2020 (2) TMI 1650 - AT - Income Tax

Bogus and unexplained cash credit - HELD THAT - Having scrutinized the individual creditors, CIT(A) deleted some of additions where he found that the assessee has submitted documents confirmation and proof in respect of sundry creditors. For balance creditors wherein the CIT(A) noticed that the assessee has failed to file a requisite documents statement and confirmation and proof of existence of sundry creditors, he sustained the addition made by AO. We have gone through the detailed reasoning given in the appellate order CIT(A) s order and we note that the conclusion reached by the ld. CIT(A) need not to be interfered therefore we confirm the addition Addition relating to inflated sundry liabilities which has been confirmed by the CIT(A) as the assessee has failed to file the reconciliation of the sundry liabilities before the lower authorities - We have gone through the findings of the assessment order and findings of the appellate order. CIT(A) pointed out that assessee has not filed the reconciliation and confirmation of excess sundry liabilities. We are of the view that this issue should be remitted back to the file of the AO with the direction to the assessee to file the reconciliation and confirmation of excess sundry liabilities before the AO. AO is directed to adjudicate the issue in accordance to law.

Summary

Issues:
Cross appeals by Revenue and assessee regarding assessment year 2007-08 against common order by CIT(A) and AO under section 143(3) of the Income Tax Act, 1961.

Analysis:
1. The appeals by Revenue and assessee were consolidated due to common issues. The assessee did not appear, leading to an ex parte disposal as per Rule 24 of the Income Tax Appellate Tribunal Rules, 1963.
2. The Revenue's appeal (ITA No. 1962/Kol/2017) focused on an addition deleted by CIT(A) amounting to Rs. 97,20,743. The appeal was dismissed based on the CBDT Circular No. 17/2019, which increased monetary limits for filing appeals.
3. The CBDT Circular is binding on the Revenue, as established by legal precedents. The appeal was found contrary to the Circular, leading to its dismissal. The Revenue was granted the option to move for a recall if required.
4. The assessee's appeal (ITA No. 2067/Kol/2017) challenged additions of Rs. 73,10,365 as bogus cash credit and Rs. 6,82,689 as inflated sundry liabilities. The CIT(A) confirmed the first addition but directed a reassessment for the second.
5. The CIT(A) justified the addition of Rs. 73,10,365 based on the lack of documentation for certain creditors. The Tribunal upheld this addition after reviewing the CIT(A)'s detailed analysis and reasoning.
6. Regarding the Rs. 6,82,689 addition for inflated sundry liabilities, the Tribunal remitted the issue back to the Assessing Officer for further examination as the reconciliation was not provided by the assessee.
7. Ultimately, the Revenue's appeal was dismissed, while the assessee's appeal was partly allowed for statistical purposes, with directions for reassessment on the issue of inflated sundry liabilities.

This judgment highlights the importance of compliance with monetary limits for filing appeals, the binding nature of CBDT Circulars, and the need for proper documentation to support claims during assessment proceedings.