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Income Tax Appellate Tribunal, “A” BENCH : BANGALORE
Before: SHRI SUNIL KUMAR YADAV & SHRI A.K. GARODIA
O R D E R
Per Sunil Kumar Yadav, Judicial Member
This appeal is preferred by the assessee against the order of the CIT(Appeals) inter alia on the following grounds:-
“1. On the facts and in the circumstances of the case, the order of the L'nd Hubli Appellate Commissioner of Income tax, [CIT(A)] is opposed to facts and law and accordingly, liable to be set aside to allow the claim/s of the Appellant. 2. The L'nd CIT(A) erred to decide and confirm addition of Rs. in the assessment of the Appellant by observing (at Pg 12 of the Order) that appeal grounds have no supporting documentary evidence.
3. The L'nd AO and the CIT(A) failed to appreciate the evidence on the fact that Appellant received 25 lakh Rupees advance cheque payments from one of his customer viz., `Mohit Steel Indt' in the earlier year and same is evident from entries in the said customer ledger in account books of Appellant and same is also supported by his bank statements (viz.,Vijaya Bank & ICICI Bank) which are filed in assessment proceedings [with the help of a letter dated 30/12/10] and same being furnished to the L'nd CIT(A).
4. The L'nd AO and the CIT(A) ought to have appreciated the fact that Appellant supplied goods to said customer `Mohit Steel Indt' against the advance payments received by Appellant in the year earlier to current assessment year and also in the subsequent ::ear as per above said evidence. 5. The L'nd AO and the CIT(A) failed to appreciate the fact that no money was received by Appellant from the said customer `Mohit Steel Indt' during the current year and the transactions between Appellant and his customer `Mohit Steel Indt' for the earlier year as well as the current and subsequent years was explained satisfactorily as against the alleged difference. 6. The L'nd CIT(A) erred to observe (at Pg 12 of the Order) that Appellant failed to explain the difference with material evidence and discharge his onus. L'nd CIT(A) ought to have appreciated that the Appellant fully discharged his onus. 7. The L'nd CIT(A) also erred to state that citation [ (a) ITO V Rakesh (1998) TIV (Del) 674; (b) Shri Vardhman Overseas Ltd v ACIT (2008) 24 SOT 393 (c) ITO v Bansi Lal (2008) 113 TTJ (Asr) 898 ] relied upon by Appellant as not relevant. 8. The L'nd CIT(A) erred to dismiss the appeal because, he failed to state the points for determination as per Section 250(6) of the IT Act on the material proposition of the parties and decide the appeal with reasons upon the points to be so stated. 9. For these and other grounds that may be urged at the time of appeal hearing, the Appellant prays that the Appeal be allowed.”
Though various grounds are raised, but they all relate to addition of Rs.10,56,623 found unexplained in the books of account of assessee.
The facts in brief borne out from the record are that the assessee, a scrap dealer, filed his return of income declaring total income of Rs.3,94,490. During the course of assessment proceedings, the AO noticed that there were credit balances in the books of account of the assessee. The assessee was asked to furnish confirmation letters from the respective creditors. With respect to Mohit Steel Industries Pvt. Ltd. as on 31.3.2008, the assessee has shown a sum of Rs.15,87,025 as outstanding balance. The assessee was asked to file confirmation letter and accordingly confirmation letter of Mohit Steel Industries Pvt. Ltd. was filed wherein outstanding balance was shown at Rs.5,30,402. The assessee was asked to explain the difference of Rs.10,56,623 vide letter dated 30.12.2010 in which the AO made his observations with regard to the said addition. The assessee has filed written submission but could not explain satisfactorily as to why there is outstanding balance of Rs.15,87,025, whereas in the books of the creditor the outstanding balance was only Rs.5,30,402. Being not convinced with the explanation, the AO has made the addition of the difference at Rs.10,56,623 as unexplained credit.
The assessee has preferred an appeal before the CIT(Appeals), but did not find favour with him.
Now the assessee is in appeal before us with the submission that he has actually credited the amount received from the creditor and if the debtor has not shown the same in his books of account, the assessee cannot be held responsible.
The ld. DR, on the other hand, has contended that if the amount was actually received by the assessee, the debtor would have debited the same in his books of account. He has also invited our attention to the statement in the books of account of the assessee. The ld. DR contended that assessee has received continuously a sum of Rs.25 lakhs in Aug. 2006 and thereafter he has been supplying the material of petty amounts. No prudent man will give so much of advance to any supplier. Moreover, the entire amount of Rs.25 lakhs was not adjusted during the three financial years and according to the statement, the balance ultimately remains Rs.9,96,258. The ld. DR further contended that in the light of these facts, the explanation of the assessee cannot be accepted.
Having carefully considered the orders of authorities below in the light of rival submissions, we find that the assessee has shown credit balance in the books of account of Rs.15,87,025, whereas the creditor has shown the debit balance of Rs.5,30,402. The assessee has been asked repeatedly to explain the reasons for the difference and to file confirmation letters. But the assessee could not explain satisfactorily, whereas the revenue has obtained confirmation letter from Mohit Steel Industries Pvt. Ltd., who is the creditor. According to him, the outstanding balance was Rs.5,30,402. Since the assessee has shown credit balance in his accounts, the onus is upon him to explain by placing relevant evidence that it was genuine credit balance. In support of it, confirmation of the creditor could have been filed, but assessee could not do the same. Therefore, we are of the view that the assessee has failed to explain the discrepancies in the credit balance in his accounts and the debit balance in the account of the creditor. The CIT(Appeals) has examined the issue in detail in his order. For the sake of reference, we extract the same as under:-
“ I have gone through the facts of the case, contents of the assessment order and written submissions of the assessee. To put in a nutshell, the AO found the assessee's books to reflect a liability of Rs,15,87,025/- in the name of one of the creditors of M/s. Mohit Steel Industries Pvt. Ltd., as on 31/03/2008. As against this, the ledger account extracts obtained from the said Mohit Steel Pvt. Ltd. revealed balance of Rs 5,30,402/-. The AO proposed to assess the differential amount of Rs.10,56,623/- as unexplained credit. This was protested by the assessee who said that the difference is coming from the previous year's i e. the difference occurred in the opening balance itself. The assessee supplied a copy of ledger account of the said Mohit Steel for earlier years and stated that if the advance given earlier year is accounted for, then there would be no difference. The assessee further submitted that if the customer does not account for some transactions, it cannot amount to income in the hands of the assessee. The submission is considered. The case laws relied are perused. The assessee's contention that the difference in closing balance is coming from opening balance is not supported by any evidence. If the assessee was sure that the difference has arisen in the earlier years it was for the assessee to strengthen his view with some documents like balance sheet and account extract for the earlier years. Mere statement that the difference is coming the previous year without documentary evidence to support cannot amount to discharging of onus. I therefore, hold that the AO has rightly brought to tax the differential amount in the subject assessment year as unexplained credit. The grounds of appeal of the assessee therefore fail.”
8. Since we do not find any infirmity in the order of CIT(Appeals), we confirm the same.
In the result, the appeal of the assessee stands dismissed.
Pronounced in the open court on this 28th day of September, 2017.