Gokulanand Petrofibres, Surat V. The Income tax Officer,Ward-6(2), Surat

ITA 1249/AHD/2010

• Counselvise Citation: 124920514 RSA 2010
• Duration Of Justice: 3 year(s) 4 month(s) 1 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 23-08-2013
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 10-07-2013
• Assessment Year: 2005-2006
• Appeal Filed On: 21-04-2010
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: P L KUREEL
• Assessee Lawyers: MEHUL R SHAH
• Keywords: Unexplained cash credit; Unexplained expenditure; Depreciation; Corroborative evidences
• Section: 69C; 133(6)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD B BENCH BEFORE: SRI D.K TYAGI, JUDICIAL MEMBER AND SHRI T.R. MEENA, ACCOUNTANT MEM BER M/S GOKULNAND PETROFIBRES PLOT NO. AA-10, SACHIN, PALSANA ROAD, VANZ, SACHIN, SURAT PAN AAEFG4816C (APPELLANT) VS INCOME TAX OFFICER, WARD 6(2), SURAT (RESPONDENT) ITA NO. 1961 /AHD/2010 ASSESSMENT YEA R 2005-06 INCOME TAX OFFICER, WARD 6(2), SURAT (APPELLANT) VS M/S GOKULNAND PETROFIBRES PLOT NO. AA-10, SACHIN, PALSANA ROAD, VANZ, SACHIN, SURAT PAN AAEFG4816C (RESPONDENT) REVENUE BY: SRI P.L. KUREEL, SR.D.R. ASSESSEE BY: SRI MEHUL R. SHAH, A.R. DATE OF HEARING : 10-07-2013 DATE OF PRONOUNCEMENT : 23-08-20 13 ITA NO. 1249/AHD/2010 ASSESSMENT YEAR 2005-06 I.T.A NOS. 1249/AHD/2010 & 1961/AHD/2010 A.Y.2005- 06 PAGE NO M/S GOKULNAND PETROFIBRES VS. ITO 2 / ORDER PER : D.K. TYAGI, JUDICIAL MEMBER:- THESE ARE CROSS APPEALS FILED AGAINST THE ORDER OF LD. CIT(A)-IV, SURAT DATED 19-02-2010 AND ARE DISPOSED OFF BY THIS CONSOLIDATED ORDER. FIRST WE WILL TAKE UP REVENUES APPEAL IN ITA NO. 1 961/AHD/2010 2. THE REVENUE HAS TAKEN FOLLOWING THREE EFFECTIVE GROUNDS:- 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE AND IN LAW, THE LD. CIT(A)-IV, SURAT HAS ERRED IN ALLOWING THE DEPRECIATION OF RS. 2,38,713/- MADE BY THE A.O. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E AND IN LAW, THE LD. CIT(A)-IV, SURAT HAS ERRED IN DELETING THE ADDITION OF RS. 19,09,710/- MADE BY THE AO U/S. 69C OF THE ACT. 3. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E AND IN LAW, THE LD. CIT(A)-IV, SURAT HAS ERRED IN DELETING THE ADDITION OF RS. 1,00,00,000/- MADE BY THE AO U/S, 68 OF THE ACT. 3. GROUND NO. 1 AND 2 RELATES TO DELETION OF DISALL OWANCE OF RS. 2,38,713/- ON ACCOUNT OF DEPRECIATION TO PLANT AND MACHINERY AND RS. 19,09,710/- U/S 69C OF THE ACT IN RESPECT OF CUSTOM DUTY PAID ON PLANT AND MACHINERY. SINCE BOTH THE GROUNDS ARE INTERLINKED, THEY ARE BEING ADJUDICATED TOGETHER. I.T.A NOS. 1249/AHD/2010 & 1961/AHD/2010 A.Y.2005- 06 PAGE NO M/S GOKULNAND PETROFIBRES VS. ITO 3 4. BRIEF FACTS OF THE CASE ARE THAT ASSESSEE IS A P ARTNERSHIP FIRM ENGAGED IN THE BUSINESS OF MANUFACTURING OF POY YAM AND OTH ER TEXTILE YARN/ FABRICS. