SHRI KRUPA UDHYOG,AKOLA vs. DCIT AKOLA CIRCLE, AKOLA

Date of Hearing – 07/11/2024 Date of Order – 18/11/2024

O R D E R PER K.M. ROY, A.M.

This appeal has been filed by the assessee challenging the impugned order dated 16/01/2024, passed by the learned Commissioner of Income Tax (Appeals), National Faceless Appeal Centre, Delhi, [“learned CIT(A)”], for the assessment year 2015–16.

2. The assessee has raised following grounds:–

“1. Under the facts and in the circumstances of the case the learned Commissioner of Income Tax (Appeals) NFAC erred in stating that during the assessment proceeding the appellant failed to attach document such as ledger accounts, quantitative stock etc., particularly in the circumstances where the Assessing Officer in assessment order writes that "The books of accounts have been audited u/s 44AB of the Income

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Tax Act, 1961. The books of accounts produced have been examined on the test check. The bank statement, computation of total income, partnership deed, valuation report, ledger, confirmation of sundry creditors etc. have been verified and placed on record." (Quantitative details are the part of Tax Audit Report). 2. Under the facts and in the circumstances of the case the learned Commissioner of Income Tax (Appeals) NFAC erred in not dealing the grounds of appeal

(additional) individually and expressed a common generalized view on all the grounds except ground no. 1 and ignoring a general principle that purchases cannot be disallowed where quantitative details are on record and the books of accounts are not rejected explicitly or any defect is brought on record in maintenance of books.

3. Under the facts and in the circumstances of the case the learned Commissioner of Income Tax (Appeals) - NFAC erred in not dealing the ground related to the credit balance of Prachi Engineering Rs.52,29,025/- in right spirit though it was an amount payable on account of capital expenditure incurred in AY 2014-15 and it has nothing to do with the year under consideration and ignoring the balance sheet as at 31-03- 2014 filed during appellate proceeding wherein the amount is shown under head sundry creditors.

4. Under the facts and in the circumstances of the case the learned Commissioner of Income Tax (Appeals)-NFAC erred in drawing a conclusion that assessee cannot take a shelter of law for his own advantage.

5. Under the facts and in the circumstances of the case the learned Commissioner of Income Tax (Appeals)/NFAC erred in drawing a conclusion that assessee introduced his own unaccounted cash in books in the shape of creditors and addition made by AO can be treated u/s 68 of the Act, whereas the pre-condition of Sec. 68 is totally absent in the present case.

6. Under the facts and in the circumstances of the case the learned Commissioner of Income Tax (Appeals)/NFAC erred in not giving any consideration to the cases relied upon and the submissions made by the assessee on the facts of the case, time to time, though the dates of submissions made are quoted in the order.

7. All the grounds are without prejudice to each other.”

3 Shree Krupa Udyog 2,00,49,652. The assessee furnished name and address of the major sundry creditors and filed confirmation with copy of relevant ledgers. Further for verification of the creditors, letters to the sundry creditors were issued calling information under section 133(6) of the Income Tax Act, 1961 ("the Act"). On being pointed out of the difference in amount confirmed vis–a–vis balance per books. The assessee furnished following submissions in support of its claim:– “1. Anis Traders Daryapur wer have purchase bill of amounting to ₹ 23,06,938/- in the last fifteen days of March 2015 and ₹12,19,791/- paid by cheque and last two bill amounting to ₹500569/- and ₹502069/- dated 14/03/2015 payable. All purchase bill are attached as cogent proof.

3. Shri Ganpati Pulses show amounting to ₹ 40412/- instead of ₹322632/- there is opening balance Dr. amount ₹672771/- is not consider by party in his books of account the copy of last year balance sheet is attached as cogent proof. It is the only party with we deal in last financial year.

6. M/s. Laxmi Traders the amount ₹544544/- is actually not paid taken by party which was paid after the year.

7. M/s. Naresh Ramvilas Siwal having payable amount ₹793754/- was paid actually but due to wrong entry made by our accountant he transfer amount in other accounts.

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4. The Assessing Officer ultimately made the addition as to the returned income by observing as below after being satisfied in some of the cases:–

“7.11 The summary of disallowances on account of sundry creditors as discussed above is as under:–

Amount of Sr. Name of Creditor addition as no. discussed above 1. Avtarsingh Premsingh Gulati, Washim 23382 2. Ganpati Pulses, Akola 282220 3. Jagdamba Industries, Akola 1036298 4. Kamal Trading Co., Washim 3040 5. M/s. Nareshkumar Ramvilashji Siwal, Akola 793754 6. M/s. Sachin Traders, Aurangabad 311748 7. Maa Vaishnavi Udyog, Akola 369138 8. Prachi Eng. Goods 5229025 9. Subhash Madhav Saoji, Dongaon 7060 Total 8055671

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5. Being aggrieved, appeal was filed before the learned CIT(A), which was dismissed. There was an adjournment application before us filed by the C.A. Shri S.G. Gandhi. But the same was rejected and the matter was taken up for adjudication in view of smallness of the matter and the paper book is already in our record. In Paper Book Page–49, the ledger of Prachi Eng. Goods is perused which is reproduced below:–

01–04–14 Balance brought forward 6,179,264 6,179,264 Pully & Shaft 04–04–14 93,196 6,272,460 Purchase voucher no.P020 10–05–14 77247 AUB Current A/c 50,000 6,222,460 To Agaraemery Stone Pvt. Ltd., 16–05–14 15,000 6,207,460 Agaraemery Stone P. Ltd. 17–05–14 Cash in Hand 17,570 6,189,890 14–06–14 Cash in Hand 17,000 6,172,890 15–06–14 Cash in Hand 18,000 6,154,890 16–06–14 Cash in Hand 19,500 6,135,390 17–06–14 Cash in Hand 13,500 6,121,890 18–06–14 Cash in Hand 18,955 6,102,935 AUB Current A/c 17–07–14 82876 800,000 5,252,925 To RTGS AUB Current A/c 28–07–14 82890 50,010 5,240,925 To TRANSFER, NEFT AUB Current A/c 12–08–14 86307 12,000 5,239,525 To TRANSFER, TRF Cash in Hand 31–08–14 1,400 5,233,525 To Shreenath Cash in Hand 26–11–14 6,000 5,229,025 To Shrinath, Labour Cash in Hand 15–03–15 4,500 5,229,025 To Shreenath Kopula Total 1,043,435 6,272,460 5,229,025

6 Shree Krupa Udyog inflation, if any, can only be ascribed to past years. The assessee has further explained that the bills worth ` 9,91,783, was considered by Jagdamba Enterprises subsequently, it is a mere timing difference since the accounting of such bills has spilled over to a different period by the supplier. The assessee has been successful in reconciling the difference. Thus, there is successful reconciliation of ` 62,20,808 (i.e., ` 52,29,025 + ` 3,88,298 + ` 6,03,485) which is meticulously explained and the addition hence is not tenable. As regards balance creditors, the assessee has not been in a position to throw light on the difference. So the same is confirmed to the extent of ` 18,34,863 i.e., (` 80,55,671 – ` 62,20,808). Thus, the assessee gets part relief of ` 62,20,808. It is a rare case of addition when none of the charging provisions have been specified. Further the lower authorities did not investigate the reasons for difference in detail. We are, however, constrained to sustain the partial disallowance since nothing is emanating from the paper book submitted. Further it is doubtful whether books, albeit audited, can be full of mistakes.