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Judgment
PER NAVEEN CHANDRA, ACCOUNTANT MEMBER :
This captioned appeal has been filed by the Revenue against the order of the CIT(A)/NFAC Delhi dated 08.09.2025 arising from the assessment order passed under section 143(3) of the Income Tax Act, 1961 (hereinafter referred as ‘the Act’) dated 26.12.2018 passed by Assessing Officer, for the Assessment Year 2016- 17.
None appeared on behalf of the assessee. We heard the ld. DR at length who assisted us with the facts of the case and relied on the orders of the Assessing Officer. Case records carefully perused and considered.
Brief facts of the case are that the assessee is a company, electronically filed return of income for the A.Y. 2016-17 on 17.10.2016 disclosing current year loss of Rs. 8,29,08,421/-. The case was selected for Complete Scrutiny under CASS and notice u/s 143(2) of the Act was issued. Further, notice under section 142(1) of the Act also along with detailed questionnaire was issued. In response to notices, assessee furnished necessary details as called for and attended the proceedings. Thereafter, completion of assessment proceedings, AO framed assessment order under section 143(3) of the Act and assessed an income of Rs.1,06,61,640/- under the normal provision of the Income-tax Act.
Aggrieved, assessee was in appeal before the CIT(A)/NFAC. In which learned CIT(A)/NFAC after deleting the addition allowed the appeal of the assessee and observed as under:
“Decision : I have carefully considered the facts of the case as well as submission of the appellant and gone through the observation and findings of the AO .The contention of the appellant on this ground is acceptable in as much as it is observed from the assessment orders vis – vis above remand report that main reason of making disallowance of sundry creditors being on account of non- furnishing of proofs in relation to identity genuineness and creditworthiness of the creditors claimed by the Appellant Company during the FY 2015-16 , have been verified by the AO in remand proceeding and neither any negative observation nor any adverse remark in relation to transaction in respect of trade creditors has been marked by the Assessing Officer (AO) in the remand report.
In view of that considering the entire conspectus of the case I am of opinion that the appellant is able to establish beyond doubt with corroborating evidence the identity genuineness and creditworthiness of the creditors. Accordingly, I find infirmity in the order of the AO and find the disallowance being made under unexplained expenditure not being justified in as much as the addition being made not in accordance with law . Accordingly disallowance of Rs.5,02,58,246/- invoking section 69C of the Act stand deleted and the ground relating to this issue is allowed.”
Aggrieved by the order of CIT(A)/NFAC, Revenue is now in appeal before us with the following grounds:
“1.On the facts and in the circumstances of the case, the Ld. CIT(A) has erred in law and on facts in deleting the addition made under section 40A(3) of the Income-tax Act, 1961, without appreciating that the assessee had failed to furnish the requisite documentary evidence during the assessment proceedings to substantiate the genuineness of cash expenditure, and therefore, the disallowance was rightly made by the Assessing Officer.
2.On the facts and in the circumstances of the case, the Ld. CIT(A) has erred in deleting the addition made under section 69C of the Income-tax Act, 1961, without appreciating that the onus to establish the identity, genuineness and creditworthiness of the creditors as well as the genuineness of the underlying transactions rested solely upon the assessee, and the assessee had failed to discharge this onus during both assessment and remand proceedings.
3.The appellant craves leave to add, alter, amend, modify or delete any of the above grounds of appeal at the time of hearing or thereafter.”
Before us, learned Representative of the department submitted that learned CIT(A) has erred in law and on facts in deleting the addition made under section 40A(3) and under section 69C of the Act.
We have heard the learned DR and perused the material available on record. We find that the CIT(A) deleted the addition on the basis of remand report of the AO which had no adverse remarks on the trade creditors as well as the cash payments. Once the Department itself in its remand report has not questioned the trade creditors genuineness and creditworthiness, there is no scope for making addition. We are therefore of the considered view that we have no reason to interfere with the decision of the CIT(A). Appeal is dismissed.
In the result, appeal filed by the Revenue in ITA No.7879/Del/2026 is dismissed.