DCIT, CHENNAI V. Olympic Cards Ltd., CHENNAI

ITA 1211/CHNY/2014

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 8462 (ITAT-CHENNAI)
• Duration Of Justice: 2 year(s) 4 month(s) 16 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-09-2016
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Assessment Year: 2009-2010
• Appeal Filed On: 05-05-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SHIVA SRINIVASAS IRS
• Assessee Lawyers: R VENKATESH
• Keywords: Unexplained cash credit
• Section: 68

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH, CHENNAI , . ! ' , #'$ BEFORE SHRI CHANDRA POOJARI, ACCOUNTANT MEMBER AND SHRI G. PAVAN KUMAR, JUDICIAL MEMBER ./ I.T.A. NOS.1211 & 1212/MDS/2014 # % &% / ASSESSMENT YEARS : 2009-10 & 2010-2011 THE DEPUTY COMMISSIONER OF INCOME TAX, COMPANY CIRCLE V(4) CHENNAI 600 034. VS. M/S. OLYMPIC CARDS LTD, 165, NSC BOSE ROAD, CHENNAI 600 001. [PAN AAACO 3651L ] ( / APPELLANT) ( /RESPONDENT) '( ) * / APPELLANT BY : SHRI. SHIVA SRINIVASAS, IRS, JCIT. +,'( ) * /RESPONDENT BY : SHRI. R. VENKATESH, C.A. ! ) - / DATE OF HEARING : 07-09-2016 ./& ) - / DATE OF PRONOUNCEMENT : 21-09-2016 / O R D E R PER CHANDRA POOJARI, ACCOUNTANT MEMBER : THE APPEALS FILED BY THE DEPARTMENT ARE DIRECTED AGAINST COMMON ORDER OF THE COMMISSIONER OF INCOME-TAX (AP PEALS)-V, CHENNAI IN ITA NO.738, 832/13-14(A)-V, DATED 20.12 .21013 FOR THE ITA NOS.1211 & 1212/MDS/14 :- 2 -: ABOVE ASSESSMENT YEARS PASSED U/S.143(3) AND 250 O F THE INCOME TAX ACT, 1961 (HEREIN AFTER REFERRED TO AS THE AC T). 2. THE FIRST GROUND RAISED BY THE REVENUE IN THESE TW O APPEALS ARE THAT THE LD. COMMISSIONER OF INCOME TAX (APPEAL S) ERRED IN DELETING THE ADDITION MADE U/S.40(A)(IA) OF THE ACT ON THE GROUND THAT THE EXPENSES WERE PAID BEFORE 31.03.2009 AND DISALL OWANCE U/S.40(A) (IA) OF THE ACT CAN BE MADE ONLY FOR PAYMENTS LYING OUTSTANDING AS ON 31.03.2009 RELYING ON THE VARIOUS JUDICIAL PRONOUNC EMENTS. FOR THE SAKE OF CONVENIENCE, WE TAKE UP FACTS IN ITA NO.121 1/MDS/2014 OF ASSESSMENT YEAR 2009-2010 FOR ADJUDICATION. 