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2019 (10) TMI 1427 - AT - Income TaxDifference in the accounts of the creditors - Difference between the balance shown by the assessee and the confirmation received in the case of six parties the details - HELD THAT - In our opinion the assessee in the instant case has fully discharged the onus cast on him by giving sufficient reasons before the AO and CIT(A) regarding the discrepancies in the accounts. Further it is a case where the liability payable is less than the balance shown by the creditors in 5 out of the 6 cases. AO has not disputed the purchases from the said parties and has accepted the trading results. Considering the totality of the facts of the present case and considering the submission made by the Ld. Counsel for the assessee before the AO and the CIT(A) we are of the considered opinion that the CIT(A) was not justified in sustaining the addition on account of difference in the accounts of the creditors. We therefore set aside the order of the CIT(A) and direct the AO to delete the addition. Appeal filed by the assessee is allowed.
Issues:
1. Addition of difference in trade creditors to total income. 2. Condonation of delay in filing appeal. 3. Disallowance of unconfirmed balances of sundry creditors. Issue 1: Addition of Difference in Trade Creditors to Total Income: The case involved cross-appeals against an order relating to the assessment year 2010-11. The Assessing Officer (AO) made an addition of ?4,49,317 to the total income of the assessee due to differences in trade creditors' balances. The CIT(A) confirmed this addition citing the assessee's failure to offer any explanation. The Tribunal considered the details provided by the assessee, showing that the liability payable was less than the balance shown by the creditors in most cases. The Tribunal found that the assessee had sufficiently explained the discrepancies and had reconciled the differences. As the AO had accepted the trading results and there was no dispute regarding purchases, the Tribunal held that the addition was unjustified. Consequently, the Tribunal directed the AO to delete the addition, allowing the assessee's appeal. Issue 2: Condonation of Delay in Filing Appeal: The assessee filed an appeal with a delay of two days, accompanied by a condonation petition and an affidavit explaining the reasons for the delay. After considering the contents of the condonation application, the Tribunal condoned the delay, allowing the appeal to be heard on its merits. Issue 3: Disallowance of Unconfirmed Balances of Sundry Creditors: The revenue's appeal raised concerns about the CIT(A) not remanding the matter for proper verification of unconfirmed balances of sundry creditors amounting to ?72,71,723. However, the Tribunal noted that the tax effect involved in the revenue's grounds was below ?50 lakhs. Referring to a CBDT Circular, the Tribunal dismissed the revenue's appeal, citing the revised monetary limits for filing appeals. Consequently, the appeal filed by the revenue was deemed not maintainable, and the order of the CIT(A) was upheld, resulting in the allowance of the assessee's appeal. In conclusion, the Tribunal addressed the issues of addition of difference in trade creditors to total income, condonation of delay in filing the appeal, and disallowance of unconfirmed balances of sundry creditors. The Tribunal found in favor of the assessee regarding the addition made by the AO, allowed the appeal after condoning the delay, and dismissed the revenue's appeal due to the revised monetary limits for filing appeals.
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