ITAT Confirms CIT(A)’s Deletion of Rs.1.82 Crore Addition as Revenue Fails to Produce Contrary Evidence [Read Order]

The Ahmedabad bench of the Income Tax Appellate Tribunal (ITAT) confirmed the Commissioner of Income Tax (Appeals) [CIT(A)]’s deletion of Rs. 1.82 crore addition as revenue failed to produce contrary evidence.

In this case, the Revenue has appealed against the order of the CIT(A) for the Assessment Year (AY) 2017-18. 

Coming to the facts of the case, the assessee, Clartech Engineers Pvt.Ltd, engaged in the business of manufacturing machinery and providing installation and maintenance services, filed its Income Tax Returns on 2-11-2017, declaring a total income of Rs. 54.26 lakhs, which was later revised to Rs. 46.67 lakhs on 9-2-2018.

During the scrutiny proceedings, the assessing officer (AO) assessed the total income at Rs. 3.57 crores, making various additions, including the disallowance of depreciation on CNC Lathe and the addition of alleged bogus creditors. 

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The assessee, who was aggrieved by the order of AO, appealed before the CIT(A) for relief, and the latter partly allowed the appeal of the assessee by restricting the depreciation on CNC Lathe to Rs 1,28,975 and deleted the addition of Rs. 1,82,75,037 on account of bogus creditors.

The Departmental Representative submitted that some creditors appeared in both lists submitted by the assessee, which were one for "Labour Purchase" and another for "Material and Labour Purchase’.  The DR referred to the ledger accounts of two specific parties, namely Megamech Engineers and Shree Khodal Engineering, to demonstrate the alleged discrepancy.

The counsel submitted that out of the total addition of Rs. 1,82,75,037 for "Bogus Creditors", Rs. 1,67,15,471, which was related to one party named Vishwakarma Engineers, the AO had already issued a notice under Section 133(6) of the Income Tax Act, 1961,  and made additions based on discrepancies found in the ledger account maintained by Vishwakarma Engineers.

The bench, after reviewing the ledger accounts of Megamech Engineers and Shree Khodal Engineering, found no discrepancies.

Read More: CIT(A) failed to consider Factual Mistake Committed by CPC: ITAT Directs AO to Delete Adjustment of Rs. 3.09 Crore

The bench observed that the revenue has not brought any contrary material on record to rebut the CIT(A)’s findings. The ITAT found no infirmity in the CIT(A)’s decision to delete the addition of Rs. 1,82,75,037 on account of bogus creditors

The ITAT, comprising Siddhartha Nautiyal (Judicial Member) and Marakand V. Mahadeokar (Accountant Member), dismissed the revenue’s appeal.

To Read the full text of the Order CLICK HERE

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