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2013 (9) TMI 8 - AT - Income TaxApplicability of section 68 or u/s 41(1) – Credit are shown in regard to four parties in the liability side of the Balance sheet of the Assessee - AO u/s 133 (6) of the IT Act, called for information from the parties in all the four cases - Held that:- the amounts in question were outstanding for the last three years - As such, there is no infirmity in the stand taken by Students Book Depot, Ranchi and Unicate Publishers & Distributors, Pune, that they did not have any transaction with the assessee during the year. No credit having given in the books of the assessee during the year under consideration, the provisions of Section 68 of the Act are obviously not attracted. Since, the amounts are still outstanding, it cannot be said that they have been either written off or squared off or that any benefit has been derived by the assessee. For doing so, the provisions of Section 41 (1) of the Act are also not attracted and no addition therein is envisagable - Amounts in question pertained to sundry creditors of the assessee, they being on account of purchases of the assessee - No addition is called for, since the purchases or the sales have not been disputed by the Assessing Officer - Therefore, just because confirmations were not filed, according to 'YFC Projects (P) Ltd. vs. DCIT' [2010 (1) TMI 880 - ITAI, Delhi ], no addition can be made. Relying upon the decision in the case of 'M/s Divine International'[ 2011 (9) TMI 134 - ITAT, New Delhi], there can be three alternative allegations against the assessee. One can be that these credits represent the credit for earlier years. If that be the case, no addition can be made in this year under Section 68 of the Act. The second allegation can be that these credits represent the purchases for which payments have been made by the assessee during the year itself. If this is so, the onus will be on the department to establish that assessee has made payment to these creditors. This is not even the allegation of the assessing officer, much less his case against the assessee. The third allegation can be that these credits do not represent the purchases which have been made by the assessee. The implication of this will be that the purchases debited in the trading account are not genuine to that extent and accordingly, that the trading account is not correct. However, as discussed, the trading results of the assessee have been accepted and considering the overall facts of the case, as dwelt upon, no addition u/s 68 of the Act is called for – Decided in favor of Assessee. Disallowance of car and telephone expenses being personal in nature – Held that:- The element of personal user has not been dispelled by the assessee. However, that the addition is an ad- hoc addition - The addition made, amounting to Rs. 6,34,421/- is on the higher side - It would serve the ends of justice, if this addition is scaled down to Rs. 6 lac.
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