Priya Enterprise Vs ITO (ITAT Surat)
Cash Deposits and Sundry Creditors Explained in Books – Additions Deleted in Absence of Rejection of Accounts
The Surat Bench of the ITAT allowed the assessee’s appeal and deleted additions relating to unexplained cash deposits and sundry creditors. The Tribunal held that the cash deposits in the bank were duly explained with reference to partners’ capital, creditors, and earlier withdrawals, all of which were recorded in the audited books of account. As the Revenue neither found these explanations to be false nor rejected the books of account, the addition could not be sustained.
With respect to sundry creditors, the Tribunal observed that the assessee had furnished complete details of creditors along with evidence of subsequent repayments. The addition was made merely on the presumption that sundry creditors constituted a high percentage of total purchases, without bringing any adverse material on record. Once purchases were accepted and the identity and genuineness of creditors were not disproved, corresponding trade creditors could not be treated as unexplained. Accordingly, all additions confirmed by the CIT(A) were deleted and the appeal was allowed
FULL TEXT OF THE ORDER OF ITAT SURAT
This appeal has been filed by the assessee against the order passed by the Ld. Commissioner of Income Tax (Appeals), National Faceless Appeal Centre (NFAC), Delhi, [hereinafter referred to as “Ld. CIT(A)”] dated 31.07.2024, under section 250 of the Income-tax Act, 1961 [in short “the Act”] for the Assessment Year 2016-17.
