The ITO,Vapi Ward-3, Vapi V. Shri Tayab Yunus Barudgar, Vapi

ITA 1351/AHD/2012

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 1517 (ITAT-AHMEDABAD)
• Duration Of Justice: 3 year(s) 11 month(s) 6 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-05-2016
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 23-05-2016
• Assessment Year: 2009-2010
• Appeal Filed On: 21-06-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Unexplained cash credit

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH, AHMEDABAD , , ! BEFORE SHRI SHAILENDRA KUMAR YADAV, JUDICIAL MEMBER AND SHRI ANIL CHATURVEDI, ACCOUNTANT MEMBER ./ I.T.A. NO.1351/AHD/2012 ( / ASSESSMENT YEAR : 2009-10) INCOME TAX OFFICER VAPI WARD-3, VAPI / VS. TAYAB YUNUS BARUDGAR STAR BUILDERS 108 ROZY TOWER NR.VAISHALI CINEMA KOPARLI ROAD, VAPI & ./ ./ PAN/GIR NO. : AKUPB 7031L ( &) / APPELLANT ) .. ( *+&) / RESPONDENT ) AND CROSS OBJECTION NO.155/AHD/2012 AY 2009-10 (IN ITA NO.1351/AHD/2012 AY 2009-10) TAYAB YUNUS BARUDGAR KOPARLI ROAD, VAPI / VS. THE ITO VAPI WARD-3, BAPI ( CROSS OBJECTOR ) .. ( RESPONDENT ) ASSESSEE BY : - NONE - REVENUE BY : SHRI NARENDRA SINGH, SR.DR , - / DATE OF HEARING 23/05/2016 ./01 - / DATE OF PRONOUNCEMENT 27/05/2016 / O R D E R PER SHRI ANIL CHATURVEDI, ACCOUNTANT MEMBER : THIS APPEAL BY THE REVENUE IS DIRECTED AGAINST THE ORDER OF THE COMMISSIONER OF INCOME TAX(APPEALS)-VALSAD DATED 30 /3/2012 FOR THE ASSESSMENT YEAR 2009-10 AND THE ASSESSEE IS IN CROS S OBJECTION THEREOF. ITA NO.1351/AHD/2012 (BY REVENUE) AND CO NO.155/AHD/2012 (BY ASSESSEE) ITO VS. TAYAB YUNUS BARUDGAR ASST.YEAR 2009-10 - 2 - 2. T HE RELEVANT FACTS AS CULLED OUT FROM THE MATERIALS ON RECORD ARE AS UNDER:- 2.1. ASSESSEE IS AN INDIVIDUAL STATED TO BE ENGAGED IN THE BUSINESS OF TRADING OF WASTE-PAPER AND DOING CIVIL CONSTRUCTION ACTIVITIES ON LABOUR JOB BASIS IN THE NAME AND STYLE OF M/S.M.Y. & SONS AND M/S.SANA CONSTRUCTION CO. ASSESSEE FILED HIS RETURN OF INCO ME FOR AY 2009-10 ON 21/09/2009 DECLARING TOTAL INCOME AT RS.4,78,006 /-. THE CASE WAS SELECTED FOR SCRUTINY AND THEREAFTER ASSESSMENT WAS FRAMED BY THE ASSESSING OFFICER U/S.143(3) OF THE INCOME TAX ACT, 1961 (HEREINAFTER REFERRED TO AS THE ACT) VIDE ORDER DATED 14/12/20 11 AND TOTAL INCOME WAS DETERMINED AT RS.64,68,400/-. AGGRIEVED BY THE ORDER OF THE AO, ASSESSEE CARRIED THE MATTER BEFORE THE LD.CIT(A)-VA LSAD, WHO SUBSTANTIALLY GRANTED RELIEF TO THE ASSESSEE VIDE O RDER DATED 30/03/2012 (IN APPEAL NO.CIT(A)/VLS/361/11-12). AG