ITO, Erode V. A.Gnanapaul, Erode

ITA 1258/CHNY/2013

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 73746 (ITAT-CHENNAI)
• Duration Of Justice: 9 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 07-03-2014
• Appeal Filed By: Department
• Bench Allotted: C
• Next Hearing Date: 04-03-2014
• Assessment Year: 2007-2008
• Appeal Filed On: 07-06-2013
• Court: TRIBUNAL
• Department Lawyers: T N BETGERI
• Assessee Lawyers: S SRIDHAR

Judgement Text

, IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH, CHENNAI . . . , ! , ' # $ BEFORE DR. O.K. NARAYANAN, VICE PRESIDENT & SHRI VIKAS AWASTHY, JUDICIAL MEMBER I.T.A. NO. 1258/MDS/2013 & C.O. NO. 109/MDS/2013 ( IN ITA NO. 1258/MDS/2013 ) ASSESSMENT YEAR : 2007-08 INCOME TAX OFFICER, WARD -I(3), ERODE VS SHRI A. GNANAPAUL, PROP: M/S.ANNAI FATHIMA LEATHERS, NO.101-A, RAMAMURTHY NAGAR, ERODE-638 003 [PAN: AFFPG 3540 K] (APPELLANT) (RESPONDENT/CROSS OBJECTOR) / APPELLANT BY : SHRI T.N.BETGERI, JCIT / RESPONDENT BY : SHRI S.SRIDHAR, ADVOCATE / DATE OF HEARING : 04-03-2014 / DATE OF PRONOUNCEMENT : 07-03-2014 #% / O R D E R PER VIKAS AWASTHY, JUDICIAL MEMBER: THE APPEAL HAS BEEN FILED BY THE REVENUE AGAINST TH E ORDER OF COMMISSIONER OF INCOME TAX (APPEALS)-I, COIMBATO RE DATED 05-03-2013 RELEVANT TO THE ASSESSMENT YEAR (AY) 200 7-08. THE I.T.A. NO.1258/MDS/13 & C.O. NO. 109/MDS/13 :- 2 -: ASSESSEE HAS FILED CROSS-OBJECTIONS IN SUPPORT OF T HE ORDER OF THE CIT(APPEALS). 2. THE ASSESSEE IS IN THE BUSINESS OF TANNERY. THE ASSESSEE HAD FILED HIS RETURN OF INCOME FOR THE AY.2007-08 O N 31-03-2008 ADMITTING TOTAL INCOME OF ` 9,89,220/-. THE SAID RETURN WAS PROCESSED U/S.143(1) OF THE INCOME TAX ACT, 1961 (H EREIN AFTER REFERRED TO AS THE ACT) ON 24-01-2009. THEREAFTE R, SURVEY WAS CONDUCTED U/S.133A OF THE ACT ON 12-09-2008 AT THE BUSINESS PREMISES OF THE ASSESSEE. NOTICE U/S.148 WAS ISSUE D TO THE ASSESSEE ON 29-04-2009. DURING THE COURSE OF RE-AS SESSMENT PROCEEDINGS, THE ASSESSING OFFICER MADE ADDITION IN RESPECT OF UN-PROVED TRADE CREDITORS TO THE TUNE OF ` 1,53,35,736/-, DETAILED AS UNDER: I. M/S. AKSHAYA LEATHERS ` 51,22,110/- II. M/S. SABARIS LEATHER EXPORTS ` 41,44,150/- III. M/S. PARESHA LEATHER AGENCIES ` 22,77,065/- IV. M/S. PRAVEEN LEATHERS ` 3,23,260/- V. M/S. SAI LEATHERS ` 5,52,851/- VI. M/S. VICTORY TANNERS ` 