9911796707
TMI Blog2023 (3) TMI 757X X X X Extracts X X X X X X X X Extracts X X X X ..... e is no analysis before us as to whether this outstanding balance of sundry creditors pertained to purchases made during the year alone or reflected a part of the opening balance also. AO had disallowed balance outstanding of the sundry creditors relating to the business of the assessee for the reason that their bills appeared to be bogus, and there was no confirmation of their outstanding balance. AO has not specified the provision of law under which the addition has been made as noted by the Ld.CIT(A) - But having said so we find that on any count the addition was not sustainable as rightly held by the Ld.CIT(A) also. By disallowing only balance outstanding of these parties as at the end of the year, the Revenue has both accepted purchases as genuine with respect to balance that are not outstanding, while at the same time holding them to be ingenuine or bogus in relation to purchases whose balances are outstanding at that end of the year. The department has therefore taken a contradictory stand on the issue by disallowing only outstanding balances of sundry creditors finding them to be bogus. - Decided against the revenue. Treating the purchases as bogus , even othe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ores as genuine.Ground No.1(a) to (c) raised by the Revenue are accordingly dismissed Addition pertaining to unsecured loans - CIT-A deleted the addition - HELD THAT:- CIT(A) has deleted the addition with respect to the aforesaid unsecured loans finding that all necessary details and confirmation of the parties was filed by the assessee and nothing adverse was found by the AO. CIT(A) has also, we have noted, dealt with the remand report of the AO wherein he had noted no information, details or confirmations being filed with respect to the said parties, stating that the AO had incorrectly noted the said facts. DR was unable to controvert this factual finding of the ld.CIT(A) that the assessee had furnished all necessary details and evidences to establish genuineness of the unsecured loans relating to the aforesaid three parties with evidences. In view of the above, we see no reason to interfere in the well reasoned order of the ld.CIT(A).Ground no.2 raised by the Revenue is dismissed. Discrepancy in totaling of opening balance - plea of the Revenue is that there is a calculation error with respect to the opening balance made by the ld.CIT(A) - HELD THAT:- Both the parti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1961 [hereinafter referred to as the Act for short] pertaining to Asst.Year 2009-10. 2. Brief background relating to the present appeal is that the assessee firm is engaged in the business of construction work as developer of buildings, commercial complex, residential complex, bungalows, road projects etc. During the year under consideration, the assessee had constructed a commercial complex Shital Varsha- V at Shivranjani Cross Road, Ahmedabad, and shown gross receipt of Rs.3.75 crores on which net profit declared, before remuneration to partners, was Rs.23,70,039/- . The total income returned to tax was Rs.9,18,841/-. During assessment proceedings several additions were made to the income of the assessee totaling in all to Rs.13,15,38,617/- which majorly included addition of Rs.11,86,87,480/- being current liabilities reflected in the books of the assessee, added for the reason that the genuineness of the credit balance remained unexplained. Minor additions made were on account of disallowance of building construction expenses depreciation on motor cars amounting toRs.59,10,574/- Rs.14,79,549/- respectively. The matter was carried in appeal before the ld.CIT() who delet ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . 55,00,000/- from Samir C. Nair made by A.O in respect of amounts claimed to have been received as unsecured loans without appreciating the fact that its genuineness could not be substantiated by the assessee. (b) The Ld. CIT(A) has deleted these additions, forming part of Annexure 'C' of his order, despite the Assessing Officer's stand in the remand report that no evidentiary documents like confirmations, PAN or addresses etc were furnished by the assessee in respect of these transactions, and even further, these were not squared-up in subsequent years nor these were found part of the opening balance. 3. The Ld. CIT(A) has erred in taking the opening balance at Rs.3,62,12,517/- in Annexure 'C' of his order, whereas on totaling, the actual opening balance comes to Rs. 3,10,87,717/- and thus granted excess relief amounting to Rs.51,25,800/-. 4. On the facts and in the circumstances of the case, the Ld. Commissioner of Income Tax(Appeals)-XV, Ahmedabad ought to have upheld the order of the Assessing Officer on above issues in accordance with above. 