TMI Blog2017 (1) TMI 1766X X X X Extracts X X X X X X X X Extracts X X X X ..... n under section 69A could be made of unexplained income which is not recorded in the books of account and source of the same have not been explained. The facts noted above clearly show it was a credit purchase which according to submission of the assessee was rejected because it was of poor quality. Any how, when credit purchase is entered into books of account of M/s Heera Moti Spices Product and no payment have made by assessee and no further inquiry have been conducted from this party whether any payment have been made by assessee, the transaction remained of credit purchase which is also clear from the ledger account of the seller party as well as entry in the books of account of the assessee. In the absence of any payment proved by the Assessing Officer, it cannot be considered to be a case of unexplained money generated by the assessee. The assessee further explained before the ld. CIT(Appeals) that during the search, trading account was drawn up and closing stock was worked out in which no discrepancy was found by the search party as well and no adverse inference was drawn. These submissions of the assessee have no been rebutted by the authorities below therefore, no additio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... was compared with the trading account drawn as on the date of search but no discrepancy had been found. Thee submissions of the assessee have also not been rebutted by the authorities below. Therefore, considering the above discussion and the totality of facts and circumstances, we are of the view addition is unjustified by enhancing GP rate by 2.5%. The orders of authorities below are, accordingly, set aside the addition is deleted on account of applying enhanced GP of 2.5%. This ground of appeal of the assessee is allowed. GP Addition - seized papers contain the details of amount jama and amount naam - HELD THAT:- As against first seized paper, amount of ₹ 5 lacs have been shown as Jama and against naam payable amount of ₹ 20,12,955/- has been shown. The interest is also noted in the second seized paper. As against amount jama in second paper, amount of ₹ 10 lacs have been shown and the amount of ₹ 19,31,819/- have been shown as amount naam i.e. payable and interest. Since no amount is paid by the assessee, therefore, payable amount could not be added against the assessee. Further, there is no evidence found of any interest paid by the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... see to file confirmations from the sundry creditors and to furnish confirmed ledger accounts. The Assessing Officer noted that assessee has introduced fresh creditors amounting to ₹ 4,24,408/- during the year. In the absence of confirmation and copy of the ledger account, addition was accordingly made. The ld. CIT(Appeals) decided several appeals of the assessee through common order and noted in the impugned order that this ground is same as in assessment year 2003-04. It is, therefore, necessary to take into consideration the findings of ld. CIT(Appeals) in assessment year 2003-04. The ld. CIT(Appeals) noted that addition on account of sundry creditors amounting to ₹ 25,21,860/- was made in assessment year 2003-04. The assessee did not file confirmations. It has been submitted by the assessee that sundry creditors as per balance sheet dated 31.03.2003 was to the tune of ₹ 25,21,860/-. 4(i) It was further explained that assessee who is engaged in manufacturing and trading, would have sundry creditors and debtors in the normal course of business. Regarding non filing of the confirmations before Assessing Officer, it was pleaded that time available was very short fo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cash credit additions are in order and accordingly, same was confirmed. The ld. counsel for the assessee submitted that the similar issue was considered by ITAT Chandigarh Bench in the group cases of the assessee namely M/s Heera Moti Agro Industries Vs DCIT etc. in ITA 739/CHD/2013 for assessment year 2007-08 and the order have been passed on 20.09.2016. The findings in para 5 to 9 (ii) of the order are reproduced as under : 5. On ground Nos. 3 to 6, assessee challenged the addition of ₹ 5,92,647/- in respect of sundry creditors/trade creditors. In this case search seizure operation was carried out and assessment under section 153A/143(3) of the Act was framed. The Assessing Officer asked the assessee to file confirmations from the sundry creditors and to furnish confirmed ledger accounts. The Assessing Officer noted that assessee has introduced fresh creditors amounting to ₹ 5,92,647/- during the year. In the absence of confirmation and copy of the ledger account, addition was accordingly made. The ld. CIT(Appeals) decided several appeals of the assessee through common order and noted in the impugned order that this ground is covered in assessment year 