T. Biswanath Patro (HUF), Cuttack V. DCIT, Berhampur Circle, Berhampur

ITA 20/CTK/2017

• Counselvise Citation: [2018] 126 COUNSELVISE.COM (IT) 4366 (ITAT-CUTTACK)
• Duration Of Justice: 1 year(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-01-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Next Hearing Date: 31-01-2018
• Assessment Year: 2011-2012
• Appeal Filed On: 12-01-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SAAD KIDWAI
• Assessee Lawyers: D K SHETH
• Section: 142(1); 133(6)

Judgement Text

1 ITA NO.20 /CTK/2017 ASSESSMENT YEAR : 2011 - 2012 IN THE INCOME TAX APPELLATE TRIBUNAL, CUTTACK BENCH, CUTTACK BEFORE S/SHRI N.S SAINI, ACCOUNTANT MEMBER AND PAVAN KUMAR GADALE, JUDICIAL MEMBER ITA NO. 20 /CTK/201 7 ASSESSMENT YEAR : 2011 - 2012 T.BIWANATH PATRO (HUF), PROP. ADIKANTA ASSOCIATES, ARUNODAYA NAGAR, CUTTACK VS. DCIT, BERHAMPUR CIRCLE, BERHAMPUR PAN/GIR NO. AAAHT 9890 D (APPELLANT ) .. ( RESPONDENT ) ASSESSEE BY : SHRI D.K.SHETH, AR REVENUE BY : SHRI SAAD KIDWAI, CIT DR DATE OF HEARING : 3 1 / 01 / 201 8 DATE OF PRONOUNCEMENT : 3 1 / 0 1/ 201 8 O R D E R PER PAVAN KUMAR GADALE, JM THIS IS AN APPEAL FILED BY THE ASSESSEE AGAINST THE ORDER OF THE CIT(A) - 1, BHUBANESWAR DATED 15.11.2016 FOR THE ASSESSMENT YEAR 2011 - 12. 2. GROUND NO.2 OF APPEAL READS AS UNDER: THAT THE CIT(A) IS NOT JUSTIFIED TO SUSTAIN AN ADDITION OF RS.5,04,770/ - TOWARDS ADHOC ADDITIONS BY WAY OF DISALLOWANCE OUT OF CERTAIN EXPENSES. 3. AT THE TIME OF HEARING, LD A.R. OF THE ASSESSEE DID NOT PRESS THIS GROUND OF APPEAL AND M ADE AN ENDORSEMENT TO THIS EFFECT TO THE GROUNDS OF APPEAL. HENCE, WE DISMISS THIS GROUND OF APPEAL AS NOT PRESSED. 2 ITA NO.20 /CTK/2017 ASSESSMENT YEAR : 2011 - 2012 4. IN GROUND NO.1 OF APPEAL, THE GRIEVANCE OF THE ASSESSEE IS THAT THE CIT(A) IS NOT JUSTIFIED IN SUSTAINING THE ADDITION OF RS.62,41,342/ - UNDER THE HEAD SUNDRY CREDITORS AND RS.9,81,442/ - UNDER THE HEAD SUNDRY DEBTORS. 5. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE DERIVES INCOME FROM DEALING IN MEDICINES IN WHOLE AND C&A AND FILED ITS RETURN OF INCOME FOR THE ASSESSMENT YEAR UND ER ASSESSMENT ON 29 TH SEPTEMBER, 2011 SHOWING A TOTAL INCOME OF RS. 90,92,950/ - AFTER CLAIMING DEDUCTION UNDER CHAPTER VIA OF THE INCOME TAX ACT, 1961. SUBSEQUENTLY, THE CASE WAS TAKEN UP FOR SCRUTINY AND NOTICES U/S. 143(2) &. 142(1) OF THE INCOME TAX ACT , 1961 WERE ISSUED AND SERVED ON THE ASSESSEE FOR COMPLIANCE. IN COMPLIANCE, THE A . R APPEARED FROM TIME TO TIME AND FILED RELEVANT DETAILS/DOCUMENTS AS REQUIRED AND BOOKS OF ACCOUNT WERE PRODUCED. THE ASSESSING OFFICER, O N VERIFICATION OF RECORDS, FOUND THAT THE ASSESSEE HAS SHOWN A SUM OF RS.8,83,12,529/ - ON ACCOUNT OF TRADE CREDITORS, OTHER CREDITORS AND ADVANCE TO SUPPLIERS IN ITS BALANCE SHEET UNDER THE HEADING 'SUNDRY CREDITORS.' THE ASSESSING OFFICER REQUIRED THE ASSESSEE TO FURNISH DETAILS OF S UNDRY CREDITORS HAVING BALANCE OF RS. 01 LACS AND ABOVE. IN RESPONSE TO SUCH QUERY, THE A/R OF THE ASSESSEE FILED A LIST SHOWING THE NAME &. ADDRESS OF THE CREDITORS AND