Such Exports (P) Ltd., New Delhi v. ACIT, New Delhi

PER K.D. RANJAN, ACCOUNTANT MEMBER This appeal by assessee arises against the order of Ld.CIT(A)-XII, New Delhi dated 12.10.2009 for A.Y. 2006-07.

2. The first issue for consideration relates to confirming the addition of Rs. 72,000/- on account of unsecured loan obtained from Shri Narender Kumar Nanda and Shri Naresh Kumar Aneja, the directors of the assessee company. The facts of the case stated in brief are that the ITA 738/Del/2010 Page 2 of 5 A.Y. 2006--07 M/s Such Exports P.Ltd. A.O. in the assessment order has noted that unsecured loan of Rs. 72,000/- from two directors have been obtained by assessee. The assessee had not filed confirmation from the loan creditors. Therefore, the primary responsibility of the company to discharge its onus by filing confirmations from the parties have not been discharged. The A.O. therefore, added an amount of Rs. 72,000/- on account of unsecured loans.

3. On appeal it was submitted by the assessee that opening balance as on 1.4.2005 was at Rs. 28,64,500/- as against the closing balance as at 31st March, 2006 at Rs. 41,39,500/-. Thus there was difference of Rs. 12,75,000/- in the balance sheet on account of unsecured loans. Out of this Rs. 8,25,000/- was received from Shri Narender Kumar Nanda and Rs.4,50,000/- was received from Shri Naresh Kumar Aneja. It was also submitted that it was impossible to understand as to how the figure of Rs. 12,75,000/- was taken by the A.O. at Rs. 72,000/-. The assessee filed copy of accounts and bank statements from the said directors in order to prove the difference of Rs. 12,75,000/- in the balance sheet. The ld.CIT(A), however, confirmed the addition on the ground that copies of confirmation were not made available during the course of appellate proceedings. The assessee had also not produced books of accounts for verification. Hence the addition of Rs. 72,000/- was confirmed. ITA 738/Del/2010 Page 3 of 5 A.Y. 2006--07 M/s Such Exports P.Ltd.

4. Before us the ld.A.R. of the assessee reiterated the same arguments. On the other hand Ld.Sr.D.R. supported the order of ld.CIT(A).

5. We have heard both the parties and perused the records carefully. According to assessee the increase in unsecured loans is by Rs. 2,75,000/- out of which Shri Narender Kumar Nanda had advanced loan of Rs. 8,25,000/- and Shri Naresh Kumar Aneja at Rs. 4,50,000/-. During the course of hearing the Ld.Sr.D.R. could not throw any light as to how the A.O. had taken the difference in the unsecured loans at Rs. 72,000/-. The ld.CIT(A) has also not considered the arguments of assessee. Therefore, under these circumstances we feel it proper to set aside the matter to the file of A.O. with the directions to examine the case in the light of the actual facts. The A.O. will provide necessary opportunity to assessee. We order accordingly.

6. Next issue for consideration relates to confirming the addition of Rs. 4,29,610/- on account of difference in the value of plant and machinery. The A.O. from the chart of block of assets filed with the return of income noted that value of plant & machinery was admitted by the assessee at Rs. 32,85,817/-. However, in the details shown in the letter dt. 7.3.2008, it was shown at Rs. 37,15,425/-. Thus there was a difference of Rs. 4,29,610/- which was to be reconciled. The A.O. added the amount of Rs. 4,29,610/- to the returned income. ITA 738/Del/2010 Page 4 of 5 A.Y. 2006--07 M/s Such Exports P.Ltd.

7. Before ld.CIT(A) it was submitted that the amount of Rs. 32,86,816.61 was not the value of total plant and machinery but it was the value of additions made during F.Y. 2005-06. The assessee had already submitted a statement of additions to fixed assets to A.O. It was also submitted that books of accounts were test checked by the A.O. There were debit notes of Rs. 4,29,612/- raised against three parties viz.; Suraj Dyeing Systems; Vishwaratan Refractories P.Ltd. and Deepak Ceramic and Allied Products. The A.O. without appreciating the facts had added the amount as unreconciled. However, ld.CIT(A) has upheld the additions on the ground that no explanation was given as to why the debit notes were not shown in the books until financial year ended.

8. We have heard both the parties and perused the material available on record. From the explanation offered by the assessee it appears that assessee had purchased machinery worth Rs. 22,86,816.61 and it raised debit notes against those parties at Rs. 4,29,612/-. Therefore the value of plant & machinery for the purpose of depreciation would be reduced by this amount. However from the facts available in assessment order it is not clear as to how the difference of Rs. 4,29,610/- remained unreconciled. Therefore, we feel it necessary to set aside this issue also to the file of A.O. with the directions to examine the claim of assessee ITA 738/Del/2010 Page 5 of 5 A.Y. 2006--07 M/s Such Exports P.Ltd. about the debit notes raised and decide the issue afresh after affording the assessee a reasonable opportunity of being heard.

9. In the result, the appeal filed by assessee is treated as allowed for statistical purposes. Order pronounced in the Open Court on 4th August, 2010 after conclusion of the hearing. (C.L.SETHI) (K.D. RANJAN) JUDICIAL MEMBER ACCOUNTANT MEMBER Dated: 4th August, 2010 *manga Copy of the Order forwarded to:

1. Appellant; 2.Respondent; 3.CIT; 4.CIT(A); 5.DR; 6.Guard File By Order Dy. Registrar // C O P Y //