ITO, Ward-8(2), Hyderabad V. Sri Sunil Mittal, Hyderabad

ITA 1027/HYD/2013

• Counselvise Citation: 102722514 RSA 2013
• Duration Of Justice: 1 year(s) 5 month(s) 22 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 19-12-2014
• Appeal Filed By: Department
• Order Result: Partly Allowed
• Bench Allotted: A
• Next Hearing Date: 16-12-2014
• Assessment Year: 2009-2010
• Appeal Filed On: 27-06-2013
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: RAMAKRISHNA B
• Assessee Lawyers: KIRHORE KUMAR KABRACA
• Keywords: Bogus purchase; Gross profit estimation; Rejection of books of accounts; Onus to prove
• Section: 80C; 68

Judgement Text

ITA NOS.1027 AND 1037 OF 2013 SUNIL MITTAL HYDERABA D PAGE 1 OF 6 IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD ABENCH, HYDERABAD BEFORE SHRI J SUDHAKAR REDDY, ACCOUNTANT MEMBER AND SHRI SAKTIJIT DEY, JUDICIAL MEMBER ITA NO. 1027/HYD/2013 (ASSESSMENT YEAR: 2009-10) INCOME TAX OFFICER, WARD 8(2), 8 TH FLOOR, D BLOCK IT TOWERS A.C.GUARDS, HYDERABAD VS. SRI SUNIL MITTAL, FLAT NO.504, VIJAYASHREE APARTMENTS, UPPERPALLY, HYDERABAD PAN: AAMPM 1223 H (APPELLANT) (RESPONDENT) ITA NO. 1037/HYD/2013 (ASSESSMENT YEAR: 2009-10) SRI SUNIL MITTAL, FLAT NO.504, VIJAYASHREE APARTMENTS, UPPERPALLY, HYDERABAD PAN: AAMPM 1223 H VS. INCOME TAX OFFICER, WARD 8(2), 8 TH FLOOR, D BLOCK IT TOWERS A.C.GUARDS, HYDERABAD (APPELLANT) (RESPONDENT) DEPARTMENT BY: SHRI RAMAKRISHNA B. (DR) ASSESSEE BY: SHRI KIRHORE KUMAR KABRA,CA DATE OF HEARING: 16/12/2014 DATE OF PRONOUNCEMENT: 19/12/2014 O R D E R PER J. SUDHAKAR REDDY, A.M. THESE ARE THE CROSS APPEALS DIRECTED AGAINST THE O RDER OF THE CIT (A) III DATED 24.04.2013 FOR THE A.Y 2009-1 0. 2. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE IS A COMPANY ENGAGED IN THE BUSINESS OF PURCHASE AND SALE OF IRO N AND STEEL. IT ITA NOS.1027 AND 1037 OF 2013 SUNIL MITTAL HYDERABA D PAGE 2 OF 6 FILED ITS RETURN FOR THE A.Y 2009-10 ADMITTING TOTA L INCOME OF RS.5,04,893/-. THE AO COMPLETED THE ASSESSMENT BY M AKING THE FOLLOWING ADDITIONS: I) ADDITION TOWARDS LOW GROSS PROFIT RS. 5, 25,880 II) ADVANCES RECEIVED FROM CUSTOMERS RS. 3,38 ,617 III)ADDITION TOWARDS SUNDRY CREDITORS RS.2,30,66, 706 & IV) DISALLOWANCE OF DEDUCTION U/S 80C RS. 34 ,420 THUS, THE AO DETERMINED THE TOTAL INCOME AT RS.2,44 ,71,561/-. 3. AGGRIEVED, THE ASSESSEE CARRIED THE MATTER IN AP PEAL. THE FIRST APPELLATE AUTHORITY GRANTED PART RELIEF. BOTH THE ASSESSEE AND THE REVENUE ARE IN APPEAL BEFORE US. THE GROUND S OF THE ASSESSEES APPEAL READ AS FOLLOWS: 1. THE LD CIT (A) ERRED BOTH ON FACTS AND LAW 2. THE LD CIT (A) ERRED IN ALLOWING THE ADDITIONS MADE TOWARDS SUNDRY CREDITORS. 3. THE LD CIT (A) ERRED IN MENTIONING THAT THE ON US OF PROVING THE GENUINENESS OF CREDITORS LIES ON THE AO AS THE ASSESSEE HAS TO SUBMIT THE DETAILS W.R.T THE IDENTITY, GENUINENESS AND CREDIT- WORTHINESS OF THE CREDITOR TO PROVE THE CREDITS AS GENUINE . 