New User   Login      
Tax Management India .com TMI - Tax Management India. Com
Extracts
Home List
← Previous Next →

2016 (2) TMI 191 - ITAT AHMEDABAD

2016 (2) TMI 191 - ITAT AHMEDABAD - TMI - Addition on account of bogus/non existing liabilities - CIT(A) deleted the addition - Held that:-CIT(A) while deleting the addition has noted that he has gone through the copies of truck rent payment and it mentioned the name of the persons, truck numbers, weight of material, amount paid to such persons and the complete details. He has also given a finding that on the verification of the LRs, he found them it to be duly stamped and acknowledged by the bu .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

of the Act would apply in a case where there has been remission or cessation of liability during the year under consideration subject to the conditions contained in the statute being fulfilled Decided against Revenue.

Addition of carting expenses - CIT(A) restricted the addition - Held that:- CIT(A) while granting relief has noted the expenditure to be essential for the normal business activity of the Assessee and that the labour engaged in the process needs to be paid in cash and .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ng the addition has noted that Assessee had furnished the copy of purchase bills, the details of payment made to those parties and sales being made out of the said purchases. He has also noted that there is no evidence to suggest that the payments made were reverted back to the Assessee. He accordingly deleted the addition. Before us, no fallacy has been pointed out in the order of ld. CIT(A). We therefore find no reason to interfere with the order of ld. CIT(A) Decided against Revenue.
.....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

SHRI ANIL CHATURVEDI, ACCOUNTANT MEMBER & SHRI KUL BHARAT, JUDICIAL MEMBER For The Appellant : Shri Dinesh Singh, Sr. D.R. For The Respondent : Shri M.K. Patel, A.R. ORDER PER ANIL CHATURVEDI, ACCOUNTANT MEMBER 1. This appeal filed by the Revenue is against the order of CIT(A)-III, Surat dated 11.07.2008 for A.Y. 2005-06. 2. The relevant facts as culled out from the material on record are as under. 3. Assessee is an individual stated to be engaged in the business of trading of coal and tran .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

rieved by the aforesaid order of ld. CIT(A), Revenue is now in appeal before us and has raised the following grounds:- 1. On the facts and in the circumstances of the case and in Law, the Ld.CIT(A)-III, Surat has erred in deleting the addition of ₹ 1,87,46,519/- made by the Assessing Officer on account of Bogus/ Non-existent Liability. 2. On the facts and in the circumstances of the case and in Law, the Ld.CIT(A)-III,Surat has erred in restricting the addition of ₹ 3,62,875/- to S .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

the balance. 1st ground is with respect to deletion of addition on account of bogus/non existing liabilities. 4. On perusing the Balance sheet of New Amar Lignite and Amar Enterprises, the proprietary concerns of Assessee, A.O noticed that Assessee had shown liability of ₹ 74,46,993/- and ₹ 1,12,99,526/- respectively under the head truck rent payable . He also noticed that for the year under consideration the truck rent debited to the Profit and Loss account of the two concerns was .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

onsidered the aggregate liability of ₹ 1,87,46,519 shown under the head truck rent payable in respect of Amar Lignite and Amar Enterprises to be bogus and non existent liability and made its addition. Aggrieved by the order of A.O., Assessee carried the matter before ld. CIT(A) who after considering the submissions of the Assessee deleted the addition by holding as under:- I have considered the submissions and gone through the details. The appellant is engaged in the business of transporta .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

the appellant and has only made an addition of the outstanding closing balance. I also find that the AO has not specified as to under which provision of the Act, the addition is being made. Such an addition can be made either u/s 68 of the IT Act or u/s 41(1) of the Act. The provisions of section 68 of the Act are not applicable here since the liability is not a cash credit but pertaining to the transportation business of the appellant. It is also seen that the AO has accepted the book result si .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ich could not be possible considering the infrastructure available with the appellant, is also misconstrued. The appellant explained that this impression arose because a single entry was passed in the books of accounts in respect of a large number of persons but those persons were not paid directly by the appellant but the collective amount would be given to the manager of the appellant who would make the payment to various persons on different dates. I have also gone through the copies of truck .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ceedings for AY 2003-04 and the appellant's explanation was considered and accepted. I am also inclined to agree with the appellant that if the outstanding liabilities are considered as bogus the GP would increase to 163% which is unimaginable. Therefore on this ground also the liabilities cannot be added to the total income. I have also gone through the complete details and find that the appellant had maintained sufficient primary and secondary records like LR register, vouchers LRs, etc. c .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

