I.T.O., Ward-3(2), Kasganj V. Mohd. Abbas, Prop.M/s Standard Commission, Kasganj

ITA 224/AGR/2013

• Counselvise Citation: [2013] 140 COUNSELVISE.COM (IT) 67480 (ITAT-AGRA)
• Duration Of Justice: 5 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-11-2013
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Next Hearing Date: 27-11-2013
• Assessment Year: 2006-2007
• Appeal Filed On: 21-06-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: KK MISHRA
• Assessee Lawyers: MUNNA LAL AGARWAL
• Section: 133(6)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, AGRA BENCH, AGRA BEFORE : SHRI BHAVNESH SAINI, JUDICIAL MEMBER AND SHRI PRAMOD KUMAR, ACCOUNTANT MEMBER ITA NO. 223 & 224/AGRA/2013 ASSTT. YEAR : 2006-07 INCOME-TAX OFFICER, VS. SHRI MOHD. ABBAS, WARD 3(2), KASGANJ. PROP. M/S. STANDARD COMMISSION AGENCY, ETAH ROAD, GANJDUNDWARA, KASGANJ. (PAN : ADZPA 6003 D) (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI K.K. MISHRA, JR. D.R. RESPONDENT BY : SHRI MUNNA LAL AGARWAL, C.A. DATE OF HEARING : 27.11.2013 DATE OF PRONOUNCEMENT OF ORDER : 29.11.2013 ORDER PER BHAVNESH SAINI, J.M.: BOTH THE APPEALS BY THE REVENUE ARE DIRECTED AGAIN ST THE ORDERS OF LD. CIT(A), GHAZIABAD DATED 08.03.2013 FOR THE ASSESSME NT YEAR 2006-07. 2. THE REVENUE IN QUANTUM APPEAL NO. 223/AGRA/2013, CHALLENGED THE DELETION OF ADDITION OF RS.14,73,185/- ON ACCOUNT O F SUNDRY CREDITORS WHICH WERE FOUND TO BE BOGUS LIABILITY BY THE AO. ITA NO. 224/AGRA/2013 IS FILED BY THE REVENUE CHALLENGING THE CANCELLATION OF PENALTY U/S. 271(1)(C) ON THE SAME ISSUE. ITA NO. 223 & 224/AGRA/2013 2 3. WE HAVE HEARD THE LD. REPRESENTATIVES OF BOTH TH E PARTIES, PERUSED THE FINDINGS OF AUTHORITIES BELOW AND CONSIDERED THE MA TERIAL AVAILABLE ON RECORD. 4. BRIEFLY, THE FACTS OF THE CASE ARE THAT THE AO I N THIS CASE PASSED THE ASSESSMENT ORDER DATED 14.12.2011 U/S.263/143(3) OF THE IT ACT. THUS, THE ASSESSMENT ORDER WAS PASSED IN PURSUANCE TO THE DIR ECTIONS ISSUED BY THE LD. CIT U/S. 263 OF THE IT ACT WITH REGARD TO THE SUNDR Y CREDITORS AMOUNTING TO RS.14,73,185/-. THE AO AT THE ASSESSMENT STAGE NOTE D THAT THE BALANCES AGAINST SEVEN OUT OF EIGHT SUNDRY CREDITORS ARE IN ROUND FI GURES WHICH GAVE RISE TO SUSPICION OF HAVING CLOSING BALANCE LIABILITY. THE DETAILS OF THE SAME ARE NOTED IN THE ASSESSMENT ORDER. THE ASSESSEE FILED SUBMISS IONS, WHICH WERE ALREADY FILED ON RECORD AS WELL AS CONFIRMATION OF M/S. M.D . RICE MILLS TO SHOW THAT THERE WAS NO OUTSTANDING BALANCE. THE AO WAS NOT SA TISFIED WITH THE EXPLANATION OF THE ASSESSEE AND MADE THE ADDITION I N RESPECT OF UNEXPLAINED LIABILITY. THE ASSESSEE SUBMITTED BEFORE THE LD. CI T(A) THAT THE AO HAS NOT FOLLOWED THE DIRECTIONS OF THE LD. CIT U/S. 263 OF THE IT ACT AND NO ENQUIRY HAS BEEN MADE FROM THE CREDITORS. COMPLETE DETAILS IN R ESPECT OF OUTSTANDING LIABILITIES WERE ALSO FILED. THE LD. CIT(A), CONSID ERING THE MATERIAL ON RECORD ITA NO. 223 & 224/AGRA/2013 3 DELETED THE ADDITION. HIS FINDINGS IN PARA 5.1 OF T HE APPELLATE ORDER ARE REPRODUCED AS UNDER : IN THE ORDER U/S. 263; THE CIT GAVE CLEAR-CUT DIREC TION TO THE AO TO ISSUE SUMMONS AND ALSO MAKE ON-SPOT VERIF ICATION SO AS TO VERIFY THE GENUINENESS AND CORRECTNESS OF SUNDRY CREDITORS. BUT IT IS CLEAR FROM THE ASSESSMENT ORDER ITSELF T HAT NOTICES U/S. 133(6) HAVE BEEN ISSUED ON 11.10.2011 I.E. TO WARDS THE TIME BARRING DATE OF ASSESSMENT, AND CONSEQUENTLY, NO WO RTHWHILE FOLLOW UP