Sri Ganpatlal Satnami, Bangalore V. Income tax Officer, Ward-10(2), Bangalore

ITA 1095/BANG/2014

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 0353 (ITAT-BANGALORE)
• Duration Of Justice: 1 year(s) 9 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 10-06-2016
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: A
• Next Hearing Date: 07-06-2016
• Assessment Year: misc
• Appeal Filed On: 25-08-2014
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: S SUNDAR RAJAN
• Assessee Lawyers: H GURUSWAMY ITP
• Keywords: Opportunity of being heard

Judgement Text

IN THE INCOME TAX APPELLATE TRI BUNAL BANGALORE BENCH A, BANGALORE BEFORE SHRI A.K.GARODIA, AM (SMC) ITA NO.1095(B)/2014 (ASSESSMENT YEARS : 2008-09) SHRI GANPATLALA SATNAMI, PRO: RAJKAMAL ELECTRICALS, BELLANDUR GATE, SARJAPURA, BANGALORE-560 0102 PAN NO.ASZPS5387B APPELLANT VS THE INCOME TAX OFFICER, WARD-10(2), UNITY BUILDING ANNEX, BANGALORE RESPONDENT ASSESSEE BY : SHRI H. GURUSWAMY, ITP REVENUE BY : SHRI S. SUNDAR RAJAN, JCIT DATE OF HEARING : 07-06-2016 DATE OF PRONOUNCEMENT : -0 6-2016 O R D E R PER SHRI A.K.GARODIA, AM: THIS IS ASSESSEES APPEAL DIRECTED AGAINST THE ORD ER OF LD. CIT(A), LTU, BANGALORE DATED 27-05-2014 FOR THE ASSESSMENT YEAR 2008-09. 2. THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS: 1. THE APPELLATE ORDER DATED 27/05/2014 IS OPPOSED TO LAW , FACTS AND WEIGHT OF EVIDENCE. 2.THE LEARNED COMMISSIONER OF INCOME-TAX (APPEALS) , BANGALORE HAS ERRED IN CONFIRMING THE ADDITION MADE BY THE AO AMOUNTING TO RS. 5,11 , 6271- MAINLY ON THE GROUND THAT THE POSTAL AUTHO R ITIES HAVE RETURNED THE CONFIRMATION LETTERS WITHOUT APPRECIAT ING THE FACT THAT THE REASONS WERE NOT MENTIONED IN THE ITA NO.1095(B)/2014 2 ASSESSMENT ORDER AS TO WHY THE POSTAL AUTHORITIES RETURNED THE NOTICES. 3. THE LEARNED COMMISSIONER OF INCOME-TAX (APPEALS) , BANGALORE HAS ERRED IN CONFIRMING THE ADDITION OF RS . 14 , 16 , 341/ - BEING THE ALLEGED DIFFERENCE BETWEEN THE CREDIT BALANCE CLAIMED BY THE APPELLANT AND NIL BALANCE CONFIRM ED BY THE 13 CREDITORS WITHOUT APPRECIATING THE FACTS THAT THE APPELLANT WAS NOT PROVIDED OPPORTUNITY TO FILE REBUTTAL EXPLANATIO N AS TO THE ALLEGED DIFFERENCE OF CREDIT BALANCE . 4. THE LEARNED COMMISSIONER OF I NCOME-TAX (APPEALS), BANGALORE HAS ERRED IN CONFIRM I NG THE ADDITION OF RS . 8 , 29 , 2551- IN THE CASE OF 9 CREDITORS IN SPITE OF ADMITTING THE FACT THAT NO VERIFICATION WAS CARRIED OUT AS REGARDS PRIMARY EV IDENCE RELATING TO THE RUNNING ACCOUNTS CONTENTED BY THE APPELLANT . 5.THE LD. CIT(A),BANGALORE AS ERRED IN CONFIRMING THE ADDITION OF RS.98,044/- IN THE CASE OF M/S PRAKASH ELECTRICALS ENTERPRISES WITHOUT ANY FINDINGS AS TO THE JUSTIFICATION OF THE ADDITION. 6. THE APPELLANT CRAVES LEAVE TO ADD, ALTER AMEND AND DELETE ANY OF THE GROUNDS AT THE TIME OF HEARING. 