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2018 (10) TMI 729

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 explained by those parties in the statement given on oath before the ld AO. The fact of these creditors rendering services to the assessee is not denied or disputed by those parties or by the reven .....

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ce 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 under:- a) Transportation charges including detention charges - Pasupati Roadways Corporation 14,20,200/- b) Manoj Tiwari (Container Survey & Repairing charges) 2,96,800/- c) Saroj Tiwari (Cartoons .....

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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 131 of the Act, Md. Ismail and Md. Israil appeared on 3.3.2016 before the ld AO , but Md. Islam did not appear. They were asked to appear with supporting documents and books of accounts which were not pr .....

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l 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 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 mor .....

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d 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/- Interest on Loan - ₹ 2,53,018/- ₹ 12,83,327/- This interest income of ₹ 12,83,327/- was offered by the assessee as business income , which was sought to be shifted to be offered under the hea .....

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