M/s. S.S.Annamalai Enterprises, CHENNAI V. ACIT, CHENNAI

ITA 1902/CHNY/2012

• Counselvise Citation: [2013] 120 COUNSELVISE.COM (IT) 0879 (ITAT-CHENNAI)
• Duration Of Justice: 2 month(s) 26 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-01-2013
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: D
• Assessment Year: 2008-2009
• Appeal Filed On: 26-10-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: K K ARUMUGAN
• Assessee Lawyers: N MUTHUKUMARAN
• Keywords: Unexplained cash credit

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL D BENCH, CHENNAI BEFORE DR. O.K. NARAYANAN, VICE PRESIDENT AND SHRI CHALLA NAGENDRA PRASAD, JUDICIAL MEMBER ITA NO. 1902/MDS/2012 ASST. YEAR : 2008-09 M/S.S.S. ANNAMALAI ENTERPRISES 123A, KALKI KRISHNAMOORTHY ROAD, THIRUVANMIYUR, CHENNAI 600 041. PAN : AABFS8879C. (APPELLANT) V. THE ASST. COMMISSIONER OF INCOME TAX, BUSINESS CIRCLE V, CHENNAI. (RESPONDENT) APPELLANT BY : MR. N. MUTHUKUMARAN RESPONDENT BY : MR. K.K. ARUMUGAN, CIT DATE OF HEARING : 01 JAN 2013 DATE OF PRONOUNCEMENT : 21 JAN 20 13 O R D E R PER CHALLA NAGENDRA PRASAD, JUDICIAL MEMBER : THIS IS AN APPEAL FILED BY THE ASSESSEE AGAINST T HE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS)-VIII, C HENNAI DATED 18.9.2012 FOR THE ASST. YEAR 2008-09. THE ONLY GRI EVANCE OF THE ASSESSEE IN THE GROUNDS OF APPEAL IS THAT THE COMMI SSIONER OF ITA 1902/MDS/12 2 INCOME TAX (APPEALS) ERRED IN CONFIRMING THE ADDITI ON OF B.69,14,303/- AS UNEXPLAINED CASH CREDITS UNDER SEC .68 OF THE I.T. ACT. 2. THE FACTS OF THE CASE ARE THAT THE ASSESSEE IS A PARTNERSHIP FIRM FILED ITS RETURN ON 30.9.2008 DECL ARING INCOME OF B.67,200/- FOR THE ASST. YEAR 2008-09. THE ASSESSM ENT WAS COMPLETED UNDER SEC.143(3) OF THE ACT ON 24.12.2010 BY THE ASSESSING OFFICER BY MAKING VARIOUS ADDITIONS AND D ISALLOWANCES. ONE OF THE ADDITIONS MADE BY THE ASSESSING OFFICER IS B.54,32,308/- TOWARDS UNEXPLAINED CASH CREDIT UNDER SEC.69 OF THE ACT. THE SAID AMOUNT REPRESENTED BALANCE IN THE CREDITORS ACCOUNT OF THE ASSESSEE. THE ASSESSING OFFICER OBSERVED THAT THE ASSESSEE RE FLECTED SUNDRY CREDITORS TO THE EXTENT OF B.1,78,21,898/-. WHEN A SKED TO PROVE THE GENUINENESS OF THE CREDITORS AND PRODUCE CONFIRMATI ON LETTERS, THE ASSESSEE COULD NOT PRODUCE CONFIRMATION LETTERS FRO M THE CREDITORS TO THE EXTENT OF B.54,32,308/- AND THIS AMOUNT WAS TRE ATED AS UNEXPLAINED CASH CREDIT UNDER SEC.68 OF THE ACT BY THE ASSESSING OFFICER. THE