Tribunal overturns assessing officer's decision on sundry creditors, citing lack of evidence.

The Tribunal allowed the appeal of the assessee regarding the addition of outstanding sundry creditors. The assessing officer added an amount to the total income due to lack of proof of expenses incurred in the current year. The CIT(A) dismissed the appeal, but the Tribunal disagreed, noting that the assessing officer did not disprove the evidence submitted by the assessee. The Tribunal found supporting documents for the creditors in the evidence submitted and disagreed with the CIT(A)'s decision. The appeal was allowed on 27-05-2020.

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Issues:
Appeal against addition of outstanding sundry creditors.

Analysis:
The appeal pertains to the addition of Rs. 19,98,102/- in respect of outstanding sundry creditors by the assessing officer. The assessing officer noted outstanding sundry credit amounting to Rs. 1,71,79,314/- during the relevant year. The assessee failed to provide confirmation for two specific creditors totaling Rs. 19,98,102/-. The assessing officer added Rs. 11,99,604/- to the total income due to lack of proof that expenses were incurred in the current year.

The assessee contended that lower authorities did not consider the submissions, explanations, and information provided during the appellate proceedings. The CIT(A) dismissed the appeal, stating the genuineness of the transaction was not established. During the appellate proceedings, the assessee submitted a detailed paper book with various documents as evidence, including bills, transport receipts, bank statements, invoices, and confirmations of sundry creditors.

The assessing officer disallowed the amount concerning the two creditors due to lack of confirmation. The assessee later submitted confirmations as additional evidence under rule 46A of the Act. The CIT(A) admitted the additional evidence and sought a remand report. The assessing officer verified the necessary documents for one creditor but could not serve notice to the other. However, the material in the paper book supported the transactions with both creditors.

The Tribunal observed that the assessing officer did not disprove the evidence submitted by the assessee. The Tribunal found supporting documents for both creditors in the paper book, including invoices, transport receipts, and bank statements. The assessing officer did not take necessary steps for verification, such as issuing a commission under section 131(i)(d) of the Act. The Tribunal disagreed with the CIT(A)'s decision to sustain the additions based on assumptions and allowed the appeal of the assessee.

In conclusion, the Tribunal allowed the appeal of the assessee, emphasizing that the assessing officer did not disprove the relevant material submitted by the assessee. The decision was made on 27-05-2020.

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