4. THE REVENUE RAISED THE FOLLOWING GROUNDS: 1. THE ORDER PASSED BY THE CIT(A) IS ERRONEOUS IN LAW AND ON FACTS OF THE CASE. 2. THE LD CIT (C)ERRED IN SUSTAINING THE ADDITION O F RS.5,25,880/- TOWARDS ALLEGED LOW GROSS PROFIT FOR UNTANABLE REASONS WITHOUT APPRECIATING THE FACT THA T THE APPELLANT HAD ALSO FURNISHED QUANTITY DETAILS A ND GOODS PURCHASED AND SOLD AND ALSO THE FACT THAT HIS BOOKS OF ACCOUNTSARE DULY AUDITED AND WITHOUT APPRECIATING THE MANNER IN WHICH GROSS PROFIT PERCENTAGE WAS REPRESENTED IN AUDIT REPORT. ITA NOS.1027 AND 1037 OF 2013 SUNIL MITTAL HYDERABA D PAGE 3 OF 6 3. THE LD CIT (A) ERRED IN SUSTAINING THE ADDITION OF RS.3,38,617/- TOWARDS ADVANCES FROMCUSTOMERS FOR UNTENABLE REASONS 4. WE HAVE HEARD SHRI RAMAKRISHNA, B. LD DEPARTMENT AL REPRESENTATIVE ON BEHALF OF THE REVENUE AND MR. KIS HORE KUMAR KABRA, HON'BLE COUNSEL ON BEHALF OF THE ASSESSEE. 5. ON A CAREFUL CONSIDERATION OF THE FACTS AND CIRC UMSTANCES OF THE CASE, ON A PERUSAL OF THE PAPERS ON RECORD A ND THE ORDERS OF THE AUTHORITIES BELOW AS WELL AS THE CASE LAW CI TED, WE HOLD AS FOLLOWS. WE FIRST TAKE UP REVENUES APPEAL. GROUND NO.1 IS GENERAL IN NATURE. GROUND NO.2 IS ON THE ISSUE OF A DDITIONS MADE TOWARDS SUNDRY CREDITORS. THE LD DR SUBMITS THAT TH E ADDITION IS BASICALLY ON THE GROUND THAT THE PURCHASES ARE BOGU S. HE SUBMITS THAT THE LD CIT (A) HAS NOT APPRECIATED THE FACTUAL POSITION AND HAS WRONGLY COME TO A CONCLUSION THAT THE ADDITION IS MADE U/S 68 OF THE ACT. ON THE OTHER HAND THE L D COUNSEL FOR THE ASSESSEE SUBMITS THAT THOSE ARE TRADE CREDITORS AND THAT THE ASSESSEE HAS DISCHARGED THE ENTIRE ONUS THAT LAY ON HIM BY FILING CONFIRMATION FROM ALL THESE CREDITORS, FURNISHING P AN NOS. VAT DETAILS, ACCOUNTS STATEMENTS, AND BANK DETAILS ETC. HE SUBMITTED THAT THE ADDITION WAS MADE U/S 68 ONLY AN D THERE IS NO MENTION OF BOGUS PURCHASES BY THE AO. 6. AFTER HEARING THE RIVAL CONTENTIONS, WE ARE OF T HE CONSIDERED OPINION THAT THE ORDER OF THE FIRST APPELLATE AUTHO RITY IS TO BE SUSTAINED FOR THE REASON THAT THE ADDITION COULD NO T HAVE BEEN MADE OTHER THAN U/S 68. NOWHERE IN THE ASSESSMENT O RDER HAS ITA NOS.1027 AND 1037 OF 2013 SUNIL MITTAL HYDERABA D PAGE 4 OF 6 THE AO ALLEGED ANY BOGUS PURCHASES. HENCE THE SUBMI SSIONS OF THE LD DR ARE WITHOUT ANY MERIT. THE ADDITION IN TH IS CASE WAS MADE MERELY BECAUSE CONFIRMATIONS WERE NOT RECEIVED FROM THESE CREDITORS ON A DIRECT ENQUIRY MADE BY THE AO. THERE IS NO POSITIVE EVIDENCE THAT THE AO TO COME TO A CONCLUSI ON THAT THE DOCUMENTS FURNISHED BY THE ASSESSEE ARE FALSE OR TH AT THEY ARE NOT GENUINE. ONLY BECAUSE NO REPLY WAS RECEIVED, AN ADVERSE INFERENCE IS DRAWN BY THE AO, WITHOUT ANY FURTHER I NVESTIGATION. 7. BE IT AS IT MAY, IN OUR VIEW THE ASSESSEE HAS DI SCHARGED THE BURDEN OF PROOF THAT LAY ON HIM AND THE ONUS HAS SH IFTED TO THE REVENUE. THE REVENUE HAS NOT DISCHARGED THE ONUS. W E FULLY AGREE THAT THE FINDINGS OF THE FIRST APPELLATE AUTH ORITY THAT THERE CANNOT BE A SALE WITHOUT PURCHASES. THE ASSESSEE HA S FILED ALL POSSIBLE EVIDENCE AT HIS COMMAND TO SUBSTANTIATE HI S CLAIM. IN THE RESULT, THE FINDINGS OF THE FIRST APPELLATE AUT HORITY ARE UPHELD AND THIS GROUND OF REVENUE IS DISMISSED. 