2014 (6) TMI 663 - AT - Income Tax

Addition made u/s 68 of the Act - Business of scrap dealer Held that - Confirmation of statement of A/c sent to Assessee was before AO as the same had been delivered on 21st November, 2011 and the Assessment Order was passed on 29/12/2011 - there is apparent contradiction in the findings recorded by AO and the documents on record - CIT(A) has taken note of confirmation but without considering the specific ground raised before him held that assessee had agreed for the addition - the confirmation filed by the party has not been considered by both the lower revenue authorities - Assessee had duly discharged its primary onus by furnishing the necessary confirmation along with details - all the transactions were through bank account and there were regular dealings with the party - The AO had not disputed the purchases from the party - when all the relevant details regarding creditor were furnished by Assessee, no addition was warranted - necessary verification of confirmation has not been done, thus, the matter is required to be remitted back to the AO for the purposes of examining the confirmation filed by the M/s Affain Steel Pvt. Ltd. and if no discrepancy is found there then no addition is called for Decided in favour of Assessee.

Summary

Issues:
Addition of Rs. 10 lacs u/s 68 based on non-confirmation of creditor's balance.

Analysis:
The appellant, a scrap dealer, challenged the addition of Rs. 10 lacs u/s 68 in the assessment year 2009-10. The Assessing Officer made the addition due to non-receipt of a response from M/s Affain Steel Pvt. Ltd., a creditor. The appellant contended that the creditor confirmed the balance, but the lower authorities upheld the addition. The CIT(A) reasoned that the appellant's agreement to treat the cash credit as income implied its non-genuineness. However, the appellant argued against the addition, emphasizing the regular transactions and banking payments with the creditor. The appellant also disputed agreeing to the addition, citing discrepancies in the findings. The Tribunal noted the confirmation provided by the creditor and the lack of proper verification by the authorities. Consequently, the matter was remanded to the Assessing Officer for reevaluation based on the confirmation from M/s Affain Steel Pvt. Ltd.

This judgment highlights the importance of thorough verification and consideration of evidence in tax assessments. The Tribunal emphasized the need for proper examination of confirmations and details provided by the taxpayer. The decision underscores the taxpayer's obligation to substantiate transactions and the authority's duty to conduct due diligence before making additions to income. The case serves as a reminder of the principles of natural justice and the significance of factual accuracy in tax proceedings.