4. The ld.DR pointed out that Ground No.1(a) to (c) related to same issue i.e. deletion of credi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ) holding that the assessee had established genuineness of sundry creditors of Rs.2.34 crores at page no.40 in para-5.2.2(p) as under: (p) In conclusion, out of the total addition of Rs.11,86,87,480/- as per para 5.2.2(h) the outstanding creditors ofRs.2,34,38,053/- were held to be genuine creditor for which AO was not justified in making addition u/s.68 of the Act. .. 7. The ld.DR pointed out that his specific finding on the various creditors being found genuine at para 5.2.2 (g) (h) are as under: (g) The appellant during the appeal proceedings with the prayer to admit additional evidences submitted a list of all sundry creditors showing Name of the party, op. balance, purchases during previous year, payments during previous year, other debits and final balances in respect of sundry creditors of Rs.2,32,06,458.55/- which was subjected to remand report. The remand report and rejoinder report are already discussed. The details / evidences with this list was already examined by A.O. during remand proceedings. The further details and evidences as submitted by appellant with rejoinder to remand report were examined by me along with the details evidences filed earlier ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ent during month of September 2008, the total outstanding balance of Rs. 8,06,225/- was paid by appellant vide cheque of Rs. 5,00,000/- dt. 28/05/09, Rs.2,59,000/- dt. 02/06/2009 and Rs. 47,225/- dt. 07/11/2009. Therefore considering these fact one cannot held them as unexplained current liabilities. (h) In all the other parties, there are sufficient evidences for confirming the balances as on 31/03/09. In view of the above facts, the disallowance and addition made in respect of these sundry creditors of Rs. 2,34,38,053/- are not justified and not sustainable. 8. The ld.DR thereafter stated that on the earlier date of hearing the Bench had directed the Revenue to file a chart summarizing party wise the facts/basis of the addition made by AO, deleted by Ld.CIT(A) and the arguments of the Revenue against the order of the Ld.CIT(A).He stated that in accordance with the said direction the arguments against the deletion of addition by the Ld.CIT(A) had been summarized in a chart giving details of the basis on which the AO in his remand report had found these sundry creditors to be not genuine, the basis on which the ld.CIT(A) had held them to be genuine and also detailing his ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... self serving copies of its ledger accounts which were not found to be acceptable by the AO as pieces of evidences. 1. Copy of invoice is attached as per Annexure The Ld. CIT (A) has treated the bills pertaining to these ledgers accounts as genuine which were furnished only before him by the assessee after the remand stage and remained unverified by the A.O. 2. Copy of Invoice as per Annexure 2,4,6,8,10,12,14,16,18 and 21 establishes the similar pattern, writing etc. 2 Ganpatbhai Ramjibhai Vatukia 434995 The pattern, writing of the bills is similar with that of other creditors. As above On perusal of the Ledger accounts furnished by assessee during the course of appellate proceedings, Entry is not confirmed by the Creditor. Assessee has submitted name, address, copy of bill, confirmation and payment is made through bank. There is sufficient evidence for confirming the balance as on 31.03.2009 and disall ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lanki 40871 The pattern, writing of the bills is similar with that of other creditors. As above On perusal of the Ledger accounts furnished by assessee during the course of appellate proceedings, Entry is not confirmed by the Creditor. Assessee has submitted name, address and payment is made through bank. There is sufficient evidence for confirming the balance as on 31.03.2009 and disallowance and addition made in respect of creditor is not justified and not sustainable. Same as above. The pattern, writing of the bills is similar with that of other creditors. Copy of ledger from the books of the assessee in case of creditor for FY 2008 to 2010-11 is enclosed herewith as per Annexure 9. Copy of invoice is attached as per Annexure 10. Annexure 2,4,6,8,10,12,14,16,18 and 21 establishes the similar pattern, writing etc. 6 ManjibhaiJivraj bhai Mer 171489 The pattern, writing of the bills is similar with that of other creditors. As above As above Assessee has submitted name ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Annexure 16. Annexure 2,4,6,8,10,12,14,16,18 and 21 establishes the similar pattern, writing etc. 9 Shantinath Transport Jivraj Park Ahmedabad 2925 The Handwriti ng is identical with that of the bill of Shantinath Transport of Jivraj Park, Ahmedabad. As above NO PAN and entry not confirmed by the creditors as per copy of ledger submitted by the assessee. Assessee has submitted name, address, copy of bill and payment is made through bank. There is sufficient evidence for confirming the balance as on 31.03.2009 and disallowance and addition made in respect of creditor is not justified and not sustainable. Same as above. The handwriting is identical with that of the bill of Shalibhadra Transport of Jivraj Park, Ahmedabad. Copy of ledger from the books of the assessee in case of creditor for FY 2008 to 2010-11 is enclosed herewith as per Annexure 17. Copy of invoice is attached as per Annexure 18. 