ITO 24(1)(2), MUMBAI V. SARASWATI BOOK MFG. COMPANY, MUMBAI

ITA 1695/MUM/2011

• Counselvise Citation: 169519914 RSA 2011
• Duration Of Justice: 3 year(s) 26 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 25-03-2014
• Appeal Filed By: Department
• Order Result: Partly Allowed
• Bench Allotted: H
• Assessment Year: 2007-2008
• Appeal Filed On: 01-03-2011
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: K P SINGH
• Assessee Lawyers: K GOPAL; JITENDRA SINGH
• Keywords: Additional evidence
• Section: 133(6)

Judgement Text

, , INCOME TAX APPELLATE TRIBUNAL,MUMBAI - H BENCH. . , !'# !$%&' , %! () BEFORE S/SH.D.MANMOHAN, VICE-PRESIDEN T & RAJENDRA,ACCOUNTANT MEMBER /. ITA NO.1695/MUM/2011, ! ! ! ! * * * * / ASSESSMENT YEAR-2007-08 ITO 24(1)(2) C-13, R.NO.608, 6 TH FLOOR, PRATYAKSHAKAR BHAVAN, BKC BANDRA(E)MUMBAI-400051 VS SARASWATI BOOK MFG. COMPANY, 35, PUSHTIKAR SOCIETY, PATEL ESTATE, JOGESHWARI(W), MUMBAI-400102 PAN: AAGFS8 950B ( !+, / APPELLANT) ( -.+, / RESPONDENT) !$) / 0 % / REVENUE BY : SHRI K.P.SINGH !12 !12 !12 !12 0 0 0 0 % %% % / ASSESSEE BY : SHRI K.GOPAL & JITENDRA SINGH ! ! ! ! / // / 2! 2! 2! 2! / DATE OF HEARING : 25-03-2014 3* ! / 2! / DATE OF PRONOUNCEMENT : 25-03-2014 , 1961 / // / !! !! !! !! 254 )1( % %% % &242 &242 &242 &242 (%5 (%5 (%5 (%5 ORDER U/S.254(1)OF THE INCOME-TAX ACT,1961(ACT) PER RAJENDRA,AM %! %! %! %! () () () () !$%&' !$%&' !$%&' !$%&' % %% % ! ! ! ! : CHALLENGING THE ORDER DT. 29.01.2010 OF THE CIT(A)- 34,MUMBAI,ASSESSING OFFICER (AO) HAS RAISED FOLLOWING GROUNDS OF APPEAL : WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF T HE CASE AND IN LAW, THE LD.CIT(A) ERRED IN DELETING THE ADDITIONS OF RS.9,76,623/- MADE BY THE AO AS NO CONFIRMATIONS WAS RECEIVED FROM THE PARTY IN RESPONSE TO NOTICE U/S 133(6) AFTER ADMITT ING ADDITIONAL EVIDENCES IN CONTRAVENTION TO RULE 46A OF THE IT ACT. 2.THE APPELLANT PRAYS THAT THE ORDER OF THE LD. CIT (A) ON THE GROUND BE SET ASIDE DECIDED ACCORDING TO LAW. THE APPELLANT CRAVES LEAVE TO AME ND OR ALTER ANY TO GROUND OR ADD NEW GROUND WHICH MAY BE NECESSARY. ASSESSEE FIRM,ENGAGED IN THE BUSINESS OF MANUFACTUR ING OF BOOKS,FILED ITS RETURN OF INCOME ON 31.10.2007DECLARING TOTAL INCOME OF RS.1,21,251/-.A O FINALISED THE ASSESSMENT ORDER U/S.143(3) OF THE ACT,ON 23.12.2009,DETERMINING THE TOTAL INCO ME AT RS.11.64 LAKHS. 