X L Plastics, Vadodara V. The Addl. CIT, Range-2, Vadodara

ITA 278/AHD/2016

• Counselvise Citation: [2018] 122 COUNSELVISE.COM (IT) 3956 (ITAT-AHMEDABAD)
• Duration Of Justice: 2 year(s) 8 month(s) 4 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 08-10-2018
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: Not Allotted
• Assessment Year: 2011-2012
• Appeal Filed On: 04-02-2016
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Keywords: Corroborative evidences
• Section: 143(3); 142(1)

Judgement Text

ITA NO. 278/AHD/2016 XL PLASTICS VS. ACIT ASSESSMENT YEAR: 2011-12 PAGE 1 OF 6 IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD A BENCH, AHMEDABAD [CORAM: PRAMOD KUMAR AM AND MAHAVIR PRASAD JM] ITA NO. 278/AHD/2016 ASSESSMENT YEAR: 2011-12 XL PLASTICS ..................APPELLANT RS NO. 442/452, NR. GALAXY HOTEL, NH NO.8, AT & POST : POR, DIST: VADODARA [PAN : AAAFX 0068 K] VS. ADDL. COMMISSIONER OF INCOME-TAX ...........................RESPONDENT RANGE-2,VADODARA APPEARANCES BY: SURESH THAKKAR, FOR THE APPELLANT RAJDEEP SINGH, FOR THE RESPONDENT DATE OF CONCLUDING THE HEARING : 09.07.2018 DATE OF PRONOUNCING THE ORDER : 08.10.2018 O R D E R PER PRAMOD KUMAR, AM: 1. BY WAY OF THIS APPEAL, THE ASSESSEE-APPELLANT HA S CHALLENGED CORRECTNESS OF THE LEARNED CIT(A)S ORDER DATED 26 TH OCTOBER 2015 IN THE MATTER OF ASSESSMENT UNDER SECTION 143(3) OF THE INCOME-TAX ACT, 1961, FOR THE ASSESSMENT YEAR 2011-12. 2. IN THE FIRST GROUND OF APPEAL, THE ASSESSEE APPE LLANT HAS RAISED THE FOLLOWING GRIEVANCE:- ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LD . CIT(A) IS NOT JUSTIFIED BOTH IN LAW IN CONFIRMING ADDITION OF RS.184251/- (DIFFEREN CE REFLECTED IN THE BANK RECONCILIATION STATEMENT) BEING THE AMOUNT CREDITED BY STATE BANK OF INDIA IN THE BANK ACCOUNT OF THE APPELLANT FOR WHICH THE BANK HA S NOT GIVEN ANY CLARIFICATION. IT IS PRAYED THAT THE ADDITION BE DELETED. 3. THE ASSESSEE IS ENGAGED IN MANUFACTURING DIFFERE NT TYPES OF PACKAGING PRODUCTS. DURING THE COURSE OF SCRUTINY ASSESSMENT PROCEEDING S, THE ASSESSING OFFICER NOTICED A DIFFERENCE OF RS.1,84,521/-. WHILE THIS DIFFERENCE WAS EXPLAINED BY THE ASSESSEE BUT THE ASSESSING OFFICER REJECTED THE EXPLANATION BY O BSERVING AS FOLLOWS:- 3. BANK RECONCILIATION STATEMENT : 3.1. VIDE THIS OFFICE NOTICE U/S 142(1) R.W.S. 129 OF THE ACT DATED 03.09.2013, THE ASSESSEE WAS REQUESTED TO SUBMIT THE DETAILS OF BAN K ACCOUNTS ALONG WITH BANK ITA NO. 278/AHD/2016 XL PLASTICS VS. ACIT ASSESSMENT YEAR: 2011-12 PAGE 2 OF 6 RECONCILIATION STATEMENT. THE ASSESSEE VIDE SUBMISS ION DATED 18.11.2013 HAS SUBMITTED THE RECONCILIATION STATEMENT. ON VERIFICA TION OF THE STATEMENTS SUBMITTED BY THE ASSESSEE WITH RESPECT TO THE STATE BANK OF INDIA, ACCOUNT NO. 10140677715, IT WAS NOTICED THAT THERE IS A DIFFERE NCE OF RS.1,84,251/- IN THE BANK RECONCILIATION STATEMENT. 