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Income Tax Appellate Tribunal, ‘B’ BENCH: CHENNAI
Before: SHRI GEORGE MATHAN & SHRI S. JAYARAMAN
आदेश / O R D E R
PER GEORGE MATHAN, JUDICIAL MEMBER:
the Order of Commissioner of Income Tax (Appeals)-5, Chennai, in dated 03.07.2017 for the AY 2013-14.
Dr.S.Pandian, JCIT, represented on behalf of the Respondent and Mr.K.G.Raghunath, Adv., represented on behalf of the Appellant.
ITA No.2204/Mds/2017 :- 2 -:
It is submitted by the Ld.AR that the only issue in the assessee’s appeal was against the action of the Ld.CIT(A) in confirming the disallowance of the trade advances received by the assessee to an extent of Rs.2,61,90,000/-. It was a submission that the assessee is in the business of bitumen, iron and steel. It was a submission that the assessee had appointed 16 Trade Agents from whom the assessee had received trade advances in cash. It was a submission that the bitumen is supplied to the assessee from various refineries on the bidding and the same is sold to the traders. It was a submission that for the purpose of bidding, the advances were given. The Ld.AR drew our attention to Page No.56 of the Paper Book to submit that the total sales during the year were more than Rs.124.00 Crs. as compared to Rs.99.00 Crs. in the previous year. It was a submission that the assessee had received the trade advances from the various Agents. It was a submission that as on 31.03.2013, the assessee had also supplied nearly Rs.1,35,30,996/- worth of materials also. The Ld.AR drew our attention to Page No.22 of the Paper Book to show the details of the advances received and dispatches made. It was a submission that out of the advances received, dispatches were pending only to an extant of Rs.1,26,59,004/- which has also been made in the subsequent year. The Ld.AR submitted that in the course of the assessment, the AO had questioned the trade creditors and the assessee had provided the confirmation letters along with the PANs. It was a submission that the addition made by the AO and as confirmed by the Ld.CIT(A) was liable to be deleted.
ITA No.2204/Mds/2017 :- 3 -:
In reply, the Ld.DR submitted that only the identity of the Trade Creditors had been proved. It was a submission that the genuineness of the transaction was doubted by the AO and this was also confirmed by the Ld.CIT(A). It was a submission that he had no objection, if the issue is restored to file of the AO for re-adjudication.
We have considered the rival submissions. A perusal of the order of the AO, in the present case shows that the issue of the Trade Creditors had been brought up by the AO for the first time on 25.02.2016 and the Assessment Order has been passed on 09.03.2016. The assessee had submitted that the 16 Trade Agents who are having business income and had the source of advance amount and had also provided the PANs, the name and address along with the agency agreements. The AO on the ground that the mere filing of the PANs and confirmation of the persons, on whose names the cash credits appeared does not prove the genuineness of the transaction, disallowed the entire Trade Creditors.
Nothing contrary was available with the AO. The Ld.CIT(A) has confirmed the order of the AO. Considering the fact that the AO had not examined the veracity of the confirmations provided by the assessee, the issues in this appeal are restored to the file of the AO for re-adjudication. The AO is to verify as to whether the amount shown as advances given to the assessee, have been disclosed by the Creditors in their books and whether it is actually a trade transaction. If the Creditors have disclosed the ITA No.2204/Mds/2017 :- 4 -: amounts in their accounts and these are actually trade transactions, then the addition made by the AO is to be deleted.
In the result, the appeal filed by the assessee is partly allowed for statistical purposes.
Order pronounced in the Open Court on December 05, 2017, at Chennai.