The ACIT, Circle-1, Surat V. Ilakshi Synthetics Pvt.Ltd., Surat

ITA 2539/AHD/2012

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 94828 (ITAT-AHMEDABAD)
• Duration Of Justice: 3 year(s) 1 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 08-12-2015
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: D
• Next Hearing Date: 30-11-2015
• Assessment Year: 2004-2005
• Appeal Filed On: 08-11-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: S B VAIDYA
• Keywords: Principle of natural justice; Additional evidence
• Section: 143(3)

Judgement Text

, IN THE INCOME TAX APPELLATE TRIBUNAL D BENCH, AHMEDABAD BEFORE SHRI SHAILENDRA KUMAR YADAV, JUDICIAL MEMBER AND SHRI RAJESH KUMAR, ACCOUNTANT MEMBER ./ ITA NO. 2539/AHD/2012 / ASSESSMENT YEAR: 2004-05 ACIT, CIRCLE-1, SURAT .. APPELLANT VS M/S. ILAKSHI SYNTHETICS PVT LTD 2/1960, MALI FALIA, RUDERPURA, SURAT .. RESPONDENT PAN : AAACI 8420 K REVENUE BY : MS. SANYOGITA NAGPAL , SR - DR ASSESSEE(S) BY : S HRI S.B. VAIDYA , AR / DATE OF HEARING 03/12/2015 / DATE OF PRONOUNCEMENT 08/12/2015 / O R D E R PER SHAILENDRA KUMAR YADAV, JUDICIAL MEMBER: THIS APPEAL FILED BY THE REVENUE IS AGAINST THE OR DER OF THE COMMISSIONER OF INCOME TAX (APPEALS)-I, SURAT D ATED 24.08.2012 FOR ASSESSMENT YEAR 2004-05, ON THE FOLL OWING GROUNDS:- 1. ON THE FACTS AND CIRCUMSTANCE OF THE CASE AND IN LA W, THE LD. CITG(A) HAS ERRED IN DELETING THE ADDITION OF RS.67,45,000/- MADE U/S 68 OF THE IT ACT INSPITE OF THE ASSESSEES FAILURE TO PRODUCE ANY DETAILS IN RESPEC T TO UNSECURED LOAN AND SUFFICIENT PROOF WAS NOT SUBMITT ED TO PROVE THE GENUINENESS OF THE TRANSACTION. ITA NO. 2539/AHD/2012 ACIT VS. ILAKSHI SYNTHETICS P LTD AY 2004-05 - 2 - 2. ON THE FACTS AND CIRCUMSTANCES OF THE CASE THE LD. CIT(A) OUGHT TO HAVE UPHELD THE ORDER OF THE ASSESS ING OFFICER. 3. IT IS THEREFORE PRAYED THAT THE ORDER OF THE CIT(A) MAY BE SET ASIDE AND THAT OF THE ASSESSING OFFICER MAY BE RESTORED TO THE ABOVE EXTENT. 2. IN THIS CASE, THE ASSESSING OFFICER HAS MADE AN ADDITION OF RS.67,45,000/- IN RESPECT OF FOLLOWING PARTIES. I. M/S. DILIP WEAVING WORKS - RS. 1,50,000/- II. M/S. DILIP SILK - RS.20,40,000/- III. M/S. RAJESH RAYON - RS. 1,30,000/- IV. M/S. SIDDHARTH SILK - RS. 50,000/- V. M/S. SHIV SILK - RS.24,35,000/- VI. M/S. SHREENATHJI SILK - RS.19,40,000/- 3. SIMILAR ADDITIONS WERE MADE AT THE TIME OF ORIGI NAL ASSESSMENT U/S 143(3) DATED 29.11.2006. THE SAID A DDITION WAS CONFIRMED BY THE CIT(A) VIDE ORDER DATED 24.07. 