INCOME TAX OFFICER 1(3), RAIPUR (CG) V. M/S KANHA GRAIN PROCESS, RAIPUR (CG)

ITA 16/BIL/2012

• Counselvise Citation: [2015] 134 COUNSELVISE.COM (IT) 0528 (ITAT-RAIPUR)
• Duration Of Justice: 3 year(s) 8 month(s) 14 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 16-10-2015
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Assessment Year: 2008-2009
• Appeal Filed On: 02-02-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: S K MEENA
• Assessee Lawyers: SUNIL AGARWAL
• Keywords: Unexplained cash credit
• Section: 68

Judgement Text

, RAIPUR IN THE INCOME TAX APPELLATE TRIBUNAL, RAIPUR BEFORE S/SHRI MUKUL KR. SHRAWAT (JM) & SHAMIM YAHYA (AM) , , ./ I.T.A. NO.16/BLPR/2012 ( / ASSESSMENT YEAR : 2008 - 2009) INCOME TAX OFFICER, WARD - 1(3), CENTRAL REVENUE BUILDING, CIVIL LINE, RAIPUR. / VS. KANHA GRAIN PROCESS, STATION ROAD,TILDA - NEORA, DIST: RAIPUR. ./ ./PAN/GIR NO. : AAIFK 3222G ( /APPELLANT ) .. ( / RESPONDENT ) / APPELLANT BY : SH. S.K.MEENA / RESPONDENT BY : SH. SUNIL AGARWAL / DATE OF HEARING :14 - 10 - 2015 / DATE OF PRONOUNCEMENT : 16 - 10 - 2015 / O R D E R PER MUKUL KR SHRAWAT, JUDICIAL MEMBER: THIS IS AN APPEAL FILED BY THE REVENUE ARISING FROM AN ORDER OF THE LD CIT(A), RAIPUR DATED 28.11.2011. THE ONLY GROUND RAISED BY THE REVENUE READS AS UNDER: WHETHER IN LAW AND ON FACTS & CIRCUMSTANCES OF THE CASE, THE CIT(A) HAS ERRED IN DELETING THE ADDITION OF RS.17,57,125/ - MADE BY THE AO U/S.68 OF THE I.T.ACT, 1961 FOR THE RE ASON THAT THE ASSESSEE HAD SHOWN CERTAIN CREDITORS IN ITS BALANCE SHEET.. 2 I.T.A. NO.16/BLPR/2012 ASSESSMENT YEAR : 2008 - 2009 2. FACTS IN BRIEF AS EMERGED FROM THE CORRESPONDING ASSESSMENT ORDER PASSED U/S.143(3) OF THE I.T.ACT, 1961 DATED 30.12.2010 WERE THAT THE APPELLANT DERIVED INCOME FROM MANUFACTU RING AND TRADING OF RICE AND ITS BY - PRODUCTS.. IT FILED THE RETURN OF INCOME ON 30.9.2008 SHOWING TOTAL INCOME AT RS.59,060/ - . DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE ASSESSING OFFICER NOTICED THAT THE ASSESSEE HAS SHOWN TRADE CREDITORS OF RS.17 ,57,125/ - FROM FOUR PARTIES AS UNDER: I) SIDHI VINAYAK TRADERS, RAIPUR : RS.3,81,625/ - II) SHUBH LAXMI TRADERS : `RS.5,90,500/ - III) SOMNATH CORPORATION, RAIPUR : RS.4,85,000/ - IV) SUHANI AGRO, ABHANPUR, RAIPUR : RS. 3,00,000/ - RS.17,57,12 5/ - THE ASSESSING OFFICER OB TAINED INFORMATION U/S.133(6) FROM THE TRANSPORTERS/TRUCK OWNERS WHOSE VEHICLES WERE CLAIMED TO HAVE BEEN USED IN THE TRANSPORTATION WORK OF RICE AND BY - PRODUCTS, RELATING TO THE PURCHASES CLAIMED TO HAVE BEEN MADE FROM THE ABO VE FOUR CONCERNS. SUMMONS U/S.131 WERE