Dept. Failed To Prove Sundry Creditors To Be Bogus: ITAT Deletes Addition Against Buffalo Meat Trader

The Delhi Bench of the Income Tax Appellate Tribunal (ITAT) has deleted the addition against the buffalo meat trader as the department has failed to prove sundry creditors to be bogus.

The bench of Yogesh Kumar US (Judicial Member) and B. R. R. Kumar (Accountant Member) observed that the Assessing Officer has failed to pinpoint any discrepancy in the details filed and books of accounts, bills, and vouchers produced during the course of the assessment proceedings.

The respondent/assessee is in the business of trading and manufacturing raw and frozen buffalo meat. The assessee declared its income from business and profession. The assessee filed a return of income on October 1, 2012, declaring an income of Rs. 29,79,360.

The AO asked the assessee to submit evidence or proof of the raw meat purchased, transportation bills, a ledger account of the purchase, and a list of sundry creditors, etc. The assessee has provided a list of around 400 sundry creditors with their names and amounts written on only three pages without any proof, evidence, or bills of purchase. But the assessee, even after repeated opportunities, could not produce the addresses of these creditors so that notices under Section 133(6) or summons could be issued to confirm the genuineness of creditors.

The assessee did not produce the PAN of the creditors to confirm their identity. In the absence of PANs, even the creditworthiness of creditors could not be verified. The assessee accepted that payments were made in cash from "Raw Meat Control A/C.".

The AO held that the assessee could not prove that the parties from whom they were purchasing raw meat were the real producers of meat. In the absence of bank details or raw meat selling parties, the genuineness of transactions could not be verified. The AO held that the appellant could not furnish the address, PAN, or other documentary evidence of the creditors and could not produce any of them.

The AO held that the books of account were neither complete nor reliable since no stock register, goods inward register, or goods outward register was maintained by the appellant on a regular basis. During the year relevant to the A.Y. 2012–13, the assessee had purchased raw meat amounting to Rs. 112.67 crores from sundry meat suppliers, processed the raw meat, and sold it to its associate concern for a sum of Rs. 120.96 crores.

The ITAT deleted the addition on the grounds that the accounts of the assessee were also regularly audited under Section 44AB of the Income Tax Act. Complete books of accounts, bills, and vouchers were produced and tested by the AO himself as per the record.

Case Title: ACIT Versus Al Nasir Agro Foods

Case No.: ITA No. 4327/Del/2016

Date: 23.05.2023

Counsel For Appellant: Rajan Chopra

Counsel For Respondent: Kanav Bali

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