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TMI Blog2025 (1) TMI 642X X X X Extracts X X X X X X X X Extracts X X X X ..... e in violation of provisions of Rule 46A of Income Tax Rules, 1962 (hereinafter in short "Rules"). On this issue, the Ld.AR submitted that there has been no violation of Rule 46A, since assessee didn't file any additional evidences on its own (suo-motu) before the Ld.CIT(A). According to the Ld.AR, the Ld.CIT(A) while exercising his jurisdiction u/s. 250 of the Act, had called upon assessee to file documents vide his letter dated 05.10.2023 and drew our attention to page no. 3 to 6 of the paper book and especially, to page no. 6, wherein the Ld.CIT(A) has asked, inter-alia for producing details/supporting documentary evidences in respect of sundry creditors, ledger extract, nature of transaction of Rs. 4,87,51,001/-, [which amount was added by the AO] as well as documentary evidences in respect of unsecured loan of Rs. 60,00,000/- taken from M/s.AKR Agencies along with proof of identity of creditors, nature of transaction, creditworthiness of creditors, ledger extract, confirmation from party etc. [which amount was also added by the AO u/s. 68 of the Act]. According to the Ld.AR, pursuant to the aforesaid direction of the first appellate authority, the assessee had filed relevant d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rmation was being furnished in view of the direction of the first appellate authority that the assessee should produce the said documents for effective decision of the appeal and the conditions specified under Rule 46A(1) to (3) of the Rules is not applicable to sub-rule (4) which would clearly says that the said provision permitting additional evidence to be adduced in Appellate Court would not be subjected to the power of the Appellate Authority to direct the parties to produce any documents which in the opinion of the authority is necessary for the effective decision of the case. Further, it is clear that before the ITAT, no ground was raised regarding reception of additional evidence by the First Appellate Authority in contravention of Rule 46A of Rules and in any view of the matter, we hold that the first appellate authority was justified in relying upon the material produced and there is no violation of Rule 46A of the Rules and accordingly, answer the said question of law against the revenue and in favour of the assessee." 6. In light of the ratio laid down by the Hon'ble Karnataka High Court in the case of CIT Vs. Sanu Family Trust (supra), we do not find any infirmity in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion on account of unexplained sundry creditors amounting to Rs. 4,87,51,001/- 3. Addition on account of unexplained Unsecured loan amounting to Rs. 60,00,000/-. 10. Aggrieved, the assessee preferred an appeal before the Ld.CIT(A) wherein the assessee is noted to have not challenged (i) rejection of books of accounts u/s. 145(3) of the Act; and (ii) the estimation by adopting the rate prescribed u/s. 44AD of the Act i.e. @8% of the turnover but pleaded to restrict the rate @6% on the gross receipts as per the amendment made by the Finance Act, 2017 w.e.f.01.04.2017 (instead of @8% adopted by the AO). 11. The Ld.CIT(A) in his order is noted to have justified the action of the AO rejecting the books of accounts of the assessee though not contested by assessee; and adjudicated the plea of the assessee to restrict the rate adopted by the AO as per section 44AD while estimating the income, in the light of the amendment brought in by the Finance Act, 2017 in sec.44AD of the Act wherein, from AY 2017-18, the presumptive rate to be applied is @6% (instead of @8%) if the total turnover or gross receipts are received by 'account payee cheque' or 'account payee bank draft' or 'use of elect ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the action of Ld.CIT(A) holding that unsecured loan of Rs. 60 lakhs couldn't be added u/s. 68 of the Act. 13. Likewise, coming to the addition of Rs. 4,87,51,001/- by the AO u/s. 68 of the Act as unexplained sundry creditors, the Ld.CIT(A) noted that the assessee was asked to furnish the ledger accounts of each sundry creditors separately for the relevant AY 2017-18 and also for all the subsequent years. And pursuant to the directions of the Ld.CIT(A), the assessee produced the ledger extracts (of sundry creditors) and from perusal of which, the Ld.CIT(A) found that most of the sundry creditors were paid the amounts due in the subsequent years by the assessee. In such a scenario, the Ld.CIT(A) rightly found that there was no justification to make addition of sundry creditors u/s. 68 of the Act, which action we concur; and also repel the contention of the Revenue that the impugned addition was sustainable u/s. 41(1) of the Act; and thus, we find no infirmity in the action of Ld CIT(A) holding that the assessee succeeded on merits on these two issues/additions erroneously made by the AO. 14. Further, we note that the Ld.CIT(A) found force in the alternate submission of the assesse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by applying a higher net profit rate to total contract receipts after rejecting assessee's books of account by invoking the provisions of section 14(3), no separate addition can be made on account of cash credit u/s. 68, even though the assessee has failed to discharge its onus of proof in explaining the amount shown in the books of account". (ii) The Hon'ble High Court of Punjab and Haryana, in the case of CIT vs. Aggarwal Engg. Co., (2008) 302 ITR 0246 had considered an identical issue and held that "no separate addition on account of cash credit and on account of unexplained payments for purchases made outside the books can be made once the net profit rate is applied on contract receipts of an assessee for estimating his income from contract work". (iii) The Hon'ble High Court of Allahabad in the case of CIT vs. Banwarilal Banshidhar, (1998) 229 ITR 0229 had taken a similar view and held that "where income is assessed at G.P. rate by rejecting the books of assessee u/s. 145(3), no disallowance can be made separately u/s. 40A(3) of the Act". 17. In the light of the aforesaid facts and law discussed, we don't find any infirmity in the action of the Ld.CIT(A) delet ..... X X X X Extracts X X X X X X X X Extracts X X X X
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