2008. IN APPEAL BEFORE ITAT, VIDE ITS ORDER DATED 16.12.2010 RESTORED THE MATTER TO THE FILE OF THE ASSESSING OFFICER, BY OBSERVING AS UNDER:- ........THAT THE ABOVE CREDIT BALANCES WERE FOUND BY THE ASSESSING OFFICER AS PER THE AUDIT REPORT SUBMITTED ALONG WITH RETURN OF INCOME. THAT ALL THE ABOVE CREDITORS ARE SISTER CONCERN/ASSOCIATED CONCERN OF THE ASSESSEE COMPANY AND DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE ASSESSEE FURNISHED CONFIRMATION OF ALL THE ABOVE CREDITORS IN WHICH THEIR PERMANENT ACCOUN T NUMBER WAS GIVEN. THAT DUE TO FLOOD IN SURAT, BOOKS OF ACCOUNTS OF THE ASSESSEE AS WELL AS THE SISTER CONC ERN HAVE BEEN LOST/DESTROYED. THEREFORE, THE SISTER CON CERN COULD NOT FURNISH THE DATE WISE DETAILS OF THEIR AC COUNT ITA NO. 2539/AHD/2012 ACIT VS. ILAKSHI SYNTHETICS P LTD AY 2004-05 - 3 - WITH THE ASSESSEE, BUT HAS FURNISHED CONFIRMATION F OR THE CREDIT BALANCE AT THE END OF THE YEAR WHICH WAS TAK EN FROM THEIR BALANCE-SHEET FURNISHED ALONG WITH THEIR RETURN OF INCOME ........' 4. THE RELEVANT FINDINGS HAVE BEEN GIVEN BY ITAT ON THIS IN PARAGRAPH 5 OF THE AFORESAID ORDER WHICH READS AS U NDER:- 5. WE HAVE CAREFULLY CONSIDERED THE ARGUMENTS OF B OTH THE SIDES AND PERUSED THE MATERIAL PLACED BEFORE US . FROM PAGE NO. 3 TO 8 OF THE ASSESSEE'S PAPER BOOK, THERE IS AN ENGLISH TRANSLATION OF THE CONFIRMATION PRODUCED BE FORE THE ASSESSING OFFICER. IT WAS EXPLAINED THAT THE OR IGINAL CONFIRMATION WAS IN GUJARATI AND THEREFORE, THE ENG LISH TRANSACTION THEREOF IS PRODUCED BEFORE THE ITAT. FR OM THE CONFIRMATION, WE FIND THAT EACH CREDITOR IS ASSESSE D TO INCOME TAX AND THEIR PAN IS GIVEN IN CONFIRMATION. HOWEVER, IN THE CONFIRMATION ONLY CLOSING BALANCE I S MENTIONED AND NOT THE ENTIRE TRANSACTION OF THE YEA R UNDER CONSIDERATION. NOW THE LEARNED COUNSEL FOR TH E ASSESSEE HAS PRODUCED BEFORE US, THE BANK STATEMENT OF THE ASSESSES WELL AS OF THE CREDITORS AND HAS CONTE NDED THAT EACH AND EVERY TRANSACTION CAN BE VERIFIED FRO M THE BANK STATEMENT OF THE CREDITOR AS WELL AS ASSESSEE. ADMITTEDLY, THESE EVIDENCES WERE NOT PRODUCED BEFOR E THE ASSESSING OFFICER AND THE NATURAL JUSTICE DEMANDS T HAT THE ASSESSING OFFICER SHOULD BE GIVEN AN OPPORTUNIT Y TO EXAMINE THESE EVIDENCES. WE THEREFORE SET ASIDE THE ORDER OF THE AUTHORITIES BELOW ON THIS POINT AND RESTORE THE MATTER BACK TO THE FILE OF THE ASSESSING OFFICER. W E DIRECT