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2014 (3) TMI 965 - AT - Income TaxAddition on account of inflated purchases - Held that:- CIT(A) has accepted the part of the assessee’s explanation in this regard with reference to the copies of the bills, purchase of kanta slips, address of the supplier alongwith TAN/PAN etc. The Ld. CIT(A) has rejected the books of accounts. Thereafter, L.d CIT(A) has rejected the AO’s addition of 15% of the purchases. He deleted the addition of ₹ 45,48,005/- on this account. In stead he proceeded to make an estimate of the net profit of the assessee. In light of the above, in our considered opinion, the issue has not been properly adjudicated by the authorities below - Thus matter is remitted to the files of the AO to consider the issue afresh. Addition on account of unconfirmed sundry creditors - Held that:- CIT(A) has accepted that all confirmations were filed. He accepted that the non-compliance could be due to the facts that some of the creditors were village based illiterate persons who may not have been familiar with income tax proceedings. Further, the time available between the issue of enquiry letters and completion of assessment was extremely short. Ld. CIT(A) has rejected the AO’s contention that the socalled confirmation, copies of accounts filed by the assessee cannot be fully relied upon. Unless the same were confirmed by the suppliers to the AO. In our considered opinion this issue also needs to be remitted to the file of the AO, as it is noted that the parties have not confirmed the balance to the AO, nor they were produced for examination. Addition on difference between the purchases as the profit loss account and as per the ledger account - Held that:- CIT(A) presumption that rectification application has been moved and furthermore AO appears to have accepted the explanation given in the submissions made during the appeal proceedings is not backed by cogent basis. Furthermore, Ld. CIT(A) has noted that once the books of accounts have been rejected they cannot be relied for further disallowance in the same head of expense. We note that we have already remitted the issue of addition on account of inflated purchases and the estimation of income to the file of the AO. Hence, we remit this issue to the file of the AO. - Appeals filed by the Assessee and Revenue stand allowed for statistical purposes.
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