3. IT WAS SUBMITTED BY THE LEARNED AR OF THE ASSESS EE THAT GROUND NO.1 IS GENERAL IN NATURE NEEDS NO ADJUDICATION. RE GARDING GROUND NO.2 HE SUBMITTED THAT IT IS NOTED BY THE AO ON PAGE -2 OF THE ASSESSMENT ORDER THAT SOME NOTICES ISSUED TO SUNDRY CREDITORS HAD BEEN RETURNED BY POSTAL AUTHORITIES. HE ALSO DRAWN MY ATTENTION TO PARA-6 OF THE LD. ITA NO.1095(B)/2014 3 CIT(A)S ORDER. IT WAS SUBMITTED BEFORE ME THAT TH E LD. CIT(A), AS NOTED IN THIS PARA OF HIS ORDER THAT THE ASSESSEE HAD DIS CHARGED ITS ONUS BY FURNISHING NAMES AND ADDRESS OF THE PARTIES ALONGWI TH TIN AND THEREFORE, THE ADDITION MADE BY THE AO AND CONFIRME D BY THE LD. CIT(A) IS NOT JUSTIFIED. 4. LEARNED DR OF THE REVENUE SUPPORTED THE ORDERS O F THE AUTHORITIES BELOW. 5. I HAVE CONSIDERED THE RIVAL SUBMISSIONS. PARA-6 OF THE ORDER OF THE LD. CIT(A) IS REPRODUCED FOR THE SAKE OF READY REFERENCE. 6.WITH REGARD TO THE PARTIES WHERE THE AOS LETT ERS RETURNED UN-SERVED THE APPELLANTS SUBMISSION THAT IT HAD DISCHARGED ITS ONUS BY FURNISHING THE NAMES AND ADD RESS ALONGWITH TIN CANNOT BE ACCEPTED, SINCE THE ADDRESS ES WERE CLEARLY DEFECTIVE AB INITIO AND THE VERIFICATI ON COULD NOT BE CONDUCTED BASED ON THIS INFORMATION. HENCE, THE ONUS HAS NOT BEEN DISCHARGED PROPERLY BY THE ASSESS EE AND THE RETURN OF THE AOS LETTERS CAN BE REASONABL Y TAKEN TO MEAN THAT THE ASSESSEES CLAIMS OF OUTSTANDING LIABILITIES IN THOSE CASES HAVE NOT BEEN SUBSTANTIA TED AND, HENCE, CANNOT BE ACCEPTED. 6. IN THE AFORESAID PARA, A CLEAR FINDING HAS BEEN GIVEN BY THE LD.CIT(A) THAT THE ADDRESSES WERE CLEARLY DEFECTIVE AB-INITIO AND THE VERIFICATIONS COULD NOT BE CONDUCTED BASED ON THIS INFORMATION AND THEREFORE, ONUS HAS NOT BEEN DISCHARGED PROPERLY BY THE ASSESSEE. THIS CATEGORICAL FINDING OF THE LD. CIT(A) COULD NOT BE CONTROVERTED BY THE LD. ITA NO.1095(B)/2014 4 AR OF THE ASSESSEE BEFORE ME AND THEREFORE, I DO NO T FIND ANY REASON TO INTERFERE WITH THE ORDER PASSED BY THE LD. CIT(A) O N THIS ISSUE. ACCORDINGLY, GROUND NO.2 OF THE ASSESSEE IS REJECTE D. 7. REGARDING GROUND NO.3 IT WAS SUBMITTED BY THE L D. AR OF THE ASSESSEE THAT LETTERS FROM THE CREDITORS WERE RECEI VED BY THE AO DIRECTLY AND THE SAME WERE NOT CONFRONTED TO THE ASSESSEE EN ABLING THE ASSESSEE TO RECONCILE THE DIFFERENCE AND THEREFORE, LD. CIT( A) WAS NOT JUSTIFIED IN CONFIRMING THE ADDITION OF RS.14,16,341/- ON ACCOUN T OF DIFFERENCE BETWEEN THE CREDIT BALANCE CLAIMED BY THE ASSESSEE AND NIL BALANCE CONFIRMED BY THE 13 CREDITORS. HE SUBMITTED THAT T HE MATTER MAY BE RESTORED BACK TO THE FILE OF THE AO FOR AFRESH DECI SION WITH A DIRECTION THAT SUCH REPLY RECEIVED FROM THE CREDITORS SHOULD BE CONFRONTED TO THE ASSESSEE SO THAT THE ASSESSEE CAN PROVIDE RE-CONCIL IATION AND EXPLAIN THE DIFFERENCE. SIMILARLY, REGARDING GROUND NO.4 AL SO THIS WAS THE SUBMISSION OF THE LD. AR OF THE ASSESSEE THAT IN RE SPECT OF THIS ADDITION OF RS.8,29,255/- IN RESPECT OF 9 CREDITORS ALSO, TH E MATTER SHOULD BE RESTORED BACK TO THE FILE OF THE AO FOR A FRESH DEC ISION, AFTER PROVIDING OPPORTUNITY OF BEING HEARD TO THE ASSESSEE TO EXPLA IN THE DIFFERENCE. 