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TMI Blog2008 (3) TMI 703X X X X Extracts X X X X X X X X Extracts X X X X ..... r assessment year which have been discharged during the relevant assessment year/subsequent year. 3. Briefly stated, the facts of the case are that the assessee company is a private limited company which is in the business of manufacturing and trading of Pan Masala. While framing the assessment, the assessing officer has made following additions under Section 68 of the IT Act, 1961: --------------------------------------------------------------------- R.K. Perfumers Rs. 38,195 --------------------------------------------------------------------- Sharda Kashyap Rs. 7,500 --------------------------------------------------------------------- Sakshi Advertisers Rs. 22,627 --------------------------------------------------------------------- Rollan Packing Rs. 75,500 --------------------------------------------------------------------- Raj Narain Uttam Rs. 2,12,725 --------------------------------------------------------------------- M/s Tanu Enterprises Rs. 87,211 --------------------------------------------------------------------- M/s Avadh Wood Products Rs. 25,70,406 --------------------------------------------------------------------- Rs. 30,14,164 ------------------------------ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n question, cannot be treated as cash credit and the addition made on application of Section 68 is wholly illegal. He further submitted that in any case, these amounts are credit balance as on 31-3-2003 appearing in the accounts of various parties and are the sundry creditors from whom the assessee-company had purchased raw material. Learned Counsel for the assessee also drew our attention to the statement showing credit balance in the accounts of various sundry creditors in various years. He further submitted that the credit balances were not on account of any cash credit, rather they represented unpaid liabilities as were outstanding to the suppliers of raw material. It was also stated that these credit balances have been squared up in the subsequent years mostly through account payee cheques/drafts. Learned Counsel for the assessee vehemently argued that all the transactions with these parties have not been doubted but only credit balance as on 31-3-2003 have been questioned but the same cannot be treated as unexplained. Reliance was placed on the decision of Hon'ble Allahabad High Court in the case of CIT v. Pancham Dass Jain (2006) 205 CTR (All) 444 wherein it has been hel ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... amount of Rs. 22,627 (Sakshi Advertisers) is coming from earlier years and same represented the opening balance in this year which cannot be added. It is stated that the liability has been squared up by making payment in the subsequent year. There is no material on record to controvert the above fact. As regards the amount of Rs. 87,211, it is stated that the said liability has been squared up in the subsequent year by making payment through cheque. In our view this addition is also not sustainable. It is seen that the Commissioner (Appeal) has also deleted the addition of Rs. 25,70,406 in the case of M/s Avadh Wood Products. It is claimed that no new transaction has taken place during the relevant financial year as the amount of Rs. 25,70,406 is coming from earlier year and no disallowance has been made either in the assessment year 2001-02 or 2002-03. It is also stated that the liability in question has been squared ears up in the subsequent year by payment through cheque. In our considered view, the Commissioner (Appeal) was justified in deleting this addition also. 11. From the above discussion, it is clear that the five amounts in question represented the purchases made b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... case. In the said case, the Tribunal held that in the case of close relatives the burden lies on the assessee to explain satisfactorily the nature and source of the credit. Mere confirmation by the party and fact of receipt of money by cheque in such case is not sufficient to shift the burden to the Revenue. The said decision was rendered in the context of Section 68 of the Income Tax Act, 1961. In the instant case, we have already observed hereinabove that the provisions of Section 68 are not attracted to amounts representing purchases made on credit. Therefore, the decision of Delhi Tribunal relied upon by learned Departmental Representative is not applicable to the facts of the present case. 12. In view of the above, we do not find any infirmity in the findings of Commissioner (Appeal) on this issue and accordingly, we uphold her view. Consequently, we dismiss ground No. 1 of Revenue's appeal. 13. The next ground of appeal reads as under: 3. The learned Commissioner (Appeal) erred in deleting the addition of royalty payment of Rs. 1,80,000, as assessee had failed to file copy of agreement or otherwise justify the payment at the assessment stage. 14. While framing the as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as closed his business activities with effect from 1-2-1998 and allowed the use of his brand name "Har Singar" to the assessee for which royalty of Rs. 1,80,000 was payable to him. In our view, the assessing officer was not justified in stating that the payment made to Shri K.N. Singh Patel was unjustified and totally unreasonable. Thus, considering the entire facts of the case and also the material available on record, we hold that the Commissioner (Appeal) has rightly deleted the addition made by the assessing officer. We therefore dismiss this ground of appeal also. 17. Now we will take up ITA No. 574/Luc/2007. Ground No. 1 of the appeal reads as under: 1. On the facts and circumstances of the case, the learned Commissioner (Appeal) erred in law in allowing the relief of Rs. 1,00,000 out of the addition of Rs. 2,06,241 of prior period expenses, ignoring the fact that assessee had not furnished any evidence before the assessing officer in support of its contention that this amount was the amount written off during the year on account of advance given in earlier years to M/s Har Singar Spices. 18. The assessee had claimed a sum of Rs. 1,00,000 as amount written off being payme ..... X X X X Extracts X X X X X X X X Extracts X X X X
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