3. THE BRIEF FACTS OF THE CASE ARE THAT THE LORRY FR EIGHT CHARGES OF ?.24,47,934/- HAVING BEEN DIRECTLY INCURRED ON V ARIOUS OCCASIONS AND DATES FOR DIFFERENT LORRY HIRES IN THE COURSE O F BUSINESS, THERE IS FORCE IN THE ASSESSEE 'S, SUBMISSIONS THAT SEC. 194 C DO NOT APPLY TO SUCH PAYMENTS TO VARIOUS LORRY FREIGHTS SUPPORTED W ITH THE DECISION OF THE PUNJAB & HARYANA HIGH COURT IN THE CASE OF BAGAVATHY STEELS REPORTED IN 326 .ITR 108 . IN THIS CASE, THE ASSESSEE HAS NOT DEDUCTED ANY TDS IN RESPECT OF ALL THE FOUR ITEMS OF EXPENSE S INCLUDING THAT ON LORRY FREIGHT CHARGES. THEREFORE, FOLLOWING THE DEC ISIONS IN THE CASE OF VECTOR SHIPPING AND MERLYN SHIPPING AND IN THE CASE OF SATHYA ITA NOS.1211 & 1212/MDS/14 :- 3 -: TOURS & TRAVELS, DECIDED BY THE HON'BLE 'B' BENCH ITA T, CHENNAI IN ITA' NO. 706 & CO NO. 91/MDS/2013 THE LD. COMMISSIONER OF INCOME TAX (APPEALS) CONSTRAINED TO FOLLOW THE JURISDICTIONAL ITA T ORD ER AND ALSO FOLLOWING THE OTHER JUDICIAL PRECEDENTS AS MEN TIONED ABOVE DIRECTED THE LD. ASSESSING OFFICER TO DELETE THE A DDITION OF ?26,29,613/-. AGGRIEVED BY THE ORDER, THE ASSESSE E FILED AN APPEAL BEFORE COMMISSIONER OF INCOME TAX (APPEALS). 4. IN THE APPELLATE PROCEEDINGS, THE LD. COMMISSIONER OF INCOME TAX (APPEALS) DELETED THE ADDITION. AGGRIEV ED BY THE COMMISSIONER OF INCOME TAX (APPEALS) ORDER, THE REV ENUE HAS ASSAILED AN APPEAL BEFORE TRIBUNAL. 5. AFTER HEARING BOTH THE PARTIES, WE ARE OF THE OPINI ON THAT SIMILAR ISSUE WAS CONSIDERED BY THE CO-ORDINATE BEN CH OF THE TRIBUNAL IN THE CASE OF T. PALANIVELU VS. INCOME TAX OFFICER, IN ITA NO. 618/MDS/2015, DATED 29.04.2015 WHEREIN IT WAS HELD AS UNDER:- 3. WE HAVE HEARD BOTH THE SIDES AND PERUSED THE MATERIAL ON RECORD. WE FIND THAT THE SPECIAL BENCH OF THE TRIBUNAL IN THE CASE OF MERILYN SHIPPING AND TRANSP ORTS VS. ACIT (2012) 136 ITD 23 (VISAKHAPATNAM) AND JUDGMENT OF GUJARAT HIGH COURT IN THE CASE OF CIT VS. M/S. VECTOR SHIPPING SERVICES (P) LTD IN ITA NO.122 OF 2013 DATED 09.7.2013 HELD THAT SEC 40(A)(IA) IS NO T APPLICABLE WHEN THERE IS NO OUTSTANDING BALANCE AT THE END OF THE CLOSE OF THE YEAR RELEVANT TO THE ASSESS MENT YEA IN RESPECT OF THESE PAYMENT. HOWEVER, THE ASSE SSEE ITA NOS.1211 & 1212/MDS/14 :- 4 -: HAS NOT BROUGHT ON RECORD, THE DETAILS OF OUTSTAND ING EXPENSES OR SCHEDULE OF SUNDRY CREDITORS SHOWING WHETHER THE IMPUGNED AMOUNT IS OUTSTANDING AT THE E ND OF THE CLOSE OF THE PREVIOUS YEAR RELEVANT TO THE ASSESSMENT YEAR EITHER IN THE NAME OF THE PARTY OR OUTSTANDING EXPENSES. HENCE, IN THE INTEREST OF JU STICE, WE ARE REMITTING THE ISSUE BACK TO THE FILE OF THE ASSESSING OFFICER WITH DIRECTION TO VERIFY THE CLAI M OF THE ASSESSEE AND THE ASSESSEE SHALL PLACE NECESSARY EVI DENCE IN SUPPORT OF HIS CLAIM. 