29,16,300/- ------------------- TOTAL: ` 1,53,35,736/- ------------------- I.T.A. NO.1258/MDS/13 & C.O. NO. 109/MDS/13 :- 3 -: AGGRIEVED AGAINST THE ASSESSMENT ORDER DATED 30-12 -2010 PASSED U/S.143(3) R.W.S.147 OF THE ACT, THE ASSESSE E PREFERRED AN APPEAL BEFORE THE CIT(APPEALS). THE CIT(APPEALS) AF TER APPRECIATING THE EVIDENCE AND THE DOCUMENTS PRODUCE D BEFORE HIM, PARTLY ALLOWED THE APPEAL OF THE ASSESSEE. TH E CIT(APPEALS) HELD THAT THE TRIBUNAL IN THE CASE OF SMT. ROLEX SUGUNAMARY IN ITA NO.843/MDS/2011 AND IN THE CASE OF SHRI A.CHARLES, IN ITA NO.1335/MDS/2011 BOTH APPEALS FOR THE AY.2007-08 DECIDED ON 04-10-2011 AND 26-07-2012 RESPECTIVELY HAD HELD THA T THE ASSESSING OFFICER HAD NOT DISPUTED THE PURCHASES AN D PAYMENTS MADE TO THE CREDITORS I.E., M/S.AKSHAYA LEATHERS, M /S.SABARIS LEATHER EXPORTS, M/S.SAI LEATHERS AND M/S.VICTORY T ANNERS. THE ASSESSING OFFICER DID NOT MAKE ANY ATTEMPT TO MAKE FURTHER ENQUIRIRES TO VERIFY THE DETAILS. ALL THE TRANSACT IONS WITH THE SAID PARTIES WERE FOUND TO BE THROUGH BANKING CHANNELS. THE TRIBUNAL, THUS, DECIDED THE ISSUE IN FAVOUR OF THE ASSESSEE B Y DISMISSING THE APPEAL OF THE DEPARTMENT. SMT. ROLEX SUGUNAMAR Y IS THE WIFE OF ASSESSEE AND SHRI CHARLES IS THE BROTHER OF THE ASSESSEE AND ARE IN THE SAME BUSINESS OF LEATHER TANNING. I.T.A. NO.1258/MDS/13 & C.O. NO. 109/MDS/13 :- 4 -: AS REGARDS M/S.PARESHA LEATHER AGENCIES, THE CIT(APPEALS) HELD THAT THE ASSESSING OFFICER HAS NO T BEEN ABLE TO SHOW THAT THE CREDITOR IS NOT GENUINE. ALL THE TRA NSACTIONS WERE MADE THROUGH BANKING CHANNELS AND THE BALANCE OUTS TANDING AS ON 31-03-2007 WAS CLEARED SUBSEQUENTLY. IN RESPECT OF M/S.PRAVEEN LEATHERS, THE CIT(APPEALS) HELD THAT TH E ASSESSING OFFICER HAS NOT DISPUTED THE PURCHASES AND PAYMENTS MADE. THE ADDITIONS ARE MADE ON THE CLOSING BALANCES AS ON 31 -03-2007. ALL THE TRANSACTIONS BETWEEN THE ASSESSEE AND THE S AID PARTY WERE THROUGH BANKING CHANNELS. THE CIT(APPEALS) DE LETED THE ADDITIONS MADE BY THE ASSESSING OFFICER. AGGRIEVED AGAINST THE ORDER OF THE CIT(APPEALS), T HE REVENUE IS IN APPEAL BEFORE THE TRIBUNAL. 