TMI Blog2015 (11) TMI 172X X X X Extracts X X X X X X X X Extracts X X X X ..... sment year as well as for the next financial year during which balance payment of the outstanding liabilities were made through bank. Here, we can take example of one of the parties amongst the list of 11 parties in the name of M/s. Landmark Engineering from whom assessee made purchases during the year. Outstanding liability in the name of this party on 31.03.2007 stood at ₹ 53,19,523/- and this outstanding amount repaid in full by the assessee during the financial year 2007-08. As submitted by ld. A.R. that in case of other parties also the outstanding liability standing under the head ‘sundry creditors’ on 31.03.2007 have been paid in the following years by account payee cheques. Books of account have not been fully rejected, none of the parties has previously been proved as bogus, part of payments made towards the purchases have already been allowed by the Assessing Officer and no specific working has been made by the Assessing Officer to treat a particular purchase from a supplier as bogus purchase and further the outstanding purchases at the end of the year have been subsequently paid by banking channel and nothing contrary to this fact of payment by banking channel h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ere made on credit and payments for the same were made by cheques. The amounts remaining payable as on 31/03/07 to the creditors for such goods were assessed u/s 69C. The appellant appeals that the provisions of s.69C could be invoked if the appellant had failed to explain source for payment of the aforesaid purchases. In the present case, there being no dispute regarding the source for payment of the purchases, the ld. AO grossly erred in applying the provisions of s.69C. The appellant very humbly submits that although the ld. CIT(A) was correct in observing that the provisions of s.69C were not applicable to the appellant s case yet he grossly erred in applying the provisions of s.68 to the appellant s case and thereby in sustaining the addition to the extent of ₹ 3,10,40,816/-. The appellant appeals that reason for the erroneous application of s.68 by the ld. CIT(A) was that the amount of ₹ 3,10,40,816/- did not represent receipt/s of cash/cheques/bankers cheques as credits/loans, by the appellant. The appellant appeals for deletion of the sustained addition of ₹ 3,10,40,816/-. 5. That without any prejudice to the aforesaid grounds of appeal the app ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ties (creditors for goods). Further, the audited trading a/c and the books of a/cs showed purchases of ₹ 4,50,40,750.37. In view of these facts coupled with the facts stated in sub-para nos.(a) and (b) hereinabove, the ld. AO didn t have any valid reason for observing that the assessee failed to prove identity of the parties from whom purchases shown to have been made and genuineness of the transactions carried out with all the parties . The appellant appeals that the ld. CIT(A) also failed to appreciate the relevant facts of the appellant s case and sustained the addition to the extent of ₹ 3,10,40,816/- merely on surmises and assumptions. The appellant appeals for deletion of the sustained addition of ₹ 3,10,40,816/-. 6. That on the facts and in the circumstances of the case, the ld. AO erred in charging interest u/s 234B 234C of the I.T. Act, 1961 and the ld. CIT(A) did not justify in sustaining the same. 7. The appellant craves opportunity for furnishing any other grounds of appeal on or before the date of appeal hearing. 2. Assessee has raised seven grounds of appeal, out of which, ground nos.1 to 5 relate to the addition of ₹ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ount of unexplained expenditure whereas ld. CIT(A) sustained the addition by invoking Section 68 by treating the unexplained sundry creditors as unexplained credits. Ld. CIT(A) has held in his order that provisions of Section 69C of the Act are not applicable in this case because Section 69C covers expenses not recorded in the books and the addition in respect of bogus expenses could be made u/s.37(1) of the Act. However, CIT(A) deemed fit to apply Section 68 of the Act for a unexplained credits. 5.2 On other hand, ld. D.R. supported the orders of lower authorities. 6. We have heard the rival contentions and gone through the facts and circumstances of the case. In the year under appeal, assessee has shown total turnover of ₹ 4,46,60,566/- and purchase of ₹ 4,31,84,151/-. Assessing Officer has not raised any doubt on the sales turnover of the assessee and nor has challenged the gross profit of the assessee. Assessing Officer made complete addition of sundry creditors liability appearing in the balance sheet as on 31.03.2007 of the following parties: 1. K.S.B. Enterprise Rs.24,15,407/- 2. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ₹ 18,56,599/-), the unpaid sundry creditors remaining at the end of the year was ₹ 3,34,56,223/-, which means that ₹ 97,27,928/- (Rs.4,31,84,151/- ₹ 3,34,56,223/-) was paid by the assessee through banking channel to the alleged sundry creditors in total. 6.3 Further, from the perusal of assessment order, it is clear that Assessing Officer has allowed purchases to the tune of ₹ 1,15,84,527/-, which were paid to various parties from whom assessee made purchases during the year. After the payment of ₹ 1,15,84,527/- outstanding balance remained to be paid on 31st March, 2007, which means that Assessing Officer has treated all these parties as genuine suppliers to whom some payments have been made during the year. If in any case, Assessing Officer had come to a conclusion that certain supplier is a bogus party, then the complete purchases made from such bogus suppliers should have been disallowed by him. In the present case, Assessing Officer has allowed the purchases to the extent they have been paid and disallowed the purchases to the extent which have not been paid. Assessing Officer ought to have appreciated the fact that assessee has submi ..... X X X X Extracts X X X X X X X X Extracts X X X X
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