2015 (11) TMI 291 - AT - Income Tax

Addition made towards unaccounted receipt - assessee claimed TDS - CIT(A) deleted the addition - Held that - The payment for the same had been received by the assessee after TDS in April 2006. We find that the assessee has duly accounted for this receipt in its profit and loss account in consonance with the mercantile system of accounting regularly employed by it. We also hold that the assessee had not claimed the TDS on the subject mentioned receipt in Asst Year 2006-07 as stated by the Learned AO and instead claimed the same with offer of corresponding income in Asst Year 2007-08. Hence we find no infirmity in the order of the Learned CITA in this regard. - Decided against revenue. Addition made towards bogus purchase of sulphur and cement - CIT(A) deleted the addition - Held that - Assessee filled complete details of purchases made by the assessee from different parties together with the details of sales made out of such purchases. The said paper book also contained the details of payments made to those suppliers for purchases made by the assessee by account payee cheques. We have perused the entire paper book filed by the assessee in this regard. We also observe that the Learned CIT(A) had called for a remand report from the Learned AO with regard to the production of these documents and the Learned AO did not offer any comments on the same. We also find that the suppliers have been produced before the Learned AO under summons proceedings u/s 131 of the Act. Just because the suppliers had not brought their books of accounts during the course of summons proceeding, we hold that the assessee could not be faulted with. Hence we find no infirmity in the order of the Learned CIT(A) - Decided against revenue.

Summary

Issues:
1. Justification of deleting the addition towards unaccounted receipt of Rs. 21,44,400.
2. Justification of deleting the addition made towards bogus purchase of sulphur and cement.

Analysis:

Issue 1: Unaccounted Receipt
The first issue in this appeal was whether the Learned CIT(A) was correct in deleting the addition towards an unaccounted receipt of Rs. 21,44,400. The assessee, a contractor engaged in trading, had raised a bill in April 2006 for the said amount, accounted for it in the subsequent year, and claimed TDS. The revenue contended that the TDS was claimed without offering corresponding income for taxation in the same year. The Learned AR argued that the TDS was made in the following year, supported by evidence from the TDS certificate. The ITAT found that the receipt was accounted for in the correct year as per the mercantile system of accounting. The appeal of the revenue was dismissed as the TDS was claimed in the correct assessment year.

Issue 2: Bogus Purchase
The second issue revolved around the deletion of the addition made towards bogus purchases of sulphur and cement. The assessee had made substantial purchases, which the AO disallowed as bogus. However, the CIT(A) deleted the addition after reviewing detailed evidence provided by the assessee, including payment details via account payee cheques and sales derived from the purchased goods. The revenue contended that the assessee failed to prove the purchases were utilized for road repair. The ITAT observed that the assessee had submitted a comprehensive paper book with purchase and sales details, along with evidence of payments made. The suppliers were also summoned but did not produce their books of accounts. The ITAT upheld the CIT(A)'s decision, emphasizing that the assessee had provided sufficient evidence, resulting in the dismissal of the revenue's appeal.

In conclusion, the ITAT upheld the decisions of the CIT(A) in both issues, leading to the dismissal of the revenue's appeal.