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE AO OBSERVED THAT THE ASSESSEE HAS ON ONE HAND DEBITED ITS PLANT AND MACH INERY ACCOUNT AND ON THE OTHER HAND HAD CREDITED CUSTOM DUTY ACCOUNT, BY THE AMOUNTS OF RS. 6,93,892/- AND RS. 12,15,818/-. THESE AMOUNTS WERE SHOWN TO HAVE BEEN PAID IN RESPECT OF IMPORT OF PLANT AND MACHINERY HO WEVER, THE AO NOTICED THAT THERE WAS NO ADDITION TO PLANT AND MACHINERY A ND ACCORDINGLY, HE ASKED THE ASSESSEE TO SHOW-CAUSE AS TO WHY THE AMOUNT OF RS. 19,09,710/- (I.E. RS. 6,93,892 + RS. 12,15,818) SHOULD NOT BE TREATED AS UNEXPLAINED. THE ASSESSEES EXPLANATION WAS THAT THE THESE PAYMENTS WERE IN RESPECT OF CUSTOM DUTY PAID FOR IMPORT OF PLANT AND MACHINERIE S, FOR WHICH THE ASSESSEE FURNISHED THE COPY OF MACHINERY BILL, T R- 6 CHALLANS ETC. HOWEVER, ON VERIFICATION OF THE BILLS, THE AO OBSERVED THAT THE DATES OF THE BILLS WERE NOT MATCHING WITH THE DATES MENTIONED IN THE LEDGER ACCOUNT. ACCORDINGLY, THE AO TREATED THE CUSTOM DUTY PAYMENT TOTALING TO RS. 19,09,710/- AS UNEXPLAINED EXPENDITURE U/S. 69C OF THE ACT AND ALS O DISALLOWED DEPRECIATION OF RS. 2,38,7137- CLAIMED BY THE ASSES SEE. 5. BEFORE LD. CIT(A) THE ASSESSEES EXPLANATION WA S THAT THE AMOUNT OF RS. 6,93,892/- IS THE CUSTOM DUTY PAID IN RESPECT O F MACHINERY PURCHASED DURING THE YEAR UNDER CONSIDERATION, WHEREAS, THE A MOUNT OF RS. 12,15,8187- IS IN RESPECT OF ADDITIONAL CUSTOM DUTY PAID ON MAC HINERIES PURCHASED IN THE EARLIER YEAR. IN SUPPORT OF HIS ARGUMENTS, THE ASSE SSEE FURNISHED THE COPY OF THE MACHINERY PURCHASED BILLS, LEDGER ACCOUNT OF PL ANT AND MACHINERY, LEDGER ACCOUNT OF CUSTOM DUTY AND COPY OF TR-6 CHALLAN. AS SESSEE FURTHER I.T.A NOS. 1249/AHD/2010 & 1961/AHD/2010 A.Y.2005- 06 PAGE NO M/S GOKULNAND PETROFIBRES VS. ITO 4 EXPLAINED THAT THE AMOUNT OF CUSTOM DUTY IS MENTION ED IN THE IMPORT BILLS BY THE CUSTOMS AUTHORITY. FURTHERMORE, THE PAYMENT OF CUSTOM DUTY IS EVIDENCED BY TR-6 CHALLANS AND HENCE, THERE IS NO M ERIT IN TREATING SUCH STATUTORY PAYMENTS AS UNEXPLAINED EXPENDITURE U/S. 69 OF !HE ACT. AS REGARDS THE MATCHING OF DATES IT WAS EXPLAINED THAT THE SAI D CUSTOM DUTY WAS PAID IN PARTS ON SEVERAL DATES VIDE RESPECTIVE TR-G CHALLAN S AND THE SAME WAS FIRST DEBITED TO CUSTOM DUTY A/C. AND THEREAFTER, ON COMP LETION OF THE TOTAL PAYMENT, THE SAME WAS TRANSFERRED TO THE LEDGER ACC OUNT OF PLANT AND MACHINERIES, ON 28-2-205 AND 31-3-2005 BY DEBITING PLANT AND MACHINERY A/C. AND CREDITING CUSTOM DUTY ACCOUNT AND HENCE, T HE SAID DATES AS APPEARING IN THE PLANT AND MACHINERY ACCOUNT WERE N OT MATCHING WITH THAT OF THE BILLS. LD. CIT(A) AFTER TAKING INTO CONSIDERATI ON THESE SUBMISSIONS OF THE ASSESSEE DELETED