The ITO, Ward-9(3), Surat V. M/s. Nilkanth Textiles, Surat

ITA 2074/AHD/2012

• Counselvise Citation: [2013] 140 COUNSELVISE.COM (IT) 68066 (ITAT-AHMEDABAD)
• Duration Of Justice: 1 year(s) 3 month(s) 5 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 19-12-2013
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 26-11-2013
• Assessment Year: 2005-2006
• Appeal Filed On: 14-09-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: O P BATHEJA
• Assessee Lawyers: M J SHAH
• Keywords: Unexplained cash credit; Rejection of books of accounts; Unexplained investment; Opportunity of being heard

Judgement Text

, , , , , , , , IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD BENCH A BENCH, AHMEDABAD .., ! ! ! ! ' #$, BEFORE SHRI N.S. SAINI, ACCOUNTANT MEMBER AND SHRI KUL BHARAT, JUDICIAL MEMBER !./ I.T.A. NO.2074/AHDE/2012 ( & '& & '& & '& & '& / / / / ASSESSMENT YEAR : 2005-06) THE INCOME TAX OFFICER WARD-9(3) SURAT / VS. M/S.NILKANTH TEXTILES 20, VRUNDAVAN SOCIETY NR.JANTA APARTMENT L.H. ROAD SURAT ( !./)* !./ PAN/GIR NO. : AACFN 0538 Q ( (+ / // / APPELLANT ) .. ( ,-(+ / RESPONDENT ) (+ . / APPELLANT BY : SHRI O.P. BATHEJA, SR.DR ,-(+ / . / RESPONDENT BY : SHRI M.J. SHAH, A.R. ' 0 / $1 / / / / DATE OF HEARING : 26/11/2013 23' / $1 / DATE OF PRONOUNCEMENT : 19/12/2013 4 / O R D E R PER SHRI KUL BHARAT, JUDICIAL MEMBER : THIS APPEAL BY THE REVENUE IS DIRECTED AGAINST TH E ORDER OF THE LD.COMMISSIONER OF INCOME TAX(APPEALS)-V, SURAT (CIT(A) FOR SHORT) DATED 01/06/2012 PERTAINING TO ASSESSMENT YEAR (AY) 2005-06. THE REVENUE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL:- 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE A ND IN LAW, THE LD.CIT(A) HAS WITHOUT APPRECIATING THE FACTS OF THE CASE, ERRED IN DELETING THE ADDITION OF RS.14,93,678/- MADE ON ACCOUNT OF U NEXPLAINED INVESTMENT U/S.69C OF THE ACT. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE A ND IN LAW, THE LD.CIT(A) OUGHT TO HAVE UPHELD THE ORDER OF THE A.O . 3. IT IS, THEREFORE, PRAYED THAT THE ORDER OF THE LD.C IT(A) BE SET-ASIDE AND THAT OF THE A.O. BE RESTORED. 2. BRIEFLY STATED FACTS ARE THAT THE CASE OF THE A SSESSEE WAS PICKED UP FOR SCRUTINY ASSESSMENT AND THE ASSESSMENT U/S.143(3) O F THE INCOME TAX ACT,1961 ITA NO.2074/AHD /2012 ITO VS. M/S.NILKANTH TEXTILES ASST.YEAR 2005-06 - 2 - (HEREINAFTER REFERRED TO AS THE ACT) WAS FRAMED V IDE ORDER DATED 24/12/2007. WHILE FRAMING THE ASSESSMENT ORDER, THE ASSESSING O FFICER(AO) REJECTED THE BOOKS OF ACCOUNTS OF THE ASSESSEE AND MADE DISALLOW ANCES U/S.69C & 68 OF THE ACT AMOUNTING TO