THE AMOUNT DUE TO BE PAID TO THEM AS ON 31.03.2011. LATER ON, THE ASSESSING OFFICER IS SUED LETTERS U/S. 133(6) OF THE INCOME TAX ACT, 1961 TO SUNDRY CREDITORS FOR VERIFICATION OF THE TRANSACTIONS SHOWN BY THE ASSESSEE WITH THEM. IN 3 ITA NO.20 /CTK/2017 ASSESSMENT YEAR : 2011 - 2012 COMPLIANCE TO SUCH VERIFICATION LETTERS, REPLIES WERE RECEIVED IN SOME CASES AND I N SOME CASES LETTERS SENT, R ETURNED BACK UNSERVED AND IN SOME CASES, REPLIES WERE NOT FURNISHED. SUCH DETAILS ARE FURNISHED BY THE ASSESSING OFFICER IN THE ASSESSMENT ORDER. FINALLY, THE ASSESSING OFFICER WAS NOT SATISFIED WITH SOME OF THE CONFIRMATIONS AS THERE IS DIFFERENCE BETWEE N THE AMOUNT CLAIMED ON ACCOUNT OF SUNDRY CREDITORS SHOWN ABOVE RS.1 LAC. ACCORDINGLY, THE ASSESSING OFFICER MADE TOTAL ADDITION OF RS.7,18,61,665/ - ON ACCOUNT OF UNEXPLAINED SUNDRY CREDITORS UNDER THREE SUB - HEADS I.E. CASE WHERE REPLIED HAD BEEN RECEIVED OF RS.3,45,58,285, CASES WHERE THE VERIFICATION LETTERS SENT TO THE CREDITORS BUT RETURNED UNSERVED OF RS.43,19,636.74 AND CASES WHERE NO REPLIES ARE RECEIVED OF RS.3,29,83,743.13 AND SIMILARLY ON VERIFICATION OF SUNDRY DEBTORS, THE ASSESSING OFFICER MADE AN ADDITION OF RS..2,50,50,950/ - ON ACCOUNT OF UNRECONCILED CLOSING BALANCES AND ASSESSED THE TOTAL INCOME AT RS.10,72,77,490/ - AND PASSED ORDER U/S.143(3) OF THE ACT ON 25.3.2014. 6. AGGRIEVED BY THE ASSESSMENT ORDER, THE ASSESSEE FILED AN APPEAL BEFOR E THE CIT(A). BEFORE THE CIT(A), THE ASSESSEE ARGUED THE GROUNDS AND REITERATED THE SUBMISSION MADE BEFORE THE ASSESSING OFFICER. THE CIT(A) HAVING CONSIDERED THE FINDINGS OF THE ASSESSING OFFICER AND SUBMISSIONS OF THE ASSESSEE CALLED FOR A REMAND REPOR T FROM THE ASSESSING OFFICER. THE ASSESSING OFFICER FURNISHED HIS REPORT BEFORE THE CIT(A), WHICH IS REPRODUCED IN THE IMPUGNED ORDER . THE CIT(A)AGREED 4 ITA NO.20 /CTK/2017 ASSESSMENT YEAR : 2011 - 2012 WITH THE REMAND REPORT FURNISHED BY THE ASSESSING OFFICER AND SUSTAINED ADDITION OF RS.62,41,342/ - UND ER THE HEAD SUNDRY CREDITORS AND RS.9,81,442/ - UNDER THE HEAD SUNDRY DEBTORS AND ALLOWED RELIEF OF RS.8,96,99,831/ - . 7. STILL AGGRIEVED, THE ASSESSEE HAS FILED APPEAL BEFORE THE TRIBUNAL. 8. BEFORE US, LD A.R. SUBMITTED THAT THE ORDER OF THE CIT(A) IN ALLOWING PARTIAL RELIEF IS BAD IN LAW AS THE ASSESSEE HAS FURNISHED SUBSTANTIAL EVIDENCES TO SUPPORT THAT THE SUNDRY CREDITORS AND SUNDRY DEBTORS ARE PROPERLY DEALT IN THE BOOKS OF ACCOUNT AND BOOKS OF ACCOUN T ARE AUDITED UNDER THE PROVISIONS OF SECTION 44AB OF THE ACT AND, THEREFORE, THERE CANNOT BE ANY ADDITION ON THE ASSUMPTION THAT THE SUNDRY CREDITORS ARE NOT SUPPORTED THE TRANSACTIONS. 9. CONTRA, LD D.R. SUPPORTED THE ORDER OF THE ASSESSING OFFICER AND EXPLAINED THAT THE CIT(A) HAS GIVEN MAXIMUM RELIEF AND, THEREFORE, THE APPEAL OF THE ASSESSEE BE DISMISSED. 