TMI Blog2018 (11) TMI 1637X X X X Extracts X X X X X X X X Extracts X X X X ..... he conclusion drawn by CIT(A) that the disallowance of 30% of claimed expenses is suffice to meet the ends of justice as this amount covers all the possible leakage of revenue in consequent to the non availability of the relevant vouchers and other documents for verification by the Revenue authorities. Therefore, we are inclined to hold that the conclusion drawn by the CIT(A) in restricting the disallowance to 30% of total claim is quite correct and justified. Addition on account of alleged sundry creditors proved bogus - CIT(A) issued notices u/s. 133(6) to nine major parties/sundry creditors and all the parties replied to the notice and copies of their replies were verified - HELD THAT:- CIT(A) was right in holding that without any concrete material or evidence showing unexplained or unaccounted income of the assessee introduced in the cover of sundry creditors, the addition made by the AO merely on the basis of suspicion, presumption and assumption cannot be held as sustainable. CIT(A) has called the assessee to submit all the details of transaction with each and every creditor which was submitted by the assessee and reproduced by the ld. first appellate authority in para ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y the Assessee in ITA No.856/RJT/2010, which read as follows: 1. That, the learned CIT(A) has wrongly confirmed the disallowance of ₹ 11,27,363/- out of purchases. 2. That, the finding of the learned CIT(A) is not justified in law as well as fact of the case and required to be deleted. 2. The grounds raised by the Revenue in ITA No.997/RJT/2010, which read as follows: 1. The Ld CIT(A)-II, Rajkot has erred in law and on facts of the case in restricting the addition to ₹ 11,27,363/- as against original addition of ₹ 37,57,877/- made by the AO on account of unaccounted purchases. 2. The Ld CIT(A)-II, Rajkot has erred in law and on facts of the case in deleting the addition of ₹ 1,34,64,877/- made by the Assessing Officer on account of alleged sundry creditors proved bogus. 3. The Ld CIT(A)-II, Rajkot has erred in law and on facts of the case in deleting the addition of ₹ 1,02,29,487/- made by the AO on account of amount deposited in bank account remained unexplained. On the facts of the case, learned CIT(A) ought to have upheld the order of the A.O. It is, therefore, prayed t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 4. Replying to the above, the ld. Departmental Representative (DR) supporting the action of the AO and contenting the ground of the assessee submitted that the assessee has not produce any books of accounts and therefore, any claim made by the assessee remains unexplained. The assessee was also requested to produce any number of persons in support of her claim. The assessee has not produced even a single person in support of her claim therefore, the AO was right in holding that the claim made by the assessee remains unexplained therefore, he was right in making addition/disallowance in this regard. The ld. DR also submitted that the ld. CIT(A) has granted relief to the assessee without any basis and justified reason therefore, impugned order may kindly be set aside by restoring that of the AO. 5. Placing rejoinder to the above, the ld. AR submitted that from the relevant para 3 of the assessment order, it is amply clear that the assessee made a claim relating to expenditure but the AO in the show cause notice considered the wrong aspect of claim and in the show cause notice alleges the claim as purchases by the assessee and ignoring the reply of the assessee dated 15. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... copy of account for labour contractors and various agreements carried out with them. The copy of bank details to prove that the expenses for paid through account payee cheque and bank statements of contractors were also produces similarly in all other expenses account the apple and furnishing copies of bills copy of accounts confirmation letter Contra cartoons and payment details. (ca) To verify further are issued notices to some suppliers calling for various details all the suppliers confirmed in bracket copies and closed the correctness of transactions and also find relevant details the appellant also furnish ID for the details for each and every expenses she also file detailed addresses of suppliers she also allowed on the decision of Vishal infrastructure Ltd. 187 TTJ 484 (Hyd.) there it was held that the you accept the fact of expenditure or out of subcontractors and does the non availability of watches of expenditure incurred by subcontractors with SSC could not be a reason for rejection even in the government offices most of the expenses which were pretty in nature and which involved casual labour would be expected to have been self made watches these authors could ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessee could not be a reason for rejection of claim of the assessee but we are not in agreement with these findings as when the assessee is incurring expenses and paying the same through account payee cheques and what prevented the assessee to