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Income Tax Appellate Tribunal, DELHI BENCH: ‘F’ NEW DELHI
Before: SH. I.C. SUDHIR & SH. O.P. KANT
ORDER PER O.P. KANT, A.M.: This appeal by the assessee is directed against order dated 8/12/2010 of learned Commissioner of Income-tax (Appeals), Dehradun, for assessment year 2006-07, raising following grounds:
1. The learned Commissioner of Income Tax (Appeals)-I, has erred on facts and in law in confirming the addition out of Sundry Creditors u/s. 68, amounting to Rs.1529017/- without considering the facts of the case.
The facts in brief of the case are that the assessee filed return of income on 22/11/2006 declaring total income of Rs.1,23,481/-. The case was selected for scrutiny and notice under section 143(2) of the Income- tax Act, 1961 (in short “the Act”) was issued and complied with. The Assessing Officer completed the assessment under section 143(3) of the Act on 30/12/2008 assessing the total income at Rs.84,92,860/-. Ld. Commissioner of Income-tax (Appeals) allowed part relief to the assessee. Aggrieved with the order of the Ld. Commissioner of Income- tax (Appeals), the assessee is in appeal before the Tribunal raising the grounds as reproduced above .
In the grounds raised, the assessee challenged addition of sundry creditors amounting to Rs.15,29,017/- made under section 68 of the Act by the Assessing Officer and upheld by the Ld. Commissioner of Income- tax( Appeals). 3.1 The facts in respect of issue in dispute are that during the scrutiny proceedings the Assessing Officer observed sundry creditors of Rs.30,23,219/-, which included small villagers and which were not paid even after six months from the date, the purchases were booked. For verification of the sundry creditors, the Assessing Officer issued summon under section 131 of the Act to 7 sundry creditors. The Assessing Officer has noted in the assessment order that out of the seven parties, four letters of summons were returned back by the postal authorities with the remark that parties not found or there were 2 or 3 people having same name and no postal acknowledgement was received in case of remaining three parties. The Assessing Officer directed the assessee to provide confirmations, copy of supporting bills etc in respect of all sundry creditors. In response to the query raised, the assessee submitted that three kinds of purchase of food grains were made by the assessee as follows: (i) purchase of food grains from small farmers was supported by form No. 6R, records of which were maintained by the “Krishi Utpadan Mandi Samiti” and whatever address provided by the farmers at the time of purchase of food grains was duly mentioned in the form No. 6R.
(ii) Purchase of food grains made through Arthias were maintained in form number 9R, record of which was also maintained by the “Krishi Utpadan Mandi Samiti” and the address provided by the seller was mentioned in form No. 9R. (iii) Purchases of food grains outside the state was supported by form No. 31, records of which were maintained the trade tax Department.
3.2 The assessee further submitted that the trade creditors used to visit the place of the assessee to get their payment due to them. With regard to four summons returned unserved, the assessee submitted that trade creditors who receives payment in toto were not bothered to cooperate with assessee. The assessee further submitted that it approached to certain sundry creditors and obtained their confirmation, a list of which amounting to Rs.3,26,670/- was submitted to the Assessing Officer on 23/12/2008. The assessee also submitted confirmation of sundry creditors amounting to Rs.5,09,126/- alongwith letter dated 29/12/2008. A bill of Rs.6,58,406/- from Babulal Rupesh Kumar alongwith evidences of payment was also furnished before the Assessing Officer. 3.3 The observation made by the Assessing Officer are summarized as under: (i) that the assessee failed to produce complete address of the parties and copies of vouchers were produced in respect of few transactions only; (ii) that details of sellers in respect of local purchases through “Krishi Utpadan Mandi Samiti” was not reflected in vouchers. (iii) that out of sevens summons issued, four summons returned unserved and no response received in respect of remaining three summons.
