The court upheld the deletion of additions for sundry creditors and brokerage expenses, affirming that the assessee provided sufficient evidence to prove the genuineness of the expenses.

ORDER

PER V. DURGA RAO, J.M.

Captioned appeal by the Revenue is directed against the impugned order dated 24/11/2023, passed by the learned Commissioner of Income Tax (Appeals)–3, Nagpur, [“learned CIT(A)”], for the A.Y. 2019–20.

2. In its appeal, the Revenue has raised following grounds:–

“1. On the fact and in the circumstances of the case the Id. CIT(A) erred in deleting the addition of Rs. 1,04,27,36/- being sundry creditors as assessee failed to prove the genuineness & creditworthiness of the sundry creditors amounting to Rs. Rs. 1,04,27,361/-.

2. On the fact and in the circumstances of the case, the Id. CIT(A) erred in deleting the addition of Rs. 1,04,27,36/- without appreciating the facts that the during the course of search proceedings statement of Shri Bandaru Ramesh, one of the creditors of the firm was recorded. In the said statement Shri Bandaru ramesh had stated that he never undertook any contract work.

3. On the fact and in the circumstances of the case, the Id. CIT(A) erred in deleting the addition of Rs. 1,04,27,36/- without appreciating the fact that during the course of search proceedings Shri Bandaru Ramesh, one of the key person of the firm in his statement stated that as per his knowledge the employees shown as creditors have not provided any services to the firm.

4. On the fact and in the circumstances of the case, the Id. CIT(A) erred in deleting the addition of Rs.27,05,454/- as Brokerage and Commission Expenses without appreciating the fact that certain persons appearing in Brokerage and commission ledger are either related to assessee’s employees or assessee himself. Further, most of them have no connection with the Brokerage and commission.

5. On the fact and in the circumstances of the case, the Id. CIT(A) erred in deleting the addition of Rs.27,05,454/- as Brokerage and Commission Expenses without appreciating the fact that assessee has not submitted any copy of agreement, nature and proof of services provided of the same. Further, payments made to persons are without any supporting material in respect of Brokerage & Commission.

6. On the fact and in the circumstances of the case, the Id. CIT(A) erred in deleting the addition of Rs. 27,05,454/- as Brokerage and Commission Expenses Shri Manvendra Mor, one of the Director, in his statement offered additional income in respect of said expenditure, for M/s RBSSD & FN Das for the relevant year.

7. Any other ground that may be raised during hearing.”

3. Grounds no.1, 2 and 3, relates to the addition of ‘ 1,04,27,361, on account of payment to contractor under section 69C of the Act.

4. In this case, the assessee is a Partnership Firm carrying business of Mining and Manganese Ore minerals. The assessee is maintaining regular books of account and audited under section 44AB of the Act. A survey under section 133A of the Act was conducted at the business premises of the assessee no 25/08/2021. The case was selected for scrutiny under section 147 of the Act and statutory notices under section 148 of the Act was issued in response to which the assessee filed return of income on 11/04/2023, declaring total income at ‘ 13,19,49,823. The case was selected for scrutiny and statutory notices were issued which were duly replied by the assessee. The Assessing Officer passed assessment order dated 06/06/2023, under section 143(3) r/w section 147 of the Act by making addition of ‘ 1,04,27,361, on account of disallowance towards payments to 6 different labour contractors under section 69C of the Act.

5. On appeal, the learned CIT(A) deleted the addition with following observations:–

“4. Discussion and Decision:–

………

Ground no.3, is regarding addition of ‘ 1,04,27,361, u/s 69C being unexplained expenditure to contractors. The A.O., during the assessment proceedings noticed that the appellant has incurred expenditure of ‘ 1,04,27,361, towards mining expenses. These expenses are on account of extraction