8. THE LD. DR OF THE REVENUE SUPPORTED THE ORDERS OF THE AUTHORITIES BELOW ON THESE TWO ISSUES. 9. I HAVE CONSIDERED THE RIVAL SUBMISSIONS. FIRST OF ALL, I REPRODUCE PARA-4 & 5 FROM THE ORDER OF THE LD. CIT( A) FOR THE SAKE OF READY REFERENCE, BECAUSE THESE TWO ISSUES WERE DECI DED BY THE LD. CIT(A) AS PER THESE TWO PARAS. ITA NO.1095(B)/2014 5 4. THE EVIDENCE FILED DURING THE APPELLATE PROCEEDINGS WERE EXAMINED BY THE AO IN REMAND PROCEEDINGS. THE APPELLANT HAD CLAIMED THAT IN RESP ECT OF 9 CREDITORS THE CREDITS DID NOT ARISE OUT OF TRANSACTIONS FOR FY 2007-08 AND THESE WERE RUNNING ACCOUNTS. THE AO, HOWEVER, EXAMINED THE LEDGER ACCOUNT AND FOUND THAT THE TRANSACTIONS IN THE NAME OF THE ASSESSEE WERE RECORDED IN THE PARTIES' ACCOUNT DURING FY 2007-08 (SL. 12, 15, 16, 18, 19, 20, 24, 26 & 27 IN TABLE ABOVE) AND, HENCE, WITHOUT DETAILED VERIFICATION OF THE PRIMARY EVIDENCES RELATING TO T HESE TRANSACTIONS, THE APPELLANT'S CONTENTION COULD NOT BE ACCEPTED. I AM INCLINED TO AGREE WITH THIS CONCLUSI ON OF THE AO. THIS IS ESPECIALLY WHEN THE CREDITED BALANC E IN THE ASSESSEE'S ACCOUNT IS MORE THAN THAT REFLECTED IN THE CONFIRMATIONS RECEIVED FROM THE PARTIES. IN THOSE C ASES WHERE THE DIFFERENCE IN CREDIT BALANCE BETWEEN THE ASSESSEE'S ACCOUNT AND THE PARTIES' CONFIRMATION SH OWS THE ASSESSEE'S BALANCE TO BE ON THE LOWER SIDE THE AO IS DIRECTED TO REMOVE THE DIFFERENCE FROM THE ADDED AMOUNT SINCE THE PAYMENT/PURCHASE RETURN SHOWN IN THE ASSESSEE'S LEDGER WOULD HAVE BEEN REFLECTED BY THE SUPPLIER ONLY IN THE NEXT YEAR. THIS WOULD REMOVE T HE ADDITIONS IN RESPECT OF CLASSIC AGENCIES (RS. 34,37 2), KARISHMA APPLIANCES (RS . 31,076) AND PRAKASH AGENCIES (RS. 53,845) TOTALING RS. 1,19,293 FROM TH E ADDITION. THE AO HAS ALSO INDICATED THIS IN THE REM AND REPORT . 5. IN RESPECT OF SOME OF THE PARTIES WHO HAD SHOWN 'NIL' RECEIVABLE FROM THE ASSESSEE, THE EXPLANATION SUBMITTED BY THE AR WAS THAT THE CASH PAYMENT MADE ITA NO.1095(B)/2014 6 IN THE FOLLOWING YEARS BY THE APPELLANT HAD BEEN ACCOUNTED FOR IN THE IMPUGNED FY 2007-08 BY THOSE PARTIES AND THE OUTSTANDING BALANCE THEREBY REDUCED TO 'NIL'. THIS IS AN IMPLAUSIBLE EXPLANATION WHICH BEL IES THE NORMAL MODUS OPERANDI OF DOING BUSINESS. IN THE ABSENCE OF RECONCILED CONFIRMATION FROM THE CREDITO RS, THE EXPLANATION CANNOT BE ACCEPTED. 