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2017 (7) TMI 1319 - ITAT MUMBAIAddition u/s 68 - peak credit addition - applying 0.50% by the AO on the sales respectively - HELD THAT:- CA appointed by the CBI prepared the audit report without confronting the same to the assessee. AO issued notice u/s 133(6) to some of the debtors and creditors and most of these parties were verified by the AO. It is only in the case of three creditors that the notices issued u/s 133(6) were returned unserved. Out of the three concerns M/s Stads Ltd was struck-off from the Register of Companies and the second concern M/s Pashupati Fabric Ltd was under liquidation before commencement of reassessment proceedings. AO has not brought to the notice of the assessee that the notices sent to these parties were returned unserved and proceeded to frame the assessment believing these parties to be non-genuine. It is also submitted that before the AO, the necessary documents could not be produced because the records were in the custody of CBI. FAA has comprehensively considered various facts and contention of the assessee and came to the conclusion that the addition of ₹ 10,00,523/- were made on the basis of peak credit which was wrong as the assessee has fully disclosed all the transactions in its books of account. CIT(A) also deleted the addition at the rate of 0.5% of the total sales on the ground that the assessee has fully disclosed the sales and purchases in its books of account and whatever profit or loss earned on these transactions were duly calculated and filed before the AO in the return of income. We are inclined to agree with the conclusion drawn by the CIT(A) . Accordingly , the appeal of the revenue department is dismissed. Addition u/s 68 in respect of unsecured loans from Pashupati Fabric Ltd. - HELD THAT:- The confirmation on account was also filed before the ld.CIT(A). The ld. CIT(A) has also recorded the findings of facts that the said buyer M/s Pashupati Fabric Ltd has paid up share capital of ₹ 91,21,77,200/- and therefore, the creditworthiness of the said party was not in doubt and finally deleted the addition after examining the various documents in the paper book which proved the transaction to be genuine and the advances was adjusted in the subsequent years and thus deleted the addition. In our opinion, the order of the ld.CIT(A) on this point is very reasoned order which call for no interference on our part as the FAA has allowed the appeal of the assessee by observing that the addition by the AO was made on the wrong understanding of facts that unsecured loan was received by the assessee whereas as a matter of facts the advance were received against the sale of software which was finally supplied on 8.5.2006. We, therefore, uphold the order of he ld.CIT(A) by dismissing the ground raised by the revenue.
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