ALSO ISSUED BY THE AO TO SOME OF THE VEHICLE OWNERS WHOSE VEHICLES TO HAVE BEEN USED FOR THE TRANSPORTATION WORK, WHO DENIED TO HAVE TRANSPORTED ANY SUCH MATERIAL FROM THE ABOVE CONCERNS TO THE PREMISES OF THE ASSES SEE. THEIR STATEMENTS WERE ALSO RECORDED BY THE AO. THE LETTERS ISSUED FOR CROSS VERIFICATION AS DEPOSED IN THE STATEMENTS WERE RETURNED BACK UNSERVED FROM THE AFOREMENTIONED TRADE CREDITORS. THEREFORE, THE AO ASKED THE ASSESSEE TO PRODUCE ALL THE CREDIT ORS FOR EXAMINATION, HOWEVER, THEY WERE NOT PRODUCED BY THE ASSESSEE ON THE GROUND THAT THE BROKER WHO ARRANGED THE ABOVE PARTIES, INFORMED THAT THEY HAVE CLOSED DOWN THEIR BUSINESS. BEFORE THE AO, IT WAS EXPLAINED THAT THE VEHICLES BY WHICH THE 3 I.T.A. NO.16/BLPR/2012 ASSESSMENT YEAR : 2008 - 2009 TRANSPORT ATION DONE WAS ALSO ARRANGED BY THE SAME PERSON WHO INFORMED THAT THE TRANSPORTERS HAD NOT GIVEN ANY DOCUMENTARY EVIDENCE SINCE THEY DID NOT MAINTAIN ANY RECORDS. BEFORE THE AO, CONFIRMATION OF ACCOUNTS RECEIVED FROM THE CONCERNED PARTIES DULY SIGNED ALON GWITH THEIR PAN WERE FILED TO PROVE THAT THE TRANSACTIONS WERE GENUINE. HOWEVER, THE AO DID NOT ACCEPT THE ASSESSEES CONTENTION AND MADE AN ADDITION OF RS.17,57,125/ - U/S.68 OF THE ACT TREATING THE SAME AS UNEXPLAINED, OBSERVING THAT THE ASSESSEE HAS F AILED TO PROVE THE IDENTITY AND GENUINENESS OF THE OUTSTANDING LIABILITY. BEING AGGRIEVED BY THE ADDITION MADE BY THE AO, THE ASSESSEE PREFERRED AN APPEAL BEFORE THE FIRST APPELLATE AUTHORITY. 3. BEFORE THE LD CIT(A), THE ASSESSEE CONTENDED THAT ALL THE AFOREMENTIONED PARTIES WERE NOT BOGUS, AS ALL OF THEM WERE REGISTERED WITH THE COMMERCIAL TAX DEPARTMENT AND WERE ALLOTTED TAN NUMBERS. IT WAS SUBMITTED THAT ALL THE TRANSACTIONS WERE SUBSTANTIATED BY THE INVOICES RAISED B Y THE SAID PARTIES AND THE PAYM ENTS WERE MADE THROUGH BANKING CHANNEL. IT WAS SUBMITTED THAT THE TRANSACTION WAS NOT ARRANGED BY THE ASSESSEE BUT BY THE SELLERS. AS REGARDS TO THE STATEMENTS OF THE TRANSPORTERS, RELIED UPON BY THE AO, IT WAS SUBMITTED THAT SHRI DEEN DAYAL AGARWAL PURC HASED VEHICLE NO.ZC 1269 IN NOVEMBER, 2007 AND CLAIMED THAT THE TRANSPORT ATION WAS DONE IN MAY, 2007. SHRI DEEN DAYAL WAS NOT THE OWNER OF THE SAID VEHICLE AND SUCH ADVERSE CONCLUSIONS DRAWN BY THE AO AGAINST THE ASSESSEE WAS BASED ON INCORRECT FACTS. IT WAS ALSO SUBMITTED THAT THE STATEMENTS GIVEN BY TWO TRANSPORTERS WERE GIVEN UNDER MISCONCEPTION OF FACTS. THE COMMISSIONER OF INCOME TAX(A) DELETED THE ENTIRE ADDITION MADE BY THE ASSESS ING OFFICER ON ACCOUNT OF TRADE /SUNDRY CREDITORS IN THE IMPUGNED ORDER . THE LD CIT(A) HAS