Tropical Agro System (India) Pvt. Ltd., CHENNAI V. JCIT, CHENNAI

ITA 1681/CHNY/2014

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 90355 (ITAT-CHENNAI)
• Duration Of Justice: 11 month(s) 1 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 15-05-2015
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 27-04-2015
• Assessment Year: 2009-2010
• Appeal Filed On: 13-06-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: P RADHAKRISHNAN
• Assessee Lawyers: DR ANITA SUMANTH
• Keywords: Unexplained cash credit; Additional evidence

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH, CHENNAI . . . , . !' , $ % BEFORE SHRI N.R.S. GANESAN, JUDICIAL MEMBER AND SHRI A. MOHAN ALANKAMONY, ACCOUNTANT MEMBER ./ ITA NO.1681/MDS/2014 ' (' / ASSESSMENT YEAR : 2009-10 M/S TROPICAL AGRO SYSTEM (INDIA) PVT. LTD., 72, MARSHALLS ROAD, EGMORE, CHENNAI - 600 008. PAN : AAACT 4250 E V. THE JOINT COMMISSIONER OF INCOME TAX, COMPANY RANGE III, CHENNAI - 600 034. (*+/ APPELLANT) (,-*+/ RESPONDENT) *+ . / / APPELLANT BY : DR. ANITA SUMANTH, ADVOCATE ,-*+ . / / RESPONDENT BY : SH. P. RADHAKRISHNAN, JCIT 0 . 1$ / DATE OF HEARING : 27.04.2015 2!( . 1$ / DATE OF PRONOUNCEMENT : 15.05.2015 / O R D E R PER N.R.S. GANESAN, JUDICIAL MEMBER: THIS APPEAL OF THE ASSESSEE IS DIRECTED AGAINST T HE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS)-III, CHENN AI, DATED 17.03.2014 AND PERTAINS TO ASSESSMENT YEAR 2009-10. 2 I.T.A. NO.1681/MDS/14 2. DR. ANITA SUMANTH, THE LD.COUNSEL FOR THE ASSESS EE, SUBMITTED THAT THE ASSESSEE-COMPANY IS ENGAGED IN T HE BUSINESS OF MANUFACTURING AND SALE OF PESTICIDES AND CHEMICALS. DURING THE COURSE OF BUSINESS ACTIVITY, THE ASSESSEE HAD TRANS ACTION WITH ONE M/S GHARDA CHEMICALS. IN THE ASSESSMENT PROCEEDING S, THE ASSESSING OFFICER FOUND THAT IN THE ACCOUNTS OF M/S GHARDA CHEMICALS, THE BOOKS OF ACCOUNT OF THE ASSESSEE SHO WED A BALANCE OF ` 80,97,910/-. HOWEVER, M/S GHARDA CHEMICALS CONFIRM ED THE BALANCE TO THE EXTENT ` 32,47,029/-. THE ASSESSEE EXPLAINED TO THE ASSESSING OFFICER THAT SOME OF THE CASH DISCOUNTS A ND DEBIT NOTES WERE NOT ENTERED BY THE PARTY AND ALSO EXPLAINED TH AT AN AMOUNT OF ` 53,18,014/- WAS ADJUSTED IN THE BOOKS OF M/S GHARDA CHEMICALS BY SETTLING THE DUES OF OTHER PARTY NAMED M/S J.U. PESTICIDES. HOWEVER, THE ASSESSING OFFICER FOUND THAT THE SUM O F ` 50,50,881/- WAS NOT REFLECTED IN THE ACCOUNTS OF M/S GHARDA CHE MICALS IN THE YEAR UNDER CONSIDERATION. THEREFORE, HE TREATED TH E SAME AS UNEXPLAINED CREDIT IN THE HANDS OF THE ASSESSEE. A CCORDING TO THE LD.COUNSEL, AN AMOUNT OF ` 53,18,014/- WAS DUE TO THE ASSESSEE BY M/S GHARDA CHEMICALS AND THE SAME WAS ADJUSTED BY M /S GHARDA CHEMICALS IN THE BOOKS. HOWEVER, THE ENTRIES WERE PASSED. SINCE THE ADJUSTMENT OF ENTRY WAS PASSED IN THE BOOKS OF ACCOUNT AS PER 3 I.T.A. NO.1681/MDS/14 THE MUTUAL UNDERSTANDING IN THE NORMAL COURSE OF BU SINESS, THEREFORE, ACCORDING TO THE COUNSEL, IT CANNOT BE C ONSTRUED AS UNEXPLAINED CREDIT. 