3. SHRI T.N.BETGERI, APPEARING ON BEHALF OF THE REV ENUE SUBMITTED THAT THE REVENUE IS ASSAILING THE ORDER O F THE TRIBUNAL IN THE CASE OF SMT. ROLEX SUGUNAMARY (SUPRA) AND IN THE CASE OF SHRI A.CHARLES (SUPRA). THE CIT(APPEALS) HAS ERRED IN RELYING ON THE ORDERS OF THE TRIBUNAL IN THE AFORESAID CASES. THE LD.DR FURTHER SUBMITTED THAT THE CIT(APPEALS) HAS FAILED TO CONSIDER THE STATEMENT RECORD AND OTHER EVIDENCES GATHERED BY TH E ASSESSING I.T.A. NO.1258/MDS/13 & C.O. NO. 109/MDS/13 :- 5 -: OFFICER DURING THE SURVEY PROCEEDINGS. THE LD.DR P RAYED FOR SETTING ASIDE THE IMPUGNED ORDER AND RESTORING THE FINDINGS OF THE ASSESSING OFFICER. 4. ON THE OTHER HAND, SHRI S.SRIDHAR, APPEARING ON BEHALF OF THE ASSESSEE SUBMITTED THAT PAYMENTS TO ALL CREDITO RS WERE MADE THROUGH BANKING CHANNELS AND ALL CREDITORS HAVE BEE N PROVED. THE ASSESSING OFFICER MADE ADDITION OF THE AMOUNTS WHICH WERE THE CLOSING BALANCES IN RESPECT OF THE CREDITORS. THE LD.COUNSEL FOR THE ASSESSEE PLACED ON RECORD THE COPIES OF THE ORDERS OF THE TRIBUNAL IN THE CASE OF SMT. ROLEX SUGUNAMARY IN ITA NO.843/MDS/2011 (SUPRA) AND SHRI A.CHARLES, IN ITA NO.1335/MDS/2011 (SUPRA), TO SHOW THAT THE CASE OF THE ASSESSEE IS IDENTICAL TO THE CASE OF SMT. ROLEX SUGUNAMARY AND SHRI A.CHARLES, WIFE AND BROTHER OF THE ASSESSEE RESPECTIVELY. THE LD.COUNSEL SUBMITTED THAT IN THE AFORESAID APPE ALS, THE TRIBUNAL HELD THAT M/S.AKSHAYA LEATHERS, M/S. SABAR IS LEATHER EXPORTS, M/S.SAI LEATHERS AND M/S.VICTORY TANNERS W ERE GENUINE CREDITORS, ALL THE TRANSACTIONS WERE THROUGH BANKIN G CHANNELS AND THE ASSESSING OFFICER FAILED TO MAKE FURTHER ENQUIR IES IN DOUBTFUL I.T.A. NO.1258/MDS/13 & C.O. NO. 109/MDS/13 :- 6 -: CASES. THE LD.COUNSEL VEHEMENTLY SUPPORTED THE IMP UGNED ORDER. 5. WE HAVE HEARD THE SUBMISSIONS MADE BY THE REPRESENTATIVES OF BOTH THE SIDES. WE HAVE ALSO PE RUSED THE ORDERS OF THE AUTHORITIES BELOW AS WELL AS THE ORDE RS OF THE TRIBUNAL ON WHICH THE LD.COUNSEL FOR THE ASSESSEE H AS PLACED RELIANCE. THE ASSESSING OFFICER HAS MADE DIS-ALLOW ANCE ON ACCOUNT OF UN-PROVED TRADE CREDITORS IN RESPECT OF FOLLOWING PARTIES: I. M/S. AKSHAYA LEATHERS II. M/S. SABARIS LEATHER EXPORTS III. M/S. PARESHA LEATHER AGENCIES IV. M/S. PRAVEEN LEATHERS V. M/S. SAI LEATHERS VI. M/S. VICTORY TANNERS WE FIND THAT OUT OF ABOVE SIX CREDITORS, FOUR CREDI TORS I.E., M/S.AKSHAYA LEATHERS, M/S. SABARIS LEATHER EXPORTS, M/S.SAI LEATHERS AND M/S.VICTORY TANNERS HAD SUPPLIED MATER IALS TO THE FIRMS OF SMT. ROLEX SUGUNAMARY AND SHRI A.CHARLES, WHO ARE CLOSELY