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2021 (5) TMI 967 - AT - Income TaxUnexplained sundry/trade credits - CIT-A deleted the addition - HELD THAT - The observations of the CIT(A) are worth to mention here that it is relevant to observe that the claims of the expenses relatable to the credits under reference were not denied by the AO, and there was no disallowance to the extent, as could be seen from the assessment order. It was not the case of the AO to show that such amounts are not allowable as business expenses. Where the expenses, which were not denied to be allowed as business expenses, if the liability related to such expenses may not be treated as unexplained liability or credit and catena of judicial decisions supports this view. We, therefore, do not find any reason to interfere with the order of CIT(A) in deleting the addition and upholding the same, we dismiss the ground raised by the revenue on this issue. Appeals of the revenue are dismissed.
Issues:
1. Dismissal of appeals by the Revenue for AYs 2009-10 to 2012-13 due to low tax effect. 2. Deletion of addition of undisclosed investment of ?2,50,00,000/- for AY 2011-12. 3. Deletion of addition of ?3,78,00,000/- for AY 2012-13 on account of treating sundry/trade credits as unexplained. Issue 1 - Dismissal of Appeals: The appeals filed by the Revenue for AYs 2009-10 to 2012-13 were dismissed by the ITAT Hyderabad due to the tax effect being less than ?50.00 lakhs, in accordance with CBDT Circulars. The Revenue was granted the liberty to seek recall of the order if any case fell within the exceptions mentioned in the Circulars. Issue 2 - Deletion of Undisclosed Investment for AY 2011-12: In the appeal for AY 2011-12, the Revenue challenged the deletion of the addition of ?2,50,00,000/- as undisclosed investment. The AO had treated this amount as unexplained investment due to non-reflection in Form 52A. However, the CIT(A) directed the AO to delete the addition, stating that the AO lacked clear information and understanding of the issue. The CIT(A) found the addition unsustainable, as it was based on presumptions and lacked a proper enquiry. The ITAT upheld the CIT(A)'s decision, dismissing the Revenue's appeal on this issue. Issue 3 - Deletion of Sundry/Trade Credits for AY 2012-13: Regarding the appeal for AY 2012-13, the Revenue contested the deletion of the addition of ?3,78,00,000/- made by the AO on account of treating sundry/trade credits as unexplained. The CIT(A) deleted the addition, emphasizing that the claims of expenses related to the credits were not denied by the AO, and there was no disallowance in the assessment order. The CIT(A) held that if expenses were allowed as business expenses, the amounts could not be treated as unexplained credits. The ITAT upheld the CIT(A)'s decision, dismissing the Revenue's appeal on this issue as well. In conclusion, all the appeals by the Revenue were dismissed by the ITAT Hyderabad, upholding the decisions of the CIT(A) in deleting the additions of undisclosed investments and sundry/trade credits for the respective assessment years.
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