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2015 (4) TMI 750 - AT - Income TaxDeletion of addition u/s 68 of Income Tax Act, 1961 - Preceding year decision was in favour of assessee - Treatment of expenditure on Land development - Disallowance of expenses - Held that - The assessee has failed to establish that the goods were in fact purchased on credit in respect of the alleged credit of ₹ 1,05,01,948/- for which addition was made by the Assessing Officer because the assessee could not even furnish the confirmation from them or their addresses or the party wise outstanding amount with period, we are of the considered opinion that the Tribunal decision in assessee s own case for assessment year 2005-06 2015 (4) TMI 747 - ITAT LUCKNOW and the judgment of Hon'ble Allahabad High Court followed therein having been rendered in the case of Pancham Das 2006 (8) TMI 582 - ALLAHABAD HIGH COURT are not applicable and therefore, the assessee do not get any help from these judgments in the facts of the present case. We also find that it is noted by CIT(A) in Para 5.5.2 of his order that the creditors outstanding as on 31/03/2006 were paid at the end of the financial year, which means that even after the end of the present accounting year i.e. financial year 2005-06, the creditors were admittedly outstanding for one full year and it may be that the creditors were outstanding for a very long period of time. We fail to understand that whether small raw hide suppliers can afford to provide this long credit and hence, this claim cannot be accepted in the absence of confirmation from supplier and their addresses. We, therefore, reverse the order of CIT(A) on this issue and restore that of the Assessing Officer. - Decided in favor revenue. Expenditure on Land development - We find that a clear finding is given by CIT(A) that the disallowance was made by the Assessing Officer on estimated basis without pointing out any specific item of purchase or expenditure of unverifiable nature or without proper supporting bills and vouchers. This finding of CIT(A) could not be controverted by Learned D.R. of the Revenue and therefore, we do not find any reason to interfere in the order of CIT(A). Accordingly, these grounds are rejected. - Decided partly in favour of revenue.
Issues Involved:
1. Deletion of addition made on account of sundry creditors under Section 68 of the Income Tax Act, 1961. 2. Disallowance of expenditure claimed under the head Power and Fuel. Issue-Wise Detailed Analysis: 1. Deletion of Addition Made on Account of Sundry Creditors Under Section 68 of the Income Tax Act, 1961: The primary issue in this appeal was whether the Commissioner of Income Tax (Appeals)-II, Kanpur (CIT(A)) erred in deleting the addition of Rs. 1,05,01,948 made by the Assessing Officer (A.O.) under Section 68 of the Income Tax Act, 1961, on account of sundry creditors, which were deemed unverifiable due to lack of complete postal addresses and whereabouts. - Facts and Assessment Stage: The assessee had shown sundry creditors amounting to Rs. 25,02,57,062 as of 31.03.2006, compared to Rs. 13,13,54,090 in the previous year. The A.O. required the assessee to submit confirmations from raw hide suppliers to prove the creditworthiness, genuineness, and identity of the creditors. The assessee provided some confirmations but failed to furnish evidence for creditors amounting to Rs. 1,05,01,948, leading to the addition under Section 68. - CIT(A) Decision: The CIT(A) deleted the addition, relying on the assessee's previous assessment year's Tribunal decision, where a similar addition was deleted. - Tribunal's Analysis: The Tribunal examined the A.O.'s objections and noted that while there was a 16% increase in turnover, the increase in creditors was nearly 100%. The Tribunal found that the assessee failed to establish that the goods were purchased on credit, as no positive evidence or complete addresses of the creditors were provided. The Tribunal also noted that the assessee's reliance on previous Tribunal decisions and High Court judgments was misplaced as the facts differed. The Tribunal emphasized the need for the assessee to furnish detailed evidence, including names, addresses, and credit periods, to substantiate the claim of credit purchases. - Conclusion: The Tribunal concluded that the assessee failed to establish the claim of credit purchases and reversed the CIT(A)'s order, restoring the A.O.'s addition of Rs. 1,05,01,948 under Section 68. 2. Disallowance of Expenditure Claimed Under the Head Power and Fuel: The second issue involved the disallowance of Rs. 5,00,000 made by the A.O. on account of power and fuel expenses, which were deemed disproportionately higher than the previous year. - CIT(A) Decision: The CIT(A) found that the disallowance was made on an estimated basis without pointing to any specific unverifiable items or lack of supporting bills and vouchers. The CIT(A) noted that both production and sales had increased, and the power situation in Kanpur justified the higher expenses. The CIT(A) deleted the disallowance, referencing a similar deletion in the previous assessment year. - Tribunal's Analysis: The Tribunal upheld the CIT(A)'s decision, noting that the A.O. did not provide specific evidence of unverifiable expenses. The Tribunal found no reason to interfere with the CIT(A)'s order. - Conclusion: The Tribunal rejected the Revenue's grounds for disallowance and upheld the deletion of the Rs. 5,00,000 disallowance under the head Power and Fuel. Final Judgment: The Tribunal partly allowed the Revenue's appeal by restoring the addition of Rs. 1,05,01,948 under Section 68 but rejected the grounds for disallowance of Rs. 5,00,000 under the head Power and Fuel.
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