ITO - 25(1)(1), MUMBAI V. SHRI CHETAN DINESH MEHTA, MUMBAI

ITA 2563/MUM/2013

• Counselvise Citation: [2016] 121 COUNSELVISE.COM (IT) 3259 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 9 month(s) 14 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 18-01-2016
• Appeal Filed By: Department
• Order Result: Partly Allowed
• Bench Allotted: C
• Assessment Year: misc
• Appeal Filed On: 04-04-2013
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: C W ANGOLKAR
• Keywords: Bogus purchase; Business income; Salary income; Principle of natural justice
• Section: 143(3); 133(6)

Judgement Text

C IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH, MUM BAI BEFORE SHRI SHAILENDRA KUMAR YADAV, JUDICIAL MEMBER AND SHRI RAMIT KOCHAR, ACCOUNTANT MEMBER ./ I.T.A. NO.2563/MUM/2013 ( / ASSESSMENT YEAR: 2009-10) INCOME TAX OFFICE 25(1)(1) C-11, PRATYAKSHAKAR BHAVAN, R.NO.201, BANDRA KURLA COMPLEX, BANDRA(EAST), MUMBAI-400 051. / V. SHRI CHETAN DINESH MEHTA 21/202, SHAKTI NAGAR, C.S. ROAD, DAHISAR (E), MUMBAI-68 ./ ./PAN/GIR NO. AAUPM8479K ( /APPELLANT ) : ( / RESPONDENT ) / APPELLANT BY : SHRI C.W. ANGOLKAR / RESPONDENT BY : SHRI RUTURAJ H. GURJAR / DATE OF HEARING : 29.10.2015 !'# / DATE OF PRONOUNCEMENT : 18.01.2016 $% / O R D E R PER RAMIT KOCHAR, ACCOUNTANT MEMBER: THIS IS AN APPEAL BY THE REVENUE DIRECTED AGAINST T HE ORDER BY THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS)- 35, MUMBAI ( CIT(A) FOR SHORT) DATED 10.01.2013 FOR THE ASSESSMENT YEAR 2009-10. 2 ITA NO.2563/MUM/2013 ASST. YR.: 2009-10 ITO-25(1)(1) V. CHETAN DINESH MEHTA 2. THE GROUNDS OF APPEAL RAISED BY THE REVENUE IN T HE MEMO OF APPEAL FILED WITH THE TRIBUNAL ARE AS UNDER: (I) ON THE FACTS AND IN THE CIRCUMSTANCES OF THE C ASE AND IN LAW, THE LD. CIT(A) ERRED IN DELETING THE ADDITION OF RS. 45,03 ,226/- ON ACCOUNT OF DIFFERENCE IN DEBTORS AND CREDITORS BY HOLDING THA T THE AO HAS NOT GONE THROUGH THE PROCESS OF CROSS EXAMINATION OF VARIOUS PARTIES INSPITE OF THE FACT THAT AMPLE OPPORTUNITY WAS GIVEN TO THE ASSESS EE TO RECONCILE THE DIFFERENCES BY THE ASSESSING OFFICER DURING THE ASS ESSMENT PROCEEDINGS AND ASSESSEE NEVER ASK FOR CROSS EXAMINATION OF PARTIES BEFORE THE ASSESSING OFFICER. (II) ON THE FACTS AND THE CIRCUMSTANCES OF THE CA SE AND IN LAW, THE LD. CIT(A) ERRED IN ACCEPTING THE ASSESSEES AUTHORIZED REPRE SENTATIVE RECONCILIATION STATEMENT PRODUCED BEFORE HIM EVEN THOUGH DEBTORS AND CREDITORS ARE RECONCILED TOGETHER, INSPITE OF THE FACTS THAT ASS ESSEE MAINTAINS SEPARATE ACCOUNTS FOR DEBTORS AND CREDITORS AND HENCE RECON CILIATION SHOULD ALSO HAVE BEEN SEPARATE FOR BOTH THE ACCOUNTS. (III) ON THE FACTS AND IN THE CIRCUMSTANCES OF TH E CASE AND IN LAW, THE LD. CIT(A) ERRED IN DELETING THE DISALLOWANCE U/S. 194 H R.W.S 40(A)(IA) ON ACCOUNT OF BROKERAGE AMOUNT IS INCLUSIVE OF C/F BALANCE OF EARLIER YEARS WITHOUT APPRECIATING THE FACT THAT IF EVEN IF IT IS SO, TH E ASSESSEE WAS NOT ABLE TO SUBSTANTIATE HIS CLAIM OF SUNDRY CREDITORS BY PROD UCING THE SAID PARTIES. (IV) THE APPELLANT PRAYS THAT THE ORDER OF THE LD . CIT(A) ON THE ABOVE GROUNDS BE SET ASIDE AND THAT OF THE A.O. BE RESTORED. (V) THE APPELLANT CRAVES LEAVE TO AMEND OR ALTER ANY GROUNDS OR ADD A NEW GROUND. 3. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSE E HAS RECEIVED INCOME FROM SALARY AND FROM BUSINESS AND PROFESSION IN THE NAME AND ST YLE OF M/S. DYNAMIC CHEMICALS, PROPERTY CONCERN, DURING THE PREVIOUS YEAR. DURING THE COURSE OF THE ASSESSMENT PROCEEDINGS U/S 143(3) OF THE INCOME TAX ACT,1961(H EREINAFTER CALLED THE ACT) READ 3 ITA NO.2563/MUM/2013 ASST. YR.: 2009-10 ITO-25(1)(1) V. CHETAN DINESH MEHTA WITH SECTION 143(2) OF THE ACT, THE LEARNED ASSESS ING OFFICER (HEREINAFTER CALLED THE AO ) OBSERVED THAT THERE ARE DIFFERENCES IN THE BALANCE OF SALE AND PURCHASE MADE BY THE ASSESSEE AND ACCORDINGLY THERE ARE DIFFERENC ES IN THE DEBTORS AND CREDITORS WITH RESPECT TO THE BOOKS OF ACCOUNTS MAINTAINED BY THE ASSESSEE VIS--VIS BALANCE APPEARING IN THE BOOKS OF SELLING/PURCHASING PARTIE S FROM WHOM THE ENQUIRIES WERE MADE BY THE AO U/S 133(6) OF THE ACT AND THE ADDITI ONS OF RS.45,03,226/- ON ACCOUNT OF ABOVE STATED DIFFERENCES WAS MADE TO THE INCOME OF THE ASSESSEE VIDE ASSESSMENT ORDERS DATED 28.12.2011 PASSED U/S 143(3) OF THE AC T, THE DETAILS ON ACCOUNT OF THESE DIFFERENCES ARE AS UNDER:- DIFFERENCES ON ACCOUNT OF BOGUS SALES /DEBTORS AS A LLEGED BY THE AO A) ADARSH CHEMICALS(SEC) RS. 14,73,101/- B) VARDHAMAN CHEM. RS. 13,09,938/- C) SYNTHETIC COLOUR CHEM. RS. 6,55,963/- TOTAL RS. 34,39,002/- ------------------- DIFFERENCES ON ACCOUNT OF BOGUS PURCHASES/CREDITORS AS ALLEGED BY THE AO A) SYNTHETIC COLOUR CHEM. RS. 10,64,224/- TOTAL RS. 45,03,226/- ------------------ SALE BY ASSESSEE NAME OF THE PARTY SALE AS PER ASSESSEE PURCHASE AS PER ASSESSEE DIFFERENCE REMARKS 4 ITA NO.2563/MUM/2013 ASST. YR.: 2009-10 ITO-25(1)(1) V. CHETAN DINESH MEHTA ADARSH CHEMICALS(SEC) 19,14,643/- 19,14,643/- NIL ASSESSEE SHOWN THE DEBTORS OF RS.14,17,101/- AS AGAINST PARTY CONFIRMED THAT THEY HAVE RECEIVED FULL PAYMENT. HENCE ENTIRE AMOUNT OF RS.14,73,101/- AS TREATED AS BOGUS DEBTORS. VARDHAMAN CHEM. 42,58,524/- 42,58,524/- ASSESSEE S HOWN THE DEBTORS OF RS.13,13,940/- AS AGAINST PARTY CONFIRMED THAT THEY HAVE RECEIVED 42,54,521/-. THEREFORE, AS PER PARTY DEBTORS REMAINED TO BE RS.13,09,938/- IS TREATED AS BOGUS DEBTORS SHOWN BY ASSESSEE. SYNTHETIC COLOUR CHEM. 2,34,631/- 2,34,631/- NIL ASSESSEE SHOWN THE DEBTORS OF RS. 13,12,860/- AS AGAINST PARTY CONFIRMED THAT THEY HAVE RECEIVED RS. 24,06,407/- (INCLUDING BROUGHT FORWARD) AND SHOWN AS THE DEBTORS OF RS. 6,56,897/-. THEREFORE, THE EXCESSIVE DEBTORS SHOWN BY THE ASSESSEE OF RS. 6,55,963/- IS TO BE ADDED TO THE TOTAL INCOME OF THE ASSESSEE. PURCHASES AS PER ASSESSEE 5 ITA NO.2563/MUM/2013 ASST. YR.: 2009-10 ITO-25(1)(1) V. CHETAN DINESH MEHTA NAME OF THE PARTY SALE AS PER ASSESSEE PURCHASE AS PER PARTY DIFFERENCE REMARKS SYNTHETIC COLOUR CHEM 99,74,097/- 94,54,897/- 5,14,260/- ASSESSEE SHOWN T HE CREDITOR OF RS.15,78,484/- AS