Sriniketan Fashions Pvt. Ltd., Kolkata V. D.C.I.T.,Central Circle-XVIII, Kolkata

ITA 1855/KOL/2019

• Counselvise Citation: [2020] 111 COUNSELVISE.COM (IT) 9387 (ITAT-KOLKATA)
• Duration Of Justice: 5 month(s) 1 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 08-01-2020
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 1996-1997
• Appeal Filed On: 06-08-2019
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: JAYANTA KHANRA
• Assessee Lawyers: M D SHAH
• Keywords: Business expenditure; Set aside
• Section: 250

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL KOLKATA SMC BENCH, KOLKATA [BEFORE SHRI J. SUDHAKAR REDDY, HONBLE ACCOUNTANT MEMBER] I.T.A. NO. 1855/KOL/2019 ASSESSMENT YEAR: 1996-97 SRINIKETAN FASHIONS PVT. LTD.................................APPELLANT STATION ROAD P.O. SODEPUR 24 PARGANAS (NORTH) KOLKATA 700 110 [PAN: AADCS 2462 C] VS. DEPUTY COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE-XVIII, KOLKATA......RESPONDENT APPEARANCES BY: SHRI M.D. SHAH, ADVOCATE, APPEARED ON BEHALF OF THE ASSESSEE. SHRI JAYANTA KHANRA, JCIT, SR. D/R, APPEARING ON BEHALF OF THE REVENUE DATE OF CONCLUDING THE HEARING : DECEMBER 12 TH , 2019 DATE OF PRONOUNCING THE ORDER : JANUARY 8 TH , 2020 O R D E R PER J. SUDHAKAR REDDY, AM :- THIS APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER OF THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) 11, KOLKATA, (HEREINAFTER THE LD.CIT(A)), PASSED U/S. 250 OF THE INCOME TAX ACT, 1961 (THE ACT), DT. 19/06/2019, FOR THE ASSESSMENT YEAR 1996-97. 2. THE ONLY ISSUE THAT ARISES FOR OUR ADJUDICATION IS THE DISALLOWANCE MADE ON PURCHASES. THE ASSESSEE HAD MADE PURCHASES FROM MAYFAIR KNITTING INDUSTRIES AND MANOJ KUMAR RAJESH KUMAR OF RS.1,05,505/- & RS.1,97,199/-. THE ASSESSEE HAD MADE PAYMENTS THROUGH ACCOUNT PAYEE CHEQUES. THE BILLS ISSUED BY THEM AND DETAILS OF THE PAYMENTS THROUGH BANKING CHANNELS WERE PRODUCED BEFORE THE AUTHORITIES BELOW. THE AMOUNT WAS DISALLOWED SOLELY ON THE GROUND THAT THESE PERSONS ARE NOT AVAILABLE AT THE GIVEN ADDRESSES AND THE ASSESSEE HAS NOT FURNISHED THE NEW ADDRESS AND THAT THE ASSESSEE HAS NOT PRODUCED EVIDENCE OF TRANSPORTATION. 3. AFTER HEARING RIVAL CONTENTION, I FIND THAT THE HONBLE JURISDICTIONAL HIGH COURT IN THE CASE OF M/S. DIAGNOSTICS VS. CIT IN ITA NO. 153 OF 2004, JUDGEMENT DT. 04/03/2011, HAS HELD AS FOLLOWS:- HOWEVER, AS REGARDS THE PAYMENTS MADE TO M/S. SELVAS PHOTOGRAPHICS ARE CONCERNED AMOUNTING TO RS.3,12,302/-, WE FIND THAT THOSE HAVE BEEN MADE BY ACCOUNT PAYEE CHEQUES AND THOSE HAVE BEEN ENCASHED THROUGH THE BANKERS OF M/S. SELVAS PHOTOGRAPHICS. IT APPEARS THAT ACCORDING TO THE APPELLANT, AT THE TIME OF ASSESSMENT, THE APPELLANT HAD NO BUSINESS TRANSACTION WITH M/S. SELVAS