Case Law Details
ITO Vs Shri Mahalakshmi Metal (ITAT Chennai)
ITAT Chennai held that trade payable appearing in the books of accounts duly explained. Accordingly, addition towards the same u/s 68 of the Income Tax Act is unjustified and liable to be deleted.
Facts- During the course of assessment proceedings, AO noticed that there is an increase in Trade payables when compared to previous financial year, even though there is no activities carried out by the assessee for the impugned assessment year. Therefore, AO called upon the assessee to file necessary details and justification for increase in trade payables.
AO was not convinced with the explanation furnished by the assessee and according to AO, the assessee could not justify increase in trade payables even though there is no substantial business activities for the impugned assessment year. AO, further observed that the assessee has received funds from M/s. Ruchika Global Interlinks Pvt. Ltd and transferred to SLO Steel Ltd through proper banking channel, but could not explain how said funds has been transferred to SLO Steels Ltd. Therefore, rejected arguments of the assessee and made additions towards trade payables u/s. 68 of the Income-tax Act, 1961.
CIT(A) deleted the addition made by AO towards sundry creditors u/s 68 of the Act. Being aggrieved, the present appeal is filed by the revenue.
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