IN THE INCOME TAX APPELLATE TRIBUNAL LUCKNOW BENCH “B”, LUCKNOW BEFORE SHRI. SUDHANSHU SRIVASTAVA, JUDICIAL MEMBER AND SHRI NIKHIL CHOUDHARY, ACCOUNTANT MEMBER ITA No.564/LKW/2018 Assessment Year: 2015-16 Dy. Commissioner of Income v. M/s Habib Tannery Pvt. Ltd.

Tax-6 15-B, 150 Ft. Road Kanpur Jajmau, Kanpur TAN/PAN:AACH4129E (Appellant) (Respondent)

Appellant by: Shri Rakesh Garg, Advocate Respondent by: Shri H. S. Usmani, CIT (DR)

O R D E R

PER SUDHANSHU SRIVASTAVA, J.M.:

This appeal has been preferred by the Revenue against the order dated 11.04.2018, passed by the ld. Commissioner of Income Tax (Appeals)-II (ld. CIT(A)), Kanpur for Assessment Year

2015-16.

2.0 The brief facts of the case are that the assessee filed its return of income for the year under consideration on 23.09.2015, declaring a total income of Rs.12,69,300/-. In this case, a survey under section 133A of the Income Tax Act, 1961 (hereinafter called “the Act’) was conducted on 18.02.2015 at the premises of the assessee. During the course of survey, various incriminating documents, such as books of account, loose papers, hard disc, etc. were found and impounded by the search party. The seized documents included a Diary marked as BK-4, wherein, according to the Assessing Officer (AO), investments made by the assessee- company in immovable properties, were found to have been recorded, on the basis of which, statement of Shri Aslam Saeed, Director of the assessee-company was recorded. In the statement recorded under section 131 of the Act on 18.02.2015 and 11.03.2015, Shri Saeed Ahmad voluntarily surrendered an additional income of Rs.1,00,00,000/-, which was treated as income of the assessee from undisclosed sources and added to the total income of the assessee.

2.1 Further, on perusal of the Balance Sheet of the assessee- company, the AO proceeded to verify the genuineness of the sundry creditors and their creditworthiness by issuance of notices under section 133(6) of the Act. The list of such sundry creditors has been reproduced by the AO in his order at page 11, paragraph 5. From the total number of 41 sundry creditors, in some cases, notices were received back as un-served with the postal remarks like either “parties left” or ‘not known’. In some cases, replies were not received, and in some cases, there were differences in the closing balance shown by the assessee and as confirmed by the parties. As per the AO, since the assessee failed to furnish complete addresses and PAN details of the creditors or confirmations from them, it was to be held that the liabilities shown in the sundry creditors’ accounts in the books did not exist. He, therefore, held that the liabilities/creditors had ceased to exist and accordingly, he made addition of Rs.3,81,68,114/- to the income of the assessee. The AO completed the assessment under section 143(3) of the Act, assessing the total income of the assessee at Rs.4,94,37,410/-.

2.2 The AO also initiated penalty proceedings under section

271(1)(c) of the Act.

2.3 Aggrieved, the assessee preferred an appeal before the ld. CIT(A), who partly allowed the appeal of the assessee, sustaining the addition of Rs.1,00,00,000/- and deleting the addition of Rs.3,81,68,114/-.

2.4 Now, the Revenue has approached this Tribunal challenging the impugned order of the ld. CIT(A) in deleting the addition of Rs.3,81,68,14/-, by raising the following grounds of appeal:

01. That the Commissioner of Income Tax (Appeals)-2, Kanpur has erred in law and on facts and circumstances of the case in deleting the addition of Rs.3,81,68,114/-, without appreciating the fact that no exhaustive chart of creditors/debtors along with confirmatory copies of accounts was submitted by the assessee during the course of assessment proceedings till 27.12.2017, as is evident from the order sheet entries.

02. That the Commissioner of Income Tax (Appeals)-2, Kanpur has erred in law and on facts and circumstances of the case in accepting the contention of the assessee that no oppo