M.P.Shan Tex Private Limited, Tiruppur V. ACIT, Tiruppur

ITA 1285/CHNY/2014

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 81277 (ITAT-CHENNAI)
• Duration Of Justice: 6 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-11-2014
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Next Hearing Date: 20-11-2014
• Assessment Year: 2009-2010
• Appeal Filed On: 13-05-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: N MADHAVAN
• Assessee Lawyers: T BANUSEKAR
• Keywords: Principle of natural justice
• Section: 143(3); 115JB

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL , C B ENCH, CHENNAI . , ! # $ , % & BEFORE SHRI A.MOHAN ALANKAMONY ACCOUNTANT MEMBER AND SHRI CHALLA NAGENDRA PRASAD, JUDICIAL MEMBER ./I.T.A.NO. 1285/MDS/2014 ( / ASSESSMENT YEAR: 2009-10) M/S. M.P.SHAN TEX PVT.LTD. SF NO.145/1A/A, NR. AMMANKOIL PARAPALAYAM ROAD, MANNARAI POST TIRUPUR-641 607. VS THE ASSISTANT COMMISSIONER OF INCOME TAX, COMPANY CIRCLE, TIRUPUR. PAN: AAFCMS5170M ( /APPELLANT) ( /RESPONDENT) / APPELLANT BY : MR. T.BANUSEKAR, C.A. /RESPONDENT BY : MR. N.MADHAVAN, JCIT / DATE OF HEARING : 20 TH NOVEMBER, 2014 /DATE OF PRONOUNCEMENT : 28 TH NOVEMBER, 2014 / O R D E R PER CHALLA NAGENDRA PRASAD, JM: THIS APPEAL IS FILED BY THE ASSESSEE AGAINST THE O RDER OF THE COMMISSIONER OF INCOME TAX, (APPEALS)-II, COIMBATORE DATED 19.02.2014 FOR THE ASSESSMENT YEA R 2009-10. 2. THE ONLY ISSUE IN THE APPEAL OF THE ASSESSEE IS THAT COMMISSIONER OF INCOME TAX (APPEALS) ERRED IN UPHOL DING THE ADDITION OF UNPROVED PURCHASES. THE ASSESSEE W HICH IS ENGAGED IN THE BUSINESS OF MANUFACTURE AND SALE OF HOSIERY CLOTH, KNITTING, DYEING AND HEAT SETTING JOB WORKS FILED ITS 2 ITA NO.1285/MDS/2014 RETURN OF INCOME ON 30.09.2009 DECLARING LOSS OF ` 1,43,62,690/- UNDER NORMAL PROVISIONS OF THE ACT A ND BOOK PROFITS UNDER SECTION 115JB AT ` 1,01,79,990/-. THE ASSESSMENT WAS COMPLETED UNDER SECTION 143(3) DETER MINING THE INCOME OF THE ASSESSEE AT ` 3,50,16,360/- BY MAKING AN ADDITION OF ` 4,93,79,050/- AS UNPROVED PURCHASES. THE ASSESSING OFFICER IN THE COURSE OF ASSESSMENT PROCE EDINGS NOTICED THAT ASSESSEE RECORDED IN ITS BOOKS OF ACCO UNTS PURCHASES FROM TWO PROPRIETARY CONCERNS NAMELY M/S. SHREE KAUSALYA TEXTILES AND M/S. SHREE MATHI AGENCIES. TH E PROPRIETORS OF M/S. SHREE KAUSALYA TEXTILES AND M/S . SHREE MATHI AGENCIES ONE MR. SEKARAN AND HIS SON MR. KAR THIK IN THEIR SCRUTINY ASSESSMENTS SAID TO HAVE DEPOSED B EFORE THE ITO THAT SALES EFFECTED BY THEM TO THE ASSESSEE WE RE NOT GENUINE AND THEY ISSUED BILLS WITHOUT ANY SUPPLY OF GOODS