ITO, CHENNAI V. M/s. Purotech Systems, CHENNAI

ITA 2195/CHNY/2008

• Counselvise Citation: [2011] 134 COUNSELVISE.COM (IT) 4762 (ITAT-CHENNAI)
• Duration Of Justice: 2 year(s) 7 month(s) 5 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 07-07-2011
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: D
• Next Hearing Date: 07-07-2011
• Assessment Year: 1999-2000
• Appeal Filed On: 02-12-2008
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: K E B RENGARAJAN JR
• Assessee Lawyers: S SRIDHAR
• Keywords: Unexplained cash credit; Set aside

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL D BENCH, CHENNAI BEFORE SHRI ABRAHAM P. GEORGE, ACCOUNTANT MEMBER AN D SHRI GEORGE MATHAN, JUDICIAL MEMBER I.T.A. NO. 2195/MDS/2008 ASSESSMENT YEAR : 1999-2000 THE INCOME-TAX OFFICER, BUSINESS WARD-II(2), CHENNAI. V. M/S. PUROTECH SYSTEMS, 28/2B, SARAVANA STREET, T. NAGAR, CHENNAI-600 017. (PAN/GIR NO. 613-P) (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI K.E.B.RENGARAJAN, JR. STANDING COUNSEL RESPONDENT BY : SHRI S. SRIDHAR O R D E R PER GEORGE MATHAN, JUDICIAL MEMBER : THIS IS AN APPEAL FILED BY THE REVENUE AGAINST THE ORDER OF THE LEARNED CIT(APPEAL S)-VI, CHENNAI IN ITA NO. 235/06-07 DATED 18-07-2008 FOR THE ASSESSMENT YEAR 1999-2000. 2. SHRI K. E. B. RENGARAJAN, JR. STANDING COUNSEL RE PRESENTED ON BEHALF OF THE REVENUE AND SHRI S. SRIDHAR, ADVOCATE REPRESENTED O N BEHALF OF THE ASSESSEE. 3. IN THE REVENUES APPEAL, THE REVENUE HAS RAISED THE FOLLOWING GROUNDS: 1. THE ORDER OF THE LEARNED CIT(A) IS CONTRARY TO LAW AND FACTS OF THE CASE. 2. THE LEARNED CIT(A) ERRED IN DELETING THE ADDITI ON OF ` 50 LAKHS MADE AS UNEXPLAINED CASH CREDIT. I.T.A. NO. 2195/MDS/2008 2 3. THE LD. CIT(A) OUGHT TO HAVE APPRECIATED THE FA CT THAT THE ASSESSEE HAD NOT FURNISHED ANY CONCRETE EVIDENC E IN SUPPORT OF HIS CLAIM VIS--VIS WHETHER THE AMOUNT HAD ACTUALLY BEEN OFFERED TO TAX ON ACCRUAL BASIS AND WHETHER THE AMOUNT SO RECE IVED WAS SHOWN AS BAD DEBT DURING THE RELEVANT ASSESSMENT YE AR. 4. THE LD. CIT(A) OUGHT TO HAVE APPRECIATED THE FA CT THAT IN THE ABSENCE OF DETAILS OF INCOME OFFERED FOR TAX FOR THE ASSESSMENT YEAR 1993-94 AND 1994-95, IT CANNOT BE C ONCLUDED THAT THE INCOME RECEIVED IN THE FORM OF COMPENSATION DUR ING THE FY 1998-99 HAS ALREADY SUFFERED TAX. 5. FOR THESE AND OTHER GROUNDS THAT MAY BE ADDUCED AT THE TIME OF HEARING, IT IS PRAYED THAT THE ORDER OF THE LEARNED CIT(A) MAY BE SET ASIDE AND THAT OF THE ASSESSING O FFICER BE RESTORED. 4. IT WAS SUBMITTED BY THE LEARNED DR THAT THE ASSE SSEE IN ITS RETURN HAD SHOWN AN AMOUNT OF ` 50 LAKHS RECEIVED FROM M/S. MACHINO IMPORT, RUSSIA AS NOT LIABLE TO TAX. IT WAS THE SUBMISSION THAT THE ASSE SSEE HAD CLAIMED THAT THIS AMOUNT WAS THE AMOUNT RECEIVABLE FROM M/S. MACHINO IMPORT AND THE AMOUNTS HAVE BEEN OFFERED TO TAX IN THE EARLIER YEARS. IT WAS THE SUBMISSION THAT AS THE ASSESSING OFFICER WAS OF THE VIEW THAT THERE WAS NO SUFFICIENT MATERIAL IN FAVOUR OF THE ASSESSEE FOR ESTABLISHING THE CLAIM UNDER CONSI DERATION WAS ALREADY TAXED IN THE YEAR OF ACCRUAL, THE COMPENSATION AMOUNT WAS BR OUGHT TO TAX ON RECEIPT BASIS. IT WAS THE SUBMISSION THAT ON FIRST APPEAL, THE LEARNED CIT(A) HAD DELETED THE ADDITION. IT WAS THE SUBMISSION THAT THE ASSES SEE HAD NOT PRODUCED ANY CONCRETE EVIDENCE IN SUPPORT OF ITS CLAIM THAT THE AMOUNT HAD ACTUALLY BEEN I.T.A. NO. 2195/MDS/2008 3 OFFERED TO TAX ON ACCRUAL BASIS. HE VEHEMENTLY SUP PORTED THE ORDER OF THE ASSESSING OFFICER. 