Income-tax Officer, Ward - 2, Beed V. Maharashtra Shetkari Sugars Ltd, Beed

ITA 1009/PUN/2018

AI Insights

The case involves Maharashtra Shetkari Sugars Ltd., which appealed against the order of the Commissioner of Income Tax (Appeals) that had deleted an addition made by the AO regarding the genuineness of certain purchases/trade payables. The ITAT examined whether the payments made through banking channels in subsequent years could establish the genuineness of the transactions. The ITAT concluded that the appellant did not provide sufficient evidence to prove the genuineness of the purchases and trade payables, leading to the restoration of the AO's original assessment order.

• Counselvise Citation: [2023] 140 COUNSELVISE.COM (IT) 136308 (ITAT-PUNE)
• Duration Of Justice: 4 year(s) 10 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 12-04-2023
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 12-04-2023
• Assessment Year: 2012-2013
• Appeal Filed On: 05-06-2018
• Other Referred Cases: DCIT Vs A B Associates in ITA No 303/PN/2014, The State of Karnataka Vs M/s Ecom Gill Coffee Trading Pvt. Ltd. (CA 230/2023)
• Laws Referred To: Income-tax Act, 1961
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Assessee Lawyers: YOGESH KATARIYA
• Keywords: Set aside
• Section: 143(3)

