TMI Blog2013 (11) TMI 321X X X X Extracts X X X X X X X X Extracts X X X X ..... h Damor For the Respondent : Shri Nikhil Pathak ORDER PER R.K. PANDA, AM : The above 2 appeals filed by the Revenue are directed against the separate orders dated 14-06-2011 15-07-2011 of the CIT(A)-I, Nashik relating to Assessment Years 2005-06 and 2004-05 respectively. Since identical grounds have been taken by the Revenue in both the appeals, therefore, these were heard together and are being disposed of by this common order. ITA No.1056/PN/2011 (A.Y. 2005-06) : 2. Facts of the case, in brief, are that the assessee is an individual and is engaged in the business of trading in scrap material of Iron and Steel. He filed his return of income on 31-10-2005 declaring total income at Rs.2,20,180/- which was accepted u/s.143(1) of the Income Tax Act. Subsequently, the Assessing Officer initiated proceedings u/s.147 of the Act after recording the following reasons : During the course of assessment proceedings in the case of assessee for A. Y. 2007-08 enquiries were conducted into the genuineness of creditors appearing in the balance sheet of assessee as at 31.03.2007. The following parties against which opening balance of the amounts were shown are ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as held that the burden of proving the creditors is on the assessee, the Assessing Officer held that the contention for accepting the creditors as genuine cannot be accepted since the assessee did not discharge the burden cast on him. Since the assessee could not obtain confirmations from the said creditors the Assessing Officer held that the creditors appearing in the balance sheet of the assessee are fictitious and bogus creditors comprising of undisclosed income of the assessee. The Assessing Officer accordingly made addition of Rs.72,55,461/-. 3. Before the CIT(A) it was submitted that the assessee regularly maintains books of accounts which are duly audited. The assessee also maintains quantitative tally of purchases and sales which is reflected in the tax audit report. The Assessing Officer has accepted the purchases, sales and books results. It was argued that in absence of the said credit purchases there cannot be any sales or profit. Relying on the decision of Hon ble Allahabad High Court in the case of CIT Vs. Pancham Dass Jain reported in 205 CTR 444 it was submitted that no addition towards alleged fictitious creditors can be made u/s.68 of the Income Tax Act. It was ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... T(A) has erred in deleting the addition made by the AO of Rs.72,55,461/-. 2. The Id. CIT(A) has erred in the facts circumstances of the case in law in holding that the impugned addition made by the AO is contrary to the provisions of sec.68 of the Act. 3. On the facts circumstances of the case the Id. CIT(A) erred in allowing the assessee's claim especially as the assessee did not prove during the course of assessment proceedings that the creditors were not fictitious. The Id. CIT(A) failed to appreciate that the assessee was unable to prove the genuineness of the creditors even during the assessment proceedings for A Y 2007-08 when these creditors were still outstanding. 4. In the facts and the circumstances of the case the Id. CIT(A) has erred in accepting that the explanation filed by the assessee in respect of the (fictitious) credits was satisfactory. 5. The order of the Id. CIT(A) be cancelled and that of the A.O be restored. 6. The appellant requests leave to add/alter/amend the grounds of appeal. 6. The Ld. Departmental Representative heavily relied on the order of the Assessing Officer. He submitted that the creditors appeared for the first time in A.Y. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f disallowance of creditors the Revenue has not filed any appeal against the order of the CIT(A) deleting the addition. Referring to the decision of the Pune Bench of the Tribunal in the case of ACIT Vs. Vikas Purushottamlal Gupta vide ITA No.588 to 590/PN/2011 for A.Y. 2004-05 to 2006-07 order dated 28-08-2012 he submitted that under identical facts and circumstances the Tribunal had directed the Assessing Officer to adopt 1% net profit of the turnover instead of adding the entire sundry creditors. 8. We have considered the rival arguments made by both the sides, perused the orders of the Assessing Officer and the CIT(A) and the Paper Book filed on behalf of the assessee. We have also considered the various decisions cited before us. There is no dispute to the fact that during the course of assessment proceedings the assessee could neither produce the creditors nor furnished the confirmation letters from the sundry creditors for which the Assessing Officer made addition of Rs.72,55,461/- on account of bogus/fictitious sundry creditors. We find the Ld.CIT(A) deleted the addition on the ground that there is substantial lapse of time between the assessment year and year of completi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rs pertaining to some of the parties appearing as sundry creditors in the books of the assessee were recovered during search action u/s.132 pertains to Sri Vikas P. Guptha, i.e. assessee. There is also no dispute to the fact that despite sufficient opportunities given, the assessee could not prove to the satisfaction of the AO regarding the genuineness of the sundry creditors appearing in the balance sheet as at 31-03-2004, 31-03-2005 and 31-03-2006. Therefore, the sundry creditors appearing in the books of account, under the peculiar facts and circumstances of the case cannot be accepted as genuine and some addition has to be made. At the same time we find the AO has accepted the sales as genuine and the same has not been disturbed. It is also a fact that the AO has not disturbed the purchase figures and he has proceeded to add the sundry creditors appearing in the balance sheet as unproved liability u/s.68 of the Income Tax Act. In our opinion addition of the total sundry creditors under the facts and circumstances of the case will give absurd result which is not possible in the type of trade the assessee is engaged in. At the same time we also do not find the argument of the lea ..... X X X X Extracts X X X X X X X X Extracts X X X X
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