PHOTOGRAPHICS AND CONSEQUENTLY, THE SAID PARTY DID NOT CO ASSE SSING OFFICER. HOWEVER, THE TRANSACTION HAVING TAKEN PLACE THROUGH ACCOUNT PAYEE CHEQUES, WE ARE UNABLE TO ACCEPT THE CONTENTION OF MR. AGARWAL, THE LEARNED ADVOCATE APPEARING FOR THE REVENUE THAT THE TRANSACTION WAS A NON- EXISTENT ONE. IF AN ASSESSEE TOO BUSINESS BY WAY OF ACCOUNT PAYEE CHEQUES FROM A THIRD PARTY AND SUBSEQUENTLY, THREE YEARS AFTER THE PURCHASE, THE SAID THIRD PARTY DOES NOT APPEAR BEFORE THE ASSESSING OFFICER PURSUANT TO THE NOTICE OR EVEN HAS STOPPED OF THE ASSESSEE ON THAT ACCOUNT CANNOT BE DISCARDED AS NON BEFORE US, THE REVENUE HAS NOT PUT FORWARD ANY OTHER GROUND, SUCH AS, IT WAS NOT A GENUINE TRANSACTION FOR OTHER REASONS BUT HAS SIMPLY REJECTED THE CLAIM ON THE GROUND AS IF THERE WAS NO SUCH TRANSACTION. THE TRANSACTION HAVING TAKEN PLACE THROUGH PAYMENT BY ACCOUNT PAYEE CHEQUES, SUCH PLEA IS NOT TENABLE AND IN SUCH CIRCUMSTANCES, THE TRIBUNAL BELOW ERRED IN LAW IN REVERSING THE FINDING ARRIVED AT BY THE COMMISSIONER OF INCOME- TAX (APPEAL) ACCEPTING THE S WE, THEREFORE, SET ASIDE THE ORDER OF THE TRIBUNAL BELOW ONLY IN RESPECT OF THE DELETION OF THE AMOUNT OF RS.3,12,302/ BY ACCOUNT PAYEE CHEQUES AND DIRECT THE ASSESSING OFFICER T AMOUNT AS BUSINESS EXPENDITURE OF THE APPELLANT. 4. APPLYING THE PROPOSITIONS OF LAW LAID DOWN IN THE ABOVE CASE FACTS OF THE CASE ON HAND, WE DELETE THE ADDITION AND ALLOW THIS GROUND OF THE ASSESSEE. 5. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWED. KOLKATA, THE DATED : 08.01.2020 {SC SPS} 2 OF M/S. SELVAS PHOTOGRAPHICS. IT APPEARS THAT ACCORDING TO THE APPELLANT, AT THE TIME OF ASSESSMENT, THE APPELLANT HAD NO BUSINESS TRANSACTION WITH M/S. SELVAS PHOTOGRAPHICS AND CONSEQUENTLY, THE SAID PARTY DID NOT CO - OPERATE WITH THE SSING OFFICER. HOWEVER, THE TRANSACTION HAVING TAKEN PLACE THROUGH ACCOUNT PAYEE CHEQUES, WE ARE UNABLE TO ACCEPT THE CONTENTION OF MR. AGARWAL, THE LEARNED ADVOCATE APPEARING FOR THE REVENUE THAT THE TRANSACTION WAS A EXISTENT ONE. IF AN ASSESSEE TOO K CARE TO PURCHASE MATERIALS FOR HIS BUSINESS BY WAY OF ACCOUNT PAYEE CHEQUES FROM A THIRD PARTY AND SUBSEQUENTLY, THREE YEARS AFTER THE PURCHASE, THE SAID THIRD PARTY DOES NOT APPEAR BEFORE THE ASSESSING OFFICER PURSUANT TO THE NOTICE OR EVEN HAS STOPPED BUSINESS, THE CLAIM OF THE ASSESSEE ON THAT ACCOUNT CANNOT BE DISCARDED AS NON - EXISTENT. IN THE CASE BEFORE US, THE REVENUE HAS NOT PUT FORWARD ANY OTHER GROUND, SUCH AS, IT WAS NOT A GENUINE TRANSACTION FOR OTHER REASONS BUT HAS SIMPLY REJECTED THE CLAIM ON THE GROUND AS IF THERE WAS NO SUCH TRANSACTION. THE TRANSACTION HAVING TAKEN PLACE THROUGH PAYMENT BY ACCOUNT PAYEE CHEQUES, SUCH PLEA IS NOT TENABLE AND IN SUCH CIRCUMSTANCES, THE TRIBUNAL BELOW