Shrinathji Cotton Industries, RAJKOT-GUJARAT V. The Income Tax Officer, Ward - 2 (2), RAJKOT-GUJARAT

CO 43/RJT/2011

• Counselvise Citation: [2013] 122 COUNSELVISE.COM (IT) 8987 (ITAT-RAJKOT)
• Duration Of Justice: 2 year(s) 3 month(s) 30 day(s)
• Appeal Type: Cross Objection
• Pronouncement Date: 30-09-2013
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Next Hearing Date: 14-08-2013
• Assessment Year: 2007-2008
• Appeal Filed On: 31-05-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: AVINASH KUMAR
• Assessee Lawyers: CHETAN AGARWAL CA
• Keywords: Unexplained cash credit; Deemed to accrue or arise in india; Additional evidence
• Section: 143(3); 133(6); 68

Judgement Text

, IN THE INCOME TAX APPELLATE TRIBULAL; RAJKOT BENCH, RAJKOT .. .. BEFORE SHRI T. K. SHARMA JM AND SHRI D. K. S RIVASTAVA AM ITA NO. 153/RJT/2011 / ASSESSMENT YEAR : 2007-08 THE INCOME-TAX OFFICER WARD 2(2), RAJKOT ( / APPELLANT) M/S. SHREENATHJI COTTON (IND.), SUR. NO. 38, GANDHADIYA AHMEDABAD ROAD, JASDAN PAN : AAMFS 6289 F / RESPONDENT C.O. NO. 43/RJT/2011 / ASSESSMENT YEAR : 2007-08 M/S. SHREENATHJI COTTON (IND.), SUR. NO. 38, GANDHADIYA AHMEDABAD ROAD, JASDAN PAN : AAMFS 6289 F ( / APPELLANT) THE INCOME-TAX OFFICER WARD 2(2), RAJKOT / RESPONDENT ! '# / REVENUE BY SHRI AVINASH KUMAR, DR $% ! '# / ASSESSEE BY SHRI CHETAN AGARWAL, CA ' & ' %( / DATE OF HEARING 14.08.2013 ) %( / DATE OF PRONOUNCEMENT 30.09.2013 / ORDER .. , / T. K. SHARMA, J. M.: THIS APPEAL BY THE REVENUE AND CROSS-OBJECTION BY THE ASSESSEE ARE AGA INST THE ORDER DATED 09.02.2011 OF CIT(A)-III, RAJKOT FOR THE ASSESSMENT YEAR 2007-08. 2. THE FACTS, IN BRIEF, ARE THAT THE ASSESSEE IS A PARTNERSHIP FIRM, ENGAGED IN THE BUSINESS OF GINNING AND PRESSING OF COTTON. FOR THE ASSESSMENT YEAR UNDER APPEAL IT FILED ITS RETURN OF INCOME ON 24.10.2007 DECLARING TOTAL INCOME AT RS.4,76,512/-. THE ASSESSING OFFICER FRAMED ASSESS MENT U/S 143(3) OF THE INCOME-TAX ACT ON 22.12.2009, WHEREIN HE MADE THE F OLLOWING ADDITIONS:- A) ADDITION IN RESPECT OF UNEXPLAINED CASH CREDIT I N THE NAME OF ARVINDBHAI D. POPAT FOR RS.96,750/-. B) ADDITION ON ACCOUNT OF ALLEGED JOB WORK OF THE G INNING AND PRESSING DONE BY THE ASSESSEE IN ITS FACTORY FROM 01.10.2006 TO 3 1.03.2007 FOR RS.15,66,702/-. 153-RJT-2011 & CO 43-RJT-2011 - SHREENATHJI COTTON INDUSTRIES 2 C) DISALLOWANCE OF SUM OF RS.8,22,989/- BEING 10% O F THE SUNDRY CREDITORS OF RS.82,29,893/-. 