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TMI Blog2019 (12) TMI 1113X X X X Extracts X X X X X X X X Extracts X X X X ..... ming the addition of Rs. 25,04,195/- made by the Assessing Officer on account of bogus sundry creditors. b) For that on the facts and in the circumstances of the case, the ld. CIT(A) erred in directing the Assessing Officer to add brought forward sundry creditors balance amounting to Rs. 41,84,399/- in the A.Y. 2012-13. 3. For that on the facts and in the circumstances of the case, the ld. CIT(A) was not justified in directing the Assessing Officer to initiate proceedings relating to alleged violation of the provision of 269SS. 4. That the appellant craves leave to add, alter or delete all or any of the grounds of appeal. 3. Since the assessee has raised before us cumulative grounds of appeal against the addition of Rs. 1,14,44,050//- on account of various issues. These issues are interlinked and the ld. CIT(A) has adjudicated these combined issues together therefore it is appropriate for us to adjudicate these issues together as these issues are interconnected and interlinked. The decision of the ld. CIT(A) on these interlinked grounds are given below: "In this case, no specific ground of appeal has been raised. The appellant has raised accumulated ground of appeal agains ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d of the lender. The capacity, identity and creditworthiness is explained therefore, the A.O. is not justified to add in the hand of the appellant as unexplained. Hence, the addition deserves to be deleted. On this issue, it is further to point out that the aforesaid transaction has been made in cash though appellant has claimed it as share application money. The finding of the A.O. is that there is no fund lying in the balance sheet as a share application money which has not been controverted by the appellant which strengthen the observation of the A.O. for treating it as a loan. Even in appellate proceeding on commenting over the Remand Report, the appellant has not controverted the observation of the A.O. Therefore, the A.O. is directed to initiate the proceedings of provision of Section 269SS of the I.T. Act, 1961. The ground of appellant is partly allowed. 4.2. Issue No. 2 of the appeal relates to the addition of Rs. 14,19,634/- on account of undisclosed investment. The A.O. found that Rs. 18,59,735/- was paid as stamp duty. The appellant has claimed that at the time of registration, it was required to pay urgently. The submission of the appellant is reproduced as under :- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt has submitted that a) A.O has no jurisdiction to assess or reassess the agricultural income and he can only include agricultural income to determine the tax liability, b) Books of account were produced before A.O. in which agricultural expenses have been shown and while making assessment, he did not reject books of account your petitioner. Ledger a/c of general expenses, Xerox of voucher of expenses and EPF payment receipt for labours included in paper book in pages 1 to 15, (hereinafter referred as PB). c) As per land record the classification of land is Danga/Sahari/Dahala/tea estate. Petitioner herein submits land khatian in the name of vendor and land revenue receipt which are attached in pages 16 to 33 of PB. d) As per circular dated 21/11/1973 issued by Govt, of West Bengal, "DANGA" means "High arable land growing jute or spring crop or vegetable". Circular submitted in page 34 to 37 of PB. e) With other objects of company, there is object of FARMING according to page 8 of Memorandum of Association which object is being purused by the company. Memorandum of association attached in PB being pages 38 to 46. f) It is worthwhile to note that Ld. ITO found the nature of Busin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er, in the hearing dated: 01/03/2016, the A/R gave the complete address and again the notice under section 133(6) was sent to all of them, vide letters dates: 01.03.2016. Since, reply was not received from any of the sundry creditors even after the lapse of reasonable period of time a show cause was issued to the assessee company vide letter dated: 17.03.2016, asking why the sundry creditors amounting of Rs. 66,74,070/- should not be added to the total income as unexplained. In reply the assessee stated: These are not unexplained sundry creditors, we are to state that we gathered from our sundry creditors that they have received your notice u/s 133(6) and some of them has given reply and rest are in process to reply the same." The above reply submitted by the assesse company is not tenable. However, confirmation was received from 10(10) sundry creditors, with the ledger attached of the assessee company except one, namely Sri Premandra Sarkar, in order to judge the authenticity of sundry creditors, summon u/s 131 were issued on 21.03.2016 to all the eleven sundry creditors and processed to be served on them throught the inspector of this office. Out of 11 (Eleven) summons, 6 (Si ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... this ruse to deceive the Department to believe that this amount ofRs. 66,74,070/- brought into the assessee's business is sundry creditors. Hence, the sundry creditors added during the year amounting of Rs. 24,89,671/- is treated as unexplained cash credit u/s 68 of the Income Tax Act and brought forward sundry creditors of Rs. 41,84,399/- is treated as cessation of trading liability under section 41(1) and added back to the assessee's income. The sundry creditors amounting of Rs. 66,74,070/- (2489671 + 4184399) is therefore added to the total income of theassessee. The said addition is made under two heads, i.e., 'brought forward creditorsbalances of Rs. 41,84,399/- treated as cessation of trading liability undersection 41(1)and current creditors of Rs. 24,89,671/- treated as Unexplained Cash Credit under section 68'. Similar report was obtained at remand stage too. During the course of appellate proceedings, the appellant was asked to submit details of purchase parties and to produce the parties along with their proof of trading activity or agricultural activity which can prove that the aforesaid sale were made to the appellant by those creditors. The appellant ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... being sale of agricultural crops, in concerned. We note that in India it is a general phenomenon that workers/Labour working in the Agricultural field are paid in cash, as the workers/labors do not have bank account. In farming activities most of the expenses are incurred in cash and receipts/income by way of selling the agricultural produce, is also in cash. We note that books of accounts were produced before A.O. in which agricultural expenses have been shown and while making assessment, AO did not reject books of account. Ledger account of general expenses, Xerox of voucher of expenses and EPF payment receipt for labours included in paper book in pages 1 to 15. As per land record the classification of land is Danga/Sahari/Dahala/tea estate. Petitioner herein submits land khatian in the name of vendor and land revenue receipt which are attached in pages 16 to 33 of PB. As per circular dated 21/11/1973 issued by Govt, of West Bengal, "DANGA" means "High arable land growing jute or spring crop or vegetable". Circular submitted in page 34 to 37 of PB. With other objects of company, there is object of FARMING according to page 8 of Memorandum of Association which object is being purs ..... X X X X Extracts X X X X X X X X Extracts X X X X
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