Ram Ganga Roller Flour Mills (P) Ltd., Haridwar V. ACIT, Haridwar

ITA 1552/DEL/2011

• Counselvise Citation: [2017] 130 COUNSELVISE.COM (IT) 6591 (ITAT-DELHI)
• Duration Of Justice: 5 year(s) 10 month(s) 29 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-02-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: F
• Next Hearing Date: 16-02-2017
• Assessment Year: 2006-2007
• Appeal Filed On: 30-03-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: F R MEENA
• Keywords: Principle of natural justice
• Section: 131; 68

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH : F NEW DELHI BEFORE SH. I.C. SUDHIR , JUDICIAL M EMBER AND SH. O.P. KANT , ACCOUNTANT MEMBER ITA NO. 1552 /DEL/ 2011 ASSESSMENT YEAR: 2006 - 07 RAM GANGA ROLLER FLOUR MILLS (P) LTD., SARAI ROAD, JWALAPUR, HARIDWAR. VS. ASSTT. COMMISSIONER OF INCOME TAX, CIRCLE, HARIDWAR PAN : AABCR0940E (APPELLANT) (RESPONDENT) APPELLANT BY NONE RESPONDENT BY SH. F.R. MEENA, SR.DR DATE OF HEARING 16.02.2017 DATE OF PRONOUNCEMENT 28.02.2017 ORDER PER O.P. KANT , A. M. : THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST ORDER DATED 8/12/2010 OF LEARNE D COMMISSIONER OF INCOME - TAX (APPEALS), DEHRADUN, FOR ASSESSMENT YEAR 2006 - 07 , RAISING FOLLOWING GROUNDS: 1. THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) - I, HAS ERRED ON FACTS AND IN LAW IN CONFIRMING THE ADDITION OUT OF SUNDRY CREDITORS U/S. 68, AMOUNTING TO RS.1529017/ - WITHOUT CONSIDERING THE FACTS OF THE CASE. 2. T HE FACTS IN BRIEF OF THE CASE ARE THAT THE ASSESSEE FILED RETURN OF INCOME ON 22/11/200 6 DECLARING TOTAL INCOME OF RS.1,23, 481/ - . THE CASE WAS SELECTED FOR SCRUTINY AND NOTI CE UNDER SECTION 143(2) OF THE INCOME - TAX ACT, 1961 (IN SHORT THE ACT ) WAS ISSUED AND COMPLIED WITH. THE 2 ITA NO. 1552/DEL/2011 AY: 2006 - 07 ASSESSING OFFICER COMPLETED T HE ASSESSMENT UNDER SECTION 143 (3) OF THE ACT ON 30/12/2008 AS SESSING THE TOTAL INCOME AT RS.84,92, 860/ - . LD. COMMISSIONER OF INCOME - TAX (APPEALS) ALLO WED PART RELIEF TO THE ASSESSEE . AGGRIEVED WITH THE ORDER OF THE LD. COMMISSIONER OF INCOME - TAX ( APPEALS), THE ASSESSEE IS IN APPEAL BEFORE THE TRIBUNAL RAISING THE GROUNDS AS REPRODUCED ABOVE . 3. IN THE GROUNDS RAISED, THE ASSESSEE CHALLENGED ADDITION OF SU NDRY CREDITORS AMOUNTING TO RS.15,29, 017/ - MADE UNDER SECTION 68 OF THE ACT BY THE ASSESSING OFFICER AND UPHELD BY THE LD. COMMISSIONER OF INCOME - TAX( APPEALS). 