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2016 (3) TMI 116 - ITAT AHMEDABAD

2016 (3) TMI 116 - ITAT AHMEDABAD - TMI - Addition on cessation of liability u/s 41 - Held that:- The assessee had claimed to sold PP/HDPE sacks to M/s. A One Chemicals, Ankleshwar and M/s. Anmol Chemicals, Gandhinagar through M/s. Dharini Packaging which aggregated to ₹ 2,15,994/-. These parties had not cleared the dues on the ground that the money had been paid to M/s. Dharini Packaging. The assessee was thus not required to pay anything to M/s. Dharini Packaging and therefore, the liabi .....

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oof of purchase or the amount paid was given by the assessee and therefore, the Assessing Officer was justified in disallowing the liability and adding the same u/s. 41(1) of the Act. - Decided against assessee

Addition of cash credit u/s 68 - Held that:- There was no evidence of personal saving of ₹ 17,000/- made by withdrawal of earlier years. This amount was also clearly unexplained. There was no justification for the cash gifts of ₹ 25,000/- from maternal uncle Shri Su .....

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ifted amount of cash of ₹ 25,000/-, ₹ 75,000/-, ₹ 75,000/- and ₹ 50,000/- were thus correctly treated as unexplained cash introduced in the books of account and the Assessing Officer was justified in treating the same as unexplained cash creditors. The CIT(A) also rejected the claim of assessee with regard to the amount of ₹ 30,000/- deposited in the bank account on the ground that the same was an altogether new story cooked up which was not before the Assessing Off .....

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xpenses, amounting to ₹ 96,253/-, which works out to ₹ 19,250/-. On appeal, CIT(A) restricted the same to 10%, i.e. ₹ 9,625/-. Considering all the facts and circumstances, it is of the view that the disallowance seems to be on higher side and therefore, the same is restricted to ₹ 5000/-.- Decided partly in favour of assessee - ITA No. 3293/Ahd/2011 - Dated:- 12-2-2016 - Shri Shailendra K. Yadav, Judicial Member For the Petitioner : Shri S.N. Divatia, AR For the Responden .....

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facts the additions of ₹ 1,59,459/- made by learned A.O. and confirmed by CIT(A) without considering written submissions dated 20.10.11, the additions deserves to be deleted. 3. That the learned CIT(A) has further grievously erred both in law and on the facts of the case in confirming an additions of cash credits U/s 68 amounting to ₹ 2,73,874/- 4. Considering the facts and material evidences submitted before learned A.O. as well CIT(A) and Paper Book the additions of ₹ 2,73,87 .....

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law which deserves to be deleted. 7. That the expenditure disallowed of ₹ 9,625/- on adhoc basis is neither capital expenditure nor in the nature of personal and hence disallowance of expenditure of ₹ 9,625/- confirmed by CIT(A) b deleted. 8. That the appellant has not committed default of Sec. 139(1), however, finding is given for charging interest U/s 139 and also for charging of interest U/s 234A, 234B, 234C and 234D even though appellant has not committed default of Section 210, .....

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. The first issue is with regard to the addition of ₹ 1,59,459/- made by the Assessing Officer holding them as cessation of liability. The Assessing Officer noticed that the assessee has disclosed sundry creditors of ₹ 10,87,310/- which includes the creditors named as M/s. Dharini Packaging, M/s. Flexor Allied Industries, M/s.Mayur Extrusion Pvt Ltd, M/s.Mayur Woven Pvt Ltd, M/s. Swiss Polyplast & M/s. Siddheshwari Electricals whose credit balances were shown outstanding since la .....

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d by the assessee that purchases were made for ₹ 2,91,957/- from M/s. Dharini Packaging during the F.Y. 2005-06 out of which payment of ₹ 1,59,459/- was made and the amount of ₹ 1,32,498/- was still outstanding. As regards the other creditor M/s. Swiss Polyplast, the assessee failed to submit any clarification / explanation except saying that purchases of ₹ 61,041/- was effected through M/s. Dharini Packaging. After considering the facts of the case, the Assessing Officer .....

