TMI Blog2008 (3) TMI 703X X X X Extracts X X X X X X X X Extracts X X X X ..... T(A). There is no material on record to controvert the contents of these confirmation letters, which are available on the assessee s paper book. In the instant case, we have already observed that the provisions of s. 68 are not attracted to amounts representing purchases made on credit. Therefore, we do not find any infirmity in the findings of CIT(A) on this issue and accordingly, we uphold her view. Consequently, we dismiss ground No. 1 of Revenue s appeal. Addition on royalty payment - From the observations of the AO in the case of Shri K.N. Singh Patel, it is clear that he has duly shown this royalty payment in his IT return on which he is duly assessed to tax. Learned counsel for the assessee stated that Shri K.N. Singh Patel has closed his business activities and allowed the use of his brand name Har Singar to the assessee for which royalty was payable to him. In our view, the AO 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 CIT(A) has rightly deleted the addition made by the AO. We ther ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ------------------------------------------------------------------ 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 --------------------------------------------------------------------- 4. Aggrieved by the order of the assessing officer, the assessee carried the matter in appeal before the Commissioner (Appeal). 5. The learned Commissioner (Appeal) deleted the addition of Rs. 27,25,959 of unexplained cash credit in the names of M/s R.K. Perfumers (Rs. 38,195) Sharda Kashyap (Rs. 7,500) (M/s Sakshi Advertisers (Rs. 22,627) M/s Tanu Enterprises (Rs. 87,211) and Avadh Wood Products (Rs. 25,70,406). 6. Now the Department is in appeal against the deletion of addition of Rs. 27,25,959. 7. Shri Anandi Verma, learned senior Departmental Representative submitted that learned Commissioner (Appeal) was not justified ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 held that provisions of Section 68 are not attracted to amounts representing purchases made on credit. 10. We have heard the rival submissions and have also perused the materials available On record. The assessee has submitted a chart to show that most of the credit balances as were appearing in the accounts of these parties were in the form of opening balances coming from earlier years. Statement showing credit balances in the account of various sundry creditors in various years is as under: Sl. No. Name of the party 31-3-1999 AY 1999-2000 31-32000 AY 2000-2001 31-3- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s been discharged on 11-6-2003 through payment made by account payee draft. There is no material on record to controvert the above contention of the learned Counsel for the assessee and therefore, we hold that there was no justification in making the addition of Rs. 38,195. In the case of Sharda Kashyap, the amount of Rs. 7,500 is coming from earlier year and it represented opening balance for this year which cannot be added. It is stated that the said liability has been discharged in the subsequent year. From the above chart it is also, clear that the 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 Produ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ts, R.K, Perfumers and Tanu Enterprises before the Commissioner (Appeal). There is no material on record to controvert the contents of these confirmation letters, which are available at pp. 13 to 16 of the assessee's paper book. In that view of the matter, the decision of Hon'ble Bombay High Court (supra), relied upon by the learned Departmental Representative is not applicable to the facts of the present case. The decision of Tribunal Delhi Bench in the case of Chawla Brass Aluminium Factory (supra), is also not applicable to the facts of the present 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 Depar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n as 'Patel Products' on 31-1-1998 and the brand name 'Har Singar' was transferred to M/s Har Singar Gutkha (P) Ltd, Lucknow in lieu of an yearly royalty of Rs. 1,80,000. Copy of agreement with the said company filed and examined with income from royalty as such Rs. 1,80,000 is accepted. From the above observations of the assessing officer in the case of Shri K.N. Singh Patel, it is clear that he has duly shown this royalty payment in his Income tax return on which he is duly assessed to tax. Learned Counsel for the assessee stated that Shri K.N. Singh Patel has 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/ ..... X X X X Extracts X X X X X X X X Extracts X X X X
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