10. WE HAVE HEARD THE RIVAL SUBMISSIONS, PERUSED THE ORDERS OF LOWER AUTHORITIES AND MATERIALS AVAILABLE ON RECORD. THE SOLE CRUX OF THE DISPUTE I SSUE IS AGAINST THE ADDITION MADE BY THE ASSESSING OFFICER IN RESPECT OF SUNDRY CREDITORS AND SUNDRY DEB TORS. WE FIND THAT THE SUNDRY CREDITORS ARE IN RESPECT OF PURCHASES, AS EXPLAINED BY LD A.R. WHICH HAVE BEEN FULLY 5 ITA NO.20 /CTK/2017 ASSESSMENT YEAR : 2011 - 2012 DISCLOSED WHEREAS THE DIFFERENCE IN SUNDRY DEBTORS IS EXPLAINED IN RESPECT OF SALE, WHICH IS PROPERLY INVOICED AND THERE IS NO DISPUTE. IN THE COURSE OF ASSESSMENT PROCEEDINGS, THE ASSESSING OFFICER HAS ACCEPTED THE PURCHASES AND SALES. ONLY AFTER THE ASSESSING OFFICER ISSUING LETTERS U/S. 133(6) OF THE ACT HAS MADE OBSERVATION THAT THERE IS NO PROPER COMPLIANCE AND THE CIT(A) HAS GRANTED RELIEF ON THIS ISSUE AFTER CALLING THE REMAND REPORT. SIMILARLY, IN THE CASE OF SALES, THE ASSESSEE HAS DISCLOSED THE SUNDRY DEBTORS RECEIVABLES AND THEY ARE PROPERLY DEALT IN THE BOOKS OF ACCOUNT AS PER THE ACCOUNTING PRINCIPLES. ON THIS ISSUE, THE CIT(A) HAS CALLED COMMENTS FROM THE ASSESSING OFFICER AND THE ASSESSING OFFICER HAS FILED REMAND REPORT , ON WHICH, THE CIT(A) HAS ALLOWE D RELIEF. WE PERUSED THE ORDER OF THE ASSESSING OFFICER. WE FIND THAT THE ASSESSING OFFICER HAS DOUBTED THE BALANCE OF SUNDRY CREDITORS BUT AS FAR AS THE BOOKS OF ACCOUNT ARE CONCERNED, IT IS NOT DISPUTE THAT THE ASSESSING OFFICER HAVING ACCEPTED THE PUR CHASE AND SALES, THE ASSESSEE BEING A DEALER IN MEDICINES, THERE CANNOT BE ANY REASON FOR THE ASSESSING OFFICER TO TAKE A DIFFERENT VIEW IN RESPECT OF CREDITORS. ACCORDINGLY, WE ARE OF THE SUBSTANTIVE VIEW THAT SINCE THE BOOKS OF ACCOUNTS HAVE BEEN ACCEP TED BY THE ASSESSING OFFICER, THERE CANNOT BE ANY ADDITION WITH RESPECT OF SALES AND PURCHASES. AS THERE IS NO DEFECT IN THE PURCHASES AND SALES, THE ADDITION IN RESPECT OF SUNDRY CREDITORS AND SUNDRY DEBTORS CANNOT BE SUSTAINED. WE SUPPORT OUR VIEW REL YING ON THE DECISION OF ALLAHABAD BENCH OF THE TRIBUNAL IN THE CASE OF JCIT VS. MATHURA DAS ASHOK KUMAR 6 ITA NO.20 /CTK/2017 ASSESSMENT YEAR : 2011 - 2012 (2006) 101 TTJ 810 (ALL), WHEREIN, IT WAS HELD THAT WHEN PURCHASES ARE ACCEPTED TO BE GENUINE BALANCE REMAINING OUTSTANDING AT THE END OF THE YEAR AGAIN ST SUCH, PURCHASES CANNOT BE TREATED AS BOGUS LIABILITY AND ADDITION MADE ON THAT BASIS CANNOT BE SUSTAINED. FURTHER, THE ITAT VISAKHAPATAM IN THE CASE ITO VS JAYANGA ANITHA (2016) 46 CCH 407 HAS HELD THAT WHEN TRADING RESULTS I.E. SALES AND PURCHASES HAD BEEN ACCEPTED AS GENUINE, NO ADDITION U/S.68 OF THE ACT COULD BE MADE FOR UNEXPLAINED SUNDRY CREDITORS. WE, ACCORDINGLY, DIRECT THE ASSESSING OFFICER TO DELETE THE ADDITION MADE BY THE ASSESSING OFFICER. 11. IN THE RESULT, APPEAL FILED BY THE ASSESSEE IS PARTLY ALLOWED. ORDER PRONOUNCED ON 3 1 / 01 /201 8 . S D / - S D / - ( N.S SAINI) ( PAVAN KUMAR GADALE) A CCOUNTANT MEMBER JUDICIALMEMBER CUTTACK; DATED 3 1 / 01 /201 8 B.K.PARIDA, SPS COPY OF THE ORDER FORWARDED TO : BY ORDER, SR.PRIVATE SECRETARY ITAT, CUTTACK 1. THE APPELLANT : .BIWANATH PATRO (HUF), PROP. ADIKANTA ASSOCIATES, ARUNODAYA NAGAR, CUTTACK 2. THE RESPONDENT. DCIT, BERHAMPUR CIRCLE, BERHAMPUR 3. THE CIT(A) - 1, BHUBANESWAR 4. PR.CIT - 1, BHUBANESWAR 5. DR, ITAT, CUTTACK 6. GUARD FILE. //TRUE COPY//