2003- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... found that entire amount of sundry creditors outstanding as on 31.03.2003 pertaining to assessment year 2003 04 of ₹ 55,05,290/- had been added back. The ld. CIT(Appeals) noted that to his mind, such addition is not tenable. Trading result for assessment year 2003-04 has, otherwise been accepted by Assessing Officer so it defines logic to add back the entire balance in the account. It was also noted that many of the parties are having running account from prior to 01.04.2002, therefore, ld. CIT(Appeals) was unable to confirm the addition for assessment year 2003-04 as by doing so, the entire trading results of the assessee would be abnormal. The appeal of the assessee for assessment year 2003-04 was accordingly allowed. 7(i) The ld. CIT(Appeals), as regards assessment year under appeal 2007-08 held that fresh credit additions are in order and accordingly, same was confirmed. 8. We have heard ld. Representatives of both the parties. The ld. counsel for the assessee reiterated the submissions made before authorities below. He has submitted that all are trade creditors as per regular books of account maintained by assessee and have been audited. No evidence of p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing Officer has nowhere mentioned in the assessment order as to how many parties wee having trade balances for which addition has been made and even no specific amount of each party has been mentioned. Therefore, no specific finding of fact have been given against the assessee for making the addition. The ld. CIT(Appeals) held in the impugned order that the issue in assessment year under appeal i.e. 2007 08 is covered by his order for assessment year 2003-04. The facts are identical as have been considered in assessment year 2003-04. The ld. CIT(Appeals) in assessment year 2003-04 deleted the entire addition because entire sundry creditors outstanding on end of the financial year cannot be addede. The ld. CIT(Appeals) noted that the trading results for assessment year 2003-04 have been accepted by the Assessing Officer therefore, there is no logic to make addition of the entire balance in this account. 9(i) The ld. CIT(Appeals) also noted that many of the parties are having running accounts from prior to 01.04.2002. The ld. CIT(Appeals) also held that if addition of this nature is confirmed, the trading results of the assessee would be abnormal. The ld. counsel for the assess ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... opportunity of being heard to the assessee. 9(ii) We, accordingly, set aside the orders of the authorities below and restore this issue to the file of Assessing Officer with direction to re-decide this issue by following the reasons for decision given by ld. CIT(Appeals) for assessment year 2003-04 (supra) whereby addition on identical issue have been deleted. The Assessing Officer shall give reasonable sufficient opportunity of being heard to the assessee. 6(i) He has, therefore, submitted that the issue is covered in favour of the assessee. Copy of the order is placed on record. ld. DR did not dispute the same. In this view of the matter, we find that issue is covered in favour of the assessee by order of ITAT Chandigarh Bench in the group cases of the assessee namely M/s Heera Moti Agro Industries etc. (supra) in which the orders of authorities below were set aside and matter was restored to the file of Assessing Officer with direction to re-decide this issue by following the reasons for decision given by ld. CIT(Appeals) for assessment year 2003-04 whereby addition on identical issue have been deleted. The orders of authorities below are set aside and issue is reman ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Ltd., Chandigarh 12. This appeal by assessee has been directed against the order of ld. CIT(Appeals), Central, Gurgaon dated 26.03.2013 for assessment year 2008-09. 13. The ld. counsel for the assessee did not press ground Nos. 1 to 6 of the appeal as well as additional grounds of appeal. These are, accordingly, dismissed as not pressed. 14. On ground Nos. 7 to 10, assessee challenged the addition of sundry creditors to the tune of ₹ 8,61,208/- which were trade creditors as per regular books of account. This issue is same as is considered and decided in the case of assessee in ITA No. 743/2013 for assessment year 2005-06. It is, therefore, covered matter. The orders of authorities below are accordingly set aside and matter is restored to the file of Assessing Officer with direction to follow the order in assessment year 2005-06 (supra) and decide the issue accordingly. These grounds are allowed for statistical purposes. 