K.SANKAR RAO, CHENNAI V. ACIT NON CORPORATE CIRCLE 6(1), CHENNAI

ITA 2917/CHNY/2018

AI Insights

The case involves an appeal by Shri K. Sankar Rao against the order of the Commissioner of Income Tax (Appeals)-5, Chennai, which confirmed the addition of Rs.31,78,366 to the assessee's income as non-genuine credits under section 68 and section 41(1) of the Income Tax Act. The addition was initially made by the AO due to the assessee's inability to produce confirmations from sundry creditors. The tribunal noted that despite being given another opportunity to substantiate the claims, the assessee could only provide partial details and confirmations, leading to the conclusion that the remaining creditors did not exist or the credits were not genuine.

• Counselvise Citation: [2023] 140 COUNSELVISE.COM (IT) 133818 (ITAT-CHENNAI)
• Duration Of Justice: 4 year(s) 4 month(s) 13 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-02-2023
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 15-02-2023
• Assessment Year: 2009-2010
• Appeal Filed On: 15-10-2018
• Laws Referred To: Income Tax Act
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Keywords: Principle of natural justice
• Section: 68; 2; 143(3); 113; 22

Judgement Text

आयकर अपीलीय अिधकरण ‘ए’ ायपीठ चे ई म । IN THE INCOME TAX APPELLATE TRIBUNAL ‘A’ BENCH, CHENNAI माननीय +ी महावीर िसंह, उपा12 एवं माननीय +ी मनोज कु मार अ6वाल ,लेखा सद9 के सम2। BEFORE HON’BLE SHRI MAHAVIR SINGH, VICE PRESIDENT AND HON’BLE SHRI MANOJ KUMAR AGGARWAL, AM आयकर अपील सं./ ITA No.2917/Chny/2018 (िनधाBरण वषB / Assessment Year: 2009-10) Shri K. Sankar Rao No.33, Venkataramier Street, Kondithope, Chennai-600 079. बनाम/ V s. ACIT Non-Corporate Circle-6(1), Chennai. थायी लेखा सं./जीआइ आर सं./P AN /GI R No . AAC P R-1 6 1 0 -H (अपीलाथ /Appellant) : ( थ / Respondent) अपीलाथ की ओरसे/ Appellant by : Shri S.Sridhar (Advocate) – Ld. AR थ की ओरसे/Respondent by : Shri AR.V. Sreenivasan (Addl. CIT) –Ld. DR सुनवाई की तारीख/Date of Hearing : 16-02-2023 घोषणा की तारीख /Date of Pronouncement : 01-03-2023 आदेश / O R D E R Manoj Kumar Aggarwal (Accountant Member) 1. Aforesaid appeal by assessee for Assessment Year (AY) 2009-10 arises out of the order of learned Commissioner of Income Tax (Appeals)-5, Chennai [CIT(A)] dated 23-02-2018 in the matter of an order passed by Ld. AO on 30-03-2017 pursuant to the directions of Tribunal. The grounds raised by the assessee read as under: - 1. The order of The Commissioner of Income Tax (Appeals) - 5, Chennai dated 23.02.2018 in I.T.A.No.16/CIT(A)-5/17-18 for the above mentioned Assessment Year is contrary to law, facts, and in the circumstances of the case. 2. The CIT (Appeals) erred in confirming the assessment of certain credits aggregating to Rs.31,78,366/- as not proved presumably within the scope of ITA No.2917/Chny/2018 - 2 - section 68 of the Act section 41(1) of the Act in the computation of taxable total income without assigning proper reasons and justification. 3. The CIT (Appeals) failed to appreciate that the assessment of the said credits was wholly unjustified and ought to have appreciated that the evidence filed in support were completely brushed aside, thereby vitiating the related findings based on non application of mind. 4. The CIT (Appeals) failed to appreciate that the decisions cited negating the applicability of section 68 of the Act and further the decisions cited negating the applicability of section 41(1) of the Act were completely overlooked and brushed aside, thereby vitiating the relating findings. 5. The CIT (Appeals) failed to appreciate that there was no proper opportunity given before passing of the impugned order and any order passed in violation of the principles natural justice would be nullity in law. 6. The Appellant craves leave to file additional grounds/arguments at the time of hearing. As evident, the assessee is aggrieved by confirmation of certain addition with respect to sundry creditors. 