MISHAPAR INVESTMENTS LTD, MUMBAI V. ITO 1(2)(3), MUMBAI

ITA 1734/MUM/2013

• Counselvise Citation: [2016] 132 COUNSELVISE.COM (IT) 3230 (ITAT-MUMBAI)
• Duration Of Justice: 3 year(s) 2 month(s) 25 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-05-2016
• Appeal Filed By: Assessee
• Bench Allotted: B
• Next Hearing Date: 06-05-2016
• Assessment Year: 2007-2008
• Appeal Filed On: 04-03-2013
• Court: TRIBUNAL
• Department Lawyers: ANUPAMA SINGLA
• Keywords: Additional evidence
• Section: 69C; 68; 69

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL B , BENCH MUMBAI BEFORE SHRI R.C.SHARMA, AM & SHRI RAM LAL NEGI , JM ./ ITA NO. 1734 / MUM/20 1 3 ( / ASSESSMENT YEAR : 200 7 - 0 8 ) MISHAPAR IN VESTMENTS LIMITED, 3 RD FLOOR, MAFATLAL HOUSE, BACKBAY RECLAMATION. H.T.PAREKH MARG, MUMBAI - 400020 VS. ITO - 1(2)(3), MUMBAI - 400020 ./ ./ PAN/GIR NO. : A A ACM 3736 E ( / APPELLANT ) .. ( / RESPONDENT ) /ASSESSEE BY : MS. AARTI VISSANJI /REVENUE BY : MS. ANUPAMA SINGLA / DATE OF HEARING : 13 / 0 5 /201 6 / DATE OF PRONOUNCEMENT 27/05 /201 6 / O R D E R PER R.C.SHARMA (A.M) : THIS IS A N APPEAL FILED BY THE ASSESSEE AGAINST THE ORDER OF CIT(A) - MUMBAI, FOR THE ASSESSMENT YEAR 200 7 - 0 8 . 3. IN THIS APPEAL, THE ASSESSEE IS AGGRIEVED FOR DISALLOWANCE OF RS.52,50,000/ - MADE AGAINST SALE OF FABRICS. 2. RIVAL CONTENTIONS HAVE BEEN HEARD AND RECOR D PERUSED. FACTS IN BRIEF ARE THAT ASSESSEE IS ENGAGED IN THE BUSINESS OF INVESTMENT IN SHARES, TRADING IN CLOTH ETC. DURING THE COURSE OF SCRUTINY ASSESSMENT THE AO MADE ADDITION BOTH ON ACCOUNT OF PURCHASE U/S.69C AND ON ACCOUNT OF SALES U/S.68 OF I.T.A CT . IN RESPECT OF SALES, ADDITION WAS CONFIRMED BY ITA NO. 1734 /13 2 THE CIT(A), HOWEVER, IN RESPECT OF PURCHASES, ADDITION WAS DELETED BY THE CIT(A) AFTER HAVING FOLLOWING OBSERVATIONS : - 3.24 WITH REGARD TO THE ADDITION OF RS.52,50,000/ - , IT IS SEEN THAT IN THE BOOKS OF ACCOUNTS, THE APPELLANT HAS SHOWN THAT IT MADE SALES TO M/S INDO FRENCH KNITTING CO. AMOUNTING TO RS.52,50,000/ - . THE SALES ACCOUNT WAS CREDITED AND M/S INDO FRENCH KNITTING CO.S ACCOUNT WAS DEBITED. IT WAS NOT SHOWN AS ANY CASH OR CHEQUE WAS RECEIVED FR OM M/S. INDO FRENCH KNITTING CO. HOWEVER, C REDIT ENTRY WAS PASSED IN THE BOOKS OF ACCOUNTS AND HENCE IT COMES WITHIN THE PURVIEW OF SECTION 68 OF THE I T. ACT. IT IS CLEAR THAT THE EXPLANATION OFFERED THAT THE APPELLANT SOLD GOODS TO M/S. INDO FRENCH KNITTI NG CO. IS NOT GENUINE. IN VIEW OF THIS, I HOLD THAT THE ADDITION MADE OF RS. 52,50,000/ - U/S. 68 OF THE I T. ACT BY THE A.O. IS JUSTIFIED AND I UPHOLD THE ADDITION MADE. AS FAR AS THE OTHER ADDITION MADE OF RS. 50,00,000/ - TOWARDS UNEXPLAINED PURCHASES, I T IS CLEAR THAT THERE WAS NO ACTUAL PURCHASES MADE BY THE APPELLANT. THESE ARE ONLY BOOK ENTRIES. NO MONEY IS