5. IN REPLY, THE LEARNED AUTHORISED REPRESENTATIVE SUBMITTED THAT A REMAND REPORT HAD BEEN CALLED FOR FROM THE ASSESSING OFFIC ER AND THE ASSESSING OFFICER HAD ALSO ACCEPTED IN THE REMAND REPORT THAT AN AMOU NT OF ` . 72.94 LAKHS HAD BEEN SHOWN AS PER THE BALANCE SHEET FOR THE YEAR EN DED 31.3.1995 AND THE AMOUNT RECEIVED FROM M/S. MACHINO IMPORT IN CONSEQU ENCE OF THE ORDER OF THE HON'BLE HIGH COURT DATED 18-12-1998 WAS LESS THAN T HE DEBT REFLECTED IN THE BALANCE SHEET FOR THE YEAR ENDED 31-03-1995. IT WA S THE SUBMISSION THAT IN VIEW OF THE REMAND REPORT THE LEARNED CIT(A) HAD DELETED THE ADDITION AND CONSEQUENTLY THE APPEAL OF THE REVENUE IS LIABLE TO BE DISMISSED. 6. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS. A PER USAL OF THE BALANCE SHEET FOR THE YEAR ENDED 31.3.1995 CLEARLY SHOWS THAT AN AMOUNT OF ` . 72,94,500/- WAS DUE TO THE ASSESSEE FROM M/S. MACHINO IMPORT, RUSSI A. A PERUSAL OF THE ASSESSMENT ORDER CLEARLY SHOWS THAT AN AMOUNT OF ` 50 LAKHS HAS BEEN RECEIVED CONSEQUENT TO THE ORDER OF THE HON'BLE HIGH COURT O F MADRAS. THIS IS ALSO EVIDENT FROM THE REMAND REPORT. IT THEREFORE REMAINS UNDIS PUTED THAT THE AMOUNT WAS RECEIVED FROM M/S. MACHINO IMPORT, RUSSIA. ONCE TH E AMOUNT WAS RECEIVED FROM M/S. MACHINO IMPORT, RUSSIA, WHICH IS SHOWN TO BE D UE TO THE ASSESSEE IN THE BALANCE SHEET FOR THE YEAR ENDED 31-03-1995, THIS R ECEIPT CAN ONLY BE SET OFF AGAINST THE DUES AS SHOWN IN THE BALANCE SHEET AND AS THE DUES ITSELF ARE FAR I.T.A. NO. 2195/MDS/2008 4 HIGHER THAN THE AMOUNT RECEIVED BY THE ASSESSEE, IT HAS TO BE HELD THAT THE AMOUNT IS NOT TAXABLE. EVEN OTHERWISE A PERUSAL OF THE ASSESSMENT ORDER CLEARLY SHOWS THAT THE CLAIM OF THE ASSESSEE THAT IT WAS FO LLOWING MERCANTILE SYSTEM OF ACCOUNTING HAS BEEN ACCEPTED IN COLUMN 8 OF THE ASS ESSMENT ORDER. ONCE IT IS ACCEPTED THAT THE ASSESSEE IS FOLLOWING MERCANTILE SYSTEM OF ACCOUNTING AND IT IS ALSO NOTICED THAT THE AMOUNT IS SHOWN IN THE BALANC E SHEET FOR THE YEAR ENDED 31.3.1995, IT WOULD BE TOO FAR-FETCHED FOR THE ASSE SSEE TO AGAIN PROVE THAT THIS AMOUNT WAS OFFERED FOR TAXATION WHEN IT BECAME DUE FOR MORE THAN 13 YEARS BACK WHICH HAS ALSO BEEN CLAIMED BY THE ASSESSEE. IN TH E CIRCUMSTANCES, WE ARE OF THE VIEW THAT THE FINDING OF THE LEARNED CIT(A) IS ON A RIGHT FOOTING AND DOES NOT CALL FOR ANY INTERFERENCE. IN THE CIRCUMSTANCES, T HE APPEAL OF THE REVENUE IS DISMISSED. 7. THE ORDER WAS PRONOUNCED IN THE COURT ON 07/07/2 011. SD/- SD/- (AABRAHAM P. GEORGE) (GEORGE MATHAN) ACCOUNTANT MEMBER JUDICIAL MEMBER CHENNAI, DATED THE 07 TH JULY, 2011. H. COPY TO: ASSESSEE/AO/CIT (A)/CIT/D.R./GUARD FILE