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2019 (11) TMI 405

..... mediately 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 the Audit report itself. The assessee has filed the copy of their ITRs as well as copy of their bank accounts. Confirmations of all these creditors have also been filed. Therefore, we are of the opinion that the Ld. CIT (A) did not commit any error in deleting this addition. Accordingly, we decline to interfere with the relief granted by the Ld. CIT (A) in this issue. This ground of the revenue is dismissed. Addition on account of sundry creditors - HELD THAT:- 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 mad .....

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..... e findings of the Ld. CIT (A) on the issue. Appeal of the revenue stands partly allowed for statistical purposes. - ITA No. 556/Del/2017 (Asstt. Year: 2013-14) - 18-10-2019 - SHRI SUDHANSHU SRIVASTAVA, JUDICIAL MEMBER AND SHRI O.P. KANT, ACCOUNTANT MEMBER Assessee by: Shri I.P. Bansal, Advocate And Shri Vivek Bansal, Advocate Department by: Shri G. Johnson, Sr. DR ORDER PER SUDHANSHU SRIVASTAVA, JM: This appeal is preferred by the Department against the order dated 25.11.2016 passed by the Ld. Commissioner of Income Tax (Appeals) - 27, New Delhi {CIT (A)} and pertains to assessment year 2013-14. 2.0 The brief facts of the case are that the return of income was filed declaring income of ₹ 59,40,208/-. The case was selected for scrutiny and the assessment 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 o .....

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..... roduce the complete details of unsecured loans, confirmation/s of the parties along with their addresses, copy of ITRs, statement of affairs and bank statements, etc to prove the identity, genuineness and creditworthiness of the persons giving these unsecured loans but the assessee had failed to produce such evidence. It was submitted that the AO was right in making the additions and Ld. CIT (A) has, without appreciating the facts on record, wrongly deleted the same. 3.1 With respect to ground no. 2 pertaining to sundry creditors, the Ld. Sr. DR submitted that the assessee had not submitted the required information in 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 .....

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..... ee did not file the requisite evidences and that this finding of the AO is contrary to the facts available on record. It was submitted that copy of the reply dated 23-12-2015 filed before the AO is placed at pages 49 to 70 of the paper-book wherein at serial No. 11 (page 51) the assessee had submitted the confirmations of loans from all the parties. It was submitted that after filing the confirmations vide letter dated 23-12-2015, the assessee, along with letter dated 22-01-2016 (filed on 25-01- 2016), also filed copy of ITRs and bank accounts of all the fresh loans and reference in this regard was made to the evidence/s filed at pages 122 to 133. Thus, it was submitted that is incorrect to say that assessee did not file documentary evidence/s to substantiate the genuineness of the fresh credit. It was submitted that the Ld. CIT (A), after taking in to consideration all these evidences, which were ignored by the AO, has rightly concluded that the addition made in respect of unsecured loans was uncalled for. 4.0.4 It was further submitted that as far as the opening balances are concerned, the same cannot be added in view of the judgment of Hon ble Delhi High Court in the case of CIT .....

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..... ccount of purchases from the relevant creditors and where the trading results have not been disturbed, the Tribunal had rightly deleted the addition in respect of amount outstanding on account of unpaid price of purchases. 4.1.4 Reference was also made to the judgment of the Hon ble Punjab & Haryana High Court in the case of Pr. CIT vs. Kulwinder Singh [2018] 99 taxmann.com 449 (Punjab & Haryana) wherein it has been held that section 68 was not attracted on the amount which represented purchases made on credits. 4.1.5 Reliance was also placed on the judgment in the case of CIT vs. Pancham Dass Jain [2006] 156 Taxman 507 (Allahabad) to contend that in a case where the assessee was maintaining regular books of account and accounts were accepted by the AO, in that case amount shown as outstanding in respect of purchases cannot be added. Thus, it was submitted by Ld. AR that addition has rightly been deleted by Ld. CIT (A). 4.2.0 With respect to Ground No. 3, the Ld. AR placed reliance on the findings of the Ld. CIT (A). 5.0 We have heard the rival submissions and have also perused the records. We now take up the grounds one by one for adjudication. 5.1.1 As far as the addition .....

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..... of their bank accounts. Confirmations of all these creditors have also been filed. Therefore, we are of the opinion that the Ld. CIT (A) did not commit any error in deleting this addition. Accordingly, we decline to interfere with the relief granted by the Ld. CIT (A) in this issue. This ground of the revenue is dismissed. 5.2.0 Coming to the second issue, i.e. addition on account of sundry creditors, it is seen that the assessee had submitted the confirmations of sundry creditors to the extent of ₹ 1,96,52,805.72 before the AO vide letter dated 22-01-2016 received in the office of AO on 25-01-2016. This fact is evident from page 73 of the paper book wherein the assessee has submitted the list of confirmations filed with the letter submitted on 25-01-2016 and confirmations are filed at pages 74 to 121 of the paper-book. Therefore, before the conclusion of the assessment, the relevant evidences in respect of a sum of ₹ 1,96,52,805.72 was filed before the AO. We have also gone through these confirmations submitted by the assessee and found that the amount outstanding is on account of opening balance and purchases made during the year. 5.2.1 It is further seen that another .....

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..... ₹ 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 verification it is found by the AO that the outstanding balance in the name of these creditors is comprising either of opening balance or of purchases made during the year or is on account of both the opening balance and purchases made during the year under consideration then no addition should be made on this account. Needless to say, the assessee will furnish before the AO the copy of list of sundry creditors placed at page 139 of the paper book and also the copies of confirmations placed at pages 140 to 173 filed along with the list to enable him to make verification as directed above. With these directions the addition to the extent of ₹ 1,62,12,538.37 is restored to the file of AO and balance addition is deleted. This ground of the revenue is partly allowed for statistical purposes. 5.3.0 Coming to the third issue being agitated by the Department, it i .....

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