Judgement Text

॥ आयकर अपीलीय न्यायाधिकरण, पुणे “बी” न्यायपीठ, पुणे में ॥ ITAT-Pune Page 1 of 6 IN THE INCOME TAX APPELLATE TRIBUNAL, PUNE “B” BENCH, PUNE BEFORE HON’BLE SHRI S. S. GODARA, JUDICIAL MEMBER AND SHRI G. D. PADMAHSHALI, ACCOUNTANT MEMBER आयकर अपऩल सं. / ITA No. 1009/PUN/2018 निर्धारण वर्ा / Assessment Year : 2012-13 Income Tax Officer, Ward-2, Beed. . . . . . . . अपऩलधथी / Appellant बनाम / V/s Maharashtra Shetkari Sugars Ltd., Hotel Ajanta Complex, Bhavani Nagar, Parali Vaijanath, Dist.-Beed– 413515 PAN:AAFCM3594H . . . . . . . प्रत्यथी / Respondent द्वारा / Appearances Assessee by : Shri Yogesh Katariya Revenue by : Shri Sardar Singh Meena सपिवधई की तधरऩख / Date of conclusive Hearing : 13/04/2023 घोर्णध की तधरऩख / Date of Pronouncement : 13/04/2023 Maharashtra Shetkari Sugars Ltd., ITA No. 1009/PUN/2018 A.Y. 2012-13 ITAT-Pune Page 2 of 6 आदेश / ORDER PER G. D. PADMAHSHALI, AM; This appeal of the Revenue is directed against the order of Commissioner of Income Tax (Appeals)-1, Aurangabad [in short ‘CIT(A)’] dt.26/03/2018 passed u/s 250 of the Income-tax Act, 1961 [in short ‘the Act’] which emanated from 143(3) order of assessment dt. 27/03/2015 of Income Tax Officer, Ward-2, Aurangabad [in short ’AO’] for the assessment year 2012-13. 2. Subject to the provisions of rule 18 of ITAT Rules 1963, we have perused the material placed on record, and after hearing to both the parties we note that; the appellate assessee engaged in the business of Manufacturing of Sugar had filed its return of income on 21/08/2012 which was picked up for scrutiny under CASS mechanism. In the course of said assessment proceedings the appellant failed to prove genuineness of certain purchases/trade payables of ₹12,09,95,132/- by adducing documentary evidence, resultantly an addition on such account was made by the Ld. AO while framing the assessment u/s 143(3) of the Act. Maharashtra Shetkari Sugars Ltd., ITA No. 1009/PUN/2018 A.Y. 2012-13 ITAT-Pune Page 3 of 6 3. Admittedly, in an appeal before Ld. FAA, the appellant in establishing the genuineness of said purchases cum outstanding balances thereagainst has submitted a list of 790 farmers by way of additional evidence, which was remanded to Ld. AO for verification before admitting it in terms of rule 46A of IT-Rules 1962. We further observed that, in a remand proceeding despite due notices none-appeared with supportive evidences like gate pass, weighment slips, bank account extracts and 7/12 extract etc., to showcase the actual supply of sugarcane to the appellant company. Thus in evince of noncompliance on the part of appellant vis-à-vis the trade vendors, the genuineness of purchases & trade payables remained unestablished. The Ld. CIT(A) however after recording reasons for such non-compliance has, in the interest of justice once again remanded the issue to the Ld. AO. Albeit the second remand report confirmed the payment against impugned trade payables in subsequent years through banking channel, however offered no comments on genuineness thereof. Maharashtra Shetkari Sugars Ltd., ITA No. 1009/PUN/2018 A.Y. 2012-13 ITAT-Pune Page 4 of 6 4. Ostensibly, the Ld. CIT(A) relying on the second remand report and the decision of co-ordinate bench in “DCIT Vs A B Associates in ITA No 303/PN/2014” has deleted the addition on the substance that the outstanding trade payables were duly paid in subsequent years through banking channels. Therefore the Revenue has set-up the case disputing the said deletion contending that the mode of payment in no case would establish the genuineness of transaction. 5. We observed that, the appellant neither during the course of original assessment proceedings nor in two remand proceedings have adduced any evidence in support of its claim showcasing the purchases are made and resultant trade payables are indeed genuine, the Ld. CIT(A) however accepted the genuinity thereof underlining only the mode of discharge without any compelling evidence, for the reason we find force in the argument of Ld. DR that the mode of payment would in no case exclusively sufficient to prove the genuineness of purchase transactions and resultant outstanding trade payable balances. Maharashtra Shetkari Sugars Ltd., ITA No. 1009/PUN/2018 A.Y. 2012-13 ITAT-Pune Page 5 of 6 6. In our considered view, showing merely that transactions were carried out through banking channel in the facts and circumstances of the case is not sufficient to prove the genuineness of the transaction as these have to be vouched in the light of cogent evidences which the appellant has sadly failed to bring on record despite of multiple opportunities provided to it. Therefore the action of deletion of addition merely on the basis of payment to trade vendors in the subsequent years through banking would defeat the very basis of allowance in arriving at correct computation of income for taxation; hence the action of Ld. CIT(A) in all fairness deserves interference. 7. It shall be approbate to quote from the recent judgement rendered by Hon’ble Supreme Court in context of indirect taxes in “The State of Karnataka Vs M/s Ecom Gill Coffee Trading Pvt. Ltd. (CA 230/2023)” wherein their lordships have held that, “Mere production of the invoices or the payment made by cheques is not enough and cannot be said to be discharging the burden of proof cast under section 70 of the KVAT Act, 2003. It also said that if a dealer claims ITC on purchases, he will have Maharashtra Shetkari Sugars Ltd., ITA No. 1009/PUN/2018 A.Y. 2012-13 ITAT-Pune Page 6 of 6 to prove and establish the actual physical movement of goods, genuineness of transactions by furnishing the details referred above and mere production of tax invoices would not be sufficient to claim ITC.” (Emphasis supplied) 8. Applying the ratio from the aforestated precedents, we do not find any justification in the action of Ld. CIT(A) in deleting the addition made by the Ld. AO which indeed carried out upon appellant’s failure to prove the genuineness of purchases/trade payables, ergo we set aside the impugned order and restore the order of assessment. 9. In result, the appeal of the Revenue is ALLOWED. In terms of rule 34 of ITAT Rules, the order pronounced in the open court on this Thursday 13 th day of April, 2023. -S/d- -S/d- S. S. GODARA G. D. PADMAHSHALI JUDICIAL MEMBER ACCOUNTANT MEMBER पुणे / PUNE ; दिन ांक / Dated : 25 th day of April, 2023. Ashwini आदेश की प्रधिधलधप अग्रेधिि / Copy of the Order forwarded to : 1. The Appellant. 2. The Respondent. 3. The CIT(A)-1, Aurangabad (MH-India) 4. The Pr.CIT-2, Aurangabad (Mh-India) 5.DR, ITAT, Bench ‘B’, Pune 6. Guard File. आिेश नुस र / By Order वररष्ठ दनजी सदिव / Sr. Private Secretary आयकर अपीलीय न्य य दिकरण, पुणे / ITAT, Pune.