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TMI Blog2013 (4) TMI 64X X X X Extracts X X X X X X X X Extracts X X X X ..... ) has grossly failed to appreciate that one of the partner Sh. Jaspal Singh who was dealing with the affairs of the firm was not feeling well for the last two months and was confined to bed. 5. That the ld. CIT(A) failed to appreciate that the factory of the assessee was closed since 2007 and the whole business was upset being labour strike and other problems occurred in the factory. As a result of this the whole condition of the factory was disturbed and the assessee as under financial crisis and as such there was no justification in dismissing the appeal in lime line without knowing and appreciating the facts of this case. 6. That the ld. CIT(A) has miserably failed to appreciate the facts and that the circumstances of this case and a grave injustice was done by the AO while deciding the case and thereby making heavy addition which was not at all called for. Thus, a grave injustice has been done and the principle of natural justice has been completely violated by worthy CIT(A) while deciding the appeal and confirming the addition without going into the facts and merits of the case. Thus, the addition confirmed by the ld. CIT(A) is not at all called for and the same deserves t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... further failed to appreciate that these expenses were incurred during the course of business and were necessary for carrying on the business and there was no justification for disallowing the same. 12. Any other ground of appeal which may be urged at the time of hearing of the appeal." 2. The asessee has not pursued grounds No. 1 to 7. Therefore, the same are dismissed. 3. Ground No.12 is general in nature and therefore, do not require any adjudication. 4. As regards grounds No. 8 to 11, the brief facts as emanating from the order of the AO dated 16.12.2009 are reproduced hereinbelow for the sake of clarity: "The assessee firm deals in Mfg. of Textile Machinery. The books of accounts as per audit report are cash book and ledger only. The details of sundry debtors and creditors is as under: Sales 5800000 Sundry Debtors 701237 Sundry Creditors (for goods) 2250757 (For Advances against Supply of machinery) 4842663 (total) 7098420 Books accounts/information including documents/evidences in support of return of income as per above notice u/s 143(2) and documents/evidences to established the genuineness of creditors alongwith confirmed copies of accounts was requir ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ot furnished complete information as claimed vide letter dated Nil, i.e. it was claimed that confirmed copies of accounts were filed in respect of all debtors and creditors but no such confirmed copies of accounts were filed. It was also stated that balances are still outstanding as on date. Assessee vide this office letter dated 14.12.2009 was asked to explain as to why the wrong information was filed fixing the case for 16.12.2009 when counsel Sh. P.N. .Arora attended the office and stated that it was wrongly mentioned that confirmed copies of acdounts and complete addresses were given. Accordingly assessee has failed to prove and establish the genuineness of the creditors including audited list of Debtors showing your creditors and details of payments made alongwith copies of accounts for the Assessment year 2008-09 and 2009-10 and reasons for non payments and mode of payments if payments made and evidence of payments received by the respective parties alongwith creditors static for more than 1 year with reasons for non payments to such creditors and accordingly amount is added to income as fictitious liability to be added as unexplained expenditure being paid outside the bo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2217625 is added to the income Assessment is made and income is computed as under: Accordingly income is computed and assessed as under: Income returned 44000 Income added in respect of Creditors for goods 1474763 Income added in respect of Creditors for advance against Supply of machinery 2630038 4104801 4104801 Expenses for personal use 30% of Car Expenses (52649) 15794 30% of car depreciation (1182027) 35408 Telephone (59618) 17885 Total Income 4217888 " 5. The Ld. CIT(A) at the outset, dismissed the appeal of the assessee being not pursued inspite of notices served. At the same time, the ld. CIT(A) decided the appeal on merits and confirmed the action of the Assessing Officer i.e. with regard to confirmation of addition of Rs. 14,74,765/-. The Ld. CIT(A) observed as under: "It is admitted fact during the assessment proceedings books of accounts were never produced and other required information was furnished fully and in all completeness, which enforced the A.O. to make addition of Rs. 14,74,765/- representation fictitious and cessation of liability representing static creditors remained unsubstantiated or confirmed." 6. As regards the confirmation of additi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... essee has not written back the liabilities unilaterally. Moreover, all the liabilities i.e. Rs. 14,74,763/- as well as Rs. 26,30,038/- are the liabilities which are existing liabilities. Rs. 14,74,763/- are the sundry creditors which areoutstanding in the preceding year and no fresh cash credit has been received during the year. The Ld. counsel for the assessee, Mr. P.N. Arora, invited our attention to the copies of accounts of all creditors at paper book pages 6 to 21 with regard to said creditors of Rs. 14,74,763/-. Mr. P.N. Arora, Advocate further invited our attention to the addition confirmed by the ld. CIT(A) in para 6 of his order that the assessee failed to discharge and to establish genuineness of the unsecured family loans by not proving the identity, capacity and creditworthiness which remained unconfirmed and in the absence of PAN on record. In this regard, it was pointed out in respect of Smt. Ujjal Kaur that balance is outstanding since many years and copies of accounts for the year ending 31st March, 2003 to 31st March, 2007 are available at PB 22 to 25 and PB 97. As on 01.04.2002, the balance brought forward as payable was Rs. 10,27,302.86 and the interest as on 31s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... an addition of Rs. 26,30,038/- being the amount of unsecured loans in the case of Smt. Ujjal Kaur, Smt. Manjit Kaur and Smt. Rayam Kaur, whose amount was outstanding at Rs. 10,51,302/-, Rs. 7,29,238/- and Rs. 8,48,798/- totaling Rs. 26,03,038/- is a matter of record in the assessment order. The Ld. CIT(A) has also with complete application of his mind has confirmed the addition made by the A. O. The Ld. CIT(A) has also observed that the assessee has not proved the identity, capacity and creditworthiness of unsecured family loans and the family loans are fromSmt. Ujjal Kaur, Smt. Manjit Kaur & Smt. Rayam Kaur. Mr. P.N.Arora,Advocate, accordingly prayed to reverse the order of ld. CIT(A) w.r.t. theseadditions and allow the ground nos. 8, 9 and 10 of the assessee. 8.1. As regards the disallowance of expenses for personal use of car expenses and car depreciation amounting to Rs. 15,794/- & Rs. 35,408/-, the AO has not passed any reasoned order in the body of the order but has simply disallowed the expenses which have been confirmed by the ld. CIT(A) in a summary manner was argued by Mr. P.N.Arora. The assessee having paid FBT and therefore, there cannot be double taxation also. 9. T ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e assessee has not obtained any benefit out of such liability which is not ceased to be a liability and the assessee has not written back such liability unilaterally in its books of account. Therefore, such liability cannot be a subject matter of section 41(1) of the Act. It is also a matter of record in the order of the A.O. where the assessee had made some payments during the assessment years 2008-09 & 2009-10, which the AO at page 2 has mentioned in his order. Inspite of such facts on record, the matter did not find favour to the AO and confirmation made by the Ld. CIT(A) in a summary manner is not justified. The assessee is assessed to income-tax regularly, is on record and sundry creditors are outstanding as per last year for which assessment record was available with the AO which was argued by the ld. counsel and was not rebutted by the Ld. DR in this respect. Even if confirmation copies of accounts and books of account are not produced, the copies of audited accounts for the impugned year and the assessment record of preceding year was available with the A.O. The AO cannot make the assessment on conjectures, surmises or on the basis of suspicion. The AO has not given any fin ..... X X X X Extracts X X X X X X X X Extracts X X X X
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