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Income Tax Appellate Tribunal, DELHI BENCH “SMC”, NEW DELHI
Before: SHRI S.V. MEHROTRA
O R D E R PER S.V. MEHROTRA, A.M :
This is an appeal filed by the assessee against the order dated 06.09.2016 passed by the Commissioner of Income Tax (Appeals), Karnal, u/s 143(3) of the Income Tax Act, 1961 (in short “the Act”) relating to assessment year 2013-14.
Brief facts of the case are that in the relevant assessment year, the assessee dealt in providing the shuttering goods on rental basis. The assessee arranged the goods (shuttering goods) from the parties and supplied them to the contractor. It earned its income from shuttering rent and from other sources. The assessee had filed return of income declaring taxable income at Rs.1,94,780/-. The Assessing Officer, in the course of assessment proceedings, required the assessee to provide the bill-wise details of Rs.9,21,935/- expended towards paying rent for procuring shuttering material debited in Profit & Loss Account. He also required the assessee to furnish the mode of payments, name of parties and also copy of bank statement to verify the genuineness of payments. The assessee furnished confirmed copies of parties which have been reproduced in the assessment order from page 3 to 8. The Assessing Officer, after examining theses confirmations, inter-alia, observed as under :-
“On the given PANS i.e. [(1) M/s Singla Shuttering PAN: BGNPD1564L, (2) M/s Kaushal Shuttering PAN: BQSPB9973L, (3) M/s Ram Niwas Bansal HUF PAN: AAQHR252ID, (4) M/s Durga Shuttering PAN: AGUPD4056H,] return of incomes were downloaded for verification/test checked, if these above mentioned assessee's have also shown you as sundry debtors in their returns of income or not, which is mandatory for the creditor to show in the ITR who declare income u/s 44AD of the Income Tax Act, 1961. Data in the three cases i.e. (1) M/s Ram Niwas Bansal HUF, (2) M/s Durga Shuttering, (3) M/s Kaushal Shuttering was obtained and test checked, but all these three above mentioned assessee's has not shown you as sundry debtors in their accounting books during the year under consideration. Thus, you are required to justify/clarify that why the credit balances shown as on 31.03.2013 towards these three names totaling to Rs. 470700/- (1) Ram Niwas Bansal HUF Rs. 248700/- (2) Durga Shuttering Rs. 67100/- (3) Kaushal Shuttering Rs. 1,54,900/- ) may not be treated as bogus purchased as all these three above mentioned persons has not shown any outstanding balances towards you as on 31.03.2013. Further, in the name of i.e. M/s Singla Shuttering PAN: BGNPD1564L, data for verification could not be obtained as the PAN is allotted in the name of someone Sh. Manoj Kumar Durua, S/o Sh. Laxman Durua, palace street, GajapPati, (Orrisa) and the PAN is lying with ITO Ward-1, Berhampur, (Orrisa). Also, data of Sagar Shuttering could also not be obtained, as the PAN of the assessee is not traceable. ………..
As narrated above, it is crystal clear and well settled law that onus is upon the assessee to prove the genuineness of hiring of shuttering to the extent of shuttering rent expenditure claimed. The assessee has supplied only copy of account from the parties and no supporting evidence in the shape of bills raised by the parties has been supplied. To be fair and to give justice to the assessee and to ascertain the genuineness of the expenditure claimed, the ITR's of the parties to whom the assessee is showing creditors were downloaded from the system. The parties has not shown the assessee as debtors in their ITR's. This fact was also confronted to the counsel of the assessee and was requested to produce the sundry creditors shown by the assessee. The counsel of the assessee did not bother to produce the creditors. Thus, all these facts, establishes that the assessee has claimed bogus expenditure by not producing any conclusive evidence in the shape of bills raised by the parties and by showing fake sundry creditors as established from their ITR's. Therefore, all these facts clearly establishes that the assessee has claimed bogus expenditure just to reduce his taxable income & thus concealed the income to the extent of Rs. 7,35,600/- Keeping in view discussion made in the body of the order an addition of Rs. 7,35,600/- is made to the taxable income of the assessee for the financial year 2012-13 relevant to the assessment year 2013-14. Further, I am satisfied that the assessee has concealed the particular of income to the extent of Rs. 7,35,600/-. Therefore, penalty penalties u/s 271(1)(c) of the Income Tax Act, 1961 are being initiated separately.”
Ld. CIT(A) dismissed the assessee’s appeal by observing as under :-
“After going through the facts and submissions, it is clear that the A.O. has conducted detailed inquiries and verification to come to the conclusion that creditor claimed by the assessee were not genuine and had accordingly made these additions. The AR of the appellant has not provided any submissions or arguments to controvert the findings of the A.O., accordingly there is no reason to interfere with this addition.”
Ld. counsel submitted that all details were filed before the Assessing Officer in regard to sundry creditors and the addition has been made only because the assessee was not shown as debtor in the respective accounts of parties. He submitted that this could not be a basis for making the addition and summons were not issued by Assessing Officer for verification.
Ld. DR referred to the assessment order and pointed out that the assessee did not produce bills before the Assessing Officer and the onus was on assessee to establish the genuineness of creditors. He further pointed out that before ld. CIT(A) also there was no proper presentation.
I have considered the submissions of both the parties and perused the record of the case. The Assessing Officer has drawn adverse inference on the ground that in the respective accounts of parties, the assessee was not shown as debtor. However, the parties had confirmed the shuttering items supplied by them and under such circumstances, the Assessing Officer should have made further enquiries from the suppliers before coming to any conclusion. It is well settled law that addition cannot be made merely on the basis of entries recorded/not recorded in the books of account of third parties. Therefore, the matter is restored back to the file of the Assessing Officer for proper verification.
In the result, the appeal of the assessee is allowed for statistical purposes. Order pronounced in the open court on this 03rd day of February, 2017.