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TMI Blog2020 (7) TMI 48X X X X Extracts X X X X X X X X Extracts X X X X ..... ack. Therefore, there was no question of them confirming the transactions. The notices to 02 parties were sent correctly. The confirmations and the transaction considering the facts in hand in totality and in light of voluminous documentary evidences, we do not find any error or infirmity in the finding of the Ld. CIT(A), hence, we decline to interfere with the finding of the Ld. CIT(A). Accordingly, the ground no. 1 raised by the Revenue is dismissed. Excessive payment of salary to Director covered under section 40(A)(2)(b) - HELD THAT:- The undisputed fact is that the AO has not brought any comparable case to demonstrate that the payments made by the assessee were excessive/ unreasonable. A plain reading of Section 40A(2)(b) show that onus has been cast upon the AO to bring on record comparable cases to demonstrate that the transactions made by the assessee with the related parties are unreasonable and excessive. The AO has failed to bring such comparable case on record. Payees are also assessed to tax at the same rate of tax. The CBDT Circular No. 6-P dated 06.07.1968 states that no disallowance is to be made u/s. 40A(2) in respect of the payments made to the relatives and siste ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s given, out of which many were not complied with. This has been explained in the table form as under:- Amount as per books of IKEA Amount confirmed / not replied Balance to be added M/s Anisa Carpets Limited 4612608 4612608 APL Delhi 5765282 5765282 APL Mumbai 4402603 4402603 Asian Handlooms 20855076 20855076 Atlantic Fabrics 9375816 NIL Baranwal Carpet Mfg. Co. 3789345 1915116 1874229 Carpet International 62346423 62346423 Continental Home Furnishings 20400551 20400551 Coronet Products Pvt. Ltd. 3619691 Confirmed NIL Cosco India Ltd. 4560226 4560226 Accent s for living 2092517 2092517 AL Paper House 7633702 7633702 Vallabh Fabrics Ltd. 8994889 Confirmed NIL JS Gupta Sons 4321965 4321965 Devtara Rag Rugs 8060311 8060311 Total Addition 146925493 3.1 The AO accordingly made the addition of ₹ 146925493/-. 4. Before the Ld. CIT(A), the Assesee furnished confirmations as additional evidences under Rule 46A of the I.T. Rules. The Ld. CIT(A) called for a Remand Report. The AO submitted the Remand Report dated 11.10.2010 wherein he has not considered the additional evidences. Once again the Ld. CIT(A) asked the AO to submit the detailed Remand Report and the same was submitted by th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is a say of the Ld. DR that Ld. CIT(A) ought to have confirmed the difference of ₹ 2.22 crores whereas the Ld. CIT(A) has confirmed only ₹ 1.01 Crores. 6. We have given the thoughtful consideration of the orders of the authorities below. It is an undisputed fact that the AO has simply added the balance as on 31.3.2004 without realizing that the entire credit balance were the outcome of the purchases made during the year. It is also undisputed that in the immediately succeeding years the outstanding have been paid by the assesee. Once the purchases have been accepted as genuine and no adverse inference has been drawn, In our considered opinion the lower authorities were not at all justified in making the addition of the balance outstanding as on 31.3.2004. Our view is fortified by the decision of the ITAT, Delhi Bench A (Special Bench) in the case of Manoj Aggarwal vs. Dy. CIT (Delhi) (SB)113 ITD 377 and the relevant part thereof read as under:- 177. We have carefully considered the arguments of both the sides. We are unable to subscribe to the contention of Mr. Sudershan Kapoor, the learned counsel for one of the interveners that where an entry has been made in the book ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... addition to paying the tax thereon at concessional rates under the VDIS. Once the amount is credited the same cannot be taxed again for any assessment year under the provisions of the Income-tax Act, 1961. Supposing, the assessee in the example credits the books of account with the amount of ₹ 5 lakhs as on 31-12-1997, the Assessing Officer making his assessment for the assessment year 1998-99 cannot invoke section 68 of the Income-tax Act to assess the amount again. However, when the gold bars are sold by the assessee at any time later, say for ₹ 8 lakhs, and the amount of ₹ 8 lakhs is received by the assessee and credited by him in his books of account, there seems to be no bar on the Assessing Officer from examining the question whether there was real and actual sale of the gold bars which fetched ₹ 8 lakhs to the assessee. Such a power has not been either expressly or by implication taken away from the Assessing Officer. Such a power may be exercised by the Assessing Officer to ensure that the provisions of the VDIS, 1997 have not been misused by an assessee. In the example given earlier, suppose that the assessee had falsely declared under the VDIS that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e taken as the real state of affairs and if the department questions the same it is for them to prove that the apparent is not the real. Though prima facie the argument seems to be attractive, we are afraid that it cannot bear closer scrutiny. Section 68 of the Income-tax Act only gives statutory recognition to the well-settled position that any monies found credited in the accounts of the assessee have to be proved by the assessee in relation to their nature and source. It does not enact any new principle. Even long prior to the introduction of the section, courts had held that any amounts found credited in the books of the assessee and the assessee offered no explanation about the nature and source thereof or the explanation offered was not satisfactory, the amounts so credited could be charged to income-tax as income of the assessee .. 6.1 Considering the totality of the facts in light of the decision of the ITAT, Delhi, Special Bench (Supra), we do not find any merit in the addition sustained by the Ld. CIT(A), hence, the entire addition made by the AO is directed to be deleted. Accordingly, the Assessee s appeal is allowed and ground no. 2 raised in Revenue s Appeal is dismiss ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 20,15,27,543/-. 10. Before us the Ld. DR strongly objected to the admission of additional evidences. It is a say of the Ld. DR that by way of additional ground, the Revenue has challenged the admission of additional evidences which is in violation of Rule 46A of the IT Rules. It is a say of the Ld. DR that Ld. CIT(A) ought not to have considered the additional evidences for deleting the disallowance. Strong reliance was placed on the assessment order. 10.1 Per contra, the Ld. Counsel reiterated what has been stated before the lower authorities and drew our attention to the Paper Book containing Duty Draw Back vouchers of all the parties which runs into 422 pages. It is a say of the Counsel that after examining the complete details furnished by the Assessee, the Ld. CIT(A) has rightly deleted the addition. 11. We have carefully gone through the orders of the authorities below. It is true that during the assessment proceedings, the Assessee furnished sample copies of vouchers. It is equally true that AO did not ask the assessee to furnish the complete details. We find that before the Ld. CIT(A), the assessee has furnished the complete details supported by vouchers and the same are a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y qualified employees. The Ld. CIT(A) further observed that the AO had failed to bring on record or substantiate that how such salary payments were actually excessive. Ld. CIT(A) accordingly deleted the addition. 17. Before us, the Ld. DR strongly supported the findings of the AO. Per contra, the Ld. Counsel for the assessee reiterated what has been stated before the lower authorities. 18. We have carefully considered the orders of the authorities below. The undisputed fact is that the AO has not brought any comparable case to demonstrate that the payments made by the assessee were excessive/ unreasonable. A plain reading of Section 40A(2)(b) show that onus has been cast upon the AO to bring on record comparable cases to demonstrate that the transactions made by the assessee with the related parties are unreasonable and excessive. The AO has failed to bring such comparable case on record. 18.1 We further find that the payees are also assessed to tax at the same rate of tax. The CBDT Circular No. 6-P dated 06.07.1968 states that no disallowance is to be made u/s. 40A(2) in respect of the payments made to the relatives and sister concerns where there is no attempt to evade tax. This ..... X X X X Extracts X X X X X X X X Extracts X X X X
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