9911796707
TMI Blog2020 (5) TMI 622X X X X Extracts X X X X X X X X Extracts X X X X ..... f unexplained creditors - HELD THAT:- Referring to assessee submission that all the details were given before the CIT(A) and it was submitted that purchases have been made from the parties continuously throughout the year for which cheques were issued to them at the end of the year. However, we find the ld.CIT(A) sustained the addition on the ground that the cheques were not encahsed during the year and the amounts were unpaid and the assessee did not furnish any further details to show when and how the payments to the sundry creditors have been made in subsequent years. Restore the issue to the file of the AO with a direction to give one final opportunity to the assessee to substantiate regarding the subsequent clearance of the cheques and give an opportunity to the assessee to file confirmations from the said sundry creditors. The Ground No.2 raised by the assessee is accordingly allowed for statistical purposes. Addition on account of low household expenses, loans from friends and opening cash - HELD THAT:- When the assessee is having a turnover of more than ₹ 3 crores during the year and the assessee has filed the cash flow statement of the whole year and the ass ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r, relating to the A.Y. 2010-11. 2. In ground No.1, the assessee has challenged the order of the CIT(A) in sustaining the addition of ₹ 2,67,190/- on account of notional interest on interest free advances given. 3. Facts of the case, in brief, are that the assessee is an individual and derives income from trading of medicines in wholesale under the name and style of the proprietorship concern M/s Manish Kumar Co. He filed his return of income on 20th September, 2010, declaring the total income at ₹ 4,34,502/-. The AO, during the course of assessment proceedings, noted that the assessee has given advances of ₹ 49,50,000/- to ten different persons and no interest has been received from the above persons. However, the assessee has paid bank interest. The AO, therefore, applying the interest rate of 15% per annum against such interest free advances, made an addition of ₹ 7,42,500/- to the total income of the assessee being deemed interest on such advances. Similarly, the assessee had shown advance of ₹ 59,95,000/- to M/s R.S. Distributors, Ghaziabad free of interest. The AO, therefore, made addition of ₹ 4,81,250/- being deemed interest @ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o the assessee to substantiate his case. The first issue raised by the assessee in the grounds of appeal is accordingly allowed for statistical purposes. 7. The assessee in his second ground has challenged the order of the CIT(A) in confirming the addition of ₹ 28,43,920/- made by the AO on account of unexplained creditors. 8. Facts of the case, in brief, are that the AO, during the course of assessment proceedings, asked the assessee to prove the identity, credit worthiness and genuineness of transaction with the following creditors:- M/s Neelam Enterprise 3,00,000/- M/s Kuber Sale Agencies 1,30,000/- M/s Shakti Medical Agencies 4,01,263/- M/s Sharma Medicine Centre 2,35,070/- M/s Veer Medical Co. 10,73,380/- M/s Ruby Hotel Banuet 7,04,207/- Total 28,43,920/- 9. Since the assessee failed to prove the identity and credit worthiness of the above parties with any sort of authentic evidence, the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... reditors. The appellant could not furnish any satisfactory details to show the genuineness of such purchases. Under the circumstances, such sundry creditors have remained unexplained and therefore the AO was justified to make addition of ₹ 28,43,920/-. The same is hereby confirmed. Ground of appeal No.3 is dismissed. 11. Aggrieved with such order of the CIT(A), the assessee is in appeal before the Tribunal. 12. We have considered the rival arguments made by both the sides, perused the orders of the AO and the CIT(A) and the paper book filed on behalf of the assessee. It is the submission of the ld. Counsel for the assessee that out of six trade creditors as mentioned by the AO, M/s Neelam Enterprise and M/s Ruby Hotel Banuet are debtors and not creditors. It is also his submission that all the details were given before the CIT(A) and it was submitted that purchases have been made from the parties continuously throughout the year for which cheques were issued to them at the end of the year. However, we find the ld.CIT(A) sustained the addition on the ground that the cheques were not encahsed during the year and the amounts were unpaid and the assessee did not furnish ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 20,000/- per month. Further, the appellant has shown receipt of cash from friends of ₹ 55,000/- on 04-01-2010/05-01-2010 and ₹ 95125/- on account of opening cash in hand as on 01-04-2009. The appellant could not furnish any satisfactory details in support of the same. Therefore, the AO has made addition on these accounts for ₹ 2,34,350/-. During the appellate proceedings the submission of the AR is very vague without any supporting details. In the circumstances there is no material to support the availability of cash in hand of ₹ 95125/- as on 01-04-2009 and further receipt of cash of ₹ 55,000/- from friends during the year. It is noted that the appellant has shown very low withdrawals and the AO has been reasonable to estimate the same for ₹ 2,40,000/-. Under the facts it is held that the AO was justified to make addition of ₹ 2,34,350/-on these accounts. The same is hereby confirmed. Ground of appeal No.4 is dismissed. 16. Aggrieved with such order of the CIT(A), the assessee is in appeal before the Tribunal. 17. The ld. Counsel submitted that he has filed cash summary of the transactions during the year copy of which is placed at ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the money in bank account and why such huge cash amount was lying with him. When the assessee is having a turnover of more than ₹ 3 crores during the year and the assessee has filed the cash flow statement of the whole year and the assessee is a person of means, therefore, merely because the assessee has not deposited the cash in bank account cannot be a ground for disbelieving the opening cash of ₹ 99,125/- which, in the peculiar facts and circumstances of the case, appears to be reasonable. We, therefore, set aside the order of the CIT(A) on this issue and direct the AO to delete the addition of ₹ 80,000/-. So far as the amount of ₹ 50,000/- received by the assessee from his friends and relations in cash is concerned, no justification or no details whatsoever was filed either before the AO or before the CIT(A) or even before us. Therefore, in absence of any details of such cash loan received from his friends and relations and considering the fact that the assessee was showing a huge amount of opening cash balance, there was no justification for receiving cash from friends and relations, the addition of ₹ 55,000/- made by the AO and sustained by t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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