GRIEVED BY THE ORDER OF THE LD.CIT(A), THE REVENUE IS NOW IN APPEA L BEFORE US AND HAS RAISED THE GROUNDS WHICH HAVE BEEN REVISED ON 15/04 /2015 AND THE REVISED GROUNDS READ AS UNDER:- 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, AND IN LAW, THE LD.CIT(A) HAS ERRED IN RESTRICTING THE ADDITION BY DIRECTING THE AO TO ADOPT NP @ 2% OF THE TURNOVER INSTEAD OF DISALLO WANCE MADE BY AO OF RS.37,61,045/- BEING 15% OF THE TOTAL URD PUR CHASES OF RS.2,50,73,632/- TREATED AS NON-GENUINE AND UNVERIF IABLE. ITA NO.1351/AHD/2012 (BY REVENUE) AND CO NO.155/AHD/2012 (BY ASSESSEE) ITO VS. TAYAB YUNUS BARUDGAR ASST.YEAR 2009-10 - 3 - 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, AND IN LAW, THE LD.CIT(A) HAS ERRED IN DELETING THE ADDITION OF RS. 22,29,345/- MADE BY THE AO ON ACCOUNT OF UNEXPLAINED SUNDRY CREDITOR S. 2.2. IN CROSS OBJECTION, THE ASSESSEE HAS RAISED TH E FOLLOWING GROUNDS:- 1. ON APPRECIATION OF THE FACTS AND CIRCUMSTANCES OF THE CASE THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) HAD RI GHTLY DELETED THE DISALLOWANCE OF RS.37,61,045/- MADE @ 15% OF TO TAL PURCHASE. 2. ON APPRECIATION OF THE FACTS AND CIRCUMSTANCES OF T HE CASE THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) HAD RI GHTLY DELETED THE ADDITION OF RS.22,29,345/- MADE BY THE LEARNED ASSESSING OFFICER ON ACCOUNT OF SUNDRY CREDITORS. 3. IT IS THEREFORE PRAYED THAT THE ORDER OF THE LEARNE D COMMISSIONER OF INCOME TAX (APPEALS) BE UPHELD TO THE ABOVE EXTENT. 4. ON APPRECIATION OF THE FACTS AND CIRCUMSTANCES OF T HE CASE THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) OUGHT NOT TO HAVE DIRECTED THE LEARNED ASSESSING OFFICER TO ADOPT NET PROFIT AT THE RATE 2% OF THE TURNOVER FOR DETERMINING THE TAXABLE INCO ME IN THE CASE OF THE APPELLANT AS AGAINST 1.10% AS DISCLOSED BY THE APPELLANT IN HIS RETURN OF INCOME. 3. AT THE OUTSET, NONE APPEARED ON BEHALF OF ASSESS EE NOR ANY ADJOURNMENT APPLICATION WAS FILED ON BEHALF ASSESSE E. WE THEREFORE PROCEED TO DECIDE THE APPEAL EX-PARTE QUA THE ASSESSEE. WE FIRST TAKE UP REVENUES APPEAL IN ITA NO.1351/AHD/2012 FOR AY 200 9-10. 3.1. FIRST GROUND IS WITH RESPECT TO DIRECTING THE ADDITION BE RESTRICTED AT 2% OF TURNOVER. ITA NO.1351/AHD/2012 (BY REVENUE) AND CO NO.155/AHD/2012 (BY ASSESSEE) ITO VS. TAYAB YUNUS BARUDGAR ASST.YEAR 2009-10 - 4 - 3.2. