DCIT CIRCLE-2, MUZAFFARNAGAR vs. RAGHUVEER METAL INDUSTRIES LIMITED, DELHI

ITA No.- 9379/Del/2019 M/s Raghuveer Metal Industries Limited “1. The CIT(A) has erred in law and on facts by deleting the addition of Rs. 3,41,56,172/- made by the AO on account of trade payables by not appreciating the fact that though the assessee had provided a list of 46 parties with trade credit balances totalling Rs. 18,19,33,614/-, in 4 lots and has failed to file confirmations in respect of the balance 114 parties involving total credit balance of Rs. 3,17,04,143/- till the date of assessment order.

When the matter was called for hearing, the Ld. Counsel for the assessee supported the order of the Ld. CIT(A) and contended that the solitary controversy involved towards the addition of credits of Rs. 3,45,53,758/- on account of unverified trade payables u/s 68 of the Act. In this regard, the Ld. Counsel contended that the relief granted by the Ld. CIT(A) and submitted that the Assessing Officer issued noticed u/s 142(1) dated 26.11.2018, seeking detailed particulars about the trade payables aggregating to Rs. 21,36,37,757/- along with confirmations. The assessee had collected confirmation from the respected parties but however, the assessee could not furnish confirmations to the extent of Rs. 3,45,53,758/-, involving 63 parties. The confirmation could not be filed due to paucity of time made available at the assessment stage.

The Ld. Counsel thus, submitted that on the face of such facts, where the creditors in question have ultimately been liquidated in subsequent years and are supported by the later confirmation or payments, there is no satisfaction to interfere with the order of the CIT(A).

The Ld. DR for the Revenue supported the assessment order and pointed out that the order passed by the CIT(A) contravened the ITA No.- 9379/Del/2019 M/s Raghuveer Metal Industries Limited principle of natural justice under Rule 46A of the Income Tax Rules, 1962. The Ld. DR pointed out that the confirmations placed as additional evidence before the CIT(A) should not have been admitted without seeking a remand report from the Assessing officer. The DR further contented that the relief granted by the CIT(A) is not permissible under the law and besides the subsequent write back of large amounts by the assessee requires verification to assess the bonafide of the action of the assessee. The Ld. DR thus, pointed out that the order of the CIT(A) granting relief is not sustainable in law.

We have carefully considered the rival submissions and perused the material adverted in the course of hearing, in accordance with 18(6) of ITAT, Rules. The tabular statement referred to on page 121 of the Paper Book is reproduced herein below.

On perusal of the tabular statement (supra), it appears that the sundry creditors related to various parties have either been paid back or Witten back, and thus no aspersions can be cast on the 5

In the result, appeal of the Revenue is allowed for statistical purposes.