Satpal & Sons (HUF) Vs ACIT (ITAT Delhi) Authorized Representative further submitted that all the above creditors are outstanding from F.Y. 2008-09 and no any transactions have been made since then. The assessing officer has alleged that the creditors are outstanding in the books of account for more than 3 years, therefore, as per limitation of three years in respect of liability, such liabilities would stand ceased. It was submitted that these creditors have been paid in the subsequent years through banking channel and therefore, the assessing officer was not justified in making the addition under section 41(1) of the Income Tax Act.
Full Text of the ITAT Order is as follows:-
This is an appeal filed by the assessee against the order dated 7-11-2014 of learned Commissioner (Appeals)-XXVIII, Delhi for the assessment year 2011-12. In this appeal, the assessee has also filed a stay petition seeking stay of the outstanding demand. The grounds raised in appeal read as under :–
“1. That having regard to the facts and circumstances of the case, learned Commissioner (Appeals) has erred in law and on facts in confirming the action of learned assessing officer in making addition of Rs. 90,36,451 on account of sundry creditors under section 41(1), inter alia by treating as cessation of liability and that too in the year under appeal and without discharging the burden as per law and without considering the submissions of assessee and without considering the correct provisions of law. 2
2. That in any case and in any view of the matter, action of learned Commissioner (Appeals) in confirming the action of learned assessing officer in making addition of Rs. 90,36,451 under section 41(1) is bad in law and against the facts and circumstances of the case.
3. That having regard to the facts and circumstances of the case, learned Commissioner (Appeals) has erred in law and on facts in confirming the action of the learned assessing officer in making the addition of Rs. 12,320 on account of bogus purchases.
4. That having regards to the facts and circumstances of the case, learned Commissioner (Appeals) has erred in law and on facts in confirming the action of the learned assessing officer in making various dis allowances under the following heads by treating it as personal in nature.
–Rs. 7,670 on account of business promotion expenses.
–Rs. 3,174 on account of telephone expenses.
–Rs. 19,808 on account of car running & maintenance expenses.
–Rs. 27,471 on account of electricity expenses.
5. That in any case and in any view of the matter, action of learned Commissioner (Appeals) in confirming the action of learned assessing officer in making the various addition/dis allowance and framing the impugned assessment order is contrary to law and facts, void ab initio and the same is not sustainable on various legal and factual grounds.
6. That having regard to the facts and circumstances of the case, learned Commissioner (Appeals) has erred in law and on facts in not reversing the action of the learned assessing officer in charging interest under section 234B, 234C and 234D of the Income Tax Act, 1961.”
2. Ground No. 3 has not been pressed by the assessee and therefore, the same is dismissed as not pressed. 3
3. The brief facts of the case are that the assessee is engaged in the business of civil construction activities. The total gross receipts of the assessee during the year under consideration was Rs. 3,45,56,683 and the net profit rate was 18.29%. During the assessment year, the assessee had shown sundry creditors of Rs. 2,59,71,557 in his balance sheet. The assessing officer issued notices under section 133(6) to various parties, from whom the assessee had claimed to have made purchases and shown them as sundry creditors in the books of account. Some notices issued under section 133(6) returned un-served or no reply was received. The assessee was asked to produce the said sundry creditors, who had not complied with the notices under section 133(6). The assessing officer received the confirmations from certain parties, the details of which and observations of the assessing officer are mentioned in the assessment order as under :–