HIM TO ALLOW ADEQUATE OPPORTUNITY TO THE ASSESSES T O PRODUCE THESE BANK STATEMENTS BEFORE HIM. THEREAFTE R, THE ASSESSING OFFICER WILL DECIDE THE ISSUE AFRESH IN ACCORDANCE WITH LAW. BEFORE WE PART WITH THE MATTER , WE MAY MENTION THAT THE ASSESSEE HAS ALSO RELIED UPON THE DECISION OF THE HON'BLE APEX COURT IN THE CASE OF O RISSA CORPORATION (SUPRA) AND THE DECISION IN THE CASE OF ROHINI BUILDER (SUPRA) WHICH THE ASSESSING OFFICER WILL CO NSIDER WHILE ADJUDICATING THIS ISSUE.' 5. THE ASSESSING OFFICER IN THE ASSESSMENT ORDER U/ S 143(3) ITA NO. 2539/AHD/2012 ACIT VS. ILAKSHI SYNTHETICS P LTD AY 2004-05 - 4 - R.W.S. 254 MADE THE ADDITION AGAIN ON THE GROUND TH AT LEDGER ACCOUNTS WERE NOT FURNISHED. THE CONFIRMATION OF C LOSING BALANCE WAS NOT CONSIDERED AS SUFFICIENT PROOF OF L OANS TAKEN FROM SISTER CONCERNS. APART FROM THESE TWO REASONS, SEVERAL OTHER REASONS LIKE LACK OF EVIDENCE OF LOSS OF BOOK S OF ACCOUNTS IN FLOODS AND DIFFICULTY IN VERIFICATION OF CREDITS FROM BANK ACCOUNTS ALONE HAVE ALSO BEEN MENTIONED IN THE ASSE SSMENT ORDER. THE FINDINGS OF ASSESSING OFFICER IN SECOND ROUND ARE SUMMARIZED AS UNDER:- '4.1. IT IS PERTINENT TO MENTION THAT NONE OF THESE SIN PARTIES HAVE ALSO COPIES OF LEDGER ACCOUNT SAYING T HAT IT IS DESTROYED IN THE FLOODS. IN ABSENCE OF THE LEDGER A CCOUNT CONFIRMING THE BALANCE ON THE LAST DATE DOES NOT PR OVE THAT LOANS MENTIONED ABOVE WERE IN FACT GIVEN. ALL THAT THESE PARTIES HAVE DONE IS HIGHLIGHTED SOME CHEQUE PAYMENTS. SIMPLY HIGHLIGHTING SOME TRANSACTION DOES NOT MEAN THAT THESE PAYMENTS WERE GIVEN TO THE ASSESSEE BECAUSE THE ASSESSEE'S NAME IS NOT MENTIONED IN ANY OF THE BANK STATEMENTS. FURTHER, THE ASSESSEE HAS NOT CORRELATED AS TO WHICH OF THESE PAYMENT WERE RECEIV ED BY IT IN ITS OWN BANK ACCOUNT.' 6. MATTER WAS CARRIED BEFORE THE FIRST APPELLATE AU THORITY WHEREIN VARIOUS CONTENTIONS WERE RAISED ON BEHALF O F THE ASSESSEE AND THE CIT(A) HAS ASKED FOR REMAND REPORT FROM ASSESSING OFFICER VIDE LETTER DATED 24.07.2012 IN T HIS REGARD WHICH READS AS UNDER:- ITA NO. 2539/AHD/2012 ACIT VS. ILAKSHI SYNTHETICS P LTD AY 2004-05 - 5 - ..PLEASE FIND ENCLOSED THE PAPER BOOK FILED BY TH E APPELLANT IN THIS OFFICE ON 20.07.2012 OF LEDGER AC COUNTS, BANK STATEMENTS AND BALANCE SHEET IN RESPECT OF SIX PARTIES WHOSE UNSECURED LOANS TOTALING RS.67,45,000 /- WERE ADDED IN THE ASSESSMENT ORDER U/S 143(3) R.W.S . 