3.1 THE FACTS IN RESPECT OF ISSUE IN DISPUTE ARE THAT DURING THE SCRUTINY PROCEEDINGS THE ASSESSING OFFICER OBSERVED SUNDRY CREDITORS OF R S.30,23, 219/ - , WHICH INCLUDED SMALL VILLAGERS AN D WHICH WERE NOT PAID EVEN AFTER SIX MONTHS FROM THE D ATE , THE PURCHASE S WERE BOOKED. FOR VERIFICATION OF THE SUNDRY CREDITORS, THE ASSESSING OFFICER ISSUED SUMMON UNDER SECTION 131 OF THE ACT TO 7 SUNDRY CREDITORS. THE ASSESSING OFFICER HAS NOTED IN THE A SSESSMENT ORDER THAT OUT OF THE SEVEN PARTIES, FOUR LETTERS OF SUMMONS WERE RETURNED BACK BY THE POSTAL AUTHORITIES WITH THE REMARK THAT PARTIES NOT FOUND OR THERE WERE 2 OR 3 PEOPLE HAVING SAME NAME AND NO POSTAL ACKNOWLEDGEMENT WAS RECEIVED IN CASE OF RE MAINING THREE PARTIES. THE ASSESSING OFFICER DIRECTED THE ASSESSEE TO PROVIDE CONFIRMATIONS, COPY OF SUPPORTING BILLS ETC IN RESPECT OF ALL SUNDRY CREDITORS. IN RESPONSE TO THE QUERY RAISED, THE ASSESSEE SUBMITTED THAT THREE KINDS OF PURCHASE OF FOOD GRAI NS WERE MADE BY THE ASSESSEE AS FOLLOWS: (I) PURCHASE OF FOOD GRAINS FROM SMALL FARMERS WAS SUPPORTED BY FORM NO. 6R, RECORDS OF WHICH WERE MAINTAINED BY THE KRISHI UTPADAN MANDI SAMITI AND WHATEVER ADDRESS PROVIDED BY THE FARMERS AT THE TIME OF PURCHASE O F FOOD GRAINS WAS DULY MENTIONED IN THE FORM NO. 6R. 3 ITA NO. 1552/DEL/2011 AY: 2006 - 07 (II) PURCHASE OF FOOD GRAINS MADE THROUGH ARTHIAS WERE MAINTAINED IN FORM NUMBER 9R, RECORD OF WHICH WAS ALSO MAINTAIN ED BY THE KRISHI UTPADAN MANDI SAMITI AND THE ADDRESS PROVIDED BY THE SELLER WAS MENTION ED IN FORM NO. 9R. (III) PURCHASES OF FOOD GRAINS OUTSIDE THE STATE WAS SUPPORTED BY FORM NO. 31, RECORDS OF WHICH WERE MAINTAINED THE TRADE TAX DEPARTMENT. 3.2 THE ASSESSEE FURTHER SUBMITTED THAT THE TRADE CREDITORS USE D TO VISIT THE PLACE OF THE ASSESSEE T O GET THEIR PAYMENT DUE TO THEM . WITH REGARD TO FOUR SUMMONS RETURNED UNSERVED, THE ASSESSEE SUBMITTED THAT TRADE CREDITORS WHO RECEIVES PAYMENT IN TOTO WERE NOT BOTH ERED TO COOPERATE WITH ASSESSEE . THE ASSESSEE FURTHER SUBMITTED THAT IT APPROACHED TO CERTAIN SUNDRY CREDITORS AND OBTAINED THEIR C ONFIRMATION , A LIST OF WHICH AMOUNTING TO RS.3,26, 670/ - WAS SUBMITTED TO THE ASSESSING OFFICER ON 23/12/2008. THE ASSESSEE ALSO SUBMITTED CONFIRMATION OF SUNDRY CREDITORS AMOUNTING TO R S.5,09, 126/ - ALONGWITH LET TER DATED 29/12/2008. A BILL OF RS.6,58, 406/ - FROM BABULAL RUPESH KUMAR ALONGWITH EVIDENCES OF PAYMENT WAS ALSO FURNISHED BEFORE THE ASSESSING OFFICER. 3.3 THE OBSERVATION MADE BY THE ASSESSING OFFICER ARE SUMMARIZED AS UNDER: (I) THAT THE ASSESSEE FAILED TO PRODUCE COMPLETE ADDRESS OF THE PARTIES AND COPIES OF VOUCHERS WERE PRODUCED IN RESPECT OF FEW TRANSACTIONS ONLY ; (II) THAT DETAILS OF SELLERS IN RESPECT OF LOCAL PURCHASES THROUGH KRISH I UTPADAN MANDI S AMITI WAS NOT REFLECTED IN VOUCHERS. (III) THAT O UT OF SE VE NS SUMMONS ISSUED, F OUR SUMMONS RETURNED UNSERVED AND NO RESPONSE RECEIVED IN RESPECT OF REMAINING THREE SUMMONS . 