ITO, Jeypore V. M/s Sajjan Trading Co,

ITA 111/CTK/2011

• Counselvise Citation: [2011] 134 COUNSELVISE.COM (IT) 4381 (ITAT-CUTTACK)
• Duration Of Justice: 3 month(s) 26 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 17-06-2011
• Appeal Filed By: Department
• Bench Allotted: DB
• Next Hearing Date: 16-06-2011
• Assessment Year: 2005-2006
• Appeal Filed On: 21-02-2011
• Court: TRIBUNAL
• Department Lawyers: K N JANA
• Keywords: Income from undisclosed sources

Judgement Text

IN THE INCME TAX APPELLATE TRIBUNAL, CUTTACK BENCH, CUTTACK BEFORE : HONBLE SHRI K.K.GUPTA, ACCOUNTANT MEMBER, AND HONBLE SHRI K.S.S.PRASAD RAO, JUDICIAL MEMBER. ITA NO. 111/CTK/2011 (ASSESSMENT YEAR 2005 - 06) INCOME - TAX OFFICER, WARD 1, JEYPORE VE RSUS M/S.SAJJAN TRADING CO., MAINROAD, NABARANGPUR PAN: AARFS 3058 H (APPELLANT) (RESPONDENT) FOR THE APPELLANT: SHRI K.N.JANA, DR FOR THE RESPONDENT NONE ORDER SHRI K.K.GUPTA, ACCOUNTANT MEMBER : THIS APPEAL BY THE REVENUE AGITATES THE ACTION OF THE LEARNED COMMISSIONER OF INCOME - TAX (APPEALS) NOT JUSTIFIED IN DELETING THE ADDITION OF RS.7,19,652 MADE BY THE ASSESSING OFFICER ON ACCOUNT OF LIQUIDATION OF LIABILITY TOWARDS CENTURY CEMENTS MADE BY THE ASSESSEE OUT OF INCOME FROM UNDISCLOSED SOURCES. THE REVENUE APPEALS THAT THE LEARNED CIT(A) ERRED IN DELETING THE SAID ADDITION ON THE BASIS OF DOCUMENTS FURNISHED BY CENTURY CEMENTS, THE CREDITORS OF THE ASSESSEE IN VIOLATION TO RULE 46A WITHOUT ALLOWING THE ASSESSING OFFICER AN OPPORTUNITY OF VERIFY ING THE SAME. 2. NONE HAVE APPEARED ON BEHALF OF THE ASSESSEE RESPONDENT AND THE NOTICE OF HEARING SENT THROUGH REGISTERED POST HAS BEEN RETURNED UNSERVED WITH THE POSTAL REMARK GONE AWAY. WE PROCEED TO DISPOSE OF THE APPEAL AFTER HEARING THE LEARNED DR. 3. THE ASSESSEE IS HAVING INCOME FROM WHOLESALE CEMENT TRADING AND FILED ITS RETURN ALONG WITH THE AUDITED FINANCIAL STATEMENTS AT AN INCOME OF RS.4,58,730. DURING THE COURSE OF SCRUTINY PROCEEDINGS, THE ITA NO.111/CTK/2011 2 ASSESSING OFFICER SOUGHT TO TAX THE DIFFERENCE OF C REDIT BALANCE WHEN THE ASSESSEE HAD DISCLOSED CREDIT BALANCE OF RS.20,92,030 IN THE NAME OF CENTURY CEMENTS. IN RESPONSE TO INFORMATION/S.133(6) THE DIFFERENCE BETWEEN THE BALANCE SHOWN BY THE CENTURY CEMENTS AND THE BALANCE SHOWN BY THE ASSESSEE IN ITS BO OKS OF ACCOUNT A DIFFERENCE THEREIN OF RS.7,19,650 WAS BROUGHT TO TAX. AGGRIEVED, THE ASSESSEE APPEALED BEFORE THE FIRST APPELLATE AUTHORITY WHO TOOK NOTE OF THE RECONCILIATION IN RESPONSE TO THE ASSESSING OFFICER CALLING FOR INFORMATION U/S.133(6) LEADING TO THE FINDING THAT CENTURY CEMENTS HAS CATEGORICALLY INTIMATED THE ASSESSING OFFICER THAT THERE WAS NO OUTSTANDING BALANCE