M/s. Star Playwood, Hoshiarpur V. The Income Tax Officer, Hoshiarpur

ITA 283/ASR/2015

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 8817 (ITAT-AMRITSAR)
• Duration Of Justice: 9 month(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 16-03-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Next Hearing Date: 09-03-2017
• Assessment Year: 2009-2010
• Appeal Filed On: 05-06-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Revised return
• Section: 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AMRITSAR BENCH; AMRITSAR (SMC). BEFORE SH. A.D. JAIN, JUDICIAL MEMBER ITA NO.283(ASR)/2015 ASSESSMENT YEAR:2009-10 PAN:ABQFS0461E M/S. STAR PLYWOOD, VS. INCOME TAX OFFICER, VILL. BASSI KASSON, WARD-1, HOSHIARPUR. HOSHIARPUR. (APPELLANT) (RESPONDENT) APPELLANT BY:SH. SANDEEP VIJH, CA RESPONDENT BY: SH. TARSEM LAL, DR DATE OF HEARING: 09/03/2016 DATE OF PRONOUNCEMENT: 16/03/2016 ORDER THIS IS THE ASSESSEES APPEAL FOR THE ASSESSMENT Y EAR 2009-10, CONTENDING THAT THE LD. CIT(A) HAS ERRED IN UPHOLDI NG THE ADDITION OF RS.2,87,862/-BY INVOKING THE PROVISIONS OF SECTION 41(1) OF THE ACT. 2. THE FACTS OF THE CASE ARE THAT THE ASSESSEE FIRM WHICH IS ENGAGED IN THE BUSINESS OF MANUFACTURING OF PLYWOOD AND SALE T HEREOF, HAD FILED ITS RETURN OF INCOME FOR THE YEAR UNDER CONSIDERATION O N 30.03.2010 DECLARING AN INCOME OF RS.29,050/-. DURING THE COU RSE OF ASSESSMENT PROCEEDINGS, THE ASSESSING OFFICER CALLED FOR THE C OPIES OF ACCOUNT OF VARIOUS SUNDRY CREDITORS AND DEBTORS AS APPEARING I N THE BOOKS OF ACCOUNT OF THE ASSESSEE. THE COPIES OF ACCOUNT OF T HE ASSESSEE AS APPEARING IN THE BOOKS OF ACCOUNT OF VARIOUS SUNDRY CREDITORS AND ITA NO.283(ASR)/2015 ASSESSMENT YEAR 21009-10 2 DEBTORS WERE ALSO CALLED FOR DIRECTLY. WHILE CROSS VERIFYING THE BALANCