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Income Tax Appellate Tribunal, HYDERABAD BENCHES “B”: HYDERABAD
Before: SHRI SATBEER SINGH GODARA & LAXMI PRASAD SAHU
O R D E R PER L.P. SAHU, A.M.: This appeal filed by the assessee is directed against CIT(A) - 6, Hyderabad’s order dated 28/06/2019 involving proceedings u/s 143(3) of the Income Tax Act, 1961 ; in short “the Act”.
Brief facts of the case are that assessee is an individual engaged in the business of security agencies i.e. providing security services under the name and style of M/s Premier Security & Management Facility Services and deriving income under the head ‘profits and gains of business or profession. He filed his return of income for the AY 2016-17 on 17/10/2016 admitting a total income of Rs. 5,85,950/-, which was processed u/s 143(1) of the Act and selected for limited scrutiny under CASS in order to examine – i) whether the sundry creditors are genuine ?, ii) whether sales turnover/receipts has been correctly offered to tax ? and iii) whether deduction claimed on account of depreciation is admissible ?
2.1 Accordingly, after issuing statutory notices, the AO completed the assessment u/s 143(3) vide order dated 21/12/2018 determining the total income of the assessee at Rs. 56,59,640/- by making the following additions: 1. Unexplained credits u/s 68 of the Act – Rs. 50,00,000/- 2. Undisclosed contract receipts - Rs. 73,685/-.
When the assessee preferred an appeal before the CIT(A), the CIT(A) elaborately discussed the issues in dispute and analysed the same with case law and confirmed the order of AO.
Aggrieved by the order of CIT(A), the assessee is in appeal before us.
With regard to the issue of addition of Rs. 50,00,000/- u/s 68 towards unexplained credits, the AO observed that an amount of Rs. 50 lakhs was shown as sundry creditors as on 31/03/2016. When asked to furnish the details of the sundry creditors and confirmation letters, the assessee filed a reply on 13/12/2018, which according to AO, the reply is silent as regards the details of sundry creditors and their confirmation. The AO therefore added the said amount of Rs. 50 lakhs to the income of the assessee u/s 68 of the Act by holding that the assessee has failed to discharge his onus in proving the identity of the creditors, their creditworthiness and the genuineness of the transactions.
5.1 The CIT(A) confirmed the said addition by observing that the assessee had failed to discharge the onus cast on him with regard to genuineness of the transactions pertaining to Rs. 50,00,000/- shown as liability against ‘Aditya Homes’ in the balance sheet as on 31/03/2016.
5.2 Before us, the ld. AR of the assessee submitted that the assessee has all the documentary evidence to prove the identity of the creditors, their creditworthiness and the genuineness of the transactions and therefore, requested the Bench to remit the issue in dispute back to the file of AO to establish his case on merits.
5.3 The ld. DR, on other hand, has not objected to the submission of the assessee to remit the matter back to the file of the AO.
5.4 After considering the submissions of both the parties and in the interest of justice, we are of the view that one more opportunity may be given to assessee to substantiate his case by way of filing documentary evidence before the AO. Accordingly, we remit the issue back to the file of AO with a direction to consider and examine the documents which will be put forth by the assessee before him and thereafter decide the issue in accordance with law after providing reasonable opportunity of hearing to the assessee. The assessee is directed to substantiate his claim by way of filing documentary evidence before the AO in support of his claim without seeking any unnecessary adjournments for early completion of the assessment. Accordingly, ground nos. 2 & 3 raised on this issue are treated as allowed for statistical purposes.
As regards the issue of addition of Rs. 73,685/- towards understatement of receipts, we remit this issue also to the file of AO with a direction to decide the same in line with ground Nos. 2 & 3. The assessee is directed to substantiate his claim by way of documentary evidence before the AO. Ground No. 4 is also treated as allowed for statistical purposes.
Ground Nos. 1 & 2 are general in nature, hence, need no adjudication.
In the result, appeal of the assessee is treated as allowed for statistical purposes in above terms.
Pronounced in the open court on 7th April, 2021.