ITO, Ward-14(1), V. Panna Lal, Science Pvt. Ltd.,

ITA 2284/DEL/2005

• Counselvise Citation: [2009] 114 COUNSELVISE.COM (IT) 8078 (ITAT-DELHI)
• Duration Of Justice: 4 year(s) 1 month(s) 21 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-06-2009
• Appeal Filed By: Department
• Order Result: Partly Allowed
• Bench Allotted: A
• Next Hearing Date: 19-05-2009
• Assessment Year: 2001-2002
• Appeal Filed On: 09-05-2005
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Assessee Lawyers: RAVI MALHOTRA
• Keywords: Set aside

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH A : NEW DELHI BEFORE SHRI C.L.SETHI, JM AND SHRI R.C.SHARMA, AM ITA NO.2284/DEL/2005 ASSESSMENT YEAR : 2001-02 INCOME TAX OFFICER, WARD-14(1), NEW DELHI. VS. M/S PANNA LAL SAREES PVT.LTD., A-50, WHS, KIRTI NAGAR, NEW DELHI. PAN NO.AAACP4519L. (RESPONDENT) APPELLANT BY : SHRI RAHUL GARG, SR.DR. RESPONDENT BY : SHRI RAVI MALHOTRA, CA. ORDER PER R.C.SHARMA, AM : THIS IS AN APPEAL FILED BY THE REVENUE AGAINST THE ORDER OF CIT(A) DATED 28.3.2005 FOR THE AY 2001-02 WHEREIN FOLLOWING GROU ND HAS BEEN TAKEN BY THE REVENUE:- ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LD.CIT(A) HAS ERRED IN REDUCING THE ADDITION OF RS.22,43,560/- MA DE ON ACCOUNT OF NON PRODUCTION OF COMPLETE BOOKS OF ACCOUNTS TO RS. 79,146/- WITHOUT CONSIDERING THE REMAND REPORT SUBMITTED BY THE AO IN WHICH IT WAS CLEARLY MENTIONED THAT IN SPITE OF SEVERAL O PPORTUNITIES GIVEN TO THE ASSESSEE NO COMPLETE BOOKS OF ACCOUNTS WERE PRODUCED. 2. RIVAL CONTENTIONS HAVE BEEN HEARD AND RECORD PER USED. IN THE ASSESSMENT ORDER U/S 143(3), THE AO OBSERVED THAT DURING THE C OURSE OF ASSESSMENT PROCEEDINGS AS PER ORDER SHEET ENTRY DATED 6.8.2003 , THE AR OF THE ASSESSEE WAS ASKED TO FILE PARTY WISE DETAILS OF PURCHASES WITH FULL ADDRESSES OF THE PARTIES FROM WHOM THE PURCHASES HAVE BEEN MADE, DETAILS OF CREDI TORS AND TO PRODUCE THE COMPLETE BOOKS OF ACCOUNTS ALONG WITH BILLS AND VOU CHERS. THE ASSESSEE WAS ALSO ASKED TO EXPLAIN THE BASIS ON WHICH VALUATION OF OP ENING AND CLOSING STOCK HAVE BEEN MADE. TO PRODUCE THE ABOVE INFORMATIONS THE C ASE WAS ADJOURNED TO 20.8.2003. AFTER THIS DATE THE CASE WAS ADJOURNED SEVERAL TIMES ON THE REQUEST OF ITA-2284/D/2005 2 THE ASSESSEE COMPANY VIDE ORDER SHEET ENTRY DATED 3 .9.2003, 10.9.2003, 24.9.2003, 13.10.2003, 29.12.2003, 19.1.2004 BUT THE REQUISITE DETAILS WERE NOT FILED/PRODUCED BY THE ASSESSEE. ON 9.2.2004, SHRI RAVI MALHOTRA, AR APPEARED AND FILED A LETTER DATED 27.1.2004 AS PER WHICH IT WAS STATED THAT RS.1,09,65,963/- SHOWN IN THE BALANCE SHEET AS DUE TO UNION BANK OF INDIA REPRESENTS SUNDRY CREDITORS FOR GOODS TO WHOM POST DATED/SELF CHEQUES ARE ISSUED AS PER PRACTICE PREVAILING IN THE TRADE AND ENCLOSED A LIST WRITTEN WITH SOME NUMBER OF PURJAS AGAINST SOME AMOUNTS. IN