Addition made on Account of Sundry Creditors Balance due to Improper Explanation on part of Assessee: ITAT Directs Re-adjudication [Read Order]

The Pune bench of the Income Tax Appellate Tribunal (ITAT) directed the assessing officer to re-adjudicate the addition made on account of sundry creditors' balances due to improper explanation on the part of the assessee. 

Rajendra Supadu Jadhav, the appellant assessee was an individual engaged in the business of manufacturing and trading in open gym equipment and also derives income from salary, business and profession, and other sources. 

The assessee appealed against the order passed by the Commissioner of Income Tax (Appeals) for confirming the addition made by the assessing officer on account of sundry creditors' balances.

Vardhaman Jain, the counsel for the assessee contended that the assessee furnished all required information to his Chartered Accountant for filing an Income Tax return for the year under consideration. 

It was further submitted that the assessee was not aware of the said wrong entry and the assessee had not purchased any material of that value and showing the same as stock in hand was wrong. 

Sardar Singh Meena, the counsel for the revenue relied on the decisions made by the lower authorities and contended that the sundry creditors are appearing on the liability side of the balance sheet as there was no proper explanation on the part of the assessee and the assessing officer was not satisfied with the explanation of the assessee. 

The bench observed that there was additional evidence which was filed by the assessee and it was not considered by the lower authorities while deciding the case. Thus it was necessary to restore the case in the interest of justice. 

The two-member panel comprising S.S. Viswanethra Ravi (Judicial) and G.D. Padmahshali (Accountant) directed the assessing officer to re-adjudicate the matter to decide the issue afresh in terms of value-added tax returns and reconciliation of purchases while allowing the appeal filed by the assessee. 

To Read the full text of the Order CLICK HERE

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