THIS ADDITION BY OBSERVING AS UNDE R:- I HAVE CONSIDERED THE FACTS OF THE CASE, THE ORDER OF THE AO AND THE SUBMISSIONS OF THE APPELLANT. IN THE PRESENT CASE, THE AO HAS MADE THE AFORESAID ADDITION AND DISALLOWANCE ON 2 GROUND S. THE FIRST ALLEGATION OF THE AO IS THAT THOUGH THE APPELLANT H AD CLAIMED THAT CUSTOM DUTY IS PAID ON PURCHASE OF PLANT AND MACHIN ERY, THERE IS NO ADDITION TO PLANT AND MACHINERY DURING THE YEAR. IN THIS REGARD, ON VERIFICATION OF THE LEDGER ACCOUNT OF PLANT AND MAC HINERY, IT IS SEEN THAT DURING THE YEAR UNDER CONSIDERATION, THE APPEL LANT HAS PURCHASED SEVERAL PLANT AND MACHINERIES TOTALING TO RS. 1,27, 77,329/-. FURTHER, THE SAID ADDITIONS TO PLANT AND MACHINERY ARE ALSO SUPPORTED BY BILLS AND MOST OF THE MACHINERIES PURCHASED ARE IMPORTED. HENCE, THE AL LEGATION OF THE AO THAT THERE IS NO ADDITION TO PLA NT AND MACHINERIES DURING THE YEAR IS NOT JUSTIFIED. THE SECOND ALLEGA TION OF THE AO IS THAT THE DATES AS MENTIONED IN THE LEDGER ACCOUNT DO NOT MATCH WITH THE MACHINERY PURCHASE BILL. IN THIS REGARD, IT IS SEEN THAT THE APPELLANT HAD IMPORTED MACHINERIES ON VARIOUS DATES AND THE CUSTOM DUTY ON IMPORT OF THE SAID MACHINERI ES HAS ALSO BEEN MADE ON VARIOUS DATES THROUGH TR-6 CHALLAN. FURTHER , AT THE TIME OF PAYMENT OF CUSTOM DUTY IN PARTS, THE APPELLANT HAD DEBITED CUSTOM I.T.A NOS. 1249/AHD/2010 & 1961/AHD/2010 A.Y.2005- 06 PAGE NO M/S GOKULNAND PETROFIBRES VS. ITO 5 DUTY ACCOUNT WITH THE SAID AMOUNTS PAID AND THEREAF TER, ON MAKING THE TOTAL PAYMENTS, THE SAID BALANCES OF RS. 6,93,892/- AND RS. 12,15,81 8/-, WERE TRANSFERRED TO PLANT AND MACHINERY ACCOUN T ON 28-2-2005 AND 31-3-2005 RESPECTIVELY, BY DEBITING THE PLANT A ND MACHINERY ACCOUNT AND CREDITING CUSTOM DUTY ACCOUNT. HENCE, THE SAID DATES OF 28-2-2005 AND 31-3-2005 DID NOT MATCH WITH THE MACH INERIES PURCHASE BILLS. THE SAID ACCOUNTING TREATMENT OF PA YMENT OF CUSTOM DUTY AS FOLLOWED BY THE APPELLANT IS NOT INCORRECT AND THE AO HAS ERRONEOUSLY COMPARED THE DATES ON WHICH THE SAID CU STOM DUTY WAS CAPITALIZED IN PLANT AND MACHINERY ACCOUNT WITH THE PURCHASE BILLS INSTEAD OF MATCHING THE SAME WITH THE TR-6 CHALLANS . THE MOST IMPORTANT ASPECT IN THE PRESENT CASE IS THAT THE AP PELLANT HAS PURCHASED IMPORTED MACHINERIES AND HAS PAID CUSTOM DUTY THEREON, WHICH IS EVIDENCED BY PURCHASE BILLS AND STATUTORY TR-6 CHALLANS. HENCE, I HOLD THAT THE SAID CUSTOM DUTY PAYMENTS FO R PLANT AND MACHINERIES CAN NEITHER BE TREATED AS UNEXPLAINED E XPENDITURE U/S. 69 OF THE ACT NOR THE DEPRECIATION CLAIMED THEREON CAN BE DISALLOWED. THEREFORE, I HEREBY DELETE THE DISALLOWANCE OF RS. 2,38,713/- MADE BY THE AO OUT OF DEPRECIATION ON PLANT AND MACHINERIES AND ALSO DELETE THE DISALLOWANCE OF RS. 19,09,710/-MADE BY THE AO U /S 69 OF THE ACT. IN THE RESULT THE GROUND OF APPEAL NO. 1 AND 2 STAN DS ALLOWED. 