4. FURTHER, WE MAKE IT CLEAR THAT IF THE IMPUGNED AMOUNT IS NOT OUTSTANDING AT THE END OF THE CLOSE O F THE ASSESSMENT YEAR IN RESPECT OF THE EXPENSES EITHER AS OUTSTANDING EXPENSES OR AS SUNDRY CREDITORS, THIS A MOUNT CANNOT BE DISALLOWED. THIS GROUND IS REMITTED BACK TO THE ASSESSING OFFICER FOR FRESH CONSIDERATION. IN VIEW OF THE ABOVE ORDER OF THE TRIBUNAL, WE ARE INCLINED TO REMIT THE ISSUE TO THE FILE OF THE LD. ASSESSING OFFICER FOR FRESH CONSIDERATION. THIS GROUND OF THE REVENUE IS PARTLY ALLOWED FOR ST ATISTICAL PURPOSE. 6. NEXT GROUND RAISED IN ITA NO.1211/MDS/2014 OF ASSES SMENT YEAR 2009-2010 IS THAT THE LD. COMMISSIONER OF INCO ME TAX (APPEALS) ERRED IN HOLDING THAT ?3.05 LAKH, OUT OF ?4.08 LAKH HAS BEEN EXPENDED FOR PURCHASE OF AC, PANELING AND INSTALLATION CHARG ES TO BE OF REVENUE IN NATURE ON THE GROUND THAT THEY HAVE NEGLIGIBLE R ESALE VALUE AND USE IF DISMANTLED BY RELYING ON THE MADRAS HIGH COURT D ECISIONS IN MADRAS AUTO SERVICES IN 233 ITR 468 AND TVS LEAN LOGISTICS 293 ITR 432 . ITA NOS.1211 & 1212/MDS/14 :- 5 -: 7. AFTER HEARING BOTH THE PARTIES, WE ARE OF THE OPINI ON THAT AMOUNT INCURRED FOR PANELING AND INSTALLATION CHARG ES OF AIR CONDITIONERS IN LEASEHOLD BUILDING CANNOT BE CONSID ERED AS CAPITAL REVENUE IN VIEW OF THE JUDGMENT OF JURISDICTIONAL H IGH COURT IN THE CASE OF MADRAS AUTO SERVICES AND TVS LEAN LOGISTICS (SUPRA). ACCORDINGLY, WE DO NOT FIND ANY INFIRMITY IN THE OR DER OF THE LD. COMMISSIONER OF INCOME TAX (APPEALS) AND THE SAME I S CONFIRMED. THIS GROUND OF THE REVENUE IS DISMISSED. 8. NEXT GROUND IN ITA NO.1212/MDS/2014 OF ASSESSMENT Y EAR 2010-2013 IS THAT THE LD. COMMISSIONER OF INCOME TA X (APPEALS) ERRED IN DELETING THE ADDITION MADE U/S.68 ON THE GROUND THAT SEC. 68 CANNOT BE INVOKED IN RESPECT OF TRADE CREDITORS. 9. THE FACTS OF THE CASE ARE THAT THE LD. ASSESSING OFFICER ADDED THE TOTAL OF THE CREDIT SIDE OF THE LEDGER ACCOUNT OF THE THREE PARTIES I.E. GURUDEV ENTERPRISES ?56,29,871/-, UNIVERSAL PA PERS ?40,37,270/- AND STAR SCREENS ?15,47,051/-, TOTAL AGGREGATING TO ?1,12,14,192/-. THE AMOUNTS ADDED, THOUGH DESCRIBED AS BALANCE, ARE NOT THE BALANCE DUE TO THE PARTIES BUT THE AGGREGATE OF ALL THE CREDITS IN THEIR RESPECTIVE ACCOUNT WHICH INCLUDES OPENING BALANCE A ND ALSO BANK T RANSACTION. T HE THREE TRADE PARTIES HAD SUPPLIED PRODUCTS TO THE ITA NOS.1211 & 1212/MDS/14 :- 6 -: ASSESSEE WERE REGISTERED UNDER T.N VAT/CST ACT. THE GOODS PURCHASED