3.2. VIDE ORDER SHEET ENTRY DATED 16.12.2013, THE A SSESSEE WAS REQUESTED TO EXPLAIN AS TO WHY THE DIFFERENCE OF RS.1,84,251/- O F THE BANK RECONCILIATION STATEMENT SHOULD NOT BE ADDED TO THE TOTAL INCOME O F THE ASSESSEE. THE ASSESSEE VIDE ITS SUBMISSION DATED 24.12.2013 HAS S TATED THAT 'THE BANK HAS PASSED SOME WRONG CREDIT ENTRIES IN O UR BANK ACCOUNT. SOME OF THE ENTRIES WHICH BELONGS TO EARLIER YEARS HAVE BEE N CORRECTED IN THIS YEAR AND WRONG CREDIT ENTRIES OF THIS YEAR HAVE BEEN CORRECT ED IN THE NEXT YEAR. SEVEN ENTRIES, CREDITS ARE STILL NOT SETTLED. COMPLETE SHEET INDICATING DATE OF WRONG CREDIT ENTR IES, NATURE, AMOUNT ALONG WITH CORRECTION DATE IS FILED HEREWITH'. THE SUBMISSION OF THE ASSESSEE IS CONSIDERED BUT NO T FOUND TO BE TENABLE. THE ASSESSEE HAS NOT PRODUCED THE DETAILS IN RESPECT OF ALL THE ENTRIES. FROM THE DETAILS OF THESE SO CALLED WRONG ENTRIES, THERE ARE SOME ENTRIES OF CASH DEPOSITS AS WELL AS 'TRANSFER' CREDITS. FURTHERMORE THE ASSE SSEE ITSELF HAS ADMITTED THAT SEVEN ENTRIES ARE YET TO BE SETTLED. THE ASSESSEE H AS ALSO NOT PRODUCED ANY EVIDENCE TO SHOW THAT THE ENTRIES WHICH ARE CLAIMED TO HAVE BEEN CORRECTED AS PER ABOVE SUBMISSION, EITHER FROM BANKS OR THROUGH BANK BOOKS/ BANK STATEMENTS. IN VIEW OF THE ABOVE, THE DIFFERENCE OF RS.1,84,251/- IN BANK BOOK AND BANK STATEMENT AS PER BANK RECONCILIATION STATE MENT FILED IS ADDED TO THE TOTAL INCOME. 4. AGGRIEVED, ASSESSEE CARRIED THE MATTER IN APPEAL BEFORE THE CIT(A), BUT WITHOUT ANY SUCCESS. LEARNED CIT(A) CONFIRMED THE ACTION O F THE ASSESSING OFFICER BY OBSERVING AS FOLLOWS:- 5.3 I HAVE CAREFULLY CONSIDERED THE FACTS AND THE CIRCUMSTANCES OF THE CASE, THE OBSERVATIONS OF THE ASSESSING OFFICER AND THE MATER IAL AVAILABLE ON THE RECORD. IT IS CLEAR FROM THE RECORDS THAT THE CORRECTIONS WERE CARRIED OUT DURING THE YEAR UNDER CONSIDERATION, THE ENTRIES WERE REFLECTED IN ASSESSEES BANK ACCOUNTS DURING THE RELEVANT YEAR AND ARE YET TO BE RECONCIL ED. THE ASSESSEE'S ARGUMENT THAT THE ENTRIES PERTAIN TO EARLIER YEARS, THEREFORE, SHOULD NOT BE CONSIDERED DURING THE YEAR UNDER CONS IDERATION IS ALSO NOT VALID AS THE ENTRIES WERE REFLECTED IN ASSESSEE'S