RINKU SANDHU,NEW DELHI vs. ITO WARD 29(4), NEW DELHI

Briefly the facts of the case are that assessee filed return of income declaring income of Rs.10,51,350/-. The case was selected for limited scrutiny for the reasons of “large amount of Sundry Creditors”. The A.O. issued statutory notices which were not attended to by the assessee and no documents have been filed. The case was selected for e-assessment, to which, assessee has given consent. The A.O. issued statutory notices, but, the same have not been complied with and no documentary evidences have been filed. The A.O. noted that there is a large amount of sundry creditors in the balance-sheet of the assessee. The A.O. asked for the details of one of the sundry creditor Shri Sikander Khan and the details of payments made to the sundry creditor. The A.O. issued notice under section 133(6) to Shri Sikander Khan and deputed Inspector of the Department to collect documents/information from Shri Sikander Khan. But, it came to the notice that Shri Sikander Khan is not residing at the given address. The bank statement also shows that payments have not been made to Shri Sikander Khan, therefore, A.O. doubted the 3 ITA.No.870/Del./2019 Kum. Rinku Sandhu, New Delhi. details mentioned in the balance-sheet in the absence of any cooperation from the side of the assessee, A.O. made addition of Rs.1,28,05,195/- on account of unexplained sundry creditor as well as made addition of Rs.6,173/- on account of tax refund.

The assessee challenged the addition before the Ld. CIT(A) and detailed written submissions of the assessee is reproduced in the appellate order in which the assessee explained that confirmation of the Shri Sikander Khan is filed and letter of the Shri Sikander Khan is also placed on record. The payments are made to third party through account payee cheque on behalf of the sundry creditor and on his request, the payments are made as under :

We have heard the Learned Representatives of both the parties.

Learned Counsel for the Assessee reiterated the submissions made before the authorities below and submitted that compliance could not be made before A.O. due to change of address and no service made through e- mail. Shri Sikander Khan supplied the material to assessee who has purchased material from above parties, therefore, on behalf of Shri Sikander Khan, payments have been made directly to the aforesaid parties. Learned Counsel for the 5 ITA.No.870/Del./2019 Kum. Rinku Sandhu, New Delhi. Assessee with regard to the genuineness of the transaction submitted that assessee is willing to produce Shri Sikander Khan along with A.J. Enterprises, Shri Vikas Dagar, HCC Store before A.O. for verification of the transaction into the matter.

On the other hand, Ld. D.R. relied upon the Orders of the authorities below.

We have considered the rival submissions and perused the material on record. It is an admitted fact that assessee did not make compliance before A.O. The confirmation of Shri Sikander Khan filed in the paper book bears thumb impression and other letter of Shri Sikander Khan is also bears his thumb impression. Shri Sikander Khan was not found residing at the given address. Therefore, it could not be verified whether he has genuinely entered into any transaction with the assessee. It was also not proved whether Shri Sikander Khan owed any liability towards A.J. Enterprises, Shri Vikas Dagar and HCC Store debit. The Ld. CIT(A) reproduced scanned copy of confirmation of Shri Sikander Khan in the appellate order in 6 ITA.No.870/Del./2019 Kum. Rinku Sandhu, New Delhi. which signature of Shri Sikander Khan is appearing. However, the other documents bears his thumb impression only. Thus, there was justification for the authorities below to disbelieve the documents filed by the assessee. The explanation of assessee thus caste doubt in regard to outstanding sundry creditors in the books of account of the assessee. The assessee also failed to prove if any liability have been discharged in subsequent year at the instance of Shri Sikander Khan to pay to other contractors ? Further it is equally a fact that payments to these third parties on behalf of Shri Sikander Khan as alleged by the assessee are made through account payee cheques, therefore, in the interest of justice, one more chance could be given to assessee to establish genuineness of the transaction entered into by the assessee with these parties and assessee. Learned Counsel for the Assessee has undertaken before us to produce Shri Sikander Khan along with A.J. Enterprises, Shri Vikas Dagar and HCC Store before A.O. for examination of the genuineness of the transaction into the matter. Considering the above facts and undertaking given

In the result, appeal of Assessee allowed for statistical purposes.