Sankara Rao, CHENNAI V. ACIT, CHENNAI

ITA 2027/CHNY/2015

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 8139 (ITAT-CHENNAI)
• Duration Of Justice: 4 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 05-02-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 17-12-2015
• Assessment Year: 2009-2010
• Appeal Filed On: 28-09-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: A B KOLI
• Assessee Lawyers: A S SRIRAMAN
• Section: 68

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH, CHENNAI . . . , . !'# ! , % !& BEFORE SHRI N.R.S. GANESAN, JUDICIAL MEMBER AND SHRI A. MOHAN ALANKAMONY, ACCOUNTANT MEMBER ./ ITA NO.2027/MDS/2015 ( )( / ASSESSMENT YEAR : 2009-10 SHRI SANKARA RAO, C/O SHRI S. SRIDHAR, ADVOCATE, NEW NO.14, OLD NO.82, FLAT NO.5, 1 ST AVENUE, INDIRA NAGAR, ADYAR, CHENNAI - 600 020. PAN : AACPR 1610 H V. THE ASSISTANT COMMISSIONER OF INCOME TAX, NON CORPORATE CIRCLE 6, CHENNAI - 600 006. (+,/ APPELLANT) (-.+,/ RESPONDENT) +, / 0 / APPELLANT BY : SH. A.S. SRIRAMAN, ADVOCATE -.+, / 0 / RESPONDENT BY : SH. A.B. KOLI, JCIT 1 / 2% / DATE OF HEARING : 17.12.2015 3') / 2% / DATE OF PRONOUNCEMENT : 05.02.2016 / O R D E R PER N.R.S. GANESAN, JUDICIAL MEMBER: THIS APPEAL OF THE ASSESSEE IS DIRECTED AGAINST THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS)-5, CHENNAI , DATED 29.07.2015 AND PERTAINS TO ASSESSMENT YEAR 2009-10. 2 I.T.A. NO.2027/MDS/15 2. SH. A.S. SRIRAMAN, THE LD.COUNSEL FOR THE ASSESS EE, SUBMITTED THAT THE ONLY ISSUE ARISES FOR CONSIDERAT ION IS WITH REGARD TO DISALLOWANCE OF ` 37,87,876/-. ACCORDING TO THE LD. COUNSEL, THE OUTSTANDING TRADING ACCOUNT WAS ERRONEOUSLY BROUGHT TO TAX UNDER SECTION 68 OF THE INCOME-TAX ACT, 1961 (IN SHORT 'T HE ACT'). ACCORDING TO THE LD. COUNSEL, THE ADDITION WAS MADE ON THE BASIS OF THE OPENING CASH BALANCE FOR THE YEAR UNDER CONSIDE RATION. WHEN THE ASSESSING OFFICER COMPUTES THE OPENING BALANCE FOR THE YEAR UNDER CONSIDERATION, HE HAS TO MAKE ADDITION ONLY I N THE EARLIER ASSESSMENT YEAR FROM WHICH THE OPENING BALANCE WAS CARRIED FORWARD, THEREFORE, NO ADDITION CAN BE MADE IN THE YEAR UNDER CONSIDERATION. THE LD.COUNSEL FURTHER SUBMITTED TH AT THE ADDITION UNDER SECTION 68 OF THE ACT HAS TO BE CONFINED ONLY TO THE CASH THAT IS FOUND IN THE BOOKS OF ACCOUNT. THE LD.COUNSEL F URTHER SUBMITTED THAT THE ASSESSEE HAS FILED CONFIRMATION LETTERS IN RESPECT OF SOME OF THE CREDITORS. HOWEVER, OTHERS COULD NOT BE FILED. THE LD.COUNSEL FURTHER SUBMITTED THAT THE ASSESSING OFFICER IS NOT JUSTIFIED IN MAKING DISALLOWANCE OF ` 37,87,876/-. 