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, AO NOTICED THAT ASSESSEE HAD MADE PURCHASES OF WASTE-PAPER FROM UNR EGISTERED DEALERS, PURCHASES AGGREGATED TO RS.2,50,73,632/-. THE ASSE SSEE WAS ASKED TO PRODUCE PURCHASE BILLS WHICH ASSESSEE FAILED TO PRO DUCE. THEREAFTER, THE ASSESSEE WAS ASKED TO SHOW-CAUSE AS TO WHY 25% OF THE TOTAL PURCHASES NOT BE ADDED TO THE TOTAL INCOME OF THE ASSESSEE TO WHICH THE ASSESSEE INTER ALIA SUBMITTED THAT HE PURCHASES WASTE-PAPER ON DAY-TO- DAY BASIS FROM SMALL WASTER-PAPER COLLECTING PERSONS AND THE SAME IS SUPPLIED TO VARIOUS PAPER MILLS AND FOR THE PURCHASES, HE MAKES PERIODIC CASH PAYMENT. HE FURTHER SUBMITTED THAT HE HAS MAINTA INED THE NECESSARY BOOKS OF ACCOUNTS INCLUDING PURCHASE REGISTERS. H E THEREFORE SUBMITTED THAT IN THE ABSENCE OF ANY FINDING OF BOGUS PURCHAS ES, NO DISALLOWANCE OF PURCHASES BE MADE. THE SUBMISSION OF THE ASSESSEE WAS NOT FOUND ACCEPTABLE TO THE AO. THE AO WAS OF THE VIEW THAT SINCE ASSESSEE WAS NOT ABLE TO PRODUCE ANY PURCHASE BILLS TO CLAIM THE PURCHASES, THE BOOKS OF ACCOUNTS WERE REJECTED U/S.145(3) OF THE ACT. H E THEREAFTER CONSIDERED 15% OF THE TOTAL PURCHASES FROM UNREGISTERED DEALE R (URD PURCHASES) AS BEING INFLATED AND UNVERIFIABLE AND ACCORDING LY DISALLOWED AN AMOUNT OF RS.36,61,045/-. AGGRIEVED BY THE ORDER O F THE AO, ASSESSEE CARRIED THE MATTER BEFORE LD.CIT(A), WHO VIDE ORDER DATED 30/03/2012 GRANTED PARTIAL RELIEF TO THE ASSESSEE BY HOLDING A S UNDER:- ITA NO.1351/AHD/2012 (BY REVENUE) AND CO NO.155/AHD/2012 (BY ASSESSEE) ITO VS. TAYAB YUNUS BARUDGAR ASST.YEAR 2009-10 - 5 - 6. DECISION :- I HAVE PERUSED THE FINDINGS OF THE AO AND THE SUBMISSIONS MADE BEFORE ME BY THE APPELLANT. THE AP PELLANT IS A TRADER IN WASTE PAPER AND IS PURCHASING THE WASTE PAPER AN D OTHER SIMILAR SCRAPS FROM SMALL TIME VENDORS WHO ARE POPULARLY KN OWN AS RADDIWALLAS. SUCH RADDIWALLAS COLLECT WASTE ITEMS F ROM DIFFERENT LOCATIONS IN AND AROUND VAPI INDUSTRIAL TOWN AND FI NALLY SOLD THE WASTE PAPER SO COLLECTED TO THE MIDDLEMAN TRADERS LIKE TH E APPELLANT. THE APPELLANT PURCHASE SUCH WASTE PAPER COLLECTED ON A DAY TO DAY BASIS, ACCUMULATE THE SAME IN QUANTITIES AND THEREAFTER SE LL THE SAME TO THE END USERS I.E. PAPER MILLS. THE PAPER MILLS PURCHAS ES THESE ITEMS IN QUANTITIES FROM THE MARKET CONSISTING OF THE TRADER S LIKE THE APPELLANT AT THE FIRST LEVEL AND RADDIWALLAS IN THE SECOND LEVEL . THE PURCHASE PRICE OF WASTE PAPER IS FIXED BY THE GUJARAT PAPER MILLS ASS OCIATION (GPMA) AND AS POINTED OUT BY THE AO IN PARAGRAPH NO. 11 OF THE ASSESSMENT ORDER, THE RATE OF EACH TON OF WASTE PAPER IS AROUN D RS. 8000/- IN THE VAPI INDUSTRIAL TOWN WHERE THERE ARE 