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Income Tax Appellate Tribunal, DELHI BENCH ‘H’, NEW DELHI
ORDER Per Prashant Maharishi, AM:
This appeal is preferred by assessee against the order of CIT(A)-XIX, New Delhi dated 22nd March, 2013 confirming the addition of Rs. 8,41,257/- made by the Assessing Officer representing credit balance of M/s. Bajaj Electricals u/s 41(1) of the Income Tax Act and not allowing credit of TDS of Rs 26,188/-.
The brief grounds of the appeal with respect to the addition u/s 41(1) of the Act of Rs. 8,41,257/- is that though there is no remission or cessation of any trading liability and further the goods purchased from the creditor is capitalized in the books of account and not debited to Profit & Loss Account, therefore, the applicability of Section 41(1) does not arise. Further there was a grievance for not allowing credit for TDS to the extent of Rs. 26188/-.
2 Varun Beverages Ltd. A Y 2009-10 03. The brief fact of the case is that assessee is engaged in the business of manufacturing and trading of Soft Drinks, Plastic Shells & Lug Caps. Return of income for AY 2009-10 was filed on 30th September, 2009 showing income of Rs. 13,60,27,806/-. The assessee is engaged in the business of manufacturing and trading of Soft Drinks, Plastic Shells & Lug Caps. During the course of assessment proceedings AO noticed that assessee has shown sundry creditors of Rs. 84,36,39,323/- and 133(6) notices were issued to 12 parties out of which 11 parties confirmed the accounts , however confirmation of M/s Bajaj Electricals Pvt. Ltd. for Rs. 8,41,257/- was not received. Therefore, AO made an addition of Rs. 8,41,257/- u/s 41(1) of the Act. Assessee preferred an appeal before the CIT(A) and before the CIT(A) assessee filed confirmation of Bajaj Electricals Pvt. Ltd. Assessee submitted that before the assessing Officer due to error the credit balance of Rs. 8,41,257/- was stated in the name of M/s Bajaj Electricals Ltd. however, the actual balance was Rs. 7,08,477/-. Further address of M/s Bhatinda Gas Industrial Pvt. Ltd. was given to the assessing officer and therefore 133(6) notices intended to be served to the Bajaj Electricals Ltd. Could not be served. Assessee submitted additional evidence in the form of the account of the both the parties to show the error and also confirmation of the parties with correct address. The CIT(A) did not admit additional evidence submitted by the assessee holding that provisions of Rule 46A are not satisfied and therefore in absence of confirmation in response to notice u/s 133(6) he confirmed the addition u/s 41(1) of the Act. He further, held that alternatively this amount is required to be added u/s 37(1) as bogus purchase. Against the order of the CIT(A), the assessee is before us.
Before us, ld. AR of the assessee referred Para no. 2 of the assessment order stating that in absence of 133(6) confirmation the addition in the hands of the assessee u/s 41(1) cannot be made. He further, submitted that the CIT(A) has erred not admitting additional evidences filed and 3 Varun Beverages Ltd. A Y 2009-10 confirming the action of AO. Therefore, he submitted that the CIT(A) should have considered additional evidence and decided the issue on merits.
Ld. DR for the revenue relied upon the orders of lower authorities and submitted that addition has been rightly made. 06. We have heard the rival contentions and the facts narrated by the lower authorities on addition u/s 41(1) of the Act with respect to the credit balances of Bajaj Electricals ltd. Firstly as stated before CIT (A) the assessee did not give the correct address of the party and Secondly the amount given as outstanding of the party of Rs. 8,41,257/- was also incorrectly mentioned. According to the assessee, assessee gave address of Bhatinda Industrial Gas Pvt. Ltd. instead of Bajaj Electricals Ltd. and further the amount of also stated to be Rs. 8,41,257/- instead of correct balance of Rs. 7,08,477/-. It is not the case of the assessee that correct address was given of the sundry creditors and at that address inquiry letter u/s 133(6) is received and no response was received from creditor. Therefore, the arguments of the AR for deletion of addition cannot be acceded to. The CIT(A) has also erred in not admitting the additional evidence filed by the Assessee. Before the assessing officer, it is a fact that 133(6) notices were issued to 12 parties and out of those 11 parties presumably satisfactorily explained by the assessee. There may be some reason or clerical error because of which assessee could not give the correct details. In these circumstances as substantially the claim of the assessee is correct in case of 11 parties it would be in the interest of justice that one more opportunity is afforded to assessee to substantiate its claim for creditor outstanding in case of Bajaj Electrical ltd. Therefore, we restore the matter back to the file of the CIT(A) with direction to admit additional evidences submitted by the assessee and after providing reasonable opportunity to the assessee as well as the assessing officer as provided under Rule 46A of the Income Tax Rules, 1962, decide the issue
4 Varun Beverages Ltd. A Y 2009-10 on merit about the applicability of Section 41(1) or 37(1) of the Act. In the result the ground nos. 2 and 3 of appeal of the assessee with respect to addition of credit balance of Bajaj Electricals Ltd. Of Rs 8,41,257/ are allowed for statistical purposes.
Ground no. 4 of the appeal relates to not granting credit of Rs. 26,188/- being TDS amount. Before the CIT(A), the assessee does not file details of credit claim and therefore the CIT(A) has dismissed this appeal stating that assessee has failed to establish his claim. Regarding this, we direct the CIT(A) to consider the claim of the assessee provided the claim of the assessee is properly supported along with certificates of TDS issued by various deductors in accordance with law. Needless to say, that the issue may be decided after proper verification and giving appropriate opportunity to both the parties and then decide the issue on merits. Therefore, ground no. 4 of the appeal is allowed.
In the result, appeal of the assessee is allowed for statistical purposes. (Order Pronounced in the Court on 08/10/2015)