TMI Blog2019 (11) TMI 405X X X X Extracts X X X X X X X X Extracts X X X X ..... s in respect of the purchases constitute only 7.95% of the purchases made during the year. Thus, it is a case where the genuineness of the sundry creditors cannot be doubted for the simple reason that either the outstanding balance is on account of opening balance or it is on account of purchases made during the year under consideration. Therefore, we hold that to the extent of ₹ 1,96,52,805.72, for which the confirmations were filed before the AO, the addition has been correctly deleted by the Ld. CIT (A) and we decline to interfere with such deletion. The assessee did not furnish confirmations of sundry creditors to the tune of ₹ 1,62,12,538.37 before the AO and to this extent the confirmations were submitted only before the Ld. CIT (A), we are of the opinion that it would be just and proper to restore this remaining addition to the extent of ₹ 1.62,12,538.37 to the file of AO with the direction that from the purchase bills to be submitted by the assessee it is to be verified that the amount outstanding is only on account of purchases and also to verify from the accounts of the assessee that the opening balance is the brought forward balance. If from such ver ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssment was completed u/s 143(3) of the Income Tax Act, 1961 (hereinafter called the Act ) at an income of ₹ 6,39,57,704/- after making addition of ₹ 2,21,25,000/- on account of non-submission of confirmation/s of unsecured loans, addition of ₹ 3,54,63,946/- on account of non-submission of confirmations of sundry creditors and addition of ₹ 4,28,550/- on account of disallowance of bank commission and interest on investment in Canara HSBC Life Insurance and on FDRs. 2.1 Aggrieved, the assessee had approached the Ld. First Appellate Authority who deleted all the three additions. Now, the department is before the Tribunal challenging the deletions by the Ld. CIT (A) and has raised the following grounds of appeal: 1. On the facts and in the circumstances of the case, the Ld. CIT(A) has erred in deleting the addition of ₹ 2,21,25,000/- on account of unsecured loans u/s 68 of the Act without appreciating the facts that the assessee has failed to prove the identity, genuineness and creditworthiness of the transaction during the course of assessment proceedings. Therefore, the Ld. CIT (A) is not justified in deleting the additi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n respect of sundry creditors, and therefore, the addition was rightly made by the AO and Ld. CIT (A) has wrongly deleted the same. 3.2 With respect to ground no. 3 pertaining to interest, the Ld. Sr. DR placed extensive reliance on the observations and findings of the AO. 4.0.0 In response, with respect to ground no. 1, the Ld. Authorised Representative (AR) submitted that complete details of the unsecured loans were submitted and are also a part of the assessee s paper book at pages 137 and 138 of the paperbook. It was submitted that from the said details it is clear that out of a total sum of ₹ 2,21,25,000/- pertaining to outstanding unsecured loan as on 31-03-2016, the opening balance was to the tune of ₹ 1,16,25,000/- and during the year under consideration the amount received as loan was a sum of ₹ 1,05,00,000/-. Further, our attention was drawn to the copy of audit report for the year under consideration (at pages 22 to 38 of the paper-book and details of unsecured loans received during the year incorporated in column No. 24a at page 24). The Ld. AR drew our attention to the following chart in the audit report and containing ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 00000 NO LALIT AGARWAL SONS(HUF) X-355 LANE NO 8 MOHALLA RAM NAGAR GANDHI NAGAR DELHI-31 AAAHL0880K 2500000 NO 2500000 NO 4.0.1 The Ld. AR sub mitted that as can be seen from the audit report that not only the name of the persons from whom these deposits have been received is given but also their complete addresses as well as PAN has also been given and it is mentioned that all these payments have been received through the banking channels. 4.0.2 It was further submitted that assessment for Assessment Year (AY) 2012-13 i.e., the immediately preceding A.Y. was also framed u/s 143(3) of the Act (copy of assessment order placed at page 134 of the Paper Book) wherein the assessment has been framed on the returned income. 4.0.3 It was further submitted that it is incorrect to say that the assessee did not file the requisite evidences and that this finding of the AO is cont ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... have been filed from pages 74 to 121 of the paper-book, it was submitted by the Ld. AR that in respect of each and every creditor, the confirmation was filed and it was submitted that from the confirmed copies of account it can be seen that the outstanding amount was only on account of purchases made from these parties. The Ld. AR submitted that these confirmations were filed before the AO vide letter dated 22-01- 2016 and are also available at pages 71 to 133 of the paper-book. 4.1.2 It was submitted that in view of the confirmations filed and also all the vouchers pertaining purchases etc. having been submitted before the AO, it will be incorrect to say that assessee did not submit the evidence/s. 4.1.3 It was also submitted that it is not a case where the sundry creditors are outstanding for a long period. It was further submitted that the gross profit rate has been accepted by the AO and books of account have not been rejected. Reference was made to the judgment of the Hon ble Delhi High Court in the case of CIT vs. Ritu Anurag Aggarwal [2010] 2 taxmann.com 134 (Delhi) and it was submitted that in a case where the AO did not make disallowance on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y been filed before the AO on 25-01-2016, the assessee has filed copies of ITRs and bank accounts from where the credits have been received by the assessee (pages 122 to 133 of the paper book). Looking into these evidence/s, it is apparent that all the persons from whom these credits have been received are assessed to tax and the amounts have been received by the assessee through banking channels. Thus, there cannot be any doubt regarding the identity, genuineness and creditworthiness of the transactions. The AO, without making any reference to these evidences has made the addition. The Ld. CIT (A), after the appreciation of evidence has rightly held that in the facts and circumstances of the case the addition of ₹ 2,21,25,000/- could not have been made. 5.1.2 It is also our considered opinion that opening balance could not be added on account of the fact that it has already been accepted in the immediately preceding A.Y. At the same time, the assessee has filed documentary evidence/s to prove the identity and genuineness of the creditors from whom the credits have been received during the year. They all are assessed to tax and PAN details were disclosed in th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Ritu Anurag Aggarwal (supra); the judgment of the Hon ble Punjab Haryana High Court in the case of CIT vs. Kulwinder Singh (supra); and the judgment of the Hon ble Allahabad High Court in the case of CIT vs. Pancham Dass Jain (supra). 5.2.3 It is seen that in the present case, the AO did not disturb the trading results of the assessee and the books of account have not been rejected. The outstanding balances in respect of the purchases constitute only 7.95% of the purchases made during the year. Thus, it is a case where the genuineness of the sundry creditors cannot be doubted for the simple reason that either the outstanding balance is on account of opening balance or it is on account of purchases made during the year under consideration. Therefore, we hold that to the extent of ₹ 1,96,52,805.72, for which the confirmations were filed before the AO, the addition has been correctly deleted by the Ld. CIT (A) and we decline to interfere with such deletion. However, taking into consideration the fact that the assessee did not furnish confirmations of sundry creditors to the tune of ₹ 1,62,12,538.37 before the AO and to this extent the confirmations were s ..... X X X X Extracts X X X X X X X X Extracts X X X X
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