TMI Blog2016 (10) TMI 163X X X X Extracts X X X X X X X X Extracts X X X X ..... transactions with the assessee. The addition made on similar basis in connection with transactions with M/s. Nisha Enterprises in the hands of the sister concern for assessment year 2006-07 has been deleted by the Tribunal. Considered in this light, in our view, so far as trading results for the instant assessment year are concerned, the same cannot be treated as unreliable on the basis of the verification exercise of the creditors carried out by the Assessing Officer. Furthermore, the unsustainability of the addition made by the CIT(A) can be seen from the fact that he has applied adhoc gross profit rate of 6.5% on the entire sales made by the assessee instead of confining it to any particular transactions which were unproved, as per him. In fact, once the CIT(A) did not find the inadequacy brought out by the Assessing Officer with respect to sundry creditors as being justified, he had no plausible evidence, apart from mere doubts, to treat the trading result as unreliable. Therefore, the addition sustained by the CIT(A) is unwarranted and is hereby directed to deleted. In the result, appeal of the assessee allowed. - ITA No.638/MUM/2011, ,664/MUM/2011, 9215/MUM/2010, 9216/M ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... proceed to consider the respective appeals for each of the assessment years. 3. We may first take up the appeal of the Revenue for assessment year 2002-03, which is against an order passed by CIT(A)-36, Mumbai dated 15/10/2010, which in turn arises out of an order passed by the Assessing Officer under section 143(3) r.w.s. 153A of the Income Tax Act, 1961 (in short the Act ) dated 18/12/2008. 4. In this appeal, the following two Grounds have been raised:- 1. On the facts and in the circumstances of the case} and In law} the CIT(A) was not Justified in deleting the addition made by the Assessing Officer by estimating the household expenses of the assessee at ₹ 4.48lakhs without appreciating that the assessee had not furnished details of his household expenses and contribution, if any, by other family members for scrutiny particularly when the personal withdrawals shown by the assessee were very meager. 2. On the facts and in the circumstances of the case}, and In law, the CIT(A) was not justified in deleting the addition of ₹ 378,059/ - made u/ s 2(22)(e) of the Act by holding that the transaction were not by way of loan or borrowing and were for supply ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nses and contribution, if any, by other family members for scrutiny particularly when the personal withdrawals shown by the assessee were very meager. 3. On the facts and in the circumstances of the case, and in law, the CIT(A) was not Justified in deleting the addition of ₹ 14,26,974/ - made u/s 2(22)(e) of the Act by holding that the transaction were not by way of loan or borrowing and were for supply of goods and repaid in kind without appreciating that the assessee had not adduced any evidence before the Assessing Officer in this regard and hence, the CIT(A) erred in accepting the additional evidence in contravention of the rule 46A of l T Rules, 1962 The appellant prays that the order of the CIT(A) on the above ground be set aside and that of the Assessing Officer be restored. The appellant craves leave to amend or alter any ground and/ or add new grounds which may be necessary. 7.2 In the Memo of cross-objection, assessee has raised the following Ground:- 1. On the facts and circumstances of the case the Assessment Order passed under section 153A of the I.T. Act, 1961 is bad in law as the assessment was not pending at the time of search and there is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Bombay High Court in the case of CIT vs. Continental Warehousing Corporation (NHAVA SHEVA) Ltd, 374 ITR 645 (Bom), such additions are beyond the scope and ambit of the jurisdiction conferred on the Assessing Officer under section 153A r.w.s. 143(3) of the Act. 7.5 The aforesaid controversy in our view, goes to the root of the matter, therefore, it is being addressed at the threshold. In order to appreciate the same, following discussion is relevant. As noted earlier, assessee and other entities in its group were subject to search and seizure action under section 132(1) of the Act on 10/11/2006. In pursuance to such action, a notice under section 153A of the Act was issued to the assessee on 5/10/2007 calling for a return of income for assessment year 2003-04, in response to which, assessee filed a return of income declaring an income of ₹ 30,48,790/-, which was the same as the income originally declared in the return of income filed under section 139(1) of the Act on 2/12/2003 for assessment year 2003-04. The return of income so filed by the assessee has been subject to scrutiny assessment under section. 