AS PER THE INVOICES OF THE PARTIES HAD BE EN RECEIVED AND PAYMENTS WERE MADE FOR THE SUPPLY THROUGH BANK REG ULARLY AND THESE DETAILS WERE WITH THE LD. AO IN AS MUCH AS THE DETA ILS OF THE BANK ACCOUNT AND CASH ACCOUNT TRANSACTIONS WERE GIVEN. I N RESPECT OF EACH OF THE THREE TRADE CREDITORS THE ASSESSEE MADE SUB MISSIONS THAT CASE OF M/S. UNIVERSE PAPERS, THE ASSESSEE HAD PURCHAS ED JK PAPERS FROM SAID PARTY. THE SAID TRADE PARTY IS A REGISTERED TN VAT DEALER HAVING TIN NO 33801242852/2008-2009 AND CST NO.955249. IT WAS SUBMITTED THAT THE ASSESSEE HAD AVAILED INPUT TAX CREDIT IN THE TN VAT RETURN, IN ELECTRONIC MODE WHICH WAS ALLOWED I N THE ELECTRONIC CROSS VERIFICATION AND ALSO BY THE REVENUE AUTHORIT IES WHICH REFLECTS THAT THE TRADE TRANSACTION HAD BEEN CARRIED OUT WIT H THE TRADE PARTY. THE TN VAT ASSESSMENT ORDER FOR THE IMPUGNED YEAR W AS PLACED BEFORE LD. ASSESSING OFFICER THE PAYMENT TO THE C REDITOR HAD BEEN MADE REGULARLY THROUGH ACCOUNT PAYEE CHEQUES MOUNTI NG TO RS.20,36,552/- AS MAY BE SEEN FROM THEIR ACCOUNT AN D BANK STATEMENTS. THE ASSESSEE IS A LISTED PUBLIC LIMITE D COMPANY HAVING MANY DIVISIONS AND MANAGED BY PROFESSIONALS. ACCORD ING TO ASSESSEE IDENTIFYING OF THE TRADE SUPPLIER/PARTY IS NOT A PR EREQUISITE TO TRANSACT WITH THEM. ON THE OTHER HAND THE PRODUCT; QUALITY, TIMELY SUPPLY ETC ITA NOS.1211 & 1212/MDS/14 :- 7 -: ARE IMPORTANT WHICH ARE CARRIED OUT WITH APPROPRIAT E CHECK AND CONTROLS OF MAKING THE PAYMENT ONLY AFTER THE SUPPL Y OF THE GOODS PURCHASED. THE REGISTERED OFFICE OF THE BUSINESS EN TITY NEED NOT BE THE PLACE OF ITS BUSINESS. THEREFORE, IT IS NOT POS SIBLE NOR A REQUIRED CAUSE ON THE ASSESSEE TO PRODUCE THE TRADE PARTIES. FURTHER, IT CANNOT BE THE CASE OF THE LD. ASSESSING OFFICER THAT THE PURCHASES ARE NOT MADE AS THE PURCHASED PRODUCTS HAD BEEN RECEIVED, T AKEN TO STOCK AND USED IN THE PROCESS OF THE BUSINESS OF THE ASSE SSEE. IN THESE CIRCUMSTANCES, IT IS HIGHLY ERRONEOUS TO INVOKE THE PROVISIONS OF SEC. 68 ON THE AGGREGATE OF PURCHASE CREDITS OF ?40,37,2 70 FOR DISALLOWANCE. THIS FACT WAS BROUGHT TO LD. AO VIDE LETTER DATED 22.03.2013 FILED IN THE PROCEEDINGS. IN RESPECT OF STAR SCREENS IT IS A REGISTERED TN VAT DEALER HAVING TIN NO 3391162131 / 2008-2009 AND CST NO.955049 AND HAD SUPPLIED PAPER PRODUCTS. IT IS SUBMITTED THAT THE ASSESSEE HAD AVAILED INPUT TAX CREDIT IN THE T N VAT RETURN, IN ELECTRONIC, MODE WHICH WAS