are duly stamped and acknowledged by the buyers of material transported by the appellant and vouchers have been maintained in respect of payment to respective truck owners wherein details like name of the person, truck number, rate of transport charges, quantity transported etc. has been mentioned and these vouchers are serially numbered. No defects were observed by the AO in these vouchers not were any defects pointed out in the books of accounts. It is also seen that the appellant has made pro .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

d to be deleted. 5. Aggrieved by the order of ld. CIT(A), Revenue is now in appeal before us. 6. Before us, ld. D.R. pointed to the various observations of the A.O and thus strongly supported the order of A.O. He further submitted that before A.O, Assessee did not furnish the details called for by the A.O nor filed the details about the truck their L.R. numbers and other proof of having incurred the expenditure. He therefore submitted that in such a situation the A.O was fully justified in treat .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

d. The issue in the present case is about making addition of on account of non existing liability. We find that ld. CIT(A) while deleting the addition has noted that he has gone through the copies of truck rent payment and it mentioned the name of the persons, truck numbers, weight of material, amount paid to such persons and the complete details. He has also given a finding that on the verification of the LRs, he found them it to be duly stamped and acknowledged by the buyers of the material tr .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

We are in agreement with the view of the Tribunal Section 41(1) of the Act as discussed in the above three decisions would apply in a case where there has been remission or cessation of liability during the year under consideration subject to the conditions contained in the statute being fulfilled. Additionally, such cessation or remission has to be during the previous year relevant to the assessment year under consideration. In the present case, both elements are missing. There was nothing on r .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

the response was that they had no dealing with the assessee nor did they know him. Of course, these inquiries were made ex parte and in that view of the matter, the assessee would be allowed to contest such findings. Nevertheless, even if such facts were established through bi-parte inquiries, the liability as it stands perhaps holds that there was no cessation or remission of liability and that therefore, the amount in question cannot be added back as a deemed income under section 41(1) of the .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

f ld. CIT(A) and thus the ground of Revenue is dismissed. 2nd ground is with respect to restricting the addition of carting expenses. 9. A.O noticed that Assessee had debited ₹ 14,51,500/- under the head carting expenses in the books of Amar Enterprises. A.O asked the Assessee to furnish the names and address of the recipients of carting expenses and their confirmation letters. A.O noted that Assessee did not file the confirmation letters nor provided their addresses. He therefore consider .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

led labours as soon as work of unloading is finished by them at site. Entire expenses were supported by vouchers. The appellant paid unloading majuri to labors @ ₹ 450/- per truck. I have gone through the details. I find that the carting expenses are in respect of loading an unloading of coal transported by the appellant and the labor engaged for the process would have to be paid in cash and names and addresses or confirmations from them cannot be expected to be furnished by the appellant. .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

iterated the submissions made before A.O and ld. CIT(A). 12. We have heard the rival submissions and perused the material on record. We find that ld. CIT(A) while granting relief has noted the expenditure to be essential for the normal business activity of the Assessee and that the labour engaged in the process needs to be paid in cash and their names address and confirmations for the entire expenditure cannot be expected from the Assessee. He accordingly restricted the disallowance to ₹ 1 .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

issued to M/s. Khwaj Traders & Gupta Coal India Ltd. were returned unserved by the postal authorities. The Assessee could not furnish their new postal addresses nor confirmation letters from those two parties. A.O accordingly considered the aggregate purchase of ₹ 2,39,958/- (purchases of ₹ 1,32,701/- from Khwaj Traders and of ₹ 1,07,257/- from Gupta Coal India Ltd.) as bogus purchases and disallowed the same. Aggrieved by the order of A.O., Assessee carried the matter bef .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

nts were squared up. I have considered the submissions. It is seen that the appellant had furnished copy of purchase bill and details of payments made to the two parties and sales have also been made against the said purchases. Merely, because notice u/s 133(6) of the Act was not served on these two parties would not make the entire purchases bogus. There is no evidence to suggest that the payment made reverted back to the appellant and therefore addition on this account is directed to be delete .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ases. He has also noted that there is no evidence to suggest that the payments made were reverted back to the Assessee. He accordingly deleted the addition. Before us, no fallacy has been pointed out in the order of ld. CIT(A). We therefore find no reason to interfere with the order of ld. CIT(A) and thus the grounds of Revenue is dismissed. 4th ground is with respect to deletion made on account of difference in the balances. 17. A.O noticed that Assessee has claimed to have made payment of tran .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

 

 

 

 

 



|| Home || Acts and Rules || Notifications || Circulars || Schedules || Tariff || Forms || Case Laws || Manuals ||

|| About us || Contact us || Disclaimer || Terms of Use || Privacy Policy || TMI Database || Members || Site Map ||

© Taxmanagementindia.com [A unit of MS Knowledge Processing Pvt. Ltd.] All rights reserved.

Go to Mobile Version