143(3) r.w.s. 153(A) dated 18/12/2008, whereby the total income has ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... resentative has pointed out that the proposition being canvassed by the assessee would not apply in a situation where an original assessment has not been finalized under section 143(3) of the Act, and in the present case original assessment has been made under section 143(1) of the Act. As per the Ld. Departmental Representative the provisions of section 153A empower the Assessing Officer to assess or reassess the total income of six assessment years immediately preceding the assessment year relevant to the previous year in which a search was conducted and, therefore, under these circumstances the Assessing Officer was duty bound to assess or reassess total income of such assessment years, and, therefore, the impugned additions were justifiably made in the assessment made under section 143(3) r.w.s. 153A(1) of the Act. 7.8 As the aforesaid discussion shows, the pertinent point raised by the assessee before us is that the impugned additions have been made in the absence of the requisite jurisdiction. In order to appreciate the controversy, it is pertinent to observe that Section 153A of the Act postulates the assessment in cases of search or requisition under section 132 or und ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... se of search. The Hon ble High Court also noticed its earlier judgment in the case of Murali Agro-products Ltd.(supra) and elaborately culled out the scope and ambit of the assessment and reassessment of total income under section 153A(1) of the Act read with the proviso thereof. The Hon ble High Court has ruled that an unabated assessment under section 153A(1) of the Act would not encompass an addition for which no incriminating material is found during the course of search, because in such a case, the original assessment had become final. 7.10 In this context, it is also notable that the Hon ble Delhi High Court in the case of CIT vs. Kabul Chawla in ITA 707/2014 dated 28/08/2015 has also considered a similar dispute and has summarized the entire legal position as follows:- Summary of the legal position 37. On a conspectus of Section 153A(1) of the Act, read with the provisos thereto, and in the light of the law explained in the aforementioned decisions, the legal position that emerges is as under: i. Once a search takes place under Section 132 of the Act, notice under Section 153 A (1) will have to be mandatorily issued to the person searched requiring him to file ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Assessing Officer. The first addition is on account of ₹ 69,28,100/- representing advances received from customers, which have been held by the Assessing Officer to be unexplained credits within the meaning of section 68 of the Act. The relevant discussion in the assessment order reveals that there was a failure on the part of the assessee to produce the parties and, therefore, the Assessing Officer has proceeded to treat the same as unexplained cash credits under section 68 of the Act. With respect to the addition in respect of deemed dividend under section 2(22)(e) of the Act of ₹ 14,26,974/-, the relevant discussion in para 9 of the assessment order reveals that the Assessing Officer has justified the addition on the basis of his examination of the balance sheet of M/s. S.K.S Ispat Ltd., from whom such amount is said to have been received. The third addition is on account of low household withdrawals and such addition is based on the perception of the Assessing Officer that the declared withdrawals for household expenses are low and ought to have been higher. Be that as it may, there is no discussion in the assessment order, which would suggest that any incriminat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and make additions either based in the incriminating material or otherwise. 11.Per contra, the case of the assessee is that the AO may be empowered to issue notices for all the six AYs in view of the cited decisions ie Jai Steel (India) Ltd (supra), Scope (P) Ltd (supra) etc. However, in case of completed assessments, AO is empowered to made additions only based on the incriminating materials and not otherwise Jai Steel (India) Ltd (supra), LMJ International Ltd (supra), Gurinder Singh Bawa (supra) etc. For making the routine additions, which are normally done in the regular assessments, the completed assessment need not be disturbed by invoking the provisions of section 153A of the Act if not for reiterating the returned or assessed income as the case may be. Judgment in the case of Jai Steel (India) Ltd (supra) supports the above legal proposition. As per the assessee, regarding the cases of abated assessments, considering the scheme of assessments u/s 153A, per contra, even the routine additions are done in these assessments. 12.We have heard the parties and their divergent stands on the legal issue and the validity of the instant assessment/reassessment with the routine a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... requisition under sections 132 and 132A, it is apparent that: (a) the assessments or reassessments, which stands abated in terms of second proviso to section 153A, the Assessing Officer acts under his original jurisdiction, for which, assessments have to be made; (b) regarding other cases, the addition to the income that has already been assessed, the assessment will be made on the basis of incriminating material and (c) in absence of any incriminating material, the completed assessment can be reiterated and the abated assessment or reassessment can be made. ..The argument of the assessee