SURESH KUMAR T JAIN Vs. INCOME-TAX OFFICER

JUDGEMENT

(1.) The assessee is an individual dealing in telephone instruments, mobile accessories and electronic goods. On 31-3-2006, he filed his return of income for the assessment year 2005-06 declaring a total income of Rs.6,06,780/-. The said return was processed under Section 143(1) of the Income Tax Act, 1961, (for short, 'the Act'). On 12-3-2007, a survey under Section 133-A of the Act was conducted in the business premises. During the course of survey, the assessee was asked to produce the books of accounts for the assessment years 2005-06 and 2006-07. He did not produce the same at the time of survey. The books produced were pertaining only to purchasers and that too partly. There was no Sales Register, Stock Register, Cash Book, etc. He stated that the books are in the Auditor's Office and would be submitted later. A physical stock was taken at the time of survey. In spite of issuing several reminders and opportunities, neither the books of accounts nor any material were produced by the assessee. Notice under Section 148 of the Act was served on the assessee. In response to the notice, the assessee filed a letter dated 30-8-2007, wherein he has stated that he has already filed his return of income on 31-3-2006, which is to be considered as a return filed in response to the notice. The assessee was heard.

(2.) During the course of assessment proceedings, the assessee was asked to produce the details of sundry creditors with complete addresses and confirmation letters from the creditors. He furnished the list of creditors with addresses in 39 cases and in 10 cases, no addresses were provided. No confirmation letter was filed by the assessee, in spite of several reminders, except in 2 cases. Thereafter, letters were addressed to the sundry creditors as per the addresses given by the assessee. In response to these letters, 23 creditors have furnished the details called for. On considering the same, it is found that the return of income did not tally with the figures confirmed by the sundry creditors. The details of outstanding balances as confirmed by 23 sundry creditors amounted to Rs.24,579/- as against Rs.35,57,868/- shown by the assessee for the same 23 creditors. The discrepancy amounted to Rs.35,33,289/-. (Rs.35,57,868/- minus Rs.24,579/-). Out of the balance 26 creditors, in 4 cases, the credit balance were confirmed as nil. In 10 cases, the assessee did not furnish the addresses. In balance of 12 creditors, notice were returned unserved on the grounds of 'insufficient address', 'no such person', etc. and the total of such amount was worked out to Rs.29,75,621/-. In view of such discrepancies, the assessee was given a show-cause letter to furnish his explanation as to why the said discrepancies in the sundry creditors' balances should not be added back to the income. In response, a reply was furnished, wherein the assessee has taken the following objections:

(3.) With regard to the creditors, whose addresses were not furnished, the assessee submitted that balance of total creditors as arrived at was Rs.29,75,621/- and reducing the balance as pertaining to the period ended 31-3-2004 of Rs.32,39,713/-. The difference was Rs.12,06,135/-. It was argued that some of them have closed their business or have shifted to other towns. However, the assessee undertook to produce proper and cogent evidences in support of the purchasers made by those creditors. The assessee requested for the copies of the sworn statement recorded and the confirmation letters obtained by the Department from the creditors. The same was furnished to him. Thereafter, the assessee has not raised any objections regarding the additions proposed. Thereafter, the Assessing Officer came to the conclusion that the amount brought forward balances of creditors of Rs.50,09,199/- is proven to be no longer liable and as the trading liability ceased to exist, it was added back to the returned income as cessation of liability and the balance amount of Rs.14,99,711/- was also proven to be not a genuine and this, too, was added back to the returned income as unexplained credits. Questioning the same, the assessee preferred an appeal before the Commissioner of Income Tax (Appeals), which was dismissed. The same was challenged before the Tribunal, which was also dismissed. Hence, the present appeal.