|The Tax Publishers2021 TaxPub(DT) 0502 (All-Trib)
INCOME TAX ACT, 1961
Where AO made addition in respect of a creditor as bogus sundry creditor, however, the assessee explained that loan from the said creditor was taken in preceding year and it was only a brought forward amount shown as opening balance; the said explanation was neither verified by AO nor by CIT(A), accordingly, the issue was remanded to the CIT(A) for fresh consideration.
Income from undisclosed sources - Addition under section 68 - Alleged bogus sundry creditor - Assessee explained that loan from creditor was taken in preceding year and it was only a brought forward amount shown as opening balance
Assessee's case was selected for limited scrutiny to examine sundry creditors and accordingly, AO called upon assessee to furnish the details and explanation. Despite several opportunities being provided, the assessee had not furnished any explanation or filed any detail regarding the loan creditors. Further, AO conducted an enquiry by issuing notice under section 133(6) to the various loan creditors. AO noted that all the loan creditors were income-tax return filers except one. Accordingly, the AO made addition in respect of that one creditor as bogus sundry creditor on the ground that assessee had failed to prove identity, creditworthiness and genuineness of the transaction. Assessee explained that the said loan was taken in preceding year and it was only a brought forward amount shown as opening balance. Held: Assessee explained that the disputed loan was taken in the preceding year and it was only an opening balance. If the loan was introduced in the preceding year and the AO while passing the assessment order under section 143(3) for the preceding assessment year had not doubted the genuineness of the loan, then the same could not be held as a bogus sundry creditor for the year under consideration. It was noted that neither the AO nor the CIT (A) had verified and considered the explanation of the assessee that the disputed loan amount was only a brought forward amount and shown as opening balance and no new loan was taken from that creditor during the year under consideration. Hence, the issue was remanded to the CIT (A) for limited purpose to verify the fact as to whether the said amount was only an opening balance and brought forward from the preceding year and then decide the issue afresh.
FAVOUR : Matter remanded.
A.Y. : 2014-15
INCOME TAX ACT, 1961
SUBSCRIBE FOR FULL CONTENT