AGAINST PARTY SHOWN THE BALANCE PAYABLE OF RS. 5,14,260/-. THEREFORE, THE DIFFERENCE BETWEEN TWO OF RS. 10,64,224/- HAS BEEN TREATED AS BOGUS CREDITORS SHOWN BY THE ASSESSEE THE AFORE-SAID DIFFERENCES IN THE SALE/PURCHASE AND CONSEQUENTLY IN THE DEBTORS/CREDITORS WAS CONFRONTED TO THE ASSESSEE WH O WAS ASKED BY THE AO TO RECONCILE THE SAME. IN REPLY BEFORE THE AO, THE ASS ESSEE RELIED UPON THE LEDGER ACCOUNT MAINTAINED BY THE ASSESSEE AND STATED THAT THESE PARTIES HAVE NOT CONSIDERED THE PAYMENTS IN TIME OR OUR PAYMENT HAS NOT BEEN CO RRECTLY INCORPORATED IN THEIR ACCOUNTS. THE AO REJECTED THE CONTENTIONS OF THE AS SESSEE AND MADE THE ADDITION AS IN THE OPINION OF THE AO THE SAME HAS TO BE RECONCILED WITH THE BANK STATEMENT AND CONCRETE INFORMATION TO BE PROVIDED TO THE DEPARTME NT OF ALL SALE/PURCHASE AND DEBTORS/CREDITORS PARTIES AND ARRIVED UPON THE CONC RETE ACCOUNTS AS PER MERCANTILE SYSTEM FOLLOWED BY THE ASSESSEE. THUS, THE AO DISAL LOWED THE ENTIRE AMOUNT OF RS. 45,03,226/- BEING DIFFERENCES IN THE SALE/PURCHASES AND CONSEQUENTLY IN DEBTORS/CREDITORS BETWEEN THE BALANCES AS APPEARING IN THE LEDGER ACCOUNT OF THE ASSESSEE AND THE BALANCES AS APPEARING IN THE ACCOU NTS MAINTAINED BY THE PURCHASING/SELLING PARTIES, AND ADDED THE SAME TO T HE INCOME OF THE ASSESSEE VIDE ASSESSMENT ORDERS DATED 28.12.2011 PASSED U/S 143(3 ) OF THE ACT. 6 ITA NO.2563/MUM/2013 ASST. YR.: 2009-10 ITO-25(1)(1) V. CHETAN DINESH MEHTA SIMILARLY, THE AO OBSERVED THAT THE BROKERAGE IS PA ID BY THE ASSESSEE TO 46 PARTIES AMOUNTING TO RS.2,07,829/- SHOWN IN SUNDRY CREDITOR S UNDER NOTE G OF SCHEDULE FORMING PART OF THE ACCOUNTS. THE AO OBSERVED THAT THE ASSESSEE HAS PRODUCED THE LIST OF TEN PARTIES TO WHOM THE ASSESSEE DEDUCTED TDS OF RS 5936/- AND FOR THE BALANCE 36 PARTIES , THE ASSESSEE HAS HIDDEN THE PAYMENT ON AC COUNT OF BROKERAGE PAID AND INCLUDED IN THE LIST OF CREDITORS TO WHOM THE AMOUN T IS PAYABLE. THE AO OBSERVED THAT THERE ARE TEN PARTIES TO WHOM THE BROKERAGE AMOUNT OF ABOVE RS.5000/- IS PAID / PAYABLE AND THE AO HELD THAT THE ASSESSEE HAS NOT D EDUCTED TDS ON BROKERAGE OF RS. 1,19,089/- U/S. 194H OF THE ACT FOR THE REST OF THE PARTIES AND THE DISALLOWANCE WAS MADE OF RS. 1,19,089/- U/S. 40(A)(IA) OF THE ACT RE AD WITH SECTION 194H OF THE ACT WHICH WAS ADDED TO THE TOTAL INCOME OF THE ASSESSEE BY THE AO VIDE ASSESSMENT ORDERS DATED 28.12.2011 PASSED U/S 143(3) OF THE ACT, AS P ER DETAILS HEREUNDER:- SR. NO. NAME OF THE PARTY BROKERAGE AMOUNT PAID 1. APEX COMPANY 14,328/- 2. BHARAT SHETH 14,450/- 3. HEMANT SHAH 9,827/- 4. JAISUJHBHAI DOSHI 8,480/- 5. JASMINE SANGHVE 18,675/- 6. KANU D. PATEL 6,232/- 7. MAHENDRA DOSHI 9,735/- 8. MITESH VORA 7,274/- 9. SHREE NATH ENTERPRISES 14,490/- 10. VIRAL JASANI 15,548/- TOTAL 1,19,089/- 7 ITA NO.2563/MUM/2013 ASST. YR.: 2009-10 ITO-25(1)(1) V. CHETAN DINESH MEHTA 4. AGGRIEVED BY THE ASSESSMENT ORDERS DATED 28.12.2 011 PASSED U/S 143(3) OF THE ACT BY THE AO, THE ASSESSEE FILED THE FIRST APPEAL BEFORE THE CIT(A) AND