THIS LETTER, IT HAS BEEN STATED THAT IN THE ASSESSEES TRADE KARIGARS/WEAVERS ARE PERSONS OF A SMALL MEANS FRO M WHOM PURCHASES ARE MADE THROUGH PURJAS. FROM YEARS TOGETHER, THIS PRACTI CE IS PREVALENT IN THE TRADE AND BASED ON THOSE PURJAS POST DATED CHEQUES ARE ISSU ED IN THE TRADE TO THE KARIGARS/WEAVERS. BUT EXCEPT THIS LIST OTHER RECOR DS LIKE STOCK REGISTER, PARTY WISE LEDGER IN RESPECT OF PERSONS FROM WHOM PURCHASES MA DE, PURCHASE BILL/COUNTERFOIL OF ALL PURJAS, SALE BILL WERE NOT PRODUCED BY THE A SSESSEE. AS PER ORDER SHEET ENTRY DATED 3.3.2004 THE CASE WAS FINALLY ADJOURNED TO 9. 3.2004 WITH THE INSTRUCTION TO PRODUCE THE ABOVE DETAILS ALONG WITH COMPLETE BOOKS OF ACCOUNTS BUT THE ASSESSEE FAILED TO PRODUCE THE SAME. ON THE SAID DATE, NOBO DY APPEARED NOR ANY REQUEST FOR FURTHER ADJOURNMENT WAS RECEIVED. SINCE THE CASE I S GETTING TIME BARRED ON 31.3.2004, THE AO HAS NO OTHER ALTERNATIVE BUT TO C OMPLETE THE ASSESSMENT ON THE BASIS OF DETAILS AVAILABLE ON RECORD. THE AO FURTH ER OBSERVED THAT AS PER THE BALANCE SHEET AND PROFIT & LOSS ACCOUNT FILED BY TH E ASSESSEE THE TOTAL PURCHASES MADE BY THE ASSESSEE DURING THE YEAR ARE RS.2,24,35 ,599/- AND OUTSTANDING LIABILITY ON ACCOUNT OF SECURED LOANS TOWARDS UNION BANK OF I NDIA, VARANASI RS.1,09,65,963/-, WHICH HAS LATER BEEN NAMED BY THE ASSESSEE AS SUNDRY CREDITORS BUT NO LIST OF SUNDRY CREDITORS AND OTHER DOCUMENTS HAVE BEEN PRODUCED BY THE ASSESSEE. IN ABSENCE OF THE ABOVE DETAILS/DOCUMENT S NECESSARY VERIFICATION TOWARDS THE GENUINENESS OF PURCHASES COULD NOT BE M ADE, NOR THE QUANTITATIVE TALLY OF THE SALE AND PURCHASE BE PREPARED BY THE AO. IN VIEW OF THE ABOVE CIRCUMSTANCES AND IN ORDER TO SAFEGUARD THE REVENUE INTEREST, AN ADDITION ITA-2284/D/2005 3 EQUIVALENT TO 10% OF THE PURCHASES WAS MADE BY THE AO TO THE INCOME OF THE ASSESSEE WHICH COMES TO RS.22,43,560/-. 3. AGGRIEVED BY THE ABOVE ORDER, THE ASSESSEE APPRO ACHED TO THE CIT(A). BEFORE THE CIT(A), ASSESSEE FURNISHED CERTAIN INFOR MATION WHICH WAS SENT BY HIM FOR AOS COMMENTS. IN HIS COMMENTS VIDE REMAND REP ORT DATED 5.7.2004, THE AO STATED THAT ASSESSEE DID NOT PRODUCE THE COMPLETE B OOKS OF ACCOUNT LIKE STOCK REGISTER, PURCHASE REGISTER, LEDGER ACCOUNT OF WEAV ERS AND CREDITORS ACCOUNTS ETC. THE AO ALSO ENCLOSED PHOTOCOPY OF ORDER SHEET ENTRI ES WHEREIN IT WAS INDICATED THAT ASSESSEE DID NOT PRODUCE THE INFORMATION AND B OOKS OF ACCOUNT AS CALLED FOR EVEN AFTER GIVING VARIOUS OPPORTUNITIES. BY THE IM PUGNED ORDER, THE CIT(A) REDUCED THE ADDITION FROM RS.22,43,560/- TO RS.79,1 46/- BY REFERRING TO AN ORDER OF THE ITAT IN THE CASE OF ANOTHER ASSESSEE, WHEREIN D EFECTS POINTED OUT BY THE AO HAVE BEEN CONSIDERED BY THE ITAT AND FOUND THAT THE RE WAS NOTHING UNUSUAL AS THE SYSTEM OF SIMILAR ACCOUNTING WAS FOLLOWED FOR THE L