TMI Blog2014 (3) TMI 965X X X X Extracts X X X X X X X X Extracts X X X X ..... Thus matter is remitted to the files of the AO to consider the issue afresh. Addition on account of unconfirmed sundry creditors - Held that:- CIT(A) has accepted that all confirmations were filed. He accepted that the non-compliance could be due to the facts that some of the creditors were village based illiterate persons who may not have been familiar with income tax proceedings. Further, the time available between the issue of enquiry letters and completion of assessment was extremely short. Ld. CIT(A) has rejected the AO’s contention that the socalled confirmation, copies of accounts filed by the assessee cannot be fully relied upon. Unless the same were confirmed by the suppliers to the AO. In our considered opinion this issue also ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nhancement (by applying NP rate of 4%) without allowing any opportunity to the assessee of showing cause against such enhancement. 2. That on the facts of the case and under the law, the Ld. CIT(A) has erred in applying NP rate of 4% on total turnover. Various observation of Ld. CIT(A) are either factually incorrect and legally untenable. 3. The grounds raised in the Revenue s appeal read as under:- 1. Whether in the facts and circumstances of the case, the Ld. CIT(A) erred in law in deleting the addition of ₹ 45,92,272/- towards unexplained sundry creditors ignoring that the assessee totally failed to discharge the onus cast upon it to prove the identity and creditworthiness of the creditors and genuineness of transactions. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed income from running hiring and maintenance of DG sets besides some other income. During the course of assessment, AO observed that purchase bills were not proper. It was further noticed that the vouchers / invoices that were available of all the suppliers were mostly in the same format except the change of name and address at the top. AO further noted that in the address in the invoices were also not complete. AO noted that there was total purchase of paddy from different persons was amounting to ₹ 1,28,08,387/-. He further observed that in spite of the fact that these invoices were of substantial amount. All the amounts were made in cash in a small denominations and it was conscious effort by the assessee to keep the payments belo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the entire purchases could not have been made basis for making the addition. Ld. CIT(A) was of the opinion that it would be appropriate to determine the income of the assessee on the basis of this turnover. Considering the preceding two years, the Ld. CIT(A) opined that it would be fair and reasonable to determine the net profit for the current year at 4% of the turnover of the business i.e. ₹ 4,04,26,635/-. This works out to ₹ 16,17,065/- as against ₹ 9,15,310/- shown in the profit and loss account. Thus, ld. CIT(A) held that there will be an addition of ₹ 7,01,755/-. 6. Apropos Addition of ₹ 45,92,272/- on account of sundry creditors. On this AO noted that notices u/s. 133(6) were issued to the credito ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lication in this regard has been moved. Ld. CIT(A) further observed that once the AO had made the addition of @15% of purchases, implicitly rejecting the book results, it is not appropriate to once again rely on the books of accounts itself to make further disallowance for the same head of expenses. Ld. CIT(A) further observed that at the remand stage the AO appears to have accepted the explanation given in the submissions made during the appellate proceedings. Hence, Ld. CIT(A) deleted the addition. 10. Against the above order the Assessee and Revenue are in appeal before us. 11. We have heard both the counsel and perused the records. We note that AO has treated 15% of the purchase as non-genuine. This has been done in the ground tha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... files of the AO to consider the issue afresh. We hold and direct accordingly. Needless to add that the assessee should be granted adequate opportunity of being heard. 13. We further noted that AO has made the addition of ₹ 45,92,272/- on account of unconfirmed sundry creditors. In this regard, Ld. CIT(A) has accepted that all confirmations were filed. He accepted that the non-compliance could be due to the facts that some of the creditors were village based illiterate persons who may not have been familiar with income tax proceedings. Further, the time available between the issue of enquiry letters and completion of assessment was extremely short. Ld. CIT(A) has rejected the AO s contention that the socalled confirmation, copies o ..... X X X X Extracts X X X X X X X X Extracts X X X X
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