10 Mukesh Trading Company 591600 No confirmation, PAN given. As ab ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 8,10,12,14,16,18 and 21 establishes the similar pattern, writing etc. 13 251100 No bills submitted, No confirmation before A.O. As above NO PAN and entry not confirmed by the creditors as per copy of ledger submitted by the assessee. Outstanding balance except having ledger account and contention with details that such outstanding were paid to party by assessee through account payee cheque, there is no other details Viz. Address, PAN, confirmation or copy of invoices. For various purchases of sand in Sept 2008, was paid vide cheque of Axis bank Vastrapur branch, Ahmedabad on 13.11.2009. Therefore, can not be held as an unexplained current liabilities. There is sufficient evidence for confirming the balance as on 31.03.2009 and disallowance and addition made in respect of creditor is not justified and not sustainable. Same as above. No bills submitted. No confirmation filed before the A.O. The said fact is also mentioned in Anne-A of CIT(A)'s order. Copy attached as per Annexure 19. 14 Bharat Tradin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by assessee during the course of appellate proceedings , Entry is not confirmed by the Creditor. Assessee has submitted name, address, copy of bill and payment is made through bank. There is sufficient evidence for confirming the balance as on 31.03.2009 and disallowance and addition made in respect of creditor is not justified and not sustainable. Same as above. No bills, No confirmation before the A.O. The said fact is also mentioned in Anne-A of CIT(A)'s order. Copy attached as per Annexure 22. 18 Jainam Traders 76924 No bills, NO PAN, No confirmation before AO. As above NO PAN and entry not confirmed by the creditors as per copy of ledger submitted by the assessee. Assessee has submitted name, address, copy of bill, confirmation and payment is made through bank. There is sufficient evidence for confirming the balance as on 31.03.2009 and disallowance and addition made in respect of creditor is not justified and not sustainable. Same as above. No bills, No PAN, No confirmation before the A. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... As above NO PAN and entry not confirmed by the creditors as per copy of ledger submitted by the assessee. Various purchases in the month of Sept 2008 for steel and o/s balance was paid through cheque of Rs. 650000/- dated 28.05.2009 and Rs. 741000/- dated 02.06.2009. Therefore, can not be held as unexplained current liabilities. There is sufficient evidence for confirming the balance as on 31.03.2009 and disallowance and addition made in respect of creditor is not justified and not sustainable. Same as above. No bills, No PAN, No confirmation before the A.O. The said fact is also mentioned in Anne-A of CIT(A)'s order. Copy attached as per Annexure 22. 23 Maruti Traders 806225 No bills, NO PAN, No confirmation before AO. As above NO PAN and entry not confirmed by the creditors as per copy of ledger submitted by the assessee. As against the purchase of cement during month of September 2008, total o/s balance was paid by cheque of Rs. 5 Lakh on 28.05.2009 and Rs. 259000/- on 02.06.2009 and Rs. 47225/- on 07.11. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Same as above. No bills, No PAN, No confirmation before the A.O. The said fact is also mentioned in Anne-A of CIT(A)'s order. Copy attached as per Annexure 22. 27 Jay Chamunda Transport 20400 No bills, NO PAN, No confirmation before AO. As above NO PAN and entry not confirmed by the creditors as per copy of ledger submitted by the assessee. Assessee has submitted name, address and payment is made through bank. There is sufficient evidence for confirming the balance as on 31.03.2009 and disallowance and addition made in respect of creditor is not justified and not sustainable. Same as above. No bills, No PAN, No confirmation before the A.O. The said fact is also mentioned in Anne-A of CIT(A)'s order. Copy attached as per Annexure 22. 28 Shree Ramdev Trasnport 72224 No bills, NO PAN, No confirmation before AO. As above NO PAN and entry not confirmed by the creditors as per copy of ledger submitted by the assessee. