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Before: SHRI N. K. SAINI & SMT SUCHITRA KAMBLE
ORDER PER SUCHITRA KAMBLE, JM
This appeal is filed by the Revenue against the order dated 16/01/2014 passed by CIT (A) Faridabad. 2. The grounds of appeal are as follows:-
1. “Whether on the facts and in the circumstances of the case, the CIT(A) was right on fact and in law in deleting the addition of Rs.85,39,595/- out of addition of RS.89,82,018/- made by the A.O for unverified Sundry Creditors when the assessee could not prove genuineness of these creditors during course of assessment proceedings.” 2. “Whether on the facts and in the circumstances of the case, CIT(A) was right on fact and in law in deleting the addition of Rs.85,39,595/- after considering additional evidence accepted during appellate proceedings which were not produced by the assessee before A.O though the assessee was provided sufficient opportunities to do so.”
3. The assessee was engaged in the business of manufacturing of Carrymore. The return income of Rs.1,09,38,181/- was assessed at Rs.1,99,41,790/-. A survey u/s 133(A) of the Income-tax Act was conducted at the business premises of the assessee on 2/3/2009. During the course of survey, the assessee surrendered additional income for taxation amounting to Rs.1 crore 5 lakhs. During the course of survey in statement Director of the Company offered a sum of Rs. 70,50,000/- for taxation for the period relevant to the Assessment Year 2009-10 against Sundry Creditors , outstanding on that date. The assessee was finally asked on 23/12/2011 to file confirmation of Sundry Creditors more than Rs. 50,000/- as on 31/3/2009. As relates to 16 parties wherein the amount involved was of Rs.89,82,018/-. The assessee has not filed any confirmation or there was no sufficient documentary evidence as recorded in the assessment order. The Assessing Officer, therefore, made disallowance of Rs.89,82,018/- as unconfirmed Sundry Creditors. The assessee filed appeal before the CIT(A). The assessee filed additional evidence as related to confirmation of the said creditors along with the statement of account for the subsequent years showing payment made to them by the assessee. The CIT(A) called for a remand report from Assessing Officer wherein the Assessing Officer noted that despite repeated opportunities the assessee has deliberately avoided filing evidence before the Assessing Officer .
Thus, the Assessing Officer was under bonafide belief that the assessee has not proved his bonafide as to why the confirmations were not submitted. The CIT(A) held that the assessee not only provided confirmations of the Sundry Creditors but also gave a copy of account of various Sundry Creditors showsing payment for the subsequent year. After looking into this, the CIT(A) come to the conclusion that all payments of this Sundry Creditors was made by cheque. Thus, not only the assessee able to provide confirmation in respect of Sundry Creditors but has also shown how the amount outstanding against the Sundry Creditors. As at the end of the year, this was subsequently paid by the assessee. The CIT(A) further held that except the two parties ie. M/s Haryana Steel Mongers Pvt. Ltd and India International Marketing Company all the other confirmations were provided. Thus, the CIT(A) has reduced the addition and confirmed only to the extent of Rs. 4,44,423/-.
The Ld. DR submitted that the assessee’s liability was not genuine. In-fact, this is the survey case and A.O in assessment order recorded that it was the onus of the assessee to prove genuineness of the Sundry Creditors shown payable as at the end of the year which the assessee has failed to discharge and hence the Sundry creditors amounting to Rs.89,82,018/- should be treated as unexplained creditors. The Ld. DR further submitted that there was no opportunity given to the Assessing Officer by the CIT (A) or there was no any enquiry conducted by the CIT(A) himself and thus the addition made by the Assessing Officer was right and CIT(A) has over looked that the confirmation was not filed before the Assessing Officer .
The Ld. DR relied upon the Jurisdictional High Court decision in the case of CIT Vs. M/s Gana Sampark Advertising and Marketing Pvt. Ltd wherein it was held that assessment proceedings under the income-tax Act are not a game of hide and seek. Further, enquire envisaged u/s 250 (4) is generally by calling what is known as remand report. The purpose of this enabling clause is essentially to ensure that the matter of assessment reaches finality with of this physic facts found.
The AR submitted that the Assessing Officer has not made out any case in respect of Section 68 related to unexplained income. It was not at all a case of old outstanding liabilities this was related to the current transaction which was subsequently fulfilled by the assessee in subsequent years. The CIT(A) has rightly held that the confirmation in respect of Sundry Creditors was filed before the CIT(A) and it shows how the amount outstanding against the Sundry Creditors as at the end of the year was paid in the subsequent year. The Ld. AR further submitted that the Assessing Officer has not taken into account the transactions and the co- relation between the closing balances of the assessee. The Ld. AR relied on the Punjab & Haryana decision in the case of CIT Vs. Speedways Tire Ltd 2014 SOT Taxman.com 113 wherein it was held that the liabilities towards the Sundry Creditors when made in the subsequent assessment years. The same has to be taken into account which was accepted by the Revenue and thus the Revenue cannot take the said in respect of Section 41(1) remission or cessation of trading liability. The Ld. AR further submitted that the Assessing Officer was given opportunity by the CIT(A) and in fact the remand report has also taken the cognizance of the additional evidence field by the assessee before the CIT(A) and Assessing Officer has not commented in any related to the evidence as the same are whether genuine or false.
We have perused all the records and heard both the parties. The assessee has not availed the opportunity of producing confirmation before the Assessing Officer. The CIT (A) though has verified the confirmation yet the enquiry related to that confirmation has not been made by the Assessing Officer and there is no mention in respect of enquiry by the Assessing Officer in remand report. Thus, the confirmation whether genuine or non- genuine, cannot be commented at this stage and the matter needs to be verified by the Assessing Officer. Therefore, the matter is remanded back to the Assessing Officer to verify the confirmation.
In result, the appeal is partly allowed for statistical purpose.
The order is pronounced in the open court on 05th of May, 2016.