3. ON APPEAL BEFORE THE LD CIT(A), THE ASSESSEE FIL ED WRITTEN SUBMISSIONS AND SOME FRESH DOCUMENTS. THE LD CIT(A) FORWARDED THE SAME TO THE ASSESSING OFFICER FOR HIS COMMENTS. THE ASSESSING OFFICER VID E HIS REMAND REPORT DATED 25.01.2011 INFORMED THE LD CIT(A) THAT INSPITE OF G IVING OPPORTUNITIES, THE ASSESSEE HAS NEITHER ATTENDED NOR SUBMITTED ANY DET AILS BEFORE THE ASSESSING OFFICER, AND AS SUCH, HE PERSISTED THAT THE ASSESSE E NEED NOT TO BE FAVOURED, ESPECIALLY IN THE MATTER RELATING TO THE ADDITIONAL /NEW EVIDENCES. THE LD CIT(A) FORWARDED THE COPY OF SAID REMAND REPORT TO THE ASS ESSEE AND ASKED TO EXPLAIN THE REASON FOR NON-CO-OPERATION WITH THE ASSESSING OFFI CER. THE SAID LETTER OF LD CIT(A) DATED 01.02.2011, WHICH IS ADDRESSED TO THE ASSESSE E, READS AS UNDER:- 2. THE REMAND REPORT DTD. 25-01-2011 RECEIVED IN Y OUR CASE FROM THE INCOME-TAX OFFICER, WARD-2(2),RAJKOT IS FORWARDED H EREWITH. THE ASSESSING OFFICER HAS OBJECTED TO THE ADMISSION OF THE NEW/ADDITIONAL EVIDENCES AS YOU HAVE NOT CO-OPERATE D TO THE ASSESSING OFFICER FOR VERIFICATION OF ADDITIONAL EV IDENCES SUBMITTED BY YOU DURING THE COURSE OF APPELLATE PROCEEDINGS. 3. YOU ARE REQUESTED TO EXPLAIN WHY YOU HAVE NOT CO -OPERATED WITH THE ASSESSING OFFICER FOR VERIFICATION OF THE ADDITIONA L/NEW EVIDENCES. I MAY BE FORCED TO TAKE ADVERSE VIEW IN THE CASE OF N ON-COMPLIANCE ON YOUR PART. YOUR EXPLANATION/REPLY SHOULD BE REAC H TO THIS OFFICE BY 07-02-2011 . IN CASE NO EXPLANATION/REPLY IS RECEIVED, IT WILL BE PRESUMED THAT YOU HAVE NO EXPLANATION TO OFFER AND YOUR CASE WILL BE DECIDED ON THE BASIS OF MATERIAL ALREADY ON RECO RD AND WITHOUT ADMITTING ADDITIONAL EVIDENCES, YOUR CASE WILL BE D ECIDED EX-PARTE. 4. SUBSEQUENTLY, IN REPLY TO ABOVE LETTER DATED 01. 02.2011, THE ASSESSEE FILED HIS REPLY ON 07.02.2011 AND SUBMITTED THAT REMAND P ROCEEDINGS WAS ON IN THE CASE OF ANOTHER ASSESSEE, NAMELY SHRI VALLABHBHAI M EGHJIBHAI VAKARIA, WHEREIN OUR ADVOCATE, SHRI D. D. SHAH REMAINED PRESENT DURI NG THE REMAND PROCEEDINGS BEFORE THE ASSESSING OFFICER, AND AT THAT TIME, THE CASE WAS DISCUSSED BY OUR ADVOCATE, SHRI D. D. SHAH WITH THE ASSESSING OFFICE R THAT HE WAS TO CALL FOR INFORMATION FROM THE SUNDRY CREDITORS BY THE ISSUE OF NOTICE U/S 133(6), AND SINCE THERE WERE NO OTHER ISSUES AS THE CONFIRMATIONS WER E FILED, OUR ADVOCATE, SHRI D. D. SHAH WAS UNDER THE IMPRESSION THAT THE ASSESSING OF FICER WOULD ISSUE NOTICE U/S. 133(6) AND IT HAD NEVER BEEN THE INTENTION OF THE A SSESSEE EITHER NOT TO COOPERATE IN THE REMAND PROCEEDINGS OR TO CAUSE DELAY IN THE REMAND PROCEEDINGS. IT WAS 153-RJT-2011 & CO 43-RJT-2011 - SHREENATHJI COTTON INDUSTRIES 3 CONTENDED THAT IN VIEW OF THESE AFORESAID FACTS AND CIRCUMSTANCES, THE ADDITIONAL EVIDENCES MAY BE ADMITTED. THEREAFTER REPORT OF THE ASSESSING OFFICER AND THE REJOINDER ON THE SAME BY THE ASSESSEE WERE EXAMINED BY THE LD CIT(A) AND HE CONCLUDED THAT THE ASSESSEE, FILED THE EVIDENCES, W AS WAITING FOR FURTHER PROCEEDINGS AND THE ASSESSING OFFICER HAD NOT EXAMI NED THE EVIDENCES ALREADY SUBMITTED. THE LD CIT(A) FURTHER CONCLUDED THAT THE PRESUMPTION AND ASSUMPTION ON THE PART OF THE ASSESSEE REGARDING ACTION OF THE ASSESSING OFFICER WAS HYPOTHETICAL. THE LD CIT(A), ON THIS CONSPICUOUS F ACTS, OBSERVED THAT ADDITIONAL EVIDENCES ARE SELF-EXPLANATORY; THEREFORE, KEEPING IN VIEW THE NATURE OF THE ADDITIONAL EVIDENCES, HE ADMITTED AND ADJUDICATED THE SAME AS UNDER:- 4.1 THE LD CIT(A) DELETED THE ADDITION OF RS.96750/ - ON ACCOUNT OF UNEXPLAINED CASH CREDIT IN THE NAME OF SHRI ARVINDBHAI D. POPAT , AFTER EXAMINING OF CONTRA ACCOUNTS FROM THE PERSONAL BOOKS AND BALANCE-SHEET OF SHRI ARVINDBHAI D. POPTAT. THE LD CIT(A) ALSO FOUND THAT THERE IS A REGULAR CR EDIT FROM THE ACCOUNT, THE SOURCE OF WHICH IS FROM THE BOOKS OF ACCOUNTS AND THE PART NER IS REGULARLY ASSESSED TO TAX WHICH IS EVIDENT FROM THE COPY OF RETURN OF INCOME FILED FOR THE ASSESSMENT YEAR 2007-08. HE ACCORDINGLY HELD THAT SOURCE OF CREDIT IN CAPITAL ACCOUNT OF PARTNER STANDS EXPLAINED AND THEREFORE DELETED THE ADDITION OF RS.96750/-. 4.2 THE LD CIT(A) ALSO DELETED THE ADDITION OF RS.1 5,66,702/- ON ACCOUNT OF JOB WORK ALLEGEDLY EARNED IN POST SURVEY PERIOD, OBSERV ING AS UNDER:- THE FACTS SHOW THAT THE APPELLANT WAS ENGAGED IN T HE JOB WORK OF GINNING AND PRESSING DURING THE PERIOD OF 1-4-2006 ON AUGUS T, 2006 AND SUBSEQUENTLY, THE PLANT & MACHINERY AND FACTORY WAS LEASED OUT FROM 1-10- 2006 TO M/S. JALARAM COTTEX. A COPY OF LEASE AGREEM ENT DATED 1-10-2006 FILED ON RECORD TO SHOW THAT THE APPELLANT HAS LEAS ED OUT FACTORY BUILDING & SHED OF RS.50000/- P.M. AND ALSO PLANT & MACHINERY @ OF RS.100000/- P.M. TO A PARTNERSHIP FIRM, M/S. JALARAM COTTEX. THE LEA SE INCOME FROM BUILDING OF RS.3 LACS AND FROM PLANT & MACHINERY OF RS.6 LAC S HAS BEEN CREDITED IN THE P & L ACCOUNT AND THERE IS TDS ALSO MADE BY THE M/S. JALARAM COTTEX ON THE LEASE RENT. THERE WAS A SURVEY U/S.133 ON TH E BUSINESS PREMISES ON 9-1-2007. THE ASSESSING OFFICER WAS NOT PRIVI TO LE ASE DEED AND SUBSEQUENT INCOME EARNED FROM 1-10-2006 ONWARDS AS LEASE RENTAL. THE ASSESSING OFFICER ERRONEOUSLY PROCEEDED TO ESTIMATE JOB WORK INCOME