Ranisati Pharmaceuticals , Kolkata V. ITO, Ward - 22(2), Kolkata , Kolkata

ITA 1658/KOL/2019

• Counselvise Citation: [2020] 111 COUNSELVISE.COM (IT) 9953 (ITAT-KOLKATA)
• Duration Of Justice: 5 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 03-01-2020
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 2013-2014
• Appeal Filed On: 11-07-2019
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: JAYANTA KHANRA
• Assessee Lawyers: RAJ KUMAR AGARWAL
• Section: 133(6); 145

Judgement Text

1 ITA NO. 1658/KOL/2019 RANISATI PHARMACEUTICALS AY- 2013-14 , B(SMC) , IN THE INCOME TAX APPELLATE TRIBUNAL B(SMC) BENCH : KOLKATA ( ) . . , ) [BEFORE SHRI A. T. VARKEY, JM] ITA NO.1658/KOL/2019 ASSESSMENT YEAR: 2013-14 RANISATI PHARMACEUTICALS (PAN: AADFR3157N) VS. INCOME-TAX OFFICER, WARD-22(2), KOLKATA APPELLANT RESPONDENT DATE OF HEARING 25.11.2019 DATE OF PRONOUNCEMENT 03.01.2020 FOR THE APPELLANT SHRI RAJ KUMAR AGARWAL, CA FOR THE RESPONDENT SHRI JAYANTA KHANRA, JCIT, SR. D R ORDER THIS IS AN APPEAL PREFERRED BY THE ASSESSEE AGAINST THE ORDER OF LD. CIT(A)-6, KOLKATA DATED 21-05-2019 FOR THE ASSESSMENT YEAR 2013-14. 2. THE SOLE ISSUE INVOLVED IN THIS APPEAL OF ASSESS EE IS AGAINST THE ACTION OF LD. CIT(A) IN CONFIRMING THE ADDITION OF RS.2,55,000/- INVOKIN G SECTION 145 OF THE INCOME-TAX ACT, 1961 (HEREINAFTER REFERRED TO AS THE ACT) AS THER E WAS DIFFERENCE IN LIABILITY SIDE IN BALANCE SHEET. 3. BRIEFLY STATED FACTS ARE THAT THE AO WHILE GOING THROUGH THE ASSESSEES BOOKS IN RESPECT OF M/S. RELIANCE LIFE SCIENCE PVT. LTD. NOT ED THAT THE OUTSTANDING LIABILITY WAS TO THE TUNE OF RS.2,55,000/- , SO THE AO IN ORDER TO V ERIFY THE VERACITY OF THE SAME ISSUED NOTICE U/S. 133(6) OF THE ACT TO THIS COMPANY, AND THEY IN -TURN REPLIED THAT OUTSTANDING AMOUNT AS PER THEIR BOOKS IN RESPECT OF ASSESSEE IS RS. NIL. WHEN THE AO CONFRONTED THE ASSESSEE WITH THIS FACT, THE ASSESSEE REPLIED THAT IT HAD IS SUED CHEQUE OF RS.2,55,000/- TO M/S. RELIANCE LIFE SCIENCE PVT. LTD. ON 28.03.2013, BUT THE SAME WAS NOT RECORDED IN ITS BOOKS OF ACCOUNTS SINCE ASSESSEE INSTRUCTED THEM TO DEPOS IT THE CHEQUE ON 03.04.2013 WHICH THEY DID AND GOT THE AMOUNT CLEARED FROM THE BANK. BUT THEY (M/S. RELIANCE LIFE SCIENCE PVT. LTD.) RECONCILED THIS FACT OF RECEIVING CHEQUE OF R S.2,55,000/- IN THEIR BOOKS AS ON 30.03.2013 ITSELF AND, THEREFORE, THE CONFUSION ARO SE AND THIS FACT WILL IN NO WAY IMPACT THE PROFIT AND LOSS OF THE ASSESSEE. HOWEVER, THIS EXP LANATION OF ASSESSEE WAS NOT ACCEPTABLE TO 2 ITA NO. 1658/KOL/2019 RANISATI PHARMACEUTICALS AY- 2013-14 THE AO. ACCORDING TO AO, THE EXPLANATION WAS NOT I N CONSONANCE WITH THE BANK RECONCILIATION STATEMENT SUBMITTED BY THE ASSESSEE. SO, ACCORDING TO HIM, SINCE THE PAYMENT TO M/S. RELIANCE LIFE SCIENCE PVT. LTD. WAS NOT REC ORDED IN THE BOOKS OF THE ASSESSEE GAVE RISE TO A DISTORTED FIGURE IN THE BALANCE SHEET. T HEREFORE, IN THE LIGHT OF THE ABOVE FACT, AO WAS OF THE OPINION THAT DIFFERENCE OF THE LIABILITY SIDE OF THE BALANCE SHEET REPRESENTS INCOME AND AS SUCH THE AO ADDED THE SUM OF RS.2,55,000/- T O THE TOTAL INCOME OF THE ASSESSEE. AGGRIEVED, ASSESSEE PREFERRED AN APPEAL BEFORE THE LD. CIT(A), WHO CONFIRMED THE ACTION OF AO BY OBSERVING AS UNDER: I HAVE EXAMINED THE ISSUES AT LENGTH. WHEN THE AP PELLANT IS