OBSERVED THAT ONCE THE TRANSACTION HAS BEEN 4 I.T.A. NO.16/BLPR/2012 ASSESSMENT YEAR : 2008 - 2009 DONE THROUGH ACCOUNT PAYEE CHEQUES, IT CANNOT BE PRESUMED THAT THE TRANSA C TION IS NOT GENUINE AND BOGUS. THE AO HAD NOT CONDUCTED ANY ENQUIRIES FROM THE CONCERNED BANK AUTHORITIES TO PROV E TH AT THE TRANSACTION WAS ALSO NOT CORRECT. THE LD CIT(A) ALSO COLLECTED THE ACCOUNT NUMBERS OF FOUR PARTIES FROM BRANCH MANAGER, VYAVSAYAK SAHAKARI BANK LIMITED, KAMALA SUPER MARKET, TELGHANI NAKA, RAIPUR, WHO HAVE OPERATED THE ACCOUNT AS CONFIRMED BY THE B ANK. HE ALSO HELD THAT NO EVIDEN C E WAS BROUGHT BY THE AO ON RECORD TO PROVE THAT T HE DOCUMENTARY EVIDENCE FILED BY THE ASSESSEE WAS BOGUS OR FALSE. DISTINGUISHING SEVERAL JUDICIAL PRONOUNCEMENTS RELIED UPON BY THE AO, THE LD CIT(A) DELETED THE ADDITION. NOW, THE REVENUE IS BEFORE THIS TRIBUNAL IN THIS SECOND APPEAL WITH THE SOLE GROUND AS MENTIONED HEREINABOVE. 4. FROM THE SIDE OF THE REVENUE, SHRI S.K.MEENA, LD D.R. APPEARED AND HIS MAIN CONTENTION IS THAT SINCE THE ASSESSEE FAILED TO PROVE THE IDENTI TY AND GENUINENESS OF THE OUTSTANDING LIABILITY STANDS IN THE NAME OF AFOREMENTIONED FOUR FIRMS, THE AO HAS RIGHTLY DISALLOWED THE SAME. EVEN AFTER A NOTICE U/S.133(6) WAS ISSUED BY THE AO, NO RESPONSE WAS MADE EITHER BY THE ASSESSEE OR BY THE SUNDRY CRE DITORS. HE SUBMITTED THAT THE VEHICLES SHOWN BY THE ASSESSEE FOR TRANSPORTATION WORK WERE HEAVY GOODS VEHICLES, WHICH WERE GENERALLY USED IN THE LONG ROUTE TRANSPORTATION WORK OF IRON AND STEEL OR GOODS OF LIKE NATURE. HE URGED TO RESTORE THE ADDITION MADE BY THE AO. 5. FROM THE SIDE OF THE RESPONDENT - ASSESSEE, SHRI SUNIL AGARWAL, LD A.R. APPEARED AND SUBMITTED THAT THE STATEMENT RECORDED BY THE AO FROM THE TRUCK OWNERS WAS NOT PERMISSIBLE AS PER LAW. HE ALSO REFERRE D TO THE STATEMENT RECORDED ON OATH FROM THE 5 I.T.A. NO.16/BLPR/2012 ASSESSMENT YEAR : 2008 - 2009 TRUCK OWNERS ON 24.11.2010 & 25.11.2010, WHICH WAS MORE THAN THREE YEARS FROM THE DATE OF TRANSACTION. HE SUBMITTED THAT THE WRONG INFERENCE WAS DRAWN BY THE AO ON THE BASIS OF THE STATEMENT OF TRUCK OWNERS, TH EREFORE, THEY CANNOT BE ACCEPTED AS GEN UINE. HE SUBMITTED THAT THE AO HAS NOT DOUBTED THE PAYMENTS MADE BY THE ACCOUNT PAYEE CHEQUES TO THE TRADE CREDITORS, WHICH WERE CREDITED IN THEIR RESPECTIVE BANK ACCOUNTS. HE SUBMITTED THAT THE ADDITION CANNOT BE M ADE U/S.68 IN CASE OF PERSONS FROM WHO PURCHASES HAVE BEEN MADE ON CREDIT PURCHASE IN THE REGULAR COURSE OF BUSINESS. HE REFERRED VARIOUS JUDICIAL PRONOUNCEMENTS PLACED IN THE PAPER BOOK AND SUBMITTED THAT IF CREDITS ARE TRADE CREDITS, ADDITION CANNOT B E MADE U/S.68 OF THE ACT. HE, THEREFORE, URGED BEFORE US TO CONFIRM THE ORDER OF THE LD CIT(A). BEFORE US, THE LD COUNSEL FOR THE ASSESSEE CITED FOLLOWING CASE LAWS IN SUPPORT OF HIS CASE: I) CIT VS. NANGALIA FABRICS (P) LTD.