Case Number: ITA 678/DEL/2019
Appellant: Ipsita Naik, C/o Babubhai & Co., 152, Office Complex, Jhande Walan Extension, Phase-I, New Delhi
Respondent: Income Tax Officer, Ward-29(5), New Delhi
Assessment Year: 2014-15
Result: Appeal Allowed
Case Filed On: 2019-01-31
Order Type: Final Tribunal Order
Date of Order: 2020-01-21
Pronounced On: 2020-01-21
Ipsita Naik, the appellant, filed this appeal against the order passed by the Commissioner of Income Tax (Appeals) [CIT(A)]-10, New Delhi, dated 30th October 2018, relating to the assessment year 2014-15. The primary issue in this case was the addition of Rs.48,17,761/- made by the Assessing Officer (AO) under section 68 of the Income Tax Act, 1961, being the amount outstanding in the name of three sundry creditors.
The appellant contested the addition made under section 68 of the Income Tax Act on the following grounds:
The case was heard by the Income Tax Appellate Tribunal (ITAT), Delhi Bench ‘C’, New Delhi, with Shri R.K. Panda, Accountant Member, and Ms. Suchitra Kamble, Judicial Member, presiding. The appellant was represented by Shri Shaantanu Jain, Advocate, while the respondent was represented by Shri S.N. Meena, Senior Departmental Representative (DR).
During the course of assessment proceedings, the AO noted discrepancies in the appellant’s declared gross profit rate and the amounts payable to three sundry creditors. The AO asked the appellant to provide address confirmations from the said parties or produce relevant bills along with supporting evidence to prove the genuineness of the transactions. The appellant furnished only the copy of account of the parties in her books of account and failed to provide the required confirmations or subsequent bank statements reflecting the payments. Consequently, the AO invoked the provisions of section 68 and made an addition of Rs.48,17,761/-.
Before the CIT(A), the appellant filed additional evidence, which was forwarded to the AO for a remand report. After considering the remand report and the appellant’s rejoinder, the CIT(A) upheld the addition made by the AO. The CIT(A) noted that the concerned inspector’s report indicated that the parties were either not residing at the given addresses or not engaged in any business. The appellant failed to substantiate the genuineness of the transactions with adequate supporting evidence.
The ITAT considered the arguments and evidence presented by both sides. The tribunal noted that the AO had not doubted the purchases, sales, or the trading results and had not rejected the book results. The appellant substantiated with evidence that the payments were made in subsequent years and that the appellant had regular transactions with the said parties in subsequent years, which were not doubted by the Revenue.
The ITAT referred to several judicial precedents, including:
Based on the above precedents and the fact that the trading results shown by the appellant for the impugned year had not been disturbed by the AO, the ITAT concluded that the addition made by the AO under section 68 of the Act in respect of the three sundry creditors was not justified.
In conclusion, the ITAT allowed the appeal filed by Ipsita Naik. The tribunal set aside the order of the CIT(A) and directed the AO to delete the addition made under section 68 of the Income Tax Act. This case underscores the importance of substantiating the genuineness of transactions and the application of section 68 in relation to outstanding sundry creditors.
Source: Income Tax Appellate Tribunal, Delhi Benches ‘C’, New Delhi
Disclaimer: This article provides an overview of the case and is not a substitute for professional legal advice. For detailed information, readers are encouraged to refer to the official case documents and consult with a qualified legal professional.
Ipsita Naik vs ITO, Ward-29(5), New Delhi: Assessment Year 2014-15
Manage the increasing number of hearings effortlessly by leveraging the legal AI revolution We are India's Leading revolutionary AI-powered legal platform where you can get enough insights into top cases and judgements.
Research Platform