file relevant vouchers for verification and in this situation, the possibility of leakage of revenue or inflation of expenses cannot be ruled out. However, we agree that merely because relevant vouchers have not been submitted for verification the books of accounts cannot be rejected only on this ground. At the same time, we also agree to the conclusion drawn by the ld. CIT(A) that the disallowance of 30% of claimed expenses is suffice to meet the ends of justice as this amount covers all the possible leakage of revenue in consequent to the non availability of the relevant vouchers and other documents for verification by the Revenue authorities. Therefore, we are inclined to hold that the conclusion drawn by the ld. CIT(A) in restricting the disallowance to 30% of total claim is quite correct and justified. There is no valid reason to interfere with the said findings recorded by the ld. CIT(A) and thus, we uphold the same. Consequently, so ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... /ground of Revenue. We also placed reliance on the decision of ITAT, Delhi in the case of Shri Vardhman Overseas Ltd. vs. ACIT reported in 24 SOT 393 (Del.) and decision of Hon ble High Court of Madhya Pradesh in the case of CIT vs. Nevendram Ahuja reported in 290 ITR 453 (MP) and also sought strong support from the preposition rendered by ITAT, Ahmedabad in the case of ITO vs. PIC (Gujarat) Ltd. reported in 119 TTJ 410 (Ahd.). 11. On careful consideration of above rival submissions, in the present case, the AO has not brought on record any adverse finding or allegation to show that the impugned depositors/sundry creditors, in fact, did not represent the sale proceeds and represents the unaccounted income of the assessee shown in the balance sheet in the garb of sundry creditors on account of booking or allotment or sales of units/flats. Therefore, the ld. CIT(A) was right in holding that without any concrete material or evidence showing unexplained or unaccounted income of the assessee introduced in the cover of sundry creditors, the addition made by the AO merely on the basis of suspicion, presumption and assumption cannot be held as sustainable. 12. At the sa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eplying to the above, the ld. AR submitted that the AO has made addition on account of deposits to three bank accounts which are mainly received by the assessee on account of booking advances received from various buyers/allottees for the units/flats sold to them in two housing projects of the assessee. The ld. AR further submitted that the assessee has maintained regular books of accounts and these transactions have been property recorded and reflected therein which again get support from the statement of bank account of the assessee. 17. The ld. AR vehemently submitted that the ld. CIT(A) issued detailed notice calling various details which were duly submitted by the assessee about the deposits in the bank account which has been produced in para (cb) at page 18 of the first appellate order supported with the source of deposits in the said three accounts. The ld. AR also submitted that the assessee has explained the source of all deposits along with supporting evidences discharging the primary onus lay on her shoulders. He further submitted that the booking advances have been shown as sales int eh subsequent assessment years and in subsequent TY 2008-09 2010-11 scrutin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . Shantidham House installment Account 3,45,000/- Through cheque ₹ 80,040/- Cash ₹ 87,460/- 8. Int. (Bhaktinagar) 31,320/- 9. M.J. Mehta 4,72,422/- 10. M.J. Mehta (HUF) 2,50,725/- Through cheque ₹ 2,50,000/- 11. P.D. Mehta 90,000/- Through cheque ₹ 90,000/- 12. Pravinchandra Bhogilal Bro. 16,07,507/- Through cheque ₹ 15,00,000/- 13. Shop Deposit 4,90,000/- 14. Shop installment 2,10,000/- 15. O ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s in the earlier part of this order). Further, in the said table, the ld. CIT(A) has also considered and noted the amount of ₹ 1,02,29,487/- which is the impugned amounts deposited to the said three bank accounts of the assessee. These factual findings have not been controverter by the AO or ld. DR during arguments before us. Therefore, these factual findings supports the conclusion arrived by the ld. CIT(A) that the amounts added and assessed as unexplained sundry creditors includes the impugned amount of ₹ 1,02,29,487/- which was deposited to the three bank accounts of the assessee therefore, the same cannot be treated as unexplained bank deposits in absence of any adverse or positive incriminating evidence or material. Thus, we are inclined to hold that the findings recorded by the ld. CIT(A) are quite correct and we are unable to see any valid reason to interfere with the same and hence, we uphold the same. Consequently, ground No.3 of Revenue is also stands dismissed. 20. In the result, both the appeals of the Assessee as well as of the Revenue are dismissed. Order pronounced in the open court on this day of 27th November, 2018 - - TaxTM ..... X X X X Extracts X X X X X X X X Extracts X X X X
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