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Income Tax Appellate Tribunal, DELHI BENCHES (CAMP AT MEERUT
Before: SHRI N.S. SAINI & SHRI KULDIP SINGH
ASSESSEE BY : Shri P.S. Kashyap, CA REVENUE BY : Shri S.S. Rana, CIT DR Date of Hearing : 09.01.2019 Date of Order : 16.01.2019
O R D E R
PER KULDIP SINGH, JUDICIAL MEMBER :
The appellant, DCIT, Circle 2, Meerut (hereinafter referred to as ‘the Revenue’) by filing the present appeal, sought to set aside the impugned order dated 19.03.2018 passed by Ld. CIT (Appeals), Meerut qua the Assessment Year 2015-16 on the grounds inter alia that :- “1. Whether in the facts and circumstances of the case, the ld. Commissioner of Income Tax (Appeals) has erred in law and fact in deleting the addition of Rs.2,03,71,450/- made by the A.O. on account of introduction of unexplained capital ignoring the fact that the assessee never tried to explain the source of funds from which fresh capital was introduced during the course of assessment proceedings and only kept harping over the issue of withdrawals being greater than the capital introduced thus leading the A.O. to draw an infere3nce that the source of funds, from which capital was introduced, was ingenuine and unauthentic.
2. Whether in the facts and circumstances of the case, the ld. Commissioner of Income Tax (Appeals) has erred in law and fact in deleting the addition of Rs.22,15,459/- made by A.O. on account of unverifiable sundry creditors without considering the fact that the assessee failed to discharge the onus cast upon him in getting the authenticity of sundry creditors verified before the A.O. during the course of assessment proceedings.”
Briefly stated the facts necessary for adjudication of the controversy at hand are : During assessment proceedings, Assessing Officer noticed form the audit report that the assessee has introduced capital of Rs.2,03,71,456/- during the year under assessment. AO, finding the submissions made by the assessee to explain the increase in capital contradictory, proceeded to hold that capital introduced during the year under assessment of Rs.2,03,71,456/- is from undisclosed sources and made addition thereof u/s 68 of the Income-tax Act, 1961 (for short ‘the Act’).
AO also made addition of Rs.22,15,459/- u/s 68 of the Act on the ground that the assessee has failed to discharge his onus in verifying the sundry creditors.
Assessee carried the matter by way of an appeal before the ld. CIT (A) who has deleted the addition by allowing the appeal.
Feeling aggrieved, the Revenue has come up before the Tribunal by way of filing the present appeal.
We have heard the ld. Authorized Representatives of the parties to the appeal, gone through the documents relied upon and orders passed by the revenue authorities below in the light of the facts and circumstances of the case.
GROUND NO.1 5. Perusal of para 4.1 at page 5 of the impugned order passed by the ld. CIT (A) apparently shows that the assessee has duly filed affidavit stating on oath that he has duly filed audited financial statements, copy of all bank statements, copy of capital account, copy of tax audit report before the AO and nature of entries were also explained. CIT (A), after examining the bank statement of proprietary concern of the assessee and his personal account, reached the conclusion that the amount has been transferred from construction concern to individual bank account of the assessee from which the funds were transferred back as and when required.
So, we are of the considered view that the ld. CIT (A) has rightly directed the AO to delete the addition after verifying the entries in the capital account from SBI Current account of the assessee and his individual personal saving account maintained with State Bank of India. So, ground no.1 is determined against the Revenue.
GROUND NO.2
So far as deletion of addition of Rs.22,15,459/- by the ld. CIT (A) is concerned, AO has made addition on the sole ground that the assessee has failed to discharge his onus in verifying the sundry creditors. Undisputedly, the payment to the creditors have been made through account payee cheques in the subsequent years.
It is also not in dispute that the books of account have been audited one and had not been rejected by the AO. It is also not in dispute that the AO has not disputed the genuineness of the purchases rather accepted the same as it is. It is also not in dispute that the notices issued u/s 133 (6) to 9 creditors were served upon them but 7 creditors have not replied till the date of assessment order. So, the AO had made addition on the closing balance of these creditors in the income of the assessee.
It is the case of the assessee that all the creditors are regular creditors of the assessee and they are paid in routine manner and he has brought on record the copy of ledger of two years with copy of invoice during the assessment as well as appellate proceedings.
So, when the AO has not disputed the purchases and accepted the trading account but made addition without rejecting the trading results and without disputing the genuineness of the purchases, no addition can be made. So, we are of the considered view that ld. CIT (A) has rightly deleted the addition and Ground No.2 is determined against the Revenue.
Resultantly, the appeal filed by the Revenue is hereby dismissed. Order pronounced in open court on this 16th day of January, 2019.