Primary Addition to Income by AO was deleted on Appeal, No Correction of Arithmetical mistake by invoking sec 263 Survive: ITAT [Read Order]

The Cuttack Bench of Income Tax Appellate Tribunal has held that primary addition to income by AO was deleted on appeal, no correction of arithmetical mistake by invoking sec 263 survive.

The appellant, Kyal Agencies Private Limited, is engaged in the business of medicine. During scrutiny assessment, the AO disallowed the sundry creditors of the assessee totalling to Rs.2,52,50,807/-. The PCIT by invoking provision under section 263 in respect of the same sundry creditors, the total was arrived at Rs.3,11,15,098/-, making a

difference of Rs.58,64,291/-, which has been directed to be added by the PCIT.

Aggrieved by the order of PCIT the assessee preferred appeal before ITAT and submitted that the same sundry creditors which were originally disallowed in the order passed u/s.143(3) of the Act was the subject matter of the appeal before the CIT(A), who had deleted the addition made by the AO.

The counsel for the appellant further submitted that the details in respect of sundry creditors were produced before the AO in a remand proceeding and the AO himself has examined everything including the calling for details of the sundry creditors u/s.133(6) of the Act. After verifying all the details, the CIT(A) confirmed the addition of Rs.11,375/- representing negligible difference. Therefore, the addition already been sustained in view of the order of the CIT(A), National Faceless Appeal Centre (NFAC), and no further purpose would be served by confirming the order u/s.263 of the Act by the ld. Pr.CIT,

The Tribunal observed that the issue of genuineness, creditworthiness and identity of the sundry creditors, the same has already been filed before the CIT(A) and on the basis of the remand proceedings, the CIT(A) has deleted the substantial portion of the addition resulting into sustenance of addition of Rs.11,375/- only.

The Coram of Mr. George Mathan, Judicial Member and Mr. Arun Khodpia, Accountant Member has held that “we are of the view that the order of the Pr.CIT passed u/s.263 of the Act on the issue of sundry creditors in respect of correction of the arithmetical mistake no more survives, insofar as the primary addition has itself been deleted”.

Mr. M.K.Sheth, Advocate appeared for the appellant and Mr. S. K. Mohapatra, appeared for the Revenue.

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