ACTUALLY SPENT BY THE APPELLANT TOWARDS PURCHASE OF TEXTILE GOODS IN THIS ACCOUNTING YEAR RELEVANT TO A.Y. 2007 - 08. TO INVOKE SECTION 69C OF THE I T. ACT, THERE SHOULD BE SOME ACTUAL EXPENDITURE MET OUT BY THE ASSESSEE AND THE ASSESSEE HAS OFFERED NO EXPLANATION WITH REGARD TO THE SOURCE OF MONEY MET OUT FOR THAT EXPENDITURE. IN THIS CASE, IT IS CLEAR THAT THERE WAS NO ACTUAL EXPENDITURE AND HENCE PR OVISIONS OF SECTION 69C OF THE I T. ACT CANNOT BE INVOKED. IN VIEW OF THIS, I DELETE THE ADDITION OF RS. 52,00,000 / - MADE BY THE A.O. U/S. 69 C OF THE I T. ACT. 4. IN THE RESULT, THE APPEAL IS PARTLY ALLOWED. AGAINST THE ABOVE ORDER OF CIT(A), THE ASSES SEE IS IN FURTHER APPEAL BEFORE US, HOWEVER, THE REVENUE HAS NOT FILED ANY APPEAL FOR THE DELETION OF ADDITION ON ACCOUNT OF PURCHASE AMOUNTING TO RS.50,00,000/ - BY THE CIT(A). 3. IT WAS CONTENDED BY LD. AR THAT THE CIT(A) HAS CONFIRMED THE ADDITION ON ACC OUNT OF SALES ON THE PLEA THAT ASSESSEE HAS NOT SHOWN RECEIPT OF CASH OR CHEQUE IN RESPECT OF SALES EFFECTED TO INDO - FRENCH KNITTING COMPANY. FROM THE RECORD WE FOUND THAT SALES WAS EFFECTED BY ASSESSEE TO M/S INDO FRENCH KNITTING COMPANY ON CREDIT AND ENT RY WAS ITA NO. 1734 /13 3 PASSED DURING THE YEAR IN THE BOOKS OF ACCOUNT AS CREDIT SALES. THE ASSESSEE RECEIVED PAYMENT THROUGH ACCOUNT PAYEE CHEQUE ON 23 - 10 - 2007. IT IS CLEAR FROM THE BANK STATEMENT PLACED ON RECORD AT PAGE 17 OF THE PAPER BOOK. AS PER THE CERTIFICATE FILED BY LD. AR THIS BANK STATEMENT WAS ALREADY PLACED BEFORE BOTH THE LOWER AUTHORITIES DURING THE COURSE OF ASSESSMENT AND APPELLATE PROCEEDINGS, THEREFORE, DO NOT CONSTITUTE ADDITIONAL EVIDENCE BEFORE THE TRIBUNAL. LD. AR ALSO DREW OUR ATTENTION TO THE LETTE R DATED 20 - 10 - 2009 ADDRESSED TO THE AO, WHEREIN DETAILS OF SALES MADE ALONG WITH COPY OF THE BANK STATEMENT OF BANK OF BARODA WAS FILED BEFORE THE AO VIDE ANNEXURE - 2. 4. MERELY BECAUSE CREDIT ENTRY WAS PASSED BY THE ASSESSEE IN ITS BOOKS OF ACCOUNTS WITH REGARD TO THE CREDIT SALE, ADDITION IS NOT WARRANTED U/S.68, INSOFAR AS IT IS NOT CASH CREDIT BUT IS A CREDIT ENTRY ON ACCOUNT OF CREDIT SALES WHICH IS INCOME ON ACCOUNT OF SALES. AS THE ASSESSEE HAS ALREADY GOT THE PAYMENT OF CREDIT SALES, THERE IS NO JUS TIFICATION FOR THE ADDITION SO MADE BY THE AO U/S.68 . WE THEREFORE, DIRECT THE AO TO DELETE THE SAME. 5 . IN THE RESULT, APPEAL OF ASSESSEE IS ALLOWED. O RDER PRONOUNCED IN THE OPEN COURT ON THIS 27/05 / 201 6 . SD/ - ( RAM LAL NEGI ) SD/ - ( R.C.S HARMA ) / JUDICIAL MEMBER / ACCOUNTANT MEMBER MUMBAI ; DATED 27/05 /201 6 . . /PKM , . / PS / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. ( ) / THE CIT(A), MUMBAI. ITA NO. 1734 /13 4 / BY ORDER, / ( ASSTT. REGISTRAR) , / ITAT, MUMBAI 4. / CIT 5. , , / DR, ITAT, MUMBAI 6. / GUARD FILE. //TRUE COPY//