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Facts
The Revenue challenged the CIT(A)'s deletion of a disallowance of Rs. 2,27,93,362/- under Section 37 of the Income Tax Act. The Assessing Officer had made this addition by treating eight creditors as bogus and the expenditure as non-genuine, as the assessee failed to prove its genuineness during assessment proceedings. The CIT(A) subsequently deleted this addition.
Held
The Tribunal upheld the CIT(A)'s decision, noting that the AO had issued notices under Section 133(6) and received confirmations from the parties. These parties had offered receipts to tax, and TDS was deducted by the assessee. Considering the specialized nature of the assessee's business and the services provided, the CIT(A)'s finding of genuineness was confirmed as the Revenue failed to controvert these facts.
Key Issues
Whether the CIT(A) was justified in deleting the disallowance of expenditure under Section 37, concerning the genuineness of services provided by various parties and the outstanding credits shown by the assessee.
Sections Cited
37, 133(6)
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Income Tax Appellate Tribunal, DELHI BENCH “A”, DELHI
(A.Y.2018-19) Deputy Commissioner of Income Tax, E-2, ARA Centre, Jhandewalan Extn. ...... अपीलाथ�/Appellant New Delhi 110055 बनाम Vs. Air Charter Services P. Ltd., BMS Complex, 10, Plaza Cinema Building, Connaught Place, New Delhi 110001 ..... �ितवादी/Respondent PAN: AADCA-2612-A Assessee by : None Department by : Shri Javed Akhtar, CIT(DR) सुनवाई क� ितिथ/ Date of hearing : 24/02/2025 घोषणा क� ितिथ/ Date of pronouncement : : 24/02/2025 आदेश/ORDER
PER VIKAS AWASTHY, JM:
This appeal by the Revenue is directed against the order of Commissioner of Income Tax (Appeals)-29, Delhi (hereinafter referred to as 'the CIT(A)') dated 22.08.2024, for assessment year 2018-19.
The solitary issue raised by the Revenue in appeal is against deleting of disallowance of expenditure u/s. 37 of the Income Tax Act,1961(hereinafter referred to as ‘the Act’) to the tune of Rs.2,27,93,362/- by the Act.
Shri Javed Akhtar, representing the department submits that the assessee had shown credit outstanding in the name of eight parties aggregating to (AY 2018-19) Rs.2,27,93,362/-. The assessee failed to prove genuineness of the expenditure in assessment proceedings, hence, the Assessing Officer (AO) made addition of the aforesaid amount holding creditors as bogus. In First Appellate proceedings, the CIT(A) deleted the addition without appreciating the fact that the AO had made sufficient enquires before holding creditors as non genuine. The ld. DR prayed for reversing findings of the CIT(A) and upholding the disallowance.
We have heard the submissions made by ld. DR and have examined the material available on record, including orders of the authorities below. The assessee is engaged in the business of providing Air Charter Services under ‘non scheduled operator permit’ issued by Director General of Civil Aviation. The service provided by the assessee also includes services of Air Ambulance to patients and Super Specialty Hospitals. During the period relevant to assessment year under appeal, the assessee had shown credit outstanding in the name of eight parties providing aircraft operation services to the assessee including provision of catering, crew, hospitality, etc. The list of parties who provided services to the assessee and against whom the amounts were shown credit outstanding is as under:-