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Sr. No Name of the Sundry Creditors for Goods Exp. Page no Credit Balance as on 31.03.09 (Rs.) Discrepancy noticed in the Submission of the assessee. Remarks 1 Aakash Enterprise 20 16750 No PAN, Not Confirmed by the creditor, enclosed erasure bill puts its genuineness in doubt. Name complete address Phone No. along with copy of bill of the supplier submitted. Payment duly made by A/c Payee Cheques in subsequent years. Confirmation of party is enclosed. PAN: ACE PS6290C. 2 Anand V.Dave 22 382024 Not Confirmed by the Creditor Name complete address Phone No. along with copy of bill of the consultant submitted. PAN : AAOPD 7887 L also submitted. Payment duly made by A/c Payee Cheq ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Babulal R Patel Bricks 33 125600 PAN submitted is in the name of Charbhuja Bricks Mfg. Co Name complete address Phone No. along with copy of bill of the supplier submitted. Payment duly made by A/c Payee Cheques in subsequent years. Copy of A/c for payment verification is enclosed. 9 Bahubali Enterprise 36 251100 No Pan/ Address, no Confirmation submitted by the assessee. Payment duly made by A/c Payee Cheques in subsequent years. Copy of A/c for payment verification is enclosed. PAYMENT MADE 10 Bapashree Elevators 37 4184000 No Pan not Confirmed by the assessee. Name complete address Phone No. along with copy of bill of the supplier submitted. Payment duly made by A/c Payee Cheques in subsequent yea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 16 Ganpat R Vatukia 47 434995 No PAN, Not Confirmed by the creditor. Name complete address Phone No. along with copy of bill of the supplier submitted. Payment duly made by A/c Payee Cheques in subsequent years. Confirmation is enclosed. PAN: AGQPV9254R. 17 Gayatri Corporation 49 12253 No PAN, Not Confirmed by the creditor. Name complete address Phone No. along with copy of bill of the supplier submitted. Payment duly made by A/c Payee Cheques in subsequent years. Confirmation is enclosed. PAN: AADFG5230F. 18 Govindbhai M. Jograna 51 35903 No PAN, Not Confirmed by the creditor. Name complete address along with ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 24 Innovative Infra P Ltd 60 645417 No Confirmation given Name complete address Phone No. along with copy of bill of the supplier submitted. PAN: AABCI2364P .Confirmation of the supplier is enclosed. 25 Jainam Traders 63 76924 No PAN, Not Confirmed by the creditor. Name complete address of the supplier submitted Payment duly made by A/c Payee Cheques in subsequent years. Confirmation is enclosed. PAN: 26 Jala Hardware sanitary 64 1998 No PAN, Not Confirmed by the creditor. Name complete address along with copy of bill of the supplier submitted. Payment duly made by A/c Payee Cheques in subsequent years. Confirmatio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 76 38700 No Pan/ Address, no Transaction during Confirmation submitted by the assessee. Opening Balance. Confirmation is enclosed. PAN: AAMPP2527K. 33 Jay shreesadhi Transport 77 1413 No Pan/ Address, no Transaction during Confirmation submitted by the assessee. Opening Balance. Confirmation is enclosed. PAN: AMKPP9781D. 34 Jignesh Construction Co 78 350 No Pan/ Address, no Transaction during Confirmation submitted by the assessee. Payment duly made by A/c Payee Cheques in subsequent years. Confirmation is enclosed. PAYMENT MADE.PAN: AAGFJ4082R. 35 Jignesh L Mer. 7 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eques in subsequent years. Copy of A/c for payment verification is enclosed. PAYMENT MADE 41 Laxmi Traders 90 1391142 No Pan/ Address, no Confirmation submitted by the assessee. Payment duly made by A/c Payee Cheques in subsequent years. Copy of A/c for payment verification is enclosed. PAYMENT MADE 42 Laxmi Trident 91 123279 No PAN, Not Confirmed by the creditor. Name complete address along with copy of bill of the supplier submitted. Payment duly made by A/c Payee Cheques in subsequent years. Copy of A/c for payment verification contra confirmation is enclosed. PAN: AAEFL1373M. 43 Lobanbhai K Mavee(Bhagat) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 3 35945 No PAN, Not Confirmed by the creditor. Name complete address along with copy of bill of the supplier submitted. Payment duly made by A/c Payee Cheques in subsequent years. Copy of A/c for payment verification is enclosed. 49 Maruti Traders 105 806225 No Pan/ Address, no Confirmation submitted by the assessee. Payment duly made by A/c Payee Cheques in subsequent years. Copy of A/c for payment verification is enclosed. PAYMENT MADE 50 Mukesh Trading Co 106 591600 No PAN, Not Confirmed by the creditor. Name complete address along with copy of bill of the supplier submitted. Payment duly made by A/c Payee Cheques in subsequent years. Copy of A/c for payment verification is enclosed. PAN:ALVP P6526E. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 56 Riddhi Sales Corporation 120 9425 No Pan/ Address, no transaction during the year. Opening Balance Confirmation is enclosed. PAN: AMKPP9771B. 57 SamjubenGandabhai 121 3203 No Pan/ Address, no Confirmation submitted by the assessee. Staff Worker. Salary of March 09 pending. Payment duly made by in subsequent years. Copy of A/c for payment verification is enclosed. 