OR MATERIALS. BASED ON THESE STATEMENTS, THE ASSESSING OFFICER REQUIRED THE ASSESSEE TO PRODUCE NECESSARY EVIDENCE TO ESTABLISH THE GENUINENESS OF THE PURCHASES MADE FRO M THOSE CONCERNS. THE ASSESSEE BEFORE THE ASSESSING OFFICER PRODUCED BILLS ISSUED BY THE AFORESAID TWO CONCERNS . THE ASSESSING OFFICER REJECTING THE BILLS PRODUCED BY T HE 3 ITA NO.1285/MDS/2014 ASSESSEE IN VIEW OF THE STATEMENTS RECORDED FROM TH E SUPPLIERS TREATED THE PURCHASES AS UNPROVED PURCHAS ES AND MADE ADDITIONS. ON APPEAL, COMMISSIONER OF INCOME T AX (APPEALS) SUSTAINED THE SAID ADDITION. 3. COUNSEL FOR THE ASSESSEE SUBMITS THAT IN THE COU RSE OF ASSESSMENT PROCEEDINGS THE ASSESSEE FILED COPIES OF THE BILLS ALONG WITH DELIVERY NOTES TO ESTABLISH THE GENUINEN ESS OF THE PURCHASES MADE BY THE COMPANY FROM THE SUPPLIERS. COUNSEL FURTHER SUBMITS THAT IN THE COURSE OF ASSES SMENT PROCEEDINGS THE ASSESSEE REQUESTED COPIES OF DEPOSI TION MADE BY THE PROPRIETORS OF M/S. SHREE KAUSALYA TEXT ILES AND M/S. SHREE MATHI AGENCIES. COUNSEL SUBMITS THAT IN SPITE OF THE REQUESTS MADE BY THE ASSESSEE, THE ASSESSING OF FICER COULD NOT PRODUCE THE DEPOSITIONS SAID TO HAVE BEEN MADE BY THE PROPRIETORS OF THE SUPPLIER AGENCIES STATING TH AT GOODS WERE NOT SUPPLIED TO THE ASSESSEE BUT ONLY BILLS WE RE RAISED. THE ASSESSEE QUESTIONED THE CREDIBILITY OF THE STAT EMENTS GIVEN BY THE TWO PROPRIETORS BEFORE THE ASSESSING OFFICER. THE ASSESSEE FURTHER EXPLAINED TO THE ASSESSING OFF ICER THAT ASSESSEE MADE PURCHASES FROM THE ABOVE TWO CONCERNS WITH THE EVIDENCES SUCH AS PURCHASE BILLS, DELIVERY NOTE S AND 4 ITA NO.1285/MDS/2014 CLOSING STOCK STATEMENT SUBMITTED TO THE BANK FOR L OAN PURPOSES. COUNSEL FOR THE ASSESSEE SUBMITS THAT SIN CE THE ASSESSING OFFICER HAS MADE ADDITION OF UNPROVED PUR CHASES BASED ON THE STATEMENTS RECORDED FROM THE PROPRIETO RS OF M/S. SHREE KAUSALYA TEXTILES AND M/S. SHREE MATHI A GENCIES AND WHICH STATEMENTS WERE NEVER PROVIDED TO THE ASS ESSEE, THE ADDITION MADE BY THE ASSESSING OFFICER IS AGAIN ST THE PRINCIPLES OF NATURAL JUSTICE. COUNSEL FOR THE ASS ESSEE FURTHER SUBMITS THAT ASSESSEE MADE PURCHASES TOWARDS END OF THE FINANCIAL YEAR AND HENCE THE GOODS PURCHASED WERE L YING AS STOCK WITH THE ASSESSEE AT THE END OF THE FINANCIAL YEAR AND IS FORMING PART OF THE CLOSING STOCK OF THE ASSESSE E. THE ASSESSEE SHOWED THE SAME AS CLOSING STOCK IN THE ST OCK STATEMENT PRODUCED TO THEIR BANKER FOR LOAN PURPOSE S. COUNSEL FOR THE ASSESSEE FURTHER SUBMITS THAT IF TH E PURCHASES FROM THE SAID PROPRIETORS WERE NOT TAKEN INTO ACCOUNT AS GENUINE