2. The Registry has noted delay of 113 days in the appeal, the condonation of which has been sought by Ld. AR on the strength of affidavit of the assessee wherein it has been submitted that appeals were prepared by the counsel which were received for signature. However, the papers got mixed up which led to delay in filing the appeal. Considering the contents of affidavit, the bench formed an opinion that the delay deserves to be condoned. Accordingly, the appeal is admitted for adjudication on merits. 3. This is second round of appeal. Upon perusal of the case records, it could be seen that the assessee was assessed u/s. 143(3) on 29-12-2011. One of the additions made was for Rs.37.87 Lacs which represent amount outstanding against 22 sundry creditors since the assessee could not produce confirmations. The addition was confirmed by Ld. CIT(A). Upon further appeal, the matter was restored back by the Tribunal vide ITA No.2027/Mds/2015 order dated 05-02- ITA No.2917/Chny/2018 - 3 - 2016 with a direction to Ld. AO to re-examine unproved creditors by issuing summons and decide the issue in accordance with law. 4. In the set aside the proceedings, the assessee was directed to furnish the complete addresses of 22 creditors along with their respective pin code along with mobile numbers and email ids. The assessee could furnish details with respect to few creditors only. It also filed confirmation from M/s Vijayalakshmi Enterprises for Rs.6.09 Lacs which was accepted by Ld. AO. The assessee expressed inability to provide the requisite details with respect to rest of the parties in view of lapse of time and in view of the fact that the transactions had taken place in earlier years. These creditors were stated to be not settled in view of certain litigation with the parties. The Ld. AO issued summons to those parties whose addresses were made available. However, all the notices were returned back by postal authorities with the remarks such as not known / insufficient address / no such addressee / party closed etc. Left with no option, the balance of Rs.31.78 Lacs standing against 21 sundry creditors was held to be non-genuine and added to the income of the assessee. The position remained the same before Ld. CIT(A) which led to confirmation of addition in the impugned order. Aggrieved, the assessee is in further appeal before us. 5. From the fact, it emerges that the assessee has shown sundry creditor balances of Rs.31.78 Lacs against 21 sundry creditors. The assessee could not file confirmation of the same during original assessment proceedings. Considering the plea of assessee for another opportunity, the matter was remanded back by Tribunal with a direction to Ld. AO to issued summons to these sundry creditors to verify their genuineness. It could be seen that the assessee could not even ITA No.2917/Chny/2018 - 4 - provide the addresses and basis details of 9 creditors. The summons were issued to other creditors, all of which remained unserved by postal authorities with the remarks such as not known / insufficient address / no such addressee / party closed etc. Thus, the assessee has miserably failed to establish the genuineness of outstanding creditors. Before us, nothing could be shown that in subsequent years, the assessee has settled any of these creditors till date. No evidence of any litigation with any of the sundry creditors could be furnished before us. These facts would lead to an inevitable conclusion that these sundry creditors do not exist in reality. In the result, no interference is required in the orders of lower authorities. 6. The appeal stand dismissed. Order pronounced on 01 st March, 2023. Sd/- (MAHAVIR SINGH) उपा12 /VICE PRESIDENT Sd/- (MANOJ KUMAR AGGARWAL) लेखा सद9 / ACCOUNTANT MEMBER चे+ई / Chennai; िदनांक / Dated : 01-03-2023 EDN/- आदेश की Vितिलिप अ 6ेिषत/Copy of the Order forwarded to : 1. अपीलाथ /Appellant 2. यथ /Respondent 3. आयकर आयु /CIT 4. िवभागीय ितिनिध/DR 5. गाड फाईल/GF