IN INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCHES SMC , HYDERABAD BEFORE SMT. P. MADHAVI DEVI, JUDICIAL MEMBER I.T.A. No. 2277/HYD/2017 Assessment Year 2007-08 M/s.Globe Steel Pipe Co., Income Tax Officer, SECUNDERABAD Vs Ward-10(4), [PAN AABFG5983F] HYDERABAD (Appellant) (Respondent) For Assessee Shri C.P.Ramaswami, AR For Revenue Smt. Amisha S.Gupt, DR Date of Hearing 25-09-2019 Date of Pronouncement 30-09-2019 ORDER This appeal filed by assessee for AY.2007-08, is directed against order of Commissioner of Income Tax (Appeals) 9, Hyderabad, dated 31-07-2017. 2. Brief facts of case are that assessee, partnership firm, engaged in mercantile business, filed its return of income for AY. 2007-08 on 31-10-2017, admitting income of Rs.4,14,808/-. 3. During course of assessment proceedings u/s.143(3) of Income Tax Act [Act], assessee was asked to produce books of account along with supporting vouchers and bills. Assessee filed same and on perusal of said books of account, Assessing Officer (AO) noticed that assessee- 2- ITA No. 2277/Hyd/2017 has unsecured loans and Sundry Creditors. Assessee was therefore asked to file confirmations with respect to said loans and creditors. 4. In reply, Ld.AR filed information in respect of un- secured loans along with details, such interest paid thereon and TDS made therefrom. As regards Sundry Creditors also, assessee filed confirmations from all parties except in respect of only two parties i.e., M/s.Bangalore Tubes and M/s.Transport Corporation of India, wherein outstanding amounts were Rs.9,47,333/- and Rs.4,98,848/- respectively. 5. When questioned, assessee stated that in case of M/s.Transport Corporation of India, assessee-firm has informed that transporter is demanding higher dues and also while transporting goods there were damages to material brought by transporter and hence there is dispute and no payments were made. 5.1. In respect of M/s.Bangalore Tubes, assessee stated that there are some differences between father and son, due to which they have closed shop and no payment has been made during relevant financial year and now they have started making payments. 6. AO, however, concluded that contention of assessee cannot be accepted in toto as primary onus is on assessee to prove that loans and creditors are genuine. :- 3 -: ITA No. 2277/Hyd/2017 Since same was not proved with any evidence, AO treated entire outstanding amount of Rs.4,98,848/- to M/s.Transport Corporation of India, as deemed income of assessee and brought it to tax. In case of M/s.Bangalore Tubes also, AO held that assessee has not established genuineness of creditor and therefore, he brought sum of Rs.9,47,333/- also to tax as un-explained expenditure and brought it to tax. 6.1. Aggrieved, assessee preferred appeal before CIT(A), stating that transactions are genuine, are reflected in books of account as well as VAT returns. It was also contended that treating credit balance of M/s.Transport Corporation of India as deemed income during year under consideration is incorrect as same has emanated in earlier year and was substantiated during scrutiny assessment proceedings of earlier years. assessee also filed confirmation letters and account copies of M/s.Bangalore Tubes and M/s.Transport Corporation of India as additional evidence. Ld.CIT(A) called for remand report from AO which was submitted by AO. From remand report, Ld.CIT(A) observed that AO in remand report has stated that assessee did not file required documents before him. Ld.CIT(A) again called for explanation from assessee with direction to attend before AO in remand proceedings for verification of confirmation letters and copies of accounts of above two parties. Assessee did not appear before AO and therefore, AO :- 4 -: ITA No. 2277/Hyd/2017 submitted report accordingly. Therefore, CIT(A) dismissed appeal of assessee. 6.2. Aggrieved by order of Ld.CIT(A), assessee is in second appeal before ITAT, raising following Grounds: 1) order of Learned CIT(A), in so far as it is prejudicial to interest of appellant, is against law, weight of evidence and probabilities of case. 2) learned CIT(A) erred in confirming addition of Rs.4,98,848/- appearing as sundry credit in name of M/s. Transport Corporation of India (TCI) despite fact that it was brought forward balance from financial year 2005-06 relevant to A.Y.2006-07. He ought to have deleted same. 3) learned CIT(A) erred in confirming outstanding balance of Rs.9,47,333/- in name of Mis. Bangalore Tubes as he failed to appreciate that it was aggregate of purchases during F.Y.2006-07 and that there was dispute known to deceased partner and dispute was resolved during financial year 2009-10 relevant to A.Y.2010-11. 4) learned CIT(A) failed to appreciate that both outstanding credit balances of TCI and Banagalore Tubes were paid off through account payee cheques during financial years 2011-12 and 2009-10 respectively substantiating that they were genuine credits and that disputes relating to such credit balances were resolved in later years and accepted as such in returns of income for A.Y.2010-11 and A.Y.2012-13. 5) learned CIT(A) failed to appreciate that reasons given by A.O. were fictitious and flimsy in impugned assessment order for treating two outstanding credit balances as not genuine and consequently erred in confirming additions. :- 5 -: ITA No. 2277/Hyd/2017 6) learned CIT(A) failed to appreciate that disgruntled employee of appellant filed unauthorized reply before A.O. during remand proceedings and consequently erred in confirming addition. 7) For above grounds and such other grounds that may be urged at time of hearing, appellant prays that appeal be allowed. 8) appellant craves leave to add to, amend or modify above grounds of appeal either before or at time of hearing of appeal, if it is considered necessary . 7. At time of hearing, Ld.Counsel for assessee submitted that two Sundry Creditors were paid amounts in subsequent assessment years and this proves that these transactions are genuine. Therefore, he prayed that issue may be set aside to file of AO for re-verification of these facts. 8. Ld.DR, however, opposed contentions of assessee and argued that at time of assessment proceedings as well as remand proceedings, assessee did not co-operate with AO. Therefore, according to him, no purpose will be served by remanding issue again to AO at this stage. 9. Having regard to rival contentions, material on record and particularly contentions of assessee that assessee has already repaid these creditors in subsequent assessment years. I find that assessee has also filed confirmation letters in this regard, before CIT(A) and remand report was called-for. In these circumstances, I deem- 6 - ITA No. 2277/Hyd/2017 it fit and proper to remand issue back to file of AO with direction to verify and consider issue afresh. assessee also shall appear and co-operate with AO for early completion of assessment proceedings. If assessee fails to produce any evidence before AO, AO shall complete assessment on basis of material already filed by assessee before AO. 10. In result, appeal of assessee is treated as allowed for statistical purposes. Order pronounced in open court on 30 th September, 2019 Sd/- (P. MADHAVI DEVI) JUDICIAL MEMBER Hyderabad, Dated 30-09-2019 TNMM- 7- ITA No. 2277/Hyd/2017 Copy to 1. M/s.Globe Steel Pipe Co., C/o. Dr.C.P.Ramaswami, Advocate, Flat Nos.102 & 303, Gitanjali Apts., Plot No.108, Srinagar Colony, Hyderabad. 2. Income Tax Officer, Ward-10(4), Hyderabad. ) 3. CIT(Appeals)-9, Hyderabad. 4. Pr.CIT-6, Hyderabad. 5. D.R. ITAT, Hyderabad. 6. Guard File. Globe Steel Pipe Co. v. Income-tax Officer, Ward-10(4), Hyderabad