RS.14,93,678/- AND RS.1,50,000/- R ESPECTIVELY. AGAINST THIS, THE ASSESSEE FILED AN APPEAL BEFORE THE LD.CIT(A), WHO AFTER CONSIDERING THE SUBMISSIONS, DELETED THE ADDITION. AGAINST THIS OR DER, THE REVENUE FILED AN APPEAL AND THE HONBLE ITAT A BENCH AHMEDABAD IN ITA NO.3244/AHD/2008 FOR AY 2005-06, DATED 19/11/2010 D ELETED THE ADDITION OF RS.1,50,000/- ON ACCOUNT OF UNEXPLAINED CASH CREDIT S U/S.68 OF THE ACT AND SET ASIDE THE CASE TO THE FILE OF LD.CIT(A) ON THE ISSU E OF UNEXPLAINED INVESTMENT U/S.69C OF THE ACT AMOUNTING TO RS.14,93,678/-. I N THE REMAND PROCEEDINGS, LD.CIT(A) CALLED FOR THE REPORT FROM THE AO AND DEC IDED THIS ISSUE IN FAVOUR OF THE ASSESSEE. AGAINST THIS, THE REVENUE HAS FILED THE PRESENT APPEAL. 3. LD.SR.DR SUPPORTED THE ORDER OF THE AO AND THE STATEMENT OF FACTS. HE SUBMITTED THAT DURING THE COURSE OF ASSESSMENT PROC EEDINGS, THE AO WORKED OUT NEGATIVE STOCK FOR THE MONTHS OF DECEMBER-2004 TO MARCH-2005 TOTALLING TO 1,29,885 METERS ON THE BASIS OF OCTROI RECEIPTS. THE AO THEREFORE HELD THAT THE ASSESSEE HAD SUPPRESSED ITS PRODUCTION TO THIS EXTENT. HE SUBMITTED THAT DURING REMAND PROCEEDINGS, M/S.ASHIRWAD SILK MILLS DID NOT FURNISH ANY ACCOUNTING ENTRY EVIDENCING THE GOODS RETURNED TO T HE ASSESSEE. M/S.M.B.SYNTHETICS ALSO DID NOT COMPLY TO THE NOTIC E ISSUED U/S.133(6) OF THE ACT. M/S.R.C.INDUSTRIES DOES NOT FIND TO BE DOING ANY BUSINESS AT THE ADDRESS GIVEN ON THE CHALLAN. THE AO IN ADDITIONAL REMAND REPORT HAD SUBMITTED THAT M/S.M.B.SYNTHETICS HAD NOT FURNISHED EVEN THE COPY OF DELIVERY CHALLAN. IN VIEW OF THOSE FACTS, THE CLAIM OF THE ASSESSEE IN R ESPECT OF RETURNED GOODS REMAINS UNVERIFIED. BESIDES, THE DETAILS FURNISHED BY M/S.M.B.SYNTHETICS ALSO ITA NO.2074/AHD /2012 ITO VS. M/S.NILKANTH TEXTILES ASST.YEAR 2005-06 - 3 - DO NOT SUGGEST ANY ENTRY REGARDING THE TOTAL NUMBER OF TAKAS/METERS RETURNED TO THE ASSESSEE. 3. ON THE CONTRARY, LD.COUNSEL FOR THE ASSESSEE SUB MITTED THAT THE LD.CIT(A) HAD EXAMINED THE ISSUE THOROUGHLY AND HAS RIGHTLY C OME TO THE CONCLUSION. HE SUBMITTED THAT THERE IS A CATEGORICAL FINDING BY TH E LD.CIT(A) THAT THE WAS A MISPRINT ON THE OCTROI RECEIPT. HE SUBMITTED THA T THIS KIND OF PRACTICE IN BUSINESS IS SUPPORTED BY A CERTIFICATE ISSUED BY TH E WEAVERS ASSOCIATION STATING THEREIN THAT THE GOODS ARE RETURNED AND NO ENTRY OF SUCH GOODS IS SHOWN IN THE BOOKS OF ACCOUNTS. HE STRONGLY RELIED ON THE ORDER OF THE LD.CIT(A). 