Non-verification of Confirmation, Invoice and Payment Details of Creditor Liability: ITAT Restores ₹34.45 Cr Addition to AO [Read Order]
Highlighting that the evidence submitted was never before the lower authorities, the tribunal restored the matter for verification.
Non-verification - Invoice and Payment - Creditor Liability - ITAT - taxscan
Non-verification - Invoice and Payment - Creditor Liability - ITAT - taxscan
The Agra Bench Income Tax Appellate Tribunal (ITAT) restored the matter of an addition of Rs. 34,45,60,149/− to the Assessing Officer (AO) for fresh consideration, after noting that documentary evidence, such as confirmations, sample invoices, and bank statements showing subsequent payments to creditors, had been submitted for the first time before the Tribunal.
Ginni Filaments Ltd. (assessee), involved in manufacturing knitted fabric, yarns, and readymade garments, e-filed its return for the Assessment Year (AY) 2020-21. The case was selected for scrutiny, and the only issue in dispute was the outstanding trade payable liability of Rs. 34,45,60,149 concerning 119 parties out of 257 sundry creditors.
The Assessing Officer disallowed the liability and added the amount to the assessee's income under section 41(1) of the Income-tax Act, 1961, noting that copies of confirmations, sample bills, or bank extracts for the impugned amount were not submitted to the revenue authorities. The ledgers for only 138 out of 257 sundry creditors above Rs. 1 lakh were submitted.
Aggrieved by the AO’s order, the assessee filed an appeal to the Commissioner of Income-tax (Appeals) [CIT(A)]. The CIT(A) dismissed the appeal. Aggrieved by the CIT(A)'s order, the assessee appealed to the ITAT.
The two-member bench, comprising S. Rifaur Rahman (Accountant Member) and Sunil Kumar Singh (Judicial Member), observed that the assessee had filed a paper book containing confirmations, sample invoices, and bank statements showing subsequent payments to creditors.
The tribunal observed that this evidence was never filed before the AO or the CIT(A). It also observed that the revenue authorities below had no occasion to examine and verify these documentary evidences.
The Tribunal considered that it was appropriate to restore the matter back to the file of the Assessing Officer. It directed the AO to pass a fresh order after examining and verifying the newly submitted details in respect of confirmations, sample invoices, and bank statements showing subsequent payments to the creditors.
The tribunal directed the AO to afford an opportunity of hearing to the assessee. The appeal of the assessee was allowed for statistical purposes.
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