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TMI Blog2016 (7) TMI 240X X X X Extracts X X X X X X X X Extracts X X X X ..... y, to set aside all the issues raised in the grounds of appeal to the file of the Learned AO, with the following directions :- (i) No addition need to be made on the opening balances of sundry creditors (current liabilities and provisions) in the assessment year under appeal ; (ii) No addition need to be made on the debit balances of sundry creditors (current liabilities and provisions) in the assessment year under appeal ; (iii) The Learned AO to make extensive verification of current liabilities and provisions , in accordance with law, in respect of accounts where there were transactions during the year ; (iv) The Learned AO is directed to allow set off of debit balances with credit balances in respect of the same parties while deciding the issue; (v) The assessee is directed to co-operate with the Learned AO and furnish necessary evidences and documents in support of its contentions in the form of reconciliation statements, confirmation of balances etc. (vi) The assessee is also directed to adduce evidences before the Learned AO in respect of rectifications stated to have been carried out in subsequent years for the wrong credit entries made in the earlier year ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , details of transactions, closing balance and nature of services rendered / transactions in whose names there was outstanding, including the amounts squared up during the year . The assessee furnished the details called for on 25.11.2010. The Learned AO observed that the assessee was not able to furnish the addresses of the parties in many cases. The Learned AO observed that the assessee had derived interest income of ₹ 1.12 crores and miscellaneous income of ₹ 50.44 lakhs but had totally returned income only at ₹ 53 lakhs, which goes to prove that the assessee had incurred loss in his chemical business. He doubted the veracity of the creditors submitted by the assessee and called for further information as follows:- (i) Address of creditors (ii) Details of Creditor balance on account of purchase suspense of ₹ 73.80 crores. (iii) Complete details of creditor parties with name and specific addresses and in case of old credit balance , please furnish original date of transactions. The Learned AO listed out the names of the sundry creditors for whom the assessee could not submit the complete addresses as below:- Name of Su ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... genuineness and veracity of the alleged transactions with credible documentary evidences and complete postal addresses. - that since the assessee has not even provided the PAN, the existence of these parties is doubted. - that further , for getting credits from any person or concern, physical existence of such person or concern as well as genuineness of transactions, as a result of which outstanding balances stood in their books, have to be proved. It was not ascertainable as to how the credit balances appeared in the names of the aforesaid parties in the assessee s books. This fact alone puts a big question mark on the genuineness of the alleged transactions. - that the assessee has failed to produce the copy of bank statement or any other credible documentary evidence whatsoever in this regard. - that notices u/s 133(6) and summons u/s 131 of the Act could not be issued as the assessee did not discharge his primary onus to furnish the proper and complete postal addresses. In fact, by not submitting the proper addresses and details like Suspense account , the assessee has prevented the department from making any independent verification of these parties. - that it ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... als Pvt. Ltd 10,53,619 10,53,619 15. K P Enterprises 22,03,133 22,03,133 16. Sahastra Exports Pvt. Ltd 34,07,946 34,07,946 Total 2,93,67,494 The assessee vide order sheet entry dated 27.12.2010 was confronted with the aforesaid list and was asked to produce the parties in person or file the complete details like PAN, complete postal address, copy of bank statement, copy of invoice and ledger account and proof of filing IT returns by these parties. For want of details from the side of the assessee, the Learned AO brought the balances of the aforesaid parties to the tune of ₹ 2,93,67,494/- to tax as unexplained cash credit u/s 68 of the Act treating the same as bogus liabilities. 3.2. The brief facts of Ground No. 3 are that wherever the assessee had furnished the complete postal address of the creditors, the Learned AO made independent enquiries by sending notices u/s 133(6) of the Act and fou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 10,56,92,541 Based on the above, the Learned AO observed that the assessee had booked bogus sundry creditros in the name of these parties and the assessee could not reconcile the differences in balances. Here the Learned AO observed that the assessee had only proved the existence of the creditors but failed to prove the genuineness and veracity of the alleged transactions with credible documentary evidences. The Learned AO treated the aforesaid parties as bogus liabilities. In cases where there is more balance as per the assessee s reply but the same is not reflected in the books of the assessee , it was treated as undisclosed purchases as the assessee failed to account for the same in its books of accounts. Accordingly, he brought the aforesaid creditors to tax as unexplained cash credit u/s 68 of the Act treating them as bogus liabilities. 