2014 (8) TMI 274 - AT - Income Tax

Unaccounted Contract receipts Held that - CIT(A) has given a finding that the amount has been credited to the Cartage account - CIT(A) did not consider any fresh material, he has only considered the books of accounts of the assessee - the assessee has claimed credit of the TDS amount deducted from the payment - submissions made by the assessee before AO and also the decision rendered by CIT(A) shows that the assessee has disclosed the amount in the profit and loss account by crediting the Cartage expenses account with the amount - When the assessee has duly accounted for the amount in its account and has also brought the same to the Profit and Loss account through the Cartage Account , there was no reason to assess it again the order of the CIT(A) is upheld Decided against Revenue. Unidentified Sundry creditors Held that - The assessee has challenged the presumption entertained by the AO - the view entertained by the AO that they are outstanding for more than one year is wrong - no creditor s balance was outstanding for more than six months - CIT(A) shows that the AO has also appears to have acted in a hasty manner on this issue - assessee has expressed its difficulty in procuring and furnishing the details that were called for by the AO - These explanations of the assessee requires examination at the end of the AO thus, the matter is remitted back to the AO for fresh adjudication Decided in favour of Revenue. Disallowance out of Telephone, Conveyance, Cartage Held that - CIT(A) has held that these disallowances need to be set aside, since he had estimated the net profit by rejecting the books of account of the assessee - the order of CIT(A) is set aside with regard to the rejection of books of account, the issue now requires adjudication - since the issue relating to the Sundry Creditors, the disallowances may also be examined afresh at the end of the AO thus, the matter is remitted back to the AO Decided in favour of Revenue.

Summary

Issues:
1. Addition of unaccounted contract receipts
2. Assessment of unidentified sundry creditors
3. Disallowance of various expenses

Analysis:

Issue 1: Addition of Unaccounted Contract Receipts
The appeal pertained to the assessment year 2009-10, where the revenue challenged the decision of Ld CIT(A) to grant relief in respect of unaccounted contract receipts. The assessing officer treated an amount received from M/s Haldyn Glass Gujarat Ltd as undisclosed income due to lack of evidence of transportation charges reimbursement. The Ld CIT(A) found that the amount was properly accounted for in the Cartage Account by the assessee, leading to the conclusion that it was disclosed in the Profit and Loss account. The tribunal upheld the Ld CIT(A)'s decision, emphasizing that the assessee had accounted for the amount adequately, thus dismissing the revenue's appeal.

Issue 2: Assessment of Unidentified Sundry Creditors
The AO assessed the sundry creditors balance as business income, considering them as bogus creditors due to lack of evidence of genuineness. However, the Ld CIT(A) rejected the books of accounts and estimated net profit at a higher rate. The tribunal noted that the assessing officer did not doubt the trading results but questioned the genuineness of creditors. The assessee challenged the presumption of outstanding balances, highlighting errors in the AO's conclusions. The tribunal found that the responsibility to prove the genuineness of creditors rested with the assessee. As the explanations provided by the assessee required further examination, the tribunal set aside the Ld CIT(A)'s decision and directed a fresh assessment by the AO.

Issue 3: Disallowance of Various Expenses
The Ld CIT(A) had set aside the disallowances of expenses as the net profit was estimated by rejecting the books of accounts. With the issue of sundry creditors being remanded for fresh examination, the tribunal directed a reevaluation of the disallowed expenses by the assessing officer. It was emphasized that the assessing officer should provide the necessary opportunity for the assessee to be heard during the reexamination process. Consequently, the tribunal partly allowed the revenue's appeal for statistical purposes, subject to the reassessment of the sundry creditors and the related expenses.

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