Income tax Officer, Varanasi V. M/s Sunder Carpet Industries, Varanasi

ITA 123/ALLD/2011

• Counselvise Citation: 12320714 RSA 2011
• Duration Of Justice: 1 year(s) 4 month(s) 16 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-10-2012
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: Not Allotted
• Assessment Year: 2007-2008
• Appeal Filed On: 14-06-2011
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: JAGDISH
• Assessee Lawyers: D K AGARWAL
• Keywords: Unexplained cash credit; Bad and doubtful debts; Onus to prove
• Section: 68

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL ALLAHABAD BENCH, ALLAHABAD BEFORE SHRI BHAVNESH SAINI, JUDICIAL MEMBER AND SHRI A.L. GEHLOT, ACCOUNTANT MEMBER ITA NO.123/A/2011 ASSESSMENT YEAR: 2007-08 INCOME-TAX OFFICER -3(1), VS. M/S. SUNDER CARPET INDUSTRIES, VARANASI. VILL. & POST-BARHI NEWADA, VARANASI. (PAN: AAIFS 6366 F) (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI JAGDISH, CIT/DR RESPONDENT BY : SHRI D.K. AGARWAL, ADVOCATE DATE OF HEARING : 29.10.2012 DATE OF PRONOUNCEMENT : 31.10.2012 ORDER PER A.L. GEHLOT, ACCOUNTANT MEMBER: THIS IS AN APPEAL FILED BY THE REVENUE AGAINST THE ORDER DATED 18.03.2011 PASSED BY THE LD. CIT(A), VARANASI FOR THE ASSESSME NT YEAR 2007-08. 2. THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL :- 1. THAT THE ORDER OF LEARNED CIT(A) IS ERRONEOUS I N LAW AND ON FACTS. 2. THAT THE LEARNED CIT(APPEAL) HAS ERRED IN DELETI NG THE ADDITION OF RS.5,86,001/- AS UNEXPLAINED CASH CREDITS, AS TH E ASSESSEE FAILED TO DISCHARGE HIS ONUS TO PROVE THE GENUINENE SS OF SUNDRY CREDITORS. ITA NO.123/A/2011 A.Y. 2007-08 2 3. THAT THE LEARNED CIT (APPEAL) HAS ERRED IN DELET ING THE DISALLOWANCE OF BAD DEBTS FOR RS.4,55,792/- AS SINC E THE FINAL DECISION/ORDER HAS NOT BEEN DELIVERED BY THE COURT, THE ASSESSING OFFICER WAS JUSTIFIED IN DISALLOWING THE CLAIM OF THE ASSESSEE FOR RS.4,55,792/- AS BAD DEBTS. THIS FACT WAS NOT APPRECIATED BY THE LD. CIT(A). 4. THAT THE ORDER OF LEARNED CIT(A) BEING ERRONEOUS IN LAW AND ON FACTS MAY BE REVERSED AND THE ORDER OF ASSESSING OF FICER MAY KINDLY BE RESTORED. 3. THE GROUND NO.1 & 4 RAISED BY THE ASSESSEE IS GE NERAL IN NATURE REQUIRES NO INDEPENDENT FINDING. 4. THE BRIEF FACTS OF SECOND GROUND ARE THAT DURING THE ASSESSMENT PROCEEDINGS, THE A.O. NOTICED THAT THE SUNDRY CREDITORS AS PER B ALANCE SHEET AS ON 31.03.2007 WAS RS.41,68,228/- APPEARING IN THE NAMES OF 29 PAR TIES. THE ASSESSING OFFICER ASKED THE ASSESSEE TO FURNISH COMPLETE DETAILS OF T HOSE CREDITORS. BEFORE THE ASSESSING OFFICER THE ASSESSEE FURNISHED THE DETAIL S OF ONLY 10 CREDITORS AMOUNTING TO RS.35,82,227/-. THE ASSESSEE DID NOT PRODUCE CO NFIRMATION OF OTHER CREDITORS AS REQUIRED BY THE A.O. IN RESPECT OF BALANCE AMOUNT. THE ASSESSING OFFICER MADE ADDITION OF RS.5,86,001 (RS.41,68,228/- MINUS RS.35 ,82,227/-). 5. THE CIT(A) DELETED THE SAID ADDITION AS UNDER :- (PARAGRAPH NO.4, PAGE NO.2) 4. I HAVE GONE THROUGH THE FACTS OF THE CASE, SUBM ISSIONS OF THE ASSESSEE AS WELL AS REASON GIVEN BY THE A.O. FO R MAKING SUCH ADDITIONS AND DISALLOWANCES. IT IS NOTICED THA T ADDITION OF RS.8,86,001/- UNDER THE HEAD UNEXPLAINED CASH CREDI T HAVE BEEN ITA NO.123/A/2011 A.Y. 2007-08 3 MADE ON AD-HOC BASIS WITHOUT ASSIGNING ANY JUSTIFIC ATION OR REASONING. THIS WORKING OF THE A.O. ONLY SHOWS THAT THE ADDITIONS HAVE BEEN MADE CAPRICIOUSLY WITHOUT PROPE RLY MEASURING ACTUAL EXTENT OF UNVERIFIABILITY. WHEREAS A.O. HAS HIMSELF CALCULATED IN BODY OF HIS ORDER THE BALANCE AMOUNT FOR WHICH NO CONFIRMATION WAS GIVEN AS RS.5,86,001/ - THEREBY WRONG ADDITION OF RS.3,00,000/- HAS BEEN MADE, SO T HAT AMOUNT WAS RECTIFIED AND ACTUAL ADDITION IS RS.5,86 ,001/-. ADDITION OF RS.5,86,001/- WAS MADE BY A.O. DUE TO N ON PRODUCTION OF CONFIRMATION LETTER BY ASSESSEE. A.O. FAILED TO APPRECIATE THAT THE ASSESSEE HAS MADE PURCHASE DURI NG THE YEAR AND WITHOUT LOOKING INTO PURCHASES AND ITS GENUINEN ESS, WHICH IS NOT DOUBTED BY THE A.O., IT WAS NOT FAIR ON THE PART OF A.O. TO ADD SUNDRY CREDITORS. HENCE THE ADDITION OF RS.5,86 ,001/- IS HEREBY DELETED. 