Smt.Snehalatha Surana , Bangalore V. The Assistant Commissioner of Income Tax Circle-7(2)(1), Bangalore

ITA 890/BANG/2019

• Counselvise Citation: [2021] 104 COUNSELVISE.COM (IT) 5478 (ITAT-BANGALORE)
• Duration Of Justice: 2 year(s) 8 month(s) 4 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-12-2021
• Appeal Filed By: Assessee
• Order Result: PartlyAllowed
• Bench Allotted: A
• Assessment Year: 2013-2014
• Appeal Filed On: 24-04-2019
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Principle of natural justice; Additional evidence; Reasonable cause; Set aside
• Section: 40A(3)

Judgement Text

ITA No.890/Bang/2019 Smt. Snehalatha Surana, Bangalore IN THE INCOME TAX APPELLATE TRIBUNAL “A’’ BENCH: BANGALORE BEFORE SHRI N.V. VASUDEVAN, VICE PRESIDENT AND SHRI B.R. BASKARAN, ACCOUNTANT MEMBER ITA No.890/Bang/2019 Assessment Year : 2013-14 Smt. Snehalatha Surana 354/23, Bannerghatta Road Near Chinnayanapalya Masjid Bangalore 560 030 PAN NO : ASHPS8380G Vs. ACIT Circle-7(2)(1) Bangalore APPELLANT RESPONDENT Appellant by : Smt. Sheetal, A.R. Respondent by : Shri Sankar Ganesh K., D.R. Date of Hearing : 29.12.2021 Date of Pronouncement : 29.12.2021 O R D E R PER B.R. BASKARAN, ACCOUNTANT MEMBER: The assessee has filed this appeal challenging the order dated 01-03-2019 passed by Ld CIT(A)-7, Bengaluru and it relates to the assessment year 2013-14. The grounds urged by the assessee relate to the following issues:- (a) Addition made u/s 41(1) of the Income-tax Act,1961 ['the Act' for short] (b) Addition made u/s 40A(3) of the Act (c) Addition on account of different between books an VAT statement. ITA No.890/Bang/2019 Smt. Snehalatha Surana, Bangalore Page 2 of 5 2. The assessee is a dealer in marbles and granites. She filed her return of income for the year under consideration on 31.10.2013 declaring a total income of Rs.52,38,950/-. The AO completed the assessment by making additions listed above. The appeal filed before Ld CIT(A) was also dismissed. Hence the assessee has filed this appeal before us. 3. The first issue relates to addition made u/s 41(1) of the Act. During the course of assessment proceedings, the A.O. noticed that the assessee has declared sundry creditors balance of Rs.3,64,17,892/- in her balance sheet. The A.O. asked the assessee to submit confirmation letters from the creditors having closing balance of more than Rs.5 lakhs. In some cases, the A.O. also issued notices u/s 133 (6) of the Act. There were replies from some people and no reply from others. The assessing officer took the view that the sundry creditors balance of parties from whom no reply was received are bogus and non-existent. The aggregate amount of such creditors was Rs.88,93,269/-. The A.O. added the above said amount to the total income u/s 41 of the Act. The details of the said creditors have been tabulated as under by the A.O. Sl.No. Name of the Creditor Amount as per the balance sheet Amount as confirmed by the creditors Difference 1. Evershine Granite 1384428 0 1384428 2 Kapil Granites 540298 No Reply 540298 3 Natural Granites 1009061 No Reply 1009061 4 Pearl Granexpo Pvt. Ltd. 831173(dr) No Reply 831173 5 Prism Granites 653484 599261 54223 6 Rama Enterprises 1670904 Returned unserved with new address 1670904 7 Rana Granites 874749 674748 200001 8 R.S. Granites Exports 1610157 Returned unserved with new address 1610157 ITA No.890/Bang/2019 Smt. Snehalatha Surana, Bangalore Page 3 of 5 9 Sri Shiva Granites 598680 (dr) No Reply 598680 10 Stone World Granites 557685 0 557685 11 S.V.G. Exports Pvt. Ltd. 1312867 876208 436659 4. Before Ld. CIT(A), the assessee furnished confirmation letters obtained from the above said creditors as additional evidences. However, the Ld. CIT(A) refused to admit the additional evidences on the reasoning that the assessee did not fulfil the conditions prescribed under Rule 46A of the I.T. Rules. Accordingly, he confirmed the above said addition. 5. Before us, the Ld. A.R. submitted that the assessee, in fact, requested the parties to furnish confirmation letters during the course of assessment proceedings, but they did not cooperate at that point of time. Subsequently, the assessee persuaded them to furnish confirmation letters and those letters were furnished before Ld. CIT(A) as additional evidences. Accordingly, the LD. A.R. submitted that the assessee was prevented by sufficient cause from producing those evidences before A.O. Accordingly, she prayed that these additional evidences may be admitted and the matter may be restored to the file of A.O. for examining them. 6. We heard Ld. D.R., who supported the order passed by Ld. CIT(A). 7. We heard rival submissions and perused the record. We notice that the assessee could not furnish the confirmation letters, since those letters were not available with the assessee during the course of assessment proceedings. Further, they have to be collected from the creditors, over whom the assessee may not be having effective control. It is the case of the assessee that the confirmation letters ITA No.890/Bang/2019 Smt. Snehalatha Surana, Bangalore Page 4 of 5 were obtained subsequent to the completion of the assessment and hence they were produced before Ld CIT(A) as additional evidences. Thus, we are of the view that there was reasonable cause for the assessee in not producing those letters before the A.O. Accordingly, in the interest of natural justice, we admit the additional evidences. Since these evidences require examination at the end of the A.O., we set aside the order passed by ld. CIT(A) on this issue and restore the same to the file of the A.O. for examining it afresh. 8. The second issue contested by the assessee relates to disallowance made u/s 40A(3) of the Act amounting to Rs.2,93,865/- We notice that the assessee has agreed for this disallowance before the A.O. Accordingly, the Ld. CIT(A) also confirmed the disallowance. Before us, the assessee could not furnish any material to controvert the addition made by the A.O. It was also not shown to us that the addition was agreed under wrong impression. Accordingly, we also confirm the disallowance made u/s 40A(3) of the Act. 9. The last issue contested by the assessee relates to the addition of Rs.94,000/- being the difference in sales reported in the books of accounts and VAT returns. Before the A.O., the assessee could not reconcile the difference and hence agreed for the addition. Before Ld. CIT(A) also the assessee could not reconcile the difference and hence the Ld. CIT(A) also confirmed the same. Before us also, the assessee could not reconcile the difference. Hence, we have no other option but to confirm the addition made by the A.O. on this issue. ITA No.890/Bang/2019 Smt. Snehalatha Surana, Bangalore Page 5 of 5 10. In the result, the appeal filed by the assessee is treated as partly allowed for statistical purposes. Order pronounced in the open court on 29 th Dec, 2021. Sd/- (N.V. Vasudevan) Vice President Sd/- (B.R. Baskaran) Accountant Member Bangalore, Dated 29 th Dec, 2021. VG/SPS Copy to: 1. The Applicant 2. The Respondent 3. The CIT 4. The CIT(A) 5. The DR, ITAT, Bangalore. 6. Guard file By order Asst. Registrar, ITAT, Bangalore.