Gateway Enterprises, CHENNAI V. ITO, CHENNAI

ITA 1516/CHNY/2016

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 8323 (ITAT-CHENNAI)
• Duration Of Justice: 4 month(s) 10 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 07-10-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: 2007-2008
• Appeal Filed On: 27-05-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SUPRIYO PAL
• Assessee Lawyers: M GOPICHAND ITP

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH, CHENNAI . . . , . !'# ! , % !& BEFORE SHRI N.R.S. GANESAN, JUDICIAL MEMBER AND SHRI A. MOHAN ALANKAMONY, ACCOUNTANT MEMBER ./ ITA NO.1516/MDS/2016 ( )( / ASSESSMENT YEAR : 2007-08 M/S GATEWAY ENTERPRISES, NO.11, KRISHNA IYER STREET, SOWCARPET, CHENNAI - 600 079. PAN : AAAFG 2093 D V. THE INCOME TAX OFFICER, WARD 4(4), CHENNAI - 600 006. (+,/ APPELLANT) (-.+,/ RESPONDENT) +, / 0 / APPELLANT BY : SHRI M. GOPICHAND, ITP -.+, / 0 / RESPONDENT BY : SHRI SUPRIYO PAL, JCIT 1 / 2% / DATE OF HEARING : 10.08.2016 3') / 2% / DATE OF PRONOUNCEMENT : 07.10.2016 / O R D E R PER N.R.S. GANESAN, JUDICIAL MEMBER: THIS APPEAL OF THE ASSESSEE IS DIRECTED AGAINST THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS) 5, CHENN AI, DATED 24.02.2016 AND PERTAINS TO ASSESSMENT YEAR 2007-08. 2. SHRI M. GOPICHAND, THE LD. REPRESENTATIVE FOR TH E ASSESSEE, SUBMITTED THAT THE ASSESSEE-FIRM IS ENGAGED IN THE BUSINESS OF 2 I.T.A. NO.1516/MDS/16 TRADING IN ACCESSORIES FOR LEATHER GOODS AND GARMEN TS. IN THE LIABILITY SIDE OF THE BALANCE SHEET, AN AMOUNT OF ` 38,83,905/- WAS SHOWN AGAINST TRADE CREDITORS. ACCORDING TO THE LD . REPRESENTATIVE, ASSESSING OFFICER CALLED FOR CONFIRMATION LETTERS F ROM SUNDRY CREDITORS. THE ASSESSEE COULD NOT PRODUCE ANY CONF IRMATION LETTER FROM M/S MEHTA ELASTIC INDUSTRIES TO THE EXTENT OF ` 1,37,750/-. IN THE ABSENCE OF ANY MATERIAL, THE ASSESSING OFFICER FOUND THAT THE TRANSACTION WAS NOT GENUINE. ACCORDINGLY, HE ADDED THE SUM OF ` 1,37,750/- TO THE TOTAL INCOME OF THE ASSESSEE. AC CORDING TO THE LD. REPRESENTATIVE, THE ASSESSEE PURCHASED GOODS FR OM M/S MEHTA ELASTIC INDUSTRIES. IN FACT, THE ASSESSEE WAS PURC HASING GOODS FROM THE SAID MEHTA ELASTIC INDUSTRIES FROM ASSESSMENT Y EAR 1998-99. THE OPENING BALANCE AS ON 01.04.2006 WAS ` 1,56,250/-. THE ASSESSEE HAS PAID A SUM OF ` 19,500/- BY CHEQUE AND THE CLOSING BALANCE WAS ` 1,37,750/-. ACCORDING TO THE LD. REPRESENTATIVE, T HE ASSESSEE HAS PRODUCED COPY OF BILLS AND LEDGER. IN SPITE OF THAT, THE CIT(APPEALS) HAS CONFIRMED THE ORDER OF THE ASSESSI NG OFFICER. M/S MEHTA ELASTIC INDUSTRIES HAS FILED CONFORMATION LET TER, THEREFORE, ACCORDING TO THE LD. REPRESENTATIVE, THE CIT(APPEAL S) IS NOT CORRECT IN CONFIRMING THE ADDITION MADE BY THE ASSESSING OF FICER. 3 I.T.A. NO.1516/MDS/16 3. ON THE CONTRARY, SHRI SUPRIYO PAL, THE LD. DEPAR TMENTAL REPRESENTATIVE, SUBMITTED THAT THE SO-CALLED LEDGER COPY SHOWS THAT A SUM OF ` 19,500/- WAS PAID BY CHEQUE. THE LEDGER COPY DOES NOT INDICATE CHEQUE NUMBER AND OTHER BANK DETAILS. ACC ORDING TO THE LD. D.R., THE ASSESSEE HAS ALSO FILED COPIES OF THE INVOICES WHICH CONTAIN NO DETAILS OF M/S MEHTA ELASTIC INDUSTRIES IN SURAT, THEREFORE, THE PAYMENT HAS TO BE MADE ONLY THROUGH BANKING CHANNEL. IN THE ABSENCE OF ANY DETAILS, ACCORDING TO THE LD. D.R., THE