14(i) In the result, appeal of the assessee is partly allowed for statistical purposes. ITA 747/2013 ( A.Y. 2009-10) M/s Himland Agro Foods Ltd., Chandigarh 15. This appeal by assessee has been directed against the order o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is copy of the accounts of this party in the books of account of assessee in which this amount have not been shown. He has, therefore, submitted that since no payment was made and no stock have been entered into the books of account of this bill, therefore, no addition under section 69 should be made. On the other hand, ld. DR relied upon orders of authorities below. 18. On consideration of the rival submissions, we are of the view addition under section 69A of the Act is wholly unjustified. The addition under section 69A could be made of unexplained income which is not recorded in the books of account and source of the same have not been explained. The facts noted above clearly show it was a credit purchase which according to submission of the assessee was rejected because it was of poor quality. Any how, when credit purchase is entered into books of account of M/s Heera Moti Spices Product and no payment have made by assessee and no further inquiry have been conducted from this party whether any payment have been made by assessee, the transaction remained of credit purchase which is also clear from the ledger account of the seller party as well as entry in the books of acco ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ded under section 69C of the Act which is difference between receipt and payment. In appeal, assessee argued that document is a rough memorandum about expenses incurred or to be incurred against cash maintained by Munim. The assessee further argued that receipt side cannot be reconciled with the regular books as being part of the cash in hand as per the regular books whereas payments are duly verifiable being wages, bank deposits, payment of taxes etc. to claim that receipt side should not represent unaccounted sales. The ld. CIT(Appeals) found that Assessing Officer has held that receipt and payments were irreconcilable. The argument that payments were of certain amounts, were never put forth to the Assessing Officer. Moreover, claim is without documentary evidence. In any case, even if paid, the source has to be explained by the assessee. This ground was accordingly, dismissed. 24. We have considered the rival submissions and perused the material on record. The ld. counsel for the assessee filed copy of the seized document and submitted that it is a dumb document and did not lead to anywhere. There is no evidence that the figures were in lacs. In the alternate contention, he h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... orders of authorities below are accordingly set aside and matter is restored to the file of Assessing Officer with direction to follow the order in assessment year 2005-06 (supra) and decide the issue accordingly. These grounds are allowed for statistical purposes. 27. In the result, appeal of the assessee is partly allowed. ITA 758/2013 ( A.Y. 2009-10) M/s Heera Moti Agro Products, Baddi (Solan) 28. This appeal by assessee has been directed against the order of ld. CIT(Appeals) Central, Gurgaon dated 18.03.2013 for assessment year 2009-10. 29. The ld. counsel for the assessee did not press ground Nos. 1 to 4 of the appeal of the assessee alongwith additional grounds. These grounds are, accordingly, dismissed as being not pressed. 30. On ground Nos. 5 to 8, assessee challenged the addition of sundry creditors to the tune of ₹ 10,23,835/- which were trade creditors as per reglar books of account. This issue is same as is considered and decided in the case of assessee M/s Himland Agro Food Ltd. in ITA No. 743/2013 for assessment year 2005-06 (supra). It is, therefore, covered matter. The orders of authorities below are accordingly set aside and mat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g GP rate of 2.5% to the gross profit declared by the assessee without rejecting books of account under section 145(3) by applying GP rate at 23.22% as against GP shown of 20.13%. It transpired that assessee had agreed for addition of ₹ 2,50,000/- on account of low GP in assessment year 2003-04. So taking the GP rate of assessment year 2003-04 as the base, GP for subsequent assessment years were increased by 5.86%. During proceedings under section 153A, the Assessing Officer referred to observation of Special Auditors that no quantitative details of stock was provided nor the stock registers and other related registers during audit, deduced that the GP ratio declared by the assessee did not seem to be justified and so the profits declared on the basis of books of account could not be accepted. A chart showing ratio of GP in the return of income filed is reproduced in the impugned order to show that in assessment year under appeal, the GP rate was 15.75% as against 16.58% of preceding assessment year 2007-08. The Assessing Officer, therefore noted that GP has dropped by almost 3% from 2003-04 onwards, thereafter GP declared is quite consistent fluctuating from 17.3% to 15.01%. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Assessee's books of accounts could not be rejected by invoking s. 145(3) when there is no specific defect pointed out in the books of account maintained by the assessee following a regular method of accounting and stock register was also maintained though not in the form expected by Assessing Officer 41(i) On the other hand, ld. DR submitted that special audit had been done because correct profit could not be deduced from the books of account of the assessee, therefore, addition is justified. 42. After considering rival submissions, we do not find any justification to sustain the addition by applying higher GP of 2.5%. It is admitted fact that the Assessing Officer did not pointed out any specific defects in maintenance of the books of account by the assessee. Even the special auditor has not pointed out any specific defects in maintenance of the books of account of the assessee. The addition is made by following the agreed addition for preceding assessment year 2003-04 without any justification. Each year is separate year and merely because assessee agreed for addition in assessment year 2003-04, is no basis to make the addition against the assessee by enhancing the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Act which is difference between receipt and the payment. The assessee submitted before ld. CIT(Appeals) that document is rough memorandum about expenses incurred or to be incurred against cash maintained by Munim. It was submitted that the receipt side cannot be reconciled with the regular books of account as being part of the cash in hand as per regular books whereas payments are duly verifiable being wages, bank deposits, payment of taxes etc. The ld. CIT(Appeals), however, confirmed the addition. 44. After considering rival submissions, we are of the view addition is wholly unjustified. The Assessing Officer noted details from the seized paper in the impugned order which shows, Receipts 3.96 and Payments 8.90 It is submitted by both the parties that this issue is same as have been considered on ground No. 4 in the case of M/s Heera Moti Agro Products in ITA 757/2013. Following the above order in the case of M/s Heera Moti Agro Products (supra) on which identical issue have been decided in favour of the assessee, we, following the reasons for decision for the same case, set aside the orders of authorities below and delete the entire addition. This ground of appeal of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 19/- respectively. The interest is integral part of entire transaction. The assessee failed to rebut these documents therefore, Assessing Officer who made the addition correctly. This ground was accordingly, dismissed. 48. We have heard ld. Representatives of both the parties. The ld. counsel for the assessee reiterated the submissions made before authorities below and submitted that the seized document contain name of the assessee company on top, meaning thereby it is sent by somebody else i.e. third party. The document is not signed by assessee and it did not belong to the assessee. The document contained payable only . There is no evidence of payment of interest, at the best GP addition can be made. No investment is proved by the department. On the other hand, ld. DR relied upon orders of the authorities below. 49. We have considered rival submissions. Both the seized papers are found from the possession of the assessee. Both the seized papers contain name of the assessee on the top. The seized papers contain the details of amount jama and amount naam . Since these documents were found from the possession of the assessee during the course of search, therefore, it has t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of ld. CIT(Appeals) Central, Gurgaon dated 15.03.2013 for assessment year 2009-10. 53. The ld. counsel for the assessee did not press ground Nos. 1 and 2 of the appeal of the assessee. Same are dismissed being not pressed. 54. On ground No. 3 assessee challenged the order of ld. CIT(Appeals) in applying GP rate of 2.5% to the GP declared by assessee without rejecting the books of account. This issue is same as has been considered in assessment year 2008-09 in ITA 569 of 2013. Following the reasons for decision in that appeal, we set aside the orders of authorities below and delete the entire addition. In the result, this ground of appeal of the assessee is allowed. 55. On ground No. 4, assessee challenged the addition of ₹ 32,94,380/-. This issue is similar to the money transaction jama and naam as in assessment year 2008-09, which have been generated from accounting software Delta-3. The Assessing Officer observed that there were interest calculations on the basis of number of dates and in totality, the balance from these documents were found to be ₹ 32,94,380/- which have been added back to the total income of the assessee. The ld. CIT(Appeals) following ..... X X X X Extracts X X X X X X X X Extracts X X X X
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