ACIT, Pune V. Anusuya Auto Press P. Ltd., Pune

ITA 2249/PUN/2012

• Counselvise Citation: [2014] 120 COUNSELVISE.COM (IT) 6746 (ITAT-PUNE)
• Duration Of Justice: 1 year(s) 7 month(s) 14 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 23-06-2014
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Assessment Year: 2007-2008
• Appeal Filed On: 09-11-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: S P WALIMBE
• Keywords: Additional evidence; Capital receipt
• Section: 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH B, PUNE BEFORE SHRI G.S. PANNU, ACCOUNTANT MEMBER AND SHRI R.S. PADVEKAR, JUDICIAL MEMBER ITA NO.2249/PN/2012 (ASST. YEAR: 2007-08) DCIT, CIRCLE-8, PUNE APPELLANT VS. ANUSUYA AUTO PRESS PARTS PVT. LTD., GAT NO.388, VILLAGE MHALUNGE, TALUKA KHED, DIST-PUNE - 410501 PAN: AACCA3246K RESPONDENT APPELLANT BY : SHRI S.P. WALIMBE RESPONDENT BY : SHRI KISHOR PHADKE DATE OF HEARING : 04-06-2014 DATE OF PRONOUNCEMENT : 23-06-2014 ORDER PER R.S. PADVEKAR, JM: THIS APPEAL IS FILED BY THE REVENUE CHALLENGING TH E IMPUGNED ORDER OF THE CIT(A)-V, PUNE, DATED 28.08.2012 FOR T HE A.Y. 2007-08. THE GROUND NO.1 READS AS UNDER: 1. WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) WAS JUSTIFIED IN HOLDING THAT DISCOUNT O F RS.1,08,22,674/- RECEIVED ON PRE-PAYMENT OF LIABILI TY UNDER THE SALES TAX DEFERRAL SCHEME, AS NOT A REMISSION OR CESSATION OF LIABILITY U/S 41(1)? THE FACTS WHICH ARE REVEALED FROM THE RECORD ARE A S UNDER: 2. THE ASSESSEE COMPANY IS A MANUFACTURER OF THE AU TOMOBILE COMPONENTS. FOR THE A.Y. 2007-08, THE ASSESSEES C ASE WAS SELECTED FOR SCRUTINY AND THE ASSESSMENT HAS BEEN COMPLETED U/S 143(3) OF THE I.T. ACT. THE ASSESSING OFFICER HAS OBSERVED THAT THE A SSESSEE OPTED FOR THE PRE-PAYMENT OF THE DEFERRAL SALES TAX LIABILITY AND GOT THE BENEFIT TO THE EXTENT OF 1,08,22,674/- WHICH WAS CLAIMED AS EXEMPT TREATING THE SAME AS A CAPITAL RECEIPT. THE ASSESSING OFFICER W AS OF THE OPINION THAT THE ASSESSEE HAS ALREADY COLLECTED THE SALES TAX WH ICH WOULD NOT BE 2 REFUNDED TO THE CUSTOMERS AND THE BENEFIT RECEIVED ON ACCOUNT OF THE PRE-PAYMENT OF THE DEFERRAL SALES TAX LIABILITY AMO UNTS TO REVENUE RECEIPT. THERE IS NO DETAILED DISCUSSION IN THE AS SESSMENT ORDER. THE ASSESSING OFFICER MADE THE ADDITION TO THE EXTENT O F 1,08,22,674/-. THE ASSESSEE HAS CHALLENGED THE ADDITION BEFORE LD CIT(A) AND LD CIT(A) DELETED THE ADDITION BY FOLLOWING THE DECISI ON OF HONBLE SPECIAL BENCH, ITAT, MUMBAI IN THE CASE OF SULZAR INDIA LTD . VS. JOINT CIT (2010) 134 TTJ 385 (MUM)(SB). 