3. ON THE CONTRARY, SH. A.B. KOLI, THE LD. DEPARTME NTAL REPRESENTATIVE, SUBMITTED THAT THE ASSESSEE WAS CLA IMING 3 I.T.A. NO.2027/MDS/15 ` 1,57,03,338.86 AS CURRENT LIABILITIES AND PROVISION S. THE ASSESSING OFFICER, AFTER VERIFICATION OF THE ACCOUNTS, FOUND THAT THERE WERE MANY SUNDRY CREDITORS WHOSE OPENING BALANCE HAS NOT CHANGED THROUGHOUT THE FINANCIAL YEAR. TO VERIFY THE GENUI NENESS OF THE SUNDRY CREDITORS, THE ASSESSEE WAS ASKED TO PRODUCE CONFIRMATION LETTERS FROM RESPECTIVE PARTIES. THE ASSESSEE WAS ABLE TO PRODUCE CONFIRMATION LETTERS ONLY FROM SEVEN PARTIES. THE ASSESSEE HAS ALSO EXPRESSED HIS INABILITY TO PRODUCE CONFIRMATION LET TERS FROM 22 OTHER PARTIES TO THE EXTENT OF ` 37,87,876/-, THEREFORE, THE ASSESSING OFFICER MADE ADDITION UNDER SECTION 68 OF THE ACT. 4. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS ON EITH ER SIDE AND PERUSED THE RELEVANT MATERIAL AVAILABLE ON RECORD. THE ASSESSING OFFICER, DURING THE COURSE OF ASSESSMENT PROCEEDING , FOUND THAT A SUM OF ` 1,57,03,338.86 WAS SHOWN AS CURRENT LIABILITIES AND PROVISIONS. THE ASSESSING OFFICER FURTHER FOUND TH AT THE OPENING BALANCE OF MANY SUNDRY CREDITORS HAS NOT CHANGED TH ROUGHOUT THE FINANCIAL YEAR. THE ASSESSEE WAS ABLE TO PRODUCE C ONFIRMATION LETTERS ONLY FROM SEVEN CREDITORS. THE ASSESSEE COU LD NOT FURNISH CONFIRMATION LETTERS TO THE EXTENT OF ` 37,87,876/- FROM 22 CREDITORS. 4 I.T.A. NO.2027/MDS/15 THEREFORE, THE ASSESSING OFFICER MADE ADDITION UNDE R SECTION 68 OF THE ACT. 5. THE CIT(APPEALS), BY PLACING RELIANCE ON THE JUD GMENT OF MADRAS HIGH COURT IN C. PAKIRISAMY V. ACIT 92009) 3 15 ITR 293, FOUND THAT WHEN THE ASSESSEE FAILED TO EXPLAIN THE SOURCE FOR THE OPENING CAPITAL AND HOW IT WAS ACCUMULATED FOR THE YEARS, DISALLOWANCE OF OPENING BALANCE CAN BE MADE. IN TH E CASE BEFORE US, THE ASSESSEE HAS FILED THE DETAILS OF THE CREDI TORS AND THEIR ADDRESSES ARE ALSO AVAILABLE. THEREFORE, THE ASSES SING OFFICER HERSELF COULD HAVE CALLED FOR CONFIRMATION LETTERS FROM THE RESPECTIVE CREDITORS. WHEN THE ASSESSEE IS ABLE TO PRODUCE TH E CONFIRMATION LETTERS, THE ASSESSING OFFICER IS EXPECTED TO EXAMI NE THE CREDITORS AND FIND OUT WHETHER ALL THE CREDITORS ARE GENUINE. SINCE SUCH AN EXERCISE IS NOT DONE, THIS TRIBUNAL IS OF THE CONSI DERED OPINION THAT THE MATTER NEEDS TO BE RE-EXAMINED BY THE ASSESSING OFFICER. ACCORDINGLY, THE ORDERS OF THE LOWER AUTHORITIES AR E SET ASIDE AND THE ENTIRE ISSUE IS REMITTED BACK TO THE FILE OF THE AS SESSING OFFICER. THE ASSESSING OFFICER SHALL RE-EXAMINE THE MATTER AFRES H AND ALSO EXAMINE THE 22 CREDITORS BY ISSUING SUMMONS TO RESP ECTIVE 5 I.T.A. NO.2027/MDS/15 CREDITORS AND THEREAFTER DECIDE THE ISSUE IN ACCORD ANCE WITH LAW AFTER GIVING REASONABLE OPPORTUNITY TO THE ASSESSEE . 6. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALL OWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED ON 5 TH FEBRUARY, 2016 AT CHENNAI. SD/- SD/- (. !'# ! ) ( . . . ) (A. MOHAN ALANKAMONY) (N.R.S. GANESAN) % / ACCOUNTANT MEMBER /JUDICIAL MEMBER /CHENNAI, 5 /DATED, THE 5 TH FEBRUARY, 2016. KRI. / -267 87)2 /COPY TO: 1. +, /APPELLANT 2. -.+, /RESPONDENT 3. 1 92 () /CIT(A)-5, CHENNAI 4. 1 92 /CIT-9, CHENNAI 5. 7: -2 /DR 6. ;( < /GF.