FOR THE SAID PERIOD AT RS.1566702/-. AS THE ABOVE PRESU MPTION IS FOUND ON WRONG FACTS, THE ADDITION DESERVES TO BE DELETED. A PPARENTLY, IT IS CLEAR THAT AFTER 1-10-2006 TO 31-3-2007, THERE COULD NOT BE AN Y JOB WORK INCOME AS THE FACTORY BUILDING, SHED AND PLANT & MACHINERY WAS LE ASED OUT BY THE APPELLANT TO ANOTHER PARTY M/S. JALARAM COTTEX AND THE INCOME EARNED FROM LEASE HAS BEEN DULY RECORDED IN THE BOOKS OF ACCOUN TS. ACCORDINGLY, THE ADDITION MADE OF RS.1566702/- IS HEREBY ORDERED TO BE DELETED. 153-RJT-2011 & CO 43-RJT-2011 - SHREENATHJI COTTON INDUSTRIES 4 4.3. FINALLY, THE LD CIT(A) DELETED THE ADDITION OF RS.8,22,989/- IN RESPECT OF SUNDRY CREDITORS AT 10% OF THE TOTAL CREDITORS, BUT MADE ADDITION OF RS.2,04,566/- IN RESPECT OF FOLLOWING TWO CREDITORS FOR THE DETAILED REASONS GIVEN IN PARAGRAPH 3.6(C) WHICH READS AS UNDER:- THE ASSESSING OFFICER MADE ADDITION OF RS.822989/- BEING 10% OF THE TOTAL AMOUNT OF THE SUNDRY CREDITORS AMOUNTING TO RS.8229 893/- IS ERRONEOUS, AS SUCH, ADHOC DISALLOWANCE CANNOT BE MADE U/S 68 OF T HE ACT. THE SECTION 68 OF THE ACT REQUIRES THAT ONLY WHEN IN CASE OF CREDI TOR, THE THREE INGREDIENTS I.E. IDENTITY, CREDITWORTHINESS OF THE CREDITOR AND GENUINENESS OF THE TRANSACTION IS NOT PROVED, THEN THE ASSESSING OFFIC ER IS FREE TO TREAT SUCH CREDIT AS DEEMED INCOME AND TAX THE SAME. HERE, THE APPELLANT HAS FILED THE CONFIRMATION OF ALL THE CREDITORS ALONGWITH P.A. NU MBERS. AFTER EXAMINING OF ALL THESE CONFIRMATIONS AND ACCOUNTS, IT IS NOTED T HAT MOST OF THESE ARE TRADE CREDITORS AND THERE ARE REGULAR DEBIT/CREDIT TRANSA CTIONS, ONLY ISSUE IS THAT THE ASSESSING OFFICER HAS NOT PERSONALLY EXAMINED T HERE CREDITORS. HOWEVER, KEEPING IN VIEW THE REGULAR TRANSACTIONS A ND THE CONTINUITY OF THESE ACCOUNTS, THERE IS NO CAUSE TO TREAT THE SAME AS NON-GENUINE. HOWEVER, IT IS FOUND THAT IN RESPECT OF FOLLOWING T WO CREDITORS, THE APPELLANT HAS NOT FILED ANY CONFIRMATION LETTER, COPY OF ACCO UNT ETC. 1) FLUIDTECH BOILERS PVT LTD RS.16459/- 2) J G PUJARA & SONS RS.188107/- TOTAL RS.204566/- HENCE, IN CASE OF ABOVE CREDITORS, THREE INGREDIENT S I.E. IDENTIRY, CREDITWORTHINESS OF THE CREDITOR AND GENUINENESS OF THE TRANSACTION ARE NOT PROVED BY THE APPELLANT. THEREFORE, THE ADDITION OF RS.822989/- BEING 10% OF THE TOTAL CREDITORS IS ORDERED TO BE DELETED. HO WEVER, ADDITION OF RS.204566/- IN CASE OF ABOVE 2 CASH CREDITS STANDS CONFIRMED. APPELLANT GETS RELIEF OF RS.618423/-. THUS, THE SECOND GROUND OF APPEAL IS PARTLY ALLOWED. 