3. NOW, THE REVENUE IS IN APPEAL BEFORE US. WE HAV E HEARD THE PARTIES AND PERUSED THE RECORD. THE FACTS ARE NOT IN DISPUTE. THE ASSESSEE WAS COVERED UNDER THE SCHEME OF INCENTIVE AND OPTED FOR THE SALES TAX DEFERRAL SCHEME. THE OPTION WAS GIVEN TO THE ASSESSEE FOR PRE-PAYMENT OF THE SALES TAX LIABILITY WHICH WAS CO NVERTED AS LOAN AND THE ASSESSEE OPTED FOR THE PREPAYMENT AND BY EXERCI SING THE OPTION, THE ASSESSEES SALES TAX LOAN LIABILITY WAS REDUCED TO THE EXTENT OF 1,08,22,674/-. THE ISSUE STANDS SQUARELY COVERED I N FAVOUR OF ASSESSEE BY THE DECISION OF SULZAR INDIA LTD. (SUPRA). WE F IND NO REASON TO INTERFERE WITH THE ORDER OF LD CIT(A) ON THIS ISSUE . ACCORDINGLY, GROUND NO.1 IS DISMISSED. GROUND NO.2 READS AS UNDER: WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF T HE CASE, THE LD. CIT(A) WAS JUSTIFIED IN ACCEPTING THE ASSESSEE S CLAIM THAT CREDITORS OF RS.6.49 CRORES REPRESENTS PARTIES HAVI NG BALANCES BELOW RS.10 LAKHS AND THE DIFFERENCE OF RS.12,47,60 0/- FOUND IN CONFIRMATIONS FILED WAS ON ACCOUNT OF PETTY ISSUES LIKE SHORT RECEIPT OF MATERIAL, RATE DIFFERENCE, ETC., WHICH N O EVIDENCE THEREOF WERE FILED AND VERIFIED BY THE A.O? 4. THE ASSESSING OFFICER HAS OBSERVED THAT IN THE B ALANCE SHEET THE ASSESSEE HAS SHOWN SUNDRY CREDITORS OF RS.22,67,94, 112/-. IN ORDER TO VERIFY THE GENUINENESS OF SUNDRY CREDITORS VIDE THE OFFICE ORDER SHEET NOTE DT. 16.12.2009, THE ASSESSEES REPRESENTATIVE WAS REQUIRED TO FILE CONFIRMATION LETTERS IN RESPECT OF SUNDRY CREDITORS HAVING CLOSING BALANCE OF 10,00,000/- AND ABOVE WITH NAME, ADDRESS AND PAN O F THE PARTY. TILL PASSING THIS ORDER, ASSESSEE HAS NOT F ILED SINGLE CONFIRMATION LETTER. THE ASSESSEES REPRESENTATIVE HAS FILED ON LY UNSIGNED ACCOUNT EXTRACTS OF CERTAIN PARTIES AS IN THE ASSESSEES BO OKS OF ACCOUNT FOR 3 VERIFICATION AND THE CLOSING BALANCES OF THE SUNDRY CREDITORS COULD NOT BE VERIFIED. THEREFORE, THE ASSESSING OFFICER DISA LLOWED 10% OF TOTAL SUNDRY CREDITORS WHICH WORKED OUT TO 2,26,79,411/-. 