ACTION/ENQUIRY COULD BE MADE BY THE AO. N EEDLESS TO SAY, NO ON-SPOT ENQUIRY HAS BEEN MADE. THE PARTIES WHICH DID NOT RESPOND TO NOTICES U/S. 133(6), HAVE NOT BEEN PURSU ED FOR FOLLOW UP ACTION OR VERIFICATION, AND HENCE NO ADVERSE VIEW C AN BE TAKEN IN RESPECT OF THOSE PARTIES. EVEN IN RESPECT OF TWO PA RTIES FROM WHOM REPLY HAS BEEN RECEIVED, I AGREE WITH THE APPELLANT S CONTENTION THAT THOSE REPLIES WERE HAVING NO AUTHENTICITY AND THEREFORE, EVEN IF BALANCES THEREIN WERE DEFERRING FROM THOSE SHOWN BY THE ASSESSEE; AO SHOULD HAVE OBTAINED FURTHER CLARIFICA TION FROM THOSE TWO PARTIES. AS FAR AS APPELLANT IS CONCERNED; I FIND THAT VOLU MINOUS PAPER BOOK WAS SUBMITTED BY THE ASSESSEE TO THE AO DURING IMPUGNED ASSESSMENT PROCEEDINGS. NOT ONLY THIS PAPE R BOOK CONTAINED CONFIRMATIONS OF SUNDRY CREDITORS BUT ALS O COMPLETE POSTAL ADDRESS, TELEPHONE NUMBERS, BILLS, FORM 31 ( WHICH IS BACK- BONE FOR SUCH TRANSACTION) AND FORM-C, AND ALSO DET AILS OF TRUCKS VIDE WHICH GOODS WERE PURCHASED AND ALSO MANDI SAMI TI GATE- PASS. SALE TAX REGISTRATION NUMBER OF THESE PARTIES CLEARLY ESTABLISHED THE IDENTITY OF THESE PARTIES. THE APPE LLANT HAS DONE ALL WHAT IT COULD DO TO ADDUCE TRANSACTIONS OF PURCHASE S CLAIMED BY IT. THE AO HAS FAILED TO MAKE WORTHWHILE ENQUIRY, WHIC H WAS CLEARLY DIRECTED BY THE CIT. AND HENCE THE AO WAS V ERY UNREASONABLE IN PUTTING THE BLAME ON THE ASSESSEE A ND ADD THE ENTIRE AMOUNT OF SUNDRY CREDITORS. ITA NO. 223 & 224/AGRA/2013 4 THE ADDITION OF RS.14,73,185/- IS THEREFORE, DELET E AND ALL THESE GROUNDS OF APPEAL ARE ALLOWED. 5. ON CONSIDERATION OF THE RIVAL SUBMISSIONS, WE DO NOT FIND ANY MERIT IN THE DEPARTMENTAL APPEAL. THE ASSESSEE HAS FILED COPY OF THE ORDER U/S. 263 IN THE PAPER BOOK ON THE BASIS OF WHICH THE PRESENT ASSESS MENT ORDER WAS PASSED. THE LD. CIT ON EXAMINATION OF ALL THE DETAILS WITH REGA RD TO THE SUNDRY CREDITORS NOTED THAT THE AO HAS COMPLETELY OVERLOOKED THE EVI DENCES AND WITHOUT VERIFYING THE GENUINENESS OF THE TRANSACTION AND EX ISTENCE OF THE PARTIES, ACCEPTED THE CLAIM. THEREFORE, THE ASSESSMENT ORDER WAS PASSED WITHOUT PROPER AND NECESSARY ENQUIRIES. THE LD. CIT, THEREFORE, DI RECTED THE AO TO PASS FRESH ASSESSMENT ORDER AFTER CONDUCTING REQUISITE INVESTI GATION WITH REFERENCE TO THE BOOKS OF ACCOUNT OF THE ASSESSEE AND PHYSICAL/SPOT ENQUIRIES REGARDING SUNDRY CREDITORS AMOUNTING TO RS.14,73,185/-. THE LD. CIT( A) ON EXAMINATION OF RECORD CORRECTLY NOTED THAT THE AO HAS PASSED THE ASSESSME NT ORDER WITHOUT MAKING ANY ENQUIRY INTO THE MATTER. THUS, WHATEVER MATERIA L WAS AVAILABLE ON RECORD COULD NOT BE SUBJECTED TO ANY ENQUIRY BY THE AO. TH E LD. CIT(A) WAS, THEREFORE, JUSTIFIED IN DECIDING THE ISSUE IN FAVOU R OF THE ASSESSEE. IN THE RESULT, THE DEPARTMENT APPEAL FAILS AND IS DISMISSED. ITA NO. 223 & 224/AGRA/2013 5 6. THE LD. CIT(A) ON THE BASIS OF THE QUANTUM ORDER ON THE SAME MATTER IN ISSUE, CANCELLED THE PENALTY AS WELL. SINCE WE HAVE DISMISSED THE DEPARTMENTAL APPEAL ON QUANTUM, THEREFORE, PENALTY APPEAL WOULD HAVE NO MERIT AND IS ACCORDINGLY DISMISSED. 7. IN THE RESULT, BOTH THE DEPARTMENTAL APPEALS ARE DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT. SD/- SD/- (PRAMOD KUMAR) (BHAVNESH SAINI) ACCOUNTANT MEMBER JUDICIAL MEMBER *AKS/- COPY OF THE ORDER FORWARDED TO : 1. APPELLANT 2. RESPONDENT 3. CIT(A), CONCERNED BY ORDER 4. CIT, CONCERNED 5. DR, ITAT, AGRA 6. GUARD FILE SR. PRIVATE SECRETARY TRUE COPY