ALLOWED IN THE ELECTRONI C CROSS VERIFICATION AND ALSO BY THE REVENUE AUTHORITIES WHICH REFLECTS THAT THE TRADE TRANSACTION HAD BEEN CARRIED OUT WITH THE TRADE PAR TY. THE TN VAT ASSESSMENT ORDER FOR THE IMPUGNED YEAR WAS ALSO PL ACED BEFORE LD. ASSESSING OFFICER. THE PAYMENT TO THE TRADE CREDITO R HAD BEEN MADE REGULARLY THROUGH ACCOUNT PAYEE CHEQUES AMOUNTING T O ?5,46,382/- AS ITA NOS.1211 & 1212/MDS/14 :- 8 -: MAY BE SEEN FROM THEIR ACCOUNT AND BANK STATEMENTS. THE ASSESSEE IS A LISTED PUBLIC LIMITED COMPANY HAVINQ MANY DIVI SIONS AND MANAGED BY PROFESSIONALS. IDENTIFYING OF THE TRADE SUPPLIER /PARTY WAS NOT A PREREQUISITE TO TRANSACT WITH THEM, ON THE OTHER HA ND THE PRODUCT, QUALITY, TIMELY SUPPLY ETC ARE IMPORTANT WHICH ARE CARRIED OUT WITH APPROPRIATE CHECK AND CONTROLS OF MAKING THE PAYMEN T ONLY AFTER THE SUPPLY OF THE GOODS PURCHASED. THE REGISTERED OFFIC E OF THE BUSINESS ENTITY NEED NOT BE THE PLACE OF ITS BUSINESS. THERE FORE IT IS NOT POSSIBLE NOR A REQUIRED CAUSE ON THE ASSESSEE TO PR ODUCE THE TRADE PARTIES. FURTHER, IT CANNOT BE THE CASE OF THE LD. AO THAT THE PURCHASES ARE NOT MADE AS THE PURCHASED PRODUCTS HAD BEEN REC EIVED TAKEN TO STOCK AND USED IN THE PROCESS OF THE BUSINESS OF TH E ASSESSEE . IN THESE CIRCUMSTANCES, IT IS HIGHLY ERRONEOUS TO INV OKE THE PROVISIONS OF SEC 68 ON THE AGGREGATE OF THE PURCHASE CREDITS OF ?15,47,051/- FOR DISALLOWANCE. THIS FACT WAS BROUGHT TO LD. AO VIDE LETTER DATED 22.03.2013. IN CASE OF M/S. GURUDEV ENTERPRISES, TH E PARTLY IS A SUPPLIER OF PAPER IN. THE LD AO DID NOT GIVE ANY PR E-ASSESSMENT NOTICE FOR PROPOSING THE AGGREGATE OF THE CREDIT IN THE SAID TRADE CREDITOR TO BE DISALLOWED U/S 68. IT WAS SUBMITTED THAT THE ASSESSEE HAD AVAILED INPUT TAX CREDIT IN THE TN VAT RETURN, IN ELECTRONIC MODE WHICH WAS ALLOWED IN THE ELECTRONIC ITA NOS.1211 & 1212/MDS/14 :- 9 -: CROSS VERIFICATION AND ALSO BY THE REVENUE AUTHORIT IES WHICH REFLECTS THAT THE TRADE TRANSACTION HAD BEEN CARRIED OUT WIT H THE TRADE PARTY. THE TN VAT ASSESSMENT ORDER FOR THE IMPUGNED YEAR W AS SUBMITTED BEFORE LD. ASSESSING OFFICER THE PAYMENT TO THE TR ADE CREDITOR HAD BEEN MADE REGULARLY THROUGH ACCOUNT PAYEE CHEQUES A MOUNTING TO RS.20,22,556/- AS MAY BE SEEN FROM THEIR ACCOUNT AN D BANK STATEMENTS. THE ASSESSEE IS A LISTED PUBLIC LIMITE D COMPANY HAVING MANY DIVISIONS AND MANAGED BY PROFESSIONALS. IDENTI FYING OF THE TRADE SUPPLIER/PARTY