2022 (3) TMI 174

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.... his return of income for the AY 2011-12 declaring income of Rs. 66,82,095/- on 29.9.2011. The case was selected for scrutiny after initial processing under section 143(1) of the Income Tax Act, 1961 (the "Act"). In response to the notice under section 143(2) and 142(1) along with questionnaire, the assessee furnished written submissions and required details called for which were examined by the Ld. Assessing Officer ("AO"). The Ld. AO completed the assessment under section 143(3) on total income of Rs. 88,24,470/- including therein addition of Rs. 19,98,352/- under section 68, disallowance of Rs. 44,967/- under section 14A, disallowance of Rs. 33,956/- under section 37 and disallowance of Rs. 65,099/- under section 32 against which the ass....

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....nder section 68 with the following findings and observations in para 2.6 of his order: "2.6 Taking into account all the submissions of the assessee, results of enquiries conducted and facts of the case, it is evident that the assessee failed to provide authentic documentary evidence to support his claim in respect of the below mentioned outstanding sundry creditors so as to establish their identity, genuineness and creditworthiness: * Mughal Art Palace : Rs. 1,97,600/- * Prajapati Arts : Rs. 1,38,610/- * Singhal Exports : Rs. 2,88,670/- * Mithila Art and Crafts : Rs. 1,30,250/- * Madan Traders : Rs. 1,13,630/- * Bharat Mughal Handicrafts : Rs. 1,97,010/- * Razzak Handicrafts : Rs. 3,01,332/....

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....,500 - 1,13,630 6. Bharat Mughal Handicrafts 2,32,010 35,000 - 1,97,010 7. Razzak Handicrafts 3,59,832 58,500 - 3,01,332 8. Manish Aits Handicrafts Jodhpur 4,10,550 55,550 - 3,55,000 9. Monika Arts & Crafts, Jodhpur 1,98,000 99,000 - 99,000 10. Piyush & Co. 2,56,250 79,000 - 1,77,250     25,13,895 5,15,550 - 19,98,345 The Ld. AR argued that no credit entry appears in the name of any of the ten parties in the year of account and the debit entries are on account of partial payments made to the creditors during the year. He submitted that the provisions of section 68 apply where any sum is found credited in books o....

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....um is credited in the books of the assessee in the previous year relevant to the assessment year under appeal in the name of any of the ten creditors in respect of whom the impugned addition has been made. No material has been brought on record by the Revenue to controvert this position. According to us, the primary condition of applicability of section 68 is not satisfied in the case of the assessee. If that be so, insistence by the Ld. AO/CIT(A) upon production of confirmatory letters by the creditors is irrelevant. No doubt, the onus of proving the identity, creditworthiness and genuineness of transaction lies upon the assessee but only if the provision of section 68 applies to him. In the case at hand, the provision of section 68 itself....