45 TO 50 SMALL SCALE PAPER MILLS. THE PAPER MILLS ASSOCIATION FIXES UP SUCH PURCHASE PRICE TO HAVE A LEVEL PLAYING FIELD FOR THE MEMBERS BY ENSURING UNIFORM I MPACT OF COST OF RAW MATERIALS I.E. WASTE PAPER. THE WASTE PAPER TRADERS LIKE THE APPELLANT OBTAIN VAT REGISTRATION AND OTHER REQUIRED GOVERNME NT PERMISSIONS AND DISCLOSE TO THE VAT DEPARTMENT THEIR TURNOVER A ND OTHER DETAILS ON A REGULAR BASIS THROUGH MANDATORY VAT RETURNS AND T HE VAT AUTHORITIES MAKE AN ASSESSMENT UNDER THE VAT LAW AN D DETERMINE THE TAX LIABILITY ON AN YEAR TO YEAR BASIS. 6.1. THE DISALLOWANCE WAS MADE BY THE AO MAINLY BE CAUSE THE APPELLANT COULD NOT PRODUCE PROPER EVIDENCES IN SUP PORT OF THE TOTAL PURCHASES MADE AND ACCORDING TO THE AO THE NATURE O F WASTE PAPER BUSINESS ENABLES PAPER MILLS TO REDUCE THEIR INCIDE NCE OF TAXATION. ADMITTEDLY THE NATURE OF BUSINESS AND ALL FACTUAL A SPECTS OF THE SAME HAVE BEEN DISCLOSED BY THE APPELLANT AND HAS NOT BE EN DISPUTED BY THE AO. ALSO ADMITTEDLY THE AO HAS DOUBTED THE PURCHASE S MADE BY THE APPELLANT BUT HAS NOT BROUGHT ON RECORD ANY INSTANC E OF WASTE PAPER PURCHASES MADE BY THE CUSTOMERS OF THE APPELLANT (P APER MILLS) AS BEING FOUND TO BE BOGUS OR INFLATED. THE AO HAS NOT DISPUTED THE NATURE OF BUSINESS CARRIED OUT BY THE APPELLANT AND HAS NO T POINTED OUT ANY ITA NO.1351/AHD/2012 (BY REVENUE) AND CO NO.155/AHD/2012 (BY ASSESSEE) ITO VS. TAYAB YUNUS BARUDGAR ASST.YEAR 2009-10 - 6 - INSTANCE OF TAX PLANNING BY ANY PAPER MILLS SPECIFI CALLY TO FORM AN OPINION AS SUCH. THE APPELLANT IS A TRADER IN AN UN ORGANIZED SECTOR THE AO HAS NOT DOUBTED THE SALES FIGURE DISCLOSED BY TH E APPELLANT. CONSIDERING THAT THE PAPER MILLS ASSOCIATION HAS FI XED THE PRICE FOR PURCHASES OF WASTE PAPER FROM THE TRADER THE SCOPE FOR MANIPULATED SALE PRICE IS NOT ESTABLISHED NOR CAN BE INFERRED. THERE IS NO CIRCUMSTANTIAL EVIDENCE TO CONCLUDE THAT THE WASTE PAPER SUPPLIER HAVE HIGHER THAN NORMAL GROSS MARGIN ON SALES ONLY BECAU SE THEY PURCHASE FROM SMALL TIME SCRAP VENDORS. 6.2. FURTHER IT WAS ALSO BROUGHT TO MY NOTICE THAT IN THE CENTRAL CIRCLE, SURAT (DEALING WITH SEARCH ASSESSMENTS) SIM ILAR CASES WERE ASSESSED DURING THE CALENDAR YEAR 2011 WHEREIN THE ASSESSING AUTHORITIES CONSIDERED ALL FACTS OF THE CASE WHIC H IS VERY SIMILAR TO THE FACTS OF THE CASE OF THIS CASE AND HAVE ESTIMATED T HE GROSS PROFIT AND MADE AN ADDITION OF 0.5% TO 0.75 % OF THE TURNOVER AS INCOME ON THE BASIS OF SAME FACTS AND ISSUES IN DISPUTE. 