M/s. V.V.Ramasamy Chettiar & Co., Namakkal V. ITO, Namakkal

ITA 1170/CHNY/2012

• Counselvise Citation: [2013] 120 COUNSELVISE.COM (IT) 0910 (ITAT-CHENNAI)
• Duration Of Justice: 8 month(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-01-2013
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: A
• Next Hearing Date: 29-01-2013
• Assessment Year: 2007-2008
• Appeal Filed On: 28-05-2012
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Assessee Lawyers: G BASKAR
• Section: 68

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH, CHENNAI BEFORE SHRI ABRAHAM P.GEORGE, ACCOUNTANT ME MBER AND SHRI VIKAS AWASTHY, JUDICIAL MEMBER ITA NO.1170/MDS/2012 (ASSESSMENT YEAR: 2007-08) M/S. V.V.RAMASAMY CHETTIAR & CO. DEALERS IN FERTILISERS, PDS KEROSENE & EGGS, 30, MAIN ROD, NAMAKKAL-637 001. PAN: AABFV2174K VS. THE INCOME TAX OFFICER, WARD-I(1) 39D, DR. SANKARAN ROAD, GANDHI NAGAR, NAMAKKAL-637 001. (APPELLANT) (RESPONDENT) APPELLANT BY : MR G.BASKAR, ADVOCATE RESPONDENT BY : MR. SHAJI P.JACOB, ADDL.CIT DATE OF HEARING : 29 TH JANUARY, 2013 DATE OF PRONOUNCEMENT : 31 ST JANUARY, 2013 O R D E R PER VIKAS AWASTHY, JM: THE APPEAL HAS BEEN FILED BY THE ASSESSEE IMPUGNIN G THE ORDER PASSED BY THE CIT(A), SALEM DATED 19.03.2 012 RELEVANT TO THE ASSESSMENT YEAR 2007-08. 2. THE FACTS IN BRIEF ARE THAT THE ASSESSEE IS IN T HE BUSINESS OF WHOLESALE SUPPLY OF PDS KEROSENE THE ASSESSEE IS ALSO CARRYING ON BUSINESS OF SUPPLY OF EGGS TO SCHOOLS UNDER FOR MIDDAY MEAL SCHEME. THE ASSESSE E FILED ITA NO.1170/MDS/2012 2 ITS RETURN OF INCOME FOR THE ASSESSMENT YEAR 2007-0 8 ON 31.10.2007 ADMITTING NIL INCOME. THE CASE OF THE AS SESSEE WAS SELECTED FOR SCRUTINY. NOTICE UNDER SECTION 143 (2) WAS ISSUED ON 15.09.2008. THE ASSESSING OFFICER VIDE ASSESSMENT ORDER DATED 21.12.2009 MADE ADDITION TO THE TUNE OF ` 48,70,913/- ON ACCOUNT OF UNEXPLAINED TRADE CREDITORS UNDER SECTION 68 OF THE INCOME TAX ACT. AGGRIEVED AGAINST THE ASSESSMENT ORDER, THE ASSESS EE PREFERRED AN APPEAL BEFORE THE CIT(A). THE CIT(A) P ARTLY ALLOWED THE APPEAL OF THE ASSESSEE BY GRANTING BENE FIT OF DOUBLE ADDITION MADE DURING THE ASSESSMENT PROCEEDI NGS TO THE TUNE OF ` 1,08,058.20/-. HOWEVER, THE CIT(A) SUSTAINED THE REMAINING ADDITION. AGGRIEVED AGAINST THE ORDER PASSED BY THE CIT(A), THE ASSESSEE HAS COME IN SECOND APPEAL BEFORE THE TRIB UNAL. 3. SHRI G.BASKAR, APPEARING ON BEHALF OF THE ASSESS EE SUBMITTED THAT THE ASSESSING OFFICER HAD SENT LETTE RS FOR CONFIRMATION TO THE SUNDRY CREDITORS, THEREAFTER TH E ASSESSING OFFICER HAS BROADLY CATEGORIZED THE CREDITORS INTO FIVE CATEGORIES:- ITA NO.1170/MDS/2012 3 I) CREDITORS WHO HAVE CONFIRMED THE CLAIM OF THE ASSESSEE; II) CREDITORS WHO HAVE GIVEN CONFIRMATION LETTERS B UT THE AMOUNTS ARE DIFFERENT FROM THE ONE FURNISHED BY THE ASSESSEE. III) CREDITORS WHO HAVE RECEIVED NOTICES BUT HAVE F AILED TO RESPOND TO THE NOTICES; IV) CREDITORS WHO HAVE DENIED ANY TRANSACTION WITH THE ASSESSEE; & V) CREDITORS TO WHOM NOTICES SENT HAVE BEEN RECEIVE D BACK UNSERVED ON ACCOUNT OF INCOMPLETE OR WRONG ADDRESSES. 