AST SO MANY YEARS. ACCORDINGLY, HE REDUCED THE ADDITION BY RESTRICTING DISALLOWANCE OF 5% OF CASH PURCHASES. AGGRIEVED BY THE SAME, THE REVENUE IS I N FURTHER APPEAL BEFORE US. 4. WE HAVE CONSIDERED THE RIVAL CONTENTIONS, CAREFU LLY GONE THROUGH THE ORDERS OF THE AUTHORITIES BELOW AND FOUND FROM THE RECORD THAT INSPITE OF VARIOUS OPPORTUNITIES BEING GIVEN BY THE AO TO FILE PARTY-W ISE DETAILS OF PURCHASES WITH FULL ADDRESSES OF PARTIES FROM WHOM THE PURCHASES H AVE BEEN MADE, DETAILS OF CREDITORS AND TO PRODUCE COMPLETE BOOKS OF ACCOUNT ALONGWITH BILLS AND VOUCHERS, THE SAME WERE NOT FILED BEFORE HIM. THE AO HAS CAT EGORICALLY OBSERVED THAT ASSESSEE HAS NOT PRODUCED THE INFORMATION CALLED FO R INSPITE OF VARIOUS OPPORTUNITIES GIVEN AND IT IS ALSO SUPPORTED BY NOT INGS IN THE ORDER SHEET. EVEN DURING REMAND PROCEEDINGS, THE AO CATEGORICALLY STA TED THAT ASSESSEE HAS NOT PRODUCED THE BOOKS OF ACCOUNT AND THE STOCK REGISTE R, PURCHASE REGISTER, LEDGER ACCOUNT ETC. WITHOUT CONSIDERING THE NEGATIVE REMA ND REPORT BEING SENT BY THE AO, THE CIT(A) DELETED THE ADDITION WITHOUT RECORDI NG ANY FINDING TO THE EFFECT ITA-2284/D/2005 4 THAT BOOKS OF ACCOUNT WERE PRODUCED BEFORE HIM [CIT (A)] AND HE HAD VERIFIED VARIOUS PURCHASES MADE BY THE ASSESSEE FROM VARIOUS SUPPLIERS/WEAVERS, WHICH REMAINED UNPAID AT THE YEAR END. THE NAMES AND ADD RESSES OF THE SUPPLIERS/CREDITORS WERE NOT EVEN FURNISHED EITHER BEFORE THE AO OR BEFORE THE CIT(A). THE ORDER OF ITAT REFERRED BY THE CIT(A) I N HIS ORDER IS DISTINGUISHABLE ON FACTS, WHEREAS IN THE INSTANT CASE, THE BASIC RE CORDS IN THE FORM OF BOOKS OF ACCOUNT, NAME AND PARTICULARS OF SUPPLIERS, THEIR C ONFIRMATION FOR OUTSTANDING BALANCE AT THE YEAR END, WERE NOT FURNISHED BEFORE ANY OF THE LOWER AUTHORITIES. WITHOUT CONTROVERTING ALL THESE FINDINGS OF AO, THE CIT(A) HAD DELETED THE ADDITION. IT IS NOT THE CASE OF THE CIT(A) THAT HE HAS VERIFIED THE BOOKS OF ACCOUNTS AND THE CREDIT PURCHASES MADE BY THE ASSESSEE FROM VARIOUS SUPPLIERS AFTER VERIFICATION OF THE BANK ACCOUNT OF THE ASSESSEE VI S--VIS THE CREDITOR, HE HAS DELETED THE ADDITION. WE, THEREFORE, SET ASIDE THE ORDER OF CIT(A) AND IN THE INTEREST OF JUSTICE AND FAIRPLAY, RESTORE THE MATTE R BACK TO THE FILE OF THE AO AND THE ASSESSEE IS DIRECTED TO PRODUCE BOOKS OF ACCOUNT, P URCHASE REGISTER, LEDGER ACCOUNT OF WEAVERS/CREDITORS ETC. THE AO IS TO DECIDE THE ISSUE AFRESH AFTER GIVING DUE OPPORTUNITY TO THE ASSESSEE. 5. IN THE RESULT, THE APPEAL OF THE REVENUE IS ALLO WED FOR STATISTICAL PURPOSES. DECISION PRONOUNCED IN THE OPEN COURT ON 30 TH JUNE, 2009. (C.L.SETHI) (R.C.SHARMA) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED : 30.06.2009. VK. COPY FORWARDED TO: - 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR, ITAT DEPUTY REGISTRAR ITA-2284/D/2005 5