Transactions validated if conducted at arm's length; no additions justify if sales not disputed by assessing authority.

JUDGMENT

Manmohan, J. (Oral)--Present income tax appeal has been filed challenging the order dated 29th November, 2021 passed by the Income Tax Appellate Tribunal (`ITAT') in ITA 5224/Del./2017 for the Assessment Year 2014-15.

2. Learned counsel for the Appellant states that the ITAT has erred in upholding the decision of the CIT(A) of deleting the addition made under Section 68 of the Income Tax Act, 1961 (`the Act') without appreciating the findings of the Assessing Officer and without considering the creditworthiness of the companies with whom assessee company had executed large scale transactions.

3. He further states that the ITAT has erred in deleting the addition made under Section 37(1) of the Act without appreciating the facts clearly mentioned in the Assessment Order and without considering that assessee has claimed and received excess incentive on the basis of erroneous declaration.

4. A perusal of the paper book reveals that the CIT(A) noted the objection of the assessee that sufficient opportunity was not given by the Assessing Officer during assessment proceedings and accordingly directed the assessee to furnish details of payments of outstanding balance as on 31st March, 2014 along with confirmation for fair and proper disposal of the appeal. The assessee submitted details of parties as well as detail of transaction made by the Appellant with said parties during the Financial Year under consideration mentioned in transfer pricing report in the Form of 3CEB as well as transfer pricing study, which was submitted by Appellant before the Assessing Officer.

5. The CIT(A) noted that the said transactions of purchases were at arm's length price and no adverse finding was brought on record by the Assessing Officer and that the Assessing Officer never doubted purchases made by the Appellant during the year which includes purchases made from sundry creditors, sale made by Appellant during year and book result declared by the Appellant-Company for the financial year under consideration.

6. During the appellate proceedings, the CIT(A) also observed that M/s Vikas Superfine Garments Pvt. Ltd. and M/s Mangat Superfine Garments Pvt. Ltd. (the sundry creditors) have purchased goods during the year under consideration from different parties and out of the said purchases, they have sold goods to the Appellant-Company and as per general business practice, goods were purchased on credit basis and therefore, the allegation of Assessing Officer that the financial statement of the sundry creditors do not support their creditworthiness, is not based on proper appreciation of the facts. The CIT (A) also perused the details of sale, purchase, trade payables and trade receivables for the financial year under consideration of the said sundry creditors and came to the conclusion that there are corresponding purchases against sales declared by them for the financial year under consideration and there are also trade payables outstanding as on 31st March, 2014, which shows that the said companies also having trade payable against purchases of goods, therefore, the allegation made by the Assessing Officer that such companies do not have creditworthiness to enter into large scale transaction of sale and purchase is factually incorrect. The CIT (A) held that once Assessing Officer has accepted sales and purchase transactions, transfer pricing report at arm's length and book results declared by the Appellant, he is not justified in treating the credit balance of associate parties relating to sales to the Appellant as non-genuine without bringing any adverse material on record.

7. It was also observed by the CIT (A) that the Appellant as well as parti