6.3. THE APPELLANT HAD FURNISHED QUANTITATIVE DET AILS OF PURCHASES AND STOCK ALONG WITH THE TAX AUDIT RETURN AND HAS DISCL OSED A SUM OF RS.17,36,499/-AS GROSS PROFIT (G.P.) WHICH WORKS OU T TO 7% OF THE TOTAL TURNOVER. ON CONSIDERATION OF THE NATURE OF THE BUS INESS THE ASSESSING OFFICER DOUBTED THE PROFITABILITY OF THE TRADING RE SULTS OF THE APPELLANT. AS A RESULT THE AO COMPLETED THE ASSESSMENT BY DISA LLOWING A PORTION OF THE PURCHASE VALUE OF THE APPELLANT. I AM OF THE CO NSIDERED OPINION THAT WASTE PAPER COLLECTION AND SUPPLYING THE SAME TO TH E TRADERS LIKE THE APPELLANT ARE CARRIED ON BY SMALL TIME COLLECTORS W HO BELONG TO UNORGANIZED POOR SECTION OF THE SOCIETY. I AGREE WI TH THE AO TO THE EXTENT THAT THE TRADERS LIKE THE APPELLANT SHOULD C OMPLY WITH THE PROVISIONS OF THE INCOME TAX LAW IN MAINTENANCE OF BOOKS OF ACCOUNT AND OTHER PARTICULARS REQUIRED FOR THE PURPOSES OF ASSESSMENT. IN THIS CASE CONSIDERING THE PECULIAR NATURE OF THE BUSINES S AND THE MODUS OPERANDI REQUIRED FOR CARRYING OUT THE BUSINESS, TH E INFERENCES HAVE TO BE DERIVED FROM ALL THE FACTS IN ENTIRETY. ADMITTED LY THERE IS NO DISPUTE AS REGARDS THE QUANTUM OF SALES. THERE IS NO POSSIB ILITY OF WASTE PAPER TRADERS LIKE THE APPELLANT ACTING AS CONDUITS FOR T AX PLANNING ON BEHALF ITA NO.1351/AHD/2012 (BY REVENUE) AND CO NO.155/AHD/2012 (BY ASSESSEE) ITO VS. TAYAB YUNUS BARUDGAR ASST.YEAR 2009-10 - 7 - OF THE PAPER MILLS. THE AO HIMSELF HAS OBSERVED THA T THE PURCHASE PRICE IS FIXED BY THE GPMA. THE TRADERS LIKE THE APPELLAN T ARE DEPENDENT UPON A FEW PAPER MILLS FOR THEIR BUSINESS. IN VIEW OF THIS FACTS I AM UNABLE TO AGREE WITH THE AO THAT AN ADHOC ADDITION OF 15% OF THE PURCHASE VALUE SHALL BE MADE THE DETERMINE THE FAIR QUANTUM OF TAXABLE PROFIT. 6.4. AS POINTED OUT BY THE APPELLANT THE CENTRAL CIRCLE SURAT HAS COMPLETED THE ASSESSMENT OF SIMILAR TRADERS BY ESTI MATING THE GROSS PROFIT AND ENHANCED THE RATE BETWEEN 0.5% TO 0.75 % BEING THE FACTS SIMILAR TO THE APPELLANT. THIS INDICATES THAT THIS TRADING ACTIVITY IS HIGH VOLUME LOW MARGIN BUSINESS. I HAVE ALSO SPARED MY T HOUGHTS ON VARIOUS ASPECTS OF THE BUSINESS ACTIVITIES SUCH AS I) WHAT ARE THE ITEMS COVERED UNDER THIS TRADE, II) SOURCE OF WASTE PAPERS AND OT HER ITEMS TRADED BY THE APPELLANT, III) HOW COST OF THE GOODS IS DETERM INED, IV) MODUS- OPERANDIE OF THE TRADING ACTIVITIES, V) METHODS OF ACCOUNTING FOLLOWED AND VI) THE SALES -PURCHASE RATIO. I HAVE ALSO PERU SED THE COPY OF THE ASSESSMENT ORDER PASSED BY DY. CIT, CENTRAL CIRCLE - 