that the Assessing Officer is also free to disturb income, expenditure or deduction de hors the incriminating material, while making assessment under section 153A is also not borne out from the scheme of the said provision which as noticed above is essentially in context of search and/or requisition. Para 26 of the Judgment: The plea raised on behalf of the assessee that as the first proviso provides for assessment or reassessment of the total income in respect of each assessment year falling within the six assessment years, is merely reading the said provision in isolation and not i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... been completed under summary scheme under section 143(1) and time limit for issue of notice under section 143(2) had expired on the date of search. Therefore, there was no assessment pending in this case and in such a case there was no question of abatement. Therefore, addition could be made only on the basis of incriminating material found during search. B. All Cargo Global Logistics Ltd. v. Deputy Commissioner of Incometax, Central Circle-44 [2012] 23 taxmann.com 103 (Mum.) (SB) Para 58 of SB decisions: Thus, question No.1 before us is answered as under: (a) In assessments that are abated, the AO retains the original jurisdiction as well as jurisdiction conferred on him u/s 153A for which assessments shall be made for each of the six assessment years separately; (b) In other cases, in addition to the income that has already been assessed, the assessment u/s 153A will be made on the basis of incriminating material, which in the context of relevant provisions means - (i) books of account, other documents, found in the course of search but not produced in the course of original assessment, and (ii) undisclosed income or property discovered in the course of search. 14 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... res in this case and the same relates to the lands deals. In principle this disclosure has nothing do with the impugned additions u/s 68 or 14A of the Act. In the instant case, specific to the assessee, no incriminating material with the details was referred either in the assessment order or in the order of the CIT (A) for making the impugned additions. As per the cited judgment in the case of Jai Steels Ltd, supra, the assessment u/s 153A is only for reiteration rather than making any additions in a routine manner without the strength of the incriminating materials. Similar view was taken up by the ITAT, Delhi 'H' Bench, in the case of V.K. Fiscal Services P Ltd vs. DCIT vide ITA Nos.5460 to 5465/Del/2012. In this regard, para 13 from the said order of the ITAT Delhi Bench (supra) is relevant and the same reads as under: 13. Applying the above case laws to the facts of the case, we have to necessarily quash the assessment proceedings for AY 2004-2005, 2005-06, 2007-08, 2008-09 on the following grounds. (a) No books of accounts belonging to the assesse were found and seized in the premises of the other person. What was found was in the hard disk was only a confirmati ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . As such, we find that the AO has not used the said report of the DVO also for making additions of ₹ 31,33,007/-, the difference between accounted amount of ₹ 46,13,007/-, claimed as the amount spent on construction of house and acquisition of land as on 31.3.2002 minus Rs. ₹ 14.8 lakhs, the investment made on the land plots. AO made addition for assessee‟s failure to provide evidences / bills in support of the claim of expenditure on the construction. It the presumption of the AO that the plots since acquired only by July 2001, the assessee would not have spend ₹ 31,33,007/- by 31.3.2002. This is merely a presumption rather conclusion based on any evidences. Such additions are unsustainable in law in the assessments made u/s 153A r.w.s 143(3) of the Act. 17. Rajasthan High Court judgment in the case of Jai Steel (India) (supra), vide para 18, it is categorically mentioned that the requirement of assessment or reassessment under the said section (153A) has to be read in the context of sections 132 or 132A of the Act, inasmuch as, in case nothing incriminating is found on account of search or requisition, then the question of reassessment of the c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on 143(3) r.w.s. 153A(1) of the Act considering the absence of any incriminating material having been found in the course of search qua the impugned additions and the original assessment not having abated in terms of Second Proviso to section 153A(1) of the Act. As a consequence, the Ground raised by the assessee in its cross- objection is allowed. 7.15 Resultantly, the ultimate decision of the CIT(A) in deleting the additions made by the Assessing Officer on account of (i) Advances received from customers considered unexplained under section 68 of the Act - ₹ 69,28,100/-; (ii) Amount received from M/s. S.K.S. Ispat Pvt. Ltd., considered as deemed dividend under section 2(22)(e) of the Act - ₹ 14,26,974/-; and, (iii) estimated addition on low household withdrawals ₹ 6.00 lacs is hereby affirmed, albeit on a different ground. 7.16 As a consequence, whereas the cross objection of the assessee is allowed, the appeal of the Revenue is dismissed. 