Assessee cannot be penalized for non response non attendance by creditors when all details are furnished-ITAT

Assessee cannot be penalized for non response or non attendance by creditors in response to notice when all details regarding creditors were furnished discharging the onus. If some enquiry was not completed by AO, the CIT(A) could have also undertaken necessary exercise-ITAT

ABCAUS Case Law Citation:
ABCAUS 2175 (2018) (01) ITAT

Important Case Laws Cited/relied upon by the parties:
CIT vs. Orissa Corporation (P) Ltd. reported in 1986 AIR 1849 (SC)
CIT vs. Jagdish Prasad Tewari reported in 220 Taxman 141 (Alld)

Brief Facts of the Case:
The assessee had claimed interest paid to various depositors. The transactions were done through banking channels, parties were regular income tax assessees. The assessee was called upon to justify his claim. Assessee filed confirmations, bank accounts, copy of ITR of the depositors, to whom interest have been paid and TDS deducted. However, the Assessing Officer was not satisfied and made additions u/s 68.

CIT(A) confirmed the additions.  

Observations made by the Tribunal:
The ITAT observed that the assessment order itself stated that assessee was asked to furnish the details and assessee did furnish those details at the end of the financial year. Therefore, all the records regarding creditors were available with the Department. Even the CIT(A), after calling for remand report, had confirmed the addition.

The ITAT observed that the entire machinery was with the Income Tax Department and if some enquiry was not completed by the Assessing Officer, the CIT(A) could have also undertaken necessary exercise. Also when assessee had furnished all the relevant details regarding the creditors and complied with the onus imposed upon by the Income Tax statute, then if any creditor does not respond to the letter of the Assessing Officer or does not make himself present before the Income Tax authorities, the assessee cannot be penalized for that.

The ITAT observed that the Hon’ble Supreme Court has held that once the assessee provided the names and addresses of the alleged creditors, the burden cast upon was discharged. It was in the knowledge of the Revenue that they were Income Tax assessees. Their index numbers were in the file of the Department. The Department has made no effort to pursue the so called alleged creditors.

The ITAT also noted that the Hon’ble jurisdictional High Court has held that just because some creditors had not confirmed their receipts, no addition could be made to the assessee’s income; particularly when identity; genuineness and creditworthiness have been proved beyond doubt.

The ITAT opined that in the instant case, undisputedly, the assessee had provided all necessary details before the Department from the time of assessment proceedings. Therefore, if some creditors had not responded, addition cannot be made in the hands of the assessee.

Decision/ Conclusion/Held:
The Tribunal set aside the order of the CIT(A) and allowed the appeal of the assessee.