ASSESSEE PREFERRED AN APPEAL BEFORE C OMMISSIONER OF INCOME TAX (APPEALS). ITA 1902/MDS/12 3 3. DURING THE COURSE OF APPEAL PROCEEDINGS BEFORE THE COMMISSIONER OF INCOME TAX (APPEALS), A REMAND REPO RT WAS CALLED FOR BY THE COMMISSIONER OF INCOME TAX (APPEALS) FRO M THE ASSESSING OFFICER. THE ASSESSING OFFICER, IN THE REMAND PROC EEDINGS, ISSUED A LETTER A LETTER DATED 4.4.2012 TO THE ASSESSEE ASKI NG IT TO PRODUCE DETAILS OF SUNDRY CREDITORS AND CONFIRMATION LETTER S. IN THE REMAND PROCEEDINGS, THE ASSESSEE PRODUCED CONFIRMATIONS FR OM SUNDRY CREDITORS TO THE EXTENT OF B14,83,975/- FROM 9 CRED ITORS. IN THE REMAND REPORT, THE ASSESSING OFFICER STATED THAT OU T OF THE TOTAL SUNDRY CREDITORS AMOUNTING TO B.83,98,278/- AS ON 3 1.3.2008, THE REPRESENTATIVE OF THE ASSESSEE PRODUCED CONFIRMATIO N LETTERS TO THE TUNE OF B.14,83,975/- ONLY. THEREFORE, THE ASSESSI NG OFFICER REQUESTED THE COMMISSIONER OF INCOME TAX (APPEALS) TO TREAT THE BALANCE SUNDRY CREDITORS AMOUNTING TO B.69,14,303/- AS UNEXPLAINED CASH CREDITS SINCE NO CONFIRMATIONS WERE FILED FOR THE SAME. THE COMMISSIONER OF INCOME TAX (APPEALS), BASED ON THE REMAND REPORT, HELD THAT THE ASSESSING OFFICER IS JUSTIFIED IN ARR IVING AT THE ADDITION ON ACCOUNT OF UNPROVED SUNDRY CREDITORS AT B.69,14, 303/- AND ITA 1902/MDS/12 4 CONFIRMED THE ADDITION ACCORDINGLY. AGGRIEVED, THE ASSESSEE IS IN APPEAL BEFORE US. 4. THE COUNSEL FOR THE ASSESSEE SUBMITS THAT AT T HE STAGE OF COMPLETION OF ASSESSMENT, ORIGINALLY THE ADDITIO N WAS MADE AT B.54,32,308/-. HOWEVER, DURING THE COURSE OF APPEA L PROCEEDINGS IN THE REMAND REPORT, THE ASSESSING OFFICER STATED THA T THE ASSESSEE COULD NOT PRODUCE CONFIRMATIONS TO THE EXTENT OF B. 69,14,303/-. THE COMMISSIONER OF INCOME TAX (APPEALS) WITHOUT GIVING ANY OPPORTUNITY TO THE ASSESSEE CONFIRMED THE ADDITION OF B.69,14,303/- WHICH AMOUNTED TO ENHANCEMENT OF ASSESSMENT. HE SU BMITS THAT WITHOUT ANY NOTICE ENHANCEMENT OF ASSESSMENT BY THE COMMISSIONER OF INCOME TAX (APPEALS) IS BAD IN LAW. THE COUNSEL FOR THE ASSESSEE FURTHER SUBMITS THAT THE TOTAL SUNDRY CREDITORS REF LECTED IN THE BALANCE SHEET OF THE ASSESSEE AS ON 31.3.2008 IS ON LY B.83,98,278/-. HOWEVER, THE ASSESSING OFFICER WHILE COMPLETING TH E ASSESSMENT TOOK THE SUNDRY CREDITORS REFLECTED IN THE BALANCE SHEET AS ON 31.3.2008 AS B.1,78,21,898/- AND MADE ADDITION OF B .54,32,308/-. IN OTHER WORDS, HE HAS NOT RECONCILED WITH THE AMOUNT OF ADDITION MADE AND LISTED OUT