8. Now we may take up the appeal of the Revenue in ITA No. 9225/Mum/2010 for assessment year 2004-05, which is directed against an order passed by CIT(A)-36, Mumbai dated 15/10/2010, which in turn arises out of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 77; 35,44,18,832/ - made u/s 68 of the Act by holding that that the addition made on a/c of the progressive peak balance relating to unexplained sundry creditors was not sustainable ignoring his own conclusion that the assessee was not reporting true and correct state of affairs particularly when assessee had no delivery details, lorry receipts and the alleged creditors had admitted that the transaction were only on paper. 6. On the facts and in the circumstances of the case, and in law, the CIT (A) was not justified in deleting the addition of ₹ 35,44,18,832/- made u/s 68 of the Act without appreciating that the assessee did not produce books of accounts, bills, vouchers before the A.D. for examination and particularly when the alleged creditors had in their original statement recorded u/s. 131 had denied the transaction of any sale of goods to the assessee and also some of them have declared commission income only on the amount of accommodation entries of purchase / sale . 9.1 The assessee has filed cross-objection raising a Ground, which is identical to that considered by us in the assessment year 2003-04 in the earlier paras. Since the issue raised in the cross-ob ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and the amount of additions being different. Under these circumstances, in our view, our decision in the Ground in the cross- objection of the assessee for assessment year 2003-04(supra) applies mutatis mutandis in this year too. As a consequence, we hereby affirm the ultimate conclusion of the CIT(A) in deleting the aforesaid five additions, albeit on a different ground. 9.4 As a consequence, whereas the cross objection of the assessee is allowed, the appeal of the Revenue is dismissed. 10. Now we may take up the assessment year 2005-06, wherein Revenue and assessee have filed cross-appeals, and assessee has also filed a cross-objection. The appeal of the Revenue in ITA No.9226/Mum/2010, is directed against an order passed by CIT(A)-36, Mumbai dated 15/10/2010, which in turn arises out of an order passed by the Assessing Officer under section 143(3) r.w.s. 153A of the Income Tax Act, 1961 (in short the Act ) dated 18/12/2008. In this appeal Revenue has raised the following Grounds of appeal:- 1. On the facts and in the circumstances of the case, and in law, the CT (A) was not justified in deleting the addition of ₹ 1,89,39,320/ - made on account of disallowance o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd creditworthiness and the genuineness of the transaction and thus the assessee had failed to discharge the onus cast upon him under the provisions of section 68 of the Act. 6. On the facts and in the circumstances of the case, and in law, the CIT (A) was not justified in deleting the addition made u/s 69B of the Act of amount of ₹ 5,05,39,000/-, by treating the difference between the cost paid by others and the cost to the assessee in respect of the shares of SKS Ispat Ltd, where in assessee is a director, by ignoring that the shares of SKS Ispat Ltd of face value of ₹ 10, which were shown as purchased at highly suppressed value of ₹ 2/ - per share by the assessee whereas in the year under consideration and also in subsequent year they were sold @ ₹ 100/ - per share to others. 7. On the facts and in the circumstances of the case, and in law, the CIT (A) was not justified in deleting the addition made u/s 69B of the Act of amount of ₹ 5,05,39,000/-, by treating the difference between the cost paid by others and the cost to the assessee in respect of the shares of SKS Ispat Ltd, where in assessee is a director, by ignoring that the A. O. had s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e additional ground of appeal raised by the appellant. 4. That each of the grounds of appeal enumerated above is without prejudice to and independent of one another. 5. That the Appellant craves leave to reserve to himself the right to add, alter or amend any of the aforesaid grounds of appeal before or at the time of hearing and to produce such further evidence, documents and papers in support of its claim as may be necessary. 10.2 In the cross-objection, assessee has raised a ground which is identical to that considered by us in the appeal for assessment year 2003-04 in the earlier paras. 10.3 In assessment year 2005-06, the relevant facts are that in response to the notice issued under section. 153A, assessee filed a return of income on 14/2/2008 declaring total income at ₹ 1,26,18,084/-, which is same at which the return of income was originally filed under section 139(1) of the Act on 30/1/2005. In the ensuing assessment finalized under section 143(3) r.w.s. 153A(1) of the Act, the Assessing Officer has determined the total income at ₹ 87,32,79,760/-, after making the following additions (i) Disallowance of Commissioner Brokerage expenses Rs.1,89 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n deleting the additions enumerated at item Nos. (i) to (iv),(vi) and (vii) above, albeit on a different ground. Further, the ground raised by the assessee in its cross-appeal relating to sustenance of a part addition by the CIT(A) in relation to item No.