4. THE COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE ASSESSING OFFICER HAS PRESUMED THAT CREDITORS WHO H AVE NOT GIVEN CONFIRMATION OR HAVE DENIED ANY BUSINESS RELA TIONSHIP WITH THE ASSESSEE OR TO WHOM NOTICES COULD NOT BE S ERVED EITHER BECAUSE OF WRONG OR INCOMPLETE ADDRESSES ARE BOGUS CREDITORS AND HAVE THUS MADE ADDITION UNDER SECTION 68 OF THE ACT. THE A.R. FURTHER CONTENDED THAT THE RESULT OF ENQUIRY WAS NOT DISCLOSED TO THE ASSESSEE AND SUFFICIENT OPPORT UNITY WAS ITA NO.1170/MDS/2012 4 NOT GIVEN TO THE ASSESSEE TO CROSS EXAMINE THE POUL TRY FARMERS WHO HAVE CONFIRMED WITH DIFFERENT AMOUNTS OR HAVE DENIED ANY BUSINESS RELATIONSHIP WITH THE ASSESSEE. THE COUNSEL FURTHER SUBMITTED THAT ALL TRANSACTIONS WE RE CASH TRANSACTIONS AND WERE GENUINE. THE COUNSEL FOR THE ASSESSEE CONTENDED THAT THE ASSESSING OFFICER CANNOT MADE AD DITION MERELY ON THE BASIS OF THE FACT THAT SOME OF THE CR EDITORS WHO HAVE RECEIVED NOTICES HAVE NOT SENT CONFIRMATION LE TTERS. NO EFFORT WAS MADE BY THE ASSESSING OFFICER TO SERVE S UCH CREDITORS AGAIN. THE COUNSEL FOR THE ASSESSEE PLACE D ON RECORD A COPY OF THE RETURN FOR THE ASSESSMENT YEAR 2007-08 ALONG WITH TRADING PROFIT AND LOSS ACCOUNT FOR THE PERIOD FROM 1.4.2006 TO 31.3.2007. HE POINTED OUT THAT IN THE B ALANCE SHEET AS ON 31.3.2007 THERE WERE TRADE CREDITORS TO THE TUNE OF ` 25,54,205/- IN THE PREVIOUS ASSESSMENT YEAR AND ` 56,86,924.30 IN THE ASSESSMENT YEAR 2007-08. 5. ON THE OTHER HAND, SHRI SHAJI P.JACOB APPEARING ON BEHALF OF THE REVENUE SUBMITTED THAT MAJORITY OF TH E TRADE CREDITORS WERE BOGUS. THEREFORE, EITHER THE NOTICES SENT TO THEM WERE UNSERVED OR HAVE DENIED BUSINESS RELATION SHIP ITA NO.1170/MDS/2012 5 WITH THE ASSESSEE. THE D.R. FURTHER CONTENDED THAT NO EVIDENCE HAS BEEN FILED BY THE ASSESSEE TO PROVE TH E GENUINENESS OF THE TRADE CREDITORS. A PERUSAL OF TH E BOOKS OF ACCOUNTS WOULD SHOW THAT TRADE CREDITORS HAVE BEEN OUTSTANDING FOR MORE THAN ONE YEAR. THIS CLEARLY SH OWS THAT CREDITORS WERE NOT GENUINE. THE DR REFERRED TO THE FINDINGS GIVEN BY THE ASSESSING OFFICER THAT LETTERS ISSUED TO THE TRADE CREDITORS WERE RETURNED BY THE POSTAL AUTHORITIES W ITH A REMARK NO SUCH FARM/ ADDRESSEE. THE ASSESSEE WAS AGAIN REQUESTED TO FURNISH THE DETAILS VIZ. THE NAME OF PROPRIETOR AND NAME OF THE FARM, NAME OF VILLAGE, TALUK, DISTR ICT ALONG WITH MOBILE NUMBER, BUT THE ASSESSEE FURNISHED THE SAME LIST WHICH WAS SUBMITTED EARLIER. THE D.R. POINTED OUT THAT OPPORTUNITY WAS AFFORDED TO THE ASSESSEE TO FURNISH COMPLETE AND CORRECT ADDRESSES OF THE