TMI Blog2016 (10) TMI 243X X X X Extracts X X X X X X X X Extracts X X X X ..... ri S.S. Dhage and Shri B.M. Gaikwad are shown as creditors as they had rendered services and the assessee was to make payment to the aforesaid persons for the services rendered. A perusal of the assessment order shows that the Assessing Officer has made addition without quoting any section in the assessment order. In first appeal the Commissioner of Income Tax (Appeals) clarified that the addition has been made u/s. 68 of the Act. The addition made in respect of outstanding expenses payable to Shri S.S. Dhage and Shri B.M. Gaikwad cannot be made u/s. 68 of the Act. The provisions of section 68 are not attracted where services are received by the assessee and an entry is made in the books crediting liability in account of person from whom ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... urn of income for the assessment year 2003-04 on 28-11-2003 declaring total income of ₹ 4,96,790/- and agricultural income of ₹ 16,995/-. The copy of Trading, Profit and Loss account, Balance Sheet and Audit Report was furnished by the assessee along with the return of income. A survey u/s. 133A of the Act was conducted at the business premises of the assessee on 10-03-2005. The Assessing Officer inter alia made addition of ₹ 2,84,300/- on account of unproved/unexplained creditors. Aggrieved by the assessment order dated 24-03-2006 passed u/s. 143(3) r.w.s. 147 of the Act, the assessee preferred an appeal before the Commissioner of Income Tax (Appeals). The Commissioner of Income Tax (Appeals) vide impugned order confir ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... submitted that the assessee has utilized the services of Shri S.S. Dhage and Shri B.M. Gaikwad and had not paid for the services utilized. It was in this context the assessee has shown the above two persons as creditors. The assessee has not obtained any advances or loans from the aforesaid persons. Shri S.S. Dhage is a driver and is also engaged in arranging JCB machines on rental. The assessee had utilized the services of Shri S.S. Dhage in respect of providing JCB machines. The ld. AR contended that the statement of Shri S.S. Dhage was recorded at the back of assessee, by the Assessing Officer and no opportunity of cross-examination was afforded to the assessee. Even during the remand proceedings no fair opportunity was granted to the as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... esaid persons. In fact, the assessee was to pay to Shri S.S. Dhage and Shri B.M. Gaikwad for the services rendered by them. 6. Before proceeding further it would be relevant to first refer to the provisions of section 68 of the Act which are as under : 68. Where any sum is found credited in the book of an assessee maintained for any previous year, and the assessee offers no explanation about the nature and source thereof or the explanation offered by him is not, in the opinion of the [Assessing] Officer, satisfactory, the sum so credited may be charged to income-tax as the income of the assessee of that previous year: [Provided that where the assessee is a company, (not being a company in which the public are substantially inter ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to make payment to the aforesaid persons for the services rendered. A perusal of the assessment order shows that the Assessing Officer has made addition without quoting any section in the assessment order. In first appeal the Commissioner of Income Tax (Appeals) clarified that the addition has been made u/s. 68 of the Act. The addition made in respect of outstanding expenses payable to Shri S.S. Dhage and Shri B.M. Gaikwad cannot be made u/s. 68 of the Act. The provisions of section 68 are not attracted where services are received by the assessee and an entry is made in the books crediting liability in account of person from whom services are received. 8. Our view is further fortified by the decision of Delhi Bench of the Tribunal in ..... X X X X Extracts X X X X X X X X Extracts X X X X
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