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Income Tax Appellate Tribunal, “E” BENCH, MUMBAI
This appeal of the assessee is arising out of the order of Commissioner of Income Tax (Appeals)-44, Mumbai [in short CIT(A)], in appeal No. CIT(A)-44/ITO 32(3)(4)/ITA-276/2014-15, dated 05.01.2016. The Assessment was framed by the Income Tax Officer, Ward-25(1)(2), Mumbai (in short ‘ITO/ AO’) for the A.Y. 2010-11 vide order dated 13.03.2013 under section 143(3) of the Income Tax Act, 1961 (hereinafter ‘the Act’).
The only issue in this appeal of assessee is against the order of CIT(A) confirming the action of the AO making addition of unproved creditors. For this, assessee has raised the following ground No.1: -
“1. The Ld. AO as well is Ld CIT(A)-44, Mumbai are erred in adding and confirming respectively a sum of ₹ 47,88,534/- as unproved creditors."
At the outset, the learned Counsel for the assessee took us through the order of CIT(A) and argued that the CIT(A) has not passed the order on merits of the sundry creditors. The learned Counsel for the assessee referred to Para 3.3. to 3.5 which reads as under: -
“3.3 I have considered the rival submissions as above. First of all, it is seen from record that as many as eight notices had been sent to the appellant by this office between the period April 2014 to November 2015. It is therefore strange that the AR has not submitted whatever details it was relying on during these eight opportunities of hearing. It is further seen from perusal of the order of Id. CIT(A) for AY 2008-09, that even during assessment proceeding of AY 2008-09 the appellant had taken the same plea that the partner was not well and therefore they were unable to make compliance before the AO. From the above facts it is obvious that the appellant had chosen not to submit explanation asked by the AO regarding the discrepancy in sundry creditors.
3.4 On merit also the AO has brought in positive evidence from record to show that the appellant has shown inflated value of sundry creditors. This can be understood from the following table: -
S. Name of the Party As per the As per reply Difference No. assessee to the notice u/s 133(5) 1. M/s Shah Steel 19,34,475 -- 19,34,475 2. M/s Sunil Trading Co. 4,77,514 5751 4,71,763 3. M/s Ganpati Corpn. 10,32,695 -- 10,32,695 3.5 It is therefore obvious that the AO has established by independent enquiry that part of sundry creditors are bogus. In the grounds of appeal the appellant have requested to delete the addition as well as the penalty proceedings. However considering the totality of facts I have come to a conclusion that the AD has rightly made this addition. As far as penalty proceedings are concerned they are only consequential in nature and they have to be followed as per law. Grounds of appeal no. 1 is dismissed and consequently addition of Rs. 47,88,534/- is confirmed.”
4. From the above, the learned Counsel stated that the CIT(A) simply accepted the AO’s order and has not consider the explanation submitted by the assessee. Even on merits the order of CIT(A) is not a speaking order. When this was confronted to the learned Departmental Representative, he fairly agreed that the matter can be restored back to the file of the CIT(A) for fresh decision on merits.
5. After going through the facts and circumstances of the case, we are of the view that the CIT(A) should pass a speaking order on merits.
We find from the order of CIT(A) that the order of CIT(A) lacks the decision on merits and hence, we set aside the same. The matter is restored back to the file of the CIT(A) for fresh adjudication. The appeal of assessee is allowed for statistical purposes. 6. In the result, the appeal of assessee is allowed for statistical purposes. Order pronounced in the open court on 28-09-2018.