Case Law Details
DCIT Vs Minal Intermediates (ITAT Ahmedabad)
The Income Tax Appellate Tribunal (ITAT) in Ahmedabad recently upheld the order by the Commissioner of Income Tax (Appeals) [CIT(A)] in the case of DCIT vs. Minal Intermediates. The Revenue had appealed against the CIT(A)’s decision to delete an addition of Rs. 2,14,53,435 under Section 68 of the Income Tax Act, which was initially imposed by the Assessing Officer (AO) for the assessment year 2016-17. The AO had previously categorized these credits as unexplained cash credits due to insufficient evidence provided by the assessee at the assessment stage. However, upon submission of a remand report, the CIT(A) found that the transactions were genuine and supported by credible documentation, including copies of accounts, bills, confirmations, payment proof, and VAT returns.
In the remand report, the AO reviewed the original bills for a specified period and did not find any discrepancies or irregularities. With no adverse findings in the remand report and the AO’s implicit acknowledgment of the transaction authenticity, the CIT(A) ruled that the addition was unsubstantiated. The ITAT affirmed this ruling, stating that since the genuineness of the transactions had been verified and accepted in the remand report, there was no basis for the AO’s proposed addition on unexplained cash credits. Consequently, the ITAT dismissed the Revenue’s appeal, thereby reinforcing the CIT(A)’s decision that no further additions were necessary. This ruling highlights the importance of comprehensive documentation and the remand report process in affirming or contesting cash credit-related additions under tax law.
FULL TEXT OF THE ORDER OF ITAT AHMEDABAD
This appeal has been filed by the Revenue against the order passed by the Ld. Commissioner of Income Tax (Appeals)-11, (in short “Ld. CIT(A)”), Ahmedabad, vide order dated 18.05.2023 passed for A.Y. 2016-17.
2. The Revenue has taken the following grounds of appeal:-
“1. In the facts on the circumstances of the case, the Ld. CIT(A) has erred in law and / or on facts in deleting the addition on account of unexplained cash credits of Rs. 2,14,53,435/- made u/s 68 of the Act, considering that, the same are genuine. The Ld. CIT(A) didn’t appreciate the facts that, assessee failed to furnish the supporting evidences before Assessing Officer.
2. In the facts and on the circumstances of the case and in law, the Ld. CIT(A) ought to have upheld the order of the AO.”
3. In this case, the Assessing Officer made addition of Rs. 2,14,53,435/-under Section 68 of the Act on account of unsubstantiated creditors.
4. The Ld. CIT(A) has deleted the addition holding that the assessee has duly submitted relevant proves like copy of account for the A.Y. 2016-17, copy of the bills, confirmations, proof of payment and VAT return. The Ld. CIT(A) has also categorically held that the original bills of all the purchases for two months have been examined in the remand report by the Assessing Officer and the Assessing Officer has neither made any adverse remarks on the remand report nor any adverse material is brought to notice with regard to the sundry creditors of the goods. The Ld. CIT(A) held that the Assessing Officer in his remand report has accepted the genuinenity of the transactions, therefore, no addition can be made out of the outstanding balances.
5. Having gone through the record before us and also keeping in view the fact that nothing adverse has been brought to our notice and since the remand report has categorically accepted by the genuinenity of the sundry creditors we hold that no addition can be made on the difference in the sundry creditors as alleged by the Assessing Officer. The order of the Ld. CIT(A) is hereby affirmed.
6. In the result, the appeal of the Revenue is dismissed.
The order is pronounced in the open Court on 16.10.2024
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