Ginni Filaments Ltd. Vs DCIT (ITAT Agra)
The Income Tax Appellate Tribunal (ITAT), Agra Bench, in the case of Ginni Filaments Ltd. Vs DCIT (Deputy Commissioner of Income Tax), decided to set aside the assessment and first appellate orders. The Tribunal did not rule on the merits of the addition but sent the matter back to the Assessing Officer (AO) for a fresh examination of a disputed outstanding trade payable liability of ₹34,45,60,149/-. This decision was primarily driven by the fact that the crucial evidence—confirmations, full ledgers, invoices, and subsequent payment details for the creditors—had never been submitted to or verified by the revenue authorities at the initial stages.
The Disputed Addition
The assessee, Ginni Filaments Ltd., a company engaged in the manufacturing of knitted fabric, yarns, and readymade garments, filed its return of income for the assessment year 2020-21. The case was selected for scrutiny on multiple grounds, but the key dispute centered on the genuineness and continued existence of outstanding trade payables totaling over ₹34.45 crore, involving 119 out of 257 sundry creditors.
The AO noted that the assessee failed to submit essential documentation, including:
1. Copies of confirmations from the creditors.
2. Sample bills or invoices related to the liabilities.
3. Bank extracts showing payments made in the subsequent period.
4. Ledgers of the remaining 119 creditors.
Based on this lack of evidence, the AO disallowed the entire outstanding amount and added ₹34,45,60,149/- to the assessee’s income under Section 41(1) of the Income Tax Act, 1961, treating the liability as having been remitted or ceased to exist. The Commissioner of Income-tax (Appeals) [CIT(A)] subsequently dismissed the assessee’s appeal, endorsing the AO’s reasoning.