6. AGGRIEVED REVENUE IS NOW IN APPEAL BEFORE US. 7. AT THE TIME OF HEARING LD. DR SUPPORTED THE ORDE R OF AO WHILE LD. COUNSEL OF THE ASSESSEE RELIED ON THE ORDER OF CIT( A). 8. AFTER HEARING BOTH PARTIES AND PERUSING THE RECO RD, WE FIND THAT ASSESSING OFFICER HAS DISALLOWED CUSTOM DUTY PAID O F RS. 19,9,710/- U/S 69C OF THE ACT AND DEPRECIATION CLAIMED ON IT OF RS. 2, 38,713/- BY OBSERVING THAT ASSESSEE HAS PAID CUSTOM DUTY ON VARIOUS DATES WHIC H DO NOT MATCH WITH THE PURCHASE BILLS OF THE MACHINERY. LD. CIT(A) HAS GI VEN RELIEF TO THE ASSESSEE BY SATISFYING HIMSELF THAT THE ACCOUNTING TREATMENT FOLLOWED BY THE ASSESSEE I.T.A NOS. 1249/AHD/2010 & 1961/AHD/2010 A.Y.2005- 06 PAGE NO M/S GOKULNAND PETROFIBRES VS. ITO 6 WAS CORRECT IN RESPECT OF THESE TRANSACTIONS. LD. CIT(A) HAS GIVEN CATEGORICAL FINDING THAT SINCE ASSESSEE HAS PURCHAS ED IMPORTED MACHINERIES AND CUSTOM DUTY HAS BEEN PAID AS IS EVIDENT FROM TR -6 CHALLAN, THE ADDITION MADE BY THE ASSESSING OFFICER U/S 69C WAS UNCALLED FOR AND CONSEQUENTLY THE DEPRECIATION ON IT WAS ALSO ALLOWABLE. SINCE THIS FINDING OF LD CIT(A) REMAINED UNCONTROVERTED BY THE REVENUE BEFORE US, W E ARE NOT INCLINED TO INTERFERE WITH THE ORDER PASSED BY LD. CIT(A) AND T HE SAME IS HEREBY UPHELD. THUS GROUND NOS. 1 AND 2 TAKEN BY REVENUE ARE DISMI SSED. 9. GROUND NO. 3 RELATES TO ADDITION OF RS. 1,00,00, 000/- U/S. 68 OF THE ACT WHICH HAS BEEN DELETED BY LD. CIT(A). THE FACT S OF THE CASE IN THIS REGARD ARE THAT DURING THE COURSE OF ASSESSMENT PRO CEEDING, THE AO OBSERVED THAT THE AMOUNT OF RS. 1,00,00,000/- WAS DEPOSITED IN THE ASSESSEES BANK ACCOUNT AND ACCORDINGLY, THE AO ASKED THE ASSESSEE TO EXPLAIN THE SAME THEREOF. IN RESPONSE TO THE SAME, THE ASSESSEE EXP LAINED THAT THE SAID AMOUNT WAS RECEIVED FROM A CUSTOMER I.E. M/S. SRV POLYTEX PVT. LTD., TO WHOM THE ASSESSEE HAD SOLD GOODS THROUGH ITS CONSIGNMENT AGE NT GOKULANAND TEXTILE INDUSTRIES. THE AO ISSUED SUMMONS U/S. 131 TO M/S SRV POLYTEX PVT. LTD. HOWEVER, THE SAME WAS NOT COMPLIED WITH. ON THE OTH ER HAND, THE ASSESSEE ALSO FURNISHED A CONFIRMATION AND IT ACKNOWLEDGEMEN T OF THE SAID SRV POLYTEX PVT LTD AS ALSO THE LEDGER ACCOUNT OF THE A GENT GOKULANAND TEXTILE INDUSTRIES TO THE AO. ON VERIFICATION OF THE SAME, THE AO OBSERVED THAT THE ACCOUNTS OF M/S SRV POLYTEX PVT. LTD AND GOKULNAND TEXTILE INDUSTRIES WERE SETTLED THROUGH J.V. ENTRIES AND HENCE, THE AO TREATED THE SAID AMOUNT OF RS. L,00,00,000/-DEPOSITED IN THE ASSESSEES BANK ACCOU NT AS UNEXPLAINED CASH CREDITS U/S 68 OF THE ACT AND MADE ADDITION FOR THE SAME. I.T.A NOS. 1249/AHD/2010 & 1961/AHD/2010 A.Y.2005- 06 PAGE NO M/S GOKULNAND