2. EFFECTIVE GROUND OF APPEAL PERTAINS TO CONTRAVENTIO N TO RULE 46A OF THE INCOME-TAX RULES,1962 (RULES).DURING THE ASSESSMENT PROCEEDINGS INFORMATI ON U/S.133(6) OF THE ACT WAS CALLED FROM SELECTED PARTIES BY THE AO FROM THE PARTIES FROM WH OM THE ASSESSEE MADE PURCHASES.IN THE CASE OF M/S.SHAH M.D. & SONS,(SMDS),THOUGH A NOTICE U/S.133 (6) WAS ISSUED,BUT THERE WAS NO COMPLIAN -CE FROM THE SAID PARTY.THIS FACT WAS BROUGHT TO TH E NOTICE OF SUNIL GUPTA,PARTNER OF THE ASSESSEE- FIRM.VIDE ORDER SHEET NOTING DATED 18.12.2009,HE WA S ASKED TO SUBMIT THE CONFIRMATION FOR THE PURCHASE TRANSACTION OF RS.9,76,623/-SHOWN FROM THE AFORESAID PARTY.VIDE ITS LETTER DATED 21.12. 2009 THE ASSESSEE FURNISHED SOME DETAILS,BUT NO CON FIRMATION FROM SMDS WAS FILED.AS PER THE AO,ONUS LIED ON THE ASSESSEE TO PROVE THE GENUINENE SS OF THE PURCHASE TRANSACTION.HE HELD THAT THERE WAS NO COMPLIANCE FROM THE ASSESSEE-FIRM,THAT IN ABSENCE OF ANY CONFIRMATION IMPUGNED PURCHASES OF RS.9,76,6231- CLAIMED TO HAVE BEEN MAD E FROM SMDS WAS TO BE TREATED AS UNPROVED PURCHASE.AS A RESULT,AO MADE AN ADDITION OF RS.9.76 LAKHS TO THE INCOME OF THE ASSESSEE. 2 ITA NO. 1695/MUM/2011 SARASWATI BOOK MFG. COMPANY. 2.1. AGAINST THE ORDER OF THE AO ASSESSEE PREFERRED AN A PPEAL BEFORE THE FIRST APPEAL AUTHORITY (FAA).IT WAS SUBMITTED BEFORE HIM THAT CONFIRMATION IN THE CASE OF SMDS WAS RECEIVED AFTER THE DATE OF ASSESSMENT ORDER,THAT IT COULD NOT PRODUCE THE SAME BEFORE THE AO,THAT DURING THE COURSE ASSESSMENT PROCEEDINGS COPIES OF PURCHASE BILLS WER E PRODUCED AND BANK STATEMENTS FOR ENTIRE 12 MONTHS WERE ALSO SUBMITTED,THAT THE AO FAILED TO VE RIFY THE AVAILABLE EVIDENCE AND MADE THE ADDITION ONLY BECAUSE ONE OF THE CREDITORS DID NOT REPLY TO THE NOTICE ISSUED U/S.133(6) OF THE ACT OR CONFIRMATION WAS NOT PRODUCED.ASSESSEE FURNISHED THE CONFIRMATION OF SMDS ALONG WITH THE COPIES OF ALL PURCHASE BILLS AND RELEVANT BANK STAT EMENTS.AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE AND THE ASSESSMENT ORDER,HE HELD THAT THE ADDITION WAS MADE U/S.68 OF THE ACT FOR THE TRADE CREDITORS,THAT SUCH AN ADDITION COULD NOT BE SUSTAINED IN LAW AS THE BURDEN TO EXPLAIN THE CREDITWORTHINESS AS WELL AS IDENTITY OF THE LOAN CR EDITORS WAS VERY HEAVY ON THE ASSESSEE IN CASE OF LOAN CREDITORS WHEREAS IT WAS FOR THE DEPARTMENT TO PROVE THE TRADE CREDITORS BOGUS AND TO MAKE ADDITION NOT ONLY FOR CREDIT BALANCES APPEARING IN THE BOOKS OF ACCOUNTS BUT FOR THE WHOLE AMOUNT OF THE PURCHASES MADE BY THE ASSESSEE, THAT THE AO HAD NOT MADE ANY ENQUIRIES TO ESTABLISH THAT THE CREDITORS WERE BOGUS,THAT NO ADDITION COULD BE MADE EVEN IF THE REQUIRED CONFIRMATION COULD NOT BE FURNISHED WELL WITHIN THE TIME DURING THE