3. ON THE CONTRARY, SHRI P. RADHAKRISHNAN, THE LD. DEPARTMENTAL REPRESENTATIVE, SUBMITTED THAT ALL THE BOOK ENTRIES, WHICH ARE SAID TO BE MADE, WERE MADE SUBSEQUENT TO 31.03.2009. ACCORDING TO THE LD. D.R., THE ASSESSEE IS A COMPAN Y, THEREFORE, THE ACCOUNTS OF THE ASSESSEE HAVE TO BE AUDITED AND FINALIZED AS PER THE PROVISIONS OF COMPANIES ACT AS WELL AS INCO ME-TAX ACT. THEREFORE, IF THERE WAS ANY ADJUSTMENT OF ENTRY, AS CLAIMED BY THE ASSESSEE, IT SHOULD NOT HAVE BEEN MADE BEFORE 31.03 .2009. IN THIS CASE, THE STATEMENT PRODUCED BY THE ASSESSEE BEFORE THE LOWER AUTHORITIES SHOW THAT THE ADJUSTMENT NOTES HAVE BEE N MADE SUBSEQUENT TO 31.03.2009. THEREFORE, THE CIT(APPEA LS) HAS RIGHTLY CONFIRMED THE ADDITION MADE BY THE ASSESSING OFFICE R. 4. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS ON EITH ER SIDE AND PERUSED THE RELEVANT MATERIAL ON RECORD. THE ASSES SEE FILED ADDITIONAL EVIDENCE BEFORE THE CIT(APPEALS) TO SHOW THAT THE ADJUSTMENT ENTRIES WERE MADE IN THE BOOKS OF ACCOUN T. EVEN THOUGH THE CIT(APPEALS) ADMITTED THE SAME, IT APPEARS THAT HE HAS NOT CONSIDERED THE ADDITIONAL MATERIAL FILED BY THE ASS ESSEE. FROM THE 4 I.T.A. NO.1681/MDS/14 ORDER OF THE CIT(APPEALS) IT APPEARS THAT A REMAND REPORT WAS CALLED FOR FROM THE ASSESSING OFFICER. IN THE REMA ND REPORT, THE ASSESSING OFFICER OBSERVED THAT THE ADJUSTMENT ENTR IES WERE MADE SUBSEQUENT TO 31.03.2009. IN FACT, THE CIT(APPEALS ) HAS REPRODUCED THE REMAND REPORT IN HIS ORDER BUT WITHO UT ANY FURTHER DISCUSSION, DISMISSED THE APPEAL OF THE ASSESSEE. WHEN THE ASSESSEE CLAIMS THAT SOME OF THE CASH DISCOUNTS AND DEBIT NOTES WERE NOT ENTERED BY M/S GHARDA CHEMICALS AND THE AM OUNT OF ` 53,18,014/- WAS ADJUSTED IN THE BOOKS OF M/S GHARDA CHEMICALS BY SETTLING THE DUES OF M/S J.U. PESTICIDES, THIS C LAIM OUGHT TO HAVE BEEN EXAMINED BY THE CIT(APPEALS). ENTRY IN THE BO OKS MAY BE ONE OF THE RELEVANT FACTORS TO BE CONSIDERED. HOWE VER, THE ENTRY IN THE BOOKS ALONE MAY NOT BE DECISIVE FOR DETERMINING THE TRANSACTION BETWEEN THE PARTIES. THEREFORE, ON THE BASIS OF TH E BOOKS, THE ASSESSING OFFICER HAS TO EXAMINE THE ISSUE AFRESH I N ORDER TO FIND OUT THE REASON FOR DISCREPANCY IN THE BOOKS. WHETH ER ANY CASH DISCOUNT AND DEBIT NOTES ARE OMITTED TO ENTER IN TH E BOOKS OF ACCOUNT OF M/S GHARDA CHEMICALS AND WHETHER THE DUE S OF M/S GHARDA CHEMICALS WAS SETTLED THROUGH M/S J.U. PESTI CIDES, AS CLAIMED BY THE ASSESSEE, NEEDS TO BE EXAMINED. SIN CE THESE FACTORS WERE NOT EXAMINED BY BOTH THE LOWER AUTHORI TIES, THIS TRIBUNAL IS OF THE CONSIDERED OPINION THAT THE MATT ER NEEDS TO BE RE- 5 I.T.A. NO.1681/MDS/14 EXAMINED BY THE ASSESSING OFFICER. ACCORDINGLY, WE SET ASIDE THE ORDERS OF THE LOWER AUTHORITIES AND THE ISSUE OF AD DITION OF UNDISCLOSED INCOME OF ` 53,18,014/- IS REMITTED BACK TO THE FILE OF THE ASSESSING OFFICER. THE ASSESSING OFFICER SHALL REC ONSIDER THE ISSUE AFRESH IN THE LIGHT OF THE MATERIAL THAT MAY BE PRO DUCED BY THE ASSESSEE AND THEREAFTER DECIDE THE ISSUE AFTER GIVI NG REASONABLE OPPORTUNITY TO THE ASSESSEE. 5. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALL OWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED ON 15 TH MAY, 2015 AT CHENNAI. SD/- SD/- (A. MOHAN ALANKAMONY) (N.R.S. GANESAN) (. !' ) ( . . . ) $ / ACCOUNTANT MEMBER /JUDICIAL MEMBER /CHENNAI, 4 /DATED, THE 15 TH MAY, 2015. KRI. . ,156 76(1 /COPY TO: 1. *+ /APPELLANT 2. ,-*+ /RESPONDENT 3. 0 81 () /CIT(A)-III, CHENNAI-34 4. 0 81 /CIT, CHENNAI-III, CHENNAI 5. 69 ,1 /DR 6. :' ; /GF.