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P.M. Abdulla Versus Income-Tax Officer

2015 (6) TMI 1024 - KARNATAKA HIGH COURT

Addition u/s 68 - Held that:- The Income- tax Appellate Tribunal, after considering the rival contentions and on perusal of material on record, by common order 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 Commissioner of Income-tax (Appeals) are to be restored to the Assessing Officer by casting the initial burden on the assessee to discharge such burden by filing confirmation letters o .....

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ssessing Officer as granted for the assessment year 2003-04.

Addition u/s 69C - Held that:- The assessment order would also indicate that in respect of the sundry creditors as reflected in the balance-sheet of the assessee was not proved by the assessee though sufficient opportunity was granted. The order of the Assessing Officer does not indicate about any explanation having called for by the Assessing Officer from the assessee and such explanation having been not accepted so as to t .....

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f a trader, as obtained in the facts of the present case. In fact, 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. Accordingly, substantial question of is being answered in favour of the Revenue. - I. T. A. Nos. 719 and 803 of 2009 - Dated:- 9-6-2015 - Mohan M. Shantanagoudar And Aravind Kumar, JJ. For the Petitioner : V. K. Gurunathan, Jinitha Chaterjee, S. Parthasarathi .....

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d to the Assessing Officer 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 December 18, 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 pur .....

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he provisions of section 69C of the Act would also apply when the expenses incurred towards purchases were not disputed and the pay ments made were also recorded in the books of account ?" 3. Sri Gurunathan, learned counsel appearing on behalf of Sri Parthasarathi, advocate, has fairly submitted he would not press his arguments in so far as substantial questions of law Nos. 1 and 2 framed by this court on December 18, 2009. His submission is placed on record. 4. We have heard the arguments .....

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7; 42,08,460 and ₹ 49,48,475, respectively, was added by the Assessing Officer as unproved sundry creditors assessed under section 68 of the Income-tax Act, 1961 (for short "the Act"). 6. Being aggrieved by these assessment orders, the assessee preferred appeals before the Commissioner of Income-tax (Appeals). For the assessment year 2003-04, the Commissioner of Income-tax (Appeals) deleted the entire addition made by the Assessing Officer except for ₹ 6,00,000 pertaining t .....

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Commissioner of Income-tax (Appeals) and contending that the deletion was based on evidence and proof adduced before the Commissioner of Income-tax (Appeals) and as such sought for dismissal of the appeals filed by the Revenue. The Income- tax Appellate Tribunal, after considering the rival contentions and on perusal of material on record, by common order dated June 30, 2009, partly allowed the appeals filed by the Department and held that in respect of parties (sundry creditors) other than rela .....

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2004-05, the matter was restored back to the file of the Assessing Officer in respect of the addition representing the closing balance of fifteen creditors with the liberty being granted to the assessee as well as the Assessing Officer as granted for the assessment year 2003-04. Re : Substantial question of law No. 3 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- .....

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to confirm the amount outstanding. Some of the creditors denied the business transaction of the assessee and some letters addressed to the creditors were received back unserved. Hence, the Assessing Officer extended an opportunity to the assessee to prove the sundry creditors by producing the relevant material. Despite offering 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 sundr .....

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and in respect of whom the assessee has neither filed confirmation letter nor produced them before the Assessing Officer for verification, and (4) sundry creditors in respect of whom full address was not furnished. Hence, the Assessing Officer added the amounts under the head "sundry creditors' in respect of the creditors mentioned in his order to the income of the assessee, amounting to ₹ 42,08,460. The Commissioner of Income-tax (Appeals) except sustaining the addition to the e .....

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2006, came to be deleted in its entirety by the Commissioner of Income-tax (Appeals) on the ground that the Assessing Officer has neither disputed the purchases nor sales amongst other grounds as indicated in the order dated December 18, 2007. The Income-tax Appellate Tribunal, vide paragraph 4.3, has remitted the matter back to the Assessing Officer as already noted hereinabove. 11. It is the contention of Sri Gurunathan, learned counsel appearing for the assessee, that the assessee has dischar .....

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hat the expenses incurred towards purchase have been recorded in the books of account of the assessee and no part of the expenses could be said as unexplained for invoking the provisions of section 69C. Hence, he prays for dismissing the appeals filed by the Revenue. In support of his submissions he has relied upon the following judgments : (1) CIT v. Bedi and Co. Pvt. Ltd. [1998] 230 ITR 580 (SC) ; [1998] 145 CTR (SC) 309 ; (2) CIT v. Bholanath Poly Fab Pvt. Ltd. [2013] 355 ITR 290 (Guj) ; [201 .....

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