SRI. T. VEERANNA vs. ITO,

This appeal filed by the assessee directed against the order of the learned Commissioner of Income Tax (Appeals), Hubli dated 30-10-2013 for the assessment year 2008-09.

The appellant raised the following grounds of appeal.

Briefly the facts of the case are the assessee is an individual and is engaged in the business of Commission Agency. The return of income for the assessment year 2008-09 was filed on 30.09.2008 declaring a total income of Rs.1,64,660/-. After processing the said Return of Income under the provisions of section 143(1) of Income Tax Act and issuing required notice u/s 143(2), the assessment was completed by the learned Income Tax Officer, Ward-1, Haveri u/s 143 r.w.s. 144A of the Income Tax Act, 1961 vide order dated 30.12.2010 at a total income of Rs.1,43,10,410/-.

Being aggrieved, an appeal was preferred before the CIT(A), Hubli who vide impugned order restricted the addition on account of unproved sundry creditors to the extent of Rs.43,97,867/-. Partial relief was granted by the CIT(A) after calling for the remand report from AO on the additional information filed before it. Being aggrieved, the appellant is before us challenging the confirmation of addition on account of unproved creditors to the extent of Rs.43,97,867/- and the confirmation of addition on account of agricultural income of Rs.30,000/-. The appellant raised 5 grounds of appeal out of which ground Nos. 1 and 5 are general in nature and do not require any adjudication. Ground No. 2 is challenging the addition to the extent of Rs.43,97,867/- on account of unproved sundry creditors. Ground No. 3 challenging the addition on account of disbelieving agricultural income is not pressed before us and hence dismissed as such.

Ground No. 4 is only a consequential in nature and does not require any adjudication. Thus the effective ground of appeal is only ground No.2 challenging the addition to the extent of Rs.43,97,867/- on account of unproved sundry creditors. The learned counsel had argued that during the course of proceedings before the AO, the appellant had produced the confirmation letters from all the sundry creditors to prove the genuineness of the creditors. It is further submitted that the sundry creditors are on account of purchase of seeds from agriculturists. He further submitted that the addition was made on mere assumptions and surmises. The time gap between the purchase of seeds and payment to the creditors is on account of the fact that payments were made to the agriculturists only after completion of certain tests like Germination test and Grow-out test to assess the quality of the seeds supplied by the agriculturists. It is further submitted that the additions were made by the AO based on the report submitted by the inspector with giving an opportunity of rebuttal to the assessee. He finally submitted that the very fact that in the subsequent year the payments were made to sundry creditors would suggest that sundry creditor was genuine and therefore should have been accepted as genuine. He finally he contends that the CIT(A) confirmed the addition to the extent of Rs.43,97,867/- based on the remand report submitted by the AO without furnishing a copy of remand report. In this connection he had drawn our attention to page No. 47 of the paper book wherein the appellant had requested CIT(A) to furnish the copy of remand report. Thus he submitted that the addition was confirmed without any basis to the extent of Rs.43,97,867/-. On the other hand, the learned DR placed reliance on the orders of lower authorities.

We heard the rival submissions and perused the material on record.

In the result, the appeal is partly allowed for statistical purposes.