5. AGGRIEVED WITH THE ORDER OF LD CIT(A), THE REVEN UE IS NOW IN APPEAL BEFORE THIS TRIBUNAL ON THE FOLLOWING GROUNDS:- 1. THE LD. CIT (A)-III, RAJKOT HAS ERRED IN LAW AN D ON FACTS IN DELETING THE ADDITION OF RS.96,750/- MADE BY A.O. ON ACCOUNT OF UNEXPLAINED CASH CREDIT. 2. THE LD. CIT (A)-III, RAJKOT HAS ERRED IN LAW AND ON FACTS IN DELETING THE ADDITION OF RS.15,66,702/-/- MADE BY A.O. ON AC COUNT OF JOB WORK EARNED IN POST SURVEY PERIOD. 3. THE LD. CIT (A)-III, RAJKOT HAS ERRED IN LAW AND ON FACTS IN RESTRICTING THE ADDITION OF RS.2,04,566/- AS AGAINST RS.8,22,98 9 MADE BY A.O. IN RESPECT OF SUNDRY CREDITORS AT 10% OF THE TOTAL CRE DITORS. 6. THE ASSESSEE HAS ALSO FILED THE CROSS-OBJECTIONS IN WHICH THE ONLY GROUND RAISED IS AS UNDER:- THE LEARNED CIT(APPEALS)-III, RAJKOT, ERRED IN LAW AND ON FACTS IN SUSTAINING THE ADDITION OF RS.204566/- IN RESPECT OF SUNDRY CR EDITORS. ON THE FACTS AND CIRCUMSTANCES OF THE CASE THE ADDITION OF RS.204566 OUGHT TO BE DELETED. 153-RJT-2011 & CO 43-RJT-2011 - SHREENATHJI COTTON INDUSTRIES 5 7. AT THE TIME OF HEARING BEFORE US, ON BEHALF OF A SSESSEE SHRI CHETAN AGARWAL, CA APPEARED AND WITH REGARD TO GROUND NO.1 HE POINTED OUT THAT THE ASSESSING OFFICER ADDED 96,750/- TO THE TOTAL INCOM E OF THE ASSESSEE ON ACCOUNT OF PARTNERS CAPITAL FOR WANT OF DETAILS. THE LD COUNS EL FOR THE ASSESSEE SUBMITTED THAT THE ASSESSEE SUBMITTED ALL THE RELEVANT DETAILS SUC H AS COPY OF ACCOUNT FROM THE BOOKS OF THE ASSESSEE AS WELL AS HIS CONTRA A/C FRO M ITS PERSONAL BOOKS AND BALANCE SHEET BEFORE THE LD CIT(A) AND THE LD CIT(A ) ACCORDINGLY DELETED THE ADDITION AFTER CONSIDERING ALL EVIDENCES PUT FORWAR DED BY THE ASSESSEE; THEREFORE THE VIEW TAKEN BY THE LD CIT(A) BE UPHELD. 8. AS AGAINST THE AFORESAID SUBMISSION MADE BY THE LD COUNSEL, THE LD DEPARTMENTAL REPRESENTATIVE POINTED OUT THAT SINCE AT THE TIME OF ORIGINAL ASSESSMENT, CONTRA ACCOUNT FROM THE PERSONAL BOOKS AND BALANCE SHEET OF SHRI ARVINDBAHAI D. POPAT WAS NOT FURNISHED; THEREFORE T HE LD CIT(A) IS NOT JUSTIFIED IN DELETING THE ADDITION OF RS.96750/-. 9. AFTER HEARING BOTH THE SIDES IN RESPECT OF GROUN D NO.1, WE HAVE CAREFULLY GONE THROUGH THE ORDERS OF THE AUTHORITIES BELOW. IT IS PERTINENT TO NOTE THAT AFTER EXAMINING OF CONTRA A/C FROM THE PERSONAL BOOKS AND BALANCE SHEET FROM SHRI ARVINDBHAI D. POPAT, IT IS FOUND THAT THERE IS A RE GULAR CREDIT FROM THE ACCOUNT, THE SOURCE OF WHICH IS FROM THE BOOKS OF ACCOUNTS AND T HE PARTNER IS REGULARLY ASSESSED TO TAX WHICH IS EVIDENT FROM THE COPY OF R ETURN OF INCOME FILED FOR THE ASSESSMENT YEAR 2007-08. THE LD CIT(A) ACCORDINGLY TOOK A VIEW THAT THE SOURCE OF CREDIT OF PARTNER STANDS EXPLAINED AND HE DELETE D THE ADDITION OF RS.96750/- ACCORDINGLY. WE DO NOT FIND ANY INFIRMITY IN THE R EASONING GIVEN BY THE LD CIT(A) FOR DELETING THE ADDITION OF RS.96750/-, THEREFORE THE GROUND NO.1 OF THE REVENUE IS REJECTED. 