KUNAL KANIYALAL PATEL,,AHMEDABAD. vs. ITO, WARD-2(2)(2),, AHMEDABAD

The assessee has raised following grounds of appeal:- “1. On facts and circumstances of the case, The learned commissioner of Income Tax (Appeals-10) has erred in confirming the addition made by Assessing officer of Rs. 5,18,194/- in respect of three creditors outstanding balance not proved as genuine by not granting proper and sufficient opportunities and by not accepting the evidences in respect of confirmation and contra Accounts of the three creditors.

The fact in brief is that return of income declaring income of Rs. 3,13,460/- was filed on 21st Sep, 2012. The case was selected subject to scrutiny assessment and notice u/s. 143(2) of the act was issued on 7th August, 2013. The assessment u/s. 143(3) of the act was finalized on 10th March, 2015 determining the total income at Rs. 30,52,268/-. The fact pertaining to two grounds of appeal filed by the assessee are discussed while adjudicating the appeal of the assessee as follows:-

The assessee has preferred appeal before the ld. CIT(A). The ld. CIT(A) has dismissed the appeal of the assessee.

We have heard the rival contention on this issue and perused the material on record carefully. During the course of assessment proceedings, the assessing officer has asked the assessee to file contra detail in respect of the sundry creditors. The assessee has filed the contra details of the sundry creditors on 3rd March, and 9th March, 2015 respectively. However, the assessee could not furnish the contra confirmation in respect of three sundry creditors as assessee could obtain contra confirmation from these sundry creditors only on 11th Marcy, 2015. The assessee has tried to submit these contra-confirmation of three suppliers on 12th March, 2015 before the assessing officer but the assessing officer has declined to accept the same on the ground that he had already passed the assessment order on 10th March, 2015 by making addition of Rs. 5,18,194/- in respect of above three outstanding sundry creditors. During the course of appellate proceedings, the assessee has filed additional evidences under Rule 46A before the ld. CIT(A). The ld. CIT(A) after considering the fact that notices of hearing could not be served on the assessee because of change of address and called remand report from the assessing officer. The ld. CIT(A) has confirmed the addition stating that as per the remand report, the assessee has simply filed the confirmation but not filed the PAN No. of the sundry creditors. In this regard, during the course of appellate proceedings before us, the ld. counsel has contended that assessing officer only called confirmations of contra accounts and copies of sale invoices of the suppliers. The assessee has supplied the confirmation of contra accounts and copies of invoices in Page No 4 Shri Kunal Kanaiyalal Patel vs. ITO respect of the suppliers except three suppliers. The assessing officer has accepted the similar confirmation of contra accounts and copies of invoices in all the cases and not any addition was made, however, in the case of three suppliers the ld. CIT(A) has sustained the addition on the ground that assessee has not supplied the other information i.e. PAN, return of income etc. In this connection, the ld. counsel has submitted that even during the course of remand report, the assessing officer has not sought any detail such as PAN/IT return and bank statement of these three suppliers. With the assistance of ld. representatives, we have gone through the page no. 30 to 34 of the paper book pertaining to letter dated 3rd March, 2015 and 9th March, 2015 vide which the assessee has furnished copies of sale invoices, copies of contra confirmation letters in respect of the other suppliers and noticed that in respect of the three sundry creditors, the assessee has also furnished the similar information vide letter dated 23rd Feb, 2017 before the ld. CIT(A). The assessing officer has never asked the assessee to furnish extra details i.e. PAN, return of income and bank statement of the sundry creditors. The assessing officer has also not disproved the details furnished by the assessee similar to the details furnished in respect of other cases. Considering the above, the decision of ld. CIT(A) is not justified, therefore, the appeal of the assessee is allowed on this issue.

Assessee has filed appeal before the ld. CIT(A). The ld. CIT(A) has dismissed the appeal of the assessee.

We have heard the rival contentions on this issue. During the course of assessment, the assessing officer has made addition u/s. 68 in respect of unsecured loan obtained from Kunal K. Patel on the ground that assessee has not furnished the detail of the loan transaction. The ld. CIT(A) has sustained the addition stating that even in the additional evidence produced by the assessee, the assessee has not furnished PAN No of the lender on the confirmation and stated that bank statement filed by the assessee was for the period 9-12-2011 to 06-07-2012 only. Therefore, the ld. CIT(A) has dismissed the appeal of the assessee. During the course of appellate Page No 6 Shri Kunal Kanaiyalal Patel vs. ITO proceedings before us, the ld. counsel has contended that during the course of assessment vide letter dated 9th March, 2015, the assessee has submitted PAN No. AAJHK0374A of the Kunal K. Patel along with confirmation and his bank statement and referred page no. 733 to 734 and 48 of the paper book. With the assistance of ld. representatives, we have perused the aforesaid document mentioned by ld. counsel and it is noticed that vide aforesaid letter dated 9th March, 2015, the assessee has attached copy of confirmation along with PAN No. and copy of bank statement of the lender. It is also noticed that at page no. 48 of the paper book, the assessee has placed the copy of confirmation from Kunal K. Patel HUF in respect of providing loan to the amount of Rs. 21,50,000/- and at page no. 49 the assessee has placed copy of acknowledgement of income tax return filed by the lender, Kunal K. Patel and at page no. 50, the assessee has also placed the copy of bank account statement demonstrating that the amount of unsecured loan was provided to the assessee. The assessee has also submitted that actually it was a one page bank statement because the assessee has opened bank account only on 9th Dec, 2011 and the HUF was established on 17th Jan, 2011, therefore, the ld. CIT(A) has incorrectly on assumption basis sustained the addition without pointing out any defect or infirmity in the information provided by the assessee. After taking into consideration the aforesaid facts and circumstances, we consider that the assessee has demonstrated from the aforesaid said copies of documents and detail placed in the paper book that the required information were submitted before the assessing officer at the time of assessment proceedings and the assessing officer has not considered the same before adjudicating the issue in appeal and further it is noticed that ld. CIT(A) has just sustained the addition Page No 7 Shri Kunal Kanaiyalal Patel vs. ITO without disproving the genuineness of transaction demonstrated in the documents and the details furnished by the assessee. In the light of the above facts and circumstances, we consider that it will be appropriate to restore this issue to the file of assessing officer for deciding afresh after taking into consideration the detail and document furnished by the assessee. Accordingly, this case is restored to the file of assessing officer as directed above for deciding afresh after affording adequate opportunity to the assessee.