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2015 (9) TMI 1302

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..... so be called upon by the AO to confirm the balance relating to ITC Ltd. in assessment proceedings of ITC. Therefore, it cannot be concluded that assessee was deliberately not accounting for the credit notes. Under such circumstances, normal commercial practice assumes significance and that has to be given due credence. In the stock register, maintained by assessee, the stock lying with ITC has separately been mentioned. Under such circumstance, we are of the opinion that the assessee’s explanation was quite reasonable, considering the business practice and, therefore, should have been accepted. In view of above, the addition made on this count is deleted. As regards the assessee’s explanation in respect of difference of ₹ 3,03,393/-, that the cheques issued were not presented by ITC, we restore this issue to the file of AO for verification of assessee’s claim with reference to the bank account, which has been filed in the paper book before us. Ground is allowed for statistical purposes. - ITA no. 5419/Del/2010 - - - Dated:- 4-9-2015 - SHRI S.V. MEHROTRA : ACCOUNTANT MEMBER AND SHRI I.C. SUDHIR : JUDICIAL MEMBER For The Appellant : Shri Salil Aggarwal Adv., and Shri .....

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..... ding year. In case of M/s Jyoti Traders, gross turnover had been shown at ₹ 20,26,901/- with gross profit of ₹ 2,32,822/- giving g.p. rate of 11.49% as against gross turnover of ₹ 9,42,662/- with gross profit of ₹ 69,019/- yielding g.p. rate of 7.32% in the preceding year. While scrutinizing the balance-sheet of M/s Prabjyoti Marketing, it was noticed that the assessee had shown sundry creditor of ₹ 91,44,472/- in the name of M/s ITC Ltd. The AO issued notice u/s 143(6) to ITC Ltd. for confirmation of the account of the assessee in their books of a/c. ITC Ltd. confirmed a balance of ₹ 65,52,852/- as against the balance of ₹ 91,44,472/- in assessee s books of a/c. Thus, there was excess credit of ₹ 25,91,620/- in the books of assessee in the account of creditor M/s ITC Ltd. The assessee submitted following reconciliation of creditor s a/c as on 31-3-2007: Balance as per Prabjyoti Marketing Less: 9144472.40 1. Amount debited by ITC but not Credited by assessee. 2199867.00 2. Cheq .....

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..... not produce any documentary evidence in support of her contention. Hence the contention of the assessee for the booking of the excess sundry credit in the name of M/s ITC Ltd. to the tune of ₹ 4,63,596/- is not tenable. As' stated above, the assessee could not further reconcile the account with ITC Limited as required vide this office letter dated 15.12.-2009 and also could not explain the difference with the help of the books of account. Therefore, the accounts submitted above are not reliable and not acceptable. Considering all the facts of the case, it is clear that the assessee has further inflated her: purchases to the extent of ₹ 3,91 ,753/- and reflected the corresponding amount as outstanding liability in the account of M/s. ITC Ltd. Thus, as the assessee has not been able to reconcile the further difference of ₹ 3,91 ,753/- (Rs.2591620 - 2199867) also in her account and the account of M/s. ITC Ltd. The assessee has inflated her purchases by an amount of ₹ 3,91,753/- and shown excess credit in the account of the ITC Ltd of the corresponding amount. Thus, the difference of ₹ 3,91,753/- is also assessable as the income of the assessee on acc .....

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..... ITC (details of bills not given) ₹ 3,03,393/- 3. Difference in opening balance of both the Parties as on 1.4.2006 ₹ 1,24,282/- 4. Difference of last year interest etc. ₹ 35,921/- Difference: ₹ 26,63,463/- 3.1. Ld. counsel for the assessee at the outset pointed out that as far as difference of last year s interest etc. amounting to ₹ 35,921/- is concerned, the AO has wrongly added the same, which should have been deducted. As regards the difference in opening balance of both the parties as on 1-4-2006 amounting to ₹ 1,24,282/-, ld. counsel pointed out that this cannot be added, in any view of the matter, in this year. Ld. counsel referred to page 31 of the paper book, wherein the submissions made before ld. CIT(A) are contained and pointed out that as regards the addition of ₹ 21,99,867/- it was explained that the entry of the amounts credited by ITC in their account had not been passed by the assessee because till the credit is given by the su .....

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..... wo cheques have not been credited to assessee s account. Ld. CIT(A) rejected the assessee s plea. 4. Ld. DR submitted that no plea was taken in regard to stock in trade lying with ITC. 5. We have considered the submissions of both the parties and have perused the record of the case. There are 4 items in dispute, as noted earlier, out of which at the outset, we are in agreement with ld. counsel for the assessee that addition of ₹ 1,24,282/- could not be made in this year because the difference pertained to earlier year. As regards the addition of ₹ 35,921/-, the same had to be reduced by AO and not added. The AO will verify this aspect. 5.1. The main issue is regarding addition of ₹ 21,99,867/-. The assessee s plea is that though credit notes had been issued by ITC aggregating to ₹ 21,99,867/-, but in its books of a/c it did not account for the same because assessee had lodged the claim for ₹ 26,32,303/-, which the assessee continued to show in its stock register as a separate item, which is evident from page 93 of the PB. In order to examine the credibility of assessee s explanation, we have to consider the various aspects. The assessee, admit .....

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