TMI Blog2016 (9) TMI 1214X X X X Extracts X X X X X X X X Extracts X X X X ..... the material and evidence led by the assessee at a given stage. The Assessing Officer had before him the averments of the sundry creditors, the income tax details of the sundry creditors, the balance sheets of the two creditors which showed the amount in question, etc. By merely pointing out that further evidence in the shape of bank account of the creditors was not available, does not distract from the fact that whatever evidence that was on record before the Assessing Officer has not been found untrue or false by him. Therefore, in so far as the assessee is concerned, it has completely discharged it’s onus of explaining the nature and source of the credits in question and such explanation stood corroborated by the two creditors. Considering the entirety of circumstances, in our view, the Assessing Officer has merely proceeded to disbelieve the evidence led by the assessee and not made any effort to establish any falsity or untruth in the same. Therefore, AO was wrong in holding that the explanation rendered by the assessee was not satisfactory within the meaning of section 68 of the Act. Thus we set-aside the order of the CIT(A) and direct the Assessing Officer to delete the add ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ning of section 68 of the Act. 4.1 A brief background of the dispute can be summarized as follows. The appellant is a company incorporated under the provisions of the Companies Act, 1956 and is engaged in the business of investments. It filed a return of income for assessment year 2000-01 on 31/10/2001 declaring a loss of ₹ 47,403/- and in an ex-parte assessment made under section 144 of the Act on 29/01/2004, the total income was assessed at ₹ 65,95,690/-. In such assessment increase in the sundry creditors of ₹ 55,71,480/- was held to be an unexplained credit under section 68 of the Act. When such assessment was carried in appeal before CIT(A), the assessee submitted that the increased balance of sundry creditors represented amount due to two of its tenants, namely, Shri. Suresh Chandra Taparia and Smt. Srikanta Devi Taparia to whom assessee had given its flat at Benhor apartments, Mumbai on rent. The aforesaid increase reflected amount credited to Shri Suresh Chandra Taparia - ₹ 33,11,052/- and Smt. Srikanta Devi Taparia - ₹ 32,23,184/- for the expenses incurred by them on the civil renovation work of the flat rented out. Before CIT(A), assessee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ransactions. In this context, assessee pointed out that the various details submitted in support of the impugned credit show that the same reflected only increase in the balance of the creditors and was on account of expenses incurred by the creditors on repairs of the premises during the period 1992-93 to 1996-97. In particular, attention was invited to the following details placed in the Paper Book to justify the nature and source of the credits:- i. Details of Sundry creditors as on 31/3/2000 ii. Details of Sundry Creditors as on 31/3/1999 iii. Balance Sheet of the Company as on 31/3/2000 iv. Copy of Board resolution of the Board of Directors v. Copy of letter by Shri Suresh Chandra Taparia dt.4/11/2011 vi. Copy of Statement of Account submitted by Shri Suresh Chandra Taparia vii. Copy of letter dt. 8/7/1999 submitted by Shri Suresh Chandra Taparia viii. Copy of Balance confirmation ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nuineness of the transaction. In the instant case, assessee company had rented its premises to Shri. Suresh Chandra Taparia and Smt. Srikanta Devi Taparia. During the year under consideration, the Assessing Officer noticed an increase in the amounts credited to the accounts of the sundry creditors by a sum of ₹ 55,71,480/-. It was explained by the assessee that the two tenants had incurred expenses on civil renovation work of the property during the financial years 1992-93 to 1996-97. The assessee had explained that initially it did not accept the claims as the parties were not paying rents, but later on accepted the aforesaid claims in terms of its Board of Directors resolution dated 18/02/2000. The assessee had explained before the lower authorities that in pursuance to such resolution, it capitalized the aforesaid amount incurred by the aforesaid two creditors by debiting it to the building account and crediting the same to the accounts of the two creditors, Shri. Suresh Chandra Taparia and Smt. Srikanta Devi Taparia. In support, assessee furnished a copy of the communication of the two creditors, copies of which have been placed in the Paper Book at pages 41 - 42 and 55 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... The Assessing Officer had before him the averments of the sundry creditors, the income tax details of the sundry creditors, the balance sheets of the two creditors which showed the amount in question, etc. By merely pointing out that further evidence in the shape of bank account of the creditors was not available, does not distract from the fact that whatever evidence that was on record before the Assessing Officer has not been found untrue or false by him. Therefore, in so far as the assessee is concerned, it has completely discharged it s onus of explaining the nature and source of the credits in question and such explanation stood corroborated by the two creditors. Considering the entirety of circumstances, in our view, the Assessing Officer has merely proceeded to disbelieve the evidence led by the assessee and not made any effort to establish any falsity or untruth in the same. Therefore, under these circumstances, in our view, the Assessing Officer was wrong in holding that the explanation rendered by the assessee was not satisfactory within the meaning of section 68 of the Act. Thus we set-aside the order of the CIT(A) and direct the Assessing Officer to delete the addition ..... X X X X Extracts X X X X X X X X Extracts X X X X
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