ITO, WD-2(3), KOLKATA, Kolkata V. M/s Admire Vinimay Pvt. Ltd., Kolkata

ITA 1000/KOL/2016

• Counselvise Citation: [2018] 119 COUNSELVISE.COM (IT) 1090 (ITAT-KOLKATA)
• Duration Of Justice: 2 year(s) 6 month(s) 20 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-11-2018
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Assessment Year: 2011-2012
• Appeal Filed On: 10-05-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: M D SHAH
• Keywords: Corroborative evidences
• Section: 142(1); 133(6)

Judgement Text

1 ITA NO. 1000/KOL/2016 ADMIRE VINIMAY PVT. LTD., AY 2011-12 , B , IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH: KOL KATA ( ) . . , . ' # $% % , '( ) [BEFORE SHRI A. T. VARKEY, JM & DR. A. L. SAINI, A M] I.T.A. NO. 1000/KOL/2016 ASSESSMENT YEAR: 2011-12 INCOME-TAX OFFICER, WD-2(3), KOLKATA VS. M/S. ADMIR E VINIMAY PVT. LTD. (PAN: AACCA7164Q) APPELLANT RESPONDENT DATE OF HEARING 19.09.2018 DATE OF PRONOUNCEMENT 30.11.2018 FOR THE APPELLANT SHRI KAPIL MONDAL, JCIT, SR. DR FOR THE RESPONDENT SHRI M. D. SHAH, AR ORDER PER SHRI A.T.VARKEY, JM THIS APPEAL PREFERRED BY THE REVENUE IS AGAINST THE ORDER OF THE LD. CIT(A)-9, KOLKATA DATED 24.02.2016 FOR AY 2011-12. 2. GROUND NOS.1 AND 2 OF REVENUES APPEAL IS AGAINS T THE ORDER OF LD. CIT(A) IN DELETING THE ADDITION OF RS. 1,39,45,715/- ON ACCOUNT OF TRA DING LOSS CLAIMED IN FABRICS ONLY TO SET OFF AN INTEREST INCOME OF RS.1,58,03,411/-. WE WOULD LI KE TO REPRODUCE BOTH THE GROUNDS OF APPEAL PREFERRED BY THE REVENUE: 1. WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) WAS JUSTIFIED IN DIRECTING THE AO TO TREAT THE LOSS OF RS.1,39,45 ,715/- IN ALLEGED TRADING LOSS IN FABRICS AS GENUINE . 2. WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) WAS JUSTIFIED IN IGNORING THE AOS BASIS OF DISALLOWANCE INASMUCH AS THE ASSESSEE HAD NO IDEAL ABOUT THE TRADING, ITS NATURE, THE CONDUCT OF ITS BUSINESS AT ALL TO CLAIM A TRADING LOSS APPARENTLY ONLY TO SET OFF AN INTEREST INCOME OF RS.1,58,03,411/-. 2 ITA NO. 1000/KOL/2016 ADMIRE VINIMAY PVT. LTD., AY 2011-12 3. BRIEFLY STATED FACTS ARE THAT DURING THE COURSE OF ASSESSMENT PROCEEDING, THE AO OBSERVED THAT THE ASSESSEE HAS SHOWN LOSS OF RS.1,3 9,45,715/- FROM TRADING IN FABRICS. HE ALSO OBSERVED THAT THE ASSESSEE DURING THE YEAR UND ER CONSIDERATION HAD EARNED INTEREST INCOME OF RS.1,58,03,411/- AND INCURRED LOSS AMOUNT ING TO RS.1,39,45,715/- FROM TRADING IN FABRICS. HE ALSO NOTED THAT THERE IS NO OPENING