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Income Tax Appellate Tribunal, IN THE INCOME TAX APPELLATE TRIBUNAL,
Before: SHRI
IN THE INCOME TAX APPELLATE TRIBUNAL, IN THE INCOME TAX APPELLATE TRIBUNAL, IN THE INCOME TAX APPELLATE TRIBUNAL, CUTTACK ‘SMC’ BENCH, CUTTACK BENCH, CUTTACK BEFORE SHRI BEFORE SHRI CHANDRA MOHAN GARG, JUDICIAL JUDICIAL MEMBER ITA No.137/CTK/2019 Assessment Year : 2012-2013 2013 Vaibhav Raonka Vaibhav Raonka, C/O. hardware Vs. ITO, Ward 4(1), Bhubaneswar. ITO, Ward 4(1), Bhubaneswar. Junction, Junction, Plot Plot No.49, No.49, Ashok Ashok Nagar, Janpath, Bhubaneswar. Nagar, Janpath, Bhubaneswar. PAN/GIR No. No.AIXPR 3837 M (Appellant (Appellant) .. ( Respondent Respondent) Assessee by : Shri S.K.Agarwal S.K.Agarwal, AR Revenue by : Shri J.K.Lenka , DR Date of Hearing : 24/12/ 201 / 2019 Date of Pronouncement : 31/1 12/ 2019 O R D E R
This is an appeal filed by the assessee against the order of the This is an appeal filed by the assessee against the order of the This is an appeal filed by the assessee against the order of the CIT(A),2, Bhubaneswar , Bhubaneswar dated 29.5.2017 for the assessment year for the assessment year 2012-13.
The appeal is barred by limitation of 615 days. The assessee has The appeal is barred by limitation of 615 days. The assessee has The appeal is barred by limitation of 615 days. The assessee has filed condonation petition supported by affidavit, wherein, it is stated that filed condonation petition supported by affidavit, wherein, it is stated that filed condonation petition supported by affidavit, wherein, it is stated that due to ill health of the assessee, the appeal could not be filed in stipulated due to ill health of the assessee, the appeal could not be filed in stipulated due to ill health of the assessee, the appeal could not be filed in stipulated time period. After hearing the r After hearing the rival submissions and perusing the affidavits ival submissions and perusing the affidavits and medical certificates, I am satisfied that the assessee had reasonable and medical certificates, I am satisfied that the assessee had reasonable and medical certificates, I am satisfied that the assessee had reasonable cause in filing the appeal late before the Tribunal. Hence, I condone the cause in filing the appeal late before the Tribunal. Hence, I condone the cause in filing the appeal late before the Tribunal. Hence, I condone the delay in filing the appeal and admit the same for adjudication delay in filing the appeal and admit the same for adjudication delay in filing the appeal and admit the same for adjudication.
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The grounds raised by the assessee are as under:
“1. That the ld CIT(A) has committed an error of law in confirming the additions of Rs.10,00,000/- in view of the fact that the appellant had submitted the copies of the PAN card and the confirmations from the persons from whom the advances were received, therefore, the additions of Rs.10,00,000/- made by the AO as unexplained investment liable to be deleted. 2. That the ld authorities below are wrong in holding that the sundry creditors of Rs.3,96,820/- as unexplained income of the appellant, since the sundry creditors are part of the purchase which is not disputed by them and, therefore, the addition of Rs.3,96,820/- is liable to be deleted.”
Facts in brief of the case are that during the course of assessment proceedings, the Assessing Officer noticed that the assessee has received as advance of Rs.10,00,000/- from the following persons:
Sl.No. Name of persons Amount 1. Anandram Mohapatra 2,00,000 2. Nigamananda Bal 2,00,000 3. Jayanta Kumar rout 2,00,000 4. Amar Ranjan Mohanty 1,00,000 5. Syed Atae Habib 3,00,000 The Assessing Officer required the assessee to produce the books of accounts and details of sundry creditors, details of advances to parties as shown in his balance sheet for verification/examination. In compliance thereto, the assessee produced purchase registers, sales register and bills and vouchers. Thereafter, the AO issued notice u/s.133(6) of the Act to the sundry creditors to confirm the genuineness of claim of the assessee. But
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the notices were returned back. The assessee also failed to furnish any documents regarding the claim of advances. In view of above backdrop that the Assessing Officer treated the amount of Rs.10,00,000/- as unexplained investment in business of the assessee and added the same to the total income. 5. The Assessing Officer also added Rs.3,96,820/- to the income of the assessee due to discrepancy in the sundry creditors. 6. On appeal, the CIT(A) confirmed the action of the Assessing Officer. 7. Ld counsel for the assessee submitted that the confirmations from the sundry creditors and their PAN cards were furnished to substantiate the claim of amount received as advance from the parties. He referred to assessee’s paper book at pages 18-19, 27-28, 38-39, 49-50 and 55-56. He submitted that the identity of the creditors and confirmations are furnished before the authorities below, therefore, the addition be deleted.
