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29-10-2018, RAJESH KUMAR, Section 68, 260A, 271(1)(c), HIGH COURT OF DELHI
The delay is condoned for the reasons stated in the application.
ITA No. 1173/2018
This appeal by the Revenue under Section 260A of the Income Tax Act, 1961 (Act for short) in the case of Sh. Rajesh Kumar arises from order of the Income Tax Appellate Tribunal (Tribunal for short) dated 25th January, 2018. The appeal relates to the Assessment Year 2010-11.
2. The impugned order, while disposing of the appeal preferred by the Revenue, affirms the order dated 5th June, 2016 of the Commissioner of Income Tax (Appeals) whereby addition of Rs.3,17,12,394/- made by the Assessing Officer, on account of unconfirmed trade creditors and expenses, was reduced to Rs.28,65,804/-. In other words, addition of Rs. 2,88,46,590/- was deleted.
3. Learned counsel for the Revenue submits that the aforesaid addition was justified and rightly made by the Assessing Officer invoking Section 68 of the Act as the respondent-assessee had failed to file confirmations from trade creditors etc. It is also submitted that the decision and finding recorded in the order of the Assessing officer for the Assessment Year 2011-12 would not justify deletion of addition in this year. The two years were separate and independent.
4. The Assessing Officer while making the addition had passed a short and cryptic order, which reads;-
“8. The assessee has shown trade creditors of Rs. 3,07,43,243/- and Rs. 9,69,151/- respectively in the case of M/s Daily Foods and M/s Surya Trading Company respectively. The assessee was asked to provide confirmations of trade creditors. In response, the assessee vide letter dated 06.03.2013 submitted that "despite best efforts, the assessee has not been able to obtain confirmations from the trade creditors and expenses payable". In the absence of confirmation of trade creditors of Rs. 3,07,43,243/- and Rs. 9,69,151/-, the same are added to the total income of the assessee. Penalty u/s 271(1)(c) are being initiated for furnishing inaccurate particulars/concealment of income.”
The order does not refer to and elucidate whether or not the assessee had produced invoices, bills, manner and mode of payment to the trade creditors. Details and nature of expenses incurred was not elucidated. Reference was made to the closing account balance i.e., the amount which was outstanding at the end of year and payable to the trade creditors.
5. On appeal preferred by the respondent-assessee, the Commissioner of Income Tax (Appeals) had examined the said aspect and the findings recorded are as under:-
“8..............Ground no. 5 which relates to the addition of Rs. 3,17,12,394 arose from the fact that in its books of accounts the appellant had shown the trade creditors and expenses payable to the tune of Rs. 3,17,12,394. During the course of assessment proceedings the AO asked the appellant to file the confirmation
of trade creditors, since no confirmation were filed accordingly he added a sum of Rs. 3,17,12,394 to the appellant's income. Aggrieved by the above action of the AO, the appellant made a detailed submission the gist of which is as under:
“……….With regard to the addition of Rs. 3,07,43,243 your goodself has directed the assessee to file copy of questionnaire issued by the AO and reply filed by the assessee in the course of assessment proceedings for AY 2011-12. In compliance with your directions, the assessee is filing herewith copy of questionnaire dated 06.11.2013 issued by the AO and copy of assessee's reply 28.11.2013 and 20.12.2013, whereby the assessee filed copy of ledger account and confirmation of the sundry creditors for AY 2011-12. It is submitted that the opening balance as on 01.04.2010 and closing balance as on 31.03.2011 in the account of the following four parties has been accepted as genuine by the AO in AY 2011-12.
,(i) Abloo Dairy
(ii) Bahadur Dairy
(iii) Sagir Dairy and
(iv) Ram Pal Dairy
The contention of the assessee is that during the course of assessment proceedings for AY 2010-11, the assessee had filed copy of ledger account of sundry creditors for the period 01.04.2010 to 31.03.2011 to show that the outstanding balance as on 31.03.2010 was liquidated in subsequent year AY 2011-12. Now as a later development, the assessment for AY 2011-12 has been completed and the balances in the account of sundry creditors and unsecured loans have been accepted. A copy of assessment order for AY 2011-12 has already been filed before your goodself and each placed at P. 360 to 361 of PB..... FINDING
9. I have gone through the above submissions of the appellant and have considered the facts and evidences on record. From the details filed during the course of appellate proceedings, it is seen that out of total creditors of Rs. 3,17,12,394 the appellant owes a sum of Rs. 3,10,74,661 towards the following entities: