TMI Blog2004 (8) TMI 642X X X X Extracts X X X X X X X X Extracts X X X X ..... t reduced by 16.5% this year but the Freight Charges have increased by 26 per cent as compared to the last years, ( ii ) the Freight Charges have been paid to the sister-concern and ( iii ) the assessee has not paid the Freight Charges on competitive rates in the market by calling tenders. Before the Ld. CIT(A) the assessee had taken the same stand what was taken before the Assessing Officer that due to labour trouble in the plant of M/s. Modi Alkalies Chemicals Ltd., Alwar, the assessee was compelled to purchase the goods from M/s. Tata Chemicals Ltd., Mithapur. As the distance from Delhi to Alwar is about 160 kms. and the distance between Delhi and Mithapur is about 1300 kms. The difference in the distance was about 8 times and the Freight increase was only about 3 times. Secondly, it was explained that the increase in the Freight Charges in the months of February and March 1997 was due to increase in the transport cost of Soda Caustic Lye from Rs. 443 to Rs. 550 per ton which was increase of 24 per cent. This increase was accepted by the assessee-firm because the price of diesel had gone upto Rs. 9.05 per litre in January to March 1997 as compared to Rs. 6.99 in the earlier ye ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eciprocability was just to introduce the capital in the firm. The assessee firm and the partner have not shown such love and affection to the donor. This clearly shows that the amount was paid out of books and raised in the form of gift. Accordingly, he added this amount of Rs. 30,000 as cash credit under section 68 of the Income-tax Act, 1961. The Ld. CIT(A) has deleted this addition by holding that the reason given by the Assessing Officer for not accepting this gift, was not valid - the donor being a close relative of Shri Rajat Soni and the transaction being not doubted by the Assessing Officer. Aggrieved by this order of the Ld. CIT(A), the Department is in appeal before us. 2.5-3 At the time of hearing the Ld. Departmental Representative relied on the order of the Assessing Officer and the Ld. AR of the assessee relied on the order of the Ld. CIT(A). 2.5-4 Heard both the parties and perused the record. We find that the Ld. CIT(A) has passed a well-reasoned order after taking into consideration the facts of this case in detail. Therefore, it does not require any interference on our part. The order of the Ld. CIT(A) on this issue, is upheld. 2.5-5 As far as an addit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... The Assessing Officer has added this amount treating it as cash credit, which is totally wrong. In fact, it is a trade liability and trade liability cannot be rejected without bringing sufficient material to probe that the particular liability is a bogus liability. There is evidence on record that the assessee had business dealing with the party and it is submitted that this factory is closed due to Government decision to close the factory. Under the circumstances, it was incumbent upon the Assessing Officer to find out the actual location and present whereabouts of the party and to verify the fact. Simply because the Inspector was unable to locate the party, the Assessing Officer cannot jump to the conclusion that this is a bogus creditor and treat the same as cash credit under section 68 of Income-tax Act. Therefore, on the given facts and circumstances of the case, I find that there is no proper justification for making this addition of Rs. 1,75,966 and the same is deleted." 2.5-8 Since the Ld. CIT(A) has passed a well-reasoned order, we are not inclined to interfere. On this issue the order of the Ld. CIT(A) is upheld. This ground of the Department is dismissed. 2.6 Re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... this basis, the Assessing Officer concluded that this liability ceased to exist and added Rs. 4 lakhs under section 41(1) of the Income-tax Act, 1961. Before the Ld. CIT(A) the assessee filed confirmation from the creditor vide Letter dated 8-2-2000 and it was argued that till that date the liability of Rs. 4 lakhs to Smt. Annu Choudhary remained. On 8-2-2000 the creditor gifted this amount to Shri Rajat Soni, her nephew and partner in the firm. It was also submitted that the assessee or the successor is liable to pay this amount to Shri Rajat Soni even after 8-2-2000 and the liability has not ceased even in the assessment year 2000-01. The Ld. CIT(A), held that during the year under appeal, the liability existed and the addition, on the ground of cessation of liability, was not sustainable. Therefore, the addition was deleted by him. We do not find any infirmity in the order of the Ld. CIT(A) on this issue in the light of these facts of the case. This ground of the Department is also dismissed. 2.10 In the result, the appeal of the Department is dismissed. ITA No. 4575/Del./2002 : 3. This is assessee s appeal against order dated 29-8-2002 of Ld. CIT(A)-XIX, New Delh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... decision of the Calcutta High Court in the case reported in Mather Platt (India) Ltd. v. CIT [1987] 168 ITR 493 1 wherein it has been held that if the assessee established the identity of the payees to whom summons were issued by the Department, Notices sent to them are coming back "Undelivered" is irrelevant as it would not mean that they were not in existence at the time of the payment. The assessee further submitted before the Ld. CIT(A) that all the information on the basis of which the Assessing Officer could have established the validity of the commission paid were given. The payment through the Bank clearly established that the commission was, in fact, paid by the assessee for the purpose of the business. The Ld. CIT(A) after going through the facts and the submissions, made before him, confirmed this addition by holding that the identity and the services rendered have not been proved by the assessee and he had failed to prove the basic ingredient for allowability of the deduction. He also relied on the judg- ment of the Bombay High Court in the case of Goodlas Nerolac Paints Ltd. v. CIT [1982] 137 ITR 58, 62 while confirming this addition. Aggrieved by this or ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and addresses of the parties to whom the payments were made, have been given, the Bank Statement showing payments though the Cheques was also not disputed and the income tax particulars of the Commission agents have also not been disputed. We are of the opinion that the assessee has discharged its primary onus of establishing the genuineness of the transactions and the Assessing Officer has not rebutted the contentions of the assessee. We also find that the case law relied on by the Ld. CIT(A), while confirming this addition, is not relevant to the facts of this case. The case of Goodlas Nerolac Paints Ltd. ( supra ) relates to the secret commission, paid to the employees/customers to keep them happy, was claimed as selling expenses. The names and addresses to which commission was alleged to have been paid, was not disclosed to the Assessing Officer. Therefore, it was held that the expenses claimed were not allowable. The facts of the instant case are quite different. The assessee has not only given the names and addresses but also other supporting evidences were also given regarding the genuineness of the transactions. Therefore, we are of the considered opinion that the addit ..... X X X X Extracts X X X X X X X X Extracts X X X X
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