TMI Blog2017 (12) TMI 120X X X X Extracts X X X X X X X X Extracts X X X X ..... ue and consider the issue afresh on merits. Estimation of income and the additions u/s 41(1) - Held that:- We have set aside the order of the CIT(A) Since the issue with regard to the estimation of income is interlinked with the addition made by the AO u/s 41(1), we are of the considered opinion that the estimation of income also required to be remitted back to the file of the AO and decide the issue afresh on merits after considering the submissions made by the assessee. Accordingly, we remit the entire assessment to the file of the AO for denovo consideration. - I.T.A.No.920/H/2013 And /I.T.A.No.253/Viz/2013 - - - Dated:- 29-11-2017 - SHRI V. DURGA RAO, JUDICIAL MEMBER AND SHRI D.S. SUNDER SINGH, ACCOUNTANT MEMBER For The Appellant : Shri T.S.N.Murthy, DR For The Respondent : Shri C.Subrahmanyam, AR ORDER PER D.S. SUNDER SINGH, Accountant Member: 1. These cross appeals are filed by the Revenue as well as the assessee against the order of the Commissioner of Income-Tax (Appeals), Visakhapatnam vide ITA No.289/09-10/ACIT, C-3(1)/VSP/2012-13 dated 27.03.2013 for the assessment year 2007-08. 2. The Revenue has raised four grounds in the appeal. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bsequent assessment year. The AO did not believe the purchase transactions and on the basis of confirmation letter the difference amount of ₹ 4,44,30,750/- brought to tax u/s 41(1) of the Income Tax Act. 5.1. The assessee had shown outstanding sundry creditors of ₹ 19,64,12,823/- and furnished the confirmation letters in respect of M/s Bhatia International Ltd. for ₹ 12,41,45,172/- and ₹ 46,25,000/- in respect of Tolia Overseas Pvt. Ltd. However, the AO made the addition of ₹ 7,22,67,651/- without furnishing any details or the break up. The AO treated the liability ceased to have been existed for taxing the same u/s 41(1) of I.T.Act. The sum of ₹ 7,22,67,651/- was inclusive of the credit of ₹ 4,44,30,750/- relating to M/s Tolia Overseas Pvt. Ltd. Cited. The AO has taken the balancing figure from the balance sheet and the confirmations furnished by the assessee. 6. Aggrieved by the order of the AO, the assessee went on appeal before the CIT(A) and furnished the details of current liabilities. The CIT(A) held that the addition cannot be made u/s 41(1) of I.T.Act and it is legally untenable. Since the transaction of ₹ 4,44,30,750/- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he AO which was explained before the CIT(A). According to the assessee, the creditors as per the balance sheet was ₹ 20,64,12,823/- but not 19.64,12,853/- and the details of sundry creditors as per the orders of the AO and the Ld.CIT(A) are as under : Assessing officer: Sundry Creditors Rs.19,64,12,823/- (-) Bhatia Intl. Rs.12,41,45,172/- (-) Tolia Overseas Ltd. ₹ 46,25,000/- Addition made u/s 41(1) Rs.7,22,67,650/- As per CIT(A) Rs.20,64,12,823/- Sundry creditors for purchase others (-) Bhatia Intl. Rs.12,41,45,172/- (-) Tolia Overseas Ltd. ₹ 4,90,55,750/- To be explained Rs.3,32,11,900/- Relating to capital goods ₹ 37,61,923/- Relating to current year purchase Rs.1,37,95,308/- Balance for which confirmation no filed ₹ 1,56,54,669/- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... was not disclosed as stock. However the AO did not accept the explanation and made the addition as follows : Sundry Creditors Rs.19,64,12,823/- (-) Bhatia Intl. Rs.12,41,45,172/- (-) Tolia Overseas Ltd. ₹ 46,25,000/- Rs.7,22,67,650/- A sum of ₹ 7,22,67,650/- was added to the total income u/s.41(1) of the I.T.Act During the appellate proceedings, the appellant submitted the positions as follows. Sundry creditors for purchase others Rs.20,64,12,823/- (-) Bhatia Intl. Rs.12,41,45,172/- (-) Tolia Overseas Ltd. ₹ 4,90,55,750/- To be explained Rs.3,32,11,900/- Relating to capital goods ₹ 37,61,923/- Relating to current year purchase Rs.1,37,95,308/- Balance for which confirmation not filed Rs.1,56,54,669/- 9.1. From the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e estimation of income and the additions u/s 41(1). The assessee argued that once the income is estimated no separate addition should be made. The AO has estimated income @2% on gross sales of ₹ 101,23,02,244/- which worked out to ₹ 2,02,46,040/- for non production of books of accounts and the relevant details. The assessee went on appeal before the CIT(A) and the Ld.CIT(A) confirmed the estimation made by the AO. However, before the Ld.CIT(A), the assessee has not objected for estimation of income, but requested for reasonable estimation of income. However the Ld.CIT(A) confirmed the estimation of income. Aggrieved by the order of the AO, the assessee is in appeal before this Tribunal challenging the reasonableness of estimation of income as well as the addition confirmed by the CIT(A) u/s 41(1) relating to sundry creditors. 10.1. In the revenue s appeal, we have set aside the order of the CIT(A) Since the issue with regard to the estimation of income is interlinked with the addition made by the AO u/s 41(1), we are of the considered opinion that the estimation of income also required to be remitted back to the file of the AO and decide the issue afresh on merits af ..... X X X X Extracts X X X X X X X X Extracts X X X X
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