TMI Blog2019 (4) TMI 760X X X X Extracts X X X X X X X X Extracts X X X X ..... Since the assessee failed to furnish any primary evidence with regard to the identity, genuineness and the existence of the said creditor, we uphold the order of the CIT(A). Accordingly, the appeals of the revenue as well as of the assessee on this issue are dismissed. Addition of un-reconciled balances in the accounts of four sundry creditors - HELD THAT:- There were differences in outstanding balance of the creditors accounts vis-à-vis the assessee. The assessee has furnished the reconciliation and the CIT(A) has verified the accounts and satisfied with regard to the correctness of the balances. Since the CIT(A) has satisfied with regard to the correctness of the out standings and the differences were duly reconciled, we do not see any reason to interfere with the order of the CIT(A) and the same is upheld. Accordingly, Ground of the Revenue are dismissed. Addition on account of credit balance in the name of Rajkumar Impex Pvt. Ltd - HELD THAT:- Having accepted the purchases and the payments were made through cheques, there is no reason to suspect the purchases. The AO without reconciling the account, made the addition. Further in case of trade creditors, if there is a bog ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... short) on total income of ₹ 25,01,160/-. The Assessing Officer (AO) made the following additions to the returned income: Total income returned by the assessee Rs.3,55,220 Add : Addition towards excess credit balance as discussed in para 3(i) 3(ii) above Rs.5,07,249 Add : Addition towards unexplained credit balance as discussed in paras 4(i) 4(ii) above Rs.4,34,129 Add : Addition towards unexplained credit balance as discussed in paras 5(i) to 5(iv) above Rs.3,93,218 Add : Addition towards unexplained credit balance as discussed in para 5(v) above Rs.1,97,693 Add : Addition towards unexplained sundry credit balance as discussed in paras 6(i) to 6(iv) above Rs.1,28,000 Add : Addition towards disallowance of sec.40(a)(ia) as discussed in paras 7(i) 7(ii) above Rs.3,85,650 Add : Addition towards unexplained cash deposit as discussed in paras 8(i) to 8(ii) Rs.1,00,000 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... #8377; 4,34,129/-. The AO found that the assessee has shown the credit balance of ₹ 4,34,129/- in his books of accounts against the Nil balance shown by the creditors in their books of accounts. The assessee did not reconcile the difference, therefore, the AO made the addition of ₹ 4,34,129/- as unexplained credit for the A.Y. 2011-12. 10. On appeal, before the CIT(A) also the assessee could not reconcile the balance or submit the evidence to support the outstanding balance as genuine. Therefore, the Ld.CIT(A) confirmed the addition made by the AO and dismissed the appeal of the assessee. Hence, the assessee is in appeal before this Tribunal. 11. We have heard both the parties and perused the material placed on record. There was an outstanding credit balance in the name of M/s Noble Cashew Industries as on 31.03.2011 in the books of the assessee. On verification of the books of accounts of the creditor, it is found that there was no balance outstanding against the assessee, which indicates that the credit balance shown in the books of the assessee is bogus. During the appeal hearing, the Ld.AR could not place any evidence to prove the genuineness of the outstandin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ee went on appeal before the CIT(A) and the Ld.CIT(A) partly allowed the appeal of the assessee. Hence, both the revenue and the assessee have filed cross appeals and the assessee has filed cross objections against the appeal of the revenue. 16. Ground Nos. 1, 9 and 10 of revenue s appeal are general in nature which does not require specific adjudication. 17. Ground No. 2 to 4 are related to the deletion of addition to the extent of ₹ 58,09,081/-. During the assessment proceedings, the AO conducted the enquiries by issuing the notice u/s 133(6) of the Act to ascertain the genuineness of the outstanding balances relating to sundry creditors as per the address given by the assessee and found that the letters issued to the creditors were returned unserved for various reasons as mentions against the remarks of the respective creditor. Therefore, the AO made the addition u/s 68 of the Act treating the same as unexplained loans as under: Sl.No. Name of the sundry creditor Closing Balance as on 31.03.2012 Postal Remarks 1. M/s Lakshmi Traders Rs.1,55,000 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e amount since the assessee failed to furnish any evidence to prove the genuineness of the outstanding creditors. 