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TMI Blog2022 (11) TMI 1217X X X X Extracts X X X X X X X X Extracts X X X X ..... which was processed u/s 143(1) of the Act and thereafter the case was selected for scrutiny and statutory notice were issued and duly served upon the assessee. The Assessing Officer during the course of assessment proceedings observed that the assessee has shown huge sundry creditors of Rs.4,35,27,806/- as on 31/03/2015 and called upon the assessee to furnish details thereof and also prove the genuineness of these liabilities. The Assessing Officer in order to verify the genuineness of the creditors and authenticity of the transactions, issued notices u/s 133(6) of the Act to 39 parties on 14/11/2017 on test check basis. However, 26 notices issued to the creditors were returned unserved whereas two creditors, namely, New Maa Kali Enterprise and Jagannath Traders have denied to have had any transactions with the assessee and the remaining did not respond at all to the notices issued u/s 133(6) of the Act. 5. The assessee is engaged in the business of construction under the name and style of "Sun Construction". The Assessing Officer called upon the assessee to produce the books of accounts, ledger, purchase invoices in respect of 39 parties which were duly furnished. The assessee al ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and in no way could relate to provisions of section 68 of the Act. In any case, as per ledger of each of the trade creditors in the books of the appellant and reflected in the audited Balance Sheet of the appellant, the closing balance on account of purchase was comprised of opening balance carried forward from earlier year. Therefore, the credits (opening balance) in question did not wholly relate to the previous year relevant to assessment year under consideration, even if at all provision of section 68 was to be imported in the matter aş envisaged by the A0. The AO's observation on the issue is totally on a wrong footing and hence not tenable under any circumstance. If at all the AO wanted to make an addition, it should have been done u/s 41 of the Act which is not the case here. In any case, there was no remission or cessation of liability inasmuch as in the subsequent assessment year the closing balance at the end of earlier previous year stood as opening balance in that year and there were debit and credit entries in the subsequent year also. Ledger copies have been placed in the paper book to substantiate the above position. Even otherwise, I find that the AR of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ransactions represented the trading liability of the assessee which remained unpaid during the year under the head sundry creditors. The ld. A/R submitted that, the provisions of Section 68 of the Act are not applicable and that Section 68 is applicable where any sum which was found to be credited in the books of accounts by the assessee during the year, is not explained by the assessee with respect to its identity, creditworthiness and genuineness, then the same should be added u/s 68 of the Act. The ld. A/R argued that at the most, the Assessing Officer could have invoked Section 41(1) of the Act to treat these liabilities as income of the assesse subject to the condition, that these liabilities were extinguished during the year. But this is also not the case of the Assessing Officer. The ld. A/R submitted that the closing balance as on 31/02/2013 represents the opening balance of the sundry creditors as on 01/04/2014. The ld. A/R submitted that the credits even if unexplained could not be subjected to tax in the subsequent year and to buttress this contention, the ld. A/R relied on the following decisions:- CIT vs. Prameshwar Bohra (2008) 301 ITR 0404 RajHC. CIT vs. Usha St ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... goods purchased by the assessee in the normal course of business. The Assessing Officer issued notice u/s 133(6) of the Act to 39 parties majority of which returned unserved. Two of these parties stated that they are not having any business with the assessee. The remaining parties did not respond at all. The assessee filed the necessary documents before the AO comprising bills, vouchers, challans, payment details and confirmations etc. which were duly considered by the Assessing Officer. However, while framing the assessment, the Assessing Officer did not point out any defect and deficiency in the said documents and primarily relied on the fact that these are either unserved on the recipients or denied by the creditors. So we are to decide whether trade liability could be added u/s 68 of the Act. We have perused the provisions of Section 68 of the Act and find that the provisions of section 68 of the Act are applicable to the money credited during the year in the books of the accounts qua which the assessee has failed to furnish any details thereby not proving the identity, creditworthiness of the creditors and genuineness of the transactions. But this is not the case before us. We ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ect matter of addition u/s 68 of the Act as the provisions of section 68 of the Act are applicable to the credits in the books of accounts of the assesse which could not be explained with respect to identity , creditworthiness and genuineness. The case of the assesse finds support from several decisions of the coordinate benches namely i) Nallam Manium textiles P Ltd Vs DCIT (Supra), ii)Sugam Construction (p) Ltd (supra) and iii) Sharda commercial Co. Ltd. Vs ITO (supra).Considering these facts and circumstances and the ratio of law laid down by various Courts of law as discussed hereinabove , we dismiss Ground Nos. 1 & 2 of the revenue. 12. The issue raised in Ground No. 3 is against the order of the ld. CIT(A) on the ground that the ld. CIT(A) has co-terminus powers with the Assessing Officer and could have enquired the matter himself instead of deleting the addition. 13. After hearing rival contentions and perusing the orders of the authorities below we find that the revenue has accepted that the provisions of Section 68 are not applicable. The ld. A/R submitted that at most Section 41 of the Act could have been resorted to, but in the present case the same is also not applica ..... X X X X Extracts X X X X X X X X Extracts X X X X
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