SHRI BISHNU PADA GHOSH,MALDA vs. JCIT, MALDA RANGE, MALDA, MALDA

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ITA 1270/KOL/2016Status: DisposedITAT Kolkata26 September 2018AY 2011-20124 pages

In favour of the assessee: the assessee's appeal was allowed. From the AI summary of this appeal.

AI SummaryAllowed

What did the Tribunal hold?

The Tribunal held that the AO's conclusion of a Nil balance was factually incorrect, as the creditor had confirmed supply of materials and an amount receivable. Furthermore, the Tribunal stated that no addition can be made under Section 68 in respect of a trade creditor when purchases are not disputed.

What were the facts?

The Assessing Officer (AO) made an addition of Rs. 9,30,625/- to the assessee's income under Section 68, treating a sundry creditor balance as unexplained cash credit. The AO based this on the belief that the creditor had confirmed a Nil balance, despite the assessee providing supporting documents and invoices.

What were the issues?

Whether a trade creditor balance can be treated as an unexplained cash credit under Section 68 when the AO's factual premise is incorrect and purchases are not disputed.

Which sections of the Income-tax Act were involved?

Section 68,Section 133(6)

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, “C” BENCH : KOLKATA

Before: Hon’ble Shri M.Balaganesh, AM & Hon’ble Shri S.S.Viswanethra Ravi, JM]

Hearing: 19.09.2018Pronounced: 26.09.2018

ORDER Per M.Balaganesh, AM

1.

This appeal by the assessee arises out of the order of the Learned Commissioner of Income Tax(Appeals)-Jalpaiguri [in short the ld CIT(A)] in Appeal No. 123/Jal/CIT(A)/Jal/2013-14 dated 03.05.2016 against the order passed by the ACIT, Malda Circle, Malda [ in short the ld AO] under section 143(3) of the Income Tax Act, 1961 (in short “the Act”) dated 25.03.2014 for the Assessment Year 2011-12.

2.

The only effective ground raised by the assessee is with regard to addition sustained by the ld. CIT(A) in respect of sundry creditor balance of Rs. 9,30,625/- u/s 68 of the Act.

3.

The brief facts of this issue is that the assessee is an individual contractor and had filed its return of income for assessment year 2011-12 on 31.03.2012 declaring total income of Rs. 1,23,63,670/-. The ld. AO observed in his assessment order in page 1 that the assessee produced documents and evidences in support of the claims furnished in the return of income with cash book, ledger accounts, bank statement, bills and vouchers which were also subjected to examination by the ld. AO. The ld. AO sought to examine the details of sundry creditors filed by the assessee u/s 133(6) of the Act. The ld. AO observed that three sundry creditors had reported that some amount was reported by them from the assessee, but had however not confirmed the closing balance figure. Based on this explanation, the ld. AO came to conclusion that the balance confirmation by those parties were Rs. Nil as on 31.03.2011. Accordingly, the ld. AO issued show cause notice to the assessee as to why the balance shown in the form of trade creditors in respect of three parties should not be treated as unexplained cash credit u/s 68 of the Act. The assessee replied that he has got no comments to offer in respect of the same. Accordingly, the ld. AO strangely sought to tax the closing balance shown in the name of M/s Jaharlal Ghosh in respect of only one creditor in the sum of Rs. 9,30,625/- and brought the same to tax u/s 68 of the Act. In other words, even though show cause notice was issued by the ld. AO in respect of three sundry creditors, the addition u/s 68 was ultimately made only in respect of one sundry creditor i.e. Mr. Jaharlal Ghosh. This addition was confirmed by the ld. CIT(A). Aggrieved the assessee is in appeal before us.

4.

We have heard rival submissions. At the outset, we find that there is no dispute that the assessee has furnished entire requisite details together with the bills and 2

3 Shri Bishnu Pada Ghosh A.Yr. 2011-12 vouchers and all the supporting documents in support of the claims made in the return of income, which fact has been acknowledged by the ld. AO in his assessment order. The assessee has shown a sum of Rs. 9,30,625/- as amount payable to Mr. Jaharlal Ghosh (Trade Creditor) as on 31.03.2011 in its balance sheet. The said supplier (Trade Creditor) had supplied materials to the assessee for the purpose of road contract work executed by the assessee. We find that the assessee has furnished the details of ledger account of the said sundry creditor (i.e. Jaharlal Ghosh) for the period 01.04.2010 to 31.03.2011 together with the entire invoices given by the said supplier to the assessee for supply of materials. These documents are available in pages 7 to 19 of the paper book filed before us. We also find that the said supplier Mr. Jaharlal Ghosh in response to notice issued u/s 133(6) of the Act had replied before the ld. AO vide his letter dated 15.11.2013 confirming the fact of supply of materials to the assessee during the financial year 2010-11 and had also confirmed the fact that some amount was receivable from the assessee for such supply of materials. This fact is evidenced from page 20 (Bengali Font) of the paper book and page 21 (Translated font) of the paper book filed before us. While this is so, it is factually incorrect on the part of the ld. AO to conclude that the said trade creditor had confirmed Nil balance as on 31.03.2011 as amount receivable from the assessee. Hence it could be safely concluded that the ld. AO had proceeded to make an addition by treating the concerned sundry creditor as bogus based on incorrect assumption of facts. In any case, we hold that no addition could be made u/s 68 of the Act in respect of a trade creditor. We find that the ld. AO had not disputed the purchase of materials made by the assessee from the said sundry creditor and hence the corresponding credit entry i.e. credit to the account of the sundry creditor cannot be doubted by the ld. AO.

4 Shri Bishnu Pada Ghosh A.Yr. 2011-12 4.1. In view of the aforesaid observations, we direct the ld. AO to delete the addition made in the sum of Rs. 9,30,625/- of the Act. Accordingly, grounds raised by the assessee are allowed.

5.

In the result, the appeal of the assessee is allowed. Order pronounced in the Court on 26.09.2018

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