CIT(APPEALS) HAS RIGHTLY CONFIRMED THE ADDITION MADE BY THE ASSESSING OFFICER. REFERRING TO THE CONFIRMATION LETTER SAID TO BE FILED BY M/S MEHTA ELASTIC INDUSTRIES, THE LD. D.R. SUBMITTED THAT THE CONFIRMATION LETTER WAS IN FACT PREPARED BY THE ASS ESSEE, AND AT THE BOTTOM OF THE CONFIRMATION LETTER, A RUBBER STAMP O F MEHTA ELASTIC INDUSTRIES WAS AFFIXED AND SOMEBODY ELSE HAS SIGNED AS PROPRIETOR. THEREFORE, ACCORDING TO THE LD. D.R., THE CIT(APPEA LS) DOUBTED THE GENUINENESS OF THE CONFIRMATION LETTER AND CONFIRME D THE ADDITION. 4. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS ON EITH ER SIDE AND PERUSED THE RELEVANT MATERIAL AVAILABLE ON RECORD. THE ASSESSEE HAS FILED COPIES OF LEDGER ACCOUNT, BILLS/INVOICES BEFORE THE ASSESSING OFFICER AND THE CIT(APPEALS). THE ASSESS EE HAS ALSO 4 I.T.A. NO.1516/MDS/16 PRODUCED CONFIRMATION LETTER FROM M/S MEHTA ELASTIC INDUSTRIES. THE CONFIRMATION LETTER WAS REJECTED BY THE CIT(APPEALS ) ON THE GROUND THAT RUBBER STAMP OF M/S MEHTA ELASTIC INDUSTRIES W AS AFFIXED IN THE BOTTOM OF THE LETTER AND SOMEBODY ELSE HAS SIGNED A S PROPRIETOR. THE ASSESSING OFFICER AND THE CIT(APPEALS) HAVE NOT EXAMINED THE GENUINENESS OF THE CONFIRMATION LETTER AFTER CALLIN G DETAILS FROM M/S MEHTA ELASTIC INDUSTRIES. THIS TRIBUNAL IS OF THE CONSIDERED OPINION THAT WHEN THE CIT(APPEALS) DOUBTED THE GENUINENESS OF CONFIRMATION LETTER FILED BY THE ASSESSEE FROM M/S MEHTA ELASTIC INDUSTRIES, HE OUGHT TO HAVE DIRECTED THE ASSESSING OFFICER TO EXAMINE THE RESPONSIBLE PERSON FROM M/S MEHTA ELAST IC INDUSTRIES AND FIND OUT WHETHER M/S MEHTA ELASTIC INDUSTRIES H AS IN FACT CONFIRMED THE OUTSTANDING AMOUNT. WITHOUT SUCH EXA MINATION, THE CIT(APPEALS) SIMPLY REJECTED THE CONFIRMATION LETTE R FILED BY THE ASSESSEE FROM M/S MEHTA ELASTIC INDUSTRIES. LIKEWI SE, THE DETAILS OF BANK ACCOUNT AND OTHER ENTRIES, WHICH WERE REQUIRED FOR ESTABLISHING THE PAYMENT OF ` 19,500/-, NEED TO BE EXAMINED EITHER BY CALLING FROM THE ASSESSEE OR FROM M/S MEHTA ELAS TIC INDUSTRIES. IN THE ABSENCE OF ANY SUCH DETAILS, THIS TRIBUNAL I S OF THE CONSIDERED OPINION THAT THE CIT(APPEALS) IS NOT JUSTIFIED IN C ONFIRMING THE ADDITION MADE BY THE ASSESSING OFFICER 5 I.T.A. NO.1516/MDS/16 5. IN THE NORMAL CIRCUMSTANCES, THIS TRIBUNAL WOULD HAVE REMITTED BACK THE MATTER TO THE FILE OF THE ASSESSI NG OFFICER FOR RE- EXAMINATION. IN THE CASE BEFORE US, THE ADDITION I S ONLY ` 1,37,750/-. REMANDING BACK TO THE FILE OF THE ASSESSING OFFICER WOULD NOT SERVE ANY PURPOSE. BY CONSIDERING THE SMALLNESS OF ADDIT ION MADE BY THE ASSESSING OFFICER AS CONFIRMED BY THE CIT(APPEALS), THIS TRIBUNAL IS OF THE CONSIDERED OPINION THAT IN THE ABSENCE OF EN QUIRY BY THE AUTHORITIES BELOW, THE ADDITION MADE BY THE ASSESSI NG OFFICER IS NOT JUSTIFIED. ACCORDINGLY, THE ORDERS OF THE AUTHORIT IES BELOW ARE SET ASIDE AND THE ADDITION OF ` 1,37,750/- IS DELETED. 6. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED ON 7 TH OCTOBER, 2016 AT CHENNAI. SD/- SD/- (. !'# ! ) ( . . . ) (A. MOHAN ALANKAMONY) (N.R.S. GANESAN) % / ACCOUNTANT MEMBER /JUDICIAL MEMBER /CHENNAI, 5 /DATED, THE 7 TH OCTOBER, 2016. KRI. 6 I.T.A. NO.1516/MDS/16 / -267 87)2 /COPY TO: 1. +, /APPELLANT 2. -.+, /RESPONDENT 3. 1 92 () /CIT(A)-5, CHENNAI 4. PRINCIPAL CIT-9, CHENNAI 5. 7: -2 /DR 6. ;( < /GF.