4 ITA NO. 1552/DEL/2011 AY: 2006 - 07 (IV) THAT A SSESSEE FAILED TO PROVIDE COMPLETE ADDRESS AND JUSTIFY PURCHASES ON CREDIT FROM SMALL FARMERS. (V) THAT I N THE PREVIOUS YEAR, THE ASSESSEE H AD NOT PURCHASED ANY RAW MATERIAL ON CREDIT BEYOND THE END OF THE RESPECTIVE FINANCIAL YEAR. (VI) THAT T HE ASSESSEE FAILED TO JUSTIFY, THE CIRCUMSTANCES UNDER WHICH SMALL FARMERS WERE SELLING THEIR PRODUCT RANGING FROM RS. 10,000 TO 20,000 ON CREDIT FOR A PERIO D MORE THAN EIGHT MONTHS AND IN SEVERAL CASES FOR A PERIOD MORE THAN 11 MONTHS. 3.4 IN VIEW OF THE ABOVE OBSERVATION, THE ASSESSING OFFICER HELD THAT THE ASSESSEE FAILED TO COMPLY THE REQUIREMENT OF SECTION 68 IN RESPECT OF TH E SUNDRY CREDITORS. ACCORDING LY, THE ASSESSING OFFICER MADE ADDITION UNDER SECTION 68 OF THE ACT IN RESPECT OF THE SUNDRY CREDITORS , CONFIRMATION OF WHI CH WERE NOT PRODUCED BEFORE HIM , WHICH AMOUNTED TO RS.15,29, 017/ - . 3.5 DURING FIRST APPELLATE PROCEEDINGS, THE LD. COMMISSIONER OF INCOME - TAX (APPEALS) ASKED THE ASSESSING O FFICER TO CONDUCT ENQUIRY TO CHECK THE VERACITY OF OUTSTANDING BALANCE ON SAMPLE BASIS AND ASKED THE ASSESSEE TO PROVIDE THE COMPLETE POSTAL ADDRESS AND OTHER DETAILS FOR CARRYING OUT N ECESSARY ENQUIRIES. THE LEAR NED COMMISSIONER OF INCOME - TAX (APPEALS) HAS NOTED IN THE IMPUGNED ORDER THAT THE ASSESSING OFFICER VIDE HIS LETTER NUMBER 2606 DATED 31/03/2010 SUBMITTED THAT NO DETAILS WERE PROVIDED BY THE ASSESSEE AND HENCE NO INQUIRY COULD BE CONDUCTED IN RESPECT OF T HE CREDITORS HELD AS UNEXPLAINED BY HIM. THE LD. COMMISSIONER OF INCOME - TAX (APPEALS) WAS OF THE OPINION THAT THAT SINCE THE ASSESSEE DID NOT PROVIDE THE BASIC DETAILS IN R ESPECT OF CREDITORS IN QUESTION , NO RELIEF COULD HAVE BEEN ALLOWED TO THE ASSESSEE MERELY ON THE GROUND THAT ITS ACCOUNTS WERE AUDITED AND ACCEPTED BY THE TRADE TAX AUTHORITIES. ACCORDING TO THE LD. 5 ITA NO. 1552/DEL/2011 AY: 2006 - 07 COMMISSIONER OF INCOME - TAX (APPEALS), THE TRADE TAX DEPARTMENT WOULD LOOK INTO THE TURNOVER OF THE ASSESSEE AND NOT INTO THE GENUINENESS OF THE TRADE CREDITORS. ACCORDINGLY HE UPHELD THE ADDITION. 4. BEFORE US THE ASSESSEE PREFERRED TO SUBMIT WRITTEN SUBMISSION ONLY AND NOBODY REPRESENTED ON BEHALF OF THE ASSESSEE. THE DIRECTOR OF THE ASSESSEE COMPANY, SENT A LETTER DAT ED 19/08/2016 ADDRESSE D TO THE A SSISTANT R EGISTRAR OF THE TRIBUNAL, AND REQUESTED TO CONSIDER THE PAPER BOOK FILED CONTAINS 54 PAGES A S WRITTEN SUBMISSION BEFORE THE TRIBUNAL. 5. ON THE OTHER HAND, THE LD. SENIOR DEPARTMENTAL R EPRESENTATIVE RELIED ON THE FINDING OF THE LOWER AUTHORITIES. 