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TMI Blog2021 (8) TMI 373X X X X Extracts X X X X X X X X Extracts X X X X ..... e has raised legal ground challenging the validity of reopening of assessment, A.R said that he will not press the same, if the appeal of the assessee is allowed on merits. Appeal of the assessee is allowed. - ITA No. 974/Bang/2009 - - - Dated:- 9-8-2021 - SHRI B. R. BASKARAN, ACCOUNTANT MEMBER AND SMT. BEENA PILLAI, JUDICIAL MEMBER Appellant by : Shri Narendra Sharma, A.R. Respondent by : Shri Kannan Narayanan, D.R. ORDER PERB.R. BASKARAN, ACCOUNTANT MEMBER: The assessee has filed this appeal challenging the order dated 4.8.2009 passed by Ld. CIT(A)-2, Bangalore and it relates to the assessment year 1998-99. 2. This is second round of proceedings. This appeal was originally disposed of by the coordinate bench, vide its order dated 29.3.2010. The assessee filed the appeal before Hon ble High Court of Karnataka challenging the order passed by the Tribunal and the Hon ble High Court vide its order dated 13.11.2018 passed in Income Tax appeal No.283/2010 has restored all the issues to the file of the Tribunal for adjudicating them afresh. Accordingly, this appeal came to be placed before us for adjudication. 3. All the grounds urged by the assessee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... prises and M/s. Magnum Trading Company are registered with sales tax authorities and they have issued all statutory forms as required by law in respect of purchases made from them. Further, it was submitted that the payments have been made by the assessee to them by way of account payee cheques. The A.O. however did not accept the explanations of the assessee and accordingly, came to the conclusion that the amounts outstanding in their name is bogus in nature. Accordingly, he assessed the aggregate amount of ₹ 46,61,745/- as income of the assessee u/s 68 of the Act. In the appellate proceedings, the Ld. CIT(A) confirmed the above said addition and hence, the assessee has filed this appeal before us. 7. The assessee has, inter alia, challenged the validity of reopening of assessment and also the addition relating to the two trade creditors mentioned above. 8. We heard the parties first on the merits of the addition. The Ld. A.R. submitted that the amount outstanding in the name of M/s. Sharda Enterprises and M/s. Magnum Company relate to the purchases made by the assessee from them and hence, they are in the nature of trade creditors. He submitted that the A.O. has made ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ason that the suppliers did not confirm the outstanding balance and further they did not respond to the notices issued to them. He submitted that the assessee has proved purchases and also proved that the payments have been made through banking channels. Hence the assessee should not have been penalized for the failure of the creditors to respond to the notices issued by the AO. 12. The Ld A.R further submitted that the AO has made addition of outstanding trade creditors u/s 68 of the Act, which is not permissible under the Act, as the provisions of sec.68 relate to cash credits only. 13. The Ld. D.R. on the contrary, supported the order passed by Ld. CIT(A).By placing reliance on the decision rendered by the coordinate bench in the case of Suresh Kumar T. Jain (2019) 101 Taxmann.com 164, the Ld. A.R. submitted that even trade creditors can be assessed u/s 68 of the Act. 14. We have heard rival contentions on this issue and perused the record. The undisputed fact is that the assessing officer has made addition of outstanding trade creditors u/s 68 of the Act. The question whether unpaid trade creditors could be added u/s 68 of the Act has been examined by various courts. T ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 12. Similar view has been expressed by Hon ble Delhi High Court in the case of CIT vs. Ritu Anurag Agarwal reported in 2009 (7) TMI 1247 as under:- This finding of AO remained undisturbed before the CIT(A) as well and has been accepted by the ITAT. Proceeding on this basis, the ITAT observed that the soles, purchases as well as gross profits as disclosed by the assessee have been accepted by the Assessing Officer. Once this is accepted, we are of the opinion that the approach of the ITAT was correct inasmuch as the Assessing Officer did not consider this aspect while making additions of sundry creditors under Section 68 of the Income Tax Act. As there was no case for disallowance for corresponding purchase, 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. We are, therefore, of the opinion that no substantial question of law arises for consideration in this case. The appeal is accordingly dismissed. 13. The Ld D.R placed his reliance on the decision rendered by the Bangalore bench of ITAT in the case of Suresh Kumar T. Jain (supra), which was als ..... X X X X Extracts X X X X X X X X Extracts X X X X
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