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Income Tax Appellate Tribunal, DELHI BENCH: “SMC”, NEW DELHI
Before: SHRI O.P. KANT & SHRI KULDIP SINGH
This appeal by the Assessee is directed against order dated 17/08/2017 passed by the Ld. Commissioner of Income-tax (Appeals), Karnal [in short the Ld. CIT(A)] for Assessment Year 2007-08 raising following grounds:
“[1.0] That having regard to the facts & circumstances of the case, Ld. CIT(A) has erred in law and facts in not quashing the impugned order u/s 143(3) of the Income-tax Act, 1961 that too without giving adequate opportunity of being heard and without considering the Reconciliation Statement of the Two Trade-Creditors of the Assessee/ Appellant and the documentary evidences filed by the Assessee during the assessment & appellate proceedings. [1.1] Ld. AO and the Ld.CIT(A) has erred in law in not providing the opportunity to the Assessee/Appellant to confront the Suppliers/[Trade-Creditors] for cross-examination and erred in recording the statement of the Supplier/Trade-Creditors at the back of Assessee inspite of assessee’s request for cross- examination the captioned two suppliers. [2.0] Ld. CIT(A) has erred in law on fact in confirming the action of the Ld. AO in the absence of AO’s remand report dt. 20.04.2012 and assessee’s corss-comments as well as record of the appeal. [3.0] That Ld.CIT(A) erred in law facts and circumstances of the case in disposing off the Appellant’s application for rectification u/s 154 without any modification and without giving any reason for rejecting it. [3.1] That Ld.CIT(A) without affording an opportunity of being heard prior to dispose-off the application u/s 154 erred in law disposing-off the appellant’s application u/s 154 which is also beyond time limitation. [4.0] The appellant craves to leave/add/amend/modify/delete/forego and to substitute any ground of appeal before or at the time of hearing.
2. Briefly stated facts of the case are that the assessee derives income from trading of yarn from a proprietary concern namely M/s Shivam Enterprises. For the year into consideration, the assessee filed return of income on 21/11/2007 declaring total income of Rs. 2,51,490/-. The case was selected for scrutiny and notice under section 143(2) of the Income-tax Act, 1961 (in short the ‘Act’) was issued and complied with. The scrutiny assessment under section 143(3) of the Act, was completed on 30/12/2009 after making addition of Rs. 4,56,941/- as bogus liability in respect of two trade creditors and Rs. 16,069/-, disallowance out of telephone and travelling expenses.
3. Aggrieved assessee filed an appeal before the Ld. CIT(A), who upheld the addition of bogus liability in respect of the trade creditors.
4. Aggrieved with the said addition sustained by the Ld. CIT(A), the assessee is in appeal before the Tribunal.
5. The grounds raised by the assessee are related to of the addition of Rs. 2,33,979/-in respect of M/s Jai Durga Handtex and Rs. 2,22,962/- in respect of M/s Grover Handloom.
Before us, the Ld. Counsel submitted that in the books of accounts of the assessee credit balances of Rs. 2,66,477/- and Rs. 3,11,551/- was appearing in the name of M/s Jai Durga Handtex and M/s Grover Handloom respectively. He further submitted that the Assessing Officer made independent enquiries with those parties and found that there was debit balance of rupees 32,498/- in the account of M/s Jai Durga Handtex and debit balance of rupees 88,589/- was in the account of M/s Grover handloom. The Ld. Counsel submitted that the assessee explained the difference before the Assessing Officer. According to the assessee, the difference was on account of the debit notes raised, which has been accounted for by the assessee in subsequent Assessment Year.
The Ld. Counsel also submitted that the Assessing Officer has relied on the statement of the parties and before making additions, no cross-examination has been provided to the assessee, which is in violation of the principle of natural Justice and thus no addition could have been made in the case of the assessee.
The Ld. DR on the other hand, relied on the order of the Lower Authorities.
We have heard the rival submission and perused the relevant material on record.
We find that before the Assessing Officer, the assessee explained the difference in ledger accounts of those two parties as due to the debit notes, which were accounted for by those parties at the time of rejection of goods but the assessee accounted for the same later on. We note that the Ld. Assessing Officer has rejected this contention without verifying that, in the subsequent year assessee has accounted for those debit notes. We find that, the only dispute is in respect of the entries made by the assessee in subsequent years. The assessee has furnished copy of the account of both the parties for the next financial year showing the debit entries of the purchase returns as on 01/04/2007. In our opinion, in substance the assessee has discharged his onus by way of taking into account the debit notes and thus the corresponding liability has already been reversed by the assessee in subsequent year. In view of the above facts and circumstances, the addition sustained by the Ld. CIT(A) is not justified and accordingly we delete the same. Thus the ground Nos. 1 to 2 raised by the assessee are allowed. In view of the ground No. 1 allowed to the assessee, the ground No. 3 is rendered infructuous. The ground No. 4 being general in nature, we are not required to adjudicate upon and dismiss the same as infructuous.
In the result, appeal of the assessee is allowed.