4. WE HAVE HEARD THE RIVAL SUBMISSIONS, PERUSED THE MATERIAL AVAILABLE ON RECORD AND GONE THROUGH THE ORDERS OF THE AUTHORITI ES BELOW. IN THE FIRST INNING, THE HONBLE TRIBUNAL IN ITA NO.3244/AHD/200 8 FOR AY 2005-06 VIDE ORDER DATED 19/11/2010 HAD RESTORED THIS ISSUE BACK TO THE FILE OF CIT(A) TO DECIDE THE ISSUE AFRESH IN ACCORDANCE WITH LAW AFTE R AFFORDING SUFFICIENT OPPORTUNITY OF BEING HEARD TO BOTH THE PARTIES. TH E LD.CIT(A) HAS DECIDED THIS ISSUE IN FAVOUR OF THE ASSESSEE ON THE BASIS THAT H E HAD CAREFULLY VERIFIED THE OCTROI RECEIPT NO.8321734 DATED 08/10/2004 TO THE E XTENT OF 33,588 METERS OF SALE OF GREY CLOTHES DUE TO WHICH THE STOCK WAS CAL CULATED NEGATIVE BY THE A.O. HE OBSERVED THAT THE ACTUAL METERS ARE 3732 BUT THE MISPRINTED METERS ARE 37320. THUS, AN EXTRA ZERO HAS BEEN PUT BY MISTA KE DUE TO WHICH QUANTITY GOT INFLATED BY 33588 METERS. THE LD.CIT(A) ALSO OBSERVED THAT IT IS SEEN THAT ONE OF THE PARTIES M/S.M.B.SYNTHETICS HAS CONFIRMED THE FACTS OF THE GOODS SENT TO THE ASSESSEE FOR CORRECTING THE DEFECTS. ALTHOU GH, NO ENTRY IN THIS REGARD HAS BEEN PASSED BY M.B.SYNTHETICS IN ITS BOOKS OF ACCOU NT BUT THE CONFIRMATION GETS SUPPORT FROM THE LETTER OF KIN-PIPODARA WEAVER S ASSOCATION AND AFFIDAVITS FROM FOUR OTHER ASSESSEES ENGAGED IN SIMILAR BUSINE SS. HE FURTHER OBSERVED ITA NO.2074/AHD /2012 ITO VS. M/S.NILKANTH TEXTILES ASST.YEAR 2005-06 - 4 - THAT THERE IS NO COGENT EVIDENCE OR INDICATOR WHICH INDICATES TOWARDS SUPPRESSION OF PRODUCTION. IT IS OBSERVED BY THE L D.CIT(A) THAT AS PER CALCULATION MADE BY THE APPELLANT AND VERIFIED BY H IM PER METER ELECTRICITY CONSUMPTION COMES TO 0.32 UNIT AND VALUE-WISE RS.1. 43 PER METER IN COMPARISON TO 0.41 UNIT AND RS.1.5 PER METER IN SUB SEQUENT A.Y. 2006-07. AFTER CONSIDERING THE TOTALITY OF THE FACTS AND THE SUBMISSIONS MADE BY THE RESPECTIVE PARTIES, WE ARE OF THE VIEW THAT THE LD. CIT(A) HAS EXAMINED THE ISSUE FROM ALL ANGLES, THEREFORE WE DO NOT FIND ANY INFIR MITY IN THE ORDER OF THE LD.CIT(A), THE SAME IS HEREBY UPHELD. HENCE, THIS GROUND OF THE REVENUES APPEAL IS REJECTED. 5. IN THE RESULT, REVENUES APPEAL STANDS DISMISSED . ORDER PRONOUNCED IN COURT ON THE DATE MENTIONED HER EINABOVE AT CAPTION PAGE SD/- SD/- ( .. ) (' #$) ( N.S. SAINI ) ( KUL BHARAT ) ACCOUNTANT MEMBER JUDICIAL MEMBER AHMEDABAD; DATED 19/12/2013 71.., .../ T.C. NAIR, SR. PS 4 / ,$8 98'$ 4 / ,$8 98'$ 4 / ,$8 98'$ 4 / ,$8 98'$/ COPY OF THE ORDER FORWARDED TO : 1. (+ / THE APPELLANT 2. ,-(+ / THE RESPONDENT. 3. !! $ ': / CONCERNED CIT 4. ':() / THE CIT(A)-V, SURAT 5. 8 #; ,$ , , / DR, ITAT, AHMEDABAD 6. ;<& =0 / GUARD FILE. 4' 4' 4' 4' / BY ORDER, -8$ ,$ //TRUE COPY// > >> >/ // / !) !) !) !) ( DY./ASSTT.REGISTRAR) , , , , / ITAT, AHMEDABAD