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Thio Pharma Versus ITO, 21 (2) (4) , Mumbai

2016 (5) TMI 418 - ITAT MUMBAI

Addition u/s 68 - un-explained cash credit - Held that:- The primary onus is on the assessee-firm to establish the identity of the creditors, creditworthiness of the creditors and genuineness of the loans of ₹ 48,23,752/- raised by the assessee-firm and stood credited in its books of accounts as per mandate of Section 68 of the Act which in our considered view , the assessee-firm has failed to discharge the burden cast on it as per provisions of Section 68 of the Act despite sufficient opp .....

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ditions made u/s 41(1) with respect to ceased liability - Held that:- CIT(A) has passed a well reasoned order making an rational and reasonable estimate of disallowance @10% of purchases towards disputes of the assessee-firm with creditors for purchases towards rate overcharging claim , claims for expired products etc which is very rational and reasonable estimate , more-so keeping in view that unfortunately the assessee-firm has consistently chosen a path of non cooperative attitude during asse .....

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ACCOUNTANT MEMBER For The Assessee : None For The Revenue : Mr. Premanand J.,Dr ORDER PER RAMIT KOCHAR, Accountant Member This appeal, filed by the assessee-firm, being ITA No. 7529/Mum/2012, is directed against the order dated 12-04-2011 passed by the learned Commissioner of Income Tax (Appeals)- 32, Mumbai (Hereinafter called the CIT(A) ), the appellate proceedings before the CIT(A) arose from the assessment order dated 29-12-2009 passed by the learned assessing officer (Hereinafter called th .....

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bunal read as under:- 1. UNSECURED LOANS The learned A.O. erred in treating the unsecured loans received from friends & relatives as cash credit and further erred in adding the same to the income. And learned CIT(A) erred in confirming the same. 2. CEASED LIABILITY The learned A.O. erred in treating the Sundry Creditors to the extent of ₹ 28,30,227/- as ceased liability and CIT(A) erred in not deleting the entire addition. 4. The brief facts of the case are that the assessee is a partn .....

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0 4823253 Despite sufficient opportunities given to the assessee-firm by the AO, the assessee-firm did not file any details before the AO to prove identity of the creditors and creditworthiness of the creditors taken by the assessee-firm.The assessee-firm only submitted that the friendly loans were taken from family members and no loan has been returned by the assessee-firm. The AO treated the said loan as unexplained cash credits as no details were furnished and the amount of ₹ 48,23,253/ .....

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ite the assessee-firm entering appearance before the CIT(A) for seeking adjournments before the CIT(A). The CIT(A) duly considered the statement of fact filed by the assessee firm attached to grounds of appeal whereby it was stated by the assessee-firm that the loans were raised from friends and relatives and no amount was returned during the year and the assessee-firm requested for further time from the AO to get the loan confirmation from the parties who were abroad but the AO had added the en .....

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the additions of ₹ 48,23,752/- as made to the income of the assessee-firm by the AO u/s 68 of the Act as the assessee-firm has failed to discharge its burden to prove the identity, creditworthiness and genuineness of the loans of ₹ 48,23,752/- appearing in the Balance Sheet. 8. Aggrieved by the orders dated 12.4.2011 of the CIT(A), the assessee-firm filed an appeal before the Tribunal. 9. Before the Tribunal, none appeared for the assessee-firm nor any explanations, documentary evide .....

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s/details to discharge the primary onus cast u/s 68 of the Act in the assessment and/or appellate proceedings. The primary onus is on the assessee-firm to establish the identity of the creditors, creditworthiness of the creditors and genuineness of the loans of ₹ 48,23,752/- raised by the assessee-firm and stood credited in its books of accounts as per mandate of Section 68 of the Act which in our considered view , the assessee-firm has failed to discharge the burden cast on it as per prov .....

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ained cash credit u/s 68 of the Act. We order accordingly. 10. Ground no 2 relates to additions made u/s 41(1) of the Act with respect to ceased liability of which additions were made by the AO to the tune of ₹ 28,30,227/- which was confirmed by the CIT(A) to the tune of ₹ 6,14,124/-. The assessee-firm is in appeal with the Tribunal with respect to sustaining of the additions u/s.41(1) of the Act by the CIT(A). The Revenue filed an appeal bearing ITA No. 5115/Mum/2011 before the Trib .....

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bmitted before the AO as under : We are giving to our party stock on sales basis they give us payment according to sales proceeds. Some of the party not paid amount they claim rate reduction and short expiry etc. , therefore some payment in dispute. No details were furnished by the assessee-firm regarding details of the creditors . The AO perused the details of the purchases made during the year and creditors list and it appeared to the AO that a sum of ₹ 32,68,941/- represented running ac .....

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he assessment orders dated 29-12-2009 passed by the AO u/s 143(3) of the Act, the assessee-firm filed an first appeal with the CIT(A). 13. There were no submissions made by the assessee-firm before the CIT(A) neither any details / confirmations were filed before the CIT(A) despite the assessee-firm entering appearance for seeking adjournments before the CIT(A). The CIT(A) observed from statement of facts and grounds of appeal filed before the CIT(A) wherein it was stated by the assessee-firm tha .....

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isputes with respect to rate differences and expiry of medicines but that does not prove the genuineness of the expenditure on account of purchases claimed in the P&L Account for purchases made from such creditors and the said dispute of rate reduction, expiry of medicine will have consequential effect on correctness of the expenditure of purchases claimed in the Profit and Loss Account. Since , no details has been given of the creditors by the assesseefirm and vague explanation has been giv .....

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77; 6,14,124/- on account of purchases not proved in absence of the details furnished by the assessee-firm in respect of sundry creditors for purchases, vide orders dated 12.4.2011. 14. Aggrieved by the orders dated 12.4.2011 passed by the CIT(A), the assessee-firm filed an appeal before the Tribunal. 15. Before the Tribunal, none appeared for the assessee-firm nor any submissions/details/explanations are filed with respect to disallowance of ₹ 6,14,124/- confirmed by the CIT(A) on account .....

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The assessee-firm had made purchases to the tune of ₹ 61,41,240/- and it is admitted by the assessee-firm that there are disputes with the creditors with respect to over-charging of rates as well claims of the assessee-firm with respect to expired medicines etc which is a normal trade practice. The assessee-firm there-after refrained from giving any further details about the creditors standing to the credit in its books of accounts, nature and extent of dispute existing with the creditors .....

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