Prayag Polytech Pvt. Ltd. Vs Addl. CIT. (ITAT Delhi)
The issue under consideration is whether the addition on account of advances from customers treating the same as unexplained liability is justified in law?
In the present case, the AO made the addition u/s 68 stating that the assessee could not prove the transaction u/s 68 and hence, in absence of identity, genuineness and credit worthiness of the customers who have given advances, this addition was rightly done.
ITAT states that the assessee has produced relevant documents before the Assessing Officer but the Assessing Officer has not taken any cognizance of these documents. In fact, the assessee duly filed the details of advances received from customers alongwith the details of current liabilities and also the sales invoices raised in the subsequent years and the record shows that these advances have been cleared in the subsequent years. Thus, the genuineness, creditworthiness and identity of the customers in fact was proved by the assessee. Therefore, this disallowance was not proper on part of the Assessing Officer as well as the CIT(A). Hence, the appeal filed by the assessee is allowed.
FULL TEXT OF THE ITAT JUDGEMENT
This appeal is filed by the assessee against the order dated 10/07/2019 passed by Commissioner of Income Tax (Appeals)-38, New Delhi for Assessment Year 2016-17.
2. The grounds of appeal are as under:-
1. “On the facts and circumstances of the case, the order passed by the learned CIT(A) is bad both in the eyes of law and on facts.
2. (i) On the facts and circumstances of the case, the learned CIT(A) is erred both on facts and in law in confirming disallowance of Rs.3,73,50,300/- made by the AO on account of following expenses treating the same as unexplained:
