Home Case Index All Cases Income Tax Income Tax + AT Income Tax - 2021 (8) TMI AT This
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2021 (8) TMI 787 - AT - Income TaxAddition of sundry creditors - outstanding creditors - HELD THAT:- The sundry creditors represent the expenditure incurred for purchases and to make the disallowance of expenditure the issue is be dealt with u/s 37(1) in the year in which it was incurred, but not to be added in the subsequent year. AO did not make any enquiries to disprove the genuineness of outstanding creditors to invoke the section 41(1) of the act. It was also accepted fact that in the earlier year, assessment was completed u/s 143(3) and accepted the genuineness of purchases or as well as the outstanding creditors. As having accepted the genuineness of the sundry creditors in the earlier year merely because the assessee could not furnish some details, the AO cannot make addition of opening sundry creditors. It was also stated in the assessment order that due to HudHud cyclone, the business was badly effected. Merely because, the assessee had entered into agreement for sale, the AO cannot presume that the sundry creditors should not continue unless tangible evidence is brought on record to disprove the genuineness of the outstanding sundry creditors. In this regard, the assessee had already submitted the balance sheet. The assessee explained that it did not receive the sale consideration by the time the survey was conducted and the sundry creditors were not paid by that time, thus the transaction stands explained. Similar issue was considered by the coordinate bench in Tum Nath Shaw. v.Assistant Commissioner of Income Tax, Circle- 2, Burdwan, .[2019 (2) TMI 783 - ITAT KOLKATA] and decided the issue against the revenue and in favour of the assessee. AO did not make any enquiries or bring any evidence to prove that the outstanding creditors are bogus or the assessee has made the payments outside the books of accounts in the assessment year under consideration. The assessee has shown the liability in the balance sheet and stated to have paid the creditors subsequently. Therefore, in the absence of any evidence to disprove the genuineness of the outstanding creditors or to controvert the submission of the assessee, there is no reason to make the addition, hence, we uphold the order of the Ld.CIT(A) and dismiss the appeal of the revenue.
|