BANK STATE MENT DURING THE YEAR UNDER CONSIDERATION AS THEY WERE RECONCILED BY THE BANK D URING THE YEAR UNDER CONSIDERATION AND WERE EFFECTED DURING THE CURRENT YEAR AND HAD IMPACT ON THE FINANCIAL RESULTS OF THE ASSESSEE DURING THE YEAR U NDER CONSIDERATION. THE ASSESSEE HAS FAILED TO EXPLAIN THE ENTRIES WITH REL EVANT EVIDENCE/DETAILS AND ITS ONLY ARGUMENT IS THAT THESE RELATE TO EARLIER YEARS , EVEN THOUGH, IT IS CLEAR THAT THESE ENTRIES WERE REFLECTED IN HIS ACCOUNT FOR THE FIRST TIME DURING THE CURRENT YEAR, THERE ARE SOME ENTRIES OF CASH DEPOSITS AS WE LL AS CREDIT ENTRIES AND ITA NO. 278/AHD/2016 XL PLASTICS VS. ACIT ASSESSMENT YEAR: 2011-12 PAGE 3 OF 6 NEEDED TO BE EXPLAINED WITH SUPPORTING EVIDENCE. SI NCE THE ASSESSEE HAS FAILED TO DO SO, THE ORDER OF THE ASSESSING OFFICER IN THI S REGARD IS UPHELD. THE ASSESSEE FAILS ON THIS GROUND OF APPEAL. 5. THE ASSESSEE IS NOT SATISFIED AND IS IN FURTHER APPEAL BEFORE US. 6. WE HAVE HEARD THE RIVAL CONTENTIONS, PERUSED THE MATERIAL ON RECORD AND DULY CONSIDERED FACTS OF THE CASE IN THE LIGHT OF THE AP PLICABLE LEGAL POSITION. 7. WE HAVE NOTED THAT THE ASSESSEES EXPLANATION WI TH RESPECT TO THE DIFFERENCE OF RS.1,84,251/- IS AS FOLLOWS:- AS REGARDS GROUND NO. 1 ADDITION OF RS.1,84,251/-. THE LD AO HAS ADDED SUM OF RS.1,84,2517- REFLECTED IN BANK RECONCILIATION STATEMENT FOR WHICH THE FIRM HAD EXPLAINED THAT THE AMOUNTS WERE DEPOSITED DIRECTLY BY CUSTOMERS THROUGH RTGS AND NEFT FOR WHI CH THE BANK DID NOT GIVE ANY INTIMATION TO THE FIRM. THEREFORE, THE SAID ENT RIES COULD NOT BE CREDITED ANY PARTY'S ACCOUNT. THE ENTRIES AS PER RECONCILIATION DTD. 31.03.2011 A RE AS UNDER. DATE PARTICULARS AMT.(RS.) RELATED FINANCIAL YEAR 05.10.2010 CLEARING BR. 10475 10350/- ENTRY CLEARED ON 19.11.2011 13.10.2010 CLEARING BR. 988 21597/- ENTRY CLEARED O N 23.11.2011 30.10.2007 CASH DEPOSIT 5000/- RELATES TO F.Y. 2007 -08 29.12.2007 TRANSFER 1000/- RELATES TO F.Y. 2007-08 04.01.2008 TRANSFER 100000/- RELATES TO F.Y. 2007-0 8 DATE PARTICULARS AMT.(RS) RELATED FINANCIAL YEAR 01.02.2008 CLEARING 5000/- RELATES TO F.Y. 2007-08 23.06.2008 CLEARING 5000/- RELATES TO F.Y. 2008-09 01.08.2008 TRANSFER 1085/- RELATES TO F.Y. 2008-09 10.08.2009 BOM. JUHU BRANCH 1655/- RELATES TO F.Y. 2009-10 14.08.2009 CASH BR. 9664 1000/- RELATES TO F.Y. 200 9-10 11.02.2010 BR. 6229 1124/- RELATES TO F.Y. 2009-10 20.03.2010 TRANSFER BR. 2854 10/- RELATES TO F.Y. 2 009-10 25.03.2010 BR. 4328 DELHI 1545/- ENTRY CLEARED ON 2 9.06.2011 25.03.2010 BR. 707 2206/- RELATES