10. WITH REGARD TO DELETION OF ADDITION OF RS.15667 02/- ON ACCOUNT OF JOB WORK EARNED IN POST SURVEY PERIOD, THE LD DEPARTMENTAL R EPRESENTATIVE POINTED OUT THAT THE ASSESSEE WAS ENGAGED IN THE JOB WORK OF GINNING AND PRESSING DURING THE 153-RJT-2011 & CO 43-RJT-2011 - SHREENATHJI COTTON INDUSTRIES 6 PERIOD 01.04.2006 TO AUGUST 2006, THEREFORE THE ASS ESSING OFFICER RIGHTLY PRESUMED THAT HE WAS EARNING INCOME FROM THE JOB WO RK IN POST SURVEY PERIOD. 11. AS AGAINST THIS, THE LD COUNSEL OF THE ASSESSEE POINTED OUT THAT THE ASSESSEE WAS DOING JOB WORK OF GINNING AND PRESSING DURING THE PERIOD 01.04.2006 TO AUGUST 2006 AND THEREAFTER THE PLANT & MACHINERY AND FACTORY WAS LEASED OUT FROM 01.10.2006 TO M/S. JALARAM COTTEX. THE LD COU NSEL OF THE ASSESSEE FURTHER SUBMITTED THAT A COPY OF LEASE AGREEMENT DATED 1.10 .2006 WAS ALSO FURNISHED BY THE ASSESSEE IN THIS REGARD BEFORE THE LD CIT(A) AN D THE LD CIT(A), AFTER CONSIDERING THESE FACTS AND THE FACT THAT TDS WAS A LSO MADE BY M/S. JALARAM COTTEX ON THE LEASE RENT, DELETED THE ADDITION OF R S.1566702/-; THEREFORE THE VIEW TAKEN BY THE LD CIT(A) BE UPHELD. 12. WE HAVE HEARD BOTH THE SIDES AND CAREFULLY GONE THROUGH THE ORDERS OF THE AUTHORITIES BELOW IN RESPECT OF DELETION OF ADDITIO N OF RS.1566702/-. IT IS PERTINENT TO NOTE THAT THE ASSESSEE HAS LEASED OUT THE FACTORY B UILDING AND SHED @ RS.50000/- PER MONTH AND ALSO PLANT & MACHINERY @ RS.100000/- PER MONTH TO A PARTNERSHIP FIRM, M/S. JALARAM COTTEX. THEREFORE, THE ASSESSING OFFICER ERRONEOUSLY PROCEEDED TO ESTIMATE JOB WORK INCOME FOR THE SAID PERIOD AT RS.1566702/- AND THE LD CIT(A) IS LEGALLY AND FACTUALLY CORRECT IN DELETING THE AD DITION OF RS.1566702/- MADE BY THE ASSESSING OFFICER ON ASSUMPTION AND PRESUMPTION. W E, THEREFORE, DECLINE TO INTERFERE. GROUND NO.2 OF THE REVENUES APPEAL IS A LSO REJECTED. 