SURINDER MALHOTRA (PROP. M/S. CRAFT INDIA),NEW DELHI vs. ACIT, CIRCLE-54(1), NEW DELHI

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ITA 2284/DEL/2019Status: DisposedITAT Delhi07 June 2022AY 2013-143 pages
AI SummaryPartly Allowed

What did the Tribunal hold?

The Tribunal held that the outstanding liabilities to Arora Handicrafts and Dev Art & Handicraft could not be added under Section 68 as they represented carry forward amounts, partly repaid. Similarly, the outstanding to First Recourse & Movers and Sunil Kumar were considered repaid in subsequent years, making the addition unjustified.

What were the facts?

The assessee challenged the disallowance of Rs. 99,091/- for alleged bogus liabilities. The addition was made under Section 68 of the Income Tax Act due to non-availability of confirmations from sundry creditors.

What were the issues?

Whether outstanding liabilities from sundry creditors, where part payment has been made or repayment occurred in subsequent years, can be added as unexplained cash credits under Section 68.

Which sections of the Income-tax Act were involved?

Section 68,Section 14A

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Income Tax Appellate Tribunal, DELHI BENCH “G” DELHI

Before: SHRI KUL BHARAT & SHRI PRADIP KUMAR KEDIA

For Appellant: Shri Abhishek Jain, CA
For Respondent: Shri Abhishek Kumar, Sr.DR

The captioned appeal has been filed at the instance of the assessee against the order of the Commissioner of Income Tax (Appeals)-XVIII, [‘CIT(A)’ in short], dated 11.01.2019 arising from the assessment order dated 17.03.2016 passed by the Assessing Officer (AO), under Section 143(3) of the Income Tax Act, 1961 (the Act) concerning AY 2013-14.

2.

As per grounds of appeal, the assessee has challenged the disallowance of Rs.99,091/- alleged to be bogus and fictitious liabilities shown by the assessee in its book of account. The assessee also challenged the disallowance under Section 14A of the Act amounting to Rs.10,500/- which was however withdrawn and not pressed at the time of hearing. Hence, this ground is dismissed as not pressed.

3. With the assistance of the ld. counsel for the assessee, we find that the addition has been made by applying Section 68 of the Act due to non availability of confirmation from such sundry creditors tabulated herein:

S.No. Name of Opening Debit Credit Closing the party Balance Balance 1. Arora 17,707/ Nil Nil 17,707/- Handicrafts 2. Dev Art & 78,890/- 19,500/- Nil 59,390/- Handicraft Total(A) 96,597/- 19,500/- Nil 77,097/- 3. First 30,581/- 39,687/- 12,965/- 3,859/- Recourse & Movers 4. Sunil Nil Nil 18,135/- 18,135/- Kumar Total (B) 30,581 39,687/- 31,100/- 21,994/- 1,27,178/- 59,187/- 31,100/- 99,091/-

4.

As regards credit for ‘Arora Handicrafts’ (supra) and ‘Dev Art & Handicraft’, it was pointed out that no credit has been received during the year and the liability declared is on account of carry forward outstanding, a part of which has been repaid during the year. In the light of these facts, the respective amounts outstanding towards these two parties cannot be added under Section 68 of the Act.

4.1 As regards outstanding from ‘First Recourse & Movers’, it is contended that the outstanding of Rs.3859/- has been returned back in the subsequent assessment year, and therefore, meager outstanding has been duly repaid ultimately.

4.2 As regards ‘Sunil Kumar’, it was submitted that the outstanding of Rs.18,135/- stood repaid in the subsequent assessment year, and therefore, addition under Section 68 is not justified merely owning to non confirmation in view of the decision in the case of CIT vs. Ayachi Chandrasekhar Narsangji, 42 Taxmann.com 251 (Guj).

5.

In view of the factual matrix pointed out as noted above, we find no justification for impugned additions of Rs.99,091/- under challenge. The action of the CIT(A) is accordingly set aside and the claim of the assessee is directed to be restored by the Assessing Officer.

6.

In the result, the appeal of the assessee is partly allowed. Order was pronounced in the open Court on 07/06/2022.

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