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2015 (11) TMI 1540 - ITAT KOLKATA

2015 (11) TMI 1540 - ITAT KOLKATA - TMI - Addition made on account of bogus creditors - Held that:- We find lot of force in the arguments of the Learned AR in respect of this addition that when the trading results are accepted by the Learned AO based on revised return filed by the assessee, there is no scope for disputing the veracity of the trade creditors as admittedly the trade creditors had emanated only out of purchases made by the assessee. Moreover, we find that in any case, there is no s .....

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a) - Held that:- We are in total agreement with the finding given by the Learned CITA that the subject mentioned payments made by the assessee are only discount paid to the purchasers of recharge coupons though wrongly categorized as commission on sales in the books of accounts. We also agree that the nomenclature in books of accounts would not be the determinative factor for understanding the real nature of the transaction and it is well settled that substance would always prevail over its form .....

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ndra Prasad, JCIT, ld.DR For the Respondent : Shri Miraj D.Shah, ld.AR ORDER SHRI M.BALAGANESH, AM This appeal of the revenue arises out of the order of the learned CIT(A), XXXVI, Kolkata in Appeal No.02/CIT(A)-XXXVI/Kol/10-11 dated 28-01-2013 for the assessment year 2007-08 passed against the order of assessment framed by the learned AO u/s. 143(3) of the Income Tax Act, 1961 (hereinafter referred to as the Act ). 2. We find that the Learned DR as well as the Learned AR advanced arguments in re .....

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CITA is justified in deleting the addition made on account of bogus creditors of ₹ 70,234/- when no details were produced by the assessee before the Learned AO. 3.1. The brief facts of this issue is that the assessee deals in medicine on wholesale basis and is a proprietor of M/s N.Saha Agency and M/s N.Saha & Co which were subjected to survey proceedings u/s 133A of the Act on 3.3.2009. The Learned AO observed that the closing balance of sundry creditors as on 31.3.2007 was ₹ 19 .....

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count of bogus creditors even after the assessee failed to produce the list creditors during assessment as well as remand proceedings. 3.2. The Learned DR vehemently supported the order of the Learned AO. In response to this, the Learned AR argued that the comparison made by the Learned AO with regard to closing balance of sundry creditors of two different years is patently wrong due to the fact that the sundry creditors had increased by ₹ 70,234/- during the year due to fresh purchases ma .....

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e creditors. 3.3. We have heard the rival submissions. We find lot of force in the arguments of the Learned AR in respect of this addition that when the trading results are accepted by the Learned AO based on revised return filed by the assessee, there is no scope for disputing the veracity of the trade creditors as admittedly the trade creditors had emanated only out of purchases made by the assessee. Moreover, we find that in any case, there is no scope for making any addition towards the disc .....

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ith section 40(a)(ia) of the Act would be applicable in the facts and circumstances of the case. 4.1. The brief facts of this issue is that the assessee debited a sum of ₹ 9,57,884/- in the profit and loss account of M/s N.Saha & Co as commission on sales. The Learned AO invoked the provisions of section 40(a)(ia) of the Act and made disallowance of the same. On first appeal, before the Learned CITA, the assessee filed a ledger account of commission on sales reflecting therein date wis .....

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ned AO in remand proceedings did not accede to the plea of the asssessee that the subject mentioned payments are only turnover discount but not commission, but however, accepted that payments in excess of ₹ 2,500/- alone would be subjected to disallowance u/s 40(a)(ia) read with section 194H of the Act which was worked out at ₹ 5,29,539/- . The Learned CITA held that the payments are made by a principal to its agent and not principal to principal. He also gave a categorical finding t .....

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ating it as trade discount to customers completely ignoring the material brought on records by the AO during remand stage that the assessee himself termed it as commission on sales. 4.2. The Learned DR argued that the finding given by the Learned CIT(A) that payments are made based on principal to principal relationship was made without giving any opportunity to the Learned AO and hence there is violation of Rule 46A of the IT Rules in this regard. In response to this, the Learned AR argued that .....

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