254 OF THE ACT. 2. IN THIS CASE, THE HON'BLE ITAT HAD ISSUED SPECIF IC DIRECTIONS IN THE FIRST ROUND, WHILE SETTING ASIDE THE MATTER TO THE FILE OF THE ASSESSING OFFICER TO EXAM INE THE ISSUE AFTER CONSIDERING THE DECISIONS OF APEX COURT IN THE CASE OF ORISSA CORPORATION AND ROHINI BUILDERS AND ALLOWING THE APPELLANT'S TO PRODUCE BANK STATEMENT OF PARTIES FROM WHOM UNSECURED LOAN HAS BEEN RECEIVED. THE ADDITION THE ORDER UNDER APPEAL HAS BEEN ON THE GRO UND THAT LEDGER ACCOUNTS WERE NOT FURNISHED. 3. THE APPELLANT HAD FILED AN AFFIDAVIT OF HAVING L OST ITS BOOKS OF ACCOUNTS AND HAS PREPARED LEDGER ACCOUNTS ON THE BASIS OF BANK STATEMENT OF LOAN PARTIES AND APPELLANT'S OWN BANK STATEMENT. THESE LEDGER ACCOUN TS WERE NOT FILED BEFORE YOU FOR THE REASON THAT THE B OOKS OF ACCOUNTS WERE CLAIMED TO HAVE BEEN LOST. 4. IN THIS REGARD, YOU ARE BEING GIVEN AN OPPORTUNI TY TO EXAMINE THE LEDGER ACCOUNTS IN VIEW OF THE PROVISIO NS OF RULE 46A(3) OF THE I T RULES. 5. IT IS CLARIFIED THAT EVEN IF A CASE IS MADE OUT FOR NON ADMISSION OF ADDITIONAL EVIDENCE UNDER RULE 46A(1)] OF THE I T RULES, THE ADDITIONAL EVIDENCE SHOULD STILL BE EXAMINED AS PROVIDED IN RULE 46A(3)(A) AND 46A(3)(B) OF THE INCOME TAX RULES, REGARDING CORRECTNESS OF RECONSTRUCTED L EDGER ACCOUNTS WITH RESPECT TO THE BALANCE SHEET OF THE APPELLANT AND BANK ACCOUNTS................' IN RESPONSE TO THE AFORESAID LETTER, THE ASSESSING OFFICER SUBMITTED HIS REMAND REPORT DATED 01.08.2012, WHICH READS AS UNDER:- ITA NO. 2539/AHD/2012 ACIT VS. ILAKSHI SYNTHETICS P LTD AY 2004-05 - 6 - ..IN REGARD TO THE CALLING OF FACTUAL REPORT UNDE R RULE 46A(3)(A) AND 46A(3)(B) AS DIRECTED THE LEDGER ACCO UNTS, THE BALANCE SHEET OF THE ASSESSEE AND ITS BANK ACCO UNTS WERE VERIFIED AND IT IS FOUND THAT THE BALANCES AS ARE REFLECTING IN THE BALANCE SHEET OF THE ASSESSEE COM PANY FOR THE YEAR UNDER APPEAL ARE ALSO APPEARING THE LE DGER ACCOUNTS PROVIDED BY THE ASSESSEE COMPANY. THE TRANSACTIONS CLAIMED TO BE THE LOAN TRANSACTIONS WI TH THE CORRESPONDING PARTIES WHICH ARE APPEARING IN THE CONCERNED BANK ACCOUNTS ARE FOUND TO BE REFLECTING IN THE BANK ACCOUNT OF THE ASSESSEE COMPANY ALSO. THE BALA NCE SHEETS OF ALL THE PERSONS FROM WHOM THE LOAN IS CLA IMED TO HAVE RECEIVED, SUBMITTED BY THE ASSESSEE ARE ALSO V ERIFIED AND IT IS FOUND THAT THE BALANCE OUTSTANDING IN THE BOOKS OF ACCOUNTS OF THE ASSESSEE COMPANY ARE ALSO REFLEC TED IN THE COPIES OF THE BALANCE SHEET(S).' 