TMI Blog2020 (6) TMI 694X X X X Extracts X X X X X X X X Extracts X X X X ..... , as mentioned above, even though the letters have been responded but the credit balance are different which would mean that the confirmations are not reliable. The appellant gets relief of ₹ 35,00,000/- in respect of the aforementioned four creditors out of the total credit amount of ₹ 1,07,00,000/- and the balance amount of ₹ 72,00,000/- is confirmed. Addition of sundry creditors - HELD THAT:- Appellant failed to discharge initial onus' of proving genuineness of its sundry creditors. Even during enquiry by the AO and this office only three creditors confirmed balance. In consideration of the facts above, out of total addition of rupees ₹ 67,07,216/- on account of sundry creditors, the appellant gets a relief Addition of commission paid owing to the absence of details of the persons to whom the commission has been paid - HELD THAT:- The appellant merely claimed that evidence has been lost in tire but at the same time she could have led secondary evidence by producing such parties and obtaining details from such parties about the payment of the said sum. The initial onus has not been discharged because by merely providing list no fruitful enqui ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he contemporaneous/circumstantial evidence furnished by the appellant and without appreciating that the transactions were supported by proper details/ documents /vouchers. 3. The return of income was filed on 28.09.2011 with an income of ₹ 4,36,460/-. The case was taken up for assessment u/s 143(3) of the Income Tax Act, 1961 and the case was adjourned at the request of the assessee. Later, several opportunities were provided on 15.07.2013, 14.08.2013, 17.09.2013, 28.10.2013, 09.01.2014 and 03.12.2014. Owing to non-submission of any details and compliance, the Assessing Officer completed the proceedings determining the total income at ₹ 3,94,12,151/- on 18.02.2014. 4. The assessee filed appeal before the ld. CIT (A) on 19.03.2014 who has completed the proceedings on 01.02.2017. On account of capital: 5. The ld. CIT (A) confirmed an amount of ₹ 42,05,216/- out of the amount of the addition made by the Assessing Officer of ₹ 49,55,216/-. 6. We have gone through the entire order of the ld. CIT (A) and find that the ld. CIT (A) has accepted and found it correct regarding the amounts received as gifts from husband of ₹ 2,50,000/- and &# ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... salary bank account and stated that he has given cash gift out of his GPF withdrawal and payment received from his office. When asked about the occasion of gift he stated that gift was given for the birthday of his grandsons i.e. children of the assessee. But when asked about the date of birthday. He stated that birthday of the children are in the month of May and July. But the date of withdrawal of amount from his account is in the month of January. Hence no any proof of gift/source of addition of capital of ₹ 45,00,000/- is submitted by the assessee and the same stands unexplained. b) In report-2, dated 17.12.2015 on this issue the Assessing Officer furnished no further comments but reiterated the comments earlier submitted vide report datedm17.12.2015. c) In report-3, dated 27.05.2016 it was reported that the authorized representative of the assessee vide order sheet entries dated 17.04.2016, 11.04.2016, 20.05.2016 23,05,2016 asked to produce persons/creditors for proving genuineness and credit worthiness of the person/creditors, On 24.05.16 the authorized representative produced Sh. Telu Ram S/o Sh. Kulwant Singh who has shown given gift of ₹ 12,50,000 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Telu Ram, Assessee's Father-In-Law amounting ₹ 12,50,000/- and Sh. Rajbir Singh, assessee's Father amounting ₹ 4,50,000/- for which confirmation were submitted with Ld. AO Sh. Rajbir Singh Father of assessee visited the office of Ld. AO and recorded his statement and the same has been taken on record by Ld. AO in remand report dated 15.07.2015. Sh. Telu Ram visited the office of Ld. AO three times on 16.05.2016, 19.05.2016 and 23.05.2016. Despite being not carrying good health (As he is more than 80 years of age) his statement was not been recorded in first two visits. In his statement he has confirmed that he had gifted ₹ 12,50,000/- for supporting the business vide Rs, 3,00,000/- from bank and ₹ 9,50,000/- in cash. Sh. Telu Ram repeatedly told to Id. AO that the total family expenses as on date are aprox. ₹ 5,00,000/- per annum and expenses in the captioned year were aprox. ₹ 2,50,000/- but despite being told to concerned Inspector, who drafted the statement, he mentioned the expenses to the tune of ₹ 5,00.000/- per annum in the statement instead of ₹ 2,50,000/- per annum and despite reminder he refused to ch ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t from such close relative has to be accepted. iii. Gift from Father - in - law: It has been reported by the Assessing Officer that the statement of this person was recorded where he admitted that total earning per annum from the agricultural income is about ₹ 8.00 lakhs only. Even in this income, there is a component of lease rent received which could not be proved in the course of remand proceedings. The total income as claimed above has not be substantiated in the statement. Further, it has been stated that gift to the appellant has been