Income Tax Appellate Tribunal Delhi Bench ‘H’ dismisses Revenue’s appeal against Real Impact Pvt. Ltd. regarding outstanding balance of sundry creditors

Case Name:

ITA No. 9459/Del/2019

Key Takeaways:

1. The present appeal was filed by the Revenue against the order of Ld. CIT(A)-7, New Delhi.
2. The Revenue raised several grounds of appeal, including the acceptance of additional evidence filed by the assessee without independent findings and the acceptance of the assessee’s contention regarding payments made to M/s. For-A Company Ltd.
3. The assessee is a private limited company engaged in the service sector.
4. The Assessing Officer added the outstanding amount of Rs. 6,59,03,929/- to the total income of the assessee due to non-compliance by creditors and non-furnishing of requisite details.
5. The ld. CIT(A) admitted the additional evidence submitted by the assessee, considering it crucial for the adjudication of the appeal.
6. The ld. CIT(A) held that no addition can be made on the outstanding balance pertaining to M/s. For-A Company Ltd. as the confirmation and payment details were provided by the assessee.
7. The ld. CIT(A) also held that the absence of replies from the creditors does not entitle the Assessing Officer to treat the creditors as bogus without bringing any evidence on record.
8. The ld. CIT(A) dismissed the appeal of the Revenue.

Case Synopsis:

This is an order from the Income Tax Appellate Tribunal, Delhi Bench ‘H’, New Delhi, in the case of Real Impact Pvt. Ltd. The appeal was filed by the Revenue against the order of the Ld. CIT(A)-7, New Delhi dated 11.09.2019. The case pertains to the assessment year 2016-17.

The Revenue raised several grounds of appeal, challenging the acceptance of additional evidence filed by the assessee, the acceptance of the assessee’s contention regarding payment to M/s. For-A Company Ltd., the acceptance of the assessee’s submission regarding the submission of details of M/s. For-A Company Ltd., and the acceptance of the assessee’s submission without independent enquiry.

The assessee is a private limited company engaged in the service sector. The Assessing Officer examined a creditor named M/s. For-A Company Ltd. and other 33 creditors by issuing notices under section 133(6) (of Income Tax Act, 1961). Due to non-compliance by these creditors and non-furnishing of requisite details, the Assessing Officer added the outstanding amount to the total income of the assessee.

The assessee filed an appeal before the ld. CIT(A) and also filed an application for furnishing additional evidence under Rule 46A (of Income Tax Rules, 1962) of the Income Tax Rules, 1962. The Assessing Officer submitted a remand report stating that the additional evidence cannot be submitted under Rule 46A (of Income Tax Rules, 1962).