TMI Blog2017 (2) TMI 907X X X X Extracts X X X X X X X X Extracts X X X X ..... rchase from the creditors to prove the genuineness of the transactions. The assessee also produced confirmation for payments made to some of the creditors and legal notices issued by the some of the sundry creditors towards outstanding amounts and therefore there was no cessation of any liability and nothing has been written off in the books of accounts. The Ld. departmental representative could not point out any infirmity in the order of the first appellate authority in deleting the above addition. Therefore we confirm the order of the Ld. at first appellate authority in deleting the addition on account of the sundry creditors. Addition on account of unaccounted sales - Held that:- CIT appeal has deleted the addition because the difference in the account has arisen due to the one transaction of 5.820 grms of the gold of ₹ 3893850/- which is wrongly shown by the party as sales instead of being accounted for issue of finished job material. For this reason, the confirmation from the supplier was also submitted along with the copy of the challan and receipt vouchers as well as the labour bill for job done which had been duly forwarded to the AO during the remand proceedings ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... without appreciating the fact that the assessee failed to produce required evidences during the course of assessment proceedings and remand report proceedings . iv) Whether on the fact and circumstances of the case, the Ld. CIT(A) was correct in deleting the addition of ₹ 41,41,309/-/- made on account of unaccounted purchases without appreciating the fact that the assessee failed to produce documentary evidences during the course of assessment proceedings and remand report proceedings. 3. During the course of hearing, revenue has made an application dated 11/03/2015 for admission of an additional ground of appeal. The additional ground raised by the revenue is as under:- whether these CIT (A) has erred in admitting additional evidence in this case is the conditions as stipulated in rule 46 (1) was not satisfied in this case and no order in this regard was passed and further that the evidence admitted were also not called for by the CIT (A) on his own under rule 46 (4) of the income tax rules. 4. The Ld. departmental representative submitted that this is a legal ground, which goes to the root of the matter, therefore can be raised at any time, and hence ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... al accounts of the company along with the tax audit report. During the course of assessment proceedings, the Ld. assessing officer stated that assessee has not produced the books of accounts which were relied upon by the tax auditor and therefore he rejected the return of the assessee and held that in case of jewellery trade the gross profit rate varies between 6 to 8% and net profit rate varies between 4 to 5% and in the absence of the book and non-confirmation from sundry creditors to the net profit rate at 5% on sales of ₹ 1 247 0519/ and estimated the net profit of the company at ₹ 6 23525/ . As the assessee did not produce the books of accounts, The Ld. assessing officer was of the view that assessee has failed to prove the genuineness of the sundry creditors as on the close of the year and therefore he added a sum of ₹ 4 519950/ on account of the sundry creditors which remain unconfirmed. He further made an addition of ₹ 3 538559/ on account of unaccounted sales made to one party M/s Choksi vachraj Makanji of Junagarh. He further made an addition of ₹ 4 141309/ on account of the opening stock in absence of books of accounts. An addition o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... icer and stated that when the books of accounts were not produced before the Ld. assessing officer during the course of assessment proceedings and also notices under section 133 (6) of the income tax act were not responded. Against this, the Ld. authorized representative submitted that the books of accounts were produced before the assessing officer in remand proceedings and further the additional evidences were submitted and merely because some of the creditors could not reply to the Ld. and assessing officers notices it cannot be used against the assessee when the confirmation of them supported by the books of account is produced. 8. We have carefully considered the rival contentions and also perused the relevant evidences produced before us. The Ld. 1st appellate authority has deleted the above addition as under:- 4.9 Estimation of Net profit at ₹ 6.23.525/- :- As per the assessment order, during assessment proceeding in response to the AO's notices and questionnaire dated 03.07.2009, the Id. AR of the assessee appeared on various dates and submitted the Tax Audit Report and Balance Sheet. The AO issued a second questionnaire dated 26.08.2009 against which part ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tring and M/s Diam Circle all other purchases during the year were made from individual household customers who have sold their personal jewellery to the assessee. It is submitted that since individual customers do not carry any personal invoice/challan etc., submitting them is not possible. !t is submitted that the AO was provided with the names and address of these customers to enable him to confirm these transactions and the AO has not made any adverse comments on this. As regard, the purchase bill for M/s Diam Circle, it is submitted by the Id. AR that non-production of only one bill cannot be basis for addition. The Id. AR has relied upon the decision in the case of Shanker Exports v. Addl. CIT (2010) 132 TTJ 107 (JP) in this regard. Further, it is submitted that the AO ignored the part payment made to this party of ₹ 1,99,000/- by the assessee by account payee cheques. Further, the confirmation' of the party and legal notice from the advocate of the party demanding the balance Outstanding amount were also produced before the AO which has not been disputed by the AO. As regards the alleged cutting/overwriting, it is submitted by the Id. AR that these are simply cle ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... addition of ₹ 1 lakh for the reason that assessee has not been able to produce the stock register for diamond and stones and other minor shortcomings as mentioned in his order. The Ld. departmental representative could not point out any infirmity in the order of the Ld. Ld. 1st appellate authority. Therefore, we confirm the finding of the Ld. CIT (A) in deleting the addition of ₹ 5 23525/- on account of rejection of the books of accounts by the Ld. and assessing officer and estimating the net profit. In the result ground No. 1 of the appeal of the revenue is dismissed. 10. Ground No. 2 of the appeal of the revenue is against the deleting the addition of ₹ 4519950/- made on account of the sundry creditors without appreciating the fact that the assessee has failed to prove the genuineness of the sundry creditors and required evidence during the course of assessment proceedings and remand report proceedings. The Ld. departmental representative relied upon the order of the Ld. and assessing officer and stated that when the assessee has not produced the complete details with respect to the genuineness of the sundry creditors the addition has rightly been made. Th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... On the other hand, the AO has not made any adverse comment in this regard in the remand report. Considering the above, the disallowance made by the AO u/s 41 by treating the above sundry creditors cessation of liability is arbitrary and cannot be legally or factually justified. The said addition is, therefore, deleted. 12. We have noted that the Ld. CIT (A) deleted the addition when the assessee has submitted the confirmation of the sundry creditors, which were duly submitted before the Ld. assessing officer during the assessment proceedings and further submitting the copies of invoices and bills for purchase from the creditors to prove the genuineness of the transactions. The assessee also produced confirmation for payments made to some of the creditors and legal notices issued by the some of the sundry creditors towards outstanding amounts and therefore there was no cessation of any liability and nothing has been written off in the books of accounts. The Ld. departmental representative could not point out any infirmity in the order of the first appellate authority in deleting the above addition. Therefore we confirm the order of the Ld. at first appellate authority in dele ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... job work- done which had been duly forwarded to the AO during the remand proceeding. The AO has not made any adverse comment on the basis of any independent enquiry or verification in this regard. In the remand report, the AO has simply mentioned that reconfirmation and other evidences produced by the assessee are an after-thought. On careful consideration of the matter, I find that the impugned disallowance is not backed by any material finding and cannot be sustained. On the other hand, the appellant has submitted necessary documentary evidence and explanation clarifying the matter. The said disallowance is, therefore, deleted. 15. the Ld. CIT appeal has deleted the above addition because the difference in the account has arisen due to the one transaction of 5.820 grms of the gold of ₹ 3893850/- which is wrongly shown by the party as sales instead of being accounted for issue of finished job material. For this reason, the confirmation from the supplier was also submitted along with the copy of the challan and receipt vouchers as well as the labour bill for job done which had been duly forwarded to the AO during the remand proceedings AO has not made any adverse comm ..... X X X X Extracts X X X X X X X X Extracts X X X X
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