TMI Blog2014 (4) TMI 927X X X X Extracts X X X X X X X X Extracts X X X X ..... making the addition under section 68 of the Act - He never considered the amount as unexplained cash credit - He simply disbelieved the purchases to that extent – thus, CIT(A) fell in error, when he deleted the addition and directed a best of judgment assessment after rejecting the books, especially when AO had not done so – thus, the addition made for bogus sundry creditors is upheld – Decided in favour of Revenue. Addition of bogus loan credit – Held that:- The assessee had discharged the primary onus resting on her, by producing confirmation letters, PAN of the concerned parties - CIT(Appeals) has clearly brought out that concerned parties were having sufficient capital balance as on 31.03.2008 for justifying it - This has not been rebutted by the Revenue – thus, there is no reason to interfere with the order of CIT(A) – Decided against Revenue. - ITA No.615/Kol/2012 - - - Dated:- 28-11-2013 - Mahavir Singh And Abraham P George, JJ. For the Appellant : Shri Saurabh Kumar, Sr DR For the Respondent : Shri M D Saha, AR ORDER:- PER : Bench This appeal filed by the Revenue is against an order dated 6th January, 2012 of Commissioner of Income Tax (Appeals)- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , the Director, of M/s. RVPL who purportedly signed the confirmation, also denied any relation with the assessee. Assessing Officer noted from the ledger of the assessee that every payment shown to have been made to M/s. RVPL were of sums less than Rs.20,000/- despite there being purchases in excess of Rs.1 crore from them. Explanation of the assessee in this regard was that supplier had insisted such payment on a daily basis. Assessing Officer refused to accept the claim of the assessee. He held that no credit balance in the name of M/s. RVPL existed at all. 5. Assessing Officer made a verification of the second sundry creditor namely M/s. Classic Sales Agency (in short 'CSA') also. No such person could be found at the address of the said sundry creditor. Since assessee had filed a confirmation of one Shri Sunil Das, proprietor of M/s. CSA with PAN, Assessing Officer ascertained his address and issued summons to Shri Sunil Das. In reply, he stated that he never knew the assessee but was only a radio mechanic. Shri Sunil Das, when he was shown the letter filed by assessee bearing his signature, denied such signature. Assessing Officer also noted that assessee had shown an opening ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d out that she had received Duty Draw Back of Rs.14,62,813/- on the exports. In support of her export sales assessee filed copies of export invoice, and bank remittance certificate which were countersigned by Inspector of Custom. Assessee also produced records to show that goods were indeed exported. As per the assessee when genuineness of sales was not doubted, purchases alone could not be doubted. Creditors verified by the Assessing Officer had turned hostile and did not respond since they themselves had manipulated their accounts, not showing the sale transactions in their books. As per assessee, the items purchased were food items which required small cash payments to the suppliers on a daily basis. Assessee also pointed out that existence or non-existence of a trade licence, did not bar a supplier from entering into a sale with the assessee. As per the assessee this was not critical in deciding on the genuineness of a purchase transaction. Assessee further pointed out that Assessing Officer himself had admitted the factum of sale and purchase. Once it was so accepted, Assessing Officer could not call into question genuineness of the credit purchase alone. Reliance was placed o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion of Rs.4,60,000/- also. 12 . Now before us, ld. D .R. strongly assailing the order of ld. CIT(Appeals) , submitted that credit purchases of goods claimed by the assessee were never accepted by the Assessing Officer. Assessee had never produced any bills and vouchers in support of its purchases. Just because it effected sales totalling to Rs.9,2 2 ,65,2 2 9/- it could not be said that there were purchases worth Rs.8,86,25,314/-. When purchase bills were not produced assessee could not say that it's claim of purchase should be believed as such. Sales of Rs.9,2 2 ,65 ,2 2 9/- could have been achieved by the assessee even with a lesser purchase of Rs.7,15,39,450/-, in other words, excluding the purchases equivalent to bogus trade creditors balances. Assessing Officer had accepted the purchases to the extent it could be believed, considering the sales effected by the assessee. He had only excluded the trade credits of three parties who had totally denied any trading with the assessee. Therefore, assessee cannot say that all the purchases were genuinely made. Not only had the alleged trade creditors' denied any credit balance, but in the case of one of the creditors namely RVPL, th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... directed an assessment to be made in the manner provided under section 144 of the Act. Revenue had not raised any ground against this action of the ld. CIT(Appeals) and therefore, could not say that addition done by the Assessing Officer should be reinstated. Relying on the decision of the Hon'ble Allahabad High Court in the case of CIT -vs.