8. GROUND NO.3 IS AN EXTENSION OF GROUND NO.2 AND R EQUIRES NO SEPARATE ADJUDICATION. 9. GROUND NO.4 IS GENERAL IN NATURE. 10. IN THE RESULT, REVENUE APPEAL IS DISMISSED. 11. WE NEXT TAKE UP ASSESSEES APPEAL IN ITA NO.103 7/HYD/ 2013. 12. GROUND NO.1 IS GENERAL IN NATURE. 13. GROUND NO.2 IS AN ADDITION MADE ON ACCOUNT OF L OW BOOK PROFIT. AFTER HEARING RIVAL SUBMISSIONS, WE FIND TH AT FROM A ITA NOS.1027 AND 1037 OF 2013 SUNIL MITTAL HYDERABA D PAGE 5 OF 6 PERUSAL OF THE ASSESSMENT ORDER, IT IS CLEAR THAT T HE AO HAS NOT REJECTED THE BOOKS OF ACCOUNTS. WHEN THE BOOKS OF A CCOUNTS ARE NOT REJECTED, THE QUESTION OF MAKING AN ADDITION ON THE GROUNDS THAT THERE IS LOW BOOK PROFIT DOES NOT ARISE. THUS, THIS GROUND OF THE ASSESSEE IS ALLOWED. 14. GROUND NO.3 IS AGAINST SUSTAINING AN ADDITION O F RS.3,38,670/- TOWARDS THE ADVANCES FROM CUSTOMERS. THE CONTENTION OF THE ASSESSEE IS THAT THESE ARE OPENIN G BALANCE AND THE AO COULD NOT HAVE MADE THAT ADDITION DURING THE YEAR. CERTAIN OTHER FACTUAL MISTAKES MADE BY THE AO WERE ALSO POINTED OUT. IT WAS SUBMITTED THAT THE BALANCE WAS DUE TO T HE DISEASED FATHER AND THE BALANCE AMOUNT WAS TRANSFERRED TO TH E LEGAL HEIR I.E. HIS SON. REGARDING OTHER TWO SUMS ALSO, SUBMIS SIONS WERE MADE THAT CONFIRMATION LETTERS WERE ON RECORD AND T HAT THE OFFICER HAS CONDUCTED INQUIRIES BEHIND BACK OF THE ASSESSEE AND IN SUCH CIRCUMSTANCES, THE ADDITION CANNOT BE SUSTA INED. 15. THE LD DR RELIES ON THE ORDER OF THE FIRST APPE LLATE AUTHORITY AS WELL AS THAT OF THE AO. 16. ON A CAREFUL CONSIDERATION, WE ARE OF THE CONSI DERED OPINION THAT THE ISSUE SHOULD BE SET ASIDE TO THE F ILE OF THE AO FOR FRESH ADJUDICATION, DE NOVO IN ACCORDANCE WITH THE LAW, FOR THE REASON THAT THE CLAIM OF THE ASSESSEE, THAT THE BAL ANCE IN QUESTION IS AN OPENING BALANCE NEEDS TO BE VERIFIED . IF THE CREDIT IS NOT PERTAINING TO THIS PARTICULAR A.Y, THEN NO A DDITION CAN BE MADE. REGARDING THE OTHER TWO ADDITIONS, THE ASSESS EE WAS NOT ITA NOS.1027 AND 1037 OF 2013 SUNIL MITTAL HYDERABA D PAGE 6 OF 6 GIVEN AN OPPORTUNITY TO REBUT THE EVIDENCE COLLECTE D BY THE AO. UNDER THE CIRCUMSTANCES, WE SET ASIDE THE MATTER TO THE FILE OF THE AO WITH A DIRECTION TO CONFRONT THE ASSESSEE WI TH THE EVIDENCE COLLECTED BY THE AO. IN THE RESULT, THIS G ROUND IS ALLOWED FOR STATISTICAL PURPOSES. 17. IN THE RESULT, APPEAL OF THE ASSESSEE IS PARTLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 19 TH DECEMBER, 2014. SD/ - SD/ - (SAKTIJIT DEY) (J. SUDHAKAR REDDY) JUDICIAL MEMBER JUDICIAL MEMBER HYDERABAD, DATED 19 TH DECEMBER, 2014. VNODAN/SPS COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CONCERNED CIT(A) 4. THE CONCERNED CIT 5. THE DR, ITAT, HYDERABAD 6. GUARD FILE BY ORDER