TMI Blog2014 (5) TMI 620X X X X Extracts X X X X X X X X Extracts X X X X ..... (A) has correctly held that addition needs only be made of the amounts outstanding to the credit of the three parties in the assessee’s books, on account of cessation of liability of credit balance, u/s 41 (1) of the Act – there was no reason to interfere in the order of the CIT(A) – Decided against Revenue. - ITA No. 1387/Del/2013 - - - Dated:- 9-5-2014 - Shri R. S. Syal And Shri A. D. Jain,JJ. For the Petitioner : Shri Subodh Singh, Partner For the Respondent : Shri Satpal Singh, Sr. DR ORDER Per A. D. Jain, Judicial Member: This is department s appeal for Assessment Year 2003-04 emanating from the order dated 17.12.2012, passed by the Ld. CIT (A)-XXVII, New Delhi, against the action of the ld. CIT (A) in res ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bills received during the year. The AO sent reminders to the three parties, but to no avail. 4. The AO observed that Rs. 14,11,515/- Rs. 14,34,586/- and Rs. 3,11,204/-, being amounts payable by the assessee to Laxmi Enterprises, AL Metal Methods Pvt. Ltd. And Komal Forging, respectively, for purchases made during the year, remained outstanding throughout the year. At the AO s asking, the assessee furnished bills from the parties and also copy of account. From the copy of account, the AO observed that these amounts remained outstanding as on 31.3.2003. 5. The AO further observed that the AR of the assessee had filed confirmation of AL Metal Methods Pvt. Ltd. and Laxmi Enterprises on his own letterhead; that nothing was filed in res ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ectly made by the AO, to Rs. 28,87,305/-; that while doing so, the ld. CIT (A) has failed to appreciate that the assessee had remained unable to establish the identity of the three parties/purchase creditors; that the ld. CIT (A) failed to appreciate that these parties were nonexistent, due to which, the disallowance had been correctly made by the AO; that the ld. CIT (A) has failed to consider that it is the identity and genuineness of the parties involved in the transaction which needs to be established and whether the GP ratio has increased or decreased, is of no essence or consequence; and that the ld. CIT (A) has also failed to take into consideration the fact that the assessee had not made itemwise co-relation of these purchases with ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... be made of the amounts outstanding to the credit of the three parties in the assessee s books, on account of cessation of liability of credit balance, under the provisions of Section 41 (1) of the Act. As such, the disallowance has rightly been restricted from Rs. 76,39,453/-, which was the sum total of the entire purchases made by the assessee from these parties, to Rs. 28,87,305/-. We do not find any error in the order under challenge and the same is hereby confirmed. The grievance sought to be raised by the department by way of the Ground of Appeal taken, in view of the above discussion, contains no merit and it is rejected. 13. In the result, the appeal filed by the department is dismissed. The order pronounced in the open court ..... X X X X Extracts X X X X X X X X Extracts X X X X
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