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TMI Blog2025 (3) TMI 996X X X X Extracts X X X X X X X X Extracts X X X X ..... 2. Ld. CIT(A)-1, Lucknow erred on facts and in law in not appreciating the decision of Honourable ITAT, Lucknow Bench that was previously pronounced in the case of myself only. 3. Ld. CIT(A)-1, Lucknow erred on facts and in law in not appreciating the VAT assessments and fact that the assessee appellant is providing services only to PSUs which led to higher estimation of the income of the assessee appellant." 2. The grounds of appeal in ITA. No.444/LKW/2020 are as under: - "1. The Ld. CIT(A)-1, Lucknow has erred in law and on facts in deleting the addition of unconfirmed Sundry Creditors amounting to Rs. 1, 66, 80, 021/- and estimated Net Profit @ 8% on total turnover of Rs. 7, 06, 19, 151/- by rejecting books of the assessee u/s 145(3) of the IT Act, 1961. 2. That the Ld. CIT(A)-1, Lucknow had erred in law and facts in deleting the addition of Rs. 3, 41, 592/- made due to difference in balance in Sundry Creditors & estimated Net Profit @ 8% on total turnover of Rs. 7, 06, 19, 151/- by rejecting books of the assessee u/s 145(3) of the I.T. Act, 1961. 3. Appellant craves leave to add as amend any one or more of the ground of appeal as stated above as and when need of doin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... under consideration as well as previous year. Therefore, the purchase of materials and such expenses in the year under consideration and past year could not be doubted. The decision of the AO to add the creditors without doubting the purchases or rejecting them was bad in law. The assessee relied upon the judgments of the Hon'ble Delhi High Court in CIT Vs. Sri Vardhaman Overseas Ltd, ITA. No.774/2009 dated 23.12.2011 343 ITR 408 (Del) and the order of the Hon'ble ITAT Ranchi in M/s. Gulf Steel & Minerals Vs. ITO in ITA. No.57/Ran/2016 dated 04.05.2018. The assessee submitted that in both these cases, it was held that the addition under section 68 of the Act could not be made in respect of Sundry Creditors relating to purchases, unless the purchase was rejected. It was further submitted that the opening balances of creditors amounting to Rs. 98, 12, 487/- had been added back by the AO under section 68 of the Act and the assessee placed reliance on a number of case laws for the proposition that the opening balances could not be added back under section 68 of the Act. Without prejudice to these arguments, the assessee submitted that the assessee, being a Civil Contractor, was ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (i) CIT Vs. Pancham Dass Jain (2006) 205 CTR 440 (Alld) (ii) CIT Vs. Ritu Anurag Agarwal (2010) 2 DTLONLINE 134 (Del) (iii) Hind Globe Links, New Delhi Vs ITO, ITA. No.4904/Del/2014 (Del Tribunal) and (iv) ITO Ward-29(4), New delhi Vs. Zazsons Exports Ltd [Lucknow Bench 'A' (Third Member)]. 8. The Ld. CIT(A) also noted that the adding of Sundry Creditors outstanding as on 31.03.2015, without disputing the purchases was not justified and also the adding back of opening balance of Rs. 98, 12, 487/-, was also not justified. He noted the fact that another quasi-judicial authority i.e. the VAT Authority had accepted the purchases and sales of the assessee as was evident from the VAT assessment order for the F.Y. 2014-15. He held that the same could not be brushed aside as it carried substantial evidentiary value. Therefore, after considering all the facts of the case, he held that no case was made out for sustaining of the additions under section 68 of the Act in respect of unverified Sundry Creditors or the difference in balances of creditors as reported by them. However, he observed that it was a fit case for rejection of books of account under section 145(3) of the Act and since the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o effect those sales. In the circumstances, we do not find any infirmity in the decision of the Ld. CIT(A) to delete the additions made under section 68 of the Act on account of the credit balances standing in the name of certain sundry creditors as on 31.03.2015. These credit balances do not represent loans or advances taken by the assessee where creditworthiness to extent the advances are essential point for examination. Rather these represent sundry creditors for purchases and the purchases have not been called into question. Therefore, merely because some part of the expenditure for the purchases have not been met during the concerned financial year, is not ground to hold that those credits are bogus, unless it can be shown that those purchases were never made at all. As the Ld. AO has not conducted any exercise to determine the bogus nature of the purchases, in view of the decision of Hon'ble Allahabad High Court in the case of CIT Vs. Pancham Dass Jain (supra) and the Hon'ble Delhi High Court in the case of CIT Vs. Ritu Anurag Agarwal (supra), the decision of the Ld. CIT(A) to delete the additions made on account of unconfirmed Sundry Creditors is upheld. Accordingly, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er of the assessee is over Rs. 7 crores. In the circumstances, a rate not bearing any relation to the history of the assessee's case or any comparable case cannot be justified. In the circumstances, we find it fit to delete the addition made on account of estimation of net profit and to restore the rate of net profit to that disclosed by assessee in the return. Ground no. 1 of the assessee's appeal is accordingly allowed. 15. Ground no. 2 of the assessee's appeal relates to not appreciating the previous order of the ITAT in the assessee's own case. After considering the arguments presented, we observe that res-judicata does not apply to income tax proceedings and each year has to be decided upon the facts of the case in that year. Therefore, Ld. CIT(A) was not bound to follow the rate of profit deemed reasonable by the ITAT in a particular year. However, as we have already held earlier, a rate cannot be estimated without reference to the history of the assessee's case or comparable cases. Hence to the extent that the Ld. CIT(A) estimated the same without reference to the history of the assessee's case, ground of appeal is partly allowed. 16. The third ground agitates the failure ..... X X X X Extracts X X X X X X X X Extracts X X X X
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