M/S SHIVALIK DHAN KUTAI UDYOG,BULANDSHAHR vs. JCIT, BULANDSHAHR

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ITA 6267/DEL/2016Status: DisposedITAT Delhi15 March 2022AY 2011-123 pages

In favour of the assessee: the assessee's appeal was allowed. From the AI summary of this appeal.

AI SummaryAllowed

What did the Tribunal hold?

The Tribunal held that confirmations received from sundry creditors cannot be dismissed solely because they appear to be made by the same person. The revenue must prove the transactions are bogus. Therefore, additions made on account of creditors with duly filed confirmations were directed to be deleted.

What were the facts?

The Assessing Officer (AO) made an addition of Rs. 1,53,77,235/- on account of sundry creditors, as notices issued to these parties under Section 133(6) were not complied with. The CIT(A) confirmed this addition.

What were the issues?

Whether the AO and CIT(A) were justified in disallowing sundry creditors without proving the transactions were bogus, despite receiving confirmations?

Which sections of the Income-tax Act were involved?

Section 133(6),Section 143(3)

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, DELHI BENCH ‘G’, NEW DELHI

Before: Sh. Saktijit DeyDr. B. R. R. Kumar

Hearing: 10.03.2022Pronounced: 15.03.2022

Per Dr. B. R. R. Kumar, Accountant Member:

1.

The present appeal has been filed by the assessee against the order of the ld. CIT(A), Ghaziabad dated 26.10.2016.

2.

Following grounds have been raised by the assessee:

“1. That having regard to the facts and circumstances of the case, Ld. CIT(A) has erred in law and on facts in confirming the action of Ld. AO in making an aggregate addition of Rs. 1,53,77,235/- on account of sundry creditors and that too by recording incorrect facts and findings and without observing the principles of natural justice.

2. That in any case and in any view of the matter, action of Ld. CIT(A) in confirming the action of Ld. AO in making an aggregate addition of Rs.1,53,77,235/- on 2 Shivalik Dhan Kutai Udyog account of sundry creditors is bad in law and against the facts and circumstances of the case.”

3.

The assessee filed his income tax return on 30.09.2011 declaring loss of Rs. 31,10,164/-. The case was processed u/s 143(1) of the IT Act. Notice u/s 143(2) was issued by Assessing Officer to the assessee on 24.09.2012. In this case the assessee is derives income from Manufacturing and Trading of Rice and has shown gross turnover of Rs.2,71,85,184/- gross profit of Rs.53,17,562/- and declared net loss at Rs.30,90,165/. During the course of assessment proceeding u/s 143(3) an addition of Rs.1,53,77,235/- was made on account of creditors which were purportedly not found to be genuine.

4.

As per the balance sheet, the outstanding sundry creditors were to the tune of Rs.2.28 crores. The AO issued notice u/s 133(6) of the Income Tax Act, 1961 to 23 parties. The sundry creditors are mostly situated in GB Nagar and Bulandshahr areas. None of the 23 parties complied to the notices issued. After considering the purchases made through APMC, Sikandrabad and old creditors, the AO added an amount of Rs.1.53 crores pertaining to 18 sundry creditors.

5.

During the appellate proceedings, the AO submitted report to the ld. CIT(A) that sudden confirmations from 8 parties have been received but the details have been incomplete. The ld. CIT(A) held that reply of 8 parties have been received but they did not furnish copy of return or ledger account. In respect of remaining 8 parties no confirmation would be received. The ld. CIT(A) has also held that all the confirmations filed before the AO appear to have been made by the same person. Holding thus, the ld. CIT(A) confirmed the addition.

3 Shivalik Dhan Kutai Udyog 6. We have gone through the entire issue and examine the confirmations filed before the revenue authorities. The confirmations cannot be brushed aside on the grounds that they appear to have been made by the same person. Having received the confirmations, it is for the revenue to bring on record as to how the transactions as confirmed by the parties are bogus. Hence, we hereby direct the AO to delete the additions made on account of sundry creditors whose confirmations have been duly filed.

7.

In the result, the appeal of the assessee is allowed Order Pronounced in the Open Court on 15/03/2022.

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