SUBMITTED THAT THE ASSESSEE HAS GIVEN ALL THE DETAILS TO RECONCILE THE BALANCES AND PROPER OPPORTUNITY WAS NOT GIVEN TO THE ASSESSEE TO EXPLAIN ITS STAND. THE ASSESSEE SUBMITTED THAT AS THE AO WAS PROPOSING TO RELY ON THE CONFIRMATIONS OBTAI NED FROM THIRD PARTIES, THE ASSESSEE HAD A RIGHT TO CROSS-EXAMINE THE SAID THIR D PARTIES RELIED UPON BY THE AO , WHICH THE AO SHOULD HAVE GRANTED TO THE ASSESSEE TO CROSS EXAMINE THESE THIRD PARTIES. THE ASSESSEE ALSO MADE THE SUBMISSIONS BEFORE THE C IT(A) AS UNDER:- 'SUBMISSIONS BEFORE THE CIT (A) -35 1. THE ASSESSING OFFICE HAS DISALLOWED A SUM OF RS .34,39,002/-AS BOGUS SALES/DEBTORS EVEN AFTER VERIFYING THE TOTAL SALES MADE BY THE ASSESSEE AND THE SAME AMOUNT OF PURCHASES ACCOUNTED BY THE PARTIES IN THE. SAME ACCOUNTING YEAR, AND ERRING IN ACCEPTING THE FACTS THAT, CHEQ UES ISSUED BY THE PARTIES ON 31/03/2009, ACCOUNTED BY THE PARTY IN THEIR BOOKS OF ACCOUNT, OBVIOUSLY APPEAR IN ASSESSEE'S BOOK IN THE SUBSEQUENT MONTH I.E. IN THE NEXT FINANCIAL YEAR. THE ASSESSEE HAS SUBMITTED THE SUBSEQUENT YEAR STATEME NT WITH RECONCILIATION OF TWO PARTIES AND THE SAID STATEMENT ARE TALLYING WITH A SSESSEE'S ACCOUNT. RECONCILIATION STATEMENT IS ALREADY SUBMITTED. HOW EVER, IN CASE OF ADARSH CHEMICALS(SECUNDARABAD) WE BROUGHT TO YOUR HONORS' NOTICE THAT, THE STATEMENTS SUBMITTED TO THE DEPARTMENT IS TALLYING WITH SALES MADE BY US AND ACCOUNTED BY THEM AS PURCHASES AND NOT TALLYING WI TH PAYMENTS MADE BY THEM AND RECEIVED BY US TO THE EXTENT OF RS.14,73,101/- . YOUR HONOR RAISED THE QUESTION THAT, WHY THE DIFFERENCE IN THE ACCOUNT S HOULD NOT BE DISALLOWED? IN THIS CONNECTION, WE WOULD LIKE TO SUBMIT ON BEH ALF OF ASSESSEE THAT, THE DIFFERENCE IS ON ACCOUNT OF ENCASHMENT OF CHEQUES TO THE TUNE OF RS. 14,73,101/- BY THE PARTY ,WHICH HAS NOT BEEN RE CEIVED BY THE ASSESSEE. ALSO FROM THE BANK STATEMENT OF THE ASSESSEE, IT CAN BE CAN ASCERTAINED THAT THE ASSESSEE HAS NOT RECEIVED THE AMOUNT FROM THE SAID PARTY FURTHER, THE ADDITIONS COULD NOT BE MADE TOWARDS UNRECORDED TRA NSACTIONS IN THE BOOKS OF THE ASSESSEE SIMPLY RELYING ON THE ENTRIES FOUN D IN THE BOOKS OF THIRD PARTY I.E. ASSESSEE'S CUSTOMER. ONCE THE ASSESSEE HAS DENIED THE TRANSACTIONS AND THE STATEMENT RELIED UPON BY THE REVENUE DEPARTMENT DOES NOT DISCLOSE THROUGH WHICH THE ALLEGED TRANSACTION ' WAS ENTERED INTO. ALSO, THE ASSESSEE IS SURPRISED UNDER WHAT SECTION OF TH E INCOME TAX ACT 1961, THE AMOUNT IS BEING DISALLOWED. 8 ITA NO.2563/MUM/2013 ASST. YR.: 2009-10 ITO-25(1)(1) V. CHETAN DINESH MEHTA FURTHER, THE ASSESSEE HAVE BOOKED THE SALES AND PA ID THE TAXES ON THE PROFITS MADE ON THE TRANSACTIONS WITH THE ABOVE PARTY. SIN CE THE STATEMENT OF ACCOUNT IS NOT TALLYING, ASSESSEE SHOULD NOT BE TAXED TWIC E. THE ASSESSEE PRAYS YOUR HONOR TO LOOK INTO THE MAT TER AND GIVE JUSTICE TO THE ASSESSEE. AFTER CONSIDERING THE RIVAL STAND, IT IS FOUND THA T THE AO DID NOT EXAMINE AND ANALYSE THE VARIOUS ENTRIES IN THE LEDGER ACCOUNT, WHICH WAS PRODUCED BY THE APPELLANT BEFORE THE