ACIT, CIRCLE-4, PATNA vs. RAJEEV KUMAR, PATNA

This appeal filed by the Revenue pertaining to the Assessment Year (in short “AY”) 2013-14 is directed against the order of ld. Commissioner of Income-tax (Appeals)-2, Patna [in short ld. “CIT(A)”] dated 23.05.2017 which is arising out of the assessment order framed u/s 143(3) of the Income Tax Act, 1961 (in short the “Act”) dated 08.03.2016.

Ld. D/R vehemently argued supporting the order of the ld. AO but could not rebut the fact that that the ld. AO in the remand proceedings has accepted the correctness of the claim of sundry creditors shown in the audited financial statements.

Per contra, ld. Counsel for the assessee vehemently argued supporting the order of the ld. CIT(A) as well as the facts noted by the ld. AO in the remand report.

We have heard rival contentions and perused the records placed before us. Revenue’s sole grievance is that ld. CIT(A) erred in deleting the addition made u/s 68 of the Act at Rs. 5,25,07,728/- made on account of unexplained sundry creditors.

We note that during the course of assessment proceedings sufficient details were not filed by the assessee due to which ld. AO made the addition u/s 68 of the Act for sundry creditors of Rs. 5,25,07,728/-. Before the first appellate authority various documents were filed. Ld. CIT(A) called for remand report. Ld. AO during the course of assessment proceedings issued notices u/s 133(6) of the Act to all the sundry creditors to verify the genuineness. In response, confirmations were received from all the sundry creditors through post wherein they confirmed the closing balance as on 31.03.2013 standing against their names in the books of the assessee and ledger account of these parties were also filed. Ld. AO accordingly observed in the remand report that I.T.A. No.: 116/Pat/2017 Assessment Year: 2013-14 Rajeev Kumar. genuineness of the sundry creditors of Rs. 5,25,07,728/- has been verified and found to be correct. We, further, note that ld. CIT(A) after considering the remand report deleted the impugned addition as follows: “Ground Nos. 6 to 9 are regarding the addition of sundry creditors u/s 68 of the act on account of the appellant’s failure to produce list of sundry creditors along with details and bills and vouchers for expenses. It has been observed by the AO that the sundry liability amounting to Rs.5,25,07,728/- have remain unverified despite opportunity to the appellant to prove the genuineness of the creditors. A remand report was called for in this case which has been received through Range Head wherein the AO has reported that notices u/s 133(6) of Income Tax Act where issued to all the sundry creditors to verify their genuineness. It has further been reported by the AO that confirmation were received from all the creditors through post wherein they have confirmed the balances as on 31.03.2013 standing against their name in the books of the assessee and have also submitted ledger of the assessee in their books and accordingly the AO has affirmed that upon verification the sundry creditor amounting to Rs.5,25,07,728/- have been found to be in order. In view of categorical finding contained in the remand report which has been received through Range Head, the addition of Rs.5,25,07,728/- made by the AO is hereby deleted.”

Therefore, under the given facts and circumstances of the case and after considering the observations of the ld. AO in the remand report, replies received from all the sundry creditors u/s 133(6) of the Act and detailed finding of the ld. CIT(A), we are of the considered view that since the assessee has succeeded in proving the genuineness of the sundry creditors of Rs. 5,25,07,728/- appearing in the audited financial statement on the closing date of the year under appeal, therefore, no interference is called for in the finding of the ld. CIT(A) deleting the said I.T.A. No.: 116/Pat/2017 Assessment Year: 2013-14 Rajeev Kumar. disallowance made u/s 68 of the Act. Thus, the sole ground raised