Loading judgment…
No AI summary yet for this case.
Before: SHRI N.K. SAINI & SMT. BEENA PILLAI
ORDER
PER BEENA PILLAI, JUDICIAL MEMBER:
The present appeal has been filed by the Revenue against the order of the ld. CIT(A)’s-XXV, New Delhi, vide his order dated 30/11/2011 for A.Y. 2007-08 on the following grounds: 1. “On the facts and in the circumstances of the case the ld. CIT(A) XXV, New Delhi has erred in deleting the addition of Rs. 30,56,110/- made by the Assessing Officer in the absence of confirmations of sundry creditors.
2. On the facts and in the circumstances of the case in the absence of Bank Certificate the ld. CIT(A) XXV, New Delhi has erred in deleting the addition of Rs. 1,50,310/- made by the Assessing Officer on account of difference in return income and net profit as per profit and loss account.
3. On the facts and in the circumstances of the case in the absence of Bank Certificate the ld. CIT(A) XXV, New Delhi has erred in allowing deduction u/s 80C of I.T. Act.”
Brief facts of the case are as under: 2.1 The assessee filed its return of income on 31/10/07 declaring total income at Rs. 1,48,395/-. The case was processed u/s 143(1). Subsequently it was selected for scrutiny and notices were issued to the assessee.
The ld. AO completed the assessment ex-parte u/s 144 on 23/12/09 by making the following additions: i) addition on account of unverified sundry creditors amounting to Rs. 21,52,440/- ii) addition on account of unverified unsecured loans amounting to Rs. 75,000/-. 3. Aggrieved by the order of the ld. AO the assessee preferred an appeal before the ld. CIT(A). 3.1. Before the ld. CIT(A) the assessee argued that the ld.AO was not justified in making adhoc additions merely because the assessee was not able to represent the case during the course of the assessment proceedings, as the assessee was out of the country. Accordingly, the assessee submitted all the details in respect of the sundry creditors and unsecured loans before the ld.CIT(A). The ld. CIT(A) called for the remand report in lieu of the additional evidence filed by the assessee. After considering the remand report, the ld. CIT(A) deleted the addition made by the assessee in respect of the sundry creditors and unsecured loans. 4. Aggrieved by the order of the ld. CIT(A) the Revenue is in appeal before us. Ground no. 1: 4.1 It was contended by the ld. AR that the assessee is a proprietor of M/s Sulochna Exports and the list of sundry creditors as on 31/03/07 was submitted before the ld. CIT(A) on which the remand report was called for. In the remand report the ld. AO has recorded that the assessee has furnished the confirmation from the unsecured lenders. He has further recorded that these creditors are continuing from the previous year and are old creditors which is proved from the opening and the closing balances. The ld.AR submitted that except for the creditor being Malika Textiles, all other parties are old creditors and are being carried forwarded by the assessee. Further the ld. AR submitted that these sundry creditors as are very much existing and that the assessee has also made some payments to certain sundry creditors during the year which proves that the liability of the sundry creditors has not seized, and they continue to be a liability for the assessee, which has to be paid back by the assessee, and as such, the ld. AO was not justified to make the additions. 4.2. On the contrary, the ld. DR submits that the assessee did not file the proper books of accounts before the ld. AO. She relies upon the order of the ld. AO.
We have considered the rival contentions of both the parties and perused the paper book filed before us. The remand report dated 4.3.11 is placed at pages 79 to 81 of the paper book. It is observed that the ld. AO has recorded a finding that the unsecured creditors have been existing with the assessee even in the previous year and that the assessee has filed the confirmations from these parties before the first appellate proceedings. It is also observed that the ld. AO could not produce any material on record to prove that these details filed by the assessee are not genuine. Tle Ld.AR brought our notice to the submission made before the ld.CIT(A), which is placed at pages 115 to 121 of the paper book. At page 120 of the submission, it has been categorically mentioned that except for the creditor being Malika Textiles, all other creditors are old. 5.1. The ld. AO has therefore, failed to justify the additions made in respect of the unsecured creditors. It is also observed that these creditors were old and, therefore, did not pertain to the year under consideration and has been brought forward from the earlier years which has not been disputed by the Revenue. 5.3. The amount payable to these creditors can be added to the assessee’s total income in the year in which the assessee’s liability to pay the amount seized or is extinguished and not in the year under consideration, where the assessee has admittedly shown the liability in the balance sheet. We, therefore, do not find any infirmity with the order of the ld. CIT(A). The ground no. 1 of the Revenue is, therefore, dismissed.
Ground NO. 2: 6. The ld. AR submitted that the adhoc addition amounting to Rs.1,50,310/-, made by the AO under the head unexplained difference of interest, on the ground that the details were not available during the course of the assessment proceedings. The ld. AR submitted that necessary details along with the bank certificate were submitted before the ld. CIT(A) as additional evidence, on which a remand report was called for. 6.1. In the remand report the ld. AO has accepted that the difference of interest paid on housing is under the head income from house property which has been further set off from income from business. On the basis of the findings of the ld. AO in the remand report the ld. CIT(A) deleted the additions. 6.1. On the contrary, the ld. DR vehemently supported the findings of the ld. AO. The ld.DR submitted that the disallowance has been made as the certificate issued by the bank were not authenticated by the bank.
We observe that there is a considerable merit in the submissions of the ld. AR. It is accepted by the ld.AO in the remand report, placed at page 81 of the paper book, that the assessee had claimed deduction u/s.24(b) for the interest payment on the home loans for which the necessary details were submitted, which has not been considered by the ld.AO. It is noticed that the assessee has paid interest on the housing loan for acquisition of self occupied house property amounting to Rs.1,50,000/- which is admissible u/s.24(b) of the act, under the head Income from House Property. The balance Rs.310/-is the difference appearing in the books of account, which is allowale u/s.32 of the Act. On the above facts, we do not find any infirmity in the deletion of the addition by the ld.CIT(A) . In view of the above facts and circumstances, the findings of the ld. CIT(A) does not call for any interference. This ground of appeal
filed by the Revenue is dismissed. Ground no. 3:
8. The ld. AR submitted that the AO made the disallowance of Rs.1,00,000/- u/s.80C, on the ground that the details regarding the housing loan which was taken by the assessee and the certificate from the bank in respect of the same were not submitted. The ld. AR further submitted that these details were submitted before the ld. CIT(A) on which a remand report was called for. The ld. AR submitted that on the basis of the findings in the remand report the ld. CIT(A) deleted the disallowance made by the AO.
15. On the contrary, the ld. DR has supported the assessment order.
16. We have perused the remand report which is at page 109 to 114 of the PB. It is observed that the ld. AO has admitted the certificate and the documents submitted by the assessee before the ld. CIT(A). He has not made out any contrary observation in respect of the housing loan repayment made by the assessee. Therefore, in our view the amount stands verified. We are, therefore, of the considered opinion that the ld. CIT(A) was right in deleting the addition made by the AO. The ld. CIT(A) was right in granting the deduction to the assessee u/s 80C of the Act. This ground of appeal is dismissed.