PETROFIBRES VS. ITO 7 10. BEFORE LD. CIT(A), ASSESSEES EXPLANATION WAS THAT THE ASSESSEE ALSO SELLS ITS GOODS THROUGH CONSIGNMENT AGENT, GOKULAN AND TEXTILE INDUSTRIES AND DURING THE YEAR UNDER APPEAL THE ASSESSEE HAD S OLD GOODS WORTH RS. 1,00,00,000/- TO A CUSTOMER M/S SRV POLYTEX PVT. LT D. THROUGH HIM. IT WAS FURTHER SUBMITTED THAT THE CUSTOMER M/S SRV POLYTEX GOKIRIRANYND TEXTILE INDUSTRIES ISSUED 2 ACCOUNT PAYEE CHEQUES OF RS. 50 LACS EACH, BEARING NO. 569142 AND 569143, DATED 16-6-2004 TOWARDS PAYMENT OF THE SE SALES MADE BY THE ASSESSEE AND THESE CHEQUES WERE DEPOSITED TO THE ASSESSEE'S BANK ACCOUNT. IT WAS FURTHER EXPLAINED THAT THE ACCOUNTI NG TREATMENT IN RESPECT OF SALES MADE THROUGH CONSIGNMENT AGENT, RECEIPT OF SA LES PROCEEDS FROM CUSTOMERS AND SETTLING OF THE CUSTOMERS ACCOUNT AND AGENTS ACCOUNT. IN THIS REGARD, THE ASSESSEE EXPLAINED THAT THE ENTIRE SALE S MADE THROUGH THE CONSIGNMENT AGENT IS DEBITED TO THE LEDGER ACCOUNT OF THE CONSIGNMENT AGENT AND THE PAYMENTS RECEIVED FROM CUSTOMERS ARE CREDIT ED TO THE SAID CUSTOMERS ACCOUNT. THEREAFTER; ON RECEIVING THE P AYMENT FROM THE RESPECTIVE CUSTOMER, A J.V. ENTRY IS PASSED WHEREBY THE CUSTOMERS ACCOUNT WAS DEBITED AND THE AGENTS ACCOUNT WAS CREDITED AN D ACCORDINGLY, THE ACCOUNTS OF CUSTOMER AND THE AGENT ARE SETTLED. THE CONFIRMATION AND IT ACKNOWLEDGMENT OF THE CUSTOMER M/S SRV POLYLTEX PVT . LTD ., AND THE LEDGER ACCOUNT OF THE CONSIGNMENT AGENT GOKULNAND TEXTILE INDUSTRIES WAS ALSO FURNISHED AND SUBMISSION WAS MADE THAT THE AMOUNT O F RS. 1,00,00000/- DEPOSITED IN THE BANK ACCOUNT REPRESENTS SALES PROC EEDS OF THE ASSESSEE FROM M/S SRV POLYTEX PVT LTD. AND THEREFORE THE ADDITION MADE U/S 68 MADE BY AO DESERVES TO BE DELETED. I.T.A NOS. 1249/AHD/2010 & 1961/AHD/2010 A.Y.2005- 06 PAGE NO M/S GOKULNAND PETROFIBRES VS. ITO 8 11. AFTER TAKING INTO CONSIDERATION THE SUBMISSION OF THE ASSESSEE, LD. CIT(A) DELETED THIS ADDITION BY OBSERVING AS UNDER: - I HAVE CONSIDERED THE FACTS OF THE CASE, THE ORDER OF THE AO AND THE SUBMISSION OF THE APPELLANT. IN THE PRESENT CASE IT IS SEEN THAT THE APPELLANT HAD SOLD GOODS OF RS. 1,00,00,000/-TO A C USTOMER VIZ. SRV POLYTEX PVT. LID., THROUGH A CONSIGNMENT AGENT VIZ. GOKULANAND TEXTILE INDUSTRIES AND THE SAME HAS BEEN OFFERED AS SALES IN THE PROFIT AND LOSS ACCOUNT. HOWEVER, AS A MATTER OF ACCOUNTIN G POLICY, THE APPELLANT HAD DEBITED THE LEDGER ACCOUNT OF THE CON SIGNMENT AGENT INSTEAD OF THE CUSTOMERS ACCOUNT WHICH HAS ULTIMATE LY BEEN SETTLED IN THE FORM OF J.V. ENTRIES. THE FACT OF GOODS BEING S OLD BY THE APPELLANT TO SRV POLYTEX PVT. LTD. THROUGH CONSIGNMENT AGENT GUKULANAND TEXTILE INDUSTRIES, GETS AMPLY EVIDENCED FROM THE C ONFIRMATION OF THE SRV POLYTEX PVT. LTD. AND