PURCHASES AND ADDED AS UNPROVED PURCHASES, THEN THE ASSESSEES CLOSING STOCK WHICH IS ARRIVED AT BY INCLUDING THE SAID PURCHASES SHOULD ALSO BE R EDUCED TO THAT EXTENT. THEREFORE, COUNSEL SUBMITS THAT IN TH E ABSENCE OF PROPER OPPORTUNITY TO THE ASSESSEE TO REBUT THE STATEMENTS 5 ITA NO.1285/MDS/2014 SAID TO HAVE BEEN GIVEN BY THE TWO PROPRIETORS, THE MATTER HAS TO BE CONSIDERED AFRESH AGAIN BY THE ASSESSING OFFICER GIVING SUFFICIENT OPPORTUNITY TO THE ASSESSEE. 4. DEPARTMENTAL REPRESENTATIVE SUPPORTS THE ORDERS OF LOWER AUTHORITIES. 5. HEARD RIVAL CONTENTIONS AND PERUSED ORDERS OF LO WER AUTHORITIES. IT IS THE FINDING OF THE ASSESSING OFF ICER THAT THE TWO PROPRIETORS OF THE SUPPLIER AGENCIES DEPOSED IN THEIR SCRUTINY ASSESSMENT PROCEEDINGS THAT NO GOODS OR M ATERIALS ARE SUPPLIED TO THE ASSESSEE BUT ISSUED ONLY THE BI LLS. IT IS A FACT THAT THE ASSESSEE QUESTIONED THE CREDIBILITY O F THE STATEMENTS GIVEN BY THE SUPPLIERS AND ALSO REQUESTE D BEFORE THE ASSESSING OFFICER THAT COPIES OF THE SAID STATE MENTS BE PROVIDED TO THE ASSESSEE. THE ASSESSING OFFICER SE EMS TO HAVE NOT PROVIDED ANY COPIES OF STATEMENTS GIVEN BY THE SUPPLIERS TO THE ASSESSEE AND BASED ON THOSE STATEM ENTS HE WENT ON TO MAKE ADDITION OF SUPPLIES MADE BY THOSE CONCERNS AS UNPROVED PURCHASES. IN OUR VIEW, THE A SSESSING OFFICER SHOULD HAVE PROVIDED TO THE ASSESSEE COPIES OF STATEMENTS COLLECTED BY HIM FROM THE SUPPLIERS. THE ADDITION 6 ITA NO.1285/MDS/2014 MADE TREATING THE PURCHASES BY THE ASSESSEE AS UNPR OVED WITHOUT PROVIDING COPIES OF STATEMENTS OF THE PROPR IETORS AND PROPER OPPORTUNITY IS NOT SUSTAINABLE IN LAW. NO DO UBT, THE BURDEN OF PROVING THE PURCHASES AS GENUINE LIES ON THE ASSESSEE. HOWEVER, THE STATEMENTS RECORDED FROM TH IRD PARTIES CANNOT BE RELIED ON IN SUSTAINING THE ADDIT ION WITHOUT PROVIDING THOSE STATEMENTS TO THE ASSESSEE AND CALL ING FOR COMMENTS ON IT WHICH IS AGAINST THE PRINCIPLES OF N ATURAL JUSTICE. IN THE CIRCUMSTANCES, WE SET ASIDE THE ASS ESSMENT ORDER AND DIRECT THE ASSESSING OFFICER TO PROVIDE S TATEMENTS COLLECTED FROM THE SUPPLIERS TO THE ASSESSEE AND DE CIDE THE ISSUE AFRESH AFTER PROVIDING ADEQUATE OPPORTUNITY T O THE ASSESSEE. 6. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON FRIDAY, THE 28 TH DAY OF NOVEMBER, 2014 AT CHENNAI. SD/- SD/- ( . ) ( ( *+ ) ( A.MOHAN ALANKAMONY ) ( CHALLA NAGENDR A PRASAD ) - / ACCOUNTANT MEMBER * - / JUDICIAL MEMBER * /CHENNAI, / /DATED, 28 TH NOVEMBER, 2014 SOMU 7 ITA NO.1285/MDS/2014 12 32 /COPY TO: 1. APPELLANT 2. RESPONDENT 3. 4 () /CIT(A) 4. 4 /CIT 5. 2 7 /DR 6. /GF .