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TMI Blog2020 (6) TMI 694X X X X Extracts X X X X X X X X Extracts X X X X ..... . 4. That the CIT (A) erred on facts and in law in confirming the addition by AO of Rs. 2,39,210/- on account of advertisement expense and Rs. 3,06,885/- on account of other expenses. 5. That the CIT(A) erred on facts and in law in confirming the action of the assessing officer in this regard without considering the 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 Rs. 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 Rs. 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 Rs. 42,05,216/- ou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is explained by the assessee. Assessee was asked to produce the above three persons. In response only Sh. Ranbir Singh father of the assessee attended and his statement was recorded Placed on record) and he produced copy of his 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 Rs. 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 pe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... led with Ld. AO and it has been submitted before AO that part, of addition was on account of gift from Mr. Sushi! Kumar, asses see's husband amounting Rs. 2,50,000/-, Sh Telu Ram, Assessee's Father-In-Law amounting Rs. 12,50,000/- and Sh. Rajbir Singh, assessee's Father amounting Rs. 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 Rs. 12,50,000/- for supporting the business vide Rs, 3,00,000/- from bank and Rs. 9,50,000/- in cash. Sh. Telu Ram repeatedly told to Id. AO that the total family expenses as on date are aprox. Rs. 5,00,000/- per annum and expenses in the captioned year were aprox. Rs. 2,50,000/- but despite being told to concerned Inspector, who drafted the statement, he mentioned the expense ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ive 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 Rs. 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 Rs. 3 lacs were withdrawn and the remaining amount of Rs. 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 Rs. 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 Rs. 3 lacs stands explained whereas there is no evide ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 07,00,000/- Total Rs. 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 Rs. 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 Rs. 1,07,00,000/- on account of liabilities stands unexplained. 5. As per Balance Sheet assessee has raised loam through banks of Rs. 1,07,00,000/- and but though asked during asstt. Proceedings assessee did not even explained account No. and the name of the banks and persons from whom loan were taken. During remand proceedings bank statement from Punjab National Bank and Andhra Bank was called for which revealed that during the year assessee was having CC account No ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... /s Anil Dahiya HUF 303 dt. 25.04.2016 2,00,000 - 14. M/s Ambika Garments 302 dt. 25.04.2016 5,00,000 - Received unserved as unclaimed 15. M/s Singla Collection 301 dt. 25.04.2016 1,20,000 NIL 16. M/S Sahid Kid Point 300 dt. 25.04.2016 1,50,000 Received unserved as no such Firm. 17. M/S Rama Store 299 dt. 25.04.2016 5,00,000 - 18. M/S New Style Apparels Prop. Ram Kumar Duhan 298 dt. 25.04.2016 5,00,000 5,00,000 19. M/S Malik & Sons 297 dt. 25.04.2016 5,00,000 5,00,000 20. M/S Vidhi Fashion 296 dt. 25.04.2016 5,00,000 5,00,000 21. Sh. Dayanand Khatri 295 dt. 25.04.2016 1,50,000 Received unserved as Expired 22. 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l Rs. 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 Rs. 74,34,788/- and to Andhra Bank Rs. 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 been submitted with your honour vide our letter dated 19.10.2015 for your kind perusal). Ld. AO had called for the confirmations from various parlies who had given security deposits to the appellant. In response to notice form Ld. AO, various parties have confirmed the balance to the tune of Rs. 51,00,000/- (Rs. Fifty One Lac only). The said fad has been confirmed by Ld. AO in his ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es and further some of the parties confirmed certain balances despite the fact that no notice under section 133(6) of Income Tax Act was issued to such persons. 1 am in agreement with the Assessing Officer that these confirmations do not inspire confidence, particularly in view of the fact that the appellant has not discharged initial onus of producing these creditors before the Assessing Officer. There is no documentary evidence which would prove that the amounts so stated to have been received as 'Security deposits' were either through the banking channel or from the credible source. The Assessing Officer had doubts in his mind about the genuineness of these creditors and therefore provided an opportunity to the appellant to substantiate her claim by producing the respective creditors. The process of confirmation by post was initiated only to facilitate the appellant but even this exercise has resulted in confirmation of credits in respect of the aforesaid four persons. Each credit appearing in the Books of Account has to be substantiated by the appellant with the help of cogent and convincing evidence. In the present case, despite number of opportunities given to the appellant t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g Officer, the inputs of which is duly considered while adjudicating the issue. We have gone through the entire order in detail and find that the ld. CIT (A) has rightly given remission of Rs. 35,00,000/- and confirmed the amount of Rs. 72,00,000/-. For the sake of ready reference, the order of the ld. CIT (A) is reproduced as under: (page no. 18 para 8 to page no. 22 para 8.6) "8. Addition of Rs. 67,07,216/- on account of sundry creditors: the Assessing Officer has made the above-mentioned addition during the course of assessment proceedings when appellant failed to file confirmation of balances from sundry creditors as appearing in the balance sheet. 8.1 In the appeal proceedings, the appellant has given additional evidence explaining the following sundry creditors: 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 Confirmation from another party namely Shree Ram Textil ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... entertained. On 11.12.2015 again letter was sent to the assessee for submission of documentary evidences in support of his claim for 18.12.2015, failing which report will be submitted on the material/facts available on record. 8.3 Response of the appellant: All the above 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 Rs. 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 Rs. 3,80,826/-, M/s Santosh Fine Fab Ltd. Rs. 7,18,428/- and M/s. Ahmadabad Cotton Mfg Co. Rs. 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 Rs. 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 Rs. 8,15,818/- is concerned, they have refused to cooperate until th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 Rs. 67,07,216/- on account of sundry creditors, the appellant gets a relief of Rs. 12,55,724 and the balance amount of Rs. 54,51,492/- is confirmed. The ground of appeal is Partly Allowed. Commission Amount: 18. The Assessing Officer made addition of commission paid owing to the absence of details of the persons to whom the commission has been paid. The assessee could not even provide details whether any TDS has been deducted on this amount or not. The total disallowance made by the Assessing Officer was Rs. 55,69,337/- on account ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 Rs. 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 Rs. 1,07,00,000/- on account of liabilities stands unexplained. 5. As per Balance Sheet assessee has raised loans through banks of Rs. 1,07,00,000/- and. But though asked during asstt. Proceedings assessee did not even explained account No. and the name of the banks and persons from whom loan were taken. During remand proceedings bank statement from Punjab National Bank and Andhra Bank was called for which revealed that during the year assessee was having CC account No. 1710008700001131 with PNB with liability of R ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of payment of commission but merely stated that a part of it constitute minimum guarantee paid (Rs. 39,68,337) and reimbursement of expenses (Rs. 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 appellant. In absence of such details the veracity of expense cannot be verified by the AO. 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 enquiry can be conducted until and unless furthe ..... X X X X Extracts X X X X X X X X Extracts X X X X
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