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2012 (9) TMI 1093

s to confront the view of the learned CIT(A). Therefore, we are inclined to follow the decision of the learned CIT(A). - Addition on account of bad debts u/s 36(1) (vii) - Held that:- This issue is covered by the decision of the Hon’ble Apex Court in the case of T. R. F. Ltd. Vs CIT [2010 (2) TMI 211 - SUPREME COURT ] wherein it was held that “it is not necessary for the assessee to establish that the debt, in fact, has become irrecoverable. It is enough, if the bad debt written off as irrecoverable in the account of the assessee.” Accordingly, we delete the addition - Addition on account of payment made to persons specified u/s 40A (2) (b) deleted as relying on assessee's own case [2011 (5) TMI 1049 - ITAT AHMEDABAD] - Unexplained advances/loans - Held that:- Though the entries in the records seized from third party and his confirmatory statement may raise suspicion but cannot prove that it is assessee’s income”, which seems to be squarely applicable to the facts of this case. Further, the question raised by the learned AR remains to be unanswered that there was no interpretation made by the learned AO for the balance amount of ₹ 2,15,60,000/- advanced out of the .....

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ted 6% on the same to be income accrued for the discrepancy in stock which works out to ₹ 77,568/-. However, the learned CIT(A) estimated the addition to ₹ 1,00,000/- as against the addition of ₹ 8,30,826/- made by the learned AO. Thus, the learned CIT(A) deleted the addition of ₹ 7,30,826/-. We concur with this view of the learned CIT(A) - ITA No.2698 and 2699/Ahd/2009 - Dated:- 7-9-2012 - SHRI G. C. GUPTA, VP AND SHRI A. MOHAN ALANKAMONY, AM Appellant by Shri S. K. Gupta, Sr. DR Respondent by Shri S. N. Soparkar, AR O R D E R PER A. MOHAN ALANKAMONY: These two appeals are filed by the revenue aggrieved by the orders of the learned CIT(A)-IV, Ahmedabad in appeals No. CIT(A)-IV/397.B/CC-1/08-09 and CIT(A)- IV/398.B/CC-1/08-09, both dated 10-07-2009 for assessment year 2006-07 passed u/s 153A read with section 143(3) of the Act and for assessment year 2007-08, passed u/s 143 (3) read with section 250 of the IT Act respectively. Both the appeals of the assessee were heard together and the same are being disposed of by this common order for the sake of convenience. ITA No.2698/Ahd/2009 (Assessee s appeal for AY: 2006-07) 2. The revenue has raised five grounds .....

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which the assessee contended that the assessee company disclosed ₹ 29 lacs as peak credit for the AY 2006-07 and since rotation of money was involved the assessee paid tax on the amount of ₹ 29 lacs. However, the learned AO opined that there was no rotation of money involved in this case and the assessee had given advances to the extent of ₹ 78,55,000/-. Thereby the learned AO came to a conclusion that addition should be sustained for an amount of ₹ 49,55,000/- i.e. the amount of ₹ 78,55,000/- being advance given by the assessee to various parties less ₹ 29,00,000/- admitted by the assessee claiming the same by invoking the principles of peak credit. 5. The assessee carried the matter before the learned CIT(A). The learned CIT(A) was of the view that working of the peak credit submitted before the learned AO was in order as the same was based on the seized documents. Accordingly, the learned CIT(A) relying on the decision of the Hon ble Jurisdictional Gujarat High Court in the case of Pipush Kumar O. Desai Vs CIT reported in 247 ITR 568 and other decisions of the Hon ble Rajasthan High Court and the Hon ble Supreme Court directed the learned AO .....

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s of the case, we do not have any reasons to confront the view of the learned CIT(A). Therefore, we are inclined to follow the decision of the learned CIT(A). Accordingly, we dismiss this ground of appeal raised by the revenue and thus, the addition of ₹ 49,55,000/- stands deleted. 8. Ground No.2: Deletion of addition of ₹ 32, 160/- on account of bad debts u/s 36(1) (vii) of the Act. The learned AO observed that during the year the assessee had debited ₹ 11,50,027/- in the profit & loss account as bad debts. The assessee was asked to submit the details of bad debts written off with substantiating evidence. In response thereto the assessee submitted ledger accounts of the debtors considered to be bad maintained in the assessee s books. On further query by the learned AO, the assessee submitted that the assessee had issued legal notice and filed civil and criminal cases against 13 debtors for total amount of ₹ 8,28,537/-. But, no action for recovery of the debts from Shakti Bekry, Dahod for an amount of ₹ 31,260/- was taken by the assessee. The learned AO relying on the decision of the Hon ble Gujarat High Court in the case of Dhall Enterprises & .....

