ITO, Ward - 2(1), Midnapore, Paschim Medinipur V. Mr. Janmajoy Dutta, Paschim Medinipur

ITA 1656/KOL/2011

• Counselvise Citation: [2013] 140 COUNSELVISE.COM (IT) 70464 (ITAT-KOLKATA)
• Duration Of Justice: 2 year(s) 21 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 23-12-2013
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: C
• Assessment Year: 2008-2009
• Appeal Filed On: 02-12-2011
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: P DAM KANUNJNA
• Assessee Lawyers: VIKASH SURANA PER SHRI
• Section: 143(3); 133(6)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH: KOL KATA [BEFORE SHRI SHAMIM YAHYA, A.M. & SHRI GEORGE MATHA N, J.M. ] I.T.A. NO.1656/KOL/2011 ASSESSMENT YEAR : 2008-09 I.T.O., WARD-2(1), MIDNAPORE .. ( APPELLANT) -VS- MR. JANMAJOY DUTTA, PASCHIM MEDINIPUR .. ( RESPONDENT ) PAN : ADEPD 2865R DATE OF CONCLUDING THE HEARING : 19.12.2013 DATE OF PRONOUNCING THE ORDER : 23.12.2013 APPEARANCES : FOR THE APPELLANT :SHRI P. DAM KANUNJNA, JCIT, SR.DR : FOR THE RESPONDENT :SHRI VIKASH SURANA O R D E R PER SHRI SHAMIM YAHYA, A.M. THIS APPEAL BY THE REVENUE IS DIRECTED AGAINST THE ORDER OF THE CIT(A) DATED 5 TH SEPTEMBER, 2011 PASSED UNDER SECTION 143(3) OF THE I.T. ACT AND PERTAINS TO THE ASSESSMENT YEAR 2008-09. 2. THE ISSUE RAISED IS THAT CIT(A) ERRED IN DELETIN G THE ADDITION OF RS.24,18,141/- ON ACCOUNT OF DISCREPANCIES IN SUNDRY CREDITORS ACC OUNT MADE BY THE AO. 3. IN THIS CASE, THE ASSESSEE RECEIVED INCOME FROM TWO BUSINESS HEADS, ONE RELATED TO RETAIL TRADING OF CEMENT AND ANOTHER RELATED TO RETAIL READYMADE GARMENTS AND CLOTHS. WHILE VERIFYING THE ACCOUNTS, THE AO FOUND THAT THE ASSESSEE HAD SUNDRY CREDITORS FOR THE BUSINESS OF M/S. AGAMONI BASTRALAYA TOTALLING T O RS.27,14,229.25 AS OUTSTANDING BALANCE IN THE BALANCE-SHEET. NOTICES UNDER SECTION 133(6) WERE ISSUED TO ALL THE 15 ITA NO.1656/K/11 MR. JANMAJOY DUTTA 2 NOS. OF SUNDRY CREDITORS. REPLIES HAD BEEN RECEIVED FROM 5 PARTIES, NAMELY, SREE GOPAL SAGARMAL, SREEGOPAL SAREE HOUSE, SUJIT MURARI, NAGJ I RAMGOBINDA & CO. AND FROM KOHINOOR TEXTILES. M/S. KOHINOOR TEXTILES IN THEIR CONFIRMATION AFFIRMED THAT NO BALANCE WAS OUTSTANDING ON 31.03.2008. M/S. NAGJI R AMGOBIND & CO. CONFIRMED THE BALANCE OF RS.73,534/- OUTSTANDING REMAINED AS ON 3 1.03.2008. M/S. SREEGOPAL SAREE HOUSE AND M/S. SREEGOPAL SAGARMAL AVOIDED TO CONFIR M THEIR BALANCES BY SEEKING THE PLEA OF FOUR WEEKS TIME. IN OTHER 10 CASE, NO REPLI ES HAD BEEN RECEIVED BY THE DEPARTMENT. 4. IN VIEW OF THE ABOVE, ASSESSEES COUNSEL WAS REQ UESTED EITHER TO PRODUCE THE SUNDRY CREDITORS STATEMENT OF ACCOUNTS OR TO PRODU CE THE SUNDRY CREDITORS FOR EXAMINATION. WHEN THE ASSESSEE FAILED TO DO SO, THE AO, DUE TO TIME BARRING SITUATION, DISALLOWED THE UNCONFIRMED BALANCES TOTALLING TO RS .25,67,440/-. 