Tribunal upholds PCIT's decision on dismissal of appeal due to non-verification of creditors.

The Tribunal affirmed the PCIT's decision to set aside the assessment due to non-verification of sundry creditors, leading to the dismissal of the assessee's appeal. The PCIT's direction for the AO to conduct proper verification was upheld, emphasizing the significance of thorough verification in such matters.

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Issues:
The judgment involves the issue of condonation of delay in filing an appeal and the issue of setting aside the assessment due to non-verification of sundry creditors.

Condonation of Delay:
The appeal was barred by limitation by 382 days, but the delay was condoned based on the extension of the limitation period by the Hon'ble Supreme Court. The delay was only 2 days beyond the extended period, and the appeal was admitted after considering the reasons provided by the assessee.

Non-Verification of Sundry Creditors:
The PCIT set aside the assessment due to the AO's failure to verify the genuineness of sundry creditors amounting to Rs. 2,28,92,649. The PCIT also noted non-reconciliation of closing stock and opening stock, directing the AO to reframe the assessment after necessary verification. The PCIT found the assessment to be erroneous and prejudicial to the revenue's interest, exercising powers u/s 263 of the Act.

Assessee's Contentions:
The assessee, engaged in wholesale business, had filed its return of income for the relevant assessment year. The AO had made adjustments to the profit rate based on the issue of low gross profit. However, the PCIT raised concerns about the verification of sundry creditors and non-reconciliation of stock, leading to the revision of the assessment.

Judgment:
The Tribunal affirmed the PCIT's revision order, noting that the AO had not adequately verified the cash credits related to sundry creditors. The assessee failed to provide essential details to prove the genuineness and creditworthiness of the creditors. As a result, the appeal of the assessee was dismissed, and the PCIT's direction to the AO to conduct proper verification was upheld.

Conclusion:
The Tribunal upheld the PCIT's decision to set aside the assessment due to non-verification of sundry creditors, emphasizing the importance of thorough verification in such cases. The judgment was pronounced on 12th July 2023 at Chennai.

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