(2013) 220 TAXMAN 17 (MAG)(G UJ HC) II) CIT VS. PANCHAM DASS JAIN (2006) 156 TAXMAN 507 (AHC) III) YFC PROJECTS (P) LTD VS. DCIT (2010) 37 SOT 130 (DEL. TRIB) IV) SMT UMADEVI SHANKARAPA THIMMAIAH (2013) (2014) 49 TAXMANN.COM 496 (BANG) 6. HAVING HEARD THE SUBMISSIONS OF BOTH THE SIDES, WE ARE OF THE CONSIDERED OPINION THAT THERE WAS NO FALLACY IN THE ORDER OF THE LD CIT(A) GRANTING RELIEF TO THE RESPONDENT - ASSESSEE. THE ASSESSEE HAD ALREADY FURNISHED RELEVANT DOCUMENTARY EVIDENCE TO SUBST ANTIATE THE GENUINENESS OF THE TRANSACTIONS. IF THERE WAS ANY DOUBT, IT WAS INCUMBENT UPON THE ASSESSING OFFICER TO CONTROVERT THE ABOVE EVIDENCES BY 6 I.T.A. NO.16/BLPR/2012 ASSESSMENT YEAR : 2008 - 2009 BRINGING CORROBORATIVE EVIDENCE. WE NOTED THAT THE BANK AUTHORITIES HAVE CERTIFIED THE ACCOUNTS HAVING I N THE BANK. IT IS PERTINENT TO MENTION THAT THE PARTIES WITH WHOM THE TRANSACTIONS HAVE BEEN MADE, WERE NOT UNDER THE ADMINISTRATIVE CONTROL OF THE ASSESSEE. IT WAS MAINLY CONCERNED WITH RECEIVING THE PURCHASED GOODS/RAW MATERIALS IN THE FORM OF PADDY, ETC AND MAKING PAYMENT THEREFOR. 7. IN THE CASE OF PANCHAM DASS JAIN (SUPRA), IT HAS BEE N HELD BY THE HONBLE ALLAHABAD HIGH COURT THA T WHERE THE AO HAD ACCEPTED THE PU RCHASES, SALES AND TRADING RESULTS DISCLOSED BY THE ASSESSEE AND IT HAD BEEN FOUND THAT THE AMOUNTS INVOLVED REPRESENTED THE PURCHASES MADE BY THE ASSESSEE ON CREDIT, THE PROVISIONS OF SECTION 68 OF THE ACT COULD NOT GET AUTOMATICALLY ATTRACTED . 8. IN THE CASE OF NANGALIA FABRICS (SUPRA), WHEN THE PURCHASES ARE SUPPORTED BY BILLS, EN TRIES IN THE BOOKS OF ACCOUNT, PAYMENT BY CHEQUE AND QUANTITATIVE DETAILS, THE AO DID NOT FIND ANY INFLATION IN PURCHASE PRICE OR INFLATION IN CONSUMPTION OR SUPPRESSION THE PRODUCTION, HOWEVER, THE THE ADDITION HAD BEEN MADE ONLY ON THE GROUND THA T THE PA RTIES ARE NOT TRACEABLE, THEN I N SUCH A SITUATION, ADDITION U/S.68 IS NOT WARRANTED. 9, IN THE CASE OF YFC PROJECTS (P) LT D., (SUPRA), IT HAS BEEN HELD THAT WHERE NO DEFECTS WERE POINTED OUT IN THE BOOKS OF ACCOUNT PARTICULARLY TO THE PURCHASERS MADE FROM CERTAIN PARTIES, MERELY NON - FILING OF CONFIRMATION FROM 2 SUPPLIERS, IT CANNOT BE SAID THAT ASSESSEE HAS NOT RECEIVED THE GOODS FROM THESE PERSONS AND THE CREDIT BALANCE IN 7 I.T.A. NO.16/BLPR/2012 ASSESSMENT YEAR : 2008 - 2009 THE SHAPE OF SUNDRY CREDIT APPEARING IN THE BOOKS OF ACCOUNT IS UNACCOUNTED MONEY OF THE ASSESSEE. 