LEDGER ACCOUNT OF GOKULAN AND TEXTILE INDUSTRIES. THE AO'S ACTION OF ADDITION THE ENTIRE AMOUNT AS UNEXPLAINED CASH CREDIT U/S. 68 ONLY ON THE GROUND THAT THE SAID CUSTOMER HAS NOT RESPONDED TO HIS SUMMONS U/S. 131 OF THE ACT IS NOT CORRECT SINCE, THE SUMMONS HAS BEEN SERVED ON THE C USTOMER AND HAD NOT RETURNED BACK UNSERVED. THE APPELLANT HAS BEEN ABLE TO DISCHARGE THE ONUS CAST UPON IT BY FURNISHING THE CONFIRMATIO N AND IT ACKNOWLEDGEMENT OF SRV POLYTEX PVT. LTD. THE APPELL ANT HAS ALSO BEEN SATISFACTORILY ABLE TO PROVE THAT THE AMOUNT O F RS. 1,00,00,000/- DEPOSITED IN ITS BANK ACCOUNT REPRESENTS SALES PROC EEDS RECEIVED FROM SRV POLYTEX PVT LTD. AND THUS, ADDITION U/S, 68 OF THE SALES PROCEEDS WOULD AMOUNT TO DOUBLE TAXATION. ACCORDINGLY, I AM OF THE OPINION THAT THE APPELLANT CANNOT BE PUNISHED FOR NON-COMPL IANCE ON THE PART OF ITS CUSTOMER MOREOVER, WHEN THE APPELLANT HAS BE EN ABLE TO SATISFACTORILY EXPLAIN THE SAID CASH CREDIT. HENCE, I HEREBY DELETE THE ADDITION OF RS, 1,00,00,000/- MADE BY THE AO U/S. 6 8 OF THE ACT. IN THE RESULT THIS GROUND OF APPEAL STANDS ALLOWED. 12. AGGRIEVED REVENUE IS IN APPEAL BEFORE US I.T.A NOS. 1249/AHD/2010 & 1961/AHD/2010 A.Y.2005- 06 PAGE NO M/S GOKULNAND PETROFIBRES VS. ITO 9 13. AFTER HEARING BOTH THE PARTIES AND PERUSING THE RECORD, WE FIND THAT THE LD. CIT(A) HAS GIVEN RELIEF TO THE ASSESSEE BY OBSE RVING THAT ASSESSEE HAS DEPOSITED RS. 1 CRORE IN THE BANK ACCOUNT IN THE MO NTH OF APRIL AND THIS AMOUNT WAS RECEIVED BY TWO CHEQUES OF RS. 50,000/- FROM M/S S R V POLYTEX PVT TO WHOM GOODS WERE SOLD THROUGH CONSIGN MENT AGENT, GOKULANAND TEXTILE INDUSTRIES. THESE SALES HAVE DU LY BEEN REFLECTED IN THE BOOKS OF ACCOUNT AND THEREFORE SIMPLY BECAUSE SUMMO NS ISSUED U/S 131 WERE NOT COMPLIED, ADDITION CANNOT BE SUSTAINED. S INCE THE ASSESSEE HAS DISCHARGED ITS ONUS CAST UPON IT BY FURNISHING THE CONFIRMATION AND INCOME TAX ACKNOWLEDGEMENT OF S R V POLYTEX PVT LTD., THE ASSESSEE HAS BEEN ABLE TO PROVE THAT THE AMOUNT OF RS. 1 CRORE DEPOSITED I NTO BANK ACCOUNT REPRESENTED SALE PROCEEDS FROM S R V POLYTEX PVT. LTD AND THUS THE ADDITION U/S 68 WAS UNCALLED FOR. SINCE THIS FINDING OF THE LD. CIT(A) REMAINED UNCONTROVERTED BY THE REVENUE AT THE TIME OF HEARIN G BEFORE US, WE ARE NOT INCLINED TO INTERFERE WITH THE ORDER PASSED BY LD. CIT(A) AND THE SAME IS HEREBY UPHELD. THIS GROUND OF REVENUE IS ALSO DISMISSED. NOW WE TAKE UP ASSESSEES APPEAL IN ITA NO. 1249/AH D/2010 14. ASSESSEE HAS TAKEN FOLLOWING EFFECTIVE GROUND:- 1. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AS W ELL AS LAW ON THE SUBJECT, THE LEARNED CIT(A) HAS ERRED IN CONFIRMING THE ACTION OF THE ASSESSING OFFICER IN MAKING DISALLOWANCE OF RS. 47, 11,360/- ON ACCOUNT OF ALLEGED UNEXPLAINED PURCHASES. I.T.A NOS. 1249/AHD/2010 & 1961/AHD/2010 A.Y.2005- 06 PAGE NO M/S GOKULNAND PETROFIBRES VS. ITO 10 14. BRIEF FACTS IN RESPECT OF THIS GROUND ARE THAT DURING THE COURSE OF ASSESSMENT PROCEEDINGS, ASSESSING OFFICER ASKED THE ASSESSEE TO FURNISH NAME AND ADDRESS OF THE PERSONS FROM WHOM PURCHASES WERE MADE AND IN RESPONSE TO THE SAME, THE ASSESSEE FURNISHED THE NAME AND AD DRESS OF VARIOUS PURCHASE PARTIES AND ALSO SUBMITTED CONFIRMATIONS FROM VARIO US PURCHASE PARTIES. THE AO ISSUED NOTICES U/S 133(6) OF THE ACT TO SEVE RAL PURCHASE PARTIES TO VERIFY THE GENUINENESS OF THE PURCHASES SHOWN BY TH E ASSESSEE AND OUT OF THESE, THE NOTICES ISSUED TO THE FOLLOWING PURCHASE PARTIES WERE RETURNED BACK UN-SERVED. SR. NO. NAME OF THE PURCHASE PARTY AMOUNT OF PURCHASES (RS.) 1 2 3 4 5 6 7 8 SHAH PAPER PACK IND. DENRAJ POLYMERS ALIDHARA TEXSPIN ENGG. AGLIS ENGG. CO. PVT. LTD. PCL TECHNOLOGIES & PRODUCT LTD. SAI INDUSTRIES HENA PACKING GUJARAT MINERAL DEVELOPMENT CORPORATION LTD. TOTAL 30,66,591 8,99,234 13,08,600 7,28,453 1,37,80,431 13,84,746 9,39,390 14,49,362 --------------- 2,35,56,807 ACCORDINGLY, ASSESSING OFFICER ASKED THE ASSESSEE T O SHOW CAUSE AS TO WHY THE AMOUNT OF RS. 47,11,350/- BEING 20% OF THE ABOV E PURCHASES OF RS. 2,35,56,807/- SHOULD NOT BE DISALLOWED. IN RESPONS E TO THE SAME, THE ASSESSEE MERELY REITERATED THAT IT HAD ALREADY FURN ISHED THE CONFIRMATION OF THE SAID PURCHASE PARTIES EXCEPT GUJARAT MINERAL DE VELOPMENT CORPORATION I.T.A NOS. 1249/AHD/2010 & 1961/AHD/2010 A.Y.2005- 06 PAGE NO M/S GOKULNAND PETROFIBRES VS. ITO 11 LTD AND ALSO SUBMITTED THAT IT HAD MADE PAYMENTS TH ROUGH ACCOUNT PAYEE CHEQUES AND FURNISHED THE COPY OF PURCHASE BILL, TR ANSPORT RECEIPTS ETC. HOWEVER THIS EXPLANATION OF THE ASSESSEE WAS NOT AC CEPTABLE TO THE AO AND HE WAS OF THE VIEW THAT CONFIRMATIONS WERE NOT SUPP ORTED BY OTHER DOCUMENTARY EVIDENCES LIKE BANK STATEMENTS, INCOME TAX ACKNOWLEDGEMENT ETC AND HENCE IN THE ABSENCE OF THESE SUPPORTING DO CUMENTARY EVIDENCES, THE PURCHASES COULD NOT BE JUSTIFIED. ACCORDINGLY, HE DISALLOWED ONLY 20% OUT OF PURCHASES AMOUNTING TO RS. 2,35,56,870/- FOR WA NT OF EVIDENCE. 15. BEFORE LD. CIT(A), IT WAS SUBMITTED ON BEHALF O F THE ASSESSEE THAT ASSESSEE HAD FULLY DISCHARGED THE ONUS CAST UPON IT TO JUSTIFY THE PURCHASES BY NOT ONLY FURNISHING THE NAME AND ADDRESS OF THE PURCHASE PARTIES BUT ALSO BY FURNISHING EVIDENCES I.E. CONFIRMATION OF PURCHA SE PARTIES, COPY OF PURCHASE BILL, TRANSPORT RECEIPTS, WEIGHING SLIPS E TC. IT WAS FURTHER SUBMITTED THAT PAYMENTS FOR THE PURCHASES HAVE BEEN MADE THRO UGH ACCOUNT PAYEE CHEQUES, THEREFORE, DISALLOWANCE OUT OF THE PURCHAS ES DESERVES TO BE DELETED. HOWEVER LD. CIT(A) CONFIRMED THE ACTION OF THE AO. 16. FURTHER AGGRIEVED ASSESSEE IS IN APPEAL BEFORE US. 17. AT THE TIME OF HEARING LEARNED COUNSEL OF THE A SSESSEE REITERATED THE SUBMISSIONS MADE BEFORE LOWER AUTHORITIES. LD. DR RELIED ON THE ORDER OF LD. CIT(A). 