2018 (3) TMI 1467 - HC - Income Tax

Addition u/s 68 - addition on account of sundry creditors - genuineness of the transactions - creditors did not respond to the notices issued u/s. 133(6) by the AO - Held that - The assessee had at the outset, contrary to what was observed by the Assessing Officer, supplied necessary details of all transactions and persons with whom such transactions were made. Wherever there was lack of response from these persons during the assessment, the Commissioner of Income Tax (Appeals) believed the genuineness of the transactions on the basis of the remand report called for during the appellate proceedings. The issues are thus, purely factual in nature. Commissioner of Income Tax (Appeals) and the Tribunal concurrently held that the additions under section 68 were incorrectly made - no question of law arise - Decided against revenue

Summary

Issues:
Appeal against ITAT judgment on additions under section 68 of the Income Tax Act, 1961.

Analysis:

Issue A:
The first question raised was whether the Tribunal was justified in deleting the addition on account of sundry creditors made by the AO under section 68 of the Act. The Commissioner of Income Tax (Appeals) and the Tribunal both held that the assessee had provided necessary details of the transactions and persons involved. Even though the creditors did not respond to notices, the genuineness of the transactions was believed based on the remand report during the appellate proceedings. The courts found the additions were incorrectly made, and as the issues were factual, no question of law arose.

Issue B:
The second question was about the deletion of the addition on account of advances received from customers. Similar to the first issue, the Commissioner of Income Tax (Appeals) and the Tribunal agreed that the assessee had provided essential transaction details, and the genuineness was established through the remand report. The courts found no perversity in the findings and concluded that the additions under section 68 were wrongly made.

Issue C:
The third question pertained to the deletion of the addition on account of an unsecured loan received from a customer. Again, the Commissioner of Income Tax (Appeals) and the Tribunal held that the assessee had fulfilled the requirement of proving the genuineness of the loans, despite the parties not responding to notices. The courts found the additions were incorrectly made and that the issues were purely factual, leading to the dismissal of the Tax Appeal.

In summary, the High Court upheld the decisions of the Commissioner of Income Tax (Appeals) and the Tribunal, dismissing the appeal as the additions under section 68 were deemed to be incorrectly made due to the assessee providing necessary transaction details and the genuineness being established during the appellate proceedings.