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2018 (3) TMI 892 - AT - Income TaxAddition on account of bogus creditors - case of the revenue before us is that, the outstanding trade creditors is a part of balance sheet item, therefore, separate addition can be made over and above the business income assessed by applying the net profit rate after rejecting the books of accounts - Held that:- When the books of accounts are rejected and income is assessed on the principle of ‘best judgment assessment’, then entries of the amounts shown in the books of accounts cannot be held to be reliable. Once business income of the assessee from the contract receipt business has been assessed at 8%, then it take cares of all other additions made on account of trading account and any liability including outstanding amount of trade creditors. Thus, we agree with the contention of assessee that if the income has been assessed after rejecting the books of accounts and net profit rate has been applied, then no separate addition on account of trade creditors should be made. Accordingly, we direct the AO to make addition of ₹ 35,25,490/- as has been worked out by the Ld. CIT(A). The additions on account of sundry creditors raised in both the appeals are dismissed. Decided in favour of assessee Addition on account of unexplained loan - Held that:- CIT (A) has noted that the party was old lender and assessee has filed his PAN details which has been verified by the AO; copy of return of income for the current year of the said creditors which reflects his creditworthiness from the quantum of income shown by him; and the genuineness of the transaction is also proved as the transaction is through banking channel. Not only that, he has already directed the Assessing Officers of the said creditors to initiate that the scrutiny proceedings in their cases. The observation and the finding of the Ld. CIT(A) as incorporated above does not call for any interference which is based on correct appreciation of law and facts and consequently, the ground raised by the revenue is dismissed
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