Principal Commissioner Of Income Tax, Surat-2 v. Rameshchandra I. Gandhi(Huf

IN THE HIGH COURT OF GUJARAT AT AHMEDABADR/TAX APPEAL NO. 1092 of 2018 ========================================================== PRINCIPAL COMMISSIONER OF INCOME TAX, SURAT-2VersusRAMESHCHANDRA I. GANDHI(HUF) ========================================================== Appearance: MRS KALPANAK RAVAL(1046) for the PETITIONER(s) No. 1 for the RESPONDENT(s) No. 1 ========================================================== CORAM: HONOURABLE MR.JUSTICE AKIL KURESHIand HONOURABLE MR.JUSTICE B.N. KARIA Date : 04/09/2018 ORAL ORDER (PER : HONOURABLE MR.JUSTICE AKIL KURESHI) 1. Revenue is in appeal against the judgment of the Income-tax Appellate Tribunal dated 20.03.2018 raising following substantial questions of law :- “(A)Whetheronthefacts and circumstances of the case and in law the Hon'ble ITAT has erred in upholding the order of the ld.CIT(A) deleting the addition of Rs.1,75,06,500/- made on account of bogus sundry creditors towards purchases u/s.41(1) of the Act ? (B) Whether on the facts and circumstances of the case and in law, the Hon'ble ITAT has not appreciated that the assessee has failed to prove the genuiness of the parties from whom purchases were made in A.Y. 2003-04 during the assessment proceedings ? (C) Whether on the facts and circumstances of the case and in law, the Hon'ble ITAT has erred in not appreciating that barring three parties purchases with whom were disallowed in the A.Y. 2003-04 rest of the parties in respect of which addition was made in A.Y. 2004-05 u/s.41(1) of the Act were different ?” 2. The issues pertain to the assessment year 2004-05. The Assessing Officer made addition of Rs.1,75,00,000/- (rounded off) towards bogus sundry creditors relatable to purchases. The Assessing Officer invoked the provisions of Section 41(1) of the Income-tax Act, 1961. 3. The assessee carried the issue further in CIT (Appeals). CIT (Appeals) accepted the assessee's contention that mere passage of time would not be sufficient to hold that there was cessation of liability. The assessee's alternative contention was also accepted which was that the corresponding purchases from the creditors of Rs.1.75 crores was already disallowed in the assessment year 2003-04 and gross profit was estimated for making additions. Therefore since the purchases have already been held unexplained leading to additions being made in the income, further disallowance on the same ground would amount to double taxation. 4. Revenue carried the matter in appeal. The Tribunal focused on the second contention of the assessee which was accepted, upon which, the Revenue has filed this appeal. Tribunal focused on the second contention of the assessee which was accepted, upon which, the Revenue has filed this appeal. 5. Counsel for the Revenue drew our attention to the materials on record to contend that at least three of the creditors had not shown any outstanding liabilities of the assessee. No matching creditor entries were made in their accounts for the relevant year. He, therefore, argued that view of the CIT (Appeals) and the Tribunal is not quite to the materials on record to contend that at least three of the creditors had not shown any outstanding liabilities of the assessee. No matching creditor entries were made in their accounts for the relevant year. He, therefore, argued that view of the CIT (Appeals) and the Tribunal is not quite correct. 6. We have focused only on the second of the two contentions raised by the assessee which succeeded before the CIT (Appeals). We do not find any error in the view of the CIT (Appeals) and the Tribunal. We may recall that in the earlier assessment year the correct. 6. We have focused only on the second of the two contentions raised by the assessee which succeeded before the CIT (Appeals). We do not find any error in the view of the CIT (Appeals) and the Tribunal. We may recall that in the earlier assessment year the Department disbelieved the entire purchases and therefore made additions on the basis of revised estimate of gross profit. Once that was done, making disallowance of the same amount or part thereof would amount to double taxation. 7. In the result, tax appeal is dismissed. (AKIL KURESHI, J) K.K. SAIYED (B.N. KARIA, J)