The Income Tax Appellate Tribunal (ITAT), Kolkata Bench deleted addition of Rupees one crore as addition was made on personal belief and imagination by Assessing Officer (AO).
The assessee, Pradip Mullick is earning business income from his proprietorship business under the name and style of M/s. BalaramMullic& Radha Raman Mullick which is into the manufacturing and sale of sweets and confectioneries spread over the State of West Bengal. Return of income was filed on 30.09.2012 reporting a total income of Rs.11,76,940/- which was taken up for scrutiny assessment. Statutory notices were issued and served on the assessee and were duly complied with. In the course of assessmentAOmade additions. Aggrieved the assessee approached the Commissioner of Income Tax (CIT).
The CIT observed that “The conclusion of AO to hold sundry creditors as bogus at the instance of report of inspector for few sample cases, was based on AO’s personal belief and not by virtue of any concrete facts and evidence placed on record. Thus,the conclusion of the AO is based on imagination and directed to delete the addition made in this respect of Rs.1,42,11,069/-.”
The Counsel for the assessee, submitted and the list of sundry creditors placed in the paper book at pages from 58 to 106 which comprises of columns containing name of the party, address, opening balance as on 01.01.2021, purchases, total credits, total payment and closing balance as on 31.03.2012 and submitted sales, purchases and the trading results have been accepted by the Ld. AO. Also there is no cessation of liability by the assessee in respect of these creditors u/s. 41(1) of the Act.
The Bench consisting of Rajpal Yadav, Vice President and Girish Agarwal, Accountant Member observed that “From the documents placed on record, it emanates that these are all small vendors supplying perishable items viz. fruits, vegetables, milk, cheese etc. Considering the nature of expenses, trading results, sales, purchases and the gross profit, more particularly owing to the nature of business of assessee comprising of manufacturing and sale of sweets and confectionery, we do not find any reason to interfere with the decision and the findings given by the ld. CIT(A). Accordingly, the ground of appeal of the revenue is dismissed.”
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