A.O. DURING THE ASSESSMENT ST AGE. I HAVE ALSO TAKEN INTO CONSIDERATION THE RECONCILIATION CHART GIVEN BY TH E APPELLANT. THE CIT(A) OBSERVED THAT THE AO HAS NOT EXAMINED A ND ANALYSED THE VARIOUS ENTRIES IN THE LEDGER ACCOUNT WHICH WAS PRODUCED BY THE ASSESSEE BEFORE THE AO DURING THE COURSE OF ASSESSMENT PROCEEDINGS . THE C IT(A) REFERRED TO THE RECONCILIATION CHART SUBMITTED BY THE ASSESSEE AND THE INFORMATION RECEIVED BY THE AO U/S. 133(6) OF THE ACT DIRECTLY FROM PURCHASING/ SELLING PARTIES IN RESPECT OF TRANSACTIONS, THE DIFFERENCES IN SALES/DEBTORS ARE :- I) ADARSH CHEMICALS (SEC) RS. 14,73,101 II) VARDHAMAN CHEMICALS RS. 13,09,938 III) SYNTHETIC COLOUR CHEM RS. 06,55,963 TOTAL RS. 34,39,002 ========== FURTHER, THE CIT(A) OBSERVED THAT THERE IS DIFFEREN CE OF RS.10,64,224/- IN THE BALANCE OF SYNTHETIC COLOUR CHEM WITH RESPECT TO PURCHASES/ CREDITORS. THE CIT(A) HELD THAT THE AO HAS NOT GONE THROUGH TH E PROCESS OF CROSS EXAMINATION OF VARIOUS PARTIES. THE CIT(A) HELD THAT THE AO HAS MADE ADDITIONS BASED ON ONE SIDED VERSION AND TAKEN ADVERSE VIEW. THE CIT(A) HE LD THAT THE AO SHOULD HAVE SUMMONED THE ABOVE PARTIES AND THE ASSESSEE, RECORD ED THEIR STATEMENT / DISPOSITION 9 ITA NO.2563/MUM/2013 ASST. YR.: 2009-10 ITO-25(1)(1) V. CHETAN DINESH MEHTA ON OATH AND ALLOWED THE CROSS EXAMINATION BEFORE AR RIVING AT THE ADVERSE CONCLUSION AND HENCE THE ADDITION MADE BY THE AO OF RS.45,03,2 26/- WAS DELETED BY THE CIT(A). THE CIT(A) RELIED UPON THE DECISION OF HONBLE SUPR EME COURT IN THE CASE OF KISHANCHAND CHELARAM V. CIT (1980) 125 ITR 713(SC) . THE CIT(A) HELD THAT THESE PARTIES ARE DEBTORS AND DEBTORS AMOUNT CANNOT BE CO NSIDERED FOR TAXATION BECAUSE IT WILL AMOUNT TO TAXING TWICE , SO THIS AMOUNT CANNOT BE ADDED TO THE INCOME OF THE ASSESSEE VIDE ORDERS DATED 10.01.2013. SIMILARLY, WITH RESPECT TO THE ADDITION OF RS. 1,19 ,089/-, IT WAS OBSERVED BY THE CIT(A) THAT THIS REPRESENTED THE TOTAL OUTSTANDING BALANCE INCLUDING THE CARRIED FORWARD BALANCE OF EARLIER YEARS ON WHICH TDS WAS DEDUCTED IN THE RELEVANT YEARS AND THERE IS NO BROKERAGE EXPENSE OF RS. 1,19,089/- INCURRED DURING THE ASSESSMENT YEAR ON WHICH TDS WAS DEDUCTIBLE. THE CIT(A) OBSERV ED THAT THE TDS WAS DEDUCTED AND TDS RETURNS WERE FILED ON THE RELEVANT BROKERAG E EXPENSES INCURRED DURING THE ASSESSMENT YEAR AND THE ADDITION MADE BY THE AO WAS DELETED VIDE ORDERS DATED 10.01.2013. 5. AGGRIEVED BY THE ORDERS OF THE CIT(A) DATED 10.0 1.2013, THE REVENUE IS IN APPEAL BEFORE THE TRIBUNAL. 6. THE LD DR RELIED UPON THE ORDERS OF THE AO . TH E LD. DR SUBMITTED THAT NO RECONCILIATION STATEMENT WAS PROVIDED BY THE ASSESS EE BEFORE THE AO TO RECONCILE THE DIFFERENCE IN SALE/DEBTOR AND PURCHASE/CREDITORS AN D THE SAME WAS PROVIDED FOR THE FIRST TIME BEFORE THE CIT(A) . THERE WAS DIFFERENC E IN THE BALANCES IN SALE/DEBTORS AS WELL PURCHASE/CREDITORS AS PER THE INFORMATION RECE IVED BY THE AO IN RESPONSE TO THE NOTICES ISSUED U/S. 133(6) OF THE ACT DIRECTLY FRO M THE SALE/PURCHASE PARTIES VIS--VIS BALANCES APPEARING IN THE BOOKS OF ACCOUNTS OF THE ASSESSEE. THE LD. DR SUBMITTED THAT NO CROSS EXAMINATION WAS ASKED BY THE ASSESSEE BEFORE THE AO OR THE CIT(A) . 