Shri Shiv Kumar Agarwal, Meerut V. ITO, Meerut

CO 320/DEL/2012

• Counselvise Citation: [2013] 122 COUNSELVISE.COM (IT) 8511 (ITAT-DELHI)
• Duration Of Justice: 7 month(s) 26 day(s)
• Appeal Type: Cross Objection
• Pronouncement Date: 03-05-2013
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: G
• Next Hearing Date: 01-05-2013
• Assessment Year: 2007-2008
• Appeal Filed On: 07-09-2012
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: JYOTI LEGHA SENIOR
• Keywords: Onus to prove

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL (DELHI BENCH G : NEW DELHI) SHRI I.C. SUDHIR, JUDICIAL MEMBER AND BEFORE SHRI B.C. MEENA, ACCOUNTANT MEMBER ITA NO.3150/DEL./2012 (ASSESSMENT YEAR : 2007-08) ITO, WARD 2 (3), VS. SHRI SHIV KUMAR AGARWAL, MEERUT. PROP. M/S. PEM SYNTHETICS, VISHWA SHANTI COMPLEX, NEAR RANI MILL, DELHI ROAD, MEERUT. (PAN : ADOPA4774G) CO NO.320/DEL/2012 (IN ITA NO.3150/DEL./2012) (ASSESSMENT YEAR : 2007-08) SHRI SHIV KUMAR AGARWAL, VS. ITO, WARD 2 (3), PROP. M/S. PEM SYNTHETICS, MEERUT. VISHWA SHANTI COMPLEX, NEAR RANI MILL, DELHI ROAD, MEERUT. (PAN : ADOPA4774G) (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI ASHOK KUMAR, ADVOCATE REVENUE BY : SMT. JYOTI LEGHA, SENIOR DR ORDER PER B.C. MEENA, ACCOUNTANT MEMBER : THE APPEAL FILED BY THE REVENUE AND CROSS OBJECTIO N FILED BY THE ASSESSEE EMANATES FROM THE ORDER OF CIT (APPEALS), MEERUT DA TED 22.03.2012. ITA NO.3150/DEL./2012 CO NO.320/DEL/2012 2 2. THE RETURN OF INCOME WAS FILED ON 31.03.2008 DEC LARING INCOME AT RS.1,01,784/-. THE ASSESSMENT WAS FINALIZED U/S 14 3(3) ON 29.12.2009 BY MAKING AN ADDITION OF RS.12,84,516/- ON ACCOUNT OF BOGUS S UNDRY CREDITORS AND RS.48,540/- ON ACCOUNT OF CONCEALED SUNDRY DEBTORS. THE CIT (A ) DELETED THESE ADDITIONS BY HOLDING AS UNDER :- 6. DECISION AND REASONS THEREFOR: I HAVE CONSIDERED THE FACTS OF THE CASE, FINDINGS O F THE A.O. AND SUBMISSIONS OF THE APPELLANT, I HAVE ALSO CONSI DERED THE ACCOUNTING PROCEDURE BEING FOLLOWED BY THE APPELLAN T AND HAVE PERUSED THE COPIES OF ACCOUNTS OF THE APPELLANT IN THE BOOKS OF HIS CUSTOMER NAMELY OLYMPIC FASTENERS AND VICE VERSA AN D THE ACCOUNT OF THE SUPPLIER M/S SYNFAB SALES & IND. LTD IN THE BOOKS OF THE APPELLANT AS WELL AS THE COPY OF ACCOUNT OF THE CUS TOMER NAMELY M/S OLYMPIC FASTENERS IN THE BOOKS OF THE SUPPLIER. I H AVE NOTED THAT THE APPELLANT HAS CREDITED THE ACCOUNT OF THE SUPPLIER BY THE AMOUNT