2014 (6) TMI 147 - AT - Income Tax

ITAT Hyderabad dismisses department's appeal on sundry creditors addition for AY 2005-06

The ITAT Hyderabad dismissed the department's appeal against the deletion of an addition of sundry creditors for AY 2005-06. The tribunal upheld the ... Deletion of sundry creditors – TDS payable - Held that:- Out of the four items appearing under sundry creditors, the AO in his remand report has himself accepted the genuineness of the credits and agreed for giving credit to the assessee in respect of them - So far as TDS payable, the CIT(A) on verifying details has found that the amount was actually paid by the assessee on 31/03/2005 – it could not be understood as to how the department can be aggrieved of the order passed by the CIT(A) - There seems to be non -application of mind both by AO and CIT, who authorised the appeal – decided against Revenue. Issues:Appeal against deletion of addition of sundry creditors in AY 2005-06.Analysis:1. The department filed an appeal against the deletion of an addition of Rs. 74,78,445 related to sundry creditors for AY 2005-06 by the Ld. CIT(A).2. The assessee, an individual, filed the return of income for the relevant year, and a search and seizure operation was conducted, leading to a notice under section 153A. The Assessing Officer added the amount of sundry creditors to the assessee's income due to failure in proving the identity, creditworthiness, and genuineness of the creditors.3. The assessee challenged the addition before the CIT(A) and provided details of the sundry creditors. The CIT(A) obtained a remand report from the Assessing Officer, who confirmed the genuineness of certain creditors but raised concerns about one creditor, Krishna Agro Agency.4. The CIT(A) confirmed the addition of Rs. 9,04,243 related to Krishna Agro Agency but deleted the balance amount after considering submissions and the remand report. The department appealed against this decision.5. The ITAT Hyderabad found that the Assessing Officer had accepted the genuineness of most credits, except for the amount related to Krishna Agro Agency. The tribunal noted that the CIT(A) correctly sustained the addition of Rs. 9,04,243 and dismissed the department's appeal due to lack of merit and non-application of mind by the authorities.6. The tribunal emphasized the importance of examining facts before preparing appeals and found no relevance in the note submitted by the Assessing Officer. Ultimately, the department's appeal was dismissed, affirming the decision of the CIT(A) regarding the addition of sundry creditors for the AY 2005-06.