BY THE END OF THE YEAR ON ACCOUNT OF REIMBURSEMENT WHICH THE ASSESSEE HAD NOT DISCLOSED HAVING TAKEN THE SAME AS INCOME. THE REVEN UE IS BEFORE US AGITATING THAT THE LEARNED CIT(A) ERRED IN DELETING THE ADDITION BY CALLING FOR INFORMATION IN VIOLATION TO THE PROVISIONS OF RULE 46A. THE LEARNED DR SUBMITTED THAT THE ASSESSEE OUGHT TO HAVE SUBMITTED THAT THE REIMBURSEMENT A CCOUNT WAS NO T CLAIMED AS LIABILITY INSOFAR AS THE INCOME STOOD RENDERED TO TAX BY THE ASSESSEE BEING A DEALER IN WH OLESALE CEMENT OF THE SAID CENT URY CEMENTS. 4. AFTER HEARING THE LEARNED DR AND PERUSING THE MATERIAL AVAILABLE ON RECORD, WE ARE INCLINED TO UPHOLD THE ORDER OF THE LEARNED CIT(A). THE LEARNED CIT(A) HAS CATEGORICALLY HELD THAT THE ASSESSEE HAD MAINTAINED TWO ACCOUNTS FOR THE PURPOSE OF RECORDING TRANSACTIONS ON BUSINESS ANCILLARY SERVICES, SERVICE CHARGES WAS TAKEN AND SALES TAX AND OTHER PAYMENTS MADE B Y THE ASSESSEE ON BEHALF OF ITA NO.111/CTK/2011 3 THE SELLER OF CEMENT NAMELY, CENTURY CEMENTS. THE LEDGER COPY OF THE ACCOUNT WAS SUBMITTED BY WAY OF A REMAND TO THE ASSESSING OFFICER WHEN THE ASSESSING OFFICER BY SUBMITTING THE TWO REPORTS DID NOT FIND ANY MATERIAL TO CONTROV ERT THE FINDINGS INSOFAR AS THE SAID CENTURY CEMENT HAD AGREED TO THE PROPOSITION THAT THE INCOME ON ACCOUNT OF REIMBURSEMENT CHARGES HAS BEEN SEPARATED AND WAS AN UNILATERAL DECISION WHICH COULD NOT BE THRUST UPON TO THE ASSESSEE FOR THE PURPOSE OF TAXATI ON. THE LEARNED CIT(A) THEREAFTER WROTE A LETTER TO THE CENTURY CEMENTS TO CLARIFY FURTHER TO COME TO THE CONCLUSION THAT THE AMOUNT RECEIVABLE FROM THE COMPANY HAS BEEN DISCHARGED BY THE COMPANY AS ON 31.3.2005 AND THAT IS WHY THE ASSESSEE DID NOT SHOW AM OUNT DUE FROM THE COMPANY. THE AMOUNT THEREFORE CANNOT BE TAXED AGAIN ON THE BASIS OF INFORMATION SOUGHT FOR U/S.133(6). IN OUR VIEW THERE IS NO VIOLATION TO RULE 46A INSOFAR AS THE OPPORTUNITY WAS GRANTED TO THE ASSESSING OFFICER BY WAY OF REMAND AGAINST WHICH THE LEARNED DR HAS NOT POINTED OUT ANY CONTROVERSY. IN VIEW THEREOF, THE FINDING OF THE LEARNED CIT(A) IS UPHELD AND THE APPEAL OF THE REVENUE IS DISMISSED. 5. IN THE RESULT, THE APPEAL FILED BY THE REVENUE IS DISMISSED. PRONOUNCED IN OPEN COURT ON D T. 17 TH JUNE, 2011 S D/ - S D/ - (K.S.S.PRASAD RAO) JUDICIAL MEMBER (K.K.GUPTA) ACCOUNTANT MEMBER DATE: 17 TH JUNE, 2011 H.K.PADHEE, SENIOR PRIVATE SECRETARY. ITA NO.111/CTK/2011 4 COPY OF THE ORDER FORWARDED TO : 1. THE APPELLA NT: INCOME - TAX OFFICER, WARD 1, JEYPORE 2. THE RESPONDENT: M/S.SAJJAN TRADING CO., MAINROAD, NABARANGPUR 3. THE CIT, 4. THE CIT(A), 5. THE DR, CUTTACK 6. GUARD FILE (IN DUPLICATE) TRUE COPY, BY ORDER, SENIOR PRIVATE SECRETARY.