OF THEIR BILL BY MAKING CORRESPONDING DEBIT ENTRY IN T HE ACCOUNT OF THE CUSTOMER ADDED WITH APPELLANT'S COMMISSION THEREON. THESE ENTRIES WERE RECORDED BY THE APPELLANT IN THE CAPACITY OF A N AGENT ONLY AND THIS FACT IS EXPLAINED DURING ASSESSMENT PROCEEDING S AS WELL AS APPEAL PROCEEDINGS. IN CASE CREDIT OF THE SUPPLIER M/S SYN FAB SALES & IND. LTD IS TREATED AS BOGUS, DEBIT BALANCE OF CUSTOMER M/S OLYMPIC FASTENERS SHALL HAVE TO BE REDUCED CORRESPONDINGLY BY THAT AMOUNT IN ORDER TO NULLIFY THE EFFECT OF THE ACCOUNTING ENTRY AS A WHOLE, AS ONLY ONE SIDE (I.E. CREDIT SIDE) CANNOT BE ASSUMED AS BO GUS WHILE ACCEPTING THE DEBIT SIDE THEREOF AS CORRECT. THIS IS ALSO SUB STANTIATED BY THE FACT THAT THE SUPPLIER IS SHOWING THE SIMILAR AMOUNT OF BALANCE IN HIS BOOKS AS DUE FROM M/S OLYMPIC FASTENERS AS IS SHOWN BY M/S OLYMPIC FASTENERS IN THEIR BOOKS OF ACCOUNT TO THE CREDIT OF THE APPELLANT. NON DECLARATION OF SALE & PURCHASE OF MA TERIAL SUPPLIED BY M/S SYNFAB SALES & IND. LTD TO M/S OLYMPIC FASTENER S BY THE APPELLANT IN HIS BOOKS OF ACCOUNT OR TO THE TRADE T AX DEPARTMENT AS HIS SALE & PURCHASE, WAS ATTRIBUTABLE TO THE FACT T HAT PROPERTY IN THE SAID GOODS HAD NEVER PASSED TO THE APPELLANT DURING THE WHOLE TRANSACTION. THIS FACT CANNOT BE A BASE TO HOLD THE CREDIT OF M/S SYNFAB SALES & IND. LTD AS BOGUS, IGNORING THE ACCO UNTING PROCEDURE BEING FOLLOWED BY THE APPELLANT. FROM THE COPY OF A CCOUNT OF THE SUPPLIER IN APPELLANT'S BOOKS OF ACCOUNT ON RECORD, IT IS APPARENT THAT THE APPELLANT HAS DEBITED THE AMOUNT OF COMMISSION RECEIVABLE OF RS.48540/- (NET OF TDS) TO THE ACCOUNT OF THE SUPPL IER AND THEIR CREDIT ITA NO.3150/DEL./2012 CO NO.320/DEL/2012 3 BALANCE TOWARDS SUPPLIES TO CUSTOMER WAS RS.13,33,0 57/ AS AGAINST RS.12,84,516/- AS CONSIDERED BY THE AO. THE AO HAS SEPARATELY ADDED THIS AMOUNT OF RS.48540/- HOLDING THE SAME AS CONCEALED DEBTS OF THE APPELLANT, APPARENTLY BASED ON INCOMPLETE AP PRECIATION OF FACTS ON RECORD. IN VIEW OF ABOVE OBSERVATION, I HOLD THAT THE A.O. HAS MISDIRECTED HIMSELF, BASED OF WRONG APPRECIATION OF FACTS ON RECORD, IN REACHING A FINDING THAT THE CREDIT OF THE SUPPLI ER IN THE BOOKS OF THE APPELLANT DECLARED AT RS.12,84,5L6/- (NET OF COMMIS SION RECEIVABLE OF RS.48,540/-) WAS BOGUS. I, THEREFORE, DELETE THE AD DITIONS OF RS.12,84,516/- AND RS.48540/- TOTALLING TO RS.13,33 ,056/-. IN THE RESULT, GROUND NOS. 1 & 2 ARE DECIDED IN