TO F.Y. 2009-10 29.03.2010 BR.3145 828/- RELATES TO F.Y. 2009-10 10.06.2010 CLE ARING BR. 10573 MADURAI 2000/- RELATES TO F.Y. 2010-11 09.11.2010 BR. 10390 BANGALORE 1655/- RELATES TO F.Y. 2010-11 07.01.2011 CLEARING 60899 BR. 10390 7023/- ENTRY CLEARED ON 07.1 1.2012 20.01.2011 CLEARING CH. NO. 60946 BR. 10390 1781/- RELATES TO F.Y. 20 10- 11 09.02.2011 BRANCH 4328 2808/- RELATES TO F.Y. 2010- 11 19.02.2011 BRANCH NO. 10395 8609/- RELATES TO F.Y. 2010-11 ITA NO. 278/AHD/2016 XL PLASTICS VS. ACIT ASSESSMENT YEAR: 2011-12 PAGE 4 OF 6 18.03.2011 BR. 10554 1551/- RELATES TO F.Y. 2010-11 21.03.2011 BR. 900 1424/- RELATES TO F.Y. 2010-11 TOTAL RS 184251/- THE APPELLANT FIRM HAS BEEN ABLE TO GET CLARIFICATI ON OF AMOUNT OF RS.49,124/- RECEIVED FROM DIFFERENT PARTIES. THE SAID AMOUNT IS ADJUSTED IN FINANCIAL YEAR 2011-12 AND 2012-13. THE COPIES OF LEDGER ACCOUNT O F PARTIES ARE ENCLOSED. THE DETAILS ARE AS UNDER. NAME OF PARTY DATE OF CLARIFICATION AMT.(RS.) M.L. INDUSTRIES, JAIPUR 19.11.2011 10350/- ASHWIN POLYMERS, MADURAI 23.11.2011 21597/- EXCEL POLY PACK, VIRUDHUNAGAR 29.06.2011 1545/- JO BLAND ENTERPRISES, MALUR, KOLAR, KARNATAKA 17.07.2012 7023/- HIND PLAST, CHENNAI 13.07.2012 8609/- TOTAL RS. 49124/- THUS, OUT OF TWENTY THREE ENTRIES IN THE RECONCILIA TION STATEMENT, THE ABOVE FIVE ENTRIES HAVE BEEN CLEARED, LEAVING BALANCE OF RS. 1 35127/- (184251-49124). THE FIRM IS MAKING RIGOROUS EFFORT TO GET DETAILS FROM BANK TO CLEAR THE ENTRIES. OUT OF BALANCE OF RS. 135127/- THE BELOW MENTIONED ENTRIES DO NOT PERTAIN TO FINANCIAL YEAR 2010-11 (ASST. YEAR 2011-12). ENTRIES RELATING TO FINANCIAL YEAR 2007-08(ASST. YE AR 2008-09) DATE PARTICULARS AMT.(RS.) RELATED FINANCIAL YEAR 30.10.2007 CASH DEPOSIT 5000/- 2007-08 29.12.2007 TRANSFER 1000/- 2007-08 04.01.2008 TRANSFER 100000/- 2007-08 01.02.2008 CLEARING 5000/- 2007-08 TOTAL RS. 111000/- ENTRIES RELATING TO FINANCIAL YEAR 2008-09(ASST. YE AR 2009-10) DATE PARTICULARS AMT.(RS.) RELATED FINANCIAL YEAR 23.06.2008 CLEARING 5000/- 2008-09 01.08.2008 TRANSFER 1085/ 2008-09 TOTAL RS. 608 5/- ENTRIES RELATING TO FINANCIAL YEAR 2009-10(ASST. YE AR 2010-11) DATE PARTICULARS AMT.