2016 (12) TMI 1730 - AT - Income Tax

Initiation of penalty proceedings u/s 269SS read with section 271D - Held that - Both these grounds are premature as mere initiation of penalty proceedings the assessee is not aggrieved, he will have the full opportunity to explain his case therefore ground Nos. 1 and 2 are dismissed. Addition on unconfirmed balance of sundry creditors - AR submitted that amount of creditors of ₹ 2914046/- have also been paid or write off by the appellant during FY 2009-10 and 2011-12 and has been offered to the income for taxation in those respective years. As submitted this details with the with the prayer for admission of additional evidence on such write back. He pleaded that for this issue the matter may be verified by the AO and after the same is offered for taxation for subsequent years as stated by him if found to be correct then addition in the current year may be deleted - Order pronounced in the open court on 16/12/2016.

Summary

Issues involved:
1. Invocation of section 269SS and penalty proceedings under section 271D of the Income Tax Act, 1961.
2. Disallowance of alleged unconfirmed balances of sundry creditors.
3. Alleged un-evidenced payments under section 43B and 40(a)(i) of the Income Tax Act.
4. Disallowance made under Section 40A(2)(b) of the Act, 1961.
5. Relief granted out of disallowance of sundry creditors' balances.

Issue 1: Invocation of section 269SS and penalty proceedings under section 271D:
The appeals were filed against the order of the ld CIT(A)-XVI, New Delhi for the Assessment Year 2007-08. The assesse raised grounds challenging the invocation of section 269SS and penalty proceedings under section 271D of the Income Tax Act, 1961. The Tribunal dismissed these grounds stating that the initiation of penalty proceedings was premature as the assesse would have the opportunity to explain the case during proceedings.

Issue 2: Disallowance of alleged unconfirmed balances of sundry creditors:
The appeal included a challenge regarding the addition of an alleged unconfirmed balance of sundry creditors amounting to ?29,14,046. The assesse failed to provide confirmation for an outstanding amount, leading to the addition. The assesse suggested that the amount had been paid or written off in subsequent years and offered for taxation. The assesse requested verification by the AO and deletion of the addition if found correct to avoid double taxation.

Issue 3: Alleged un-evidenced payments under section 43B and 40(a)(i) of the Income Tax Act:
The assesse disputed the disallowance of payments made under section 43B and 40(a)(i) of the Income Tax Act totaling ?52,857 and ?2,80,305 respectively. The assesse's plea was rejected due to non-production of evidence, leading to a challenge in the appeal.

Issue 4: Disallowance made under Section 40A(2)(b) of the Act, 1961:
The revenue appealed against the disallowance of ?64,22,436 made by the AO under Section 40A(2)(b) of the Act, 1961. The CIT(A) allowed relief of ?21,64,518 out of the disallowance of ?50,78,564 on account of unconfirmed balances of sundry creditors.

Issue 5: Relief granted out of disallowance of sundry creditors' balances:
The appeal addressed the relief granted out of the disallowance of sundry creditors' balances. The CIT(A) had disallowed a certain amount, but a partial relief was granted. The specifics of the relief and disallowance were outlined in the appeal for further review and consideration.

In conclusion, the judgment covered various issues related to the invocation of specific sections of the Income Tax Act, disallowance of balances, un-evidenced payments, and relief granted in the context of sundry creditors. The arguments presented by both parties were considered, and decisions were made based on the facts and circumstances of the case, ensuring a comprehensive analysis of each issue involved.