(vi) above is also allowed, because the entire addition in this context made by the Assessing Officer is held to be untenable by us while adjudicating the issue raised in the crossobjection. 10.6 Thus, the appeal of the assessee in ITA No.638/Mum/2011 as well as C.O. No.182/Mum/2010 of the assessee are allowed. 11 Now the Grounds remaining in the appeal of the Revenue are Ground Nos. 9 10, which relate to an addition of ₹ 30,00,000/- made by the Assessing Officer as unaccounted receipts. 11.1 In this context, the brief facts are that the said addition is in terms of the discussion in para 13 of the assessment order. The Assessing Officer has made an addition of ₹ 30.00 lacs on the basis of a loose paper being page 13 of Annexure A-4 seized from the residence of one Mr.Bharat G. Shah, an employee of the assessee. The Assessing Officer notes that in the course of search, said Mr. Bharat G. Shah stated that such ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... presentative for the assessee pointed out that the CIT(A) was justified in deleting the addition as there was no material to link the said seized document with the transactions undertaken by the assessee with Mr. Suresh Agarwal, which were duly accounted for in the account books. 11.6 We have carefully considered the rival submissions. Quite clearly the seized paper in question was found from the premises of Mr. Bharat G. Shah, who is an employee of the assessee. Therefore, the primary onus was on Mr. Bharat G. Shah to explain the contents of the document so as to justify the inference of the Assessing Officer that it reflected unaccounted transactions of the assessee, and, such an onus does not appear to have been discharged, having regard to the material on record. Even otherwise, we do not find any infirmity in the conclusion of the CIT(A) that there is no material to connect the assessee with such loose papers. Therefore, under these circumstances, we find no reasons to interfere with the conclusion of the CIT(A) in deleting the impugned addition. The order of CIT(A) is hereby affirmed and accordingly Revenue fails on Grounds of appeal No.9 10 also. 11.7 Resultantly, ap ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cash credit, claimed to be advances received from customers, by holding that there was no material to doubt assessee's explanation, though the assessee had neither furnished confirmations with PAN details etc., nor produced the party for verification to establish their identity and creditworthiness and the genuineness of the transaction and thus the assessee had failed to discharge the onus cast upon him under the provisions of section 68 of the Act. 5. On the facts and in the circumstances of the case, and in law, the CIT (A) was not justified in deleting the addition made of ₹ 30,00,000/ - as unaccounted receipts by holding that the amount does not represent receipt of the assessee without appreciating that the addition was made on the basis of papers seized during search from assessee's trusted employee, who had deposed that the same were given to him by the assessee 6. On the facts and in the circumstances of the case, and in law, the CIT(A) was not justified in deleting the addition made of ₹ 30,00,000/ - as unaccounted receipts by holding that provisions of sec 68,69 do not apply, without appreciating that the addition was made on the basis of pap ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s. 13. In so far as, the Grounds No.2 to 4 in the appeal of the Revenue and the Ground No.1 in the appeal of the assessee are concerned, they arise out of a singular addition of ₹ 24,03,56,882/- made by the Assessing Officer by invoking section 68 of the Act. Since the said crossgrounds relate to the same issue, they are being taken up together. 13.1 As noted earlier, assessee is carrying on the business of trading in various steel products under the name and style of proprietary concern M/s. Gupta Steel Corporation. In the course of assessment proceedings, the Assessing Officer considered the maximum credit balance standing in the names of the following eight creditors at ₹ 24,03,56,882/- as unexplained credits within the meaning of section 68 of the Act:- Name of the party Amount (Rs.) 1. Nisha Enterprises 21608878 2. Loha Ispat Ltd. 40280019 3. Bhagwati Steel Cast. Ltd. 14961115 4. Offshore Industrial Const.(P) Ltd. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in appeal, challenging the action of the CIT(A) in holding that there was no justification for the addition of ₹ 24,03,56,882/- made under section 68 of the Act, whereas the assessee is in appeal challenging the order of the CIT(A) in retaining an addition of ₹ 10.96 crores to the trading results. 13.3 In the course of hearing, the Ld. Departmental Representative pointed out that the CIT(A) had failed to appreciate the stand of the Assessing Officer, wherein it has been brought out that in the original statement of the creditors recorded by the Department, such creditors had initially denied supply of goods and, therefore, the Assessing Officer was justified in treating such creditors as unexplained. 