M/S. SHIV SUNDER GRIT UDYOG,HARYANA vs. ITO, NARNAUL

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ITA 844/DEL/2015Status: DisposedITAT Delhi06 November 2015AY 2010-112 pages

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

AI SummaryAllowed

What did the Tribunal hold?

The Tribunal held that since the liability was discharged in the subsequent financial year, the addition was incorrect. No addition can be made unless the Revenue gathers contrary evidence.

What were the facts?

The assessee treated sundry creditors amounting to Rs. 1,71,627/- as bogus by the AO and confirmed by the CIT(A). The assessee contended these were payments to labourers and truck owners, whose confirmations were not obtained as they lacked fixed addresses.

What were the issues?

Whether sundry creditors can be treated as bogus and added to income when the liability was discharged in the subsequent year and confirmations were not obtained from labourers and truck owners.

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 BENCH ‘SMC-2’, NEW DELHI

Before: SHRI J. SUDHAKAR REDDY

For Appellant: Shri Navin Gupta, Adv

This is an appeal filed by the Assessee directed against the order dated 22.12.2014 of Ld.CIT(A), Rohtak pertaining to the Assessment Year (A.Y.) 2010-11. The effective ground of appeal is ground no.2 which reads as under.

2. That the Ld.CIT(A) erred in confirming the addition of Rs.1,71,627/- made by the Ld.A.O. by treating the sundry creditors as bogus.

2. After hearing rival contentions, I find that the assessee has furnished confirmation of balances of sundry creditors to the tune of Rs.27,46,791/-. Copies of accounts and confirmations were not furnished only in the case of creditors to the tune of Rs.1,71,627/-. But the assessee submitted that these creditors listed out at page 2 of the assessment order, are labourers and truck owners, who have been paid these amounts in the immediately succeeding financial year and that confirmations cannot be obtained from them, as they do not have any fixed addresses. In my view this Explanation

Shiv Sunder Grit Udyog has to be upheld, the conclusion of the Ld.CIT(A) that these amounts are bogus and fictitious liabilities is not correct. When the liability in question has been discharged in the subsequent A.Y., no addition can be made unless the evidence is gathered to the contrary by the Revenue.

3.

In the result assessee’s appeal is allowed. Order pronounced in the Open Court on 06th November,2015.

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