DY. COMMISSIONER OF INCOME TAX, CIRCLE 1, KOLHAPUR, KOLHAPUR vs. ADITYA PERIPHERALS PRIVATE LIMITED, KOLHAPUR

Facts of the case, in brief, are that the assessee is a private limited company. It is engaged in the business of wholesale trade of computer spares and peripherals and also other electronic goods and components in Kolhapur and nearby districts. It filed its return of income for the impugned assessment year on 05.10.2022 declaring total income of 1,39,96,810/-. Subsequently the case of the assessee was selected for compulsory scrutiny. Accordingly, statutory notice u/s 143(2) of the Income Tax Act, 1961 (hereinafter referred to as ‘the Act’) was issued and served

During the course of assessment proceedings the Assessing Officer asked the assessee to furnish the details of unsecured loans amounting to Rs.68,24,189/-, sundry creditors of Rs.8,30,34,020/- and the details of remuneration payable amounting to Rs.28,65,398/-. However, there was no proper compliance from the side of the assessee with full details. The Assessing Officer, therefore, made addition of the above three amounts to the total income of the assessee.

In appeal the Ld. CIT(A) / NFAC deleted the addition made by the Assessing Officer holding that the assessee has submitted the full details before the Assessing Officer. So far as the addition of Rs.8,30,34,020/- made by the Assessing Officer on account of sundry creditors is concerned, he held that the assessee has demonstrated that the creditors are genuine trading counterparts arising from normal business operations and deleted the addition by observing as under: “5.3 Ground No.2 - Addition of Rs.8,30,34,020/- on account of Sundry Creditors: The AO made the addition stating that the appellant failed to provide documentary evidence to establish identity, genuineness, and creditworthiness of the sundry creditors. However, the appellant has demonstrated that the creditors are genuine trading counterparts arising from normal business operations. The books of accounts were audited under statutory laws, and payments to creditors were made in subsequent years. Furthermore, the AO neither rejected purchases, nor questioned trading volumes or profitability, thereby tacitly accepting the genuineness of the accounts. The appellant also submitted detailed creditor-wise

So far as the addition of Rs.2,44,90,346/- on account of unsecured loans is concerned, he deleted the same by observing as under:

So far as the addition of Rs.28,65,398/- on account of Directors’ remuneration is concerned, he deleted the same by observing as under: “5.5 Ground No.4 Remuneration Addition of Rs.28,65,398/- on account of Directors' Remuneration: The appellant explained that the said amount represents accrued remuneration payable to directors in the normal course of business, supported by audited books of accounts. The AO, however, neither sought clarification nor issued any notice requesting documentary proof. It is a settled law that in absence of confrontation or inquiry, no addition can be made merely on suspicion. The remuneration liability is recognized under statutory law, and its genuineness stands established.

Aggrieved with such order of the Ld. CIT(A) / NFAC the Revenue is in appeal before the Tribunal by raising the following grounds: 1. Whether, on the facts and in the circumstances of the case and in law, the Ld. CIT(A) erred in deleting the addition made on account of sundry creditors of Rs.8,30,34,020 accepting the assessee's explanation without proper verification, ignoring that assessee failed to discharge the onus of proving identity, genuineness. creditworthiness of the creditors with cogent evidence? 2. Whether, on the facts and in the circumstances of the case and in law, the Ld. CIT(A) justified in deleting the addition of Rs.2,44,90,346/- on account of unsecured loan under section 68 by relying upon documents such as PAN, Aadhaar, ITRs, and statements, without examining the creditworthiness and financial capacity of the lenders? 3. Whether the Ld. CIT(A) erred in law in accepting the genuineness of unsecured merely on the ground that transactions were routed through banking channels. conducting proper inquiry or verification? 4. Whether, on the facts and in the circumstances of the case and in law, the Ld. CIT(A) erred in deleting the addition of Rs.28,65,398/ on account of directors remuneration payable without verifying the supporting documentary evidence and statutory con under the relevant provisions of law? 5. Whether on the facts and circumstances of the case and in law the Ld. CIT(A) deleting the additions without calling for a remand report from the Assessing thereby violating the principles of natural justice and causing prejudice to the in the Revenue. 6. The appellant craves to add amend, alter or delete the above grounds of appeal course of appellate proceeding before the Hon'ble Tribunal.

We have heard the rival arguments made by both the sides, perused the orders of the Assessing Officer and Ld. CIT(A) / NFAC and the paper book filed on behalf of the assessee. We have also considered the various decisions cited before us. A perusal of the various details filed by the assessee before the

In the result, the appeal filed by the Revenue is allowed for statistical purposes.