(RS.) RELATED FINANCIAL YEAR 10.08.2009 BOM. JUHU BRANCH 1655/- 2009-10 14.08.2009 CASH BR. 9664 1000/- 2009-10 11.02.2010 BR. 6229 1124/- 2009-10 ITA NO. 278/AHD/2016 XL PLASTICS VS. ACIT ASSESSMENT YEAR: 2011-12 PAGE 5 OF 6 20.03.2010 TRANSFER BR. 2854 10/- 2009-10 25.03.2010 BR. 707 2206/- 2009-10 29.03.2010 BR. 3145 828/- 2009-10 TOTAL RS. 6823/- THUS, AMOUNT RELATING TO FINANCIAL YEARS 2007-08 (R S. 111000/-), 2008-09 (RS. 6085/-) AND 2009-10 (RS. 6823/-) DO NOT PERTAIN TO FINANCIAL YEAR 2010-11 RELATING TO ASST. YEAR 2011-12 AND THEREFORE, TOTAL OF RS. 1 23908/- NEED NOT BE ADDED TO THE INCOME FOR ASST. YEAR 2011-12. IF AT ALL, ADDIT ION IS REQUIRED TO BE MADE IT SHOULD BE IN THE RESPECTIVE ASSESSMENT YEARS AND NO T IN THE ASST. YEAR 2011-12. IF AT ALL ADDITIONS IS REQUIRED TO BE MADE THAN ONL Y AMOUNT RELATING TO F.Y. 2010- 11 (ASST. YEAR 2011-12) OF RS. 11219/- NEEDS TO BE ADDED TO THE TOTAL INCOME. 8. ON A PERUSAL OF THE ABOVE DETAILS, WE FIND THAT THE ENTRIES TO THE EXTENT OF RS.49,124/- ARE PROPERLY EXPLAINED. TO THIS EXTENT , THEREFORE, THE IMPUGNED ADDITION INDEED DESERVES TO BE DELETED. AS REGARDS THE REMA INING AMOUNT, PRIMARY EXPLANATION OF THE ASSESSEE IS THAT THE AMOUNT OF RS.1,10,000/- PERTAINS TO AY 2008-09, RS.6,085/- PERTAINS TO AY 2009-10 AND RS.6,823/- PERTAINS TO A Y 211-12 AND SHOULD BE EXCLUDED FROM THE INCOME OF THE PRESENT ASSESSMENT YEAR. IF THE ASSESSEE THINKS THAT BY GIVING THIS EXPLANATION, HE WILL BE ABLE TO AVOID TAXABILI TY OF THESE AMOUNTS AS THE ASSESSMENT FOR THOSE ASSESSMENT YEARS CANNOT BE REOPENED, IN O UR OPINION, HE IS CERTAINLY MISTAKEN. SUCH AN APPROACH WILL IN FACT BE COUNTER PRODUCTIVE. EXPLANATION 2(A) TO SECTION 153 CATEGORICALLY PROVIDES FOR SUCH A SITUA TION, I.E. WHEN AN INCOME IS EXCLUDABLE FROM TAXABLE INCOME OF ONE YEAR BECAUSE IT WAS TAXABLE IN SOME OTHER ASSESSMENT YEAR, AND PROVIDES FOR MECHANISM TO BRIN G IT TO TAX IN SUCH OTHER ASSESSMENT YEAR, EVEN AFTER THE PERMISSIBLE TIME TO FRAME ASSESSMENTS OR REASSESSMENT HAS ELAPSED. LEARNED COUNSEL, ON BEING POINTED OUT THIS LEGAL FRAMEWORK, DOES NOT PRESS THE POINT FURTHER. WE, THEREFORE, C ONFIRM THE DISALLOWANCE TO THE EXTENT OF THE REMAINING AMOUNT I.E. RS.1,35,127/-. 9. GROUND NO.1 IS THUS PARTLY ALLOWED. 10. IN GROUND NO.2, THE ASSESSEE HAS RAISED THE FOL LOWING GRIEVANCE:- ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LD. CIT(APPEALS) HAS ERRED AND IS NOT JUSTIFIED BOTH IN LAW AND ON FACTS IN CONFIR MING APPLICATION OF PROVISIONS OF SECTION 40(A)(IA) OF THE ACT AND THEREBY CONFIRMING DISALLOWANCE OF RS.375860/- BEING REIMBURSEMENT OF EXPENSES GIVEN TO ORIENT MAR INE LINE PVT LTD WITHOUT DEDUCTION OF TDS. IT IS PRAYED THAT THE DISALLOWANC E U/S 40(A)(IA) OF RS.375860/- BE DELETED. 