ST OCK OR CLOSING STOCK OF FABRICS. BY ISSUING NOTICE U/S. 142(1) OF THE INCOME-TAX ACT, 1961 (HER EINAFTER REFERRED TO AS THE ACT) THE ASSESSEE WAS SPECIFICALLY ASKED TO PRODUCE BOOKS OF ACCOUNT, STOCK REGISTER, BILLS/CHALLANS AND ALL SUPPORTING EVIDENCES TO SUBSTANTIATE THE TR ANSACTIONS/TRADING IN FABRICS/TEXTILES AS CLAIMED BY THE ASSESSEE AND WHICH HAVE BEEN SHOWN I N THE AUDITED ACCOUNT BY IT FOR THE YEAR ENDED 31.03.2011. THE ASSESSEE WAS ALSO ASKED TO P RODUCE THE PRINCIPAL OFFICERS OF THE PARTIES/CONCERNS WITH WHOM THE ASSESSEE HAS TRANSAC TED/TRADED IN FABRICS DURING THE YEAR ALONG WITH THEIR EVIDENCE OF IDENTITY, BOOKS OF ACC OUNT AND BANK STATEMENT TO SUBSTANTIATE THE GENUINENESS OF THEIR TRANSACTIONS IN FABRICS WI TH THE ASSESSEE DURING THE YEAR. ACCORDING TO AO, THOUGH THE AR OF THE ASSESSEE APPEARED BUT D ID NOT PRODUCE THE DETAILS OR ANY SUPPORTING EVIDENCE IN RESPECT OF AFORESAID TRANSAC TION IN FABRICS. HENCE, THE AO ISSUED SHOW CAUSE NOTICE TO THE ASSESSEE AS TO WHY THE LOS S GENERATED THROUGH THE PURCHASE AND SALES OF FABRICS SHOULD NOT BE TREATED AS BOGUS LOS S CONSIDERING THE ASSESSEES FAILURE TO SUBSTANTIATE THE AFORESAID TRANSACTIONS. ACCORDING TO AO, THE ASSESSEE NEITHER PRODUCED THE BOOKS OF ACCOUNT NOR ANY DETAILS IN SUPPORT OF TRAD ING BUSINESS IN FABRICS TO SUBSTANTIATE THE GENUINENESS OF LOSS CLAIMED TO HAVE INCURRED FROM S UCH TRANSACTIONS. THEREFORE, ACCORDING TO AO, THE TRANSACTIONS IN FABRICS/TEXTILES SHOWN B Y THE ASSESSEE IS SHAM/UNREAL TRANSACTIONS AND THE LOSS OF RS.1,39,45,715/- ARISING IN THE BOO KS OF ACCOUNT AGAINST THESE TRANSACTIONS WERE TREATED AS A BOGUS LOSS AND WAS CONSEQUENTLY D ISALLOWED AND ADDED BACK TO THE TOTAL INCOME OF THE ASSESSEE. AGGRIEVED, ASSESSEE PREFERR ED AN APPEAL BEFORE THE LD. CIT(A), WHO DELETED THE ADDITION AS MADE BY THE AO BY OBSERVING AS UNDER: 4.1. IT IS SEEN THAT THE BOOKS OF ACCOUNT WERE PR ODUCED AND THE AO HAD ISSUED NOTICES U/S. 133(6) TO SOME PARTIES FOR VERIFICATION OF SALES AN D PURCHASES. THESE PARTIES HAVE FILED REPLIES TO THE NOTICES U/S. 133(6). WITHOUT FINDING ANY DE FECT IN THE REPLIES TO NOTICES U/S. 133(6), THE AO HAS HELD THESE TRANSACTIONS TO BE BOGUS. IN THE SUBSEQUENT AY, THE AO HAS HELD THE TRANSACTIONS WITH SAME PARTIES AS GENUINE. IT IS D IFFICULT TO UNDERSTAND HOW THE TRANSACTIONS IN ONE YEAR ARE HELD TO BE BOGUS AND IN SUBSEQUENT YEA R ARE HELD TO BE GENUINE, WHEN NO DEFECT HAS BEEN FOUND OUT BY AO IN REPLIES TO NOTICES U/S. 