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2015 (7) TMI 12 - KARNATAKA HIGH COURT

2015 (7) TMI 12 - KARNATAKA HIGH COURT - TMI - Addition made under section 68 - CIT(A) deleted addition - Held that:- ITAT after considering the rival contentions and on perusal of material on record, by common order dated 30.06.2009 partly allowed the appeals filed by the department and held that in respect of parties (Sundry Creditors) other than relating to whom additions made by the CIT(A) are to be restored to the assessing officer by casting initial burden on the assessee to discharge such .....

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e assessee as well as assessing officer as granted for the assessment year 2003-04.

Unapproved sundry creditors - Whether the Tribunal was justified in law in holding that the provisions of Section 69C of the Act would also apply when the expenses incurred towards purchases were not disputed and the payments made were also recorded in the books of accounts? - Held that:- The order of the assessing officer does not indicate about any explanation having called for by the assessing offic .....

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as section 69C would be squarely applicable to sundry creditors in case of a trader, as obtained in the facts of the present case. Infact, credit purchases are nothing but expenditure and if sundry credits are not proved by the assessee addition can be made by the assessing officer by resorting to section 69C. - Decided in favour of revenue. - ITA Nos. 719/2009 & 803/2009 - Dated:- 3-6-2015 - Mohan M. Shantanagoudar And Aravind Kumar,JJ. For the Appellant : Sri V K Gurunathan A/w Smt. Jinitha Ch .....

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r to examine the addition representing the closing balance of 15 creditors on confirmations being filed by the assessee and to pass orders thereunder. 2. This court by order dated 18.12.2009 has admitted the appeal to consider the following substantial questions of law: (1) Whether the Tribunal was justified in law in upholding the application of section 68 in respect of trade credits outstanding at the end of the year on account of purchases, when the purchases have not been disputed and the tr .....

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uld also apply when the expenses incurred towards purchases were not disputed and the payments made were also recorded in the books of accounts?" 3. Sri.Gurunathan, learned counsel appearing on behalf of Sri.Parthasarathi, Advocate has fairly submitted he would not press his arguments insofar as substantial questions of law 1 and 2 framed by this court on 18.12.2009. His submission is placed on record. 4. We have heard the arguments of Sriyuths Gurunathan, learned counsel appearing on behal .....

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ng officer as unproved sundry creditors assessed under section 68 of the Income Tax Act, 1961 (for short Rs.Act'). 6. Being aggrieved by these assessment orders, assessee preferred appeals before CIT(A). For the assessment year 2003-04 CIT(A) deleted entire addition made by the assessing officer except for ₹ 6,00,000/- pertaining two sundry creditors and for the assessment year 2004-05 the entire addition made by the assessing officer was deleted by order dated 18.12.2007. 7. The reven .....

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after considering the rival contentions and on perusal of material on record, by common order dated 30.06.2009 partly allowed the appeals filed by the department and held that in respect of parties (Sundry Creditors) other than relating to whom additions made by the CIT(A) are to be restored to the assessing officer by casting initial burden on the assessee to discharge such burden by filing confirmation letters of Sundry Creditors and reserving liberty to assessing officer to make verification .....

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8. In order to answer the above question of law, it would be necessary to state the facts in brief which has led to the filing of these two appeals. 9. For the assessment year 2003-04 the assessee has declared a gross profit of ₹ 5,97,168/- on total sales of ₹ 7,23,69,380/-. It was noticed by the assessing officer that assessee had shown liability of ₹ 81,91,755.80 towards sundry creditors in the Balance Sheet. Hence, communication was forwarded to those sundry creditors under .....

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ing opportunity the same was not proved. Hence, summons under section 131 came to be issued to the assessee and in response to the same, confirmation letters from those sundry creditors on whom letters under section 133(6) had been issued and who had not responded came to be filed. The assessing officer vide assessment order dated 23.03.2006 has completed the assessment and categorized the sundry creditors under four categories namely, (1) Creditors who have denied the transaction with the asses .....

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oned in his order to the income of the assessee, amounting to ₹ 42,08,460/- . The CIT(A) except sustaining the addition to the extent of ₹ 6,00,000/-, deleted all other additions made by the assessing officer. The tribunal as indicated in its order vide paragraph 2.37 has remitted the matter back to the assessing officer for the reasons indicated thereunder and to examine the matter in the background of directions issued therein. 10. Likewise, for the assessment year 2004-05 the addi .....

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sel appearing for the assessee that assessee has discharged the initial burden and if the revenue disbelieved the confirmation on account of some valid reason, the burden was on the revenue to issue commission and make further enquiries to satisfy itself about the claim. He would elaborate his submission by contending that tribunal erred in holding Section 69C can be invoked in respect of sundry creditors which are not proved though assessing officer had not made any whisper about invoking the p .....

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r of Income Tax Vs Bholanath Poly Fab Pvt. Ltd. 3. (1996) 133 CTR (SC) 82 - Life Insurance Corporation of India Vs Commissioner of Income Tax 4. (1986) 52 CTR (SC) 138 - Commissioner of Income Tax Vs Orissa Corporation (P) Ltd 5. (2005) 195 CTR (Bom) 199 - Babulal C. Borana Vs Income Tax Officer and ors 12. In the instant case, the tribunal has found on factual scrutiny that the sundry creditors indicate in the books of accounts of the assessee was not proved in its entirety and the same being q .....

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