2022 (7) TMI 1270 - HC - Income Tax

Unexplained cash-credit - HELD THAT - We find from the order passed by the CIT(A) that each of the sundry creditors have been specifically dealt with by the CIT(A). Though there were total 20 sundry creditors, the addition was only in respect of 17 of them. Thus, the issue before the tribunal would be whether the explanation offered by the assessee before the CIT(A) was justified and was the CIT(A) right in rejecting the explanation. Such an exercise appears to have not been done in the instant case largely due to the fact that the assessee did not appear before the tribunal. Therefore, we are of the view, that one more opportunity can be granted to the assessee to go before the tribunal. In the result, the appeal filed by the assessee is allowed and the order passed by the tribunal is set aside and the matter is remanded to the tribunal for fresh consideration. The assessee is directed to appear before the tribunal on the date fixed without seeking for unnecessary adjournment and, they will also be entitled to file paper book containing documents which were placed before the CIT(A). After affording an opportunity to the assessee, the learned tribunal shall consider and decide the matter afresh on merits and in accordance with law. Consequently, the substantial questions of law are left open.

Summary

Issues:
Delay in filing appeal, treatment of sundry creditors' liabilities as unexplained cash credit, verification of transactions, disclosure of verification report, support of CIT(A) order by Tribunal, treatment of sundry creditors' payments, employees' Provident Fund contribution, violation of Section 40A(ia) regarding hire charges.

Delay in Filing Appeal:
The High Court of Calcutta considered an appeal under Section 260A of the Income Tax Act, 1961, filed with a delay of 737 days. The Court noted that the appellant was entitled to the benefit of an extended limitation period by the Supreme Court. Consequently, the delay in filing the appeal was condoned, and the application for condonation of delay was allowed.

Treatment of Sundry Creditors' Liabilities:
The appellant raised substantial questions of law regarding the treatment of sundry creditors' liabilities as unexplained cash credit. The assessing officer had found certain transactions to be bogus and treated them as unexplained cash credit, resulting in taxation. The Court observed discrepancies in the assessing officer's treatment of sundry creditors and directed a fresh consideration by the tribunal.

Verification of Transactions and Disclosure of Report:
The Court highlighted the importance of verifying transactions and the necessity of disclosing verification reports to the concerned party. It emphasized the need for a fair assessment based on genuine transactions and proper disclosure of supporting documentation.

Support of CIT(A) Order by Tribunal:
The Tribunal's decision to support the CIT(A) order, despite discrepancies in the treatment of sundry creditors' payments, was questioned. The Court noted the lack of representation by the assessee during the tribunal proceedings and directed a reevaluation of the case to ensure a fair and just decision.

Employees' Provident Fund Contribution and Violation of Section 40A(ia):
Issues related to employees' Provident Fund contribution and the violation of Section 40A(ia) concerning hire charges were also examined. The assessing officer's findings regarding these matters were scrutinized, and the Court directed a fresh consideration by the tribunal to ensure proper assessment and adherence to legal provisions.

In conclusion, the High Court of Calcutta allowed the appeal, set aside the tribunal's order, and remanded the matter for fresh consideration. The appellant was directed to appear before the tribunal without seeking unnecessary adjournments and to submit relevant documents for review. The tribunal was instructed to decide the case afresh on its merits and in accordance with the law, leaving the substantial questions of law open for further examination.