CO URSE OF ASSESSMENT PROCEEDINGS.ACCORDINGLY,HE DELETED THE ADDITION MADE BY THE AO. 2.2. BEFORE US,DEPARTMENTAL REPRESENTATIVE(DR)SUBMITTED THAT FRESH EVIDENCES WERE ADMITTED BY THE FAA IN CONTRAVENTION OF RULE 46A OF THE RULES.A UTHORISED REPRESENTATIVE(AR) SUBMITTED THE ASSESSEE HAD FILED BANK STATEMENT WAS FILED BEFORE THE AO,THAT BANK STATEMENT PROVED THE GEUIUNE -NESS OF THE PURCHASES.HE REFERRED TO THE PAGES NO. 5,7,8-10 OF THE PAPER BOOK. 2.3. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL BEFORE US.WE FIND THAT PAGES 21 -34 OF THE PAPER BOOK,FILED BY THE ASSESSEE,CONTAIN PURCHASE BILLS AND THE CONFIRMATION OF SMDS. AS PER THE CERTIFICATE OF THE ASSESSEE THESE PAPERS WERE FURNISHED BEFORE THE FAA FOR THE FIRST TIME AND WERE NOT AVAILABLE TO THE AO.IN OUR OPINION,PRO VISIONS OF RULE,46A ARE VERY CLEAR AND STIPULATE THAT FAA SHOULD NOT ADMIT FRESH EVIDENCES WITHOUT AFFORDING AN OPPORTUNITY TO THE AO. THERE IS NO BAR ON FAA FOR ADMITTING FRESH EVIDENCE S,BUT HE HAS TO FOLLOW A CERTAIN PROCEDURE,AS STIPULATED IN RULE 46A(4).WE FIND THAT HE DID NOT I NVOKE THE SAID PROVISION.IT IS NOT CLEAR AS TO WHY DID HE NOT CALL FOR A REMAND REPORT FROM THE AO ,WHEN NEW EVIDENCES WERE PRODUCED BEFORE HIM.HONBLE COURTS HAVE HELD THAT FAA SHOULD RECORD REASONS BEFORE ADMITTING ADDITIONAL EVIDENCE AND SHOULD AFFORD A REASONABLE OPPORTUNITY OF HEARING TO THE AO.IN THE CASE UNDER CONSIDERATION,FAA HAS NOT FOLLOWED THE PROCEDURE AS ENVISAGED BY THE PROVISIONS OF RULE 46A OF THE RULES.THEREFORE,IN THE INTEREST OF JUSTICE,WE A RE SETTING ASIDE THE MATTER TO THE FILE OF THE FAA FOR AFFORDING AN OPPORTUNITY OF HEARING TO THE AO W ITH REGARD TO THE DOCUMENTS FILED BEFORE HIM FOR THE FIRST TIME BY THE ASSESSEE-FIRM. AS A RESULT,APPEAL FILED BY THE AO STANDS ALLOWED IN PART. 627 !12 ! / 527 $8 / $!2 9 . ORDER PRONOUNCED IN THE OPEN COURT ON 25 TH ,MARCH, 2014 . (%5 / 3* ! % &!! : ;(! 25 ! , 201 4 / 4 < SD/- SD/- ( . / D.MANMOHAN) ( !$%&' !$%&' !$%&' !$%&' / RAJENDRA) !'# / VICE PRESIDENT %! %! %! %! () () () () /ACCOUNTANT MEMBER / MUMBAI, ;(! /DATE: 25.03.2014. SK (%5 (%5 (%5 (%5 / // / -2= -2= -2= -2= >%=*2 >%=*2 >%=*2 >%=*2 / COPY OF THE ORDER FORWARDED TO : 3 ITA NO. 1695/MUM/2011 SARASWATI BOOK MFG. COMPANY. 1. ASSESSEE / !+, 2. RESPONDENT / -.+, 3. THE CONCERNED CIT(A)/ ? @ , 4. THE CONCERNED CIT / ? @ 5. DR H BENCH, ITAT, MUMBAI / =A!4 -2 ,P ,P,P ,P , . . &!! . 6. GUARD FILE/ 4! 6! .!=2 .!=2 .!=2 .!=2 -2 -2-2 -2 //TRUE COPY// (%5!! / BY ORDER, / ! $! DY./ASST. REGISTRAR , /ITAT, MUMBAI