Abdul Muqeed Mohammed Vs ITO (ITAT Hyderabad)
Creditor Confirmed in Both Books: Section 68 Addition Reopened for Verification
The Hyderabad Bench of the Income Tax Appellate Tribunal (ITAT) condoned a delay of 223 days in filing the appeal and set aside the addition of ₹3.06 crore made under section 68, holding that the assessee had demonstrated bona fide reasons for the delay and had produced crucial additional evidence going to the root of the matter.
The addition arose because the Assessing Officer treated a sundry creditor (M/s A.A. Nayeem Beedi Leaves) as unexplained solely on the ground that the creditor did not respond to notice under section 133(6), despite the assessee having filed a written confirmation. The AO accepted the opening balance and added only the incremental amount as unexplained cash credit.
Before the Tribunal, the assessee explained the delay due to death of the Chartered Accountant, non-receipt of the CIT(A) order (email landing in spam), and serious medical condition of the assessee’s daughter, all supported by affidavits and medical records. The Tribunal found the delay to be bona fide and condoned it.
On merits, the ITAT admitted additional evidence, including balance sheets and ledger accounts of the creditor, which showed that the same outstanding amount was reflected in the books of both parties, with running business transactions over multiple years. The Tribunal observed that, prima facie, there was no justification to treat the creditor as unexplained, merely for non-response to section 133(6).
However, since these documents were not examined by the Assessing Officer earlier, the ITAT restored the matter to the AO for fresh verification. It directed that if the creditor’s books corroborate the assessee’s claim, the entire addition under section 68 shall stand deleted. The appeal was allowed for statistical purposes.
FULL TEXT OF THE ORDER OF ITAT HYDERABAD
