2017 (5) TMI 17 - AT - Income Tax

Addition in respect of sundry creditors - Held that - We are at loss to understand as to from where the AO has picked up the figures mentioned in the remand report and cognizance of the same was taken by the CIT(A) without verifying the figures. Since the assessee has filed the confirmation letters of all the creditors and the revenue has not brought out anything on record to disbelieve the confirmation letters filed by the assessee, we find no justification in the addition made by the AO. On account of slight difference in the figures, the credit balance shown in the books of accounts of the assessee cannot be disbelieved. We therefore find no merit in the additions and we accordingly set aside the order of the CIT(A) and delete the additions. The other ground of appeal is with regard to chargeability of interest under section 234B, 234C and 234D. Since this ground is consequential in nature, it needs no independent adjudication. Accordingly, the appeal of the assessee is allowed.

Issues:
1. Disallowance of sundry creditors by the assessing officer.
2. Delay in filing the appeal and condonation of the same.
3. Disallowance of expenses incurred in the course of business.
4. Levy of interest under Sections 234B, 234C & 234D of the Act.
5. Arbitrariness and excessiveness of additions/disallowances.

Detailed Analysis:
1. The assessing officer disallowed a portion of the sundry creditors claimed by the assessee, leading to an addition of &8377; 30,87,616. The CIT(A) confirmed this addition for three specific creditors, as the assessee failed to provide complete confirmation letters initially. However, during the appeal, the assessee submitted confirmation letters for all creditors, but the AO and CIT(A) did not accept them for three creditors due to discrepancies in the figures. The Tribunal found no justification for the addition, as the confirmation letters were submitted, and the slight differences in figures were not sufficient to doubt the genuineness of the credits. Hence, the Tribunal set aside the CIT(A) order and deleted the additions.

2. The appeal was filed late, and the assessee sought condonation for the delay, which was granted by the Tribunal after finding a reasonable cause for the delay. The appeal was admitted for hearing.

3. The assessing officer disallowed certain expenses incurred in the course of business, which the CIT(A) confirmed partially. However, the Tribunal found that the expenses were indeed for business purposes and should not have been disallowed. Therefore, the disallowance was set aside.

4. The assessing officer levied interest under Sections 234B, 234C & 234D of the Act, which the CIT(A) confirmed. The Tribunal considered this issue consequential and did not find the need for independent adjudication since the main additions were deleted. Consequently, the appeal was allowed, and the interest levy was not upheld.

5. The Tribunal addressed the overall arbitrariness and excessiveness of the additions and disallowances sustained by the CIT(A) and found them unjustified. The Tribunal concluded that the assessee had provided sufficient evidence to support their claims, and the revenue authorities failed to disprove the genuineness of the transactions. As a result, the Tribunal allowed the appeal and set aside the additions made by the lower authorities.

← Previous Next →