given from two sources, one is out of Bank Account from where ₹ 3 lacs were withdrawn and the remaining amount of ₹ 9.5 lacs has been given from the agricultural income. Even though the Assessing Officer has proposed that nothing could be substantiated but I find that the Assessing Officer did not conduct further enquiries in respect of gift made out of bank balance to the extent of ₹ 3.00 lacs. It has been specifically stated that such an amount has been withdrawn from the bank but the Assessing Officer did not accept the contention without giving any reason. The gift from Father-in-Law to this extent of ₹ 3 l ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ccount of secured unsecured loans: the Assessing Officer has made the abovementioned addition during the course of assessment proceedings when no explanation was filed. 6.1. In the appeal proceedings, the appellant has given additional evidence explaining the source of loans as below: (a) PNB CCA/c ₹ 74,34,788/- (b) Andhra Bank ₹ 28,60,136/- (c) Security Deposit from Dealers ₹ 1,07,00,000/- Total ₹ 2,09,94,924/- 6.2. Remand Reports: The Assessing Officer has examined the additional evidence and contentions of the appellant. After due consideration submitted the following reports: a) In report-1, dated 30.06.2015 the following was reported that: As per Balance Sheet assessee has shown liability of ₹ 1, 07,00,000/- on account of security deposit. During remand proceedings also assessee only submitted copy of agreement with many parties from which it is not clear that the actually the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n 315 dt. 25.04.2016 2,00,000 3. M/S Shree Ram Textiles 314 dt. 25.04.2016 Received - unserved as incomplete address 4. M/S Mehta Garments 313 dt. 25.04.2016 3,00,000 -do- 5. M/S Shree Balaji Co. 311 dt. 25.Q4.2016 2,03,000 Received unserved as no such Firm. 6. M/s She Collection 310 dt. 25.04.2016 3,10,000 - Received unserved as insufficient 7. M/s Indus address. Collection 309 dt. 25.04.2016 3,10,000 - 8. M/S Paul Brothers 308 dt. 25.04.2016 4,00,000 - Received ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2. M/S Sheela Garments 294 dt. 25.04.2016 3,00,000 2,00,000 23. M/S Sharan Enterprises 293 dt. 25.04.2016 1,50,000 5,00,000 24. M/s Arora Bartan Store 292 dt. 25.04.2016 3,00,000 25. M/s Vikaran Fashion 291 dt. 25.04.2016 1,00,000 - Received unserved as not known. 26. M/s Swati Fashion Point 290 dt. 25.04.2016 5,00,000 - Received unserved as no such firm 27. M/S Singhal Brother 289 dt. 25.04.2016 4,00,000 5,00,000 28. M/s Kamal International 288 dt. 25.04.2016 5, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ured and Unsecured Loans are as below: (a) PNB CCA/c ₹ 74,34,788/- (b) Andhra Bank ₹ 28,60,136/- (c) Security Deposit from Dealers ₹ 1,07,00,000/- Total ₹ 2,09,94,924/- Secured Loans During Remand Proceedings, Bank Statements from Punjab National Bank and Andhra Bank was called for by Hon'ble Assessing Officer (here-in-after called AO) which revealed that your appellant was liable to pay to Punjab National Bank ₹ 74,34,788/- and to Andhra Bank ₹ 28,60,136/-. The above fact has been confirmed by Ld. AO in 1st Remand Report dated 15.07.2015. Security Deposits The security deposits from dealers are basically the deposits received by M/s Bru International (Prop. Sunita Rani) from the dealers while entering into agreement for opening the franchisee of Bru Fashion, a Brand of M/s Bru International. During Remand Proceedings, appellant submitted detail list of the persons from whom security deposit has been received (copy had already be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ucted by the assessing officer in remand. Out of the total amount of ₹ 2,09,94,924/-, the AO has accepted the components pertaining to PNB CC A/c ₹ 74,34,788/- and Andhra Bank ₹ 28,60,136/- as explained which leaves behind the component of addition pertaining to Security Deposit from Dealers to the extent of ₹ 1,07,00,000/-, 6.4.1. In the remand proceedings, the Assessing Officer conducted complete enquiries about Security Deposit from Dealers of ₹ 1,07,00,000/- and after such enquiry came to a conclusion that the following deposits have been confirmed: S. No. S. No. of Remand report Name Amount 1 1 M/s Aeri Apparel Inc. 20,00,000/- 2 18 M/s New Style Apparels Prop. Ram Kumar Duhan 5,00,000/- 3 19 M/s Malik Sons 5,00,000/- 4 20 M/s Vidbi Fashion 5,00,000/- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . 18 table para 8.1) S. No. Name of the party Amount 1. M/S Ruchi Enterprises, Mumbai 20,46,050 2. M/S S.R. Enterprises, Ludhiana 10,43,574 3. M/s Gujarat Cotfab, Delhi 3,80,826 4. M/s Goyal Traders, Delhi 8,15,818 5. M/s Nirmal Textiles, Delhi 3,24,204 6. M/s Ahmadabad Cotton Mfg. Co. 1,56,470 7. M/s Santosh Fine Fab Ltd., Delhi 7,18,428 15. The confirmations of the sundry creditors have been accepted by the ld. CIT (A) as additional evidences. Based on the additional evidences filed, enquiries were conducted during the appellate proceedings also by the ld. CIT (A) which could not lead to any substantiation of existence of sundry creditors. Owing to such enquiry, only three creditors have ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . Co. 1,56,470 7. M/s Santosh Fine Fab Ltd., Delhi 7,18,428 Confirmation from another party namely Shree Ram Textile (4,43,161/-) was furnished not before the Assessing Officer but in the appellate proceedings. 