5. THE ASSESSEE HAS CHALLENGED THE ADDITION BEFORE LD CIT(A) AND THE CIT(A) DELETED THE ADDITION BY GIVING THE FOLLO WING REASONS: 12. I HAVE CAREFULLY CONSIDERED THE SUBMISSIONS F ILED BY THE APPELLANT. AS FAR AS ADMISSION OF ADDITIONAL EVIDEN CE IS CONCERNED IT IS SEEN THAT THE APPELLANT WAS ASKED VIDE ORDER SHEET NOTINGS DATED 16.12.2009 TO FILE CREDITORS CONFIRMATION IN RESPECT OF BALANCE OF 10,00,000/- AND ABOVE. THE ASSESSMENT WAS COMPLETED ON 31.12.2009. OBTAINING CONFIRMATIONS WI THIN SUCH A SHORT TIME WAS NOT REALLY FEASIBLE AS SUBMITTED BY THE APPELLANT. THE ASSESSING OFFICER HAS ASKED FOR FILING OF THESE DETAILS AT THE FAG END OF TIME BARRING PERIOD WHEN THE ASSESSMENTS WERE GETTING BARRED BY LIMITATION ON 31.12.2009. TO AVOID SUCH S ITUATION, ASSESSING OFFICER SHOULD HAVE TAKEN UP ASSESSMENT P ROCEEDINGS MUCH EARLIER IN ORDER TO PROVIDE SUFFICIENT OPPORTU NITY TO THE APPELLANT. THEREFORE, ON THE FACTS AND CIRCUMSTANCE S OF THE CASE IT IS HELD THAT THE APPELLANT WAS PREVENTED BY SUFFICI ENT CAUSE IN PRODUCING THE CONFIRMATIONS FOR BY THE ASSESSING OF FICER. ACCORDINGLY, THE ADDITIONAL EVIDENCES WAY OF CREDIT ORS CONFIRMATION BY THE APPELLANT IS ADMITTED AS IT IS APPELLANT IS ADMITTED AS IT IS NECESSARY FOR ADJUDICATION OF THE ISSUE AT HAND. 13. COMING TO THE ISSUE OF CREDITORS AMENDING TO 6.46 CRORES FOR WHICH THE ASSESSING OFFICER CLAIMS THAT NO CONF IRMATION WERE FILED, THE APPELLANT HAS SUBMITTED THAT THE LEARNED ASSESSING OFFICER HAD ASKED FOR CONFIRMATIONS IN RESPECT OF P ARTIES HAVING CREDIT BALANCE OF MORE THAN 10 LACS. IT WAS FURTHER SUBMITTED THAT OUT OF TOTAL CREDIT BALANCE OF 22.68 CRORES CONFIRMATIONS FOR 16.49 CRORES IN RESPECT OF 17 PARTIES HAVING BALAN CE EXCEEDING 10 LACS WERE FILED. THE BALANCE AMOUNT OF 6.46 CRORES REPRESENTS PARTIES HAVING CREDIT BALANCE OF LESS THAN 10 LACS. THE APPELLANT'S CONTENTION IS CORRECT AS ORIGINALLY CON FIRMATION PAYMENT ABOVE 10 LACS WAS CALLED FOR BY THE ASSESSING OFFICER. THEREFORE, ASSESSING OFFICER'S SUBMISSION THAT THER E WAS NO CONFIRMATION FOR 6.46 CRORES IS NOT OF ANY RELEVANCE AS CONFIRMATION WAS NOT ASKED FOR IN RESPECT OF ALL TH E PARTIES BY THE ASSESSING OFFICER DURING THE ASSESSMENT PROCEEDINGS . 14. COMING TO THE ISSUE OF DIFFERENCE OF 12,47,600/- IN RESPECT OF CONFIRMATIONS FILED IT IS SEEN THAT THE SAME IS ON ACCOUNT PETTY ISSUES LIKE SHORT RECEIPT OF MATERIAL, RATE DIFFERENCE ETC AS PER RECONCILIATION SUBMITTED BY THE APPELLAN T. HOWEVER, IN CASE OF RAHUL CABLES PVT. LTD., OPENING BALANCE DIF FERENCE OF 39,187 HAS NOT BEEN EXPLAINED BY THE APPELLANT IN T HE RECONCILIATION. THEREFORE, ADDITION OF 39,187/- IS CONFIRMED AND THE BALANCE ADDITION IS DELETED. APPELLANT GETS R ELIEF OF 2,26,40,224 (2,26,79,411 - 39,187). THE GROUND IS T HUS PARTLY ALLOWED. 