58 Sanjay L Gohil 123 815740 No Confirmation given Name complete address along with copy of bill of the supplier submitted. PAN of the supplier also submitted. PAN: AKTPG3546J. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ment duly made by A/c Payee Cheques in subsequent years. Copy of A/c for payment verification is enclosed. 65 Shree Ramdev Transport 138 72224 No PAN, Not Confirmed by the creditor. Name complete address along with copy of bill of the supplier submitted. Confirmation is enclosed. PAN: ABTPV8242M. 66 Shree Sahjanand Trading Corporation 141 15247 No PAN, Not Confirmed by the creditor. Name complete address along with copy of bill of the supplier submitted. Payment duly made by A/c Payee Cheques in subsequent years. Copy of A/c for payment verification is enclosed. 67 Shree Vallabh Traders 143 2170 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Referring to the above he pointed out that each and every discrepancy noticed by the AO had been explained as being of no relevance and taking note of which the Ld.CIT(A) had found and held the sundry creditors as been genuine. ii) The next argument taken up by the ld. Counsel for the assessee was that primary argument of the Revenue for challenging the findings of the ld.CIT(A) to the effect that the sundry creditors were genuine ,was that bills of purchases of these parties were bogus, which imply that the Revenue found the purchases made from these parties to be bogus. The ld. Counsel for the assessee contended that in this background it was the purchases which needed to be disallowed and not balances of outstanding purchases relating to these parties. He further stated that outstanding balance in some cases related to opening balance also, and in which case no addition could have been made either on account of bogus purchases or even as unexplained credit under section 68 of the Act; 11. He pointed out that in various judicial decisions it has been held that credit balance pertaining to sundry creditors could not be added ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ates declared was 68.94% as compared to sales of Rs.21,18,994/- in the previous year. The AO accepted the aforesaid figures and categorically observed as under: The GP rate as well as the sales has been substantially increased during the year in comparison to the last year. Sales trading results are not disturbed. 3.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 sales, purchases as well as gross profits as disclosed by the assessee have been accepted by the Assessing Officer. 4. 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 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eld the addition made under Section 68 of the Act. On behalf of the assessee, a comparative chart of net profit rate of the assessee for the assessment years has been filed before us. In the earlier years also, no such addition was made. For the assessment year 2007-08, under scrutiny assessment, the assessment was made at 8%. The position remained much the same for the assessment year 2008-09. The year under consideration is assessment year 2009-10. The material supplied to the assesseee by the concerned department is part of the assessee's turnover. The net profit rate of the assessee for the year under consideration was in line with the preceding assessment 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 no-verification 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 o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... counts. Accordingly, he submitted that such an addition has to be made u/s 68 and in support he relied upon the following judgment of Hon'ble Karnataka High Court in the case of Rekha Krishna Raj Vs. ITO [2013] 215 Taxman 159/33 taxmann.com. 16. On the other hand, Ld. Counsel for the assessee submitted that assessee has filed copy of ledger account of the sundry creditors which gives the opening and closing balances as well as bill numbers, details of payment made and additions made during the year. Ld. AO without even verifying the books of accounts or the records 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rit side also, the A.O. has not discussed even mentioned that if such liabilities are unexplained then under which provisions of Act this addition is made. Whether the same is under 68 of the Act since the addition of deposits are also aggregated with it or under section 41(1) of the Act contending these liabilities are now non-existent. 14. At this juncture noting the fact that the entire disallowance pertained to sundry creditors relating to the business of the assessee, certain financial facts pertaining to the issue were called for at Bar. It was asked as to what was the total purchase booked by the assessee in its P L account during the year, and what was the quantum of disallowance made by the AO. To which the ld. Counsel for the assessee drew our attention to PB filed by the department which contained tax audit report of the assessee disclosing all financial information. Referring to the same, he pointed out that while the assessee has booked total purchases of Rs.4.5 crores, the AO had disallowed Rs.2.34 crores out of the same i.e. approximately 50% of the purchases. Note was taken of the above. 