3, SURAT IN THE CASE OF M/S. PAPER SALES CORPORATION WHEREIN THE AO HAD MADE G.P. ADDITION OF 0.50% TO 0.75%. THE MARKET RULE IN THIS TRADE IS THAT AS THE TURNOVER INCREASES THE G.P./N.P. DECLINES MARGINALL Y. CONSIDERING THE CASE IN TOTALITY AND THE NATURE OF TRADE, IT IS SAF E TO SAY THAT 15% MARGIN IN THIS TRADE IS NOT POSSIBLE. IN THESE CIRCUMSTANC ES, FOR THE SAKE OF JUSTICE AND FAIRNESS, I CONSIDER THE N.P. RATES SHO ULD APPLY BETWEEN 2-3 % DEPENDING ON THE TURNOVER. AS MENTIONED EARLIER, HIGHER THE TURNOVER, THE GP/NP IS LOWER. IN THIS CASE THE APPE LLANT HAD SHOWN GP/NP AT 7.0%/1.10% RESPECTIVELY. THUS, APPLYING TH E GENERAL RULE, IN MY CONSIDERED VIEW, THE N.P. ESTIMATED AT 2% AS AGA INST 1.10% DISCLOSED BY THE APPELLANT WILL MEET THE JUSTICE. A CCORDINGLY, THE AO IS DIRECTED TO ADOPT NP AT THE RATE 2% FOR DETERMINING THE TAXABLE INCOME IN THIS CASE. THIS GROUND OF APPEAL IS PARTLY ALLOWED. 3.3. AGGRIEVED BY THE ORDER OF THE LD.CIT(A), REVEN UE IS NOW IN APPEAL BEFORE US. ITA NO.1351/AHD/2012 (BY REVENUE) AND CO NO.155/AHD/2012 (BY ASSESSEE) ITO VS. TAYAB YUNUS BARUDGAR ASST.YEAR 2009-10 - 8 - 3.4. BEFORE US, LD.DR SUPPORTED THE ORDER OF AO. 4. WE HAVE HEARD THE LD.DR, PERUSED THE MATERIAL A VAILABLE ON RECORD AND GONE THROUGH THE ORDERS OF THE AUTHORITI ES BELOW. WE FIND THAT THE LD.CIT(A) WHILE DECIDING THE ISSUE IN FAVOUR OF ASSESSEE HAS GIVEN A FINDING THAT THOUGH THE AO HAS DOUBTED THE PURCHASE S BUT HAS NOT BROUGHT ON RECORD ANY INSTANCE OF BOGUS OR INFLATED PURCHASE AND HAS ALSO NOT DOUBTED THE SALES FIGURE DISCLOSED BY THE ASSESSEE. HE HAS FURTHER GIVEN A FINDING THAT PAPER MILL ASSOCIATION HAD FIXED THE PRICE FOR PURCHASES OF WASTE-PAPER FROM THE TRADERS AND, THER EFORE, THE SCOPE OF MANIPULATED SALES PRICE WAS NOT ESTABLISHED AND THE RE WAS NO EVIDENCE TO CONCLUDE THAT WASTER-PAPER SUPPLIER HAVE HIGHER GRO SS MARGIN ON SALES ONLY BECAUSE THEIR PURCHASES ARE FROM SMALL TYPE VE NDORS. HE HAS FURTHER GIVEN A FINDING THAT 15% MARGIN OF PROFIT I S NOT POSSIBLE IN THE CASE OF ASSESSEE. HE HAS FURTHER GIVEN A FINDING T HAT CENTRAL CIRCLE SURAT HAD COMPLETED THE ASSESSMENT OF SMALL TRADERS BY ES TIMATING THE GROSS PROFIT AND HAD CONSIDERED THE GROSS PROFIT RATE BET WEEN 0.5% TO 0.75% ON SIMILAR FACTS AS THAT OF ASSESSEE. HE THEREA FTER AFTER CONSIDERING THE GROSS PROFIT AND NET PROFIT RATIO SHOWN BY THE ASSE SSEE, ESTIMATED THE NET PROFIT AT 2% AS AGAINST 1.10% DISCLOSED BY THE ASSE SSEE.. BEFORE US, REVENUE HAS NOT BROUGHT ANY MATERIAL ON