014-15. 2. Although a number of grounds have been raised by the assessee, these all relate to the order of the CIT(A) in confirming the addition of ₹ 48,17,761/- made by the AO u/s 68 of the IT Act being the amount outstanding in the name of the three sundry creditors. 3. Facts of the case, in brief, are that the assessee is an individual and is the proprietor of M/s Macrame Designs engaged in the business of manufacturing and export of readymade garments and also derives income from job work for local market, fabric sale to local market, etc. She filed her return of income on 27th September, 2014 declaring the total income of ₹ 9,67,820/-. During the course of assessment proceedings, the AO noted that on a total turnover of ₹ 7.72 cro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e same to the assessee. After considering the contents of the remand report and the rejoinder of the assessee to such remand report, the ld. CIT(A) upheld the addition made by the AO. While doing so, he noted that the concerned Inspector had given the report that either these parties are not residing at the address given by the assessee or are not doing any business and the assessee could not substantiate the genuineness of such transactions by furnishing the evidence in the form of gate pass, delivery challans, copy of transporters bills, etc. 6. Aggrieved with such order of the CIT(A), the assessee is in appeal before the Tribunal. 7. The ld. counsel for the assessee, at the outset, strongly challenged the order of the CIT(A). He submitted that the assessee has filed the audit report and no defects were pointed out by the auditors. Referring to various pages of the paper book, the ld. Counsel drew the attention of the Bench to the confirmations along with copy of account statement of the three parties. He submitted that the payments were made in subsequent year and the assessee is regularly purchasing from the said parties which ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ted, then, no addition on account of sundry creditors could be made. 13. Relying on various other decisions filed in the paper book, he submitted that the addition made by the AO and sustained by the CIT(A) by invoking the provisions of section 68 of the Act in respect of the three sundry creditors is not sustainable especially when the trading results of the assessee have not been disturbed. 14. The ld. DR, on the other hand, heavily relied on the order of the CIT(A). He submitted that the amount outstanding in the name of the three sundry creditors has rightly been added by the AO u/s 68 of the IT Act since the assessee has miserably failed to substantiate with evidence to the satisfaction of the AO regarding identity of those creditors and the genuineness of the transaction. Referring to the copy of the remand report, which has been reproduced by the CIT(A) in the body of the order, he submitted that the Inspector had categorically mentioned that out of the three creditors, address of the two are the residential addresses from where no business is being carried out and in respect of the third creditor, the same is not dealing with items in which ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sel for the assessee that since the AO has accepted the purchase, sales and the trading results and has not rejected the book results, therefore, the provisions of section 68 of the IT Act cannot be attracted to such outstanding sundry creditors. 17. We find some force in the above arguments of the ld. Counsel. It is an admitted fact that the AO has not doubted the purchase, sales and the trading results and the books of account have not been rejected. The assessee has also substantiated with evidence that the payments have been made in subsequent years to the said parties and the assessee is also making regular purchases from the said parties in the subsequent years and the Revenue has not taken any step to reopen the assessment. 18. We find the Hon ble Delhi High Court in the case of CIT vs. Ritu Anurag Aggarwal (supra) , while deciding an identical issue has dismissed the appeal filed by the Revenue as under:- 1. The assessee filed his return for the Assessment Year 2001-02, declaring an income of ₹ 4,10,544/-. This return was processed under Section 143(1)(a) and the case was selected for scrutiny thereafter. Notice und ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t consider this aspect while making additions of the sundry creditors under Section 68 of the Income Tax Act. As there was no case for disallowance for corresponding purchases, no addition could be made under Section 68 inasmuch as it is not in dispute that the creditors outstanding related to purchases and the trading results were accepted by the AO. 5. We are, therefore, of the opinion that no substantial question of law arises for consideration in this case. The appeal is accordingly dismissed. 19. We find the Hon ble Punjab Haryana High Court in the case of PCIT vs. Kulwinder Singh (supra), while holding that the provisions of section 68 are not attracted to the amounts representing purchases made on credit, has observed as under:- 4. A perusal of the order passed by the Tribunal shows that the assessee had shown numerous sundry creditors along with details in his balance sheet. The assessee being a road Contractor received material for the construction of the road. The amounts in question represented purchases made on credits. According to Section 68 of the Act, where any sum is found credited in the books ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... year. Further, the trade creditors in the earlier years, i.e. assessment years 2007-08 and 2008-09 stand accepted in scrutiny assessments. Thus, the genuineness of the expenses under consideration cannot be doubted. Moreover, the genuineness of the expenditure was not at all called into question. It was only that noverification thereof raised doubts of the incurrence thereof. Then, even if the credits concerning the purchases and transportation of the material are not to be accepted, as discussed, still, the provisions of Section 68 of the Act cannot be invoked to make the addition. 20. We find the Hon ble Allahabad High Court in the case of CIT vs. Pancham Dass Jain (supra), while holding that the provisions of section 68 would not be attracted to purchases made on credit, has observed as under:- 6. We have heard Shri Shambhoo Chopra, learned standing counsel for the Revenue. 7. He submitted that as the respondent-assessee was unable to produce the alleged creditors the provisions of Section 68 of the Act was squarely attracted in the present case and the assessing authority has rightly added the two amounts at the hands of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as produced before him has made the entire addition u/s 68 when most of the amount were not credited during the year and they are coming from the earlier years. He thus strongly supported the order of the Ld. CIT (A). 17. We have heard the rival submissions and also perused the relevant finding given in the impugned orders as well as material referred to before us. The entire basis for the additions made by the AO is that, none of the parties have responded to notices sent u/s 133(6) and beyond that he has neither examined the nature of sundry creditors or ledger account or the bills. First of all, from the perusal of the copy of the ledger account and the balance sheet, it is quite clear that during the year addition on account of sundry creditors are only ₹ 35,36,546/-; and if AO is invoking section 68, ostensibly, the entire addition of ₹ 2,22,59,664/- could not have been made u/s 68, because these are not credits in the books of account for the relevant previous year. Moreover, from the perusal of the ledger account of the sundry creditors it is seen that all these parties were having regular transactions from whom assessee has been making purchase ..... X X X X Extracts X X X X X X X X Extracts X X X X
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