Smt. Pramila Jayaram Sharma, Pune V. Assistant Commissioner of Income-tax, Circle - 9, Pune

ITA 1317/PUN/2019

• Counselvise Citation: [2020] 110 COUNSELVISE.COM (IT) 4177 (ITAT-PUNE)
• Duration Of Justice: 1 year(s) 2 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-10-2020
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 2013-2014
• Appeal Filed On: 29-08-2019
• Result in Favour of: Assessee
• Court: TRIBUNAL

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH SMC, PUNE VIRTUAL COURT BEFORE SHRI R.S. SYAL, VICE PRESIDENT ITA NO.1317/PUN/2019 / ASSESSMENT YEAR : 2013-14 SMT. PRAMILA JAYARAM SHARMA PROP. M/S. ARKAY INDUSTRIES, GAT NO.84, PLOT NO.24, JYOTIBA NAGAR, TALAWADE, PUNE 412 109 PAN : ACNPS7015G VS. ACIT, CIRCLE-9, PUNE APPELLANT RESPONDENT / ORDER PER R.S.SYAL, VP : THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER DA TED 19-07-2019 PASSED BY THE COMMISSIONER OF INCOME-TAX (AP PEALS)- 8, PUNE IN RELATION TO THE ASSESSMENT YEAR 2013-14. 2. THE ONLY ISSUE RAISED IN THIS APPEAL IS AGAINST THE CONFIRMATION OF RS.15,66,027/- U/S. 41(1) OF THE INCOME- TAX ACT, 1961 (HEREINAFTER ALSO CALLED THE ACT). 3. BRIEFLY STATED, THE FACTS OF THE CASE ARE THAT THE ASSESSE E IS ENGAGED IN THE MANUFACTURING OF WOODEN BOXES. DURING THE ASSESSEE BY SHRI M.K. KULKARNI REVENUE BY SHRI S.P.WALIMBE DATE OF HEARING 29-10-2020 DATE OF PRONOUNCEMENT 29-10-2020 ITA NO.1317/PUN/2019 PRAMILA JAYARAM SHARMA 2 COURSE OF THE ASSESSMENT PROCEEDINGS, THE ASSESSING OFFIC ER (AO) OBSERVED THAT THERE WERE CERTAIN CREDITORS WHICH REMAINED OUTSTANDING FROM THE PRECEDING YEAR. ON BEING CALLED UPON TO EXPLAIN AS TO WHY THE PROVISIONS OF SECTION 41(1) OF THE AC T BE NOT APPLIED TOWARDS SUCH OUTSTANDING CREDITORS, THE ASSESSEE SUB MITTED THAT THE BALANCES REMAINED OUTSTANDING DUE TO DISPUTES REGARDIN G MATERIALS NOT SENT AS PER ORDERS OR SHORTAGE OF MATERIALS SE NT BY THE PARTIES OR POOR QUALITY ETC. THE ASSESSEE FURTHER SUBMITTED THAT THE OUTSTANDING BALANCES OF THE CREDITORS WERE PAID IN THE FINANCIA L YEAR 2014-15. THE AO OBSERVED THAT THE ASSESSEE MADE CASH PAYMENTS OF LESS THAN RS.20,000/- ON VARIOUS DATES IN THE YEAR ENDING 31-03-2015. IN ORDER TO CROSS VERIFY THE SUBMISS ION OF THE ASSESSEE, THE AO CAUSED INQUIRIES CONDUCTED U/S.133(6) OF THE ACT IN RELATION TO THE SEVEN CREDITORS. TWO CREDITORS CONFIRMED TH E ASSESSEES CONTENTION. REGARDING THE REMAINING FIVE CREDITOR S NAMELY; (1) M/S. SHRIKRISHNA ENTERPRISES, PO PERUMBAVOOR, KERALA-RS.3,18,972/-; (2) M/S. ANUGRAH TIMBER TRADERS, PERUMBAVOOR, ERNAKULAM, KERALA-RS.1,62,215/-; (3) M/S. ASIAN PLYWOOD INDUSTRIES, MEKALADY, KALADY, ERNAKULAM DIST., KERA LA RS.6,04,242/-; (4) M/S. KAPBSONS SAW MILL AND INDUSTRIES, A LLAPRA, PO PERUMBAVOORM, KERALA RS.1,60,129/-; AND (5)M/S. K APBSONS ITA NO.1317/PUN/2019 PRAMILA JAYARAM SHARMA 3 BOARD, ALLAPRA, PO PERUMBAVOORM KERALA- RS.3,20,469/-, THE AO NOTICED THAT THE LETTERS U/S.133(6) SENT TO THREE CREDITORS WERE RETURNED UNSERVED BY THE POSTAL AUTHORITIES, WHICH FACT WHEN BROUGHT TO THE NOTICE OF THE ASSESSEE COULD NOT BE SORTED OUT. NOT CONVINCED WITH THE ASSESSEES SUBMISSION, THE AO TREATED SUC H FIVE CREDITORS TOTALING TO RS.15,66,027/- AS CEASING TO BE PAYABLE ATTRACTING THE PROVISIONS OF SECTION 41(1) OF THE ACT. ERGO, H E MADE ADDITION FOR THIS SUM. 4. THE LD. CIT(A) IN