FOLLOWING A MERCANTILE SYSTEM OF ACCOUNTING, THE CHEQUES ONCE ISSUED HAVE TO BE E NTERED, WHETHER CLEARED OR NOT. THE APPELLANT ADMITS TO HAVE ISSUED THE CHEQUE ON 28.03 .2013 BUT DID NOT REFLECT IT IN ITS ACCOUNT. BEFORE THE AO THE APPELLANT FILED A BANK RECONCILIATION STATEMENT THAT DID NOT REFLECT THIS AMOUNT FOR FY 2012-13 EVEN THOUGH IT M AINTAINS ITS ACCOUNTS ON MERCANTILE BASIS. SUCH VIOLATION OF PRINCIPLES OF ACCOUNTING CANNOT BE ACCEPTED. ACCORDINGLY, ADDITION TO THE EXTENT OF RS.2,55,000/- IS CONFIRME D U/S. 145 OF THE ACT. AGGRIEVED, ASSESSEE IS BEFORE US. 4. HEARD BOTH THE PARTIES AND GONE THROUGH THE FACT S AND CIRCUMSTANCES OF THE CASE. AT THE OUTSET, IT HAS BEEN BROUGHT TO OUR NOTICE THAT THOUGH THE CHEQUE WAS ISSUED BY THE ASSESSEE DATED 28.03.2013 TO THE CREDITOR M/S. RELI ANCE LIFE SCIENCE PVT. LTD. THEY HAD BEEN INSTRUCTED TO DEPOSIT THE CHEQUE FOR CLEARANCE ONLY ON 03.04.2013 AND THEY (M/S. RELIANCE LIFE SCIENCE PVT. LTD. ) DULY DEPOSITED THE CHEQUE AND CLEARED THE AMOUNT. SINCE THE ASSESSEE INSTRUCTED M/S. RELIANCE LIFE SCIENCE PVT. LTD. TO DEPOSIT THE CHEQUE ONLY ON 03.04.2013, THE ASSESSEE DID NOT REFLECT THE SAME I N ITS BOOKS AS ON 31.03.2013. HOWEVER, M/S. RELIANCE LIFE SCIENCE PVT. LTD HAD SHOWN THE CHEQUE IN ITS BOOKS ON 30.03.2013 ITSELF AND GOT THE AMOUNT FROM THE BANK ON 03.04.2013, THE REFORE, M/S. RELIANCE LIFE SCIENCE PVT. LTD PURSUANT TO THE NOTICE U/S. 133(6) OF THE AO RE PLIED THAT THERE IS NO OUTSTANDING IN RESPECT OF ASSESSEE IN THEIR BOOKS. I NOTE THAT TH E WHOLE CONTROVERSY IS BECAUSE THE ENTRY IN RESPECT OF PAYMENT OF RS.2.25 LACS HAS NOT BEEN ENT ERED BY THE ASSESSEE IN RESPECT OF M/S. RELIANCE LIFE SCIENCE PVT. LTD. IN ITS BOOKS BEFOR E 30.03.2013 THOUGH THE ASSESSEE HAD ISSUED CHEQUE OF RS. 2.25 LACS DATED 28.03.2013 TO M/S. RELIANCE LIFE SCIENCE PVT. LTD. . SINCE THE PAYMENT HAS BEEN CLEARED BY THE BANK ON 0 3.04.2013, WHICH FACT HAS NOT BEEN DISPUTED BY THE AUTHORITIES BELOW, THE ADDITION WAS NOT WARRANTED SINCE HAD THIS CHEQUE BEEN RECORDED IN ASSESSEES BOOKS BEFORE 31.03.2013, CRE DITORS AND BANK BALANCE WOULD HAVE GONE DOWN BY THIS AMOUNT AND, THEREFORE, IT DOES NO T AT ALL AFFECT THE PROFIT FIGURE. THUS THE 3 ITA NO. 1658/KOL/2019 RANISATI PHARMACEUTICALS AY- 2013-14 ADDITION OF RS.2,55,000/- FOR THE YEAR UNDER CONSID ERATION DOES NOT MAKE ANY REVENUE IMPACT SINCE THE PAYMENT HAS BEEN RECEIVED BY THE C REDITOR ON 03.04.2013 AND HAS BEEN ENTERED IN THE ASSESSEES BOOK ABOUT THAT FACT [FY 2013-14]. SO, THERE IS NO REVENUE IMPACT, WHAT SO EVER, AND THEREFORE, THE ADDITION OF RS.2.2 5 LAKH IS DIRECTED TO BE DELETED. AND BEFORE PARTING IT IS OBSERVED THAT THE ADDITION CON FIRMED BY LD CIT(A) INVOKING SECTION 145 OF THE ACT IS ILLEGAL AND EX FACIE ERRONEOUS. WE OR DER ACCORDINGLY. 3. IN THE RESULT, THE APPEAL OF ASSESSEE IS ALLOWED . ORDER IS PRONOUNCED IN THE OPEN COURT ON 3 RD JANUARY, 2020. SD/- (ABY. T. VARKEY) JUDICIAL MEMBER JD.(SR.P.S.) DATED :3RD JANUARY, 2020 COPY OF THE ORDER FORWARDED TO: 1. APPELLANT M/S. RANISATI PHARMACEUTICALS,1 ST FLOOR, 85, BENTINCK STREET, KOLKATA-700 001. 2 RESPONDENT INCOME-TAX OFFICER, WARD-22(2), KOLK ATA. 3. 4. 5. CIT(A)-6, KOLKATA (SENT THROUGH E-MAIL) CIT- , KOLKATA. DR, ITAT, KOLKATA. (SENT THROUGH E-MAIL) / TRUE COPY, BY ORDER, ASSISTANT REGISTRAR