2011 (12) TMI 773 - AT - Income Tax

Summary

Issues involved:
The issues involved in this case are the deletion of addition on account of sundry creditors and sundry debtors by the Commissioner of Income Tax (Appeals)-IV, Rajkot for assessment year 2007-08.

Deletion of addition on account of sundry creditors:
The Assessing Officer (AO) made an addition of Rs.13,02,68,979/- as unexplained sundry creditors due to lack of details provided by the assessee. The CIT(A) admitted new additional evidence following a judgment of Calcutta High Court and found that the genuineness of the creditors amounting to Rs.27,55,376/- had been proved. The ITAT confirmed the CIT(A)'s decision, stating that the notices sent under section 133(6) being returned by postal authorities did not prove the parties were non-genuine, especially since both were limited companies governed by the Companies Act.

Deletion of addition on account of sundry debtors:
The AO made an addition of Rs.1,29,85,264/- as the assessee failed to produce details. The CIT(A) accepted the assessee's contention that most of the debtors were trade debtors with regular transactions. The CIT(A) held that the non-response to notices u/s.133(6) by some debtors did not warrant doubting the transactions. The ITAT upheld the CIT(A)'s decision, emphasizing that the assessee provided sufficient evidence to explain the genuineness of the parties and transactions.

Conclusion:
The ITAT dismissed the appeal of the revenue, confirming the CIT(A)'s deletion of the additions on account of sundry creditors and sundry debtors. The decision was based on the fact that the transactions were routine, recorded in the books of accounts, and supported by evidence provided by the assessee.