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2023 (8) TMI 1009 - AT - Income TaxUnexplained credit u/s 68 - assessee has not been able to explain the genuineness and creditworthiness of the sundry creditors - assessee submitted that since the assessee has submitted additional evidences and which was remitted back to the file of the AO for taking remand report, however AO has not submitted any remand report, therefore it is not a mistake on the part of the assessee - HELD THAT:- Additions cannot be made towards trade creditors u/s 68 as unexplained credits, when purchases are accepted as genuine. Thus, we note that no additions can be made u/s 68 towards trade creditors when genuineness of the purchases are not doubted. In the assessee’s case on hand, the A.O. has not doubted the genuineness of the purchases. We note that in assessee’s case the creditors have confirmed the transactions with the assessee. The confirmation of all creditors and their income tax returns containing PAN number and their addresses were there before the CIT(A). A.O. was not correct in making additions towards trade creditors u/s 68 of the Act, hence we delete the addition. AO has disallowed sundry creditors on estimated basis, at the rate of 25% of the sundry creditors without rejecting the books of accounts of the assessee. As per assessing officer, an individual creditor is true up to 75% level and untrue up to 25% level, which is unheard practice because a purchase bill issued by creditor cannot be bogus for 25% and true for 75% level, particularly when books of accounts are not rejected and purchases made from the said creditor has not been treated as bogus. CIT(A) has decided the issue on merit based on the evidences submitted by assessee and the material on record and therefore order passed by ld CIT(A) cannot be treated as an ex parte order, hence matter cannot be remitted back to the file of the ld CIT(A) (for second inning) for fresh adjudication, as contended by ld DR for the Revenue. Hence, considering these facts and circumstances, we delete the addition. Enhancement of assessment by CIT(A) - expenditure u/s 40A(3) - Revenue submitted that Ld. CIT(A) has co-terminus power as that of the AO and therefore has right to enhance the assessment - HELD THAT:- We find that the issue involved in the second ground of appeal of assessee, is no longer res integra. The question as to whether the ld CIT(A) can enhance the assessment without giving notice to the assessee, was considered by various judicial forums across India, wherein it was held that ld CIT(A) cannot enhance the assessment without giving notice to the assessee. See Sureshchandra Parekh [2017 (2) TMI 1540 - ITAT AHMEDABAD] - Decided in favour of assessee.
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