R Z MALPANI,LATUR vs. ACIT, CIRCLE, LATUR, LATUR

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ITA 770/PUN/2024Status: DisposedITAT Pune04 September 2024AY 2016-17Bench: SHRI SATBEER SINGH GODARA (Judicial Member), SHRI INTURI RAMA RAO (Accountant Member)3 pages
AI SummaryRemanded

What did the Tribunal hold?

The Tribunal noted that the change in accounting method was accepted in principle. However, the correctness of the impugned addition was disputed due to a potential miscalculation of the increase in sundry creditors. Therefore, the addition was set aside for fresh examination by the Assessing Officer.

What were the facts?

The Assessing Officer made an addition of Rs. 19,16,260/- to the assessee's income due to a change in the method of accounting from cash to mercantile. The assessee contended that the actual increase in sundry creditors was only Rs. 9,23,234/-, and the lower authorities had incorrectly used a different figure.

What were the issues?

Whether the addition made on account of increase in sundry creditors due to change in accounting method was correctly calculated and substantiated.

Which sections of the Income-tax Act were involved?

Section 143(3)

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, PUNE “B” BENCH : PUNE

Before: SHRI SATBEER SINGH GODARA & SHRI INTURI RAMA RAO

Hearing: 03.09.2024Pronounced: 04.09.2024

Coimbatore’s Din and Order No.ITBA/APL/S/250/2023-24/ 1060795898(1), dated 12.02.2024, in proceedings u/s.143(3) of the Income Tax Act, 1961 (in short “the Act”).

Heard both the parties. Case file perused.

2.

It emerges during the course of hearing that both the learned lower authorities have made increase in sundry creditors addition of Rs.19,16,260/-; as on 01.04.2015; in 2 ITA.No.770/PUN./2024 assessee’s hands due to change in method of accounting in the course of assessment dated 28.12.2018; as upheld in the CIT(A)'s lower appellate discussion.

3.

Learned DR vehemently supported the impugned addition made in both the lower proceedings. He seeks to buttress the point as per the assessment discussion that the assessee has not been able to prove any “compelling reason” justifying the change in his method of accounting.

4.

We find in this factual backdrop that so far as the first and foremost issue herein regarding assessee having changed his method of accounting from cash to mercantile is concerned; the same already stands accepted in principle in para-5.6 of the lower appellate discussion. The solitary question therefore, which arises in this factual backdrop is that of correctness of the impugned addition amounting to Rs.19,16,260/- only.

5.

Learned counsel at this stage invited our attention to page-9 of the assessee’s paper book that the actual figure of increase in creditors’ is only Rs.9,23,234/- and both the lower authorities have in fact taken the other sum to Rs.19,60,260/- representing deduction(s) from deposits shown as receivables.

6.

Faced with this situation, we deem it appropriate in larger interest of justice that the instant addition of increase in sundry creditors; which is also disputed by the assessee in 3 ITA.No.770/PUN./2024 principle on merits; is required to be examined afresh by the Assessing Officer. Ordered accordingly with a rider that it shall be the taxpayer’s sole risk and responsibility to prove and plead his case with all relevant documents in consequential proceedings.

7.

This assessee’s appeal is allowed for statistical purposes in above terms.

Order pronounced in the open Court on 04.09.2024.

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