M/s Shree Satyanarayan Press, Cuttack V. ITO, Cuttack

ITA 242/CTK/2009

• Counselvise Citation: [2010] 136 COUNSELVISE.COM (IT) 4254 (ITAT-CUTTACK)
• Duration Of Justice: 8 month(s) 25 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 23-07-2010
• Appeal Filed By: Assessee
• Bench Allotted: DB
• Next Hearing Date: 20-07-2010
• Assessment Year: 2001-2002
• Appeal Filed On: 28-10-2009
• Court: TRIBUNAL
• Department Lawyers: S C MAHANTY
• Assessee Lawyers: DEBAPRIYA MISHRAS K JETHIARS
• Keywords: Unexplained cash credit
• Section: 68

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, CUTTACK BENCH, CUTTACK BEFORE HONBLE SHRI D.K.TYAGI, JUDICIAL MEMBER. /AND HONBLE SHRI K.K.GUPTA, ACCOUNTANT MEMBER . / I.TA.NO . 242/CTK/2009 / ASSESSMENT YEAR 2001 - 02 M/S.SHREE SATYANARAYAN PRESS, DAGARPARA, CUTTACK - 2 AARPD 9554 H - - - VERSUS - . ITO, WARD 2(4), CUTTACK. / A PPELLANT RESPONDENT FOR THE APPELLANT : SHRI DEBAPRIYA MISHRA/S.K.JETHI,ARS FOR THE RESPONDENT : SHRI S.C.MAHANTY, DR / ORDER SHRI K.K.GUPTA, ACCOUNTANT MEMBER . THE A SSESSEE IS IN APPEAL RAISING THE FOLLOWING GROUNDS. 1. ON THE FACTS & IN THE CIRCUMSTANCES OF THE CASE THE LEARNED C.I.T.(A) SHOULD NOT HAVE RELIED ON A HALF BAKED REMAND REPORT OF THE A.O., BASED ON THE VERIFICATION OF A LEDGER OF M/S JAGANNATH PROCESS, WHICH IS PATENTLY WRONG. 2. THE LEARNED C.I.T.(A) SHOULD NOT HAVE ACCEPTED THE A.OS REMAND REPORT INDICATING THE DETAILS OF PAYMENT AS 16.08.01, 15.11.01 & 12.07.01, WHICH RELATES TO ASST.YEAR 2002 - 03 AND NOT ASST. YEAR 2001 - 02, THE IMPUGNED YEAR UNDER C ONSIDERATION. 3. THE LEARNED C.I.T. (A) SHOULD NOT HAVE CONSIDERED THE PAYMENT BY M/S. MULTICRAFT TO BE OF ANY RELEVANCE TO APPELLANTS LIABILITY OF RS.7,27,202.00 AS ON 31 - 03 - 01 TO M/S. JAGANNTH PROCESS. 4. THAT THE LEARNED C.I,T.(A) SHOULD NOT HAVE EN TERTAINED THE CONTRADICTING REMAND REPORT OF THE A.O IN WHICH THE A.O. ADMITS THAT M/S MULTICRAFT IS A SISTER CONCERN OF THE APPELLANT AND MADE PAYMENTS TO M/S. JAGANNTH PROCESS FOR AND ON BEHALF OF THE APPELLANT M/S SHREE SATYANARAYAN PRESS. 5. THAT THE LEARNED C.I.T (A) HAS OMITTED TO READ FROM THE REPORT THAT, NO MONEY RECEIPT WERE ISSUED BY MIS. JAGANNTH PROCESS EVEN AFTER RECEIPT FROM M/S. MULTICRAFT. WHICH IS ITSELF A DEBTOR OF SHREE SATYANARAYAN PRESS. I.TA.NO .242/CTK/2009 2 6. THAT ANY OTHER GROUNDS, IF NECESSARY CAN B E URGED BEFORE AT THE TIME OF HEARING OF APPEAL. 