ERRED IN LAW IN REVERSING THE FINDING ARRIVED AT BY THE COMMISSIONER OF TAX (APPEAL) ACCEPTING THE S AID TRANSACTION AS A GENUINE TRANSACTION. WE, THEREFORE, SET ASIDE THE ORDER OF THE TRIBUNAL BELOW ONLY IN RESPECT OF THE DELETION OF THE AMOUNT OF RS.3,12,302/ - PAID TO M/S. SELVAS PHOTOGRAPHICS BY ACCOUNT PAYEE CHEQUES AND DIRECT THE ASSESSING OFFICER T O DEDUCT THE SAID AMOUNT AS BUSINESS EXPENDITURE OF THE APPELLANT. APPLYING THE PROPOSITIONS OF LAW LAID DOWN IN THE ABOVE CASE FACTS OF THE CASE ON HAND, WE DELETE THE ADDITION AND ALLOW THIS GROUND OF THE OF THE ASSESSEE IS ALLOWED. KOLKATA, THE 8 TH DAY OF JANUARY, 2020. SD/- [J. SUDHAKAR REDDY] ACCOUNTANT MEMBER I.T.A. NO. 1855/KOL/2019 ASSESSMENT YEAR: 1996-97 SRINIKETAN FASHIONS PVT. LTD OF M/S. SELVAS PHOTOGRAPHICS. IT APPEARS THAT ACCORDING TO THE APPELLANT, AT THE TIME OF ASSESSMENT, THE APPELLANT HAD NO BUSINESS TRANSACTION WITH M/S. SELVAS OPERATE WITH THE SSING OFFICER. HOWEVER, THE TRANSACTION HAVING TAKEN PLACE THROUGH ACCOUNT PAYEE CHEQUES, WE ARE UNABLE TO ACCEPT THE CONTENTION OF MR. AGARWAL, THE LEARNED ADVOCATE APPEARING FOR THE REVENUE THAT THE TRANSACTION WAS A K CARE TO PURCHASE MATERIALS FOR HIS BUSINESS BY WAY OF ACCOUNT PAYEE CHEQUES FROM A THIRD PARTY AND SUBSEQUENTLY, THREE YEARS AFTER THE PURCHASE, THE SAID THIRD PARTY DOES NOT APPEAR BEFORE THE BUSINESS, THE CLAIM EXISTENT. IN THE CASE BEFORE US, THE REVENUE HAS NOT PUT FORWARD ANY OTHER GROUND, SUCH AS, IT WAS NOT A GENUINE TRANSACTION FOR OTHER REASONS BUT HAS SIMPLY REJECTED THE CLAIM THE TRANSACTION HAVING TAKEN PLACE THROUGH PAYMENT BY ACCOUNT PAYEE CHEQUES, SUCH PLEA IS NOT TENABLE AND IN SUCH CIRCUMSTANCES, THE TRIBUNAL BELOW ERRED IN LAW IN REVERSING THE FINDING ARRIVED AT BY THE COMMISSIONER OF AID TRANSACTION AS A GENUINE TRANSACTION. WE, THEREFORE, SET ASIDE THE ORDER OF THE TRIBUNAL BELOW ONLY IN RESPECT OF PAID TO M/S. SELVAS PHOTOGRAPHICS O DEDUCT THE SAID APPLYING THE PROPOSITIONS OF LAW LAID DOWN IN THE ABOVE CASE -LAW TO THE FACTS OF THE CASE ON HAND, WE DELETE THE ADDITION AND ALLOW THIS GROUND OF THE C OPY OF THE ORDER FORWARDED TO: 1. SRINIKETAN FASHIONS PVT. LTD STATION ROAD P.O. SODEPUR 24 PARGANAS (NORTH) KOLKATA 700 110 2. DEPUTY COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE 3. 4. CIT(A)- 5. CIT- , 6 . CIT(DR), KOLKATA BENCHES, KOLKATA. 3 OPY OF THE ORDER FORWARDED TO: SRINIKETAN FASHIONS PVT. LTD DEPUTY COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE -XVIII, KOLKATA SENT THROUGH E-MAIL. . CIT(DR), KOLKATA BENCHES, KOLKATA. TRUE COPY BY ORDER ASSISTANT REGISTRAR ITAT, KOLKATA BENCHES I.T.A. NO. 1855/KOL/2019 ASSESSMENT YEAR: 1996-97 SRINIKETAN FASHIONS PVT. LTD TRUE COPY BY ORDER ASSISTANT REGISTRAR ITAT, KOLKATA BENCHES