2022 (9) TMI 1269 - HC - Income Tax

Addition made on account of bogus expenses corresponding to the sundry creditors - ITAT deleted the addition - HELD THAT - AO after opining on the genuineness of the purchases, disallowed the sundry creditors and held the creditors to be doubtful. ITAT and CIT(A) satisfied itself with respect to the genuineness of the sundry creditors through bank statements and thereafter deleted the addition. Revenue has been unable to bring out any deficiency in the said concurrent finding of the appellate authorities. The learned counsel's endeavor to urge this Court to examine the issue of bogus purchases by perusing the bills and statements of alleged suppliers in these proceedings cannot be accepted. This Court in exercise of its jurisdiction under Section 260A of the Act is confined to hearing substantial questions of law and interference on the finding of facts is not warranted if it involves re-appreciating of evidence. The learned counsel has not been able to point out any perversity in the finding of facts. We therefore, find no infirmity in the orders of the appellate authorities deleting the addition made on account of bogus expenses corresponding to the sundry creditors. Disallowance on account of static creditors - ITAT concurred with the findings of the CIT(A) and held that the AO could not have relied upon initial letter for making such an addition when to the knowledge of the AO the Assessee had retracted the said letter during the assessement proceedings. ITAT noted that the department representative had not brought on record any material on record to contradict the fact findings of the CIT(A) on this issue and accordingly upheld the said deletion. In this appeal as well, the learned counsel for the Revenue has not brought to our attention any material to indicate that the finding of the appellate authorities is incorrect. His sole contention was that since the Assessee initially had surrendered the income, no further enquiry was required to be conducted by the AO. He, however, could not point any infirmity in the findings of the CIT(A) while deleting the said addition. As per the Circular No. 14(XL-35) of 1955 dated 11th April, 1955, as well the Department has been directed to assist a taxpayer where the proceedings or other particulars before AO indicate that some refund or relief is due to the Assessee. We, therefore, find that in the present appeal, the appellate authorities have returned concurrent findings of fact by deleting the additions made by the AO. The ITAT is the final fact finding authority and no material has been placed on record to contradict the findings of the appellate authorities, therefore, no substantial question of law arises for consideration in the present appeal. Accordingly, the same is dismissed.

Summary

Issues:
1. Delay in re-filing the appeal.
2. Disallowance of business loss of futures and options.
3. Addition of sundry creditors as bogus expenses.
4. Addition of static creditors.
5. Rectification application under Section 154 of the Income Tax Act.
6. Deletion of additions by appellate authorities.
7. Disallowance of losses during assessment proceedings.
8. Wide powers of the tribunal in assessment proceedings.
9. Circular No. 14(XL-35) of 1955 regarding assisting taxpayers.

Analysis:

1. Delay in re-filing the appeal:
The delay of 59 days in re-filing the appeal was condoned by the High Court in view of the averments made in the application.

2. Disallowance of business loss of futures and options:
The Income Tax Appeal sought to set aside the ITAT's order upholding the deletion of business loss by the CIT(A). The AO disallowed the business loss as it was not claimed in the original return, citing the Supreme Court's decision in Goetze India Ltd. vs. CIT. The ITAT upheld the CIT(A)'s decision, noting that the loss had been set off in audited accounts and rectified during assessment proceedings.

3. Addition of sundry creditors as bogus expenses:
The AO disallowed an amount as bogus expenses based on sundry creditors. The CIT(A) corrected the amount and deleted a sum on account of a typographical error. The ITAT and CIT(A) found the sundry creditors to be genuine after verifying bank statements and payments made, except for a specific project, which was remanded back to the AO for further verification.

4. Addition of static creditors:
The CIT(A) deleted the addition made by the AO on account of static creditors, as the Assessee provided documents showing the creditors were not static and had been cleared or adjusted. The ITAT upheld the deletion, noting the lack of material contradicting the CIT(A)'s findings.

5. Rectification application under Section 154:
The Assessee filed a rectification application under Section 154 to correct a typographical error in the amount of expenses, which the CIT(A) allowed, deleting the erroneous sum.

6. Deletion of additions by appellate authorities:
The appellate authorities deleted additions made by the AO after verifying the genuineness of claims and payments, with the ITAT being the final fact-finding authority.

7. Disallowance of losses during assessment proceedings:
The ITAT allowed the Assessee to claim losses on account of futures and options, considering it a mistake rectified during assessment proceedings, in line with the judgment in CIT vs. Jai Parabolic Springs Ltd.

8. Wide powers of the tribunal in assessment proceedings:
The tribunal has wide powers to assess the correct tax liability of an Assessee in accordance with the law, as highlighted in the case of National Thermal Power Co. Ltd. v. CIT.

9. Circular No. 14(XL-35) of 1955 regarding assisting taxpayers:
The circular directs the Department to assist taxpayers where proceedings indicate that a refund or relief is due to the Assessee.

In conclusion, the High Court dismissed the appeal as no substantial question of law arose, given the concurrent findings of fact by the appellate authorities. The ITAT's decision was upheld, emphasizing the finality of the fact-finding authority in such matters.