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Income Tax Appellate Tribunal, “H” BENCH, MUMBAI
Before: SHRI MAHAVIR SINGH, JM & SHRI MANOJ KUMAR AGGARWAL, AM
Per Manoj Kumar Aggarwal (Accountant Member)
The captioned appeal by revenue for Assessment Year [AY] 2011- 12 contest the order of Ld. Commissioner of Income-Tax (Appeals)-20 [CIT(A)], Mumbai, Appeal No.CIT(A)-20/DCIT-12(3)(1)/IT-285/2014-15 dated 05/02/2016 by raising the following Grounds of Appeal: - 1) “On the facts and in circumstances of the case and in law, the Ld. CIT(A) has erred in deleting the addition made by the AO on account of outstanding balance of creditors amounting to Rs.3,30,30,836/- though the assessee was unable to discharge onus to establish that creditors were genuine.”
ITA.No.3535/Mum/2016 K.C & Sons Infrastructure Private Limited Assessment Year 2011-12 2) “On the facts and in circumstances of the case and in law, the Ld. CIT(A) has erred in holding that the assesse has made all transactions through bank account whereas the assesse in own submission categorically stated that payments were made by cash or cheque.” 3)The appellant prays that the order of the Ld. CIT(A) on the above grounds be set aside and that of the A.O. be restored.” 4) “The appellant craves leave to add, amend or alter all or any of the grounds of appeal.”
The assessment for impugned AY was framed by Ld. Deputy Commissioner of Income-Tax-Circle 9(2), Mumbai [AO] u/s 143(3) of the Income Tax Act,1961 on 30/03/2014 where the assessee was saddled with aggregate addition of Rs.3,30,30,836/- on account of creditors for goods for Rs.63,48,239/- & creditors for expenses amounting to Rs.2,66,82,597/-. None has appeared for assessee despite notice and no adjournment application is on record. Left with no option, we proceed to dispose-off the same on the basis of material available on record and after hearing Ld. Departmental Representative [DR].
During assessment proceedings, it was noted that the assessee was engaged in construction activity. The assessee was required to furnish the name, address and amounts of all creditors and purchases. The assessee failed to provide the complete details as well as reasonable explanation to the satisfaction of Ld. AO. To confirm the transactions, notice u/s 133(6) were sent to various parties but the same elicited no satisfactory response. All these factors led Ld. AO to believe that the assessee failed to discharge the onus of proving the genuineness of the liabilities reflected by him in the financial statements and accordingly, the impugned additions were made in the hands of the assessee.
ITA.No.3535/Mum/2016 K.C & Sons Infrastructure Private Limited Assessment Year 2011-12 3. Aggrieved, the assessee contested the same with success before Ld. CIT(A) vide impugned order dated 05/02/2016 where the assessee, inter-alia, contended that the said liabilities were ascertained liabilities and did not cease to exist within the meaning of Section 41(1) and therefore, the additions were not justified. Reliance was placed on several judicial pronouncements as noted by Ld. CIT(A) in the impugned order. The Ld. CIT(A) observed that entire creditors were disallowed by Ld. AO without establishing the specified bogus creditors through inquiry whereas sales were not doubted by Ld. AO. The Ld. CIT(A) further observed that the payments were through banking channels and balances were paid in subsequent years. Finally, the impugned additions were deleted by Ld. CIT(A). Aggrieved, the revenue is in further appeal before us.
The Ld. DR submitted that relief has been granted to the assessee by Ld. first appellate authority without any sound basis since the assessee miserably failed to prove even the identity of the creditors during assessment proceedings and moreover, Ld. CIT(A) erred in noting that all the payments were made through banking channels in the impugned AY as well as in subsequent years.
We have carefully heard the contentions and perused relevant material on record. We find that the assessee reflected impugned creditors in the financial statements which were stated to be against receipt of goods and services. However, a perusal of the assessment order, prima facie, reveals that the assessee even failed to prove the identity of the creditors with cogent material. The notices served u/s 133(6) remained un-complied with and the assessee could not furnish