THE CREDITORS. ITA 1902/MDS/12 5 5. THE COUNSEL FOR THE ASSESSEE FURTHER SUBMITS T HAT THE ASSESSEE, VIDE LETTER DATED 24.4.2012 REQUESTED THE ASSESSING OFFICER TO SHOW HOW HE ARRIVED AT THE AMOUNT OF B.54,32,308 /- AND LIST OUT THE PARTIES FROM WHOM THE ASSESSEE HAS TO GET CONFI RMATIONS. HOWEVER, TILL THE DATE OF REMAND REPORT, THE ASSESS ING OFFICER COULD NOT GIVE THE BASIS FOR ADDITION AND COULD NOT LIST OUT THE PARTIES FROM WHOM THE ASSESSEE HAS TO GET CONFIRMATIONS. THE C OUNSEL FOR THE ASSESSEE SUBMITS THAT THE ASSESSING OFFICER, IN FAC T, ASKED FOR SOME CONFIRMATIONS FROM CREDITORS OF THE CHOICE OF THE A SSESSEE AND THE ASSESSEE FILED CONFIRMATIONS FROM FEW OF THE CREDIT ORS TO ESTABLISH THAT ALL THE CREDITORS ARE VERIFIABLE. BUT WHILE S UBMITTING THE REMAND REPORT, THE ASSESSING OFFICER REQUESTED THE COMMISS IONER OF INCOME TAX (APPEALS) TO ENHANCE THE VALUE OF UNPROVED CRED ITORS FROM B.54,32,308/- TO B.6914,303/- WHICH IS NOT AT ALL P ROPER AND JUSTIFIED. THE COUNSEL FOR THE ASSESSEE SUBMITS THAT THIS ITS ELF WILL PROVE THAT EVEN AT THIS STAGE, THE ASSESSING OFFICER WAS NOT A BLE TO PROVE THAT THE CREDITORS ARE BOGUS. ITA 1902/MDS/12 6 6. THE COUNSEL FOR THE ASSESSEE FURTHER SUBMITS T HAT ALL THESE CREDITOR ARE VERIFIABLE AND THEY ARE ALL TRAD E CREDITORS AND TRANSACTIONS ARE BEING CARRIED OUT WITH THE,. REFE RRING TO PAGE 20 TO 24 OF THE PAPER BOOK FILED BY THE ASSESSEE WHICH CO NTAINS THE STATEMENT OF LIST OF CREDITORS, FOR THE ACCOUNTING YEARS 2006-07, 2007-08 AND 2008-09, HE SUBMITS THAT THE ASSESSEE H AS, IN FACT, REPAID SOME OF THE CREDITORS DURING THE ACCOUNTING YEAR 2008-09 AND THE AMOUNTS TO BE PAID FROM THE CREDITORS HAVE GONE UP. THEREFORE, THE COUNSEL FOR THE ASSESSEE SUBMITS THAT ALL THES E CREDITORS ARE TRADE CREDITORS. THEREFORE, NO ADDITION IS REQUIRE D TO BE MADE UNDER SEC.68 OF THE ACT AS UNEXPLAINED CASH CREDITS. 7. THE DEPARTMENTAL REPRESENTATIVE SUPPORTS THE OR DERS OF THE AUTHORITIES BELOW. 8. WE HAVE HEARD BOTH SIDES, PERUSED THE MATERIALS AVAILABLE ON RECORD AND THE ORDERS OF THE LOWER AUT HORITIES. THE ASSESSING OFFICER, WHILE COMPLETING THE ASSESSMENT STATES THAT THE TOTAL CREDITORS APPEARING IN THE BALANCE SHEET IS B .1,78,21,898 AND MAKES AN ADDITION OF B.54,32,308/- ON THE GROUND TH AT THE ASSESSEE COULD NOT PRODUCE CONFIRMATIONS FROM THE CREDITORS TO THE EXTENT OF ITA 1902/MDS/12 7 THIS AMOUNT. THAT MEANS THAT THE ASSESSEE PRODUCED CONFIRMATION FOR THE BALANCE SUNDRY CREDITORS. HOWEVER, WHILE I N THE REMAND PROCEEDINGS, THE ASSESSING OFFICER STATES THAT THE SUNDRY CREDITORS AS ON 31.3.2008 IS B.83,98,278/- AND THE ASSESSEE PROD UCED CONFIRMATIONS TO THE TUNE OF B.14,83,975/- AND RECO MMENDS FOR ADDITION OF B.69,14,303/-. 