KALPESH P SHAH,THANE vs. ITO WD 4(2), THANE

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ITA 5902/MUM/2013Status: DisposedITAT Mumbai13 October 2017AY 2007-084 pages
AI SummaryRemanded

What did the Tribunal hold?

The Tribunal restored the issue of unexplained creditor of Rs. 1,55,637/- back to the AO for fresh verification. Regarding the unexplained advance, the Tribunal found that the assessee had received foreign remittances and made exports, and directed the AO to verify the figures and decide afresh.

What were the facts?

The Assessing Officer made an addition of Rs. 11,75,353/- on account of unexplained creditors and Rs. 9,55,384/- as unexplained advance. The assessee provided additional evidence for the creditor amount and explanations for the advance, which were not fully verified by the lower authorities.

What were the issues?

Whether the amounts treated as unexplained creditors and advances are income in the hands of the assessee and require proper verification.

Which sections of the Income-tax Act were involved?

Section 68

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, MUMBAI BENCH “A”, MUMBAI

Before: SHRI D.T. GARASIASHRI G. MANJUNATHA

For Appellant: Shri Awadesh Kumar, A.R
For Respondent: Shri Rajesh Kumar Yadav, D.R
Hearing: 21.08.2017Pronounced: 13.10.2017

Per D.T. Garasia, Judicial Member:

1.

The present appeal has been preferred by the assessee against the order dated 02.08.2013 of the Commissioner of Income Tax (Appeals) [hereinafter referred to as the CIT(A)] relevant to assessment year 2007-08.

Ground No.1 2. The short facts of the case are that the Assessing Officer (hereinafter referred to as the AO) has made the addition on account of Rs.11,75,353/- made on account of unexplained creditor. The AO during the course of remand proceedings found that sundry creditor to the extent of Rs.10,09,166/- verifiable on the basis of copies of bills and ledger account and also confirmations furnished. The

3.

Before us, the Ld. A.R. has filed the additional evidence to show that this amount has already been paid by the assessee. Therefore, we restore this issue back to the file of AO to verify the same and decide the matter afresh in respect of Rs.1,55,637/- as per law.

Ground No.2 4. The second ground is in respect of addition of Rs.9,55,384/-. The amount of advance of Rs.9,55,384/- received by the assessee through cheque on different dates from a party namely Aaron Pharmaceuticals Pvt. Ltd. During the course of hearing, the AO found and verified the documentary evidences viz. confirmatory letters, proof of remittances and export made against the advances received from foreign buyers. However, assessee could not file confirmatory letter for advances received from the party Aaron Pharmaceuticals Pvt. Ltd. of Rs.9,55,384/-. The amounts of advances were received by the assessee through cheques on different dates from the said parties i.e. in F.Y. 2005-06 of Rs.6,43,793/- and in F.Y. 2006-07 Rs.3,11,591/-. The assessee has received the advance for supply of pharmaceutical product to be exported by Aaron Pharmaceuticals Pvt. Ltd. but due to some reason the party could not confirm the order after giving the advance. The advances are still lying with assessee and the same were not written off in the

5.

Matter carried to the Ld. CIT(A) and the Ld. CIT(A) has confirmed the same.

6.

We have heard the rival contentions of both the parties. Looking into the facts and circumstances of the case, we find that assessee has received the advance of Rs.1,17,45,773/- in financial year 2006-07. In the remand proceedings, the AO has verified these debtors from Bank of Maharashtra and in the remand proceeding, the AO verified from the bank and he has submitted the report as under: Out of Rs.1,17,45,773/- on account of advance from debtor all the debtors were confirmed except confirmation in which the addition of Rs.9,55,384/- was outstanding. The assessee has received a letter from Bank of Maharashtra intimating that assessee has received Rs.7,26,83,940/- as foreign remittance against which assessee has made export of Rs.6,98,57,582/- as per bank realization certification issued by Bank of Maharashtra. Therefore, this fact requires verification at the end of AO because, assessee has already received the amount of Rs.6,98,57,582/-. Therefore, only addition can be made in respect of the amount which assessee has not exported but at the same time the assessee has also submitted before me that advance of Rs.6,43,793/- relates to F.Y. 2005-06 & F.Y. 2006-07 and addition of Rs.3,11,591/- can be made in this year but all these facts and figures require verification. Therefore, we allow the appeal of the assessee

7.

In the result, appeal of the assessee is allowed.

Order pronounced in the open court on 13.10.2017.

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