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2015 (10) TMI 743 - AT - Income TaxLegality of order passed U/s 147 - addition on account of alleged unexplained sundry creditors - Held that:- As revealed from the chart that in case of Anurag Sales Corp, and Sunraj Steel, the credit balance has increased from 31/3/2004 and 31/3/2005. In case of Swastik trading company and P.K. Industry, the credit balance had gone down compared to 31/3/2004 to 31/3/2005, which proved that on 31/3/2005, these credit balances were cumulative. AO for A.Y. 2005-06 had considered the G.P. addition on account on discrepancy found in these creditors account. No separate additions were made on account of different in creditors. The credit balance as on 31/3/2005 i.e. for A.Y. 2005-06 cannot be added as income in A.Y. 2004-05. The ld Assessing Officer had not verified the creditor’s balance as on 31/3/2004 from the assessee’s books as well as creditor’s books and had not quantified the exact difference if any difference in their accounts. He simply made addition on the basis of difference in the credit balances in the accounts of these parties for A.Y. 2005-06. It is further confirmed from the CIT(A)’s order wherein sundry creditors list in case of Yash enterprises and Arihant Corp. there were no outstanding creditors as on 31/3/2004. Even the ld Assessing Officer considered these parties for addition to the tune of ₹ 1,11,715/- in case of Arihant Corp. and ₹ 1,72,435/- in case of Yash Enterprises, which is not justifiable as there was no outstanding balance as on 31/3/2004 in case of above two parties. The ld Assessing Officer made addition in A.Y. 2005-06 as well as A.Y. 2004-05 in case of four parties and in case of Arihant corp. and Yash enterprises, he made addition without any creditors outstanding as on 31.03.2004. Therefore, the ld CIT(A) was not right to confirming the addition between difference in creditors as on 31/3/2003 and 31/3/2004, this increase can be on the basis of further purchase made by the assessee herself. In some of the cases, there is even reduction in outstanding creditors on payment. The Assessing Officer should have collected the information from the creditors directly to verify the outstanding creditors as on 31/3/2004 and should have compared with the assessee’s books of account before making any addition, which has not been carried out by the Assessing Officer. Thus, the addition confirmed by the ld CIT(A) is deleted. Decided in favour of assessee.
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