Replying to above, Ld. D.R. relied upon the Orders of the authorities below and submitted that the notices issued to the sundry creditors were returned back unserved and the assessee also could not co-operate with the department for compliances, therefore, addition was rightly made against the assessee.
I have considered the rival submissions and perused the record of the case.. The Assessing Officer issued notice under section 133(6) of the
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Income Tax Act, 1961 to all the sundry creditors and noted that the letters returned unserved with the postal remarks ‘not known’, ‘no such address and ‘no confirmation received’. Although the assessee filed the evidences of identity of the creditors but could not able to produce them before the Assessing Officer. Merely because failure of the assessee to produce the sundry creditors could not, by itself, have justified the additions made by the Assessing Officer, when the assessee had furnished documents, on the basis of which, the Assessing Officer, if he so wanted, could have summoned them for verification. On the other hand, the confirmations from the sundry creditors are placed on record in the paper book filed by the assessee, wherein, they have categorically stated that they have advanced the money to the assessee. The assessee has also placed on record the PAN card of the sundry creditors.
The allegation of the AO that the assessee has failed to produce cash book for verification of his claim is not a ground to disbelieve the claim of the assessee. Another reason to doubt regarding PAN numbers of the sundry creditors by ld CIT(A) is not a ground to disallow the claim of the assessee because if the authorities below could have doubted the PAN of the sundry creditors, they could have verified from their own source for authentication of the same. The Assessing Officer and ld CIT(A) being judicial authorities were under obligation to adhere to the rule of natural justice by providing opportunity of being heard to produce with the sundry
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creditors, whose confirmations have been placed on record during the appellate proceedings. When the assessee has discharged its onus by providing cogent evidence such as confirmation letters and PAN, the onus stands shifted to the AO to controvert the same by bringing cogent evidence on record to the effect that the sundry creditors are not existing in their address given in the confirmation letters and as appearing in data base of PAN of the Income tax department and their creditworthiness and genuineness of the transaction are highly doubtful. Without doing such exercise by the departmental authorities, as provided under the Act, the addition has been made on the basis of surmises and conjectures and in haste. In this case, ld CIT(A) although has accepted the confirmations letters and PAN, but did not allow the same under the plea that the same has not been furnished in the application under rule 46A. The powers of the ld CIT(A) is co-terminus with that of the AO. The ld CIT(A) has not done the exercise also. In view of above, when the assessee has provided all such evidences in support of the claim of receiving the advance from sundry creditors, I am of the considered the addition of Rs.10 lakhs is not justified and, accordingly, I direct the AO to delete the same. Ground No.1 is allowed.
So far as Rs.3,96,820/- as unexplained income of the sundry creditors, I observe that the AO has made the addition being discrepancies found between the amount as per the assessee and amount as per the
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party. On perusal of the assessment order, I find that in case of R.K.Sales of Rs.58,736/-, R.Atul & Co. of Rs.77,998/- and Anesh & Associates of Rs.1,06,618/-, totalling to Rs.2,43,352/-, the creditors have not responded to the notice issued under section 133(6) of the Act. Mere not responding of the notices issued to them, cannot be treated as unexplained investment. Out of total discrepancies of Rs.3,96,820/-, I observe that there are discrepancies of Rs.1,51,468/- (Rs.3,96,820 – Rs.2,43,352), the addition of which, deserves to upheld. However, I direct the AO to delete Rs.2,43,352/-. Hence, Ground No.2 is partly allowed.
In the result, appeal is partly allowed.
Order pronounced on 31/12/2019. Sd/- (Chandra Mohan Garg) JUDICIAL MEMBER Cuttack; Dated 31/12/2019 B.K.Parida, SPS Copy of the Order forwarded to : 1. The Appellant : Vaibhav Raonka, C/O. hardware Junction, Plot No.49, Ashok Nagar, Janpath, Bhubaneswar 2. The Respondent. ITO, Ward 4(1), Bhubaneswar 3. The CIT(A)-2, Bhubaneswar 4. Pr.CIT-2 , Bhubaneswar 5. DR, ITAT, Cuttack 6. Guard file. //True Copy// By order
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