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TMI Blog2025 (3) TMI 996X X X X Extracts X X X X X X X X Extracts X X X X ..... he bogus nature of the purchases, in view of the decision of Pancham Dass Jain[2006 (8) TMI 582 - ALLAHABAD HIGH COURT] and Ritu Anurag Agarwal [2009 (7) TMI 1247 - DELHI HIGH COURT] the decision of the Ld. CIT(A) to delete the additions made on account of unconfirmed Sundry Creditors is upheld. Accordingly, ground no. 1 of the Department appeal is dismissed. Difference in balances reported by Sundry Creditors - As this is a matter of re-conciliation, we restore this matter back to the file of the Assessing Officer so as to give the assessee of the opportunity to re-concile the differences and order that in the event of such re-conciliation being made to satisfaction of the AO, addition should not be made on this account. This ground of appeal is allowed for statistical purposes. Estimation of net profit rate @ 8% - CIT(A) has himself recorded the fact that VAT Authorities have examined and confirmed the sales and purchases of the assessee. In the circumstances, in the absence of finding any fault in the accounts of the assessee, in our opinion the rejection of the books and estimation of the profit @ 8% would not be justified. In any case, the 8% profit is presumptive tax for ci ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e as under: - "1. The Ld. CIT(A)-1, Lucknow has erred in law and on facts in deleting the addition of unconfirmed Sundry Creditors amounting to Rs. 1, 66, 80, 021/- and estimated Net Profit @ 8% on total turnover of Rs. 7, 06, 19, 151/- by rejecting books of the assessee u/s 145(3) of the IT Act, 1961. 2. That the Ld. CIT(A)-1, Lucknow had erred in law and facts in deleting the addition of Rs. 3, 41, 592/- made due to difference in balance in Sundry Creditors & estimated Net Profit @ 8% on total turnover of Rs. 7, 06, 19, 151/- by rejecting books of the assessee u/s 145(3) of the I.T. Act, 1961. 3. Appellant craves leave to add as amend any one or more of the ground of appeal as stated above as and when need of doing so arises with the prior permission of the Hon'ble ITAT." 3. It is observed that the Revenue's appeal is delayed by 18 days. However, considering the fact that the appeal was filed during the period covered by the decision of the Hon'ble Supreme Court in suo moto Writ Petition (Civil) No(s) 03/2020 dated 23.03.2020, wherein the limitation was waved for all filing during the Covid-19 period, the delay in filing of the said appeal is condoned. 4. The fact ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... #39;ble ITAT Ranchi in M/s. Gulf Steel & Minerals Vs. ITO in ITA. No.57/Ran/2016 dated 04.05.2018. The assessee submitted that in both these cases, it was held that the addition under section 68 of the Act could not be made in respect of Sundry Creditors relating to purchases, unless the purchase was rejected. It was further submitted that the opening balances of creditors amounting to Rs. 98, 12, 487/- had been added back by the AO under section 68 of the Act and the assessee placed reliance on a number of case laws for the proposition that the opening balances could not be added back under section 68 of the Act. Without prejudice to these arguments, the assessee submitted that the assessee, being a Civil Contractor, was covered by the provisions of Section 44AD of the Act which provided for presumptive rate of taxation of 8% in the case of small contractor and such cases the assessee was not required to maintain regular of books of account. Therefore, the additions can be made to the extent that the assessee's income comes to 8%. It was submitted that the assessee had already disclosed a profit of 5.5% and Hon'ble ITAT, Lucknow Bench in the assessee's own case for the A.Y. 20 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ning balance of Rs. 98, 12, 487/-, was also not justified. He noted the fact that another quasi-judicial authority i.e. the VAT Authority had accepted the purchases and sales of the assessee as was evident from the VAT assessment order for the F.Y. 2014-15. He held that the same could not be brushed aside as it carried substantial evidentiary value. Therefore, after considering all the facts of the case, he held that no case was made out for sustaining of the additions under section 68 of the Act in respect of unverified Sundry Creditors or the difference in balances of creditors as reported by them. However, he observed that it was a fit case for rejection of books of account under section 145(3) of the Act and since the order of the Ld. CIT(A) was co-terminus with that of the AO, he exercises the same to reject the books of accounts under section 145(3) of the Act as in his opinion books of account did not reflect true and correct affairs of the business of the assessee. He noted that the purchases were mostly from PSUs and therefore could not be manipulated. Thereafter, relying upon the decision of the Hon'ble ITAT Lucknow Bench in the case of assessee for the A.Y. 2010-11 i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r purchases and the purchases have not been called into question. Therefore, merely because some part of the expenditure for the purchases have not been met during the concerned financial year, is not ground to hold that those credits are bogus, unless it can be shown that those purchases were never made at all. As the Ld. AO has not conducted any exercise to determine the bogus nature of the purchases, in view of the decision of Hon'ble Allahabad High Court in the case of CIT Vs. Pancham Dass Jain (supra) and the Hon'ble Delhi High Court in the case of CIT Vs. Ritu Anurag Agarwal (supra), the decision of the Ld. CIT(A) to delete the additions made on account of unconfirmed Sundry Creditors is upheld. Accordingly, ground no. 1 of the Department appeal is dismissed. 12. Ground no. 2 of the Department appeal, relates to disallowance on account of differences in balances of Sundry Creditors as shown by the assessee and as confirmed by the Sundry Creditors on enquiry by the Assessing Officer. As this is a matter of re-conciliation, we restore this matter back to the file of the Assessing Officer so as to give the assessee of the opportunity to re-concile the differences and or ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... relates to not appreciating the previous order of the ITAT in the assessee's own case. After considering the arguments presented, we observe that res-judicata does not apply to income tax proceedings and each year has to be decided upon the facts of the case in that year. Therefore, Ld. CIT(A) was not bound to follow the rate of profit deemed reasonable by the ITAT in a particular year. However, as we have already held earlier, a rate cannot be estimated without reference to the history of the assessee's case or comparable cases. Hence to the extent that the Ld. CIT(A) estimated the same without reference to the history of the assessee's case, ground of appeal is partly allowed. 16. The third ground agitates the failure of the Ld. CIT(A) to consider the VAT assessment and the fact that the assessee supplied only to PSUs, which was the reason for higher estimation of income by him. In deciding ground no. 1, we have already observed that the Ld. CIT(A) has considered the VAT assessment and we observe that he has also recorded the fact of the purchases of the assessee being verifiable as they were from PSUs. However, since the estimation of income by him is at variance with these fin ..... X X X X Extracts X X X X X X X X Extracts X X X X
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