Mere Non-production of Evidence by the Creditor of Assessee doesn't result in Addition of Income: ITAT allows Appeal [Read Order]
![Mere Non-production of Evidence by the Creditor of Assessee doesnt result in Addition of Income: ITAT allows Appeal [Read Order] Mere Non-production of Evidence by the Creditor of Assessee doesnt result in Addition of Income: ITAT allows Appeal [Read Order]](https://www.taxscan.in/wp-content/uploads/2023/07/Mere-Non-production-Evidence-Creditor-Assessee-result-Addition-Income-ITAT-Appeal-TAXSCAN.jpg)
The Mumbai bench of the Income Tax Appellate Tribunal (ITAT) held that mere non-production of evidence by the creditor of the assessee doesn’t result in the addition of income.
The assessee is a partnership firm carrying on the business of builders and developers, filed its return of income at a total income of Rs.3,10,736/-. The return was processed and taken up for scrutiny under limited scrutiny.
In the absence of any such evidence, the sundry creditors amounting to Rs.2,44,85,512/- were added to the total income, and consequently, an assessment order under Section 144 r.w.s 143(3) of the Income Tax Act was passed determining the total income at Rs.2,47,96,252/-.
The main contention of the assessee is that out of Rs.2,44,85,512/- of sundry creditors, the sum of Rs. 2,31,65,707/- are the persons to whom such sum is payable on account of the purchase of land at Panvel.
It was submitted that the assessee has purchased land during the year for consideration of Rs.2,96,75,707/- from nine different parties. To these parties, Rs.65,10,000/- was paid and the balance sum of Rs.2,31,65,707/- is outstanding.
During the course of the hearing before the Commissioner of Income Tax (Appeal) [CIT (A)], the assessee filed additional evidence such as the ledger account of the parties, copies of their bills, and bank statements showing payment to the parties subsequently. The Commissioner of Income Tax (Appeal) examined all the details.
The Authorized Representative that failure of parties to respond under Section 133 (6) of the Income Tax Act cannot be a ground for making such addition when the assessee furnished the copies of documents with respect to parties from whom land is purchased while registering those documents all the parties who sold the properties to the assessee, were present and their photograph was taken along with photocopies of their election card before registering authority, therefore the identity of those parties is clearly established.
Therefore, mere non-production of those parties could not result in the addition. With respect to the balance parties, he referred to the order of the Commissioner of Income Tax (Appeal) wherein it is evident that out of the other creditor’s confirmation has already been received from parties amounting to Rs.11,81,755/-.
The two-bench member comprising of Amit Shukla (Judicial member) and Prashant Maharishi (Accountant member) directed the Assessing Officer to delete the addition of Rs.11,81,755/-. With respect to the balance sum of Rs.1,38,580/-, the assessing officer has made the addition of sums to be paid to the two carpenters.
Naturally, the nature of payment and the quantum is so small that non-receipt of confirmation from them under Section 133 (6) of the Income Tax Act cannot result in addition.
It was further shown that these expenses are not debited to the Profit and Loss account but are added to the fixed assets on which depreciation is claimed and allowed.
This fact was not controverted by Revenue, therefore, the addition of Rs.1,38,580/- also deserves to be deleted.
Thus, the appeal of the assessee was partly allowed.
To Read the full text of the Order CLICK HERE
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