SMT.SNEHALATHA SURANA ,BANGALORE vs. THE ASSISTANT COMMISSIONER OF INCOME TAX CIRCLE-7(2)(1), BANGALORE

The assessee has filed this appeal challenging the order dated 01-03-2019 passed by Ld CIT(A)-7, Bengaluru and it relates to the assessment year 2013-14. The grounds urged by the assessee relate to the following issues:- (a) Addition made u/s 41(1) of the Income-tax Act,1961 ['the Act' for short] (b) Addition made u/s 40A(3) of the Act (c) Addition on account of different between books an VAT statement.

The first issue relates to addition made u/s 41(1) of the Act. During the course of assessment proceedings, the A.O. noticed that the assessee has declared sundry creditors balance of Rs.3,64,17,892/- in her balance sheet. The A.O. asked the assessee to submit confirmation letters from the creditors having closing balance of more than Rs.5 lakhs. In some cases, the A.O. also issued notices u/s 133 (6) of the Act. There were replies from some people and no reply from others. The assessing officer took the view that the sundry creditors balance of parties from whom no reply was received are bogus and non-existent. The aggregate amount of such creditors was Rs.88,93,269/-. The A.O. added the above said amount to the total income u/s 41 of the Act. The details of the said creditors have been tabulated as under by the A.O.

Before Ld. CIT(A), the assessee furnished confirmation letters obtained from the above said creditors as additional evidences. However, the Ld. CIT(A) refused to admit the additional evidences on the reasoning that the assessee did not fulfil the conditions prescribed under Rule 46A of the I.T. Rules. Accordingly, he confirmed the above said addition.

Before us, the Ld. A.R. submitted that the assessee, in fact, requested the parties to furnish confirmation letters during the course of assessment proceedings, but they did not cooperate at that point of time. Subsequently, the assessee persuaded them to furnish confirmation letters and those letters were furnished before Ld. CIT(A) as additional evidences. Accordingly, the LD. A.R. submitted that the assessee was prevented by sufficient cause from producing those evidences before A.O. Accordingly, she prayed that these additional evidences may be admitted and the matter may be restored to the file of A.O. for examining them.

We heard Ld. D.R., who supported the order passed by Ld. CIT(A).

We heard rival submissions and perused the record. We notice that the assessee could not furnish the confirmation letters, since those letters were not available with the assessee during the course of assessment proceedings. Further, they have to be collected from the creditors, over whom the assessee may not be having effective control. It is the case of the assessee that the confirmation letters

The second issue contested by the assessee relates to disallowance made u/s 40A(3) of the Act amounting to Rs.2,93,865/- We notice that the assessee has agreed for this disallowance before the A.O. Accordingly, the Ld. CIT(A) also confirmed the disallowance. Before us, the assessee could not furnish any material to controvert the addition made by the A.O. It was also not shown to us that the addition was agreed under wrong impression. Accordingly, we also confirm the disallowance made u/s 40A(3) of the Act.

The last issue contested by the assessee relates to the addition of Rs.94,000/- being the difference in sales reported in the books of accounts and VAT returns. Before the A.O., the assessee could not reconcile the difference and hence agreed for the addition. Before Ld. CIT(A) also the assessee could not reconcile the difference and hence the Ld. CIT(A) also confirmed the same. Before us also, the assessee could not reconcile the difference. Hence, we have no other option but to confirm the addition made by the A.O. on this issue.

In the result, the appeal filed by the assessee is treated as partly allowed for statistical purposes. Order pronounced in the open court on 29th Dec, 2021.