FAV OUR OF THE APPELLANT. AGAINST WHICH THE REVENUE IS IN APPEAL BY TAKING TH E FOLLOWING GROUNDS :- 1. WHETHER IN THE FACTS AND CIRCUMSTANCES OF THE C ASE, THE LD. COMMISSIONER OF INCOME TAX (APPEALS) WAS RIGHT IN L AW AND IN FACT IN DELETING THE ADDITION OF RS.13,33,056/- IGNORING THE FACT THAT THE ASSESSEE FAILED TO EXPLAIN HOW IN ABSENCE OF PURCHA SES, CREDITOR COULD EXIST AND FURTHER TOTALLY FAILED TO EXPLAIN THE CRE DIT ENTRY APPEARING IN ITS BALANCE SHEET. 2. WHETHER IN THE FACTS AND CIRCUMSTANCES OF THE CA SE, THE LD. COMMISSIONER OF INCOME TAX (APPEALS) HAS ERRED IN L AW AND IN FACT IN DELETING THE ADDITION OF RS.13,33,056/- IGNORING THE LEGAL POSITION THAT ONUS TO PROVE SUCH CREDITOR WAS ENTIRELY UPON THE ASSESSEE WHICH TOTALLY REMAINED UNDISCHARGED. RELIANCE IS PLACED O N THE FOLLOWING JUDGMENTS- I. CIT VS. KORLAY TRADING CO. LTD. (CAL.) 232 ITR 8 20. II. KRISHAN KUMAR JHANB VS ITO AND ANR (PUNJAB & HA RYANA) 17 DTR 249 III M/S. SEJAI INTERNATIONAL LTD. VS. CIT,MEERUT (A LL.)APPEAL NO.306 OF 2010 3. IN THE FACTS AND CIRCUMSTANCES OF THE CASE, THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS) MAY BE SET A S IDE AND THAT OF THE A.O. RESTORED. THE ASSESSEE HAS FILED THE CROSS OBJECTION BY TAKIN G THE FOLLOWING GROUNDS :- ITA NO.3150/DEL./2012 CO NO.320/DEL/2012 4 1. THAT THE ORDER OF LD. COMMISSIONER IT.(APPEAL) MEERUT HAS BASED VERY RIGHTLY ON THE SUBSTANTIAL FACTS & LAW, BECAUSE OF RIGHT PROSPECTIVE CONSIDERATION OF CORRECT APPRECIATION O F FACTS ON RECORD(DELETION OF IMPUGNED DEMAND RS.13,33,056/- M ADE IN THIS CASE BY HIM ACCORDINGLY. 2. THAT THE ENTRIES OF SUNDRY CREDITORS AND DEBTORS IN THE BALANCE SHEET OF THE OBJECTOR/RESPONDENT HAD BEEN RECORDED IN THE CAPACITY OF AN AGENT ONLY BASED UPON THE ACTUAL APPRECIATION OF FACTS AND CIRCUMSTANCES OF THE NORMAL COURSE OF BUSINESS TREN D OF THE RESPONDENT BUSINESS. 3. THAT THE LD. COMMISSIONER (I.T.) APPEAL HAS PASS ED THE ORDER IMPUGNED IN ACCORDANCE OF LAWS AND FACTS CONSIDERIN G THE ACCOUNTING ENTRY AS A WHOLE, AS ONLY ONE SIDE (I.E. ) CREDIT SIDE CANNOT BE ASSUMED AS BOGUS WHILE ACCEPTING THE DEBIT SIDE THERE OF AS CORRECT. 4. THAT THE RELIANCE PLACED AT THE FOLLOWING JUDGME NTS A. CIT VS. KORLAY TRADING CO. LTD. (CAL) 232 ITR 82 0. B. KRISHAN KUMAR JHANB VS. ITO AND AM (PUNJAB & HAR YANA ) 17 DTR 249 C. M/S SEJAI INTERNATIONAL LTD. VS. CIT, MERRUT (AI L) APPEAL NO.306 OF 2010. BY THE APPELLANT HAVE NOT RELIED SIMILARITIES WITH THE FACTS AND CIRCUMSTANCES OF THE CROSS OBJECTOR IN PURSUANCE OF NATURAL LAW AND JUSTICE. 