ALLEGED CREDITORS, SO THAT CONFIRMATIONS CAN BE RECEIVED FROM THEM. HOWEVER, T HE ASSESSEE FAILED TO FURNISH THE SAME. EVEN NOW, THE ASSESSEE HAS NOT FURNISHED ANY DOCUMENT TO SUBSTANTIATE HIS CLAIM. THE DR SUBMITTED THAT ONUS WAS ON THE ASSESSEE TO P ROVE THE GENUINENESS OF THE TRADE CREDITORS. THE D.R. ST RONGLY ITA NO.1170/MDS/2012 6 SUPPORTED THE ORDER OF THE CIT(A) AND PRAYED FOR DI SMISSAL OF THE APPEAL OF THE ASSESSEE. 6. WE HAVE HEARD THE SUBMISSIONS MADE BY BOTH THE PARTIES AND DOCUMENTS ON RECORD. A PERUSAL OF THE ASSESSMENT ORDER SHOWS THAT OUT OF TOTAL TRADE CRED ITORS OF ` 56,86,924/- CONFIRMATION LETTERS WERE RECEIVED ONL Y FROM THE TRADE CREDITORS TO THE TUNE OF ` 9,70,524/- . WITH REGARD TO 20 TRADE CREDITORS HAVING AN AMOUNT OF ` 22,02,349/- , NOTICES SENT WERE RETURNED BY THE POSTAL AUTHORITIES WITH T HE REMARK NO SUCH FARM / ADDRESSES AND THERE WERE 14 TRADE CREDITORS HAVING AMOUNT OF ` 15,53,815/- TO WHOM NOTICES WERE SERVED BUT THEY FAILED TO FILE ANY CONFIRMATION LETTERS. A S REGARDS OTHER TRADE CREDITORS EITHER THE ADDRESSES WERE NOT FURN ISHED OR HAVE DENIED ANY BUSINESS RELATIONSHIP WITH THE ASSE SSEE. A PERUSAL OF THE ORDER OF THE CIT(A) SHOWS THAT THE A SSESSEE HAS NOT FILED ANY FRESH LIST WITH COMPLETE AND COR RECT ADDRESSES OF TRADE CREDITORS WHICH THE ASSESSEE HAS ALLEGED TO BE GENUINE CREDITORS. ITA NO.1170/MDS/2012 7 7. HOWEVER, WE OBSERVE THAT TRADE CREDITORS TO THE TUNE OF ` 15,53,815/- TO WHOM NOTICES WERE SERVED BUT HAVE NO T REPLIED WERE NOT SERVED AGAIN. NO EFFORT WAS MADE T O SUMMON THE AFORESAID CREDITORS AGAIN. THE FACT THAT THE ASSESSEE HAS MADE SALE OF EGGS AND HAS EARNED REVEN UE IS NOT DISPUTED. CORRESPONDING TO SALE THE ASSESSEE MU ST HAVE MADE PURCHASES ALSO. IT IS NOT THE CASE OF THE REVE NUE THAT THE AMOUNT IS A LOAN AMOUNT AND ADVERSE INFERENCE H AS TO BE DRAWN AGAINST THE ASSESSEE IN CASE THE ASSESSEE FAI LS TO PRODUCE CREDITOR. THE ASSESSEE HAS PURCHASED EGGS. THE ALLEGED PURCHASES WERE MADE IN CASH. 8. IN THE INTEREST OF EQUITY, WE DEEM IT APPROPRIAT E TO REMIT THE FILE BACK TO ASSESSING OFFICER ONLY FOR LIMITED PURPOSE TO VERIFY AGAIN FROM THE TRADE CREDITORS WHO HAVE BEEN EARLIER SERVED BUT FAILED TO FILE ANY CONFIRMATION LETTERS. NEEDLESS TO SAY THAT IF CONFIRMATIONS ARE RECEIVED IN FAVOUR OF THE ASSESSEE THE BENEFIT BE GIVEN TO ASSESSEE TO THE EX TENT CONFIRMED. ITA NO.1170/MDS/2012 8 9. AS REGARDS THE REMAINING AMOUNT OF ADDITION MADE , WE UPHOLD THE SAME. THE APPEAL OF THE ASSESSEE IS PAR TLY ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON THURSDAY, T HE 31 ST DAY OF JANUARY, 2013 AT CHENNAI. SD/- SD/- (ABRAHAM P.GEORGE) (VIKAS AWASTHY) ACCOUNTANT MEMBER JUDICIAL MEMBER CHENNAI, DATED THE 31 ST JANUARY, 2013 SOMU COPY TO: (1) APPELLANT (4) CIT(A) (2) RESPONDENT (5) D.R. (3) CIT (6) G.F.