2017 (12) TMI 926 - AT - Income Tax

Addition of trade creditors - Held that - We find from the assessment order that assessee has disclosed Sundry Creditors in the name of M/s Jugial Cement of ₹ 1,43,780/- and M/s KB Timber Supply company of ₹ 1,67,632/- totaling of ₹ 3,11,412/-. As the assessee failed to file confirmation before the AO, he added back the same to the returned income of the assessee. Aggrieved, assessee preferred the appeal before CIT(A). Before CIT(A) assessee filed additional evidences and CIT(A) asked for remand report from the AO, who vide the remand report dated 07-03-2014 has not considered the additional evidences. The assessee before CIT(A) filed confirmation from these parties, but none of the authorities below have considered the same. We restore this issue back to the file of the AO, who will consider these trade creditors qua the additional evidences and will decide accordingly after allowing reasonable opportunity of being heard to the assessee. This issue of assessee s appeal is allowed for statistical purposes. Addition of Sundry Creditors for earth Filling expenses - Held that - After going through the case records are of the view that these evidences should have considered by the AO and accordingly, decision should have been taken. In the entire facts and circumstances of the case and in the interest of natural justice, we set aside the orders of lower authorities on this issue and remand the matter back to the file of the AO for fresh adjudication after allowing reasonable opportunity of being heard to the assessee. This issue of Revenue s appeal is allowed for statistical purposes.

Summary

Issues Involved:
1. Deletion of addition made by AO for expenditure on earth filling.
2. Confirmation of addition of Sundry Creditors by CIT(A).

Deletion of Addition for Expenditure on Earth Filling:
The appeal of Revenue in ITA No. 5343/Mum/2014 revolves around the deletion of an addition made by the AO for expenditure on earth filling. The AO disallowed 20% of the expenses on an ad-hoc basis, leading to an addition of ?38,75,908. However, the CIT(A) deleted this addition after finding that the closing balances tallied and discrepancies in opening balances were due to transactions in earlier years. The CIT(A) also noted that the expenses claimed were supported by running bills and payments reflected in bank statements. The Tribunal upheld the CIT(A)'s decision, emphasizing that the AO verified entries in the bank statement during remand proceedings, thereby dismissing the Revenue's appeal.

Confirmation of Addition of Sundry Creditors by CIT(A):
In the appeal of the assessee in ITA No. 5488/Mum/2014, two issues were raised regarding the addition of Sundry Creditors. The first issue concerned the confirmation of the AO's action in sustaining the addition of ?3,11,412 for two Sundry Creditors. The Tribunal found that the assessee had failed to file confirmations before the AO, leading to the addition. As additional evidence was not considered by the AO or CIT(A), the Tribunal remanded the issue back to the AO for reevaluation after considering the trade creditors and allowing the assessee a reasonable opportunity to present its case.

The second issue involved the addition of Sundry Creditors for earth filling expenses amounting to ?19,99,816. Discrepancies between bills raised and expenses debited were noted, and additional evidence presented by the assessee was not considered by the lower authorities. The Tribunal set aside the decisions of the lower authorities, remanding the matter to the AO for fresh adjudication after affording the assessee a fair hearing.

In conclusion, the Tribunal dismissed the appeal of the Revenue and Cross Objection, while allowing the appeal of the assessee for statistical purposes. The detailed analysis of each issue involved in the judgment highlights the meticulous consideration of facts and legal arguments by the Tribunal to arrive at a just decision in each instance.