RECORD TO C ONTROVERT THE FINDINGS OF LD.CIT(A). LOOKING TO THE TOTALITY OF THE FACTS OF THE PRESENT ITA NO.1351/AHD/2012 (BY REVENUE) AND CO NO.155/AHD/2012 (BY ASSESSEE) ITO VS. TAYAB YUNUS BARUDGAR ASST.YEAR 2009-10 - 9 - CASE, WE DO NOT SEE ANY REASON TO INTERFERE WITH TH E ORDER OF THE LD.CIT(A). THUS, THIS GROUND OF REVENUE IS DISMIS SED. 5. SECOND GROUND IS WITH RESPECT TO UNEXPLAINED SUN DRY CREDITORS. 5.1 DURING THE COURSE OF ASSESSMENT PROCEEDINGS, ASSESSEE WAS ASKED TO FURNISH THE CONFIRMATION FROM THE CREDITORS. SINCE THE ASSESSEE HAD FAILED TO FURNISH CONFIRMATIONS FROM THE PARTIES HAVING AG GREGATE CREDIT BALANCE OF RS.22,29,345/-, THE AO DISALLOWED RS.22,29,345/- BY CONSIDERING IT AS UNEXPLAINED CREDITS. AGGRIEVED BY THE ORDER OF THE AO, ASSESSEE CARRIED THE MATTER BEFORE THE LD.CIT(A), WHO DECIDED THE IS SUE IN FAVOUR OF ASSESSEE BY HOLDING AS UNDER:- 6.4 DECISION:- I HAVE PERUSED THE FINDINGS OF THE AO AND THE SUBMISSIONS MADE BEFORE ME BY THE APPELLANT. THE SH ORT ISSUE HERE IS WHETHER SUCH AMOUNT CAN BE DISALLOWED IPSO-FACTO BE CAUSE THE APPELLANT COULD NOT FURNISH THE CONFIRMATIONS FROM THE CREDITORS. THE AO OBSERVED THAT THE APPELLANT FAILED TO PRODUCED C ONFIRMATIONS FROM THE CREDITORS AND THEREFORE, MADE ADDITION AS UNEXP LAINED CASH CREDITS. ON THE OTHER HAND THE ID. AR SUBMITTED THAT THE CRE DIT BALANCE PERTAINS TO 3 COMPANIES AND DURING THE SUBSEQUENT YEAR AS SO ON AS THE MONEY WAS RECEIVED FROM THE PAPER MILLS, THE OUTSTANDING AMOUNT WAS PAID TO THE VENDORS. THIS IS THE NATURE OF BUSINESS AND INV ARIABLY PAYMENTS ARE MADE TO THE CREDITORS FOR SUPPLY OF WASTE PAPER ONL Y AFTER THE SAME IS RECEIVED FROM THE PAPER MILLS. THE APPELLANT HAD SU BMITTED LIST OF CREDITORS AND LEDGER ACCOUNT EVIDENCING PAYMENT TO SUCH CREDITORS IN THE SUBSEQUENT YEAR. I HAVE CAREFULLY CONSIDERED TH E FACTUM OF THE CASE. THIS IS NOT A CASE OF CASH CREDIT OR A CASE OF UNEX PLAINED CREDIT BUT A TRADE BALANCE/CREDITS AT THE END OF THE FINANCIAL Y EAR. THE AO SHOULD HAVE EXAMINED THE VERACITY OF THE SUNDRY CREDITORS BEFORE THE DISALLOWANCE. THE APPELLANT CLEARLY DEMONSTRATED TH AT THE CREDIT ITA NO.1351/AHD/2012 (BY REVENUE) AND CO NO.155/AHD/2012 (BY ASSESSEE) ITO VS. TAYAB YUNUS BARUDGAR ASST.YEAR 2009-10 - 10 - BALANCE APPEARED IN THE B/S IN THE END OF THE YEAR IS A TRADE CREDIT WHICH WAS PAID TO 3 SUNDRY CREDITORS IN THE SUBSEQU ENT YEAR. IN VIEW OF THIS, THE AO IS DIRECTED TO DELETE THE ADDITION MAD E IN THIS GROUND. THIS GROUND IS ALLOWED. 