4 6. NOW, THE REVENUE IS IN APPEAL BEFORE US. WE HAV E HEARD THE RIVAL SUBMISSIONS AND PERUSED THE SAME. IT APPEARS THAT THE LD. CIT(A) HAS CALLED FOR THE REMAND REPORT OF THE ASSESSING OFFIC ER AND THE ASSESSING OFFICER HAS SENT THE REMAND REPORT, PART OF WHICH I S REPRODUCED IN THE IMPUGNED ORDER IN PARA 10. A COPY OF THE REMAND RE PORT WAS GIVEN TO THE ASSESSEE AND THE ASSESSEES REPLY SUBMISSIONS W ERE CALLED. THE ASSESSEE FILED THE REPLY DATED 13.08.2012 WHICH IS PARTLY REPRODUCED IN THE IMPUGNED ORDER IN PARA 11 WHICH IS AS UNDER: 'OBJECTION TO ADDITIONAL EVIDENCES THE LEARNED AO HAD ASKED FOR BALANCE CONFIRMATIONS OF CREDITORS HAVING BALANCE > RS. 10 LACS WITHIN A SPAN OF 12-13 DAYS. THE SAID CONFIRMATION COULD NOT BE SUBMITTED IN A SHORT SPAN OF TIME AS EXPLAINED IN THE EARLIER SUBMISSIONS. AS PER THE REMAND REPORT, THE LEARNED AO HAS OBSERVED THAT THE PERIOD OF 15 DAYS WAS SUFFICIENT TO GET THE CONFIRMATIONS FROM THE CR EDITORS HAVING BALANCE > RS. 10 LACS AND AS SUCH, THE ADDITIONAL E VIDENCE MAY NOT BE ACCEPTED. IT IS SUBMITTED, THE PROCESS OF GE TTING CONFIRMATION IS QUITE TEDIOUS AND REQUIRES REQUISIT E FOLLOW-UP. FURTHER, THE MONTH OF DECEMBER 2009 WAS A MONTH OF HEAVY PRESSURE OF SCRUTINY PROCEEDINGS, QUARTERLY CLOSING , BANK SUBMISSIONS, ETC. AS SUCH, THE TIME SPAN OF MERE 15 DAYS CAN'T BE TERMED AS REASONABLE. IT IS SUBMITTED WITH RESPECT, THE LEARNED AO OUGHT TO HAVE INSISTED UPON THE CONFIRMATIONS EARLI ER IN THE SCRUTINY PROCEEDINGS. KINDLY NOTE, THE DETAILED SCR UTINY PROCEEDINGS WORK WAS ONGOING SINCE OCTOBER 2009. A COPY OF THE QUESTIONNAIRE DATED 30-10-09 IS ENCLOSED HEREWITH I N WHICH, THE ISSUE OF CREDITORS CONFIRMATION WAS NEVER RAISED. OBJECTION TO QUANTUM OF CONFIRMATIONS THE LEARNED AO, VIDE PARA 4 OF THE REMAND REPORT HA S OBSERVED THAT CONFIRMATIONS OF ONLY RS. 16.49 CR ARE PRODUCE D ON RECORD AS AGAINST TOTAL CREDITORS OF RS. 22.68 CR. IT IS ALSO ALLEGED THAT EVEN AFTER 2 & YEARS, GENUINENESS OF CREDITORS OF ABOU T RS. 6.19 CR IS STILL NOT ESTABLISHED. IT IS SUBMITTED, THE TOTA L CREDITORS HAVING BALANCES > RS. 10 LACS (AS SO DESIRED BY THE AO) AS ON 31-3-2007 AMOUNTS TO ONLY RS. 16.49 CR. THERE WERE 17 PARTIES HAVING CLOSING BALANCE > RS. 10 LACS. ALL CONFIRMATIONS AR E PRODUCED ON RECORD. REST OF THE CREDITORS OF RS. 6.46 CR ARE AL L THOSE