RELATED TO THE ASSESSEE. THE TRIBUNAL IN T HE APPEALS OF THE REVENUE IN RESPECT OF SMT. ROLEX SUGUNAMARY AND SHRI I.T.A. NO.1258/MDS/13 & C.O. NO. 109/MDS/13 :- 7 -: A.CHARLES, HAS HELD THESE FOUR CREDITORS TO BE GENU INE. IN CASE OF THE SAID CREDITORS, PAYMENTS WERE MADE THROUGH BANK ING CHANNELS AND THE ASSESSING OFFICER HAD ALSO ACCEPTE D THE TRANSACTIONS BETWEEN THE PARTIES. THE FACTS OF THE CASE OF THE ASSESSEE ARE IDENTICAL TO THE CASE OF THE RELATED P ERSONS DECIDED BY THE TRIBUNAL, THUS, THE EXISTENCE OF THESE FOUR CREDITORS CANNOT BE DOUBTED AS THE GROUP CONCERNS WERE ALREADY IN BU SINESS WITH THE AFORESAID CREDITORS. IN THE INSTANT CASE ALSO THE PAYMENTS ARE MADE THROUGH PROPER BANKING CHANNELS. 6. AS REGARDS M/S.PARESHA LEATHER AGENCIES, THE CIT(APPEALS) HAS GIVEN A CATEGORIC FINDING THAT THE BALANCES IN THE ACCOUNT OF THE CREDITORS DO NOT RELATE TO THE A Y UNDER CONSIDERATION AND ARE CARRY FORWARD BALANCES OF THE TRANSACTIONS DONE BY THE ASSESSEE IN THE EARLIER YEAR/YEARS. TH E ASSESSEE HAS PRODUCED COPIES OF THE SALES TAX ASSESSMENT ORD ERS AND COPIES OF THE BILLS EVIDENCING THE PURCHASE OF THE GOODS FROM THE SAID PARTIES. MOREOVER, THE ENTIRE PAYMENTS WERE M ADE THROUGH BANKING CHANNELS. IN RESPECT OF M/S.PRAVEEN LEATHERS, THE REVENUE HAS NOT DISPUTED THE PURCHASES MADE BY THE ASSESSEE AND THE PAYMENTS I.T.A. NO.1258/MDS/13 & C.O. NO. 109/MDS/13 :- 8 -: MADE TO THE CREDITORS. THE ADDITION HAS BEEN MADE BY THE ASSESSING OFFICER OF THE CLOSING BALANCE AS ON 31-0 3-2007. THERE IS NO REASON TO SUSTAIN THE ADDITION AS THE A SSESSING OFFICER HAS NOT DISPUTED THE TRADING TRANSACTION BE TWEEN THE ASSESSEE AND THE SAID CREDITOR. 7. THE LD.DR HAS NOT BEEN ABLE TO CONTROVERT THE CA TEGORIC FINDINGS GIVEN IN THE IMPUGNED ORDER. WE CONCUR WI TH THE FINDINGS OF THE CIT(APPEALS) AND DISMISS THE APPEAL OF THE R EVENUE BEING DEVOID OF MERIT. 8. THE ASSESSEE HAS FILED CROSS-OBJECTIONS IN SUPPO RT OF THE ORDER OF THE CIT(APPEALS). SINCE THE APPEAL OF THE REVENUE HAS BEEN DISMISSED THE CROSS-OBJECTIONS OF THE ASSESSEE HAVE BECOME INFRUCTUOUS AND THE SAME ARE DISMISSED AS SU CH. ORDER PRONOUNCED ON FRIDAY, THE 07 TH MARCH, 2014 AT CHENNAI. SD/- SD/- (DR. O.K. NARAYANAN) (VIK AS AWASTHY) VICE PRESIDENT JUDICIAL MEMBER DATED: 07 TH MARCH, 2014 TNMM COPY TO: ASSESSEE/AO/CIT(A)/CIT/DR