2015 (3) TMI 1262 - AT - Income Tax

Addition u/s 41 - Held that - Assessee was made purchases from M/s. Sai Shakthi Minerals M/s. Dhanalakshmi Logistics in the year ended 31/03/2008. A small amount was paid in April 2008 and balance thereof as outstanding creditors since then. This amount was written off in the year ended 31/03/2011 and offered taxation. Learned AR has produced copies of ledger accounts of these two parties at page Nos. 11-14 of the paper book wherein in the year under consideration the assessee has written off of this amount in his books of accounts. Similarly in respect of Dhanalakshmi Logistics the assessee has written off of this amount and tax on that amount has been paid. We find that assessee has written off of this amount in his books of accounts and paid due taxes therefore we are of the view that no addition can be made. In respect of Transport Creditors M/s. Vinayak Enterprises M/s. Aniketh Enterprises M/s. Hanuman Traders M/s. Veerabhadreshwara Enterprises we find from the paper book wherein the assessee has submitted the copies of the bank account wherein payment has been made to transport creditors through bank. The balance of small amount has been written off. The payment has been made through bank confirmation letters and income tax returns in this regard have not been considered by the Ld. CIT(A). In respect of confirmation letter when the assessee paid this amount through banking channel we are of the view that this party do exists at a relevant time. The Department has also accepted the written off for the same party. Therefore in our opinion no addition can be made u/s. 41(1) of the Act. In respect of Aniketh Enterprises Hanuman Traders & Veerabhadreshwara Enterprises - The assessee has made the payment through RTGS necessary information was given to the Assessing Officer and the Ld. CIT(A) therefore in our opinion no addition can be made. The assessee has also filed the acknowledgement of the copy of the return filed by those parties. If the transport contractor had left the residence and they were not traceable it is proved from the record that they are transport contractors therefore in our opinion no addition is required hence we delete the same. - Decided in favour of assessee

Summary

Issues:
1. Disallowance of sundry creditors by Assessing Officer.
2. Disallowance of transport creditors by Assessing Officer.
3. Appeal against the order of ld. CIT (A)-VI, Bangalore dated 11/09/2014 for the A.Y. 2010-11.

Issue 1: Disallowance of Sundry Creditors
The Assessing Officer disallowed sundry creditors due to non-response to his letters and unsuccessful verification. The ld. CIT(A) dismissed the appeal, leading to the current appeal. The assessee argued that the disputed amounts were written off and offered for tax in the subsequent year, thus resulting in double taxation. The Tribunal noted that the assessee had written off the amounts and paid taxes, hence no addition was warranted. The Tribunal found support in the CIT(A)'s order and ruled in favor of the assessee, deleting the disallowed amounts.

Issue 2: Disallowance of Transport Creditors
Regarding transport creditors, the Assessing Officer disallowed amounts due to variations in signatures, confirmation letters, and income tax returns. The Tribunal examined evidence provided by the assessee, including bank payment confirmations and ledger accounts. It was observed that payments were made through bank channels, and the parties existed as per the Income Tax Department records. The Tribunal found that the Assessing Officer should have insisted on the assessee producing the parties and that no addition was warranted. The Tribunal highlighted the provisions of sec. 41(1) of the Act and emphasized that the burden of proof lies with the revenue to show that the benefit was received by the assessee. As the assessee had discharged the onus by providing relevant details, the Tribunal allowed the appeal, disagreeing with the Assessing Officer and CIT(A)'s disallowances.

Issue 3: Appeal Against CIT (A) Order
The appeal was made against the order of ld. CIT (A)-VI, Bangalore for the A.Y. 2010-11. The Tribunal carefully considered the arguments presented by both parties, examined the evidence provided, and analyzed the relevant legal provisions. Ultimately, the Tribunal ruled in favor of the assessee, allowing the appeal and deleting the disallowed amounts related to both sundry and transport creditors. The Tribunal's decision was based on the assessee's compliance with tax obligations and the lack of justification for the disallowances made by the Assessing Officer and CIT(A).

This comprehensive analysis of the judgment highlights the key issues, arguments presented, evidence examined, and the Tribunal's decision in each aspect of the case.