Tax Management India.Com

Home Page

Home List
← Previous Next →

2018 (10) TMI 729

Additions towards outstanding liabilities - treating the liabilities as bogus - one party did not appear against notice issued u/s 131 - however written statement was submitted before AO - Held that:- Creditors had only stated before the ld AO that they are all small time labourers and workers and do not have that much income left with them. We find that they had deposed correctly that in as much as their income component in the entire services rendered to the assessee would be miniscule but the total transactions carried out through them for and on behalf of the assessee would be more. The assessee had engaged them for rendering of specific services . The assessee cannot be expected to know how those parties render the services i.e either on their own or through outsourced agencies. For the services rendered by those creditors, the assessee would make total payments to them. - Those parties in turn would pay the respective dues to the outsourced agencies such as truck owners and lorry drivers. By this process, the amounts that would be left with those creditors would only be commission income which would be miniscule. - The entire modus operandi of these transactions were exp .....

X X X X X X X

Full Text of the Document

X X X X X X X

ursement of expenses like customs duty, charges to shipping companies, transportation charges etc and that only the service charges component included in the total bill would be its income. In the Balance sheet, the assessee had shown liability for expenses of ₹ 4,16,53,151/- for which details were sought by the ld AO. The ld AO observed that the assessee submitted evidence of outstanding balance of ₹ 2,90,445/- only which was payable to HDF against car loan. Apart from this, it submitted details of job expenses payable for the period 2012-13 amounting to ₹ 46,06,609/- and job charges payable for the period 2011-12 amounting to ₹ 45,79,443/-. He observed that no details were provided for the remaining outstanding liability of ₹ 3,21,76,654/- shown under the head liability for expenses . 2.2. The ld AO observed that the details of liability towards job expenses as on 31.3.2013 shown by the assessee is as under:- Opening Balance as on 1.4.2012 - ₹ 3,70,46,541.58 Add: Payable for the year - ₹ 46,06,609.62 Closing Balance as on 31.3.2013 - ₹ 4,16,53,151.20 The break up of job charges payable for the year were furnished by the assessee as .....

X X X X X X X

Full Text of the Document

X X X X X X X

; that they take the money from the assessee as and when they get the order for trucks ; that the same money is advanced to the truck owners ; that they don t remember exactly what was the outstanding amount lying with them as on 31.3.2013 ; that they could not produce any evidence of any outstanding amount lying with the assessee ; that they were working jointly under the name of Pasupati Roadways Corporation which had transactions with the assessee and that they do not have any outstanding balance in their individual capacity with the assessee as on 31.3.2013 . Having said this, they further deposed that they might have some small amount outstanding due from the assessee which they don t remember and they don t have any proof for it. They further deposed before the ld AO regarding the reply sent by Pasupati Roadways Corporation directly that they don t have any idea about income tax and hence on receipt of the said notice , they had given it to Tushar Pandit, the partner of M/s Kunal Exim ( i.e the assessee herein) who in turn handed over to his advocate for preparation of the reply and that they had signed on the dotted lines in good faith. 2.5. In response to the summons u/s 1 .....

X X X X X X X

Full Text of the Document

X X X X X X X

ot appear before the ld AO in response to summons u/s 131 of the Act. Accordingly, he confirmed the addition made towards liabilities standing in the names of these parties. Other than these parties, all other creditors appeared and confirmed the transactions and accordingly the balances shown in their names are to be accepted as genuine. No details were submitted in respect of inspection charges of ₹ 7,02,500/- and hence he upheld the addition made thereon. Aggrieved, the assessee is in appeal before us. 2.8. We have heard the rival submissions. At the outset, we find that the expense creditors did not deny having transactions with the assessee. It is not in dispute that those creditors were not having any idea of income tax and accordingly had handed over the 133(6) notice to assessee s partner and had signed on the replies given by the advocate of the assessee. The entire transactions have been confirmed by them before the ld AO by way of deposition in statement on oath. We find that the creditors had only stated before the ld AO that they are all small time labourers and workers and do not have that much income left with them. We find that they had deposed correctly that .....

X X X X X X X

Full Text of the Document

X X X X X X X

reon cannot be disputed. None of those creditors had denied having rendered services to the assessee. In view of the aforesaid observations in the facts and circumstances of the case, we hold that the ld CITA erred in confirming the addition made towards these liabilities in the sums of ₹ 2,96,800/- (Manoj Tiwari) ; ₹ 3,21,610/- (Saroj Tiwari) and ₹ 4,05,000/- (Md. Islam) treating them as bogus liabilities. 2.9. The ld AR at the time of hearing stated that the addition made towards inspection charges of ₹ 7,02,500/- was not pressed by him. The same is reckoned as a statement from the Bar and accordingly the same is treated as dismissed as not pressed. 2.10. Accordingly, the Ground No.2 raised by the assessee is partly allowed. 3. The next issue to be decided in this appeal is as to whether the ld CITA was justified in confirming the action of the ld AO in treating the interest income on fixed deposits as income from other sources in the facts and circumstances of the case. 3.1. The brief facts of this issue are that the assessee derived interest income as under :- Interest from HDFC Realty Fund - ₹ 2,59,071/- Interest on FD - ₹ 7,71,238/- Interes .....

X X X X X X X

Full Text of the Document

X X X X X X X

 

 

← Previous Next →