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2019 (11) TMI 631 - AT - Income TaxAddition on account of sundry creditors u/s 68 - HELD THAT:- As noticed from the assessment order that the AO has not rejected the book results and thereby has accepted the purchases made from the said parties and the sales have also been accepted. As to be seen as to whether the addition is called for merely because some of the letters issued u/s 133(6) were returned back unserved or in some other cases there was no compliance from the said creditors. The coordinate Bench of the Tribunal in the case of Sudha Loyalka [2018 (7) TMI 1892 - ITAT DELHI] has held that addition cannot be made u/s 69C in respect of amount payable to creditors towards purchases when such purchases were duly recorded in books of account and sales made against those purchases was not disputed. The Lucknow Bench of the Tribunal in the case of Zazsons Exports Ltd. [2015 (4) TMI 747 - ITAT LUCKNOW] has held that when the AO has accepted the purchases and trading results has not been disturbed, addition cannot be made u/s 68 of the Act merely on account of non-verifiability of sundry creditors. The Hon'ble Delhi High Court in the case of Ritu Anurag Agarwal [2009 (7) TMI 1247 - DELHI HIGH COURT] has held that when there was no disallowance for corresponding purchases and the trade results were accepted by the Assessing Officer, no addition can be made u/s 68 in respect of the outstanding sundry creditors related to purchases. The various other decisions relied on by the ld. counsel in his paper book also support his case. CIT(A) is not justified in sustaining the addition made by the Assessing Officer on account of the sundry creditors in whose cases the letters issued u/s 133(6) were either returned unserved or were not complied with and the assessee failed to produce them. Accordingly, the order of the CIT(A) is set aside and the grounds raised by the assessee are allowed. Lumpsum disallowance on account of unverifiable freight expenses - HELD THAT:- When the Assessing Officer had not rejected the books of account and no specific amount has been doubted and the accounts are audited and the auditors have also not pointed out any defects, the addition made by the Assessing Officer and sustained by the CIT(A) is not justified. I find some merit in the above arguments of the ld. counsel. Admittedly, the accounts of the assessee are audited u/s 44AB by the auditors and they have not given any adverse remarks. AO has not pointed out any specific defect and has merely made the disallowance on ad hoc basis on the ground that the assessee failed to produce bills and vouchers. He has also not given any comparable case which he has mentioned in the order other than stating that the claim is higher in comparison to other similar assessees. In this view of the matter, set aside the order of the CIT(A) and direct the Assessing Officer to delete the addition. Disallowance on account of low household withdrawal - HELD THAT:- Assessee has shown only ₹ 32,434/- as withdrawal for household expenses. The argument of the assessee that his wife has also contributed an amount of ₹ 42,159/- was rejected by the Assessing Officer. I find the ld.CIT(A) upheld the action of the Assessing Officer in making the addition of ₹ 60,000/- on account of low household expenses. It is the submission of the ld. counsel for the assessee that the total amount of 74,593/- is sufficient to maintain the family. However, on a pointed query by the Bench, the ld. counsel was unable to explain the size of the family for which an amount of ₹ 74,593/- will be sufficient. However, AO has also not given any plausible reason as to on what basis he has made this addition of ₹ 60,000/-. Disallowance on ad hoc basis appears to be on higher side, modify the order of the CIT(A) and direct the Assessing Officer to restrict the same to ₹ 30,000/-.
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