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us. At the outset, we must say that this issue is covered by the decision of the Hon ble Apex Court in the case of T. R. F. Ltd. Vs CIT, 323 ITR Page 397 wherein it was held that it is not necessary for the assessee to establish that the debt, in fact, has become irrecoverable. It is enough, if the bad debt written off as irrecoverable in the account of the assessee. Accordingly, we delete the addition of ₹ 32,160/- made by the learned AO on account of rejection of bad debt claimed. This ground of appeal of the revenue is dismissed. 9. Ground No.3: Deleting addition of ₹ 9,34,062/- on account of payment made to persons specified u/s 40A (2) (b) of the Act. The learned AO noticed that in the original return filed u/s 139(1) by the assessee accompanied with form No.3CD, the auditors have specified that the assessee made payments to specified persons covered u/s 40A (2) (b) of the Act under the head interest. On being asked to furnish the nature and amount of payment by the learned AO, the assessee submitted that the relatives of the directors and the directors of the assessee company were paid interest at the following rates: Assessment year Directors & Members Other .....

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ounds No.8 and 9 are general in nature and require no adjudication. The surviving ground Nos. 1, 2, 3, 4, 5, 6 and 7 are reproduced herein below for reference: 1. The Ld. CIT(A) has erred in law and on facts and circumstances of the case in deleting the addition of ₹ 63,00,000/- on account of unexplained advances/loans. 2. The Ld. CIT(A) has erred in law and on facts and circumstances of the case in deleting the addition of ₹ 1,34,940/- on account of interest on unaccounted loans. 3. The Ld. CIT(A) has erred in law and on facts and circumstances in deleting the addition of ₹ 1.18.92,500/- on account of unaccounted payments/advances. 4. The Ld. CIT(A) has erred in law and on facts and circumstances of the case in deleting the addition of ₹ 6,36,650/- on account of silver coins purchased. 5. The Ld. CIT(A) has erred in law and on facts and circumstances of the case in deleting the addition of ₹ 35,630/- on account of bad debts u/s. 36(1) (vii) of the I. T. Act. 6. The Ld. CIT(A) has erred in law and on facts and circumstances of the case in deleting the addition of ₹ 7,30,826/- on account of excess physical stock over stock book. 7. The Ld. CIT(A) .....

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ainst the figure which are stated to be advances by the appellant so as to verify as to whether any cash was advanced by the appellant as per the said notings. This is necessary for the Assessing Officer and the search party particularly keeping in view the statement of Shri Sheth recorded at the time of search. In the absence of any such exercise carried on by the Department it is not justified to make the addition in the hands of the appellant based on the loose papers found from Shri Mihir Shah particularly when veracity of statement of Shri Mihir Shah remained unexamined. The decisions referred to by the appellant viz. Prarthana Construction, Prabhat Oil Mills and V. C. Shukla support the appellant s claim that notings made by the third persons in their diary does not represent any unaccounted money of the appellant. The addition is, therefore, totally unjustified and is directed to be deleted. 12.1 Against this order of the learned CIT(A), the revenue is now in appeal before us. The learned DR supported the order of the learned AO and prayed that the same may be sustained. On the other hand, the learned AR reiterating the submissions made before the authorities below and relie .....

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CIT(A) deleted the addition as he held that there was no reason for making the addition of ₹ 63,00,000/- in the hands of the assessee for the alleged advances made through Shri Mihir Shah. Since, we have also concurred with this view of the learned CIT(A) (supra) and this addition of ₹ 1,34,940/- being consequential for the addition made for ₹ 63,00,000/-, we delete the same. Thus, the order of the learned CIT(A) stands confirmed on this count also. Accordingly, this ground raised by the revenue is dismissed. 14. Ground No.3: Deleting the addition of ₹ 1,18,92,500/- made on account of unaccounted payments/advances. This issue pertains to the granting of benefit of peak credit to the assessee for the advances made and advances returned. Both the parties submitted that the this issue is the same as considered for the AY 2006-07 wherein the learned AO did not grant the benefit of peak credit considering that there was no rotation of money involved, however, the learned CIT(A) had allowed the appeal in favour of the assessee. It was submitted by both the parties that the decision of the Tribunal for the AY 2006-07 on this issue may be followed for the AY 2007-08 .....

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bearing on the year under consideration. Further, there is no dispute that the silver coins were purchased during the year 1995 from the declared source of income. Therefore, we do not have any hesitation to confirm the order of the learned CIT(A) on this issue. Accordingly, this ground of appeal raised by the revenue is dismissed. 16. Ground No.5: Deleting the addition of ₹ 35,630/- on account of bad debts u/s 36(1) (vii) of the IT Act. The same issue has been decided by us in ground No.2 of the revenue s appeal for AY 2006-07 supra following the decision of the Hon ble Apex Court in the case of T. R. F. Ltd. Vs CIT reported in 323 ITR 397. Accordingly, we dismiss this ground raised by the revenue for the AY 2007-08 also. 17. Ground No.6: Deleting the addition of ₹ 7,30,826/- on account of excess physical stock over the stock book. The learned AO noted that during the survey physical stock of ₹ 11,41,686/- was found against book stock of ₹ 4,31,060/-. The learned AO required the assessee to explain the excess stock of ₹ 7,10,626/-.The assessee submitted that there was no discrepancy in the stock and that the survey party has not taken the stock prope .....

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