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2019 (10) TMI 1174 - AT - Income TaxAdditions towards sundry creditors - assessee could not explain creditors with necessary evidence to the satisfaction of the AO nor prove genuineness of transactions - According to the AO, notices issued to few parties were returned unserved - HELD THAT:- It is not a case of the AO that the assessee did not file any documents in respect of creditors to prove identity and genuineness of transactions. In fact, the CIT(A) has recorded categorical finding that the assessee has filed various details including PAN and TIN numbers of the parties. CIT(A) has also recorded categorical finding that the assessee has filed proof of payment by cheque against creditors in subsequent financial years. Therefore, we are of the considered view that it is incorrect on the part of the learned AO as well as CIT(A) to come to the conclusion that the assessee has failed to prove identity of the creditors. Genuineness of transactions - The assessee claims that before lower authorities, it has filed various evidences including bills issued by the parties which contain PAN and TIN numbers of the suppliers. The assessee further claims that it has deducted TDS on payments made to those parties and filed necessary TDS certificates before the AO as well as the CIT(A). When payments have been made through proper banking channels and also necessary TDS has been deducted on such payments, it cannot be said that the transactions between the parties are not genuine. Further, when the assessee has filed various evidences including PAN and TIN numbers of the parties to prove identity and also filed evidences of payment by cheque in subsequent years, then there is no reason for the AO to doubt identity and genuineness of transactions merely for the reason of non filing confirmation letters from the parties. The assessee has explained the reasons for non-furnishing confirmation letters from few parties as per which those parties have closed their business before assessment proceedings was completed. In respect of other parties, even though it could not obtain confirmation letters, but filed all possible details including payment proof by cheque along with letters from the bankers confirming payment to the party account. AO as well as the learned CIT(A) had erred in coming to the conclusion that the assessee had failed to file necessary evidences to prove genuineness of creditors. In so far as M/s. Air State Logistics & Couriers Pvt. Ltd.as per assessee’s books of accounts, balance outstanding as on 31.03.2011 is at ₹ 8,56,641/-. Even going by the details filed by the assessee, there is huge difference in balance as per books of accounts of the assessee and balance confirmed by the party. The assessee claims that there are some reconciliation issues between balance shown in books of accounts of the assessee and balance confirmed by the party for which necessary reconciliation can be filed to explain difference. Therefore, the learned AR for the assessee requested to set aside the issue to the file of the AO for further verification in light of reconciliation filed by the assessee to explain difference in balance appeared in assessee books of accounts and balance confirmed by the party. But, the fact remains that the assessee has filed certain additional evidences in form of TDS certificates and payment through cheque in subsequent financial years against those creditors. We are not sure whether these documents were placed before the AO at the time of assessment proceedings or not. Therefore, we are of the considered view that the issued needs to go back to the file of the AO for further verification in light of various evidences filed by the assessee including payment proof by cheque in subsequent financial years. Isue needs to go back to the file of the AO for further verification in light of various evidences filed by the assessee including additional evidences filed in the form of TDS certificates and payment proof by cheque in subsequent years to those creditors. Hence, we set aside the issue to the file of the AO and direct him to reconsider the issue in accordance with law, after affording opportunity of being heard to the assessee. Decided in favour of assessee for statistical purposes.
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