5. UPON ASSESSEES APPEAL, THE LD. CIT(A) HELD AS U NDER: 3.4. ITS A FACT THAT TEN OUT OF FIFTEEN CREDITORS DID NOT RESPOND TO AO'S NOTICE U/S. 133(6) OF THE ACT AND THE APPELLANT COU LD NOT PRODUCE THEM BEFORE THE AO. HOWEVER, THE RECORDS SUGGEST THAT TH E APPELLANT HAS BEEN CONTINUOUSLY PURCHASING MATERIALS ON CREDIT FROM TH OSE PERSONS AT PAST AS WELL AS IN THE NEXT YEAR. NONE OF THE NOTICES ISSUE D U/S. 133(6) CAME BACK UNSERVED AND THE AO HIMSELF ACCEPTED THE CREDIT PUR CHASES FROM THOSE PERSONS AS GENUINE. IN VIEW OF SUCH, AO'S DECISION IN TREATING THE NON- RESPONDING CREDITORS AS NOT-GENUINE WAS NOTHING BUT SELF-CONTRADICTION AND THEREFORE, NOT MAINTAINABLE. HOWEVER, THE AO NO TED THAT TWO CONFIRMATORY CREDITORS NAMELY, MIS. KOHINOOR TEXTILE AND M/S. NAGJI RAMGOBIND & CO. FILED DIFFERENT BALANCE OF ACCOUNTS IN RESPONSE TO NOTICE U/S. 133(6) OF THE ACT. M/S. KOHINOOR TEXTILE CONFIRMED 'NIL BALANCE' AGAINST RS.45,960/- SHOWN BY THE APPELLANT AS PAYABLE. M/S. NAGJI RAMGOBIND & CO. CONFIRMED BALANCE OF RS.73,534/- AGAINST RS.1,76,873/- SHOWN BY THE APPELLANT. THE APPELLANT COULD NOT REC ONCILE THESE DIFFERENCES. THUS, THE CREDITORS TO THE EXTENT OF RS.1,49,299/- [RS.45,960/- + (RS.I,76,873/- MINUS RS.73,534/-)] HAVE BEEN PROVED NON-GENUINE BEYOND DOUBT. THE ADDITION IS THEREFORE, RESTRICTED TO RS.1,49,299/-. ITA NO.1656/K/11 MR. JANMAJOY DUTTA 3 6. AGAINST THE ABOVE ORDER, THE REVENUE IS IN APPEA L BEFORE US. 7. WE HAVE CONSIDERED THE CONTENTIONS OF BOTH THE C OUNSELS AND PERUSED RECORDS. WE FIND THAT IN THIS CASE 10 OUT OF 15 CREDITORS HA D NOT RESPONDED. THEIR BALANCES COULD NOT BE CONFIRMED. THE ASSESSEE COULD ALSO NOT PRODU CE THEM BEFORE THE AO. TWO OF THE CREDITORS SOUGHT TIME TO RESPOND AND TWO OF THE CRE DITORS SHOWED A BALANCE LOWER THAN THAT REFLECTED BY THE ASSESSEE. IN THESE CIRCUMSTAN CES, THE AO HAS MADE THE DISALLOWANCE. HOWEVER, THE LD. CIT(A) HELD THAT THE ASSESSEE HAS BEEN CONTINUOUSLY PURCHASING MATERIALS ON CREDIT FROM THESE PERSONS. NONE OF THE NOTICES ISSUED UNDER SECTION 133(6) CAME BACK UNSERVED AND THE AO HIMSEL F ACCEPTED CREDIT PURCHASES FROM THOSE PERSONS AS GENUINE. HENCE, THE LD. CIT(A) SUS TAINED THE ADDITION ONLY TO THE EXTENT OF RS.1,49,299/- AND DELETED THE REST ADDITI ON. 8. NOW WE FIND THAT THE LD. CIT(A)S APPROACH IS NO T CONVINCING. THE AO HAS MADE THE ADDITION ON ACCOUNT OF THE FACT THAT BALAN CES WERE NOT CONFIRMED BY THE CREDITORS. IT IS NOT THE CASE THAT CIT(A) HAS HIMSE LF OBTAINED THE CONFIRMATIONS OR DONE NECESSARY VERIFICATION. IT IS A SETTLED LAW THAT PO WERS OF LD. CIT(A) ARE CO-TERMINUS TO THAT OF THE AO. HENCE, WHEN THE NECESSARY CONFIRMAT IONS WERE NOT FILED BEFORE THE AO, THE LD. CIT(A) SHOULD NOT HAVE DELETED THE ADDITION WITHOUT ENSURING NECESSARY VERIFICATION. IN OUR CONSIDERED OPINION, INTEREST O F JUSTICE MAY BE SERVED, IF THE MATTER IS REMITTED TO THE FILE OF THE AO. THE AO SHALL EXA MINE THE ISSUE AFRESH. THE ASSESSEE SHOULD BE GIVEN DUE OPPORTUNITY TO PROVE THE GENUIN ENESS AND VERACITY OF THE SUNDRY CREDITORS. WE HOLD AND DIRECT ACCORDINGLY. 9. IN THE RESULT, THIS APPEAL FILED BY THE REVENUE STANDS ALLOWED FOR STATISTICAL PURPOSES. THIS ORDER IS PRONOUNCED IN THE OPEN COURT ON 23 RD DECEMBER, 2013. SD/- SD/- (GEORGE MATHAN) (SHAMIM YAHYA) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED : 23 RD DECEMBER, 2013 ITA NO.1656/K/11 MR. JANMAJOY DUTTA 4 COPY OF THE ORDER FORWARDED TO: 1. MR. JANMAJOY DUTTA, KRISHNANAGAR, GHATAL, DIST- PAS CHIM MEDINIPUR 2 I.T.O., WARD-2(1), MIDNAPORE 3. THE CIT(A), 4. CIT, 5. DR, TRUE COPY, BY ORDER, ASSTT. REGISTRAR , ITAT, KOLKATA TALUKDAR(SR.P.S.)