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onfirming an addition of ₹ 1,59,459/- made by the Assessing Officer holding it as nonexistent liabilities and by applying Sec. 41(1) of the Act. The ld. Authorized Representative for the assessee further submitted that the CIT(A) erred in confirming the addition of ₹ 1,59,459/- made by Assessing Officer without considering the objections raised by the assessee; so he pleaded that the addition in question may be deleted. On the other hand, ld. Departmental Representative supported the .....

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ng and therefore, the liability actually ceased to exist and the same was rightly added to the income by resorting to the provisions of section 41(1) of the Act. Same is the situation in the case of M/s. Swiss Polyplast in whose case the outstanding amount was ₹ 61,410/-and these purchases were made through M/s. Dharini Packaging and this amount was also must have been adjusted by M/s. Dharini Packaging against its outstanding and nothing was payable to M/s. Dharini Packaging to this exten .....

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,874/-. The assessee had not furnished the details regarding the identity of the creditors, capacity of the persons who has given such loans to the assessee and the genuineness of the transactions. In absence thereof and after relying on various decisions, the Assessing Officer treated the cash credits as unexplained and added the same to the total income of the assessee. On appeal, the addition in question has been confirmed by the CIT(A). 3.1 Before me, the Authorized Representative for the as .....

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going through the rival contentions and material on record, I find that that the Authorized Representative for the assessee furnished a written submission before the CIT(A) in this regard and the relevant portion of the same is reproduced hereunder :- The learned A.O. has further erred in making an addition of ₹ 2,73,874/- holding it as cash credits. During the course of assessment proceedings, the appellant has submitted confirmation and evidences in support of it. However, learned A.O. .....

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the same, addition deserves to be deleted. 2. ₹ 17,000/- credited out of personal savings made by withdrawal made in earlier years and the cash of personal savings is deposited in my Bank Account with Punjab National Bank. I am residing with my parents and household expenses is borne by him and so whatever cash is available with me about ₹ 17,000/- was deposited in Bank Account which please note. My old Capital balance is ₹ 4,44,683/-. I am doing business with small capital and .....

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. Doshi who is doing business at Bombay and he has filed his confirmation along with details of his residential address, Pan No., confirmation of gin and I being a son of sister of Donor (Bhaniya) this amount is gifted to me for development of my business being a only sister's son and considering the confirmation which has not been doubted to be unproved the cash credit amount added ₹ 25,000/- may please be deleted. The Xerox copy of the same is enclosed. 4. ₹ 75,000/- received b .....

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ubmitted to learned A.O. and copy of the same is enclosed The learned A.O. has not challenged the said confirmation and bank withdrawal in assessment order and therefore cash credit added may please be deleted. 5. ₹ 75,000/- This amount of ₹ 75,000/- is gifted by my real sister Ruchi by withdrawing from her bank account. She is a Diploma holder in Architect from Gujarat University and serving with Prashant Studio and Shital Design and during then financial year she has received salar .....

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residing at Bombay and doing business and assessed to tax at Pan No. at Bombay and declaration of his gift is filed before learned A.O. and without disproving it the addition made by learned A.O. deserves to be deleted. The confirmation is given by his son Hetal Dilip Doshi as Dilip Kantilal Doshi has expired, considering the confirmation, the addition deserves to be deleted. The appellant being a son of sister of donor and out of natural love and affection and being a custom in the Hindu Relig .....

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because there was no withdrawal of this amount from the bank and therefore, he was of the opinion that it was required to be added back as unexplained cash credit. The CIT(A) further observed that there was no evidence of personal saving of ₹ 17,000/- made by withdrawal of earlier years. This amount was also clearly unexplained. There was no justification for the cash gifts of ₹ 25,000/- from maternal uncle Shri Suresh K. Doshi, ₹ 75,000/- from mother Smt Rita Rajendra Shah, &# .....

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