2. THE BRIEF FACTS ON THE ISSUES RAISED ARE THAT THE ASSESSEE IN THE RETURN FILED HAD ENCLOSED A BALANCE SHEET INDICATING RS.7,27,202 AS A LIABILITY TO BE PAID TO M/S.JAGANNATH PROCESS AS ON 31.3.2001. TH E ASSESSING OFFICER HAD ENQUIRED FROM M/S.JAGANNATH PROCESS WHO DENIED HAVING PAID ANY AMOUNT TO THE ASSESSEE AS ON 31.3.2001. THE ASSESSEE HAD SUBMITTED THAT THE AMOUNT OWED WAS PAID IN THE SUBSEQUENT YEAR AS VERIFIED IN THE REMAND REPORT OF THE ASSESSING OFFICER, CALLED FOR BY THE LEARNED CIT(A) AS CAN BE PERUSED ON PAGE 5 OF HIS ORDER PARAGRAPH 7. THE LEARNED CIT(A), THEREFORE, PROCEEDED TO CONSIDER THAT THE ASSESSEE HAD AN ONGOING BUSINESS RELATIONSHIP WITH M/S.JAGANNATH PROCESS BUT THE PAYMENTS WERE RO UTED THROUGH ITS SISTER CONCERNS ON NON - AVAILABILITY OF FUND AND AMOUNT OWED TO M/S.JAGANNATH PROCESS WAS PAID IN SUBSEQUENT YEAR THROUGH THE SISTER CONCERNS THAT HAD RAISED DEBIT NOTES ON THE ASSESSEE. THEREFORE, THERE THE UNPROVED CASH OR UNEXPLAINED CAS H CREDITS IN THE HANDS OF THE ASSESSEE WERE APPROPRIATELY CONSIDERED BY THE LEARNED CIT(A) BUT GAVE THE ERRONEOUS FINDING IN PARA 9 OF THE APPELLATE ORDER THAT THE ASSESSEE FAILED TO ESTABLISH THE GENUINENESS OF THE CASH CREDIT OF RS.7,27,202 AS ON 31 ST MA RCH, 2001. 3. THE LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE ASSESSEE HAD BEEN ESTABLISHING THE AMOUNT OWED TO M/S.JAGANNATH PROCESS WAS AS ON 31.3.2001 WHEN THE JOB WORK EXPENSES RELATED TO THIS CREDIT HAD BEEN ACCEPTED BY THE ASSESSING OFFICER AS AN ALLOWABLE EXPENSE AND VERIFIED WITH RESPECT TO THE BILLS AND VOUCHERS AND NOT THE DEBIT NOTES, THAT WERE RAISED BY THE SISTER CONCERN IN THE SUBSEQUENT YEAR. THE LEARNED CIT(A) HAD CATEGORICALLY CONSIDERED THAT THE PAYMENT WAS RECEIVED IN THE SUBSEQU ENT YEAR WHICH DETAILS OF CHEQUES ARE NOTED BY HIM IN PARA 7 OF HIS ORDER, THEREFORE, BY NO STRETCH OF IMAGINATION COULD BE CONSIDERED THAT M/S.JAGANNATH PROCESS HAD RECEIVED PAYMENT PRIOR TO 31.3.2001 CONFIRMING THE DENIAL OF HAVING RECEIVED ANY AMOUNT AN D WAS THE SOLE CRITERIA TO THE ASSESSING OFFICER BASED ON LETTER ISSUED BY HIM TO M/S.JAGANNATH PROCESS RECEIVING REPLY OF NO PAYMENT HAVING BEEN RECEIVED IN THE I.TA.NO .242/CTK/2009 3 ASSESSMENT YEAR 2001 - 02. THEREFORE, THE PAYMENT WAS CONSIDERED UNPROVED BECAUSE THE SISTER CO NCERN HAD PAID THE AMOUNT IN THE SUBSEQUENT YEAR AND IT IS NOT DENIAL OF PAYMENT RECEIVED BY M/S.JAGANNATH PROCESS WHICH IN ITSELF IS CORRECT. 4. THE LEARNED DR SUPPORTED THE ORDERS OF THE AUTHORITIES BELOW BY INDICATING THAT IN WHATEVER CIRCUMSTANCE THE ASSESSEE MAY HAVE BEEN FUNDED BY THE SISTER CONCERN OF HAVING PAID THE AMOUNT WAS ACTUALLY OWED BY THE ASSESSEE, THEREFORE, COULD NOT SETTLE ONLY ON RAISING DEBIT NOTES. IT HAS NOT BEEN CLARIFIED OF THE SAID CREDIT APPEARING ON 31.3.2001 OUGHT TO HAVE BEE N EXPLAINED BY THE ASSESSEE IN THE FIRST PLACE. THE SUBSEQUENT PAYMENTS RELEVANT FOR THE ASSESSMENT YEAR 2002 - 03 THEREFORE CANNOT BE CONSIDERED AGAINST THE DEBIT NOTES FOR THE UNPROVED CREDIT WHICH THE ASSESSEE HAS NOT BEEN ABLE TO ESTABLISH STILL. HE, TH EREFORE, PRAYED THAT THE ADDITION U/S.68 IN THE IMPUGNED ASSESSMENT YEAR MAY KINDLY BE CONFIRMED. 