TMI Blog2013 (9) TMI 8X X X X Extracts X X X X X X X X Extracts X X X X ..... assessee - No addition is called for, since the purchases or the sales have not been disputed by the Assessing Officer - Therefore, just because confirmations were not filed, according to 'YFC Projects (P) Ltd. vs. DCIT' [2010 (1) TMI 880 - ITAI, Delhi ], no addition can be made. Relying upon the decision in the case of 'M/s Divine International'[ 2011 (9) TMI 134 - ITAT, New Delhi], there can be three alternative allegations against the assessee. One can be that these credits represent the credit for earlier years. If that be the case, no addition can be made in this year under Section 68 of the Act. The second allegation can be that these credits represent the purchases for which payments have been made by the assessee during the year itself. If this is so, the onus will be on the department to establish that assessee has made payment to these creditors. This is not even the allegation of the assessing officer, much less his case against the assessee. The third allegation can be that these credits do not represent the purchases which have been made by the assessee. The implication of this will be that the purchases debited in the trading account are not genuine to that exten ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion has been made relying upon the information collected under Section 136 without giving opportunity to the assessee of cross examination and rebutting the same. 5 (i) On the facts and circumstances of the case, the learned CIT(A) has erred both on facts and in law in confirming the disallowance of an amount of Rs.6,34,421/- being 1/10th of the expenses incurred by the assessee on car and telephone. S. No. Particulars Amount (Disallowed) Rs. 1. 1/10 of car maintenance expenses of 7,10,692/- 71,069/- 2. 1/ 10 of telephone expenses of Rs. 4,10,154/ - 41,015/- 3. 1/10 of travelling expenses of Rs.44,45,307/- 1,00,000/- 4. Car Depreciation Expenses (a) 1/10 of Car Audi depreciation of Rs.4,72,144/- 4,7214/- (b) 1/10 of Car Lancer depreciation of Rs.20,284/- 2,028/- (c) 1/10 of Car Mercedes depreciation of Rs.1,49,087/- 14,908/- (d) 1/10 of Car Honda depreciation of Rs.1,09,782/- 10,978/- (e) 1/10 of Car Honda City depreciation of Rs.81,475/- 8,147/- (f) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n the assessee's books in the name of these two parties, to the total income of the assessee. The ld. CIT (A) confirmed this addition also. 7. The ld. Counsel for the assessee has contended before us that the ld. CIT (A) has erred in confirming these additions, despite observing in the impugned order itself that these creditors had static balance for the three years; that while illegally confirming the additions, the ld. CIT (A) has erred in failing to consider the fact that the first addition was made relying on information collected u/s 133 (6) of the Act, without affording any opportunity of cross-examination and rebuttal to the assessee. It has been contended, as before the ld. CIT (A), that the additions are not justified, as the sundry creditors are still outstanding; that the trade creditors are old creditors and they do not relate to the year under consideration; that during the year under consideration, there was no transaction of the assessee with the parties in question and due to this very fact, it cannot be held that the old sundry creditors has become bogus; that there were genuine purchases from the parties and this has not been disputed by the AO; that in AY 2007- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... essee miserably failed to prove the genuineness of the sundry creditors inasmuch as, even the confirmation from any other parties was not filed; that Students Book Depot, Ranchi and Unicate Publishers and Distributors, Pune, had specifically stated in their respective replies that during the year, they did not have any transaction with the assessee; Researchco Books and Scientific International did not even filed replies before the AO, indicating that they had nothing to offer in response to the notice issued to them u/s 133 (6) of the Act; that therefore, the ld. CIT (A) has rightly confirmed the addition made and that there being no merit whatsoever in the grievance of the assessee in this regard, the same be rejected, upholding the CIT (A)'s order on this issue. 11. With regard to this issue, having heard the rival contentions and having perused the relevant material placed on record, we find that undisputedly, the amounts in question are outstanding as sundry creditors for the last three years. This is evident from the ledger accounts of the creditors, as placed in the paper book at pages 44-57. As such, there is no infirmity in the stand taken by Students Book Depot, Ranchi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... orily required to be added as income of the assessee and that Section 68 of the Act gives a discretion of the Assessing Officer in this regard; and that the Assessing Officer has to take into account the overall facts. In the present case, as discussed, on considering the facts of the case, the provisions of Section 68 of the Act are not attracted and considering the overall facts, no addition is called for under the Section. 13. Further, as considered in the order dated 30.09.2011 passed by this Bench (authored by the JM) in the case of 'M/s Divine International' for Assessment Year 2001-02, in the case of the assessee these creditors represent the outstanding amount on account of the purchases. There can be three alternative allegations against the assessee. One can be that these credits represent the credit for earlier years. If that be the case, no addition can be made in this year under Section 68 of the Act. The second allegation can be that these credits represent the purchases for which payments have been made by the assessee during the year itself. If this is so, the onus will be on the department to establish that assessee has made payment to these creditors. This is no ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 9,087/- 14,908/- (d) 1/10 of Car Honda depreciation of Rs.1,09,782/- 10,978/- (e) 1/10 of Car Honda City depreciation of Rs.81,475/- 8,147/- (f) 1/10 of Car Mercedes depreciation of Rs.4,17,226/- 41,722/- (g) 1 / 10 of Car Maruti depreciation of Rs. 7, 421/ - 742/- (h) 1/10 of Car Safari depreciation of Rs.95,759/- 9,575/- Total 6,34,421/- 18. The disallowance was made by the Assessing Officer, treating the user of the car and the telephone by the assessee to be of a personal nature. The Ld. CIT (A) confirmed the disallowance. 19. The ld. counsel for the assessee has contended that all the expenses have been incurred wholly and exclusively for the purpose of business only and that the authorities did not point out exactly which expenses had been incurred for personal purposes and that so, no ad hoc addition can be made. Reliance has been placed on the following case laws:- 1. 'Manika Gems Ors. vs. ACIT', 237 ITR 570 (SC); 2. 'Coco Cola (India) Ltd. vs. JCIT' 104 TTJ 254 (Pune); 3. Lavrids Khudsen Maskin Fabric (I) Ltd. vs, A ..... X X X X Extracts X X X X X X X X Extracts X X X X
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