DCIT, GURGAON vs. M/S. ISHA DECOR SOLUTIONS INDIA PVT. LTD., GURGAON

This appeal by the Revenue and cross objection by the assessee are preferred against the order of the CIT(A) - 1, Gurgaon dated 19.02.2016 pertaining to A.Y 2011-12.

The solitary grievance of the revenue is that the ld. CIT(A) erred in deleting the addition of Rs. 2,21,64,928/- made by the Assessing Officer on account of unexplained/unverified sundry creditors.

Briefly stated, the facts of the case are that while scrutinizing the return of income, the Assessing Officer found that the assessee has shown sundry creditor of Rs. 2,21,64,928/- in the name of Bo Concept, Denmark. The assessee was asked to furnish confirmation from the said creditor. In response, the assessee furnished the address of the creditor alongwith copy of ledger account, which was not found to be verified and confirmed by the creditor.

The Assessing Officer once again asked the assessee to furnish confirmation from the said creditor. On receiving no plausible reply and drawing support from various judicial decisions, the Assessing Officer made addition of Rs. 2,21,64,928/- u/s 68 of the Act.

Before the ld. CIT(A), it was pointed out by the ld. counsel for the assessee that during the assessment proceedings itself, the assessee has stated that the said credits are on account of purchases made by it from the company Bo Concept, Denmark. It was strongly contended that the purchases could be easily verified from the purchase invoices, shipping bills, bills of entry, etc and also from the ledger account of the supplier and the payments are reflected in the bank accounts. It was explained to the ld. CIT(A) that the amount relates to the outstanding balance in the account of Bo Concept, Denmark, the sole supplier of goods to the assessee company.

After considering the facts and submissions, the ld. CIT(A) was convinced with the genuineness of the transactions and deleted the addition made u/s 68 of the Act.

Before us, the ld. DR strongly relied upon the findings of the Assessing Officer. It is the say of the ld. DR that the ld. CIT(A) himself has neither verified nor directed the Assessing Officer to verify the purchases.

On the other hand, the ld. counsel for the assessee reiterated what has been stated before the lower authorities.

We have given thoughtful consideration to the orders of the authorities below. There is no dispute that Bo Concept, Denmark is the sole supplier of goods to the assessee company. Bo Concept is a branded manufacturer and supplier of ready to assemble furniture and the company is a franchisee, having retail outlet at Palladium Mall, Mumbai. Details of purchases are exhibited at pages 43 to 51 of the paper book and balance outstanding in the name of Bo Concepts, Denmark is out of purchases made from it by the assessee. These transactions are continuous transactions. In our considered opinion, such transactions do not come within the purview of section 68 of the Act. Considering the facts of the case in totality, we do not find any error or infirmity in the findings of the ld. CIT(A).

The cross objection is in support of the order of the ld. CIT(A) and hence needs no separate adjudication and, accordingly, dismissed.

In the result, the appeal of the Revenue in as well as the cross objections in CO No. 220/DEL/2016 stand dismissed.