6. WE HAVE HEARD THE SUBMISSION OF THE LEARNED S ENIOR DR AND PERUSED THE WRI TTEN SUBMISSION OF THE ASSESSEE , CONTAINING PAPER BOOK AND THE RELEVANT MATERIAL ON RECORD. ON PERUSAL OF THE PAPER BOOK, WE FIND THAT THE ASSESSEE HAS GIVEN LIST OF THE SU NDRY CREDITORS AMOUNTING TO RS.15,29, 017/ - WHICH HAVE BEEN HELD AS UNEXPLAINED BY THE ASSESSING OFFICER AND CONFIRMED BY THE LEARNE D COMMISSIONER OF INCOME - TAX ( APPEALS). THE DETAIL OF THE SUNDRY CREDITORS SUBMITTED BY THE ASSESSEE IS AS UNDER: PARTICULARS AMOUNT 1. PURCHASE OF PLANT & MACHINERY PARTS AGAINST FORM 31 97148.00 2. PURCHASE OF BARDANA AGAINST FORM 31 371435.10 3. PURCHASE OF FOOD GRAINS AGAINST FORM 31 209339.85 4. PURCHASE OF FOOD GRAINS AGAINST 9R 340330.50 5. PURCHASE OF FOOD GRAINS AGAINST 6R 364854.40 6. ADVANCE AGAINST SALES OF CHOKAR 184117.00 TOTAL 1529017.00 6.1 W E FIND THAT THE ASSESSEE HAS SUBMITTED DETAIL ED ADDRESS IN RESPECT OF FIRST FOUR CATEGORIES OF SUNDRY CREDITORS BEFORE US. WE ALSO FIND THAT THE LD. COMMISSIONER OF INCOME - TAX ( APPEALS) HAS UPHELD THE ADDITION ONLY ON THE GROUND THAT IN REMAND PROCEEDING DETAIL OF ADDRESS OF THE SUNDRY CREDITORS WAS NOT PROVIDED BY THE ASSESSEE TO THE ASSESSING OFFICER. HOWEVER, IT APPEARS TO US F ROM THE ORDER OF THE LEARNED COMMISSIONER OF 6 ITA NO. 1552/DEL/2011 AY: 2006 - 07 INCOME - TAX ( APPEALS), THAT A COPY OF REPORT OF THE ASSESSING OFFICER WAS NOT PROVIDED TO THE ASSESSEE FOR SUBMITTING HIS REJOINDER. IN OUR OPINION , WHEN COMPLETE ADDRE SS OF THE PARTIES ARE AVAILABLE , THE ASSESSING OFFICER CAN VERIFY THE TRANSACTION CARRIED OUT WITH ASSESSEE WITH THOSE PARTIES AND IN THE INTEREST OF NATURAL JUSTICE, THE ASSESSE E SHOULD BE AFFORDED ONE MORE OPPORTUNITY TO FURNISH COMPLETE ADDRESS AND OTHER EVIDENCE IN RESPECT OF THE SUNDRY CREDITORS. 6.2 IN THE CIRCUMSTANCES, WE FEEL IT APPROPRIATE TO RESTORE THE MATTER TO THE FILE OF THE ASSESSING OFFICER WITH THE DIRECTION TO THE ASSESSEE TO FURNISH CONFIRMATION ALONGWITH COMPLETE ADDRESS FROM ALL THE SUNDRY CREDITORS IN QUESTION, COPY OF RELEVANT BILLS E TC. THE ASSESSING OFFICER IS ALSO DIRECTED TO CARRY OUT THE NECESSARY I NQUIRY FOR VERIFICATION OF THE SUNDRY CREDITORS, AS HE DEEMS NECESSARY AND DECIDE THE ISSUE IN DISPUTE AFTER AFFORDING SUFFICIENT OPPORTUNITY OF HEARING TO THE ASSESSEE. ACCORDINGLY THE GROUND OF THE APPEAL IS ALLOWED FOR STATISTICAL PURPOSE. 7. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSE. THE DECISION IS PRONOUN CED IN THE OPEN COURT ON 2 8 T H FEBRUARY , 201 7 . S D / - S D / - ( I.C. SUDHIR ) ( O.P. KANT ) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 2 8 T H FEBRUARY , 201 7 . RK / - (D.T.D) COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR ASST. REGISTRAR, ITAT, NEW DELHI