2024 (3) TMI 709 - AT - Income Tax

Assessee gets fresh hearing opportunity after failing to respond on unexplained sundry creditors under section 68

Marulasidappa Gundagathi Dyamavvanahalli Versus ITO Ward-1 Davangere

Marulasidappa Gundagathi Dyamavvanahalli Versus ITO Ward-1 Davangere - TMI Issues Involved:1. Addition made under Section 68 of the Income Tax Act towards sundry creditors.2. Addition towards sundry creditors for vehicle maintenance.3. Alleged lack of opportunity provided to the appellant during appellate proceedings.4. Interest charged under Sections 234-B and 234-C of the Income Tax Act.Summary:Issue 1: Addition under Section 68 towards Sundry CreditorsThe assessee contested the addition of Rs. 2,79,54,672/- under Section 68 of the Income Tax Act, arguing that the identity, creditworthiness, and genuineness of the transactions were proven through ledger accounts and banking channel payments. The Tribunal previously remitted the issue to the AO, who maintained the addition due to the absence of confirmation letters and adequate independent third-party confirmations. The NFAC upheld the AO's decision, noting the lack of response and supporting documents from the assessee. The Tribunal, referencing the Allahabad High Court's judgment in CIT Vs. Pancham Dass Jain and ITAT's decision in Smt. Madhu Solanki, emphasized that accepted purchases imply genuine trade creditors, thus remitting the issue back to NFAC/CIT(A) for a thorough review.Issue 2: Addition towards Sundry Creditors for Vehicle MaintenanceThe assessee also contested the addition of Rs. 4,76,430/- for vehicle maintenance on similar grounds as the first issue. The AO and NFAC upheld the addition due to insufficient proof of the creditors' identity, creditworthiness, and transaction genuineness. The Tribunal, aligning with its stance on the first issue, remitted this matter back to NFAC/CIT(A) for reconsideration, ensuring the assessee is given an opportunity to present their case.Issue 3: Lack of Opportunity during Appellate ProceedingsThe appellant argued that the CIT(A) disposed of the appeal without providing sufficient opportunity, particularly as the authorized representative was preoccupied with tax audits. The Tribunal noted this procedural lapse and remitted the issues back to NFAC/CIT(A) to ensure the assessee is granted a fair hearing.Issue 4: Interest under Sections 234-B and 234-CThe assessee sought cancellation of interest charged under Sections 234-B and 234-C of the Act. This issue was not specifically addressed in the Tribunal's decision, as the primary focus was on the additions under Section 68 and procedural fairness.Conclusion:The Tribunal remitted the issues concerning additions under Section 68 and procedural fairness back to NFAC/CIT(A) for a fresh decision, ensuring the assessee is given a fair opportunity to present their case. The appeal was partly allowed for statistical purposes.