7. FROM THIS, ASSESSING OFFICER OBSERVED IN THE REM AND REPORT THAT THE BALANCES AS REFLECTING IN THE BALAN CE-SHEET OF THE ASSESSEE-COMPANY FOR THE YEAR UNDER APPEAL WERE ALSO APPEARING IN THE LEDGER ACCOUNTS PROVIDED BY THE AS SESSEE- COMPANY AND THE TRANSACTIONS CLAIMED TO BE THE LOAN TRANSACTIONS WITH THE CORRESPONDING PARTIES, WHICH ARE APPEARING IN THE CONCERNED BANK ACCOUNTS. SAME WERE ALSO FOUND TO BE REFLECTED IN THE BANK ACCOUNT OF THE AS SESSEE- COMPANY. MOREOVER, HE OBSERVED THAT THE BALANCE-SHE ETS OF ALL THE PERSONS FROM WHOM THE LOAN WERE CLAIMED TO HAVE RECEIVED, WERE ALSO REFLECTED IN THE COPIES OF THE BALANCE-SH EET. INSPITE OF THESE FACTUAL FINDINGS, THE ASSESSING OFFICER IN HI S REMAND REPORT SUBMITTED THAT IN THE ABSENCE OF BOOKS OF AC COUNTS THE CLAIM OF ASSESSEE SHOULD NOT BE ADMITTED. ITA NO. 2539/AHD/2012 ACIT VS. ILAKSHI SYNTHETICS P LTD AY 2004-05 - 7 - 8. THE CIT(A) HAVING CONSIDERED THE REMAND REPORT A S WELL AS MATERIAL ON RECORD, OBSERVED THAT SINCE THE PROCEED INGS BEFORE THE ASSESSING OFFICER WERE SET ASIDE PROCEEDINGS, T HE ASSESSING OFFICER WAS EXPECTED TO FOLLOW THE DIRECTION OF ITA T WHICH HAD ACCEPTED THE FACT OF LOSS OF BOOKS OF ACCOUNTS IN F LOODS AND HAD DIRECTED THE ASSESSING OFFICER TO VERIFY THE CLAIM WITH RESPECT TO BANK ACCOUNTS OF THE ASSESSEE. THE CIT(A) ALSO HEL D THAT IN VIEW OF ABOVE DIRECTION OF ITAT, RECONSTRUCTION OF LEDGER ACCOUNTS FROM BANK STATEMENTS DOES NOT STRICTLY AMO UNT TO FRESH EVIDENCE. IN VIEW OF THESE FACTUAL FINDINGS AS MENTIONED BY THE ASSESSING OFFICER IN THE REMAND REPORT, THE CREDIT BALANCES WERE FOUND EXPLAINED BY CIT(A). THESE FAC TUAL REASONED FINDINGS OF THE CIT(A), BASED ON REMAND RE PORT OF ASSESSING OFFICER AS DISCUSSED ABOVE, NEED NO INTER FERENCE FROM OUR SIDE WHO HAS RIGHTLY DELETED THE ADDITION IN QUESTION.. SO, THE ORDER OF THE CIT(A) ON THIS ISSUE IS UPHELD . 9. IN THE RESULT, APPEAL OF THE REVENUE IS DISMISSE D. ORDER PRONOUNCED IN THE COURT ON 08TH OF DECEMBER, 2015 AT AHMEDABAD. SD/- SD/- ( RAJESH KUMAR ) ACCOUNTANT MEMBER ( SHAILENDRA KUMAR YADAV ) JUDICIAL MEMBER AHMEDABAD; DATED 08/12/2015 *BT ITA NO. 2539/AHD/2012 ACIT VS. ILAKSHI SYNTHETICS P LTD AY 2004-05 - 8 - / COPY OF THE ORDER FORWARDED TO : 1. '# / THE APPELLANT 2. $%'# / THE RESPONDENT. 3. && ' / CONCERNED CIT 4. ' ( ) / THE CIT(A), 5. ()* $++ , , / DR, ITAT, AHMEDABAD 6. *, / GUARD FILE. / BY ORDER, //TRUE COPY// / (DY./ASSTT.REGISTRAR) ! , / ITAT, AHMEDABAD