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Income Tax Appellate Tribunal, VISAKHAPATNAM BENCH, VISAKHAPATNAM
Before: SHRI V. DURGA RAO& SHRI D.S. SUNDER SINGH
आदेश /O R D E R
PER D.S. SUNDER SINGH, Accountant Member:
This appeal is filed by the assessee against the order of the Commissioner of Income Tax (Appeals) [(CIT(A)]-12, Hyderabad vide Appeal No.10310/2017-18 dated 27.02.2018 for the Assessment Year (A.Y.)2014-15.
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The assessee filed the return of income declaring total income of Rs.10,92,230/- on 24.11.2014. The case was selected for scrutiny and during the course of assessment proceedings, the Assessing Officer (AO) made enquiries with regard to the genuineness of sundry creditors by issue of notice u/s 133(6) of the Income Tax Act (hereinafter called as ‘Act’) and received the replies from all the sundry creditors except in three cases. In the case of M/s Jay Enterprise and M/s Seemanth Trading Co., the notices issued u/s 133(6) were returned unserved with comments of ‘left’ and ‘unknown’ respectively. In the case of M/s Paramount Consulting & Corporate Advisors P.Ltd., no communication was received. The AO asked the assessee as to why the outstanding amounts of the said creditors should not be brought to tax and the assessee submitted before the AO that the transactions in respect of sundry creditors were genuine which is verifiable from the books of accounts with the relevant documents and entries but not being satisfied with the explanation, the AO made the addition of Rs.5,32,462/- relating to the outstanding sundry creditors in the above accounts.
Against the order of the AO, the assessee went on appeal before the CIT(A) and the Ld.CIT(A) confirmed the addition made by the AO observing that the AO has given enough opportunities and only after non submission
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of information, the AO made the addition. Accordingly, confirmed the order of the AO and dismissed the appeal of the assessee.
Aggrieved by the order of the CIT(A), the assessee is in appeal before us. During the appeal hearing, the Ld.AR submitted that there was an outstanding amount of Rs.3,81,005/- in the case of M/s Jay Enterprises as on 31.03.2014 which was added by the AO. The Ld.AR filed a paper book and taken our attention to the page No.40-41 of the paper book relating to the account copies of the creditors in the books of the assessee. In Page No.40 in the case of Jay Enterprise, there was opening balance of Rs.18,81,005/- as on 01.04.2013 and the assessee made the payment of Rs.15,00,000/- during the year and the closing balance was Rs.3,81,005/- as at the end of the year. Page No.41 also pertains to account copy of M/s Jay Enterprise from 01.04.2014 to 31.03.2015. The account reveals series of transactions in the creditor’s account relating to the purchases and the payments made during the subsequent year i.e. 01.04.2014 to 31.03.2015 and there was closing balance of Rs.79,78,575/- as at the end of the year. The assessee also invited our attention to page No.52 of the paper book, which shows the account for the period from 01.04.2015 to 31.03.2016. As per the account copy, the assessee has made the number of transactions during the year and ultimately on 29.04.2015 the entire payable was paid
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by cheque drawn on Oriental Bank of Commerce. All the account copies for the 3 years were placed before the AO at the time of assessment. From the account copies and the bills furnished in the paper book clearly shows that the assessee has made the regular purchases from Jay Enterprises and the payments were made through cheque. The AO did not suspect he purchases made by the assessee from M/s Jay Enterprises. Having accepted the purchases by the AO, merely because the amount was outstanding as at the end of the year and the assessee could not produce the sundry creditors, the addition cannot be made. The assessee has furnished the account copies from 2011-12 to 2015-16 along with the bills. All the bills clearly shows that the transactions were genuine. No evidence was brought on record by the revenue to controvert the evidence placed by the assessee. Therefore, we are unable to sustain the order of the Ld.CIT(A) and the same is set aside and the appeal of the assessee is allowed.
Seemant Trading Co.: The AO made the addition of Rs.1,47,593/- as at the end of the year in this case. The AO made the addition as the notice issued u/s 133(6) was returned unserved and the assessee was unable to produce the evidence to prove the genuineness of outstanding. The assessee furnished the paper book in page No.53 to 56 relating to the account copies of the creditor for the period from 01.04.2012 to
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31.03.2016. As per the account copies, there was closing balance of Rs.1,47,593/- as on 31.03.2013 which was carried forward to the subsequent years and at the end of the Financial Year (F.Y.)2015-16, the assessee passed a journal entry debiting to discounts account and stated that the said amount was offered to income for the F.Y. 2015-16 relevant to the A.Y. 2016-17. From the above details furnished by the assessee, it is observed that the assessee was unable to produce any evidence to show that the amount outstanding was genuine and ultimately written off in 2015-16. No evidence was filed before the AO or before the CIT(A) or before the Tribunal to establish the genuineness of the outstanding and to prove that the outstanding balance was not paid out of unaccounted resources. Therefore, we are unable to accept the contention of the Ld.AR that the outstanding was genuine. Since the assessee failed to establish the genuineness and identify the sundry creditor, we do not see any reason to interfere with the order of the Ld.CIT(A) and the same is upheld. The assessee’s appeal in respect of addition of Rs.1,47,593/- in the case of Seemant Trading Co. is dismissed.
Paramount Consultant and Corporate Advisors Pvt. Ltd. There was an outstanding amount of Rs.2,864/- as at the end of the year. The
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assessee stated that the transaction was related to the purchases made by the assessee from the creditor. The assessee furnished the paper book and the account copies for purchases and also the account copies of the creditor, as per which the assessee has made the series of transactions from Paramount Consulting & Corporate Advisors Pvt. Ltd. and paid the brokerage. The Ld.AR argued that the payment was made through cheque. Since the AO did not dispute the fact that the payment was made by cheque, which is evident from the account copy in page No.95 and only defect was non submission of reply from the creditor. The notice was served and the AO did not make any further enquiry to ascertain the correctness of the outstanding. Since the identity is established and the books of accounts show series of transaction, we do not see any reason to suspect the genuineness of the expenditure/outstanding. Accordingly, we set aside the order of the Ld.CIT(A) and delete the addition made by the AO.
In the result, appeal of the assessee is partly allowed.
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Order pronounced in the open court on 7th December, 2018.
Sd/- Sd/- (िी.दुगाा राि) (धड.एस. सुन्दर ससह) (V. DURGA RAO) (D.S. SUNDER SINGH) न्याधयक सदस्य/JUDICIAL MEMBER लेखा सदस्य/ACCOUNTANT MEMBER धिशाखापटणम /Visakhapatnam ददिांक /Dated : 07.12.2018 L.Rama, SPS आदेश की प्रधिधलधप अग्रेधर्ि/Copy of the order forwarded to:- 1. ननर्ााररती / The Assessee – Mandeep Maheswari, D.No.76-1-18, Bhagyodaya Apartments, Danavaipeta, Rajahmundry 2. राजस्व / The Revenue– Income Tax Officer, Ward-2(1), Rajahmundry 3. The Pr.Commissioner of Income Tax, Rajahmundry 4. The Commissioner of Income Tax-(Appeals)-12, Hyderabad 5. धिभागीय प्रधिधिधि, आयकर अपीलीय अधिकरण, धिशाखापटणम /DR, ITAT, Visakhapatnam 6. गाडा फ़ाईल / Guard file
आदेशािुसार / BY ORDER // True Copy //
Sr. Private Secretary ITAT, VISAKHAPATNAM