IS NOT A PREREQUISITE TO TRANSACT WI TH THEM, ON THE OTHER HAND THE PRODUCT; QUALITY, TIMELY SUPPLY ETC ARE IM PORTANT WHICH ARE CARRIED OUT WITH APPROPRIATE CHECK AND _ CONTROLS O F MAKING THE PAYMENT ONLY AFTER THE SUPPLY OF THE GOODS PURCHASE D. THE REGISTERED OFFICE OF THE BUSINESS ENTITY NEED NOT BE THE PLACE OF ITS BUSINESS. THEREFORE IT IS NOT POSSIBLE NOR A REQUIRED CAUSE O N THE ASSESSEE TO PRODUCE THE TRADE PARTIES. FURTHER, IT CANNOT BE TH E CASE OF THE LD. AO THAT THE PURCHASES ARE NOT MADE AS THE PURCHASED PR ODUCTS HAD BEEN RECEIVED, TAKEN TO STOCK AND USED IN THE PROCESS OF THE BUSINESS OF THE ASSESSEE. IN THESE CIRCUMSTANCES, IT IS HIGHLY ERRO NEOUS TO INVOKE THE PROVISIONS OF SEC 68 ON THE AGGREGATE OF THE PURCHA SE CREDITS INCLUDING OPENING BALANCE OF ?56,29,871/- FOR DISAL LOWANCE. THIS FACT WAS BROUGHT TO LD AO VIDE LETTER DATED 22.03.2013 F ILED IN THE ITA NOS.1211 & 1212/MDS/14 :- 10 -: PROCEEDINGS. THE OPENING BALANCE IN THE ACCOUNT IS ?1,50,000/- (CREDIT) AND THE CLOSING BALANCE IS ?36,07,315/-(CR EDIT). HOWEVER, THE LD. ASSESSING OFFICER ADDED THE CREDIT AMOUNTS IN T HE ACCOUNT OF THE PARTIES U/S.68 OF THE ACT. AGGRIEVED BY THE ORDER, THE ASSESSEE FILED AN APPEAL BEFORE COMMISSIONER OF INCOME TAX (APPEAL S). 10. IN THE APPELLATE PROCEEDINGS, THE LD. COMMISSIONER OF INCOME TAX (APPEALS) OBSERVED F ROM THE ACCOUNT STATEMENT AND DETAILS FILED BEFORE THE HIM THAT U/S.68 OF THE ACT THE AO HAS ADDED THE AGGREGATE OF THE CREDITS IN THE ACCOUNT O F THREE PURCHASE PARTIES AMOUNTING TO ? 1,12, 14,192/-. THE SE CREDITS REPRESENT PURCHASE OF MATERIALS ON VARIOUS DATES UN DER VARIOUS INVOICES FROM THE RESPECTIVE PARTIES, EXCEPT THAT I N THE CASE OF GURUDEV ENTERPRISES, THE AGGREGATE OF THE CREDIT OF ?56,29,871/- TAKEN BY THE AO FOR THE ADDITION, INCLUDES OPENING CREDIT BALANCE OF ?.1,50,000/- AS ON 01.04.2009. THE THREE TRADE CREDITORS ARE REGISTERED DEALERS UNDER THE TN VAT/ CST ACT. THE ASSESSEE HAD TAKEN CREDIT FOR THE VAT PAI D ON THE PURCHASES MADE FROM THE THREE PARTIES AS PER TH EIR INVOICES AND HAS FILED THE TN VAT/CST RETURNS THROUGH ELECTRONIC MODE QUOTING THE REGISTRATION NUMBER OF THE PARTIES. IT IS SHOWN THAT THE ITA NOS.1211 & 1212/MDS/14 :- 11 -: VAT CREDIT FROM THE THREE PARTIES HAVE BEEN ALLOWED TO ESTABLISH THAT THE 3 TRADE CREDITORS ARE IN BUSINESS AND HAD CARRIED ON THE INVOICE WITH THE ASSESSEE. IN SUPPORT OF THIS THE A SSESSEE HAS