2018 (12) TMI 527 - AT - Income Tax

Admission of additional evidence - addition on account of Sundry Creditors - non producing books of accounts - Held that - In view of the submission of the Ld. Counsel, and in the interest of Justice, we feel it appropriate to admit the additional evidences and restore the matter in dispute to the Ld. CIT(A) for deciding a fresh after analyzing the documents or the evidences, which the assessee may file before him. CIT(A) may call for remand report from the Assessing Officer - no books of accounts were produced during the assessment proceeding, therefore we direct the assessee to produce all the books of accounts along with vouchers for the year under consideration before the authorities - direct the assessee to produce confirmation of the creditors along with their copy of ledger accounts, complete narration of the transaction alongwith documentary evidences, and also produce those sundry creditors before the authorities for verification of the their existence and transactions of the assessee with them. To verify and ascertain facts in respect of the issue in dispute, if the authorities feel it necessary, they may carry out enquiries from the real estate companies, from whom the assessee received commission and also from the customers to whom the commission has been passed over. - Decided in favour of assessee for statistical purposes. Disallowance of advertisement expenditure - failure of the assessee to produce bills of those expenses - Held that - We find that issue in dispute related to sundry creditors has already been restored to the file of the Ld. CIT(A). This disallowance has been confirmed on the ground that no bills or other documents in support of the expenditure have been produced before the authorities. In the interest of substantial Justice, we feel it appropriate to give one more opportunity to the assessee to produce the bills of documents in support thereof, accordingly, we restore this issue to the file of the Ld. CIT(A) for deciding afresh - Decided in favour of assessee for statistical purposes.

Summary

Issues Involved:
1. Non-admission of additional evidence under Rule 46A of the Income Tax Rules, 1962.
2. Addition of ?42,76,362/- on account of sundry creditors.
3. Addition of ?16,300/- on account of advertisement expenses.

Issue-wise Detailed Analysis:

1. Non-admission of Additional Evidence under Rule 46A:

The assessee challenged the decision of the Ld. CIT(A) for not admitting additional evidence under Rule 46A of the Income Tax Rules, 1962. The assessee argued that the evidence was available initially but was not produced before the Assessing Officer (AO). The Ld. CIT(A) forwarded the additional evidence to the AO, who objected, stating that the assessee had several opportunities to present the evidence during the assessment but failed to do so. The Ld. CIT(A) concluded that the assessee did not satisfy the conditions under Rule 46A for the admissibility of additional evidence, citing that the appellant had multiple opportunities and failed to establish any sufficient cause for not furnishing the evidence earlier.

2. Addition of ?42,76,362/- on Account of Sundry Creditors:

The AO observed inconsistencies in the closing balance of sundry creditors and noted that no details or evidence of the existence of these creditors were provided. The AO added the amount of ?42,76,362/- to the income of the assessee under section 41(1) of the Income Tax Act, 1961, stating that the assessee failed to prove the existence of the creditors and had obtained a benefit by transferring part of the liability to the capital account. The Ld. CIT(A) upheld this addition, noting that the assessee failed to provide even the basic information such as the names and addresses of the creditors. The Tribunal found that both authorities had not examined the applicability of section 41(1) due to the absence of evidence. The Tribunal admitted the additional evidence and restored the matter to the Ld. CIT(A) for a fresh decision, directing the assessee to produce all relevant books of accounts, confirmations, and documentary evidence.

3. Addition of ?16,300/- on Account of Advertisement Expenses:

The AO disallowed the advertisement expenses of ?16,300/- due to the assessee's failure to produce bills. The Ld. CIT(A) confirmed this disallowance, noting that the assessee's representative argued that bills were not essential for the allowability of the expenses. The Tribunal, in the interest of justice, restored this issue to the Ld. CIT(A) for a fresh decision, directing the assessee to produce all bills and documentary evidence supporting the expenditure.

Conclusion:

The Tribunal allowed the appeal of the assessee for statistical purposes, directing the Ld. CIT(A) to re-examine the issues after admitting the additional evidence and providing adequate opportunities for both the AO and the assessee to present their cases. The order was pronounced in the open court on 7th December 2018.