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2017 (3) TMI 890 - AT - Income TaxAddition u/s 41 - genuineness of the sundry creditors - Held that - Assessee miserably failed to furnish any proper detail and details of sundry creditors nor could furnish any detail if any payment was made to the sundry creditors in subsequent years and most importantly the fact that assessee has himself offered to ld. Assessing Officer for making addition of ₹ 7,02,042/-. We, therefore, find no reason to interfere with the order of ld. Commissioner of Income Tax(A) on this issue. Accordingly, the appeal of assessee is dismissed. Deduction u/s.54EC - Held that - Legislature has introduced the prospective amendment w.e.f. 1.4.2015 in the existing provisions of sub-section (i) of section 54EC of the Act, thus we confirm the view that assessee has rightly claimed deduction u/s 54EC of the Act of ₹ 1 crores. We, therefore, find no reason to interfere with the order of ld. Commissioner of Income Tax(A) and accordingly dismiss the appeal of Revenue.
Issues Involved:
1. Addition under Section 41(1) of the Income-tax Act. 2. Deduction under Section 54EC of the Income-tax Act. Issue-wise Detailed Analysis: 1. Addition under Section 41(1) of the Income-tax Act: The primary issue in the assessee’s appeal was the confirmation of the addition of ?7,02,042/- made under Section 41(1) of the Income-tax Act. The assessee, an electrical contractor, had sundry creditors amounting to ?7,02,042/- brought forward from previous years. During the assessment proceedings, the assessee could not substantiate the genuineness of these creditors with necessary details. Consequently, the assessee’s Authorized Representative offered the cumulative sum of ?7,02,042/- as income under Section 41(1) of the Act. The Commissioner of Income Tax (Appeals) [CIT(A)] confirmed this addition, noting that the assessee had voluntarily offered the amount as income during the assessment proceedings. The CIT(A) referred to judicial precedents, including the Kerala High Court's decision in Mahesh B. Shah Vs. CIT and the Bombay High Court's decision in Rameshchandra & Co. Vs. CIT, which held that no appeal lies against agreed additions unless coercion or malafide is proved. The CIT(A) also observed that the assessee failed to provide current addresses or payment details of the sundry creditors, further justifying the addition under Section 41(1). The Tribunal upheld the CIT(A)’s decision, emphasizing that the assessee could not furnish any proper details or evidence regarding the sundry creditors and had voluntarily offered the amount for addition. Consequently, the assessee’s appeal was dismissed. 2. Deduction under Section 54EC of the Income-tax Act: The Revenue’s appeal challenged the CIT(A)’s decision to allow a deduction of ?1 crore under Section 54EC of the Act, arguing that the limit is restricted to ?50 lakhs as per the proviso to Section 54EC(1) effective from 01.04.2007. The assessee had sold a plot of land and invested ?50 lakhs each in two financial years within six months from the date of sale, claiming a total deduction of ?1 crore under Section 54EC. The CIT(A) allowed the deduction, relying on judicial precedents, including the ITAT Ahmedabad Bench’s decision in Aspi Ginwala and the Madras High Court’s decision in CIT vs. C. Jaichander. These decisions supported the view that if the investment is made within six months from the date of transfer, even if it spans two financial years, the assessee is entitled to a deduction of ?1 crore. The Tribunal upheld the CIT(A)’s decision, noting that the legislature had introduced a prospective amendment effective from 01.04.2015 to address the ambiguity in the proviso to Section 54EC(1). The Tribunal found no reason to interfere with the CIT(A)’s order, confirming that the assessee had rightly claimed the deduction of ?1 crore under Section 54EC. Consequently, the Revenue’s appeal was dismissed. Conclusion: Both the assessee’s appeal regarding the addition under Section 41(1) and the Revenue’s appeal concerning the deduction under Section 54EC were dismissed. The Tribunal upheld the CIT(A)’s decisions on both issues, confirming the addition of ?7,02,042/- under Section 41(1) and allowing the deduction of ?1 crore under Section 54EC.
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