3. WE HAVE HEARD BOTH THE SIDES ON THESE ISSUES. T HE ASSESSEE WAS CARRYING OUT THE BUSINESS OF TRADING OF YARN AND FABRIC ON HIS O WN ACCOUNT AS WELL AS ON COMMISSION BASIS. ASSESSEE HAD SHOWN SUNDRY CREDIT ORS OF RS.13,15,269/-. ON CROSS VERIFICATION, ASSESSING OFFICER DID NOT FIND THE MATCHING AMOUNT OF RS.12,84,516/- IN THE COPY OF BOOKS OF SYNFAB SALE S & INDUSTRIES LTD.. CIT (A) HAD CONSIDERED THE METHOD OF ACCOUNTING OF ASSESSEE AND ALSO ACCOUNTS OF THESE CONCERNS. THE ASSESSEE IS A COMMISSION AGENT OF M/ S. SYNFAB SALES & IND. LTD., ITA NO.3150/DEL./2012 CO NO.320/DEL/2012 5 SILVASA, PANCHSHEEEL POLYSTER PVT. LTD., DAMAN AND HIM CHEMICAL LTD., NALAGARH. TOTAL BILLING DURING THE YEAR WAS RS.1,54,39,920/- AND THE MAIN CUSTOMER WAS M/S. OLYMPIC FASTENERS, MEERUT. OUT OF THE TOTAL BILLIN G AMOUNT, RS.1,50,61,287/- WAS FOR THE MATERIAL OF M/S. SYNFAB SALES & IND. LTD.. THE TOTAL PURCHASES FROM THIS SUPPLIER WAS RS.1,49,86,357/-. THE COMMISSION AMOU NT WAS RS.74,930/- @ HALF PER CENT OF THE TOTAL AMOUNT. THE DEBIT NOTE OF RS .1,50,61,287/- WAS DEBITED TO M/S. OLYMPIC FASTENERS, MEERUT. THE AMOUNT WAS CREDITED IN THE ACCOUNT OF M/S. SYNFAB SALES. THE ACCOUNT OF M/S. OLYMPIC FASTENER S WAS DEBITED BY THE SAME AMOUNT AFTER ADDING HALF PER CENT COMMISSION. THUS , THESE ENTRIES WERE RECORDED BY THE ASSESSEE IN THE CAPACITY OF AN AGENT ONLY. THUS, THE DIFFERENCE NOTED BY ASSESSING OFFICER WAS ON ACCOUNT OF ACCOUNTING PROC EDURE FOLLOWED BY ASSESSEE. IT HAS BEEN CLARIFIED BY ASSESSEE AND ACCEPTED BY CIT (A). CONSIDERING THESE FACTS, WE FIND THAT CIT (A) WAS JUSTIFIED IN DELETING THE ADDITION AND WE SUSTAIN THE SAME. 4. SINCE THE CROSS OBJECTION FILED BY THE ASSESSEE IS IN SUPPORT OF THE ORDER OF CIT (A) WHICH WE HAVE SUSTAINED, THE CROSS OBJECTIO N OF THE ASSESSEE HAS BECOME INFRUCTUOUS AND ACCORDINGLY, DISMISSED. 5. IN THE RESULT, THE APPEAL OF THE REVENUE AND CRO SS OBJECTION OF THE ASSESSEE STAND DISMISSED. ORDER PRONOUNCED IN OPEN COURT ON THIS 3 RD DAY OF MAY, 2013. SD/- SD/- (I.C. SUDHIR) (B.C. MEENA) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED THE 3 RD DAY OF MAY, 2013/TS ITA NO.3150/DEL./2012 CO NO.320/DEL/2012 6 COPY FORWARDED TO: 1.APPELLANT 2.RESPONDENT 3.CIT 4.CIT(A), MEERUT. 5.CIT(ITAT), NEW DELHI. AR, ITAT NEW DELHI.