Case Law Details
Nirja Khatuwala Vs ITO (ITAT Gauhati)
I note that the out of total outstanding credits of Rs. 2,23,89,337/-[total number of sundry creditors were eleven (11)], the Assessing Officer was not satisfied about the genuinity in respect of credit worth Rs. 34,35,509/- i.e. only in respect of three sundry creditors which comes to 16% of total sundry creditors. In other words, the Assessing Officer was satisfied about the genuineness in respect of 84% of sundry creditor as claimed by the assessee. And the reason he was not satisfied with these three sundry creditors was that he did not get reply from two of the creditors situated at Bhutan and as far as the one situated at Guwahati is concerned the notice had returned back to him un-served.
It has been discussed (supra) that the sundry creditor at Gauhati proprietor Shri Sougata Bhowal of M/s Bajrang Traders had confirmed that he has shut down the proprietary concern due to financial constraints. It is noted that this party has filed the confirmation of receiving Rs. 7,68,250/- in FY 2015-16 by letter dated 10.12.2016 (page 22 of paper book) and though the assessee has given confirmation of receiving the amount, the AO rejected the same on the flimsy reason that assessee was furnishing this document before him and not the sundry creditor proprietor Shri Sougata Bhowal of M/s Bajrang Traders, which action of AO cannot be countenanced, because, when the assessee produced the confirmation from the said party, if the AO doubts the veracity of the document then he was duty bound to cross-verify the veracity of the same. It is noted that in respect of M/s Bajrang Traders the assessee has placed on record the copy of the invoice raised by the said supplier which inter alia comprised of the details of purchases, name , address, PAN, VAT details of the supplier. The quantity and value of purchases formed part of the audited accounts, quantitative details, gross profit margin and also various accounting ratios of the appellant. In the report furnished by the tax auditor in Form 3CA, no adverse comments or qualifications have been given in this regard. Further no specific infirmity or defect has been pointed out by the AO in respect of the books of accounts of the appellant. In the confirmation letter placed at Page 22 of PB, it has also been clarified by Shri Saugata Bhowal, proprietor of M/s Bajrang Traders that his proprietorship concern had been closed down due to financial problems so it can be presumed that it was the reason why the AO’s notice u/s 133(6) could not be served upon it, so no adverse view was warranted against this sundry creditor.
And as I have already noted (supra) the other two sundry creditors M/s Lhaki Steels and Rolling Pvt. Ltd. and M/s. Bhutan Rolling Mills were non-residents and had been duly served the notice issued by AO u/s 133(6) of the Act, and they both have already furnished their confirmation to have received the balance amount from assessee by RTGS/NEFT. The details have already been discussed supra after referring Page 19 (M/s. Bhutan Rolling Mills Ltd as well as page 17 M/s Lhaki Steels and Rolling Pvt. Ltd.) and copy of confirmation has been reproduced supra. And I not that these details and facts were filed before the AO/Ld. CIT(A) and no infirmities could be pointed out by the lower authorities, so in the light of aforesaid facts and circumstances, I am of the view that no addition was warranted u/s 68 of the Act and therefore, I direct the deletion of addition of Rs 35,34,509/-.
FULL TEXT OF THE ITAT JUDGEMENT
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