TMI Blog2016 (2) TMI 1096X X X X Extracts X X X X X X X X Extracts X X X X ..... able to the AO after rejecting the books of the assessee was to proceed u/s 144 of the Income Tax Act and to make best judgment assessment. Per contra, he made addition of sundry creditors, holding that the assessee had not been able to substantiate the existence of the sundry creditors as claimed and thus, they could not be accepted. The ld. CIT(A) was incorrect in sustaining this addition made against the law by the AO. Thus, looked at from any angle, the ld. CIT(A) has fallen into error in sustaining the unsustainable addition made by the AO. The grievance of the assessee in this regard is, therefore, justified. It is accepted. The orders of the ld. CIT(A) on this issue are reversed. - Decided in favour of assessee. Disallowance of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Traders is engaged in the business of fruits, whereas M/s. Dharampal Sandeep Kumar is into the business of vegetables on wholesale trading/commission basis. M/s. Laxmi Fruit Traders comprises of the assessee, his brother Sudhir Gupta and their father Sh. Dharampal Gupta, whereas in M/s. Dharampal Sandeep Kumar, the assessee, his brother Sh. Sudhir Gupta are the partners. The profit was claimed exempt u/s 10(2A) of the I.T. Act. 4. The AO asked the assessee to furnish the details of bank accounts held by him. As per the assessee s S.B. a/c with ICICI Bank, Jammu, there were deposits in cash. The assessee s balance-sheet showed for the AY 2008-09 on the liability side ₹ 5,63,888/- on account of sundry creditors. The assessee could no ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n the course of his business. The assessee did not produce any bills of purchase, bills/advice note of sale, advice notes/any memo of his goods sold by his consignees, or the names and addresses of his suppliers. The assessee was asked as to when the said books were prepared and as to what the basic documents were, on the basis of which, the computerized books had been prepared. The assessee stated that the books had been written during the current year, on the basis of bank statement and information available with him. The AO asked him as to why the books of account may not be rejected, since they had admittedly not been maintained in the regular course of business and they were not supported by any bills/vouchers. The assessee stated that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ded that the ld. CIT(A) has erred in confirming the addition wrongly made by the AO; that while doing so, the ld. CIT(A) has failed to appreciate that whereas the AO had accepted the amounts appearing on the assets side of the balance sheet and the secured loan taken against car, as shown on the liabilities side of the balance sheet, he had not accepted the sundry creditors shown by the assessee; and that the ld. CIT(A) has erred in not considering that after rejecting the books of account, the AO ought to have worked out the profits, rather than illegally adding the sundry creditors, as was done. 9. On the other hand, the ld. DR has placed reliance on the impugned order. 10. With regard to this issue, it is seen that the ld. CIT(A) h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... valid, the one and only course left available to the AO after rejecting the books of the assessee was to proceed u/s 144 of the Income Tax Act and to make best judgment assessment. Per contra, he made addition of sundry creditors, holding that the assessee had not been able to substantiate the existence of the sundry creditors as claimed and thus, they could not be accepted. The ld. CIT(A) was incorrect in sustaining this addition made against the law by the AO. 13. Thus, looked at from any angle, the ld. CIT(A) has fallen into error in sustaining the unsustainable addition made by the AO. The grievance of the assessee in this regard is, therefore, justified. It is accepted. The orders of the ld. CIT(A) on this issue are reversed. 14. ..... X X X X Extracts X X X X X X X X Extracts X X X X
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