8.2 Remand Reports: The Assessing Officer has examined the additional evidence and contentions of the appellant. After due consideration submitted the following reports: a) In report-1, dated 30.06.2015 the following was reported that: During Assessment Proceedings assessee was asked to furnish names and complete address and confirmation of the sundry creditors for ₹ 67,07,216/- but assessee did not furnish any reply. Now assessee submitted confirmation of few parties though assessee was requested to submit complete address of all the parties. Hence copy of account/confirmation was called for from the parties out of which only confirmation from Smt. Neelam of Gujarat Cotton Fab of ₹ 3,80,826/- and Santosh Fine Fab of ₹ 7,18,428/- from Ahmadabad Cotton Mfg. Co. of ₹ 1,56,470/- is received and query letter in respect of balance credito ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... reports were given to the appellant and. finally a written submission was filed on her behalf on wherein the following was submitted: Sundry Creditors The AO has erred on facts and in law while making addition amounting ₹ 67,07,216/- on account of creditors. During Remand Proceedings at the time of 1v Remand Report, confirmation letters were sent to five creditors out of seven and three confirmations had been received by Ld. AO from M/s. Gujrat Cotton Fab ₹ 3,80,826/-, M/s Santosh Fine Fab Ltd. ₹ 7,18,428/- and M/s. Ahmadabad Cotton Mfg Co. ₹ 1,56,470/-. The fact has been stated by Ld. AO in the remand report dated 15.07.2015. As far as M/s. Nirmal Textiles amounting ₹ 3,24,204/- is concerned (hey have confirmed us that they have not received any letter from Sonipat Income tax Office and with regard to M/s. Goel Traders amounting ₹ 8,15,818/- is concerned, they have refused to cooperate until their debts are paid off in full. M/s. S.R. Enterprises another creditor for ₹ 10,43,574/- had already filed the confirmation to Ld. AO which is there on records in the file of AO, However despite being reminded by AR of appellan ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ced before the undersigned. 8.5.1. In the remand proceedings, only the following creditors have confirmed the balances for which relief can be given to the appellant: Sl. No. Name Amount (i) Gujarat Cott. Fab 3,80,826/- (ii) Santosh Fine Fab Ltd. 7,18,428/- (iii) Ahmadabad Cotton Mfg Co. 1,56,470/- 12,55,724/- 8.6. I have given careful consideration to the entire facts of the case and find that the appellant failed to discharge initial onus' of proving genuineness of its sundry creditors. Even during enquiry by the AO and this office only three creditors confirmed balance. In consideration of the facts above, out of total addition of rupees ₹ 67,07,216/- on account of sundry creditors, the appellant gets a relief of ₹ 12,55,724 and the balance amount of ₹ 54,51,492/- is confirmed. The ground of appeal is Partly Allowed. Commission ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt was to be paid by the appellant to registered dealers on monthly basis as reimbursement of expenses. The dealers were entitled to commission as per the terms of agreement. In support of contention copies of some of the Agreements were filed. During Remand Proceedings, a partial list of persons to whom commission had been paid was given to the Assessing Officer. 9.2 Remand Reports: The Assessing Officer has examined the additional evidence and contentions of the appellant. After due consideration submitted the following reports: a) In report-1, dated 30.06.2015 the following was reported that: As per Balance Sheet assessee has shown liability of ₹ 1,07,00,000/- on account of security deposit. During remand proceedings also assessee only submitted copy of agreement with many parties from which it is not clear that the actually the transaction have taken place or not . Though asked specifically assessee has not given any detail/proof/bank account statement etc. in this regard. Hence additional evidence towards addition of ₹ 1,07,00,000/- on account of liabilities stands unexplained. 5. As per Balance Sheet assessee has raised loans through banks of & ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mment in his remand report regarding payment of commission to dealers which shows that the Ld. AO has nothing to comment in this regard. Your honor will appreciate that during the captioned year approx. ₹ 5,25,00,000/- had been paid from various banks for various expenses debited in the Profit and Loss Account. 9.4 I have given careful consideration to the above and find that the appellant has not given any direct evidence of payment of commission but merely stated that a part of it constitute minimum guarantee paid (₹ 39,68,337) and reimbursement of expenses (₹ 39,68,000) as per the agreement entered with the dealers/shop owners/showroom owners. However, as per provisions of Section 37(1) of the I.T, Act the appellant has to prove two elements, in respect of any expense one is that such expense has been incurred and secondly it has been expanded for the purposes of business. In the present case by merely producing dealers agreement /contemplated sum minimum guarantee/reimbursement by its is not enough evidence to establish that the claimed amount has actually been spent. No direct evidence of mode of payment, date of payment etc. has been given by the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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