15. We have heard contentions of both the parties, have gone through th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ce also. 18. Considering all of the above, we find that the AO had disallowed balance outstanding of the sundry creditors relating to the business of the assessee for the reason that their bills appeared to be bogus, and there was no confirmation of their outstanding balance. What it implies is two folds; (i) that the purchases booked by the assessee relating to these parties was bogus since the bills were found to be bogus and their outstanding balances were also not confirmed. (ii) That considering that only addition of outstanding balances was made in the absence of balance confirmations: it could either be a case of addition made u/s 41(1) of the Act on account of cessation of liabilities, or; u/s 68 of the Act as unexplained credit balances. The AO has not specified the provision of law under which the addition has been made as noted by the Ld.CIT(A) also at page 33 of his order reproduced above. But having said so we find that on any count the addition was not sustainable as rightly held by the Ld.CIT(A) also. 19. In the circumstance, if the purchases are found to be bogus, then it is the entire purchases made from these parties which are to be disall ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... count of bills of these parties appearing to be manipulated. No exercise however has been carried out by the Revenue to confirm this aspect from an expert. Therefore, on merit also considering specific finding of the ld.CIT(A) regarding assessee s discharging its onus of establishing genuineness of these sundry creditors by furnishing relevant documents being undisturbed, we see no reason to interfere in the order of the ld.CIT(A) holding sundry creditors to be genuine. 23. We may conclude by adding that even otherwise from the facts as noted by us, the Revenue has attempted to hold approximately 50% of the purchases made by the assessee as bogus, resulting in GP increasing by 50%, which is highly improbable figure in any line of business. Therefore, on all the above counts, we hold that the ld.CIT(A) is justified in treating the sundry creditors to the extent of Rs.1.19 crores as genuine. Ground No.1(a) to (c) raised by the Revenue are accordingly dismissed. 24. Taking up, Ground no.2, the ld.DR contended that the same related to the deletion of addition pertaining to unsecured loans of third parties as noted in the grounds raised above viz. (i) Devendra C. Vaghela Rs.25, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Sr. No. Name of the creditor/depositor Page No. Credit Balance as on 31.3.2009 (Rs.) Discrepancy noticed in the submission of the assessee 76 Devensinh C. Vaghela 177 250000 No PAN/Address no confirmation submitted by the assessee 87 Samirchandra Nair 267 5500000 No PAN/Address no confirmation submitted by the assessee 26 Leesa Security P.Ltd. 231 25000 No confirmation given 27. The ld. Counsel for the assessee countered by stating that the ld.CIT(A) had dealt with the finding of the AO in his remand report and had found them to be contrary to the facts on record, and after taking note of all the evidences filed by the assessee tabulated in Annexure- C of his order, the ld.CIT(A) had deleted the addition. He drew our attention to para 36(i) of the CIT(A) s order finding the above facts and deleting the addition made on account of above three un ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ating to the issue. Ground no.2 raised by the Revenue is dismissed. 29. Ground No.3 raised by the Revenue, it was pointed out, relates to discrepancy in totaling of opening balance noted by the ld.CIT(A) in Annexure-C of loans and advances. It was pointed out that while dealing with the issue of addition made on account of unsecured loans, the ld.CIT(A) had tabulated all information in Annexure-C relating to various parties, and had held that with respect to the opening balance of the said parties, no addition in any case could be made under section 68 in the impugned year, and had accordingly deleted the addition on account of the same. In the present ground, the plea of the Revenue is that there is a calculation error with respect to the opening balance made by the ld.CIT(A).That while opening balances were to the tune of Rs.3.10 crores, the ld.CIT(A) noted the same at Rs.3.60 crores, therefore giving excess relief of Rs.51.31 lakhs. Both the parties agreed that the issue may be restored back to the AO to verify the facts, and thereafter allow relief to the extent of correct opening balance. In view of the above, this issue is restored back to the AO with the direction to veri ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ned