2014 (8) TMI 274 - AT - Income Tax

Tribunal affirms CIT(A) on contract receipts, orders fresh assessment on sundry creditors. Expenses disallowance remanded.

Income Tax Officer Versus Shri Ranjhomal Assomal Dodeja

Income Tax Officer Versus Shri Ranjhomal Assomal Dodeja - TMI Issues:1. Addition of unaccounted contract receipts2. Assessment of unidentified sundry creditors3. Disallowance of various expensesAnalysis:Issue 1: Addition of Unaccounted Contract ReceiptsThe appeal pertained to the assessment year 2009-10, where the revenue challenged the decision of Ld CIT(A) to grant relief in respect of unaccounted contract receipts. The assessing officer treated an amount received from M/s Haldyn Glass Gujarat Ltd as undisclosed income due to lack of evidence of transportation charges reimbursement. The Ld CIT(A) found that the amount was properly accounted for in the Cartage Account by the assessee, leading to the conclusion that it was disclosed in the Profit and Loss account. The tribunal upheld the Ld CIT(A)'s decision, emphasizing that the assessee had accounted for the amount adequately, thus dismissing the revenue's appeal.Issue 2: Assessment of Unidentified Sundry CreditorsThe AO assessed the sundry creditors balance as business income, considering them as bogus creditors due to lack of evidence of genuineness. However, the Ld CIT(A) rejected the books of accounts and estimated net profit at a higher rate. The tribunal noted that the assessing officer did not doubt the trading results but questioned the genuineness of creditors. The assessee challenged the presumption of outstanding balances, highlighting errors in the AO's conclusions. The tribunal found that the responsibility to prove the genuineness of creditors rested with the assessee. As the explanations provided by the assessee required further examination, the tribunal set aside the Ld CIT(A)'s decision and directed a fresh assessment by the AO.Issue 3: Disallowance of Various ExpensesThe Ld CIT(A) had set aside the disallowances of expenses as the net profit was estimated by rejecting the books of accounts. With the issue of sundry creditors being remanded for fresh examination, the tribunal directed a reevaluation of the disallowed expenses by the assessing officer. It was emphasized that the assessing officer should provide the necessary opportunity for the assessee to be heard during the reexamination process. Consequently, the tribunal partly allowed the revenue's appeal for statistical purposes, subject to the reassessment of the sundry creditors and the related expenses.This detailed analysis of the judgment addresses the key issues involved in the legal judgment while preserving the legal terminology and significant phrases from the original text.