10 ITA NO.2563/MUM/2013 ASST. YR.: 2009-10 ITO-25(1)(1) V. CHETAN DINESH MEHTA WHILE ON THE OTHER HAND, THE LD. COUNSEL OF THE ASS ESSEE SUBMITTED THAT THESE ADDITION OF RS. 45,03,226/-WERE MADE ON ACCOUNT OF DEBTORS/C REDITORS WHILE THE SALE AND PURCHASE ARE DULY INCLUDED IN THE BOOKS OF ACCOUNTS OF THE ASSESSEE AND IT HAS LED TO DOUBLE TAXATION. THE LD. COUNSEL RELIED UPON THE DE CISION OF ITA NO. 619/KOL/2015 IN THE CASE OF PLY PALACE V. ITO TO CONTEND THAT THESE ADDITIONS CANNOT BE MADE WITH RESPECT TO RS. 45,03,226/- BEING DIFFERENCE IN THE SALE/PURCHASE AND CONSEQUENTLY IN DEBTORS/CREDITORS IN THE BALANCES AS APPEARING IN T HE BOOKS OF ACCOUNTS OF THE ASSESSEE VIS--VIS BALANCES APPEARING IN THE BOOKS OF SALE/P URCHASING PARTIES AS IT WILL LEAD TO DOUBLE TAXATION. THE LD. COUNSEL REITERATED THE SUB MISSIONS AS MADE BEFORE THE AUTHORITIES BELOW. THE LD. COUNSEL OF THE ASSESSEE SUBMITTED THAT THE SE AMOUNTS OF RS. 1,19,089/- ARE OPENING BALANCES AS PER SCHEDULE G IN THE AUDITED ACCOUNTS IN THE SUNDRY CREDITORS AND TDS WAS DULY DEDUCTED IN THE RELEVANT YEARS AND HENCE, THERE WAS NO REQUIREMENT OF DEDUCTION OF TDS ON THESE OLD OUTSTANDING PAYMEN TS DURING THE ASSESSMENT YEAR AS IT HAS ALREADY SUFFERED TDS IN PRECEDING YEARS WHIL E WITH RESPECT TO BROKERAGE EXPENSES INCURRED DURING THE YEAR WHICH EXCEEDED TH E MINIMUM LIMIT AS PRESCRIBED U/S 194H OF THE ACT, THE TDS HAS BEEN DULY DEDUCTED AND DEPOSITED WITH THE REVENUE. 7. WE HAVE CONSIDERED THE CONTENTIONS OF THE RIVAL PARTIES, PERUSED THE MATERIAL ON RECORD INCLUDING THE CASE LAWS. WE HAVE OBSERVED T HAT THERE WAS A DIFFERENCE IN THE BALANCE OF SALE/DEBTORS AND PURCHASE/CREDITORS AS A PPEARING IN THE BOOKS OF ACCOUNTS OF THE ASSESSEE AND INFORMATION CALLED BY THE AO U/ S 133(6) OF THE ACT DIRECTLY FROM THE SELLING/PURCHASING PARTIES WITH RESPECT TO THE ACCOUNT OF THE ASSESSEE APPEARING IN THEIR BOOKS OF ACCOUNTS. THE AO OBSERVED THAT THERE IS A TOTAL DIFFERENCE OF RS. 45,03,226/- WITH RESPECT TO FOUR PARTIES IN THE SAI D ACCOUNTS. THE AO ASKED THE ASSESSEE TO RECONCILE THE DEBTORS AND CREDITORS AL ONG WITH THE SALE AND PURCHASE IN ITS BOOKS OF ACCOUNTS VIS--VIS ACCOUNT BALANCE AS APPE ARING IN THE BOOKS OF 11 ITA NO.2563/MUM/2013 ASST. YR.: 2009-10 ITO-25(1)(1) V. CHETAN DINESH MEHTA SELLING/PURCHASING PARTIES. THE ASSESSEE RELIED UPO N THE LEDGER ACCOUNTS MAINTAINED AS PART OF BOOKS OF ACCOUNTS BY THE ASSESSEE AND CON FIRMED THAT THE LEDGER ACCOUNT MAINTAINED BY THE ASSESSEE ARE CORRECT. THE CIT(A) DELETED THE ADDITION HOLDING THAT THE AO SHOULD HAVE MADE FURTHER ENQUIRES BY ISSUING SUMMONS TO THESE FOUR PARTIES AS WELL THE ASSESSEE AND RECORDED THEIR STATEMENT ON O ATH AND ALLOWED CROSS EXAMINATION TO THE ASSESSEE . WE HAVE OBSERVED THAT THE AO AFFO RDED THE OPPORTUNITY TO THE ASSESSEE TO RECONCILE THE DIFFERENCES, BUT THE ASS ESSEE MERELY RELIED UPON