ACIT, Circle-29(1), New Delhi V. SAF Impex, New Delhi

ITA 7673/DEL/2018

• Counselvise Citation: [2022] 105 COUNSELVISE.COM (IT) 7297 (ITAT-DELHI)
• Duration Of Justice: 3 year(s) 3 month(s) 6 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 08-03-2022
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: G
• Assessment Year: 2015-2016
• Appeal Filed On: 02-12-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Unexplained cash credit; Opportunity of being heard
• Section: 68; 142(1); 133(6)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH ‘G’, NEW DELHI Before Sh. Saktijit Dey, Judicial Member Dr. B. R. R. Kumar, Accountant Member (Through Video Conferencing) ITA No. 7673/Del/2018 : Asstt. Year : 2015-16 ACIT, Circle-29(1), New Delhi Vs SAF Impex, C-2, 3 rd Floor, East of Kailash, New Delhi-110065 (APPELLANT) (RESPONDENT) PAN No. ABAFS0515P Assessee by : Sh. Sourav, CA Revenue by : Sh. Umesh Takyar, Sr. DR Date of Hearing: 03.03.2022 Date of Pronouncement: 09.03.2022 ORDER Per Dr. B. R. R. Kumar, Accountant Member: The present appeal has been filed by the Revenue against the order of the ld. CIT(A)-10, New Delhi dated 14.09.2018. 2. The order of the ld. CIT(A) reads as under: 3. The assessment order and the written submission have duly been considered. On perusal of details, it is noticed that the sundry creditors were in the nature of trade creditors. On perusal of details furnished by the appellant, it is noticed that opening balance of ten creditors, in respect of which addition has been made by the AO, the opening credit balance as on 01.04.2014 was Rs.2,78,96,356/-. The AO has made addition of Rs.3,68,85,701/- on account of unexplained credit u/s 68 of the ITA No. 7673/Del/2018 SAF Impex 2 Act. It is observed by the AO that notice u/s 133(6) was issued to various sundry creditors to ascertain their creditworthiness and most of the creditors have not replied with satisfactory explanation except few. In this connection, it is submitted by the appellant that in show cause notice dated 19.12.2017 issued u/s 142(1) of the Act, the AO has mentioned as under: “1. On perusal of Assessment Records and the documents submitted by the AR(Advocate Bharat Pal Singh) of the Assessee, it is found that there is sudden increase in sundry creditors for the F. Y. 2014- 15 as compared to the sundry creditors in previous F Y. Thus several notices u/s 133(6) of Income Tax Act, 1961 were issued to sundry creditors. Many of such notices have returned back. Also no reply is received in most of them. 2. So, please explain and provide your reply that why the amount relating to these sundry creditors should not be treated as your income and added back to your total income." 4. In the said notice, the AO has made the general observation that there was sudden increase sundry creditors as compared to the previous year. It is also noted that the AO did not specify his notice u/s 142(1) issued on 19.12.2017 the details of sundry creditors in respect of which he had adverse finding. It is also observed that the appellant could not put forth a satisfactory reply and did not furnish the ITRs of the concerned parties in order to establish their lending capacity. The AO has observed that - ‘‘Hence appropriate disallowance in this regard has to be made". He has proceeded to add a sum of Rs.3,68,85,701/- u/s 68 of the Act under the head ‘unexplained credit’ with the observation that such credits were not ITA No. 7673/Del/2018 SAF Impex 3 verifiable. The AO did not provide opportunity of being heard to the appellant in respect of the above addition. On perusal of the submissions and the documents furnished by the appellant which also included letters furnished with the AO on different dates during the course of assessment proceedings. The appellant had submitted confirmed copy of ledger account of all the creditors with the AO in the month of May, June and September, 2017. It is submitted that reply to 133(6) notice was received from the following parties: i) Jai Shree Mills ii) Mohan Lai Chander iii) Moorti Fashion 5. The appellant furnished reconciliation of accounts with the above mentioned parties during the course of assessment proceedings. Further, notice u/s 133(6) were issued to M/s Atiksh Trading, Narayan Impex, Rainbow Enterprises and Shree Senthil Mills but no reply was received from the said parties. In respect of notice issued to Rahul Fashion, Vaishnavi Fabrics and Vinayak International, notice u/s 133(6) returned back with the postal remarks ‘left’. It is submitted by the appellant that the notice return back due to change of address of the aforesaid three creditors. It is further submitted that reply from the above mentioned three parties were sent by e-mail to the AO on 22.12.2017 alongwith confirmation of accounts. It is submitted by the appellant that confirmation of accounts, copy of ITR of the creditors, bank statement showing payments to the creditors were furnished before the AO. It is also noted that apart from two parties, the remaining eight creditors were old purchase parties. It is also submitted that the payments have ITA No. 7673/Del/2018 SAF Impex 4 been made to the aforesaid parties by cheque. On perusal of details furnished it is noticed that the creditors have shown the following income in their ITRs: i) Atiksh Trading Co. Pvt. Ltd. Rs.5,03,760/- ii) Jayashree Mills (Prop. M Sadashivam) Rs.14,85,980/- iii) Moorthi Fashion (Prop. K.V. Palaniappan) Rs. 10,86,620/- iv) Narayan Impex (Prop. Mohit Agarwal) Rs.8,83,170/- v) Rahul Fashion (Prop. Meena Gupta) Rs.3,34,910/- vi) Rainbow Enterprises (Prop. S K Goyal) Rs.8,02,820/- vii) Shree Senthil Mills (Prop. P S Nathan) Rs. 16,37,660/- viii) Vaishnavi Fabrics (Prop. Kusum Gupta) Rs.3,44,320/- ix) Vinayak International (Prop. Mukesh K Gupta) Rs.5,08,920/- x) Mohanlal Chander Prakash & Sons Rs.9,93,740/- 6. On perusal of facts, it is noticed that the AO has not been able to specify the deficiency and could not bring any material on record to substantiate his findings in light of the fact that all the necessary documents in respect of purchase creditors were furnished by the appellant during the course of assessment proceedings. Considering the facts mentioned above, the action of the AO appears to be arbitrary and is found to be not supported with cogent reasons and material. In view of the above, addition of Rs.3,68,85,701/- cannot be upheld and the same is deleted. Accordingly, the above grounds of appeal are allowed. 7. Having gone through the entire factum of the case, the sundry creditors have been duly examined and proved to be ITA No. 7673/Del/2018 SAF Impex 5 acceptable. Hence, we find no cause to interfere with the well reasoned order of the ld. CIT(A). 8. In the result, the appeal of the Revenue is dismissed. Order Pronounced in the Open Court on 09/03/2022. Sd/- Sd/- (Saktijit Dey) (Dr. B. R. R. Kumar) Judicial Member Accountant Member Dated: 09/03/2022 *Subodh Kumar, Sr. PS* Copy forwarded to: 1. Appellant 2. Respondent 3. CIT 4. CIT(Appeals) 5. DR: ITAT ASSISTANT REGISTRAR