3.3. The brief facts of Ground No. 4 are that during the course of assessment proceedings, from the details of current liabilities and provisions filed by the assessee, the Learned AO observed that the assessee has shown Purchase Suspense of ₹ 73,80,73,509/-. The assessee stated that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 48,75,000 10. Sahastraa Exports Ltd Repurchase of 75 MT Phenol sold to Sahastraa Exports Ltd, and the invoice not 56,25,000 Received 11. Shubham Chemicals Solvents Ltd Repurchase of 250MT Phenol sold to Shubham Chemicals Solvents Ltd, and15000000 the invoice not received. 1,87,50,000 12. Sundek India Ltd Repurchase of 200MT Phenol sold to Sundek India Ltd, and the invoice not Received 15,00,0000 13. Aarem Chemicals Ltd Repurchase of 450MT Phenol sold to Aarem Chemicals Ltd, and the invoice not received 3,37,50,000 14. BR Agrotech Ltd Repurchase of 40MT Solvent C9 sold to BR Agrotech Ltd, and the invoice not received 16,00,000 15. Ketul Chem Pvt.Ltd Repurchase of 4 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e also tried to explain that some of the liabilities were required to be adjusted against certain debit balances appearing as sundry debtors in the balance sheet and many of such adjustments had already been made in subsequent years. The Learned CIT(A) also observed that assessee had given detailed explanation with specific references to various annexures filed before him in respect of all such credit entries appearing in the books of account and most of which were being carried forward from earlier year and also observed that some of the credits were made due to wrongly entry in the books of accounts in as much as the amount which should have been credited to some other accounts had been wrongly credited to such accounts and most of such entries had already been rectified by April 2010 and much before the case had been taken up by the Learned AO and hence it cannot be said that the assessee did not offer any explanation. The assessee also tried to argue that various case laws relied upon by the Learned AO were rendered in the context of section 68 of the Act. In the instant case, whether at all the provisions of section 68 of the Act could be invoked keeping in view the fact that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he contentions of the assessee and deleted the additions made on account of sundry creditors as bogus liabilities and on account of purchase suspense. Aggrieved , the revenue is in appeal before us. 5. The Learned DR argued that lot of additional evidences were filed before the Learned CIT(A) by the assessee and prayed for one more opportunity to be given to the Learned AO for his verification. In response to this, the Learned AR reiterated the various submissions made by the assessee before the Learned CIT(A) with specific reference to relevant pages of the paper book filed by the assessee in respect of each of the additions and further argued that the Learned CIT(A) had passed this order after obtaining remand report from the Learned AO. In rejoinder, the Learned DR stated that the Learned AO had only stated in his remand report, due to paucity of time, he is not able to look into the various additional details filed by the assessee and accordingly the Learned DR re-emphasized the argument that the matter requires to go back to the file of the Learned AO. 6. We have heard the rival submissions and perused the materials available on record including the detailed paper book f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by assessee from such parties. We find that the assessee had filed complete details and workings of the aforesaid transactions with regard to ground no. 4 raised by the revenue before us including the note on re-purchase of materiasl from the parties to whom materials were sold. These are enclosed in pages 183 to 213 of the paper book. 6.1. The Learned DR argued that most of the details were filed and explained in detail by the assessee before the Learned CIT(A) and the Learned AO had not given any remarks about the same in his remand report. He pleaded that in the interest of justice, the case may be remanded back to the file of the Learned AO with a specific direction to relook into the details filed by the assessee. He further argued that if the Learned AO had not utilized the opportunity of verification (as stated by the Learned AR) in the remand proceedings, then the Learned CIT(A) ought to have verified the same in detail and then granted relief to the assessee, if warranted. Just because the Learned AO had not remarked in the remand report, the Learned CIT(A) cannot brush aside his duties contemplated in section 250(4) of the Act. We find lot of force in the arguments ..... X X X X Extracts X X X X X X X X Extracts X X X X
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