9911796707
|
Home
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2018 (7) TMI 1892 - AT - Income TaxAddition on sundry creditors not proved as genuine - closing credit balances of 26 parties could not verified - If addition has been mentioned u/s 41(1), ingredients of section 41(1), the burden of proof which is resting on revenue in view of the following judicial decisions has not been discharged? - HELD THAT - Failure by creditors to participate in inquiry and furnish accounts - Does not mean that creditors lacked identity - No material to show that amounts advanced by creditors in reality represented money belonging to assessee - Sums cannot be treated as cash credits - CIT v. CHANDELA TRADING CO. P. LTD. 2014 (11) TMI 409 - CALCUTTA HIGH COURT Income from undisclosed sources-Addition-Alleged bogus purchases - AO was not justified in making the disallowance of purchases made by the assessee merely due to non-filing of confirmation from suppliers especially when assessee has filed certificate from the bank indicating the facts that cheques issued by it were cleared and no defect in the books of account was pointed out by AO. We note that Opening balances which is evident from copies of account of these parties enclosed in the paper book at PB 42-66 is not justified on the ground that when assessee has not claimed any expense to that extent during the year under appeal, where is the question of making disallowance of such amount? If addition has been mentioned u/s 41(1), ingredients of section 41(1), the burden of proof which is resting on revenue in view of the following judicial decisions has not been discharged. There is no evidence that the liability has ceased to exist and that too in the year under appeal. The very fact these amounts are being shown as payable in the balance sheet of the assessee go to establish that there was no cessation of the liability. - Decided in favour of assessee
Issues Involved:
1. Addition of ?3,50,94,758 on the ground that sundry creditors were not proved as genuine. 2. Charging of interest under sections 234A, 234B, and 234C of the Income Tax Act. Issue-wise Detailed Analysis: 1. Addition of ?3,50,94,758 on the Ground that Sundry Creditors were Not Proved as Genuine: Background: The assessee filed a return declaring taxable income of ?3,52,180 for the assessment year 2012-13. The case was selected for scrutiny due to a large amount of sundry creditors. During the assessment, the Assessing Officer (AO) issued notices under section 133(6) to verify the genuineness of the creditors. Out of 27 notices, 20 were returned undelivered. The AO added ?3,50,94,758 to the total income, stating that the sundry creditors were not genuine. Appellate Proceedings: The assessee appealed to the Commissioner of Income Tax (Appeals) [CIT(A)], who upheld the AO's decision. The CIT(A) observed that the assessee failed to provide addresses and did not prove the genuineness of the creditors. The CIT(A) relied on several judicial precedents, including the Hon'ble Delhi High Court's decision in Modi Stone Ltd., which supported the AO's action in disallowing the amount due to lack of evidence. Tribunal's Analysis: The Tribunal noted several critical points: - The AO and CIT(A) did not specify under which section of the Income Tax Act the addition was made. - The addition could not be made under section 68 as there was no sum received from these parties during the year under appeal. - Purchases from these parties were recorded in the books and supported by authenticated purchase bills and vouchers. - The Tribunal cited various judicial decisions, including RAJESH P. SONI VS. ACIT and CIT vs. Vardhman Overseas Ltd, which held that credit on account of purchases cannot be added under section 68. - The Tribunal also noted that the opening balances amounting to ?1,60,19,598 were not justified for disallowance as no expense was claimed during the year under appeal. - If the addition was made under section 41(1), the burden of proof, which rests on the revenue, was not discharged. The Tribunal cited decisions like CIT vs. Tamilnadu Warehousing Corporation and Ambica Mills Ltd vs. CIT to support this view. Conclusion: The Tribunal concluded that the transactions were not bogus and that the authorities below were not justified in making or sustaining the addition. The total addition of ?3,50,94,758 was deleted. 2. Charging of Interest under Sections 234A, 234B, and 234C of the Income Tax Act: The Tribunal did not provide a detailed analysis of this issue, as the primary focus was on the addition of sundry creditors. However, given that the main addition was deleted, the associated interest charges under sections 234A, 234B, and 234C would also be impacted accordingly. Conclusion: The Tribunal allowed the appeal of the assessee, deleting the total addition of ?3,50,94,758 made by the AO and confirmed by the CIT(A). The order was pronounced on 18.07.2018.
|