deposit. In respect of 44 parties with total unsecured loan 7 advances 7 deposit of Rs. 6,29,34,4677-, ten parties having outstanding opening balance of Rs. 74,27,1317- were found to be having no details but as per para 5.2.2 (k) the A.O. has to initiate proper proceedings in the year when such loan/deposit were accepted and addition u/s 68 for the previous year was found not justified. Out of the balance, it is only deposit of Rs. 70,000/-(para 5.2.2(1)) which was found to be justifiable for addition u/s 68 of the Act. As per para 5.2.2(m) the balance advances of Rs. 38,00,000/- were found to be genuine and explained. Therefore, out of Rs.11,86,87,480/- only Rs. 70,000/- is upheld and confirmed and balance of Rs. 11,86,17,480/- (11,86,87,480 - 70,000) is directed. Para 5.2.2(l) dealing with unsecured loans of Rs.70,000/- disallowed is as under: (I) Out of the balance 34 cases, it is only in the case of Shri Amarsinh bhai D. for an amount of Rs. 70,000/- which was accepted by appellant during previous year and for which no details like address, PAN, confirmation was submitted. It is therefore, the addition u/s 68 of the Act for this amount is confirmed and upheld. In ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... imed by appellant u/s.37(1) of the Act has to be duly supported by bills or vouchers to reflect that the same is business expenditure and wholly and exclusively incurred by appellant for business. By deducting IDS out of it and by producing confirmation from the party does not absolve the appellant from the onus to furnish / submit necessary bills related to such expenditure. Therefore the difference of expenditure of Rs.5,467 is upheld and confirmed. (ii) Shri RameshbhaiRamsinghNinama The appellant neither with details dated 09.07.2012 nor in the rejoinder to remand report furnished any details viz. bill, ledger account, confirmation etc. It is therefore, as per reasoning given above at (i), the disallowance of Rs.56,513 and addition thereof is upheld and confirmed. Shri Maheshbhai Himmatbhai Solanki The appellant vide detail dated 09.07.2012 at page No.99 submitted a ledger account copy of the party showing this amount of Rs.78,000 as credited on 16.7.2008 but no bills / vouchers was furnished. In the rejoinder to remand report at 'SC-55' the appellant submitted contra account and confirmation from the party for the ledger account for the period 1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 8,64,073 (5467 +65513 + 78000 + 204593 + 51050) are upheld and confirmed as discussed above. The A.O. is directed to delete the balance disallowance and addition of Rs.50,46,501 (5910574 - 864073). The appellant gets part relief. 37. We have gone through order of the Ld.CIT(A) and have noted that the disallowance was upheld by him in the absence of any substantiation of the same by the assessee with necessary evidences. The ld. Counsel for the assessee was unable to controvert the factual finding of the ld.CIT(A), though he vehemently argued before us that the expenses were genuine. In view of the same, we see no reason to interfere in the order of the Ld.CIT(A) upholding the disallowance of building construction expenses amounting to Rs.8,64,073/-. This ground of appeal of the assessee is dismissed. 38. With to disallowance of motor car depreciation confirmed by the ld.CIT(A) to the extent of Rs.4,67,633/-, the ld.CIT(A) has dealt with the same at para 5.2.4(e) of his order as under: (e) I am inclined with the contention of the appellant that in view of tax audit report and the details in the form of ledger account reflecting the source of purchase of vehicles, the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d depreciation of Rs.3,28,500 being 50% of eligible claim being the vehicle was acquired after 30.09.2009 i.e. owned and used for less than 180 days. But, the rate of depreciation adopted is 50% at the place of 15% resulting into excess claim of Rs.2,29,950.(3,28,500 - 7.5% of 13,14,000). The appellant has not submitted any explanation about adoption of such higher rate of depreciation of 50% which is as per I.T.Rule is permissible for only New commercial Vehicle which is acquired on or after 01.01.2009 but before 01.10.2009 and it is put to use before 01.10.2009 for the purpose of business and profession (Refer Rule 5 of the I.T.Rule 1962 and Appendix I where under the head 'III Machinery and Plant at clause 3 (via) such rate is provided). The purchased vehicle is not a commercial vehicle because the appellant's business is of construction and development. Further as per I.T.Rule 1962 Notes attached to Ann. I for rates at Sr.No.6 the 'commercial vehicle' means 'Light Motor vehicle' shall have the meaning assigned to them in section 2 of the Motor Vehicle Act 1988 (59 of 1988). As per Motor Vehicle Act 1988 clause (21) the Light Motor Vehicle means a tran ..... X X X X Extracts X X X X X X X X Extracts X X X X
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