5. WE HAVE HEARD THE RIVAL CONTENTIONS AND CAREFULLY PERUSED THE MATERIALS AVAILABLE ON RECORD AND WE ARE INCLINED TO HOLD THAT THE ASSESSEE HAS BEEN UNJUSTI FIABLY SUBJECTED TO DISALLOWANCE/ADDITION UNDER THE PROVISIONS OF SECTION 68 FOR THE ASSESSMENT YEAR 2001 - 02. THE FACTS THAT HAVE BEEN NOTED BY THE ASSESSING OFFICER AND THE LEARNED CIT(A) CLEARLY INDICATE THAT A CREDITOR CONSIDERED NON - GENUINE WAS TO BE PAID IN A SUBSEQUENT YEAR AGAINST THE EXPENSES AS PER NOTING OF A BUSINESS TRANSACTION UNDER MERCANTILE SYSTEM OF ACCOUNTING, CLAIMED IN SUBSEQUENT YEAR BEING A PUBLICATION HOUSE PAYING CHARGES FOR INK, PAPER ETC. THE SISTER CONCERN, THEREFORE, AGREED TO P AY THE SAID TRADE CREDITOR IN THE SUBSEQUENT YEAR WHICH CLINCHES THE ISSUE IN FAVOUR OF THE ASSESSEE TO THE EXTENT THAT AS ON 31.3.2001 M/S.JAGANNATH PROCESS WAS NOT AN UNPROVED CREDITOR AS THE EXPENSES CLAIMED BY THE PUBLISHER WERE ON ACCOUNT OF WORK REN DERED BY THE TRADE CREDITOR AND HAD BEEN VERIFIED TO THE EXTENT THAT THE TRADE CREDITORS WERE NOT GENUINE. THE LEARNED DR HAS NOT BEEN ABLE TO CLARIFY THAT AFTER HAVING VERIFIED THE VARIOUS DISALLOWANCES AND HAVING SUBMITTED A REMAND REPORT TO THE CIT(A) W HEREIN THE ASSESSING OFFICER HIMSELF WAS SATISFIED WITH RESPECT TO THE PAYMENT HAVING BEEN MADE SUBSEQUENTLY, THEREFORE, CANNOT BE HELD FOR THE SAME TRADE CREDIT AS UNPROVED WHEN HE ACKNOWLEDGED THAT THE PAYMENT MADE BY THE SISTER I.TA.NO .242/CTK/2009 4 CONCERN WERE ON BEHALF OF THE ASSESSEE IN A SUBSEQUENT YEAR AND HAS NOT BEEN CONSIDERED EITHER BY THE ASSESSING OFFICER OR BY THE LEARNED CIT(A). IN OTHER WORDS, THE ASSESSING OFFICER AND THE LEARNED CIT(A) HAVE HELD THIS AS UNEXPLAINED CREDIT IN THE IMPUGNED YEAR ONLY WHEN THE EX PENSES TO BE ALLOWED HAD BEEN DEALT WITH BY THEM IN ACCORDANCE WITH LAW IN FAVOUR OF THE ASSESSEE. THEREFORE, WE HOLD THAT THE CREDIT BALANCE BEING SQUARED UP IN A SUBSEQUENT YEAR CANNOT BE HELD AS A GROUND FOR HOLDING THAT THE TRADE CREDIT IS UNPROVED AND NON - GENUINE IN THE IMMEDIATE PRECEDING YEAR. ON OUR CAREFUL CONSIDERATION OF THE FACTS ENUMERATED ABOVE, WE ARE INCLINED TO HOLD THAT THE AUTHORITIES BELOW ARE NOT JUSTIFIED IN BRINGING THE SAME TO TAX IN THE ASSESSMENT YEAR UNDER CONSIDERATION. THEREFORE , THE DISALLOWANCE/ADDITION OF RS.7,27,202 MADE U/S.68 OF THE ACT IN THE IMPUGNED ASSESSMENT YEAR IS DIRECTED TO BE DELETED. 6. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALLOWED. THIS ORDER IS PRONOUNCED IN OPEN COURT ON DT. 23.07.2010 SD/ - SD/ - ( ), D.K.TYAGI JUDICIAL MEMBER (K.K.GUPTA), ACCOUNTANT MEMBER. DATE: 23.07.2010 - COPY OF THE ORDER FORWARDED TO : / THE APPELLANT : M/S.SHREE SATYANARAYAN PRESS, DAGARPARA, CUTTACK - 2 / THE RESPONDENT : ITO, WARD 2(4), CUTTACK. THE CIT, THE CIT(A), DR, CUTTACK BENCH GUARD FILE TRUE COPY , BY ORDER , [ ] SEN IOR PRIVATE SECRETARY ( /) H.K.PADHEE SENIO R.PRIVATE SECRETARY.