- Pancham Das Jain [205 CTR 444], Ld. A.R. submitted that once goods were accepted to have been purchased and profits therefrom considered by Assessing Officer, then the creditors could not be considered as bogus. As per ld. A.R., Hon'ble Allahabad High Court, had noted that creditors were bogus, but despite that it was held that once purchase of goods were accepted, an addition under section 68 could not be fastened on the assessee. Reliance was also placed on the decision of Hon'ble Jharkhand High Court in the case of Amitabh Construction Pvt. Ltd. -vs.- ACIT [335 ITR 523], for supporting his argument that once books of accounts were not found reliable, only course available was to proceed under section 145(3 ) of the Act and no addition could be made for sundry creditors as such. 15. So far as loan credit was concerned, ld. A.R. submitted ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is presumed. But these are not produced before me. The difference between the job of an auditor of accounts and that of an AO lies in the basic fact that the latter enjoys the power to cross-check the accounts. After this, I accept all the purchases and sales considering that for every sale there would be purchase. It is also admitted that there is no reliable information on the purchase, or at all she made purchases from the disclosed sources of money. It is also seen that some purchases are shown to have been made from a concern that did not com e into existence. In another case, the so-called supplier went on record to say that it had not been his signature which is claimed by the assessee. These may be treated as wilful attempts to avoid taxes and to be dealt with separately. Having said all this, I accept her balance sheet as on the end of the previous year, or for that matter, balance sheet of M/s. Ansh Enterprises as on 31.3.2008 because the assets are counterbalanced and certified by a qualified auditor. But I regret I cannot treat the sundry creditors' figures as genuine. It is Rs.17124938 [one crore seventy one lakhs twenty four thousand nine hundred and thirty eigh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sales turnover of Rs.9,2 2 ,65,2 29/-. However, the same level of sales could have been achieved with a purchases of Rs.7,51,79,983/- also, viz. excluding the bogus trade credit value of Rs.1,70,85,864/-. Once assessee failed to produce purchase bills, it cannot say that whatever purchases shown by it was to be believed. It is not the case of the Assessing Officer that assessee had not made any purchases. Assessee had definitely effected purchases, but not to the extent shown by it, as proved by the existence of bogus creditors. Assessing Officer had not at any point of time stated that he was making the addition under section 68 of the Act. He never considered the amount as unexplained cash credit. He simply disbelieved the purchases to that extent. No doubt, the case of Manoj Aggarwal -vs.- DCIT [113 ITD 377 (Del.)], relied on by the ld. CIT(Appeals), it was held by the Special Bench of this Tribunal that once the account of the supplier is credited with the amount payable and the purchase was allowed as an expenditure, an assessee cannot be called upon, to prove the nature and source of the credit. In our opinion, this case has no application since, here purchase itself has not ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... se of assessee. 21. As against above the decision of the Hon'ble Delhi High Court in the case of CIT -vs.- La Medica [(2001) 250 ITR 575 (Delhi) (supra) relied on by the revenue, is on all four squares. Their Lordships held that once material was brought on record by the revenue to show that purchases were not made from the persons shown by the assessee, the question whether such purchases were made from some other persons was not relevant. 22 . Ld. CIT(Appeals) , in our opinion, fell in error, when he deleted the addition and directed a best of judgment assessment after rejecting the books, especially when Assessing Officer had not done so. 23. In the result, Ground No. 1 of the revenue stands allowed and addition of Rs.1,70,85,846/- made for bogus sundry creditors is reinstated. 24. With respect to addition of bogus loan credit of Rs.4,60,000/-, the assessee had discharged the primary onus resting on her, by producing confirmation letters, PAN of the concerned parties. Ld. CIT(Appeals) has clearly brought out that concerned parties were having sufficient capital balance as on 31.03.2008 for justifying it. This has not been rebutted by the Revenue. We are of the opinion, ..... X X X X Extracts X X X X X X X X Extracts X X X X
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