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2022 (6) TMI 469 - AT - Income TaxReopening of assessment u/s 147 - addition of 100% creditors as unproved creditors - HELD THAT:- We find that the requisite material papers were filed by the assessee and placed before the CIT(A) in the appellate proceedings, but there was no reasons recorded by the CIT -A on rejecting the material information which goes to the roots of the case. Prima facie we find that the additions made by the AO is not supported with any valid reasons except on assumptions and presumptions as the amounts are being carry forwards from earlier years. The Ld.AR submissions are realistic and duly supported by the material information having evidenceial values. We considering the facts, circumstances, provisions of law are of the opinion that the creditors are trade creditors and the payments are made by the assessee in F.Y. 2014-15 cannot be doubted and the revenue has also accepted the payments. Accordingly, we set aside the order of the CITA) on this disputed issue and direct the AO to delete the addition. Addition @ 0.55% of closing balances of creditors and debtors as bogus - HELD THAT:- As relying on assessee own case [2022 (1) TMI 1255 - ITAT MUMBAI] disallowance of creditors @.55% of the total value is absolutely based upon the surmise and conjectures. If the AO is not satisfied about the books of the assessee,he can reject the same and make an estimate of the income based upon industry trend or past record of the assessee. No such exercise has been done by the AO. This is fatal to the assesseement here. More ever, outstanding creditors which are trade creditors can be added only under the provisions of section 41(1) of the Act. No case has been made out that section 41(1) has been invoked and there is disallowances as per provisions of section 41(1). Hence we set aside the orders of the authorities below and direct that the addition in this regard should be deleted. - Decided in favour of assessee.
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