18. AFTER HEARING BOTH THE PARTIES AND PERUSING THE RECORD, WE FIND THAT ASSESSING OFFICER HAS DISALLOWED 20% OF THE PURCHAS ES MADE BY THE ASSESSEE I.T.A NOS. 1249/AHD/2010 & 1961/AHD/2010 A.Y.2005- 06 PAGE NO M/S GOKULNAND PETROFIBRES VS. ITO 12 FROM CERTAIN PARTIES FOR WANT OF VERIFICATION MAINL Y ON THE GROUND THAT THE NOTICES U/S. 133(6) ISSUED TO THESE PARTIES WERE RE TURNED UN-SERVED AND THE ASSESSEE HAS NOT BEEN ABLE TO FURNISH OTHER SUPPORT ING EVIDENCES I.E. BANK STATEMENT, INCOME TAX ACKNOWLEDGEMENT ETC. OF THE S UPPLIERS AND ACCORDINGLY THESE PURCHASES COULD NOT BE HELD TO BE GENUINE. THE ASSESSEES CONSISTENT CONTENTION HAS BEEN THAT IT HAD GIVEN NA ME AND ADDRESS OF THE PURCHASE PARTIES, THEIR CONFIRMATIONS, COPY OF PURC HASE BILLS, TRANSPORT RECEIPTS ETC AND THAT PAYMENT HAS BEEN MADE THROUGH PROPER BANKING CHANNEL ,AND HENCE IT HAS DISCHARGED ITS ONUS TO JUSTIFY TH E PURCHASES MADE BY IT. HOWEVER WE FIND THAT SINCE NOTICES U/S 133(6) ISSUE D TO THESE PARTIES RETURNED UN-SERVED THE PRIMARY DETAIL OF ADDRESS OF THE SUPPLIERS AS SUBMITTED BY THE ASSESSEE WAS FOUND TO BE INCORRECT AND THEREFORE IT CANNOT BE SAID THAT ASSESSEE HAS BEEN ABLE TO DISCHARGE TH E ONUS CAST UPON IT TO JUSTIFY ITS CLAIM OF PURCHASES MADE BY HIM FROM THE SE PARTIES. WE FURTHER FIND THAT IN SUPPORT OF ITS CLAIM THAT PURCHASES WE RE MADE THROUGH BANKING CHANNELS, THE ASSESSEE HAS NOT FILED SUPPORTING EVI DENCES LIKE BANK STATEMENT AND INCOME TAX ACKNOWLEDGEMENT ETC. OF THE SUPPLIER S EITHER BEFORE THE LOWER AUTHORITIES OR EVEN BEFORE US. THEREFORE WE ARE OF THE CONSIDERED OPINION THAT ASSESSING OFFICER WAS REASONABLE ENOUG H BY NOT DISALLOWING ENTIRE PURCHASES MADE FROM THESE PARTIES BUT BY DIS ALLOWING ONLY 20% OF TOTAL PURCHASES MADE FROM THESE PARTIES. IN THE AB SENCE OF ANY SUPPORTING EVIDENCE IN RESPECT OF PURCHASES, LD. CIT(A) HAS RI GHTLY CONFIRMED THIS ACTION OF AO, THEREFORE THE ORDER PASSED BY HIM IS HEREBY UPHELD. THIS GROUND OF ASSESSEE IS DISMISSED. I.T.A NOS. 1249/AHD/2010 & 1961/AHD/2010 A.Y.2005- 06 PAGE NO M/S GOKULNAND PETROFIBRES VS. ITO 13 19. IN THE RESULT, THE APPEAL FILED BY ASSESSEE AND CROSS APPEAL FILED BY REVENUE ARE DISMISSED. ORDER PRONOUNCED IN OPEN COURT ON THE DATE MENTIONE D HEREINABOVE AT CAPTION PAGE SD/- SD/- (T.R. MEENA) ( D.K. TYAGI) ACCOUNTANT MEMBER J UDICIAL MEMBER AHMEDABAD : DATED 23/08/2013 AK / COPY OF ORDER FORWARDED TO:- 1. ASSESSEE 2. REVENUE 3. CONCERNED CIT 4. CIT (A) 5. DR, ITAT, AHMEDABAD 6. GUARD FILE. BY ORDER/ , / ,