13.4 On the other hand, Ld. Representative for the assessee pointed out that the CIT(A) made no mistake in setting-aside the action of the Assessing Officer because there was no material adverse with respect to the seven parties in question. In this context, the Ld. Representative for the assessee referred to Page-18 of the Paper Book, wherein for each of the eight parties, it has been narrated as to how the Assessing Officer was wrong in inferring that the creditors ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... party. No summons has been issued by the A.O. The Assessee has paid the entire outstanding amount in subsequent year. The assessee has filed confirmation of party with PAN before the CIT(A) and the same was forwarded to the A.O. The party appeared before A.O. in remand proceedings and confirmed the transaction. 4 Offshore Industrial Const. (P.)Ltd. 29,315,674 The addition was made without raising any specific query for this party. No summons has been issued by the A.O. The Assessee has paid the entire outstanding amount in subsequent year. The assessee has filed confirmation of party with PAN before the CIT(A) and the same was forwarded to the A.O. 5 Balaji Trading Co. 14,984,883 AO has made addition of closing outstanding balance of ₹ 1,49,84,883/- ignoring the fact that there was an opening debit balance of ₹ 4,23,67,975/- on account of sales made to the party which has been accepted in the previous year relevant to A.Y.2006-07. No summons ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... it is also gathered that out of the 169 parties who have allegedly issued accommodation bills or given entries, only 7 were examined and on that basis the addition has been made, This meant that the entire addition has been based on the examination of only less than 5% of the parties who initially accepted the transaction, then denied the same and later again changed the stance by accepting it. The frequent change of stance by such parties is by itself (making their entire statements doubtful and not worth taking as evidence on record. 48. During the course of hearing, the appellant without prejudice to the submission already made submitted without admitting that assuming all the purchases are bogus then the corresponding sales has also to be treated as bogus. The AR of the appellant further emphasized that once the purchased are allowed as genuine then how come the outstanding balance can be disallowed and added to the income while the appellant is following mercantile system of accounting. If the appellant has to follow the methodology as adopted by the AO then the same should be allowed in the year of payment. 49. Considering the submission made, I agree that where both p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the aforesaid parties had made purchases from certain other parties who stated that they had issued only accommodation bills in favour of the aforesaid parties. This aspect has not been disputed by the Revenue before us, and in any case, the further finding of the CIT(A) that no particular purchase effected by the assessee has been linked to such accommodation bills obtained by the suppliers has also not being disputed before us. In fact, it is for this reason that the Assessing Officer chose to treat the maximum credit balance standing in the aforesaid eight creditor s as unexplained within the meaning of section 68 of the Act. The said approach of the Assessing Officer is itself suspect because what is expected to be assessed under section 68 of the Act are the particular credits which are found to be unexplained. 13.7 It is also emerging that the action of Assessing Officer is based on the verification carried out from seven parties involved in purchase transactions over various assessment years, and not in relation to the transactions carried out specifically in the instant assessment year. In fact, the CIT(A) records out of the 169 parties who were alleged to have issue ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... terference in so far as they relate to setting-aside of the action of the Assessing Officer in treating the sundry creditors as unexplained. Therefore, on this aspect Revenue fails. 13.9 In so far as assessee s appeal is concerned, it is contended that the CIT(A) was not justified in making an addition of ₹ 10.96 crores to the trading results. It is seen that the CIT(A) opined that the trading results were not reliable for the reason that in the case of one of the parties i.e. Mrs Mehrunisa Husseini , director of M/s. Chevend Technology P. Ltd. and Cheveron Metal Product (P) Ltd., the initial statements were not retracted, which showed an element of doubt on the purchases effected by the assessee. For this reason, he had made addition to the trading results. 13.10 On this aspect, the Ld. Representative for the assessee pointed out that so far as the instant assessment year is concerned, the statement of Mrs. Mehrunisa Husseini has no relevance because no transaction has been carried out by the assessee with the said concern during the year under consideration. Secondly, it is canvassed on an alternative basis that the adoption of gross profit @ 6.5% by the CIT(A) is unr ..... X X X X Extracts X X X X X X X X Extracts X X X X
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