6. WE HAVE HEARD THE LEARNED REPRESENTATIVES OF THE PARTIES AND RECORDS PERUSED. THE CONTENTION OF THE ASSESSEE WAS THAT T HE CASH CREDIT PERTAINING TO RS.5,86,001/- IS IN RESPECT OF PURCHASE OF RAW MATE RIAL AND ONE ITEM OF RS.2,868/- RELATING TO P.F. PAYABLE. THE ASSESSEE REITERATED THE SUBMISSION THAT THE CORRESPONDING PURCHASE HAS BEEN ACCEPTED BY THE ASS ESSING OFFICER, THEREFORE, THERE IS NO QUESTION OF MAKING ADDITION UNDER SECTI ON 68 OF THE INCOME TAX ACT, 1961 (THE ACT HEREINAFTER). THE CASE OF THE ASSE SSING OFFICER WAS THAT THE ASSESSEE DID NOT FURNISH THE RELEVANT DETAILS, THER EFORE, HE MADE ADDITION OF RS.5,86,001/-. THE CIT(A) WENT TO DIFFERENT ISSUE AND DELETED THE ADDITION ON THE GROUND THAT THE ASSESSING OFFICER DID NOT DOUBT THE GENUINENESS OF THE CORRESPONDING PURCHASE OF THOSE CREDITORS. BUT, WE NOTICE THAT THE ASSESSEE HAS FAILED TO POINT OUT THE DETAILS OF RS.5,86,001/-, W HETHER IT WAS RELATED TO PURCHASE OR OTHER ITEMS. IN ABSENCE OF DETAILS, WE CANNOT U PHOLD THE ORDER OF CIT(A) ITA NO.123/A/2011 A.Y. 2007-08 4 AGREEING WITH THE PRESUMPTION THAT THE AMOUNT REPRE SENTED OUTSTANDING PURCHASES. THE FINDING OF CIT(A) IS WITHOUT VERIFYING THE RELE VANT DETAILS AND FACTS OF THE ISSUE. THE ASSESSEE DID NOT FURNISH THE DETAILS BE FORE THE ASSESSING OFFICER. WE, THEREFORE, FIND THAT THIS ISSUE REQUIRES VERIFICATI ON AND ALSO REQUIRE DETAILS TO BE PUT ON RECORD. WE, THEREFORE, SEND THIS MATTER BACK TO THE FILE OF ASSESSING OFFICER WITH THE DIRECTION TO EXAMINE THE DETAILS OF RS.5,8 6,001/- AND DECIDE THE ISSUE AFRESH IN ACCORDANCE WITH LAW. IN THIS REGARD, WE WOULD LIKE TO REFER TO AN ORDER OF I.T.A.T., AMRITSAR BENCH IN THE CASE OF DAVINDER SI NGH VS. ACIT REPORTED IN 290 ITR (AT) 306 (AMRITSAR). 7. THE BRIEF FACTS OF SECOND GROUND IS IN RESPECT O F BAD DEBT OF RS.4,55,792/-. THE A.O. DISALLOWED THE CLAIM OF THE ASSESSEE AS TH E ASSESSEE FAILED TO FURNISH DETAILS. THE CIT(A) DELETED THE ADDITION OBSERVING THAT THE ASSESSING OFFICER MADE DISALLOWANCE WITHOUT MAKING ANY ENQUIRY. 8. WE HAVE HEARD THE LEARNED REPRESENTATIVES OF THE PARTIES AND RECORDS PERUSED. WE FIND THAT THE BAD DEBT ISSUE HAS NOW B EEN SETTLED BY THE JUDGEMENT OF APEX COURT IN THE CASE OF T.R.F. LIMITED VS. CIT, 3 23 ITR 397 (SUPREME COURT). IN THE LIGHT OF THE SAID JUDGMENT OF THE HON'BLE SU PREME COURT, WE SEND THIS MATTER BACK TO THE FILE OF ASSESSING OFFICER WITH DIRECTIO N TO DECIDE THE ISSUE AFRESH IN ACCORDANCE WITH JUDGMENT OF APEX COURT IN THE CASE OF T.R.F. LIMITED VS. CIT ITA NO.123/A/2011 A.Y. 2007-08 5 (SUPRA). NEEDLES TO MENTION THAT BEFORE DECIDING T HE ISSUE, THE ASSESSING OFFICER SHALL PROVE REASONABLE OPPORTUNITY OF HEARING TO TH E ASSESSEE. 9. IN THE RESULT, APPEAL FILED BY THE REVENUE IS AL LOWED FOR STATISTICAL PURPOSES. (ORDER PRONOUNCED IN THE OPEN COURT) SD/- SD/- (BHAVNESH SAINI) (A.L. GEHLOT) JUDICIAL MEMBER ACCOUNTANT MEMBER PBN/* COPY OF THE ORDER FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT (APPEALS) CONCERNED 4. CIT CONCERNED 5. D.R., ITAT, ALLAHABAD BENCH, ALLAHABAD 6. GUARD FILE. BY ORDER ASSISTANT REGISTRAR INCOME-TAX APPELLATE T RIBUNAL, ALLAHABAD TRUE COPY