19. Against the order of the Ld.CIT(A), the revenue filed appeal before this Tribunal and the assessee has filed cross appeal for the balance amount. 20. We have heard both the parties and perused the material placed on record. In the instant case, the credits are related to the trade transactions but not cash credits. The crux of the issue is the genuineness of purchases and if the purchases are bogus the AO required to disallow the expenditure. The AO has accepted the purchase and sales. Having accepted the purchases, the AO cannot make the addition of outstanding credit balance, since, the addition required to be made disallowing the relevant purchases which are bogus or paid outside the books of accounts. In the instant case, the CIT(A) has verified the ledger extracts and observed that out of 9 accounts 5 accounts are continuous running accounts, wherein the supplies were made in the subsequent years also and the payments were made by cheques. The AO did not gather any evidence to prove that the outstanding credits are bogus or purchases from the above partie ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l Difference Rs.13,36,703 21.1. The assessee was asked to reconcile the difference and the assessee did not reconcile the difference, therefore, the AO made the addition of ₹ 13,36,703/- to the returned income u/s 68 of the Act. 22. On appeal before the CIT(A), the assessee had reconciled the differences in all the creditors accounts, except Noble Cashew Industries. The Ld.CIT(A) has verified the correctness and after being satisfied, allowed the appeal of the assessee. In the case of Noble Cashew Industries, the Ld.CIT(A) observed that the difference of ₹ 4,34,129/- was related to the A.Y 2011-12 and the said amount was added by the AO in the respective assessment and the Ld.CIT(A) has confirmed the said addition. In respect of remaining 3 creditors, the assessee filed reconciliation which was examined by the Ld.CIT(A) and allowed the appeal of the assessee. For the sake of clarity and convenience, we extract para No.7.3 of the order of the Ld.CIT(A) which reads as under : 7.3.I have carefully considered the submissions of the appellant, the order of the Assessing Officer, and the written submissions of the AR. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and the same is dismissed. 25. In the instant case there were differences in outstanding balance of the creditors accounts vis- -vis the assessee. The assessee has furnished the reconciliation and the Ld.CIT(A) has verified the accounts and satisfied with regard to the correctness of the balances. Since the Ld.CIT(A) has satisfied with regard to the correctness of the out standings and the differences were duly reconciled, we do not see any reason to interfere with the order of the Ld.CIT(A) and the same is upheld. Accordingly, Ground No.5 6 of the Revenue are dismissed. 26. The next ground in Ground Nos. 7 and 8 are related to the addition of ₹ 18,16,336/- on account of credit balance in the name of Rajkumar Impex Pvt. Ltd. The AO found during the assessment that in the case of Rajkumar Impex Private Ltd., Chennai, there was an outstanding balance of ₹ 90,14,029/- as on 31.03.2012 and the balance outstanding as at the end of the year 31.03.2011 was ₹ 71,97,693/- which shows the difference of ₹ 18,18,336/-. The AO understood that the difference between the outstanding balance as on 31.03.2011 and 31.03.2012 represents unexplained cash credits, accor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s reconciled to the extent of RsS,5955/- and he could not reconcile balance amount for ₹ 32,211 and also stated that he has no objection for making addition of ₹ 32,211/- for the AV 2013-14 . Against the order of the Ld.CIT(A), the revenue is in appeal before us. 28. We have heard both the parties and perused the material placed on record. In this case, it is observed from the assessment order that the outstanding balance as on 31.03.2011 was ₹ 71,97,693/- which is opening balance for the year under consideration and the closing balance as on 31.03.2012 was ₹ 90,14,029/-. The difference between the balance as on 01.04.2011 and 31.03.2012 was understood as unexplained cash credits by the AO and made the addition u/s 68 of the Act. At the outset, the AO is not correct in invoking the provisions of section 68 of the Act with regard to outstanding trade creditors balances since there is no introduction of cash in the books of accounts. Invoking of section 68 is in the circumstances of introduction of fresh credits in the books of accounts, but not with regard to purchase and sales. In the instant case, the AO completed the assessment for the A.Y.2013-14. ..... X X X X Extracts X X X X X X X X Extracts X X X X
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