133(6). THE AO IS DIRECTED TO TREAT THE LOSS IN TRADING IN FABRICS AS GENUINE 3 ITA NO. 1000/KOL/2016 ADMIRE VINIMAY PVT. LTD., AY 2011-12 AGGRIEVED, REVENUE IS NOW IN APPEAL BEFORE US. 4. WE HAVE HEARD RIVAL SUBMISSIONS AND GONE THROUGH THE FACTS AND CIRCUMSTANCES OF THE CASE. WE NOTE THAT THE LD. CIT(A) HAS MADE A FINDI NG THAT THE BOOKS OF ACCOUNT WERE PRODUCED AND THE AO HAD ISSUED NOTICES U/S. 133(6) TO SOME PARTIES FOR VERIFICATION OF SALES AND PURCHASES AND THOSE PARTIES HAVE FILED REPLIES TO THE AO. THE LD CIT(A) TOOK NOTE OF THE FACT THAT AO WITHOUT FINDING ANY DEFECT IN THE REPLIES TO NOTICES U/S. 133(6), HAS HELD THESE TRANSACTIONS TO BE BOGUS. THE LD CIT(A) HAS ALSO TAKEN NOTE THAT IN THE SUBSEQUENT AY, THE AO HAS HELD THE TRANSACTIONS WITH SAME PART IES AS GENUINE. SO THE LD CIT(A) WONDERED AS TO HOW THE TRANSACTIONS IN ONE YEAR CA N BE HELD TO BE BOGUS AND IN SUBSEQUENT YEAR TO BE GENUINE, WHEN NO DEFECT HAS BEEN FOUND O UT BY AO IN REPLIES TO NOTICES U/S. 133(6) AND GAVE RELIEF TO THE ASSESSEE . THIS FINDING OF FACT HAS NOT BEEN ASSAILED BY THE REVENUE IN ITS GROUND OF APPEAL WHICH WE HAVE REPR ODUCED (SUPRA), SO THE SAID FINDING OF FACT HAS CRYSTALLIZED. ONCE THE PARTIES WITH WHOM A SSESSEE HAD TRANSACTION HAS REPLIED TO AO PURSUANT TO SEC. 133(6) NOTICE AND AO FAILED TO FIND ANY FAULT/INFIRMITY IN THEIR REPLIES AND IN THE SUBSEQUENT ASSESSMENT YEAR THE AO FIND T HE TRANSACTION WITH THE VERY SAME PARTIES TO BE GENUINE, THERE IS NO REASON TO DOUBT/ DISBELIEVE THE TRANSACTION WHICH RESULTED IN LOSS AND THE FINDING OF FACT BY LD. CIT(A) REMAINED UNCONTROVERTED BEFORE US AS THE LD. DR WAS UNABLE TO PRODUCE ANY COGENT/RELEVANT MATERIAL TO DO SO. SO WE FIND NO INFIRMITY IN THE ORDER OF THE LD. CIT(A) AND THE SAME IS HEREBY UPHE LD. THEREFORE, THIS GROUND OF APPEAL OF REVENUE IS DISMISSED. 5. IN THE RESULT, THE APPEAL OF THE REVENUE IS DISM ISSED. ORDER IS PRONOUNCED IN THE OPEN COURT ON 30/11/201 8 SD/- SD/- (DR. A. L. SAINI) (A. T. VARKEY) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 30TH NOVEMBER, 2018 JD.(SR.P.S.) 4 ITA NO. 1000/KOL/2016 ADMIRE VINIMAY PVT. LTD., AY 2011-12 COPY OF THE ORDER FORWARDED TO: 1 APPELLANT I.T.O., WARD-2(3), KOLKATA. 2 RESPONDENT M/S. ADMIRE VINIMAY PVT. LTD., 16, JAM UNALAL BAJAJ STREET, GROUND FLOOR, KOLKATA-700 001.. 3 4 5 CIT(A)-9, KOLKATA. (SENT THROUGH E-MAIL) CIT , KOLKATA DR, KOLKATA BENCHES, KOLKATA (SENT THROUGH E-MAIL) / TRUE COPY, BY ORDER, SR. PVT. SECRETARY