(iv) that assessee failed to provide complete address and justify purchases on credit from small farmers. (v) that in the previous year, the assessee had not purchased any raw material on credit beyond the end of the respective financial year. (vi) that the assessee failed to justify, the circumstances under which small farmers were selling their product ranging from Rs. 10,000 to 20,000 on credit for a period more than eight months and in several cases for a period more than 11 months. 3.4 In view of the above observation, the Assessing Officer held that the assessee failed to comply the requirement of section 68 in respect of the sundry creditors. Accordingly, the Assessing Officer made addition under section 68 of the Act in respect of the sundry creditors, confirmation of which were not produced before him, which amounted to Rs.15,29,017/-. 3.5 During first appellate proceedings, the Ld. Commissioner of Income-tax (Appeals) asked the Assessing Officer to conduct enquiry to check the veracity of outstanding balance on sample basis and asked the assessee to provide the complete postal address and other details for carrying out necessary enquiries. The learned Commissioner of Income-tax (Appeals) has noted in the impugned order that the Assessing Officer vide his letter number 2606 dated 31/03/2010 submitted that no details were provided by the assessee and hence no Inquiry could be conducted in respect of the creditors held as unexplained by him. The Ld. Commissioner of Income-tax (Appeals) was of the opinion that that since the assessee did not provide the basic details in respect of creditors in question, no relief could have been allowed to the assessee merely on the ground that its accounts were audited and accepted by the trade tax authorities. According to the Ld.
Commissioner of Income-tax (Appeals), the trade tax Department would look into the turnover of the assessee and not into the genuineness of the trade creditors. Accordingly he upheld the addition.
Before us the assessee preferred to submit written submission only and nobody represented on behalf of the assessee. The director of the assessee company, sent a letter dated 19/08/2016 addressed to the Assistant Registrar of the Tribunal, and requested to consider the paper book filed contains 54 pages as written submission before the Tribunal.
On the other hand, the Ld. Senior Departmental Representative relied on the finding of the lower authorities.
We have heard the submission of the learned Senior DR and perused the written submission of the assessee, containing paper book and the relevant material on record. On perusal of the paper book, we find that the assessee has given list of the sundry creditors amounting to Rs.15,29,017/- which have been held as unexplained by the Assessing Officer and confirmed by the learned Commissioner of Income-tax (Appeals). The detail of the sundry creditors submitted by the assessee is as under: PARTICULARS AMOUNT 1. PURCHASE OF PLANT & MACHINERY PARTS AGAINST FORM 31 97148.00 2. PURCHASE OF BARDANA AGAINST FORM 31 371435.10 3. PURCHASE OF FOOD GRAINS AGAINST FORM 31 209339.85 4. PURCHASE OF FOOD GRAINS AGAINST 9R 340330.50 5. PURCHASE OF FOOD GRAINS AGAINST 6R 364854.40 6. ADVANCE AGAINST SALES OF CHOKAR 184117.00 Total 1529017.00 6.1 We find that the assessee has submitted detailed address in respect of first four categories of sundry creditors before us. We also find that the Ld. Commissioner of Income-tax (Appeals) has upheld the addition only on the ground that in remand proceeding detail of address of the sundry creditors was not provided by the assessee to the Assessing Officer. However, it appears to us from the order of the learned Commissioner of Income-tax (Appeals), that a copy of report of the Assessing Officer was not provided to the assessee for submitting his rejoinder. In our opinion, when complete address of the parties are available, the Assessing Officer can verify the transaction carried out with assessee with those parties and in the interest of natural Justice, the assessee should be afforded one more opportunity to furnish complete address and other evidence in respect of the sundry creditors. 6.2 In the circumstances, we feel it appropriate to restore the matter to the file of the Assessing Officer with the direction to the assessee to furnish confirmation alongwith complete address from all the sundry creditors in question, copy of relevant bills etc. The Assessing Officer is also directed to carry out the necessary inquiry for verification of the sundry creditors, as he deems necessary and decide the issue in dispute after affording sufficient opportunity of hearing to the assessee. Accordingly the ground of the appeal is allowed for statistical purpose.
In the result, appeal of the assessee is allowed for statistical purpose.
The decision is pronounced in the open court on 28th February, 2017.