ALSO PLACED THE TN/VAT & CST ASSESSMENT ORDER FOR THE IMPUGNED YEAR. IN THE PRESENT INDIRECT TAX ADMINISTRATION MO NITORED AND REGULATED ELECTRONICALLY, A TRANSACTION WITH A REGI STERED DEALER QUOTING THE NUMBER ARE MATCHED TO ESTABLISH THE CLA IM FOR TAX CREDITS. IN THE PRESENT CASE, THE VIEW OF THE AO TH AT THE PARTIES ARE REGISTERED DEALERS AND PAYMENTS TO THEM WERE MADE T HROUGH CHEQUES CANNOT BE CONCLUSIVE PROOF FOR THE GENUINEN ESS OF THE TRANSACTION, CANNOT BE A VALID LEGAL GROUND TO SUST AIN THE ADDITION. THE SUBMISSIONS OF THE ASSESSEE THAT IT IS A LARG E BUSINESS ENTITY AND DEALING WITH LARGE NUMBER OF SUPPLIERS, IT IS NOT A PRE REQUISITE TO IDENTIFY THEIR ADDRESS IN TRANSACTING WITH THEM, ESPECIALLY WHEN THE GOODS PURCHASED ARE DELIVERED AT THE DOOR FILED, IT CANNOT BE SAID THAT PAYMENTS HAVE NOT BEEN MADE; PAYMENTS ARE DELAYED BUT MADE THROUGH BANK. IT WAS NOT THE CASE HERE, THAT N O PAYMENTS HAVE BEEN MADE OR THAT THE TRADE CREDITORS ARE CARRIED O VER MONTHS AND YEARS. THE COMMISSIONER OF INCOME TAX (APPEALS) WA S OF THE OPINION THAT THE ASSESSEE HAD PURCHASED FROM REGISTERED DE ALERS AND A REGISTRATION NUMBER FOR THE PURPOSE OF AVAILING VAT CREDIT WAS ITA NOS.1211 & 1212/MDS/14 :- 12 -: ACCEPTED IN THE ELECTRONIC MODE INVOLVED IN THE PRO CESS OF ASSESSMENT IN VAT/CST ACT IS A VALID GROUND IN FAVOUR OF THE A SSESSEES CLAIM. THE CASE LAWS RELIED BY THE ASSESSEE ESPECIALLY THAT O F THE ALLAHABAD HIGH COURT IN THE CASE OF CIT VS. PANCHAM DASS JAIN 156 TAXMANN 507 SUPPORT THE PLEA OF THE ASSESSEE THAT THE REQUIREME NT OF PROOF AND CONDITIONS LAID IN SEC. 68 CANNOT BE ENFORCED IN RE SPECT OF CREDITORS FROM WHOM PURCHASES HAVE BEEN MADE. ACCORDINGLY, T HE LD. COMMISSIONER OF INCOME TAX (APPEALS) DELETED THE AD DITION OF ?1,12,14,192/-. AGGRIEVED BY THE COMMISSIONER OF INCOME TAX (APPEALS) ORDER, THE REVENUE HAS ASSAILED AN APPEAL BEFORE THE TRIBUNAL. 11. BEFORE US, THE LD. DEPARTMENTAL REPRESENTATIVE SUB MITTED THAT THE LD. COMMISSIONER OF INCOME TAX (APPEALS) FAILED TO CONSIDER THE FACT THAT NO SUCH CREDITORS EXISTING IN THE ADD RESS GIVEN BY THE ASSESSEE IN THE CASE OF UNIVERSAL PAPERS AND GURUDE V ENTERPRISES AND IN RESPECT OF THE THIRD PARTY VIZ STAR SCREENS, THE CONFIRMATION SUBMITTED DID NOT CLEARLY SHOW THE NAME OF THE PERS ON WHO FURNISHED THEM. FURTHER, THE LD. COMMISSIONER OF INCOME TAX (APPEALS) FAILED TO APPRECIATE THAT THE ASSESSEE DID NOT PROVE