ITO, NEW DELHI vs. M/S. FAMIEE INDIA, NEW DELHI

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ITA 2280/DEL/2015Status: DisposedITAT Delhi23 November 2016AY 2010-115 pages

In favour of the assessee: the Revenue's appeal was dismissed. From the AI summary of this appeal.

AI SummaryDismissed

What did the Tribunal hold?

The Tribunal upheld the CIT(A)'s deletion of additions, finding that the partners had disclosed the sources of their capital contributions and the trade creditors had confirmed the outstanding balances. The assessee's submissions and the remand report supported the deletion.

What were the facts?

The Revenue appealed against the deletion of additions made by the AO on account of fresh capital introduced by partners and sundry creditors. The assessee provided details and confirmations during remand proceedings, which were accepted by the CIT(A).

What were the issues?

Whether the AO was justified in making additions for unexplained partner's capital and sundry creditors when the assessee provided satisfactory explanations and confirmations during appellate proceedings.

Which sections of the Income-tax Act were involved?

Section 68

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, DELHI BENCHES : SMC-1 : NEW DELHI

Before: SHRI R.S. SYAL

For Appellant: Shri Subhash Khanna, CA
Hearing: 23.11.2016Pronounced: 23.11.2016

This appeal by the Revenue relating to the assessment year 2010- 11 arises out of the order passed by the CIT (Appeals) on 05.01.2015.

2.

The first ground is against the deletion of addition of Rs.9,50,000/. Briefly stated, the facts of this ground are that the assessee firm filed its return declaring total income of Rs.1,07,613/-. On perusal of the details, it was observed that some of the partners made additions to their respective capital accounts. Except Shri Yogesh Kumar Bansal, all other partners introduced fresh capitals viz., Shri Ashok Kumar, Rs.3,50,000/-, Shri Kanhiya Lal Sharma, Rs.3 lac and Shri Santhosh Kumar Singh, Rs.3 lac. In the absence of any details furnished by the assessee, the AO made addition amounting to Rs.9,50,000/-. The assessee furnished necessary details before the ld. CIT(A), who sent such details to the AO for comments. The AO, in turn, submitted remand report. Based on such remand report and the assessee’s submissions, the ld. CIT(A) deleted the addition. The Revenue is aggrieved against this deletion of addition.

3.

I have heard the ld. AR and perused the relevant material on record.

There is no appearance from the side of the Revenue. As such, I am proceeding to dispose off this appeal ex parte qua the Department. It is noticed from the impugned order that the assessee firm came into existence on 11.8.2009 and the above referred three partners introduced capital to the tune of Rs.3,71,000/- and Rs.3 lac each. The firm was dissolved after dispute amongst the partners on 30.11.2010. The accounts were settled as per the dissolution deed and retiring partners, namely, the three persons in respect of whom the addition has been made, got their respective shares from the firm and retired. All the three partners admitted during the course of remand proceedings before the AO that they had contributed the capital as was disclosed in the books of the partnership firm. Not only that, they also disclosed the source of such capital contribution, which was largely out of withdrawals from their other concerns. These facts have been admitted by the AO in the remand report. He, however, chose not to agree with the assessee on certain hyper technical grounds. When these three partners declared their respective sources of investment in the partnership firm amounting to Rs.3,50,000/- and Rs.3 lac each, and this fact was also recognized by the AO in the remand proceedings, in my considered opinion, the ld. CIT(A) was justified in deleting this addition. This ground is not allowed.

4.

The only other ground is against the deletion of addition of Rs.27,49,116/- in respect of sundry creditors appearing in the books of partnership firm. The AO made this addition in respect of two sundry creditors, namely, M/s Harsh Enterprises with outstanding balance of Rs.7,22,987/- and M/s Krishna Tex Print with the outstanding balance of Rs.20,26,129/- on the ground that the confirmations were not filed.

During the appellate proceedings, the assessee furnished details in respect of these trade creditors. In the remand proceedings, there was no dispute that the amounts appearing in the books of account of the assessee were, in fact, outstanding to these two trade creditors The ld. CIT(A) got convinced and deleted the addition.

5.

After hearing the ld. AR and perusing the relevant material on record, it is observed that both the trade creditors confirmed during the course of remand proceedings that the amount outstanding in the books of account of the assessee firm was rightly due to them. That being the position, there can be no question of any addition. I, therefore, uphold the impugned order.

6.

In the result, the appeal is dismissed.

The order pronounced in the open court on 23.11.2016.

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