ACIT, CIR-3, ASANSOL, ASANSOL vs. SRI PRAVIN KR. HETAMSARIA,

O R D E R

Per Dr. Arjun Lal Saini, AM:

raised by the Revenue are as follows: “i) “That the ld. Commissioner of Income Tax(A), Asansol has erred in law and on facts in deleting the addition of Rs.1,20,85,226/- made by the A.O. on account of unverifiable creditors/advances from customers shown as liabilities.”

3. The brief facts apropos this issue are that the assessee filed its return of income for the Assessment year 2010-11 on 01.10.2010, disclosing total income at Rs.24,85,430/-. The assessee’s case was processed u/s 143(1) of the Act, on 03.05.2011 accepting the returned income. Later, the assessee’s case was selected for scrutiny u/s 143(2) of the Act and the AO Sri Pravin Kumar Hetamsaria Assessment Year: 2010-11 has completed the assessment U/s 143(3) by making an addition of Rs.1,20,85,226 (Rs.1,22,18,226 – Rs.1,33,000/-) u/s 41(1) of the I.T. Act. In the balance sheet of assessee there was an entry of Rs.1,22,18,226/- being advance from customers. The AO sought details of the transaction and the assessee furnished the same but that was not in the format as required by the AO. Based on information received, the AO issued notices u/s 133(6) of the Act to the various customers. Notices were served onsome customers and some customers furnished the reply which was in variance with the figures furnished by the assessee. In the assessment order, the AO narrated 59 cases in Page 2 and Page 3 and the assessee could not explain the creditors hence, he proceeded to make addition u/s 41(1) of the I.T. Act, 1961.Therefore, not being satisfied with the explanation offered by the assessee, the AO made addition of Rs.1,20,85,226/-.

4. Aggrieved by the order of the AO, the assessee filed an appeal before the ld. CIT(A) who has deleted the addition made by the AO. The ld. CIT(A), (vide Page 3 Para 8 of the order), stated that assessee submitted an extensive list of papers, covering 480 persons demonstrating how the figure of Rs.1,22,18,226/- was arrived at and addresses has been furnished in about 145 cases. This was sent to AO, with written explanation on the matter for comments. This way, the ld. CIT(A) sent the matter to the AO to take the remand report on the issue involved. In para 8 of the order of the ld.CIT(A), the ld. CIT(A) himself stated that no comments was received from the AO. The ld. CIT(A) stated, on Page 7 Para 10 of his order, that in this case, assessee had given a clarification of sundry creditors on six counts. The AO was provided with all details (of course address of all sundry creditors were not given) as to how the sundry creditors has developed. The ld. CIT(A) held that section 41(1) was not applicable and hence opening balance of Rs.17,25,173/- cannot be considered as income for the year for which remission is to be established. The explanation in regard to refund and sale in subsequent year is accepted as it has logic and rationale and not a single case, the AO has established to be incorrect. The set off of debit and credit entries were visible from books of accounts and books of Page | 2 Sri Pravin Kumar Hetamsaria Assessment Year: 2010-11 accounts were not found to be defective. This way, the ld. CIT(A) held that the addition made by the AO u/s 41(1) was wrong. The ld. CIT(A) also held that on independent analysis [power of CIT(A)) is co-terminus with that of AO], he could not find any material evidence to show that credits were bogus. Therefore, he directed the AO to delete the addition of Rs.1,20,85,226/-.

5. Not being satisfied with the order of the ld. CIT(A), the Revenue is in appeal before us. At the outset, the ld. DR for the Revenue has pointed out that ld. CIT(A) did not wait for remand report and without examining remand report, he passed the order. Therefore, order passed by the ld. CIT(A) is against the principle of natural justice. Hence, the ld. DR for the Revenue prayed the Bench that the said matter should go back to the file of the AO to examine the issue afresh.