THE FIRST ROUND OF PROCEEDINGS UPHELD THE ASSESSMENT ORDER. THE ASSESSEE APPROACHED THE TRIBUNA L. VIDE ORDER DATED 07-02-2019, THE TRIBUNAL IN ITA NO.1691/PUN/201 8 RESTORED THE MATTER TO THE FILE OF CIT(A) FOR A FRESH DETER MINATION OF THE ISSUE. IN THE CURRENT PROCEEDINGS AGAIN, THE LD. CIT(A) HAS REITERATED HIS EARLIER VIEW. 5. HAVING HEARD THE RIVAL SUBMISSIONS THROUGH VIRTUAL COURT A ND PERUSED THE RELEVANT MATERIAL ON RECORD, IT IS FOUND AS AN ADMITTED POSITION THAT THE FIVE CREDITORS IN QUESTION AROSE OUT OF EARLIER PURCHASE TRANSACTIONS MADE BY THE ASSESSEE IN THE COURSE OF BUSINESS. THE AO ISSUED NOTICES U/S.133(6). THOSE NOTICE S WERE NOT SERVED BUT THE ASSESSEE DURING THE COURSE OF ASSESS MENT ITA NO.1317/PUN/2019 PRAMILA JAYARAM SHARMA 4 PROCEEDINGS FURNISHED E-MAILS FROM SOME OF THE PARTIES, W HO ATTACHED CONFIRMED LEDGER ACCOUNTS AFFIRMING THE ASSESSEE S STAND. THE AO DID NOT ACCEPT THE SAME BY HOLDING THAT THE SOURCE CANNOT BE RELIED UPON AND ALL THE MORE SUSPICIOUS SINCE THE CREDITO R COULD SEND A MAIL WITHOUT RECEIVING THE NOTICE ISSUED BY THIS OFFICE . THE ASSESSEE FURTHER PROVIDED TELEPHONE NUMBER OF THE PA RTNER OF M/S. KAPBSONS. FOR THIS CREDITOR ALSO, AN E-MAIL WAS SENT TO THE ASSESSEE, WHICH WAS FORWARDED TO THE AO GIVING COPY OF LE DGER ACCOUNT AND CONFIRMATION. IT IS A MATTER OF RECORD THAT THE ASSESSEE PAID THE AMOUNTS TO SOME OF THE PARTIES IN THE F.Y. 2014-15 , WHOSE COPIES HAVE ALSO BEEN REPRODUCED IN THE IMPUGNED ORDER. THE LD. CIT(A) HAS DOUBTED THE GENUINENESS OF THE TRANSACTIONS ON THE GROUND THAT CASH PAYMENTS COULD NOT HAVE BEEN MADE BECAU SE ALL SUCH PARTIES WERE COMING FROM KERALA. ONCE THE ASSESSEE FURNISHED LEDGER ACCOUNTS OF THE PARTIES EVIDENCING THE MAKING OF PAYM ENTS IN A SUCCEEDING YEAR THAT ESTABLISHED THE EXISTENCE OF LIABILITY A T THE END OF THE YEAR UNDER CONSIDERATION NON-JUSTIFYING THE APPLICA BILITY OF SECTION 41(1) OF THE ACT. HERE IS A CASE IN WHICH SOME OF THE PARTIES SENT CONFIRMATIONS WITH THEIR LEDGER ACCOUNTS TO THE AO THROUGH THE ASSESSEE. THE AO SIMPLY DOUBTED THE GENUINE NESS OF E-MAILS WITHOUT BRINING ANYTHING CONCRETE ON RECORD AS TO THEIR ITA NO.1317/PUN/2019 PRAMILA JAYARAM SHARMA 5 NON-GENUINENESS. IN VIEW OF THE FOREGOING FACTS, I AM SATISFIED THAT THE CASE IS NOT COVERED U/S.41(1) CALLING FOR ANY ADDITION. I, THEREFORE, ORDER TO DELETE THE ADDITION. 6. IN THE RESULT, THE APPEAL IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 29 TH OCTOBER, 2020. SD/- (R.S.SYAL) / VICE PRESIDENT PUNE; DATED : 29 TH OCTOBER, 2020 / COPY OF THE ORDER IS FORWARDED TO : 1. / THE APPELLANT; 2. / THE RESPONDENT; 3. ( ) / THE CIT (APPEALS)-8, PUNE 4. THE PR. CIT-7, PUNE 5. , , SMC / DR SMC, ITAT, PUNE; 6. / GUARD FILE. // TRUE COPY // / BY ORDER, // TRUE COPY // SENIOR PRIVATE SECRETARY , / ITAT, PUNE ITA NO.1317/PUN/2019 PRAMILA JAYARAM SHARMA 6 DATE 1. DRAFT DICTATED ON 29-10-2020 SR.PS 2. DRAFT PLACED BEFORE AUTHOR 29-10-2020 SR.PS 3. DRAFT PROPOSED & PLACED BEFORE THE SECOND MEMBER JM 4. DRAFT DISCUSSED/APPROVED BY SECOND MEMBER. JM 5. APPROVED DRAFT COMES TO THE SR.PS/PS SR.PS 6. KEPT FOR PRONOUNCEMENT ON SR.PS 7. DATE OF UPLOADING ORDER SR.PS 8. FILE SENT TO THE BENCH CLERK SR.PS 9. DATE ON WHICH FILE GOES TO THE HEAD CLERK 10. DATE ON WHICH FILE GOES TO THE A.R. 11. DATE OF DISPATCH OF ORDER. *