THE LEDGER ACCOUNT MAINTAINED BY THE ASSESSEE AS PART OF BOOKS OF ACCOUNTS AND INSISTED BEFORE THE AO THAT THE BOOKS OF ACCOUNTS MAINTAINED BY THE ASSESSEE ARE CORRECT. AS PER THE FACTS AS EMERGING FROM THE ORDERS OF THE AUTHORITIE S BELOW, THE ASSESSEE NEVER ASKED FOR THE CROSS EXAMINATION BEFORE THE AO OR BEFORE T HE CIT(A). THE ASSESSEE HAS CONTENDED BEFORE THE CIT(A) , THAT IT SUBMITTED THE RECONCILIATION BEFORE THE AO WHICH WAS NOT CONSIDERED BY THE AO BUT THE SAME HAS BEEN DISPUTED BY THE REVENUE BEFORE US THAT NO SUCH RECONCILIATION STATEMENT WAS SUBMITTED BY THE ASSESSEE BEFORE THE AO AND ALSO SAME IS NOT EMERGING FROM THE ORDER S OF THE AO AND WE HAVE OBSERVED THAT THESE RECONCILIATION STATEMENTS WERE NOT FORWARDED BY THE CIT(A) TO THE AO UNDER RULE 46A OF INCOME TAX RULES, 1962 FOR EXA MINATION/REMAND REPORT . EVEN THE CIT(A) HAS OBSERVED THAT THE AO HAS NOT ANALYSE D AND EXAMINED THE VARIOUS ENTRIES IN THE LEDGER ACCOUNTS . THE CIT(A) HAS ALL OWED THE APPEAL ON THE GROUND THAT THE AO SHOULD HAVE SUMMONED THESE PARTIES AS WELL THE ASSESSEE AND RECORDED THEIR STATEMENT ON OATH AND ALLOWED THE CROSS-EXAMINATION TO THE ASSESSEE BEFORE DRAWING ADVERSE INFERENCE AGAINST THE ASSESSEE BUT AS PER T HE FACTS AS EMERGING FROM THE ORDERS OF THE AUTHORITIES BELOW, THE ASSESSEE HAS NOT ASKE D FOR THE CROSS EXAMINATION BEFORE THE AO AND THE CIT(A) AND RATHER THE ASSESSEE HAS S UBMITTED BEFORE THE AO THAT ITS ACCOUNTS ARE CORRECT.NO SUCH EVIDENCE HAS BEEN BROU GHT ON RECORD BY THE ASSESSEE BEFORE US TO SUBSTANTIATE THAT THE ASSESSEE ASKED F OR THE CROSS EXAMINATION OF THESE FOUR PURCHASING/SELLING PARTIES .THE ASSESSEE HAS R ELIED UPON THE DECISION OF KOLKATTA 12 ITA NO.2563/MUM/2013 ASST. YR.: 2009-10 ITO-25(1)(1) V. CHETAN DINESH MEHTA TRIBUNAL IN THE CASE OF PLY PALACE V. ITO IN ITA NO . 619/KOL/2015 , BUT THE FACTS OF THE SAID CASE WERE DIFFERENT AS IN THE SAID CASE TH E DIFFERENCE IN THE DEBIT BALANCE SHOWN OF RS.1,36,815/- WITH RESPECT TO DEBTOR WAS E XPLAINED VIS-A VIS CASH RECEIPT OF RS.1,00,000/- IN MARCH 2010 BY THE PURCHASER TO THE TAXPAYER WHICH WAS NOT ACCOUNTED BY THE TAXPAYER IN HIS BOOKS OF ACCOUNTS AS WELL THE BALANCE AMOUNT OF RS.36,815/- REFLECTED THE DIFFERENCE IN THE OPENING BALANCE WHILE IN THE INSTANT CASE THE ASSESSEE IS INSISTING THAT ITS LEDGER ACCOUNTS IN THE BOOKS OF ACCOUNTS REFLECT CORRECT BALANCES WHILE IN OUR CONSIDERED VIEW THE DIFFERENC ES NEED TO BE DULY RECONCILED AND THE PRIMARY ONUS IS ON THE ASSESSEE TO RECONCILE TH E DIFFERENCE WHICH NEEDED TO BE DISCHARGED BY THE ASSESSEE. IN OUR CONSIDERED VIEW THE INTEREST OF JUSTICE WILL BE BEST SERVED , IF THE MATTER IS RESTORED TO THE FILE OF THE AO TO DENOVO DETERMINATION OF THE ISSUE WITH RESPECT TO DIFFERENCES IN THE BOOKS OF A CCOUNTS OF THE ASSESSEE WITH RESPECT TO SALE/DEBTORS AND PURCHASES/CREDITORS VIS--VIS B ALANCES AS APPEARING IN THE BOOKS OF THE PURCHASING/SELLING PARTIES , WITH THE DIRECTION TO AO TO GRANT PROPER AND ADEQUATE OPPORTUNITY AS PER LAW , TO THE ASSESSEE