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TMI Blog2017 (3) TMI 819X X X X Extracts X X X X X X X X Extracts X X X X ..... rming the addition of the sum of Rs. 2,82,119/- (Rupees two lac eighty two thousand one hundred nineteen only), being @5% of the expenses incurred and claimed by the appellant in the Profit & Loss account as unreasonable expenses 2. The learned Commissioner of Income Tax, Appeals has also erred in confirming the addition of the sum of Rs. 9,68,628/- (Rupees nine lac sixty eight thousand six hundred twenty eight only), on account of purchases being treated as unexplained expenditure. 3. The learned Commissioner of Income Tax (Appeals), has also erred in not considering the amount of M/s. Blue Cross Networks of Rs. 2,52,001/- (Rupees two lac fifty two thousand one only) declared as income in the assessment year 2013/2014 on account of unpaid liability written off." 3. Brief facts of the case are that the assessee is engaged in manufacturing of signage boards. During the course of assessment proceedings u/s 143(3) r.w.s. 143(2) of 1961 Act, the assessee company was asked to furnish by AO details of the various expenses cumulatively amounting to Rs. 56,42,384/- claimed under the head 'Financial and Administrative expenses' and was also asked to explain the allowability and reasonabi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lowance of Rs. 2,82,119/-, which was later upheld by the ld. CIT(A) by dismissing the appeal of the assessee on not being pressed. In our considered view, this matter need to go back to the file of learned CIT(A) who shall adjudicate the same based on merits after hearing the assessee. Needless to say that proper and adequate opportunity of being heard shall be provided by learned CIT(A) to the assessee in accordance with law and the assessee shall be allowed by learned CIT(A) to produce cogent material/ evidences in its defense which shall be admitted by learned CIT(A) in the interest of justice. This disposes of ground no.1 .We order accordingly. 5. The second addition is with respect to the purchases made by the assessee from certain parties wherein information was received by Revenue from Sales Tax Department that certain parties are issuing accommodation entries without actual delivery of the goods. Information was also received by the AO from DGIT(Inv.) regarding bogus purchases. The AO noticed three such purchases in the case of the assessee wherein assessee company was beneficiary with regard to the purported transaction of purchases alleged to have made from the following ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s. The assessee could only file copies of ledger accounts and no other documents or details were furnished or produced by the assessee . The AO observed that the assessee did not discharge the primary onus cast on the assessee. The A.O. observed that the concerned parties were involved in issuing bogus bills wherein accommodation entries were provided by these parties of which the assessee was beneficiary as per information received from Maharashtra Sales Tax Department. The said parties in their statement recorded by Maharshtra Sales Tax Department have admitted to be involved in bogus billing .Except ledger copies, no other documents or details were furnished or produced by the assessee. No stock register was produced by the assessee for verifications. The assesseee did not produce the parties before the AO despite being asked to do so by the AO. It was observed by the AO that merely because payments are made by account payee cheque is not sacrosanct. Hence, addition of Rs. 9,68,628/- was made by the AO u/s 69C of the Act towards purchases made by the assessee from these three parties as genuineness of purchases could not be proved by the assessee, vide assessment order dated 28- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... year 2013-14 as the amount was not paid to them on account of dispute and hence the same should not be added, was also repelled by learned CIT(A) as the amount stood debited in Profit and Loss Account, vide appellate order dated 23.06.2016 passed by learned CIT(A). 8. Aggrieved by the appellate order dated 23.06.2016 passed by ld. CIT(A), the assessee is in appeal before the tribunal. 9. The ld. Counsel for the assessee submitted that payments were made by account payee cheques to these parties except to Blue Cross Networks to whom no payment was made due to dispute. Our attention was drawn to the bank statement placed at paper book / page 59 reflecting the payments made by cheques against purchases made from these parties. Our attention was also drawn to pages 60-67 placed in paper book to contend that invoices were received from these parties and also ledger extracts of these parties were produced before the authorities below, which are also placed in paper book. The auditor's certificate was also placed vide paper book /page 68 to contend that an amount of Rs. 2,52,001/- payable to Blue Cross Networks was not paid due to dispute and being unpaid liability was written back in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... party due to dispute and the unpaid liability towards purchases of Rs. 2,52,001/- had been written back as income in the assessment year 2013-14, hence, the addition on account of said purchases was not called for was contended by assessee. The notices issued by the AO u/s 133(6) of 1961 Act were not complied with. The assessee also could not produce these parties before the authorities. The assessee also could not produce goods movement evidences such as transport memo/challans/ bilti's or could not evidence the date of delivery with bills/challans etc along with supporting documents and details. The assessee also did not produce stock register as no stock register was maintained. The assessee also could not corelate quantitative reconciliation of quantities of sale with purchases so made nor the assessee could prove , correlate and reconcile the consumption of material so purchased with the manufacturing / business activity of the assessee. The assessee also could not prove that the said material so purchased was part of the closing stock so held by the assessee at year end. The amounts of purchases are entered in books of accounts so maintained by the assessee and more-so incri ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ely the assessee could not prove to be genuine and satisfying the mandate of Section 37 of 1961 Act as the assessee made no attempt towards the same as detailed above by us and hence we cannot accept this plea of the assessee while adjudicating this appeal for assessment year 2011-12. We are fully aware that there should not be double jeopardy but be it known clearly that the taxpayer does not have a vested right to get allowability of deduction of expenses in a particular year despite being not proved to be spent wholly and exclusively for the purposes of business thereby not satisfying mandate of Section 37 of 1961 Act merely on grounds that the said sum of amount is written back and offered to tax in subsequent year , except in a very few exceptionable cases where bonafide is proved beyond doubt and in order to avoid undue hardship to the tax-payer. The assessee did not made out its case to fall under exception. The court will not lean in favour of the litigant to take advantage of its own wrong. However, in order to avoid double jeopardy,we direct Revenue to grant appropriate relief in the assessment year 2013-14 after verification of the claim of the assessee. We order accordi ..... X X X X Extracts X X X X X X X X Extracts X X X X
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