5.2. AGGRIEVED BY THE ORDER OF LD.CIT(A), REVENUE I S NOW IN APPEAL BEFORE US. BEFORE US, LD.DR SUPPORTED THE ORDER OF AO. 6. WE HAVE HEARD THE LD.DR, PERUSED THE MATERIAL AV AILABLE ON RECORD AND GONE THROUGH THE ORDERS OF THE AUTHORITIES BELO W. WE FIND THAT THE LD.CIT(A) WHILE DELETING THE ADDITION HAS GIVEN A F INDING THAT THE CREDIT BALANCE PERTAINS TO THREE COMPANIES AND DURING SUBS EQUENT YEAR, THE MONEY WAS PAID TO THE VENDORS. HE HAS FURTHER GIV EN A FINDING THAT IT IS NOT THE CASE OF UNEXPLAINED CREDIT, BUT A CASE OF T RADE BALANCE/CREDITS AT THE END OF THE FINANCIAL YEAR. BEFORE US, REVENUE HAS NOT BROUGHT ANY MATERIAL TO CONTROVERT THE FINDINGS OF THE LD.CIT(A ). WE THEREFORE FIND NO REASON TO INTERFERE WITH THE ORDER OF LD.CIT(A). THUS, THIS GROUND OF REVENUE IS ALSO DISMISSED. 7. AS A RESULT, REVENUES APPEAL IS DISMISSED. 8. ASSESSEES CROSS OBJECTION NO.155/AHD/2012:- 81. SINCE THE GROUNDS RAISED IN CROSS OBJECTION IS SUPPORTING THE ORDER OF LD.CIT(A), WE ARE OF THE VIEW THAT IT REQUIRES NO SEPARATE ADJUDICATION AND, THEREFORE, CROSS OBJECTION FILED BY THE ASSESS EE IS DISMISSED. ITA NO.1351/AHD/2012 (BY REVENUE) AND CO NO.155/AHD/2012 (BY ASSESSEE) ITO VS. TAYAB YUNUS BARUDGAR ASST.YEAR 2009-10 - 11 - 9. IN THE COMBINED RESULT, REVENUES APPEAL AND CRO SS OBJECTION FILED BY THE ASSESSEE ARE DISMISSED. THIS ORDER PRONOUNCED IN OPEN COURT ON 27/05/2016 SD/- SD/- ( ) () (SHAILENDRA KUMAR YADAV) ( ANIL CHATUR VEDI ) JUDICIAL MEMBER ACCOUNTANT MEMBER AHMEDABAD; DATED 27/ 05 /2016 4..,.../ T.C. NAIR, SR. PS !'#$#! / COPY OF THE ORDER FORWARDED TO : 1. &) / THE APPELLANT 2. *+&) / THE RESPONDENT. 3. 567 8 / CONCERNED CIT 4. 8 ( ) / THE CIT(A)-VALSAD 5. 9:;*67 , 67 1 , 5 / DR, ITAT, AHMEDABAD 6. ;=>, / GUARD FILE. / BY ORDER, +9* //TRUE COPY// / ( DY./ASSTT.REGISTRAR) , / ITAT, AHMEDABAD 1. DATE OF DICTATION .. 23.5.16 (DICTATION-PAD 12+ PAGES ATTACHED AT THE END OF THIS APPEAL-FILE) 2. DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE DICTATING MEMBER 25.5.16/26.5.16 3. OTHER MEMBER 4. DATE ON WHICH THE APPROVED DRAFT COMES TO THE SR.P. S./P.S.. 5. DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE THE D ICTATING MEMBER FOR PRONOUNCEMENT 6. DATE ON WHICH THE FAIR ORDER COMES BACK TO THE SR.P .S./P.S.30.5.16 7. DATE ON WHICH THE FILE GOES TO THE BENCH CLERK 30.5.16 8. DATE ON WHICH THE FILE GOES TO THE HEAD CLERK ... 9. THE DATE ON WHICH THE FILE GOES TO THE ASSISTANT RE GISTRAR FOR SIGNATURE ON THE ORDER.. 10. DATE OF DESPATCH OF THE ORDER