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2016 (2) TMI 1096 - ITAT AMRITSAR

2016 (2) TMI 1096 - ITAT AMRITSAR - Tmi - Addition on account of sundry creditors - Held that:- AO had erred in on the one hand accepting the trading results of the assessee, and at the same time rejecting his books of account. The ld. CIT(A) went wrong in failing to appreciate that such a course of action is impermissible in law. The books of account need to be either accepted, or rejected in totality. And once the trading results of the assessee were accepted, there remained no scope for the A .....

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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 car expenses - 10% of car expenses incurred by the assessee in .....

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of the years is excessive. The grievance of the assessee in this regard for both the years is rejected. The disallowances of ₹ 36,034/- for AY 2008-09 and ₹ 31,406/- for AY 2009-10, as confirmed by the ld. CIT(A), are upheld. - ITA Nos. 277 And 502(Asr)/2015 & 2014 - Dated:- 26-2-2016 - SH. A.D. JAIN, JUDICIAL MEMBER For The Appellant : Sh. P.N.Arora, Advocate For The Respondent : Sh. K.V.K. Singh, DR ORDER These are the assessee s appeals for the assessment years 2008-09 & 2009- .....

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e 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 c .....

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assessee in his individual capacity, though they admitted having had transactions with M/s. Laxmi Fruit Traders, in which, the assessee was a partner. To this, the assessee stated that he had been looking after the business of the firm himself and making purchases for the firm and for himself from the growers and other parties and had, thus, mixed up the names of the suppliers/customers of the firm and his own business. 5. The assessee produced print-outs of ledger and cash book. The ledger acco .....

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no ledger account of the customers/suppliers. The AO observed that this showed that the books of account produced were not the ones which the assessee prepared in 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 .....

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prescribed limit. The AO observed that this showed that the books produced were not the ones required to be maintained during the regular course of business. It was, as such, that the AO, being dissatisfied with the correctness and completeness of the assessee s books of account, rejected them. 6. Apropos the sundry creditors of the assessee, the AO observed that even though the bank account and copies of cheques obtained from the bank showed some payments made by cheques, the sundry creditors, .....

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creditors as claimed; and that besides, the business admittedly carried on by the assessee had not been reflected in his return of income. In this manner, the AO made addition of ₹ 5,63,888/- to the income of the assessee. A similar addition of ₹ 1,47,062/- was made for the assessment year 2009-09. 7. The ld. CIT(A) confirmed the additions. 8. The ld. counsel for the assessee has contended that the ld. CIT(A) has erred in confirming the addition wrongly made by the AO; that while doi .....

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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) has confirmed the AO s action in rejecting the assessee s books of account and adding the sundry creditors for both the years. The assessee has all though stated that he had not maintained books of account, as his turn- over was of less than the prescribed limit. He had got the books prepared on computer on the basis of his bank account, when he had been .....

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he ld. CIT(A) has erred in not taking into consideration this aspect of the matter. 11. Then, the AO had erred in on the one hand accepting the trading results of the assessee, and at the same time rejecting his books of account. The ld. CIT(A) went wrong in failing to appreciate that such a course of action is impermissible in law. The books of account need to be either accepted, or rejected in totality. And once the trading results of the assessee were accepted, there remained no scope for the .....

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