2020 (7) TMI 94 - AT - Income Tax

Addition of outstanding sundry creditors u/s 68 - HELD THAT - Assessee has furnished the copy of sale invoice pertaining to Kankane Oil Mill and copy of contract note, copy of challan, copy of receipt of the agricultural production of marketing committee, copy of form no. 403 of the commercial sales tax department certifying that goods were distributed from Kankane Oil Mill to place of the assessee Assessee has placed in the paper book copy of transporter receipt along with payment of transport charges for delivering the goods from the consigner to the assessee, copy of bank account statement showing that payment was made by the assesee to Kankane Oil Mill. Party namely Kankane Oil Mill was based in Uttar Pradesh and for any further verification the assessing officer should have issued commission u/s.131(i)(d) of the act after keeping into consideration the distance from the place of the assessee and the place of the assessee. AO has neither given any commission nor disproved a number of evidences furnished by the assessee in supported of its claim of purchasing the goods from the aforesaid parties. CIT(A) has not disproved the relevant supporting evidences furnished in respect of other party namely Westwind Shipping Logistics Pvt. Ltd. in spite of the fact that assessing officer has clearly mentioned in his remand report that bills were verified and TDS was deducted. We are not inclined with the decision of the ld. CIT(A) for sustaining the additions on assumption basis without disproving the relevant material submitted by the assessee. - Decided in favour of assessee.

Summary

Issues:
Appeal against addition of outstanding sundry creditors.

Analysis:
The appeal pertains to the addition of ?19,98,102/- in respect of outstanding sundry creditors by the assessing officer. The assessing officer noted outstanding sundry credit amounting to ?1,71,79,314/- during the relevant year. The assessee failed to provide confirmation for two specific creditors totaling ?19,98,102/-. The assessing officer added ?11,99,604/- to the total income due to lack of proof that expenses were incurred in the current year.

The assessee contended that lower authorities did not consider the submissions, explanations, and information provided during the appellate proceedings. The CIT(A) dismissed the appeal, stating the genuineness of the transaction was not established. During the appellate proceedings, the assessee submitted a detailed paper book with various documents as evidence, including bills, transport receipts, bank statements, invoices, and confirmations of sundry creditors.

The assessing officer disallowed the amount concerning the two creditors due to lack of confirmation. The assessee later submitted confirmations as additional evidence under rule 46A of the Act. The CIT(A) admitted the additional evidence and sought a remand report. The assessing officer verified the necessary documents for one creditor but could not serve notice to the other. However, the material in the paper book supported the transactions with both creditors.

The Tribunal observed that the assessing officer did not disprove the evidence submitted by the assessee. The Tribunal found supporting documents for both creditors in the paper book, including invoices, transport receipts, and bank statements. The assessing officer did not take necessary steps for verification, such as issuing a commission under section 131(i)(d) of the Act. The Tribunal disagreed with the CIT(A)'s decision to sustain the additions based on assumptions and allowed the appeal of the assessee.

In conclusion, the Tribunal allowed the appeal of the assessee, emphasizing that the assessing officer did not disprove the relevant material submitted by the assessee. The decision was made on 27-05-2020.