PARTIES HAVING BALANCES < RS. 10 LACS AS OF 31-3-2007. AS S UCH, THE LEARNED ASSESSING OFFICER'S COMMENTS ON THIS ASPECT ARE BESIDES THE REALITY. OBJECTION AS TO DIFFERENCE IN BALANCES THE LEARNED AO HAS ALSO OBSERVED THAT THERE EXISTS DIFFERENCE IN BALANCE PR CONFIRMATIONS PRODUCED AND BALANCES PER ACCOUNTS. KINDLY APPRECIATE THAT THE OVERALL DIFFERENCE IS ON LY OF RS. 12,47,600/- AS AGAINST CORRESPONDING BALANCE OF RS. 16,49,86,982 AND THE SAID DIFFERENCE IN PERCENT TER MS WORKS OUT TO LESS THAN 1% OF THE BOOKS BALANCE. SUCH MINO R DIFFERENCES ALWAYS EXIST CONSIDERING ISSUES OF PRIC ES, REJECTIONS, ETC. LASTLY, IT IS SUBMITTED, ALL THESE DIFFERENCES ARE ON HIGHER 5 SIDE I.E. THE PARTIES ARE SHOWING HIGHER AMOUNT REC EIVABLE FROM OUR COMPANY. IN OTHER WORDS, THE APPELLANT HAS CLAI MED LESSER EXPENDITURE THAN THAT REPRESENTED BY PARTIES CONSID ERING THE DIFFERENCE.' 7. IT IS SEEN THAT THE ASSESSING OFFICER HAD ASKED FOR THE CONFIRMATION OF THE BALANCES FROM THE CREDITORS WHICH WERE HAVIN G THE OUTSTANDING BALANCES OF 10 LAKHS AND ABOVE. THE ASSESSMENT OF THE ASSESSE E WAS COMPLETED ON 31.12.2009. IN OUR OPINION, IN SUCH A SHORT TIME, IT WAS NOT POSSIBLE FOR THE ASSESSEE TO COLLECT THE CONFIR MATIONS AND FILE THE SAME. THE CONTENTION OF THE COUNSEL IS THAT OUT OF TOTAL CREDITORS OF 22.68 CRORES, THE CONFIRMATION IN RESPECT OF 17 PAR TIES HAVING THE BALANCE EXCEEDING 10 LAKHS WERE FILED TOTALING TO 16.49 CRORES. THE BALANCE AMOUNT OF 6.46 CRORES IS IN RESPECT OF THE CREDITORS HAVING THE CREDIT BALANCE LESS THAN 10 LAKHS. IF THE ASSESSING OFFICER HAS NOT ASKED FOR THE REQUIRED DETAILS, THEN HOW THE ASSESS EE CAN FILE THE SAME. IT IS SEEN THAT THE ASSESSEE HAS ALSO FILED THE REC ONCILIATION BEFORE THE LD. CIT(A) IN RESPECT OF THE PARTY, WHICH BALANCE W AS NOT TALLYING. IN OUR OPINION, THERE WAS NO JUSTIFICATION FOR THE ASS ESSING OFFICER TO MAKE THE ADDITION ON ADHOC BASIS. WE ACCORDINGLY, DELET E THE SAME. ACCORDINGLY, THE GROUND NO.2 IS DISMISSED. 8. IN THE RESULT, THE REVENUE'S APPEAL IS DISMISSED . PRONOUNCED IN THE OPEN COURT ON THIS THE 23 RD DAY OF JUNE, 2014. SD/- SD/- (G.S. PANNU) (R.S. PADVEKAR) ACCOUNTANT MEMBER JUDICIAL MEMBER PUNE, DATED 23 RD JUNE, 2014 GCVSR COPY TO:- 1) DEPARTMENT 2) ASSESSEE 3) THE CIT(A) V, PUNE 4) THE CIT-V, PUNE 5) THE DR, B BENCH, I.T.A.T., PUNE 6) GUARD FILE BY ORDER //TRUE COPY// SENIOR PRIVATE SECRETARY ITAT PUNE BENCHES, PUNE