TaxTMI 
TaxTMI 
2019 (9) TMI 1149
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....t is not taxable in the year of receipt as being of revenue character, the amount changes its character when the amount becomes the assessee's own money because of limitation or by any other statutory or contractual right. When such a thing happens, common sense demands that the amount should be treated as income of the assessee.' In the background of aforesaid discussion and precedent, we find that even if the said purchases were genuine, the amount due to creditors has remained unclaimed is taxable u/s 41 (1) inasmuch as the assessee is not even aware of the address of the creditors. Hence, we are inclined to set aside the order of the learned Commissioner of Income Tax (Appeals) and decide the issue in favour of the Revenue. 8. In the result, this appeal by the Revenue is allowed." 3. The Assessing Authority, in the present case, in the Assessment Order, dated 30th March,2004, had made the following additions : ''During the course of hearing, letters were issued calling for confirmation to some of the Sundry Creditors. Letter issued to the following Sundry Creditors returned unserved : 1.Yes Em Traders, Villupuram 2.DCW Home Products Ltd., Vijayawada....
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....Trader Rs. 1,36,332 as amount not being due Rs. 6,88,332 4. The appellant vehemently assailing the action of the A.O. has pleaded that the impugned additions be deleted as they are unsustainable on facts and as in law. It has also been pleaded that the balances payable to the sundry creditors was wrongly construed as income in the hands of the appellant against the provisions of the Act. Several lines of argument were advanced by the appellant which inter alia include the following. (i) That all the creditors are genuine. In support invoice copies relating to the creditors for supplies made were enclosed. (ii) the balance on these creditors and not the credit of the year under consideration and were brought forward credits. (iii) the purchases made were for assessment year relating to 1998-99 and 1999-2000 as vouched by purchase register. (iv) The purchases filed for sales tax authorities confirm the transactions. (v) that all purchases and sales were recorded and appellant had paid taxes on the same. (vi) that all relevant details relating to the creditor were produced during the assessment proceedings. The books of account and invoices produced ....
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....alised after production in support of the returns of the day book, ledger purchase and sales bill etc. 6. The non furnishing of address appears to be the major reason based on which disallowances were preferred by the A.O. The A.O. also further observed in his report that the appellant is a wholesaler and retailer of electrical goods and filed its return of income for the assessment year 1998-99, 1999-2000 admitting income u/s 44AF. The A.O. further observed that the profit and loss account, balance sheet and other particulars like list of sundry creditors, debtors etc. were not filed along with the return of income. 7. In response thereto the appellant filed necessary clarifications which were considered. In its support the appellant argued that the returns of income filed for the assessment years 1997-98, 1998-99 and 1999-2000 had been accepted. The credits appearing in these aforesaid returns could not be rejected now without any basis. In support the copies of documents were once again filed for perusal. It is also stated that the books of accounts in respect of its business were produced before the A.O. and were subject to verification and the copies of accounts of such ....
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.... such, additions could not have been made by the Assessing Authority in the impugned order. Hence, according to the learned counsel, the learned CIT(A) has rightly set aside the additions, but the learned Tribunal has erred in allowing the appeal of the Revenue. 8. Per contra, Mr.M.Swaminathan, learned Senior Standing Counsel, appearing for the respondent-Revenue, has vehemently submitted that the Assessing Authority had made due inquiry regarding the Trade Creditors shown in the Balance Sheet, but the assessee failed to supply even the details of the Sundry Creditors shown in the Balance Sheet and, upon verification of two Sundry Creditors, whose addresses were supplied, it was found that those Creditors did not confirm any claim against the assessee, and upon the assessee being confronted with such averment made by the Sundry Trade Creditors, he did not even respond to the same and, therefore, the Assessing Authority was justified in assuming that the liability of the assessee had ceased in terms of Section 41 (1) of the Act and the additions were, therefore, justified. 9. Mr.Swaminathan would submit that the learned CIT(A) has wrongly allowed the appeal of the assessee believi....