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TMI Blog2015 (1) TMI 358X X X X Extracts X X X X X X X X Extracts X X X X ..... s of Rs. 5,84,151/- & Rs. 4,42,170/- respectively from two parties as unexplained expenditure and bogus sundry debtors of Rs. 5,00,000/-, Rs. 2,55,615/- & Rs. 78,375/- respectively from these parties as income from undisclosed sources and also unexplained closing stock of Rs. 24,166/- as income from other sources without verifying the genuineness and creditworthiness of the parties involved in the transactions with the assessee by way of purchases and sales. 2. That on the facts and circumstances of the case, ld. CIT(A) erred in law in treating the business as genuine on the basis of receipt and payment basis where the payment was found to be false and during assessment stage, business activity as claimed by the assessee was proved false i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ee company, Sarita Chowdhury, wife of Vikash Chowdhury instead of seller. The shares which were sold (as claimed) to M/s. Shilpashree Saree and M/s. S.S Textiles had not been registered in the company in their names. It proves that the money had been circulated back to Director and his family under camouflage of purchase. (D) The company had no business establishment as discussed above. All these circumstantial evidences prove that there had not been purchase by the assessee. Hence, the argument of the assessee is rejected and Rs. 5,84,151 and Rs. 4,42,170/- are added treating same as unexplained expenditure. Again, Spinter Saree was the Debtor in the books of the assessee company for Rs. 77,900 and S.S Creation was the debtor of the asse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ther, in this case, the assessing officer has made additions on account of both receipts and payments, closing stock as also deposits in bank and cash in hand treating the same as income of the appellant from other sources. Even if the business is held to be a sham affair and the receipts are held to be bogus, it is beyond the stretch of imagination that the other parts of the trading account/profit and loss account or balancesheet could also be added as the income of the appellant from other sources. As far as the facts go, the appellant, has, during the year shown availability of funds in the following manner- Receipts (i)Receipts from sundry debtors (M/s. Roop Laxmi Sarees Pvt. Ltd Rs.500,000/- (ii)Receipts from Debtors (M/s. Sprintex ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ount, or about the sundry creditors. It is not the case of the appellant that it had started the business during the year, nor had closed down the business during the year under consideration. The business is shown to have been started in the financial year 20005-06 and continued in the succeeding assessment years. On the facts and in the circumstances of the case, there appears no warrant in making additions both in respect of the sundry creditors and sundry debtors, nor the bank deposits or cash balance as per cash book and on account of closing stock. In view of the above observation and considering the factual and legal position, the additions made by the AO being unjustified and unwarranted are hereby deleted." 6. Against the above o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... M/s. S.S Textiles, but issued to M/s. Kalna Machines Pvt. Ltd and Vikash Chowdhury, one of the directors of the assessee company. It is clearly seen that the AO's examination revealed that the transactions were not aboveboard. However, the assessee has made submissions before the ld.CIT(A), which included the materials, which was not produced before the AO during the course of assessment. The ld. CIT(A) in his appellate order has found that the AO was being asked to enquire the transactions. But he has not made necessary verification/examination. We note that the powers of the ld.CIT(A) are coterminus with that of the AO. If the AO has failed to perform the necessary examination, then it was incumbent on the ld.CIT(A) to make necessary veri ..... X X X X Extracts X X X X X X X X Extracts X X X X
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