TO EXPLAIN THE DIFFERENCES IN SALE/DEBTORS AND PURCHASE/CREDITORS AS APPEARING IN THE BOOKS OF ACC OUNTS OF THE ASSESSEE VIS--VIS BALANCE AS APPEARING IN THE BOOKS OF ACCOUNTS OF TH E PURCHASING/SELLING PARTIES IN ACCORDANCE WITH THE PRINCIPLES OF NATURAL JUSTICE A S ENSHRINED IN DOCTRINE OF AUDI ALTERAM PARTEM. THE APPEAL OF THE REVENUE WITH RESP ECT TO THIS GROUND IS ALLOWED FOR STATISTICAL PURPOSES. WE ORDER ACCORDINGLY. WITH RESPECT TO THE SECOND ISSUE OF THE DISALLOWANC E OF RS. 1,19,089/- U/S. 40(A)(IA)OF THE ACT READ WITH SECTION 194H OF THE ACT , WE HAV E OBSERVED FROM THE ORDERS OF THE CIT(A) THAT THESE EXPENSES OF BROKERAGE EXPENSES A MOUNTING TO RS. 1,19,089/- WERE INCURRED BY THE ASSESSEE IN THE PRECEDING YEAR AND EXPENSES WERE BOOKED BY THE ASSESSEE IN ITS BOOKS OF ACCOUNTS IN THE PRECEDING YEAR WHILE DUE TAXES HAS BEEN DEDUCTED AT SOURCE IN THE RELEVANT ASSESSMENT YEARS AND PAID TO THE CREDIT OF THE REVENUE AND THE BALANCES ARE APPEARING IN SCHEDULE G TO THE AUDITED ACCOUNTS AS 13 ITA NO.2563/MUM/2013 ASST. YR.: 2009-10 ITO-25(1)(1) V. CHETAN DINESH MEHTA CREDITORS AS OPENING BALANCE AS AT 01-04-2008 AND T HE AO HAS MERELY TAKEN THE FIGURE FROM SCHEDULE G THAT HAS BEEN A SCHEDULE OF SUNDRY CREDITORS . IN OUR CONSIDERED VIEW, THESE BROKERAGE EXPENSES AMOUNTING TO RS.1,1 9,089/- HAS ALREADY BEEN BOOKED AS EXPENSES IN THE PRECEDING YEARS AND DUE TDS HAS BEEN DEDUCTED BY THE ASSESSEE FOR THE PREVIOUS YEAR AS PER THE FACTS EMERGING FROM TH E ORDERS OF AUTHORITIES BELOW AND HENCE THERE IS NO LIABILITY FOR DEDUCTION OF TDS O N THESE BROKERAGE EXPENSES OF RS.1,19,089/- DURING THE CURRENT YEAR AS IT HAS AL READY SUFFERED DUE TDS IN THE EARLIER YEARS WHEN THE SAME WAS BOOKED AS EXPENSES IN THOSE YEARS AND IN THE CURRENT ASSESSMENT YEAR, THE AMOUNTS ARE TAKEN BY THE AO FR OM THE OPENING BALANCE OF SUNDRY CREDITORS AS ON 01-04-2008 AS PER SCHEDULE G TO THE AUDITED ACCOUNTS AND HENCE IN OUR CONSIDERED VIEW NO DISALLOWANCE IS CALLED FOR U/S. 40(A)(IA) OF THE ACT READ WITH SECTION 194H OF THE ACT AS THESE BROKERAGE EXPENSES OF RS.1,19,089/- PERTAINS TO THE BROKERAGE EXPENSES OF THE EARLIER YEARS. WE, THERE FORE, UPHOLD AND SUSTAIN THE ORDERS OF THE CIT(A) IN WHICH WE DO NOT FIND ANY INFIRMIT Y AND ORDER THE DELETION OF ADDITION OF RS.1,19,089/- MADE BY THE AO TO THE INC OME OF THE ASSESSEE. THE APPEAL OF THE REVENUE IS DISMISSED WITH RESPECT TO THIS GR OUND OF APPEAL. WE ORDER ACCORDINGLY. 8.IN THE RESULT, THE REVENUES APPEAL IS PARTLY ALL OWED. ORDER PRONOUNCED IN THE OPEN COURT ON JANUARY 18 TH , 2016 SD/- SD/- (SHAILENDRA KUMAR YADAV) (RAMIT KOCHAR) &' $ / JUDICIAL MEMBER $ / ACCOUNTANT MEMBER ( ) MUMBAI; *$ DATED : 18.01.2016 PS:- POOJA K 14 ITA NO.2563/MUM/2013 ASST. YR.: 2009-10 ITO-25(1)(1) V. CHETAN DINESH MEHTA ! '#$% &%# / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT 3. 3 ( ) / THE CIT(A) 4. 3 / CIT - CONCERNED 5. 678 ''9: , 9:# , ( ) / DR, ITAT, MUMBAI 6. 8<= > / GUARD FILE ' / BY ORDER, (/') * (DY./ASSTT. REGISTRAR) , ( ) / ITAT, MUMBAI