Utpal Sarkar Vs DCIT (ITAT Kolkata)
In the case of Utpal Sarkar vs. DCIT, the assessee filed a belated return for AY 2013-14, which was selected for scrutiny due to low reported income despite substantial commission receipts. The assessment was completed ex parte under Section 144, with an addition of ₹49,86,306/- treating sundry creditors from two proprietary concerns—Sarada Trading (₹5,87,924/-) and Sarada Electronics (₹43,98,382/-)—as bogus. The CIT(A), after a remand report, reduced the disallowance to ₹35,28,140/- since ₹14,15,020/- was confirmed by creditors under Section 133(6), but the remaining amount was considered unverifiable due to unserved notices.
The ITAT found that the inter-unit transactions between the two proprietary concerns were mistakenly treated as bogus. It emphasized the principle of preponderance of probability, ruling that unverified creditors alone do not constitute bogus liabilities unless there is clear evidence of cessation under Section 41(1). A CA certificate submitted by the assessee confirmed full repayment by 31.03.2023, but lacked details on timing and mode of payment. Consequently, the ITAT directed the deletion of ₹20,76,149/- on submission of further evidence and remanded ₹14,51,991/- for verification. The appeal was partly allowed, pending reassessment by the AO.
The assessee, Utpal Sarkar, filed a belated income tax return on 30.09.2013, declaring total income of Rs. 14,15,020/-. The return was selected for scrutiny under CASS, citing the reason “Low income compared to large Commission receipt”. Subsequently, notices under section 143(2) and section 142(1) were issued.