BEYOND DOUBT AND WITH CONCLUSIVE EVIDENCE THAT EXISTING OF CREDITORS AND HENCE, THE LD. ITA NOS.1211 & 1212/MDS/14 :- 13 -: ASSESSING OFFICER WAS RIGHT IN LAW IN MAKING AN ADD ITION U/SEC. 68 OF THE ACT. 12. ON THE OTHER HAND, THE LD. AUTHORISED REPRESENTATIV E SUBMITTED THAT THE DETAILS OF ENQUIRY CONDUCTED BY THE LD. ASSESSING OFFICER WAS NOT FURNISHED TO THE ASSESSEE. HE ALSO SUBMITTED THAT THESE ARE TRADE CREDITORS AND ALSO THE LD. ASSESSIN G OFFICER CONSIDERED THE OPENING BALANCE AS UNEXPLAINED CREDIT U/S.68 O F THE ACT WITHOUT MAKING PROPER ENQUIRY AND AS SUCH THE SUBMITTED THA T THE ORDER OF COMMISSIONER OF INCOME TAX (APPEALS) HAS TO BE AFF IRMED. 13. WE HEARD THE RIVAL SUBMISSIONS, PERUSED THE MATERIA L ON RECORD. ADMITTEDLY, THE LD. ASSESSING OFFICER MADE ENQUIRY REGARDING THE NATURE OF TRANSACTIONS. SOME PARTIES ARE NOT PROPERLY RESPONDED. FURTHER, THE LD. ASSESSING OFFICER HAS NOT PUT THE ENQUIRY REPORT BEFORE ASSESSEE FOR ITS COMMENTS. IN OUR OPINION T HE ENQUIRY REPORT REQUIRED TO BE FURNISHED TO THE ASSESSEE FOR ASSESS EES COMMENTS. FURTHER, THE LD. COMMISSIONER OF INCOME TAX (APPEAL S) OBSERVED THAT IN RESPECT OF TRADE CREDITORS OF SEC. 68 OF THE ACT CANNOT BE APPLIED WHICH IS ALSO NOT CORRECT. WHENEVER ANY CREDIT APP EARED IN THE BOOKS OF ACCOUNT IN RELEVANT ASSESSMENT YEAR, THE ASSESSE E BOUND TO PROVE THE IDENTITY AND CAPACITY OF THE PARTIES AND GENUIN ENESS OF THE ITA NOS.1211 & 1212/MDS/14 :- 14 -: TRANSACTIONS. THE BURDEN CAST ON THE ASSESSEE IN NO T DISCHARGED BY ASSESSEE. HENCE, WE REMIT THE ISSUE TO THE FILE OF THE LD. ASSESSING OFFICER TO PROVE ALL THE INCREDENCE BEFORE LD. AS SESSING OFFICER. ACCORDINGLY, THIS ISSUE IS REMITTED TO THE FILE OF THE LD. ASSESSING OFFICER FOR FRESH CONSIDERATION. THE ASSESSEE SHALL CO-OPERATE WITH LD. ASSESSING OFFICER AND IT HAS TO PROVE THE TRANSACTI ONS. THE GROUND OF THE REVENUE IS PARTLY ALLOWED FOR STATISTICAL PURPO SE. 14. IN THE RESULT, THE APPEALS OF THE REVENUE IN ITA NO.1211/MDS/2014 IS DISMISSED AND ITA NO.1212/MDS/ 2014 IS PARTLY ALLOWED FOR STATISTICAL PURPOSE. ORDER PRONOUNCED ON WEDNESDAY, THE 21 ST DAY OF SEPTEMBER, 2016, AT CHENNAI. SD/- . ! ' ) (G. PAVAN KUMAR) / JUDICIAL MEMBER SD/- ( ) (CHANDRA POOJARI) / ACCOUNTANT MEMBER / CHENNAI 1 / DATED:21.09.2016 KV 2 ) +#-34 54&- / COPY TO: 1 . '( / APPELLANT 3. ! 6- () / CIT(A) 5. 4 9: +#-# / DR 2. +,'( / RESPONDENT 4. ! 6- / CIT 6. :;% < / GF