9911796707
TMI Blog2023 (5) TMI 699X X X X Extracts X X X X X X X X Extracts X X X X ..... The Ld. CIT(A) erred in accepting the claim of the assessee that the amount shown as "Trade Payable" and this financials has been certified by a Statutory Auditor and filed before the Registrar of Companies (ROC) 2.1. The Ld. CIT (A) erred in allowing the appeal of the assessee without obtaining any revised Balance Sheet approved by the Board or submission of any re-classification of accounts by the Statutory auditor. 2.2. The Ld. CIT(A) has failed to notice that the assessee has shown corresponding entry as in the assets side of the Balance Sheet as "Trade Receivables" 2.3. The Ld. CIT(A) has erred in placing the onus on the Assessing Officer in respect of the documentary evidence regarding the impugned transaction when the onus is on the assessee to establish as to why it has classified the amount under "Trade Payables". 3. The Ld. CIT(A) ought to have appreciated that when the claim of Trade payable itself has been disallowed, the claim of the interest expenditure is also to be disallowed. 4. For these and other grounds that may be adduced at the time of hearing, it is prayed that the order of the ld. CIT(A) be set aside and that of the Assessing Officer be restored." ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... luding various evidences filed in support of sundry creditors opined that the assessee has received funds from M/s. Ruchika Global Interlinks Pvt. Ltd, a third party in relation to trading activities. Therefore, there is no ground for suspecting the transactions between the assessee and creditor. The ld. CIT(A), further observed that funds received from M/s. Ruchika Global Interlinks Pvt. Ltd was recorded under running account as loan and finally transferred to a sister concern namely SLO Industries Ltd, towards trade dues receivable from said company. All these transactions are routed through proper banking channels. The assessee had also filed confirmation from creditors and also other two sister concern to confirm the transactions. Therefore, there is no reason for the Assessing Officer to make additions towards sundry creditors only on the ground that there is an increase in sundry creditor, even though there is no regular business activity, ignoring the fact that all amounts have been received through proper banking channel and further, the assessee had also explained reasons for receiving funds from M/s. Ruchika Global Interlinks Pvt. Ltd and transferring to SLO Industries Lt ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ture and only an accommodation entry. From the above it is very clear that the Assessing Officer has made additions towards sundry creditors purely on suspicion and surmises basis without there being any factual recording as to how such amount is unexplained cash credit of the assessee which can be taxed u/s. 68 of the Act. Be that as it may, the assessee has filed all evidences including confirmation letter from all the parties, relevant ledger account in their books of accounts and also bank statement to prove that funds has been received through proper banking channel. The assessee had also filed financial statement of all three parties and explained transactions between the assessee and those parties and also proved transactions are are recorded in their regular books of accounts and reported in their financial statement. The assessee had also explained why it has received funds from M/s. Ruchika Global Interlinks Pvt. Ltd and finally transferred to SLO Industries Ltd. According to the explanation of the assessee, it was in the business of trading in steel and iron scrap in the earlier years and further, it has two sister concerns which are engaged in the business of manufactur ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dentity of all creditors by giving their complete addresses, GIR numbers/ permanent account numbers and copies of assessment orders wherever readily available - Assessee had also proved capacity of creditors by showing that amounts were received by account payee cheques drawn from bank accounts of creditors - Repayment of loans and interest thereon was also made by account payee cheques by assessee and tax also had been deducted at source on interest payments and remitted - Whether assessee was not expected to prove genuineness of cash deposited in bank accounts of creditors, because under law, assessee can be asked to prove source of credits in its books of account but not source of source - Held, yes - Whether merely because summons issued to some of creditors could not be served or they failed to appear before Assessing Officer, could not be ground to treat those credits as non-genuine Held, yes - Whether considering totality of facts and circumstances of case, especially fact that Assessing Officer had not disallowed interest claimed/ paid in relation to those credits in assessment year under consideration or even in subsequent assessment years, and tax at source had been deduc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... taken up by the Assessing Officer in the assessment proceedings. However, the JCIT, before issuing directions which is prejudicial to the interest of the assessee did not provided an opportunity to the assessee as required under proviso to section 144A of the Act, which vitiates the entire proceedings, including assessment proceedings and consequently, assessment order passed by the Assessing Officer is liable to be quashed. 12. The ld. CIT-DR, supporting the order of the ld. CIT(A) submitted that although, the Counsel for the assessee refers to directions issued by the JCIT, Corporate Range-6, u/s. 144A of the Act, but fact remains that the Assessing Officer did not referred said directions in their assessment order and hence, it cannot be said that the assessment order passed by the Assessing Officer is in pursuant to direction issued u/s. 144A of the Act and consequently, the CIT(A) has rightly rejected arguments of the assessee for annulment of assessment. 13. We have heard both the parties, perused materials available on record and gone through orders of the authorities below. We have also carefully considered provisions of section 144A and proviso provided therein and we f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to the assessee to be heard as provided under proviso to section 144A of the Act, in our considered view the whole proceedings including assessment proceedings is vitiated and consequent assessment order passed by the Assessing Officer is liable to be quashed. 15. In so far as argument of the ld. DR is concerned, since the Assessing Officer did not refer to the directions issued by the JCIT u/s. 144A of the Act, it cannot be presumed that the assessment framed is in pursuant to directions u/s. 144A of the Act, we find that although, the Assessing Officer did not specifically referred to the directions of the JCIT issued u/s. 144A in the assessment order, but if you go through the directions and the assessment order, the directions issued by the JCIT is in lines on which the investigation connected with the assessment should be made. Therefore, we are of the considered view that, the assessment made in pursuant to directions of the JCIT issued u/s. 144A of the Act, without providing opportunity to the assessee to be heard as per provisions of section 144A of the Act is illegal, void and liable to be quashed. Thus, we quash the assessment order passed by the Assessing Officer u/s. ..... X X X X Extracts X X X X X X X X Extracts X X X X
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