13. THE FACTS RELATING TO THE CONTROVERSY INVOLVED IN GROUND NO.3 OF THE REVENUE AND THE GROUND OF CROSS-OBJECTIONS ARE THAT IN THE ASSESSMENT ORDER THE ASSESSING OFFICER MADE ADDITION OF RS.822989/- IN RESPECT OF SUNDRY CREDITORS AT 10% OF THE TOTAL CREDITORS. THE LD CIT(A) RESTRICTED THIS ADD ITION TO RS.204566/- FOR THE DETAILED REASONS GIVEN IN PARAGRAPH 3.6(C) OF THE APPELLATE ORDER. THE LD CIT(A) HAS MADE THE SPECIFIC ADDITION IN RESPECT OF FOLLOWING TWO C REDITORS:- 1) FLUIDTECH BOILERS PVT LTD RS.16459/- 2) J G PUJARA & SONS RS.188107/- TOTAL RS.204566/- 153-RJT-2011 & CO 43-RJT-2011 - SHREENATHJI COTTON INDUSTRIES 7 AGAINST THE DELETION OF ADDITION, THE REVENUE IS I N APPEAL AND AGAINST THE CONFIRMATION OF ADDITION OF RS.204566/-, THE ASSESS EE HAS FILED CROSS-OBJECTIONS. BEFORE US, THE COUNSEL OF THE ASSESSEE PLEADED THAT IN RESPECT OF ABOVE REFERRED TWO SUNDRY CREDITORS FOR WHICH THE LD CIT(A) CONFIR MED THE ADDITION ARE OLD ONE. THE SUBMISSIONS MADE BY THE ASSESSEE IN THIS REGARD AS UNDER:- A). RE. ADDITION OF RS.188107/- IN ACCOUNT OF J.G . POOJARA & SONS IT IS RESPECTFULLY SUBMITTED THAT THE ASSESSEE HAD FILED THE COPY OF ACCOUNTS OF THIS PARTY FROM ITS BOOKS FOR THE PERIOD F.Y. 2 006-07 TO F.Y. 2009-10, THE YEAR IN WHICH THE PAYMENT MADE TO THIS PARTY IS MAD E BY ACCOUNT PAYEE CHEQUE FROM C.C. ACCOUNT 258 OF HDFC (CHEQUE NO.293 552) ON 10.3.2010. THE ADDRESS OF THE ABOVE PARTY HAS BEEN GIVEN IN THE COPY OF ACCOUNT. IN CASE THE LEARNED AO HAD ANY DOUBTS ABOU T THE GENUINESS OF THIS CREDITOR, HE COULD HAVE VERY WELL MADE THE INQUIRIE S AS DEEMED FIT UNDER THE POWER VESTED WITH HIM. MORE PARTICULARLY IT IS PERT INENT TO MENTION THAT THE BALANCE OF RS.188107/- IN THE ACCOUNT OF THIS PARTY IS AN OPENING CARRIED FORWARD BALANCE AS ON 1.4.2006. THEREFORE THE CREDI T IN THIS ACCOUNT HAS NOT ARISEN IN THE YEAR UNDER APPEAL AND THEREFORE THE A DDITION FOR ALLEGED UNEXPLAINED CREDITOR IN THIS REGARD CANNOT BE MADE IN A.Y. 2007-08, THE YEAR UNDER APPEAL. SO FAR AS GENUINENESS OF THIS CREDITOR IS CONCERNED , THE ASSESSEE SUBMITS THAT THE CREDIT IN THE ACCOUNT OF THIS PARTY IN THE EARLIER YEAR IS FOR BROKERAGE/DALALI FOR THE COTTON BALES SOLD THROUGH HIM IN SOUTH INDIA. SINCE THERE WERE DISPUTES RAISED BY BUYER PARTIES, ITS CO MMISSION WAS RETAINED WHICH WAS SUBSEQUENTLY PAID AS WILL BE APPRECIATED FROM THE COPIES OF ACCOUNTS OF SUBSEQUENT YEARS. THUS, THE QUESTION OF MAKING THE ADDITION DOES NOT ARISE. B) RE. ADDITION OF RS.16459/- IN THE ACCOUNT OF FLUID TECH BOILERS PVT LTD THE ASSESSEE HAD FILED THE COPY OF ACCOUNTS OF THIS PARTY FROM ITS BOOKS. IT IS SUBMITTED THAT THERE WAS AN OPENING BALANCE OF RS.1 2813/- AS ON 1.4.2006 FOR BILL NO.20. THE COPY OF LEDGER ACCOUNTS ARE ENC LOSED. IT IS SUBMITTED THAT IN NO CASE THIS CAN BE ADDED BECAUSE THERE IS AN OP ENING CREDIT BALANCE OF RS.12813/- IN