10 . IN THE RECENT DECISION DATED 12.6.2015 OF ITAT, HYDERABAD IN THE CASE OF BHAGYANAGAR OIL INDUSTRIES VS. ITO (ITAT HYDERABAD), ITA NO. 1178 OF 2012 AS S REGARD THE ADDITION U/S 68, ITAT OBSE RVED THAT THE IMPUGNED CREDITS BEING TRADE CREDITS OF THE ASSESSEE ON ACCOUNT OF PURCHASE OF SUNFLOWER SEEDS ARE NOT IN THE NATURE OF CASH CREDITS AS ENVISAGED UNDER SECTION 68 AND THE SAME THEREFORE CANNOT BE ADDED TO THE INCOME OF THE ASSESSEE BY INVOKIN G THE SAID PROVISION BECAUSE THE CORRESPONDING SALE OF THE SAME PRODUCTS CREDITED TO THE TRADING A/C OF THE ASSESSEE. THEREFORE, IT CANNOT BE TAXED AS UNEXPLAINED CASH CREDIT AS THE PURCHASE COULD NOT BE TREATED AS BOGUS ONE. 11 . IN THE LIGHT OF THE ABOVE PRECEDENTS, O N PERUSAL OF PAPER BOOK FILED BEFORE US BY THE ASSESSEE, WE HAVE NOTED THAT THE PURCHASES DURING THE YEAR WAS RS.59,02,725/ - AND PAYMENTS DURING THE YEAR WAS RS.41,45,600/ - LEAVING CLOSING CREDIT BALANCE AT RS.17,57,125/ - AS AGAINST THE TRANS ACTIONS MADE WITH AFOREMENTIONED FOUR TRADE CREDITORS. FROM THE PERUSAL OF TABLE GIVEN IN THE PAPER BOOK, WE HAVE ALSO NOTED THAT THE ASSESSEE HAS CARRIED OUT VARIOUS PURCHASES OF RICE, BROKEN AND BRAN FROM 1.4.2007 TILL 31.3.2009 FROM THE ABOVE MENTIONED FOUR TRADE CREDITORS AND PAYMENTS WERE ALSO MADE BY THE ASSESSEE THROUGH BANKING CHANNELS, WHICH WAS SUPPORTED BY THE CONFIRMATIONS FILE BEFORE THE AO. THE AO HAS NOT DISPUTED THE TRANSACTIONS MADE BY THE BANKING CHANNELS. I T IS WORTH TO M ENTION THAT IT IS NOT A CASE OF CASH CREDITORS BUT A 8 I.T.A. NO.16/BLPR/2012 ASSESSMENT YEAR : 2008 - 2009 CASE OF TRADE CREDITORS AND ESPECIALLY WHEN THE PU RCHASES MADE FROM THE SAID FO UR PARTIES HAVE NOT BEEN DOUBTED DURING THE COURSE OF ASSESSMENT PROCE EDINGS, WE DO NOT FIND ANY INFIRMITY IN THE ORDER OF THE LD CIT(A) DELETING THE ADDITION OF RS.17,57,125/ - MADE BY THE AO. RESULTANTLY, GROUND OF THE REVENUE IS HEREBY DISMISSED. 1 2 . IN THE RESULT, APPEAL FILED BY THE REVENUE IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 1 6 /10/2015 . S D / - S D / - ( , ) ( , ) SHAMIM YAHYA, ACOUNTANT MEMBER MUKUL KR SHRAWAT,JUDICIAL MEMBER RAIPUR, DATED 1 6 / 10/2015 . . ./ PARIDA , SR. PS / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT : INCOME TAX OFFICER, WARD - 1(3 ),CENTRAL REVENUE BUILDING, CIVIL LINE, RAIPUR. 2. / THE RESPONDENT: KANHA GRAIN PROCESS, STATION ROAD, TILDA - NEORA, RAIPUR. 3. ( ) / THE CIT(A) - RAIPUR 4. / CIT , RAIPUR 5. , , / DR, ITAT, RAIPUR 6. / GUARD FILE. / BY ORDER, //TRUE COPY// AR, ITAT RAIPUR