11. SO AS FAR AS THIS ISSUE IS CONCERNED, IT IS SUF FICIENT TO TAKE NOTE OF THE FACT THAT THE AMOUNT IN QUESTION PERTAINS TO REIMBURSEMENT OF OCE AN FREIGHT TO THE C&F AGENT WHO, IN TURN, HAS PAID THE AMOUNTS TO THE SHIPPING COMPANY, THE AUTHORITIES BELOW HAVE UPHELD THE DISALLOWANCE ON THE GROUND THAT ITS A PAYMENT TO NON-RESIDENT AND THE ASSESSEE WAS UNDER AN OBLIGATION TO DEDUCT TAX AT SOURCE FRO M THE SAME. THE NATURE OF PAYMENT IS ALSO DISPUTED BY THE ASSESSING OFFICER AND THE C IT(A) INASMUCH AS THE EXPENDITURE WAS CLASSIFIED AS EXHIBITION EXPS. AND THAT THERE WAS NO EVIDENCE ABOUT THE PAYMENT ITA NO. 278/AHD/2016 XL PLASTICS VS. ACIT ASSESSMENT YEAR: 2011-12 PAGE 6 OF 6 BEING IN THE NATURE OF FREIGHT EXPENSES. THE ASSESS EE IS AGGRIEVED AND IS IN FURTHER APPEAL BEFORE US. 12. WE HAVE HEARD THE RIVAL CONTENTIONS, PERUSED TH E MATERIAL ON RECORD AND DULY CONSIDERED FACTS OF THE CASE IN THE LIGHT OF THE AP PLICABLE LEGAL POSITION. 13. ON A PERUSAL OF BILLS, COPIES OF WHICH ARE PLAC ED BEFORE US AT PAGES 16 AND 17 OF THE PAPER-BOOK, WE ARE SATISFIED THAT THE PAYMENT I S MADE ON ACCOUNT OF REIMBURSEMENT OF OCEAN FREIGHT EXPENSES EVEN THOUGH IT WAS BOOKED EXHIBITION CHARGES AS THE OCEAN FREIGHT WAS IN CONNECTION WITH EXHIBITION OF PRODUC TS. AS THE PAYMENT IS IN THE NATURE OF REIMBURSEMENT OF FREIGHT EXPENSES, IN OUR CONSIDERE D VIEW, THE TAX WITHHOLDING OBLIGATIONS WERE NOT ATTRACTED. WE, THEREFORE, UPH OLD THE PLEA OF THE ASSESSEE AND DELETE THE IMPUGNED DISALLOWANCE OF RS.3,75,860/-. 14. GROUND NO.2 IS THUS ALLOWED. 15. IN THE RESULT, THE APPEAL IS PARTLY ALLOWED. PR ONOUNCED IN THE OPEN COURT TODAY ON THE 8 TH OCTOBER, 2018 SD/- SD/- MAHAVIR PRASAD PRAMOD KUMAR (JUDICIAL MEMBER) (ACCOUNTANT MEMBER) AHMEDABAD, THE 8 TH OCTOBER, 2018 **BT COPIES TO: (1) THE APPELLANT (2) THE RESPONDENT (3) COMMISSIONER (4) CIT(A) (5) DEPARTMENTAL REPRESENTATIVE (6) GUARD FILE BY ORDER TRUE COPY ASSISTANT REGISTRAR INCOME TAX APPELLATE TRIBUNAL AHMEDABAD BENCHES, AHMEDABAD 1. DATE OF DICTATION: .....ORDER PREPARED AS PER 6 PAGES MANUSCRIPTS OF HONBLE AM, WHICH ARE ATTACHED....08.10.2018 2. DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE T HE DICTATING MEMBER: .. 08.10.2018 3. DATE ON WHICH THE APPROVED DRAFT COMES TO THE SR . P.S./P.S.: 08.10.2018... 4. DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE TH E DICTATING MEMBER FOR PRONOUNCEMENT: 08.10.2018.. 5. DATE ON WHICH THE FILE GOES TO THE BENCH CLERK : . 08.10.2018. 6. DATE ON WHICH THE FILE GOES TO THE HEAD CLERK : . 7. THE DATE ON WHICH THE FILE GOES TO THE ASSISTANT RE GISTRAR FOR SIGNATURE ON THE ORDER : . 8. DATE OF DESPATCH OF THE ORDER: ......