THIS ACCOUNT AND SINCE THIS IS NOT TH E CREDIT OF THE YEAR UNDER APPEAL, THEREFORE THE SAME CANNOT BE ADDED. THIS IS THE ACCOUNT OF GENUINE 08 I.E. A.Y. 2008-09 AND THIS HAS BEEN WRITTEN TO T HE CREDIT OF KASAR ACCOUNT AND HAS BEEN OFFERED TO TAX. THEREFORE MAKING ADDIT ION OF THIS AMOUNT IN A.Y. 2007-08 IS TOTALLY UNJUSTIFIED AND THE SAME AM OUNTS TO DOUBLE TAXATION OF THE SAME ITEM IN TWO DIFFERENT YEARS. HOWEVER, W ITHOUT PREJUDICE THE OPENING BALANCE OF RS.12813/- CAN IN NO CASE BE ADD ED IN A.Y. 2007-08 (F.Y. 2006-07). 14. ON THE OTHER HAND, THE LD DEPARTMENTAL REPRESEN TATIVE POINTED OUT THAT THE ASSESSING OFFICER RIGHTLY DISALLOWED 10% OF THE SUN DRY CREDITORS. WITHOUT PREJUDICE TO THIS, HE POINTED OUT THAT WHETHER BOTH THE AFORE SAID CREDITORS ARE OLD ONE OR NOT NEEDS VERIFICATION AT THE END OF THE ASSESSING OFFI CER. 153-RJT-2011 & CO 43-RJT-2011 - SHREENATHJI COTTON INDUSTRIES 8 15. HAVING HEARD BOTH THE SIDES, WE HAVE CAREFULLY GONE THROUGH THE ORDERS OF THE AUTHORITIES BELOW. THE APPROACH OF THE ASSESSIN G OFFICER TO DISALLOW THE 10% OF SUNDRY CREDITORS CANNOT BE SUSTAINED AND LD CIT(A) HAS RIGHTLY DELETED THE ADDITION TO THE EXTENT OF RS.618423/- (RS.822989 RS.204566 ). HOWEVER, WITH REGARD TO AFORESAID TWO PARTIES NAMELY (1) FLUIDTECH BOILERS PVT LTD AND (2) J G PUJARA & SONS; WE FOUND CONSIDERABLE FORCE IN THE SUBMISSION MADE BY LD DR THAT WHETHER THE BOTH THE AFORESAID SUNDRY CREDITORS ARE OLD ONE OR NEW, NEEDS VERIFICATION AT THE END OF THE ASSESSING OFFICER. WE THEREFORE RESTORE THIS ISSUE TO THE FILE OF THE ASSESSING OFFICER WITH THE DIRECTION THAT HE WILL M AKE NECESSARY VERIFICATION. IN CASE BOTH THE SUNDRY CREDITORS ARE OLD, HE WILL DEL ETE THE ADDITION; OTHERWISE HE MAY MAKE THE ADDITION. 16. IN THE RESULT, THE APPEAL OF THE REVENUE IS DIS MISSED AND THE CROSS- OBJECTIONS FILED BY THE ASSESSEE IS TREATED AS ALLO WED FOR STATISTICAL PURPOSES. THIS ORDER IS PRONOUNCED IN THE OPEN COURT ON THE D ATE MENTIONED HEREINABOVE. SD/- SD/- ( D. K. SRIVASTAVA) (T. K. SHARMA) #( '* / ACCOUNTANT MEMBER '* /JUDICIAL MEMBER *#+ ,*-/ ORDER DATE 30.09.2013 /RAJKOT *BT !'# $%'& / COPY OF ORDER FORWARDED TO:- 1. / APPELLANT- THE INCOME-TAX OFFICER, WARD 2(2), RA JKOT 2. / RESPONDENT- M/S. SHREENATHJI COTTON (IND.), SUR. NO. 38, GANDHADIYA AHMEDABAD ROAD, JASDAN 3. '-2- % & 3% / CONCERNED CIT-II, RAJKOT 4. & 3%- / CIT (A)-III, RAJKOT 5. 789 % , , / DR, ITAT, RAJKOT 6. 9; <= / GUARD FILE. *#+ '# / BY ORDER , TRUE COPY PRIVATE SECRETARY INCOME TAX APPELLATE TRIBUNAL, RAJKOT