TMI Blog2010 (6) TMI 762X X X X Extracts X X X X X X X X Extracts X X X X ..... f disallowance u/s. 40A(2)(b) of the Act of ₹ 36,62,765/-. (2) On the facts and circumstances of the case and in law, the ld. CIT(A.)has erred in deleting the addition on account of unexplained creditors of ₹ 2,55,110/-. (3) On the facts and circumstances of the case, the ld. CIT(A.) ought to have upheld the order of the Assessing Officer. (4) It is, therefore, prayed that the order of the CIT(A.) be set aside and that of Assessing Officer be restored. 2. None appeared on behalf of the assessee, when the case was called for hearing. Though a written submission dated 22.04.2010 was filed by the Director of the assessee-company. Therefore, we have decided to dispose of the appeal after hearing the ld. Department ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sion of ITAT, Ahmedabad Bench in the case of Binit Corporation reported in 24 TTJ 571. Aggrieved by the order of ld. CIT(A.), the Revenue is in appeal before the Tribunal. 5. In the assessment order, the Assessing Officer also disallowed the amounts of 2,55,110/- in respect of sundry creditors on the ground that these amounts shown in the balance-sheet were outstanding for more than three years. The Assessing Officer in the assessment order also stated that the assessee has not furnished complete address, confirmation or any evidence regarding the nature of dispute for justifying the reasons of outstanding amount in respect of sundry creditors for more than three years. On appeal, the ld. CIT(A.) deleted the said disallowance following t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... disallowed 10% for both the expenses by invoking the provisions of section 40A(2)(b) of the Income Tax Act, 1961 and the ld. CIT(A.) is not justified in deleting the same. 7. In the written submission, the assessee contended that the Assessing Officer made adhoc 10% disallowance on the plea that no comparative rates were given out of total work of ₹ 3.66 crores. It was submitted that it is the duty of the Assessing Officer to pin point excessive rates, if any, before coming to the conclusion that market rate is lower than the payment made to sister concerns. No such exercise has been done by the Assessing Officer. It was further contended that on similar facts and circumstances of the case, ITAT, Ahmedabad Bench in ITA No. 4117/Ah ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssessment proceedings, the assessee was supposed to explain each and every entry appearing in the books of accounts to the satisfaction of Assessing Officer. Despite sufficient opportunity afforded by the Assessing Officer, the assessee failed to do so. Therefore, disallowance of ₹ 2,55,110/- on account of unexplained creditors was rightly made by the Assessing Officer by invoking the provisions contained in section 40A(2)(b) of the Income Tax Act, 1961. As against this, in the written submission the assessee contended that the creditors were disputed in nature and, therefore, they were not offered to tax under section 41(1) of the Act. It was further pointed out that recently ITAT, Ahmedabad in the case of assessee s sister concern v ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... iling suit has passed. In the case of T.V. Sundaram Iyengar Sons Ltd. [222 ITR 344], the Hon'ble Supreme Court stated that the addition of old advances and deposits of other parties has to be made only if the assessee has written off the creditors because due to efflux of time the liability is ceased to be operative and accordingly the same is required to be taxed u/s. 41(1). Further, in view of the decision of Hon'ble Supreme Court in the case of Sugauli Sugar Works (supra), no addition u/s. 41(1) can be made. Therefore, the addition made by the A.O. is deleted and this ground of appeal is allowed . 11. In our opinion, the ld. CIT(A.) has given cogent reason for deleting the addition made by the Assessing Officer. We, therefo ..... X X X X Extracts X X X X X X X X Extracts X X X X
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