9. WE FIND FROM THE RECORDS AND THE PAPER BOOK FIL ED BY THE ASSESSEE THAT THESE CREDITORS ARE TRADE CREDITORS H AVING RUNNING ACCOUNT WITH THE ASSESSEE AND SOME OF THE CREDITORS WERE REPAID IN THE NEXT YEAR. THE ASSESSEE PRODUCED LIST OF THESE CREDITORS AND THE DETAILS OF REPAYMENTS MADE SUGGESTING THE REPAYMENT S MADE IN THE SUBSEQUENT YEAR AND ALL THESE DETAILS WERE FILED BE FORE THE ASSESSING OFFICER AND ALSO THE COMMISSIONER OF INCOME TAX (AP PEALS). THE LOWER AUTHORITIES HAVE FAILED TO EXAMINE THESE DETA ILS IN ARRIVING AT THE CONCLUSION THAT THE ASSESSEE HAS NOT PROVED THE CREDITORS TO THE EXTENT OF B.69,14,303/-. ITA 1902/MDS/12 8 10. WE FIND FROM THE ASSESSMENT ORDER THAT AT THE STAGE OF COMPLETION OF ORIGINAL ASSESSMENT, THE ASSESSING OF FICER EXCEPT STATING THAT THE ASSESSEE HAS NOT PRODUCED CONFIRMA TIONS TO THE EXTENT OF B.54,32,308/-, HAS NOT GIVEN ANY DETAILS OR RECONCILIATION FOR THE SAID ADDITION ARRIVED AT. THE STATEMENT OF THE ASSESSING OFFICER IN THE ORIGINAL ASSESSMENT AND IN THE REMAND REPORT ARE CONTRADICTORY. THE COMMISSIONER OF INCOME TAX (A PPEALS) ALSO DID NOT EXAMINE THIS ISSUE IN DETAIL, EXCEPT ACCEPTING THE REMAND REPORT AS IT IS AND WITHOUT EVEN ISSUING A NOTICE FOR ENHA NCEMENT CONFIRMED THE ADDITION. IN THE TOTALITY OF THE CIRCUMSTANCES , WE FEEL THAT THE ASSESSING OFFICER SHOULD EXAMINE THIS ISSUE AFRESH IN THE LIGHT OF THE MATERIALS PRODUCED BY THE ASSESSEE. THEREFORE, WE SET ASIDE THE ISSUE TO THE FILE OF THE ASSESSING OFFICER WITH A D IRECTION THAT THE ISSUE BE EXAMINED, PARTICULARLY THE ISSUE OF ADDITI ON TOWARDS UNPROVED CASH CREDITS AFRESH AFTER PROVIDING ADEQUA TE OPPORTUNITY OF HEARING TO THE ASSESSEE. THE ASSESSEE IS DIRECTED TO PROVIDE NECESSARY DETAILS FOR COMPLETION OF ASSESSMENT. ITA 1902/MDS/12 9 11. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS A LLOWED FOR STATISTICAL PURPOSE. 12. ORDER PRONOUNCED ON MONDAY, THE 21ST OF J ANUARY 2013, AT CHENNAI. SD/- SD/- ( DR. O.K. NARAYANAN) (CHALLA NAGENDR A PRASAD) VICE PRESIDENT JUDICIAL MEMBE R CHENNAI, DATED : 21 ST JANUARY 2013 JLS. COPY TO:- (1) APPELLANT (2) RESPONDENT (3) CIT-(A), CHENNAI (4) C.I.T., CHENNAI (5) D.R. (6) GUARD FILE