9.1 I FIND THAT INPARA-4 OF HIS ORDER, IT IS NOTE D BY THE LD. CIT(A) THAT WITHOUT DETAILED VERIFICATION OF THE PRIMARY E VIDENCE, THE ASSESSEES CONTENTION CANNOT BE ACCEPTED AND THEREAFTER, HE HA S COME TO THE CONCLUSION THAT HE IS INCLINED TO AGREE WITH THE CO NCLUSION OF THE AO. SIMILARLY, IN PARA-5 OF HIS ORDER, AS REPRODUCED AB OVE, IT WAS THE SUBMISSION OF THE ASSESSEE BEFORE THE LD. CIT(A) TH AT THE CASH PAYMENT MADE IN THE FOLLOWING YEARS BY THE ASSESSEE HAS BEE N ACCOUNTED FOR BY THESE PARTIES IN FINANCIAL YEAR 2007-08 AND FOR THI S REASON, THE OUTSTANDING BALANCE WAS REDUCED TO NIL. THERE IS NO FINDING OF THE LD. CIT(A) THAT ANY EFFORTS WERE MADE TO EXAMINE THE C ONTENTION OF THE LD. AR OF THE ASSESSEE AND UNDER THESE FACTS, I FIND FO RCE IN THE SUBMISSION OF THE LD. AR OF THE ASSESSEE THAT THE ISSUE INVOLV ED IN GROUND NO.3 & 4 RAISED BEFORE ME SHOULD GO BACK TO THE FILE OF THE AO FOR A FRESH DECISION AND ACCORDINGLY, I SET ASIDE ORDER OF THE LD.CIT(A) ON THESE TWO ISSUES AND RESTORE THE MATTER BACK TO THE FILE OF THE AO F OR A FRESH DECISION WITH A DIRECTION THAT HE SHOULD PROVIDE A COPY OF C ONFIRMATION AND LEDGER ACCOUNT RECEIVED BY THE AO FROM THESE 13 AND 9 PARTIES RESPECTIVELY TO THE ASSESSEE AND THE ASSESSEE MAY F URNISH RECONCILIATION ITA NO.1095(B)/2014 7 ALONG WITH THE COGENT EVIDENCE IN SUPPORT OF HIS EX PLANATION AND THEREAFTER, THE AO SHOULD DECIDE THESE TWO ISSUES A FRESH AFTER PROVIDING ADEQUATE OPPORTUNITY OF BEING HEARD TO THE ASSESSEE . ACCORDINGLY, GROUND NO.3 & 4 ARE ALLOWED FOR STATISTICAL PURPOSE S. 10. REGARDING GROUND NO.5, IT WAS SUBMITTED BY THE LD. AR OF THE ASSESSEE THAT AS PER SL.NO.8 ON PAGE NO.3 OF THE OR DER OF THE LD. CIT(A), THE BALANCE IN THE NAME OF M/S PRAKASH ELECTRICAL E NTERPRISES, AS PER ASSESSEES BOOKS IS RS.1,12,621/- WHEREAS THE SAME AS PER THE CREDITORS BOOKS IS RS.14,577/- AND THE CREDIT BALAN CE AS PER ASSESSEES BOOKS IS HIGHER BY RS.98,044/-. HE SUBMITTED THAT H E HAS NO EXPLANATION REGARDING THIS DIFFERENCE. ACCORDINGL Y, I DECIDE THIS ISSUE AGAINST THE ASSESSEE AND GROUND NO.5 OF THE ASSESSE E IS REJECTED. 11. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS P ARTLY ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON THE DATE MEN TIONED IN CAPTION PAGE. SD/- (A.K.GARODIA) ACCOUNTANT MEMBER D A T E D : 10-06-2016 PLACE: BANGALORE AM* ITA NO.1095(B)/2014 8 COPY TO : 1 APPELLANT 2 RESPONDENT 3 CIT(A) BANGALORE 4 CIT 5 DR, ITAT, BANGALORE. 6 GUARD FILE BY ORDER AR, ITAT, BANGALORE 1. DATE OF DICTATION .. 2. DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE DICTATING MEMBER . 3. DATE ON WHICH THE APPROVED DRAFT COMES TO THE SR. P. S. .. 4 DATE ON WHICH THE ORDER IS PLACED BEFORE THE DICTATING MEMBER FOR PRONOUNCEMENT .. 5. DATE ON WHICH THE ORDER COMES BACK TO THE SR. P.S. .. 6. DATE OF UPLOADING THE ORDER ON WEBSITE .. 7. IF NOT UPLOADED, FURNISH THE REASON FOR DOING SO . 8. DATE ON WHICH THE FILE GOES TO THE BENCH CLERK .. 9. DATE ON WHICH ORDER DOES FOR XEROX & ENDORSEMENT . 10. DATE ON WHICH THE FILE GOES TO THE HEAD CLERK. 11 THE DA TE ON WHICH THE FILE GOES TO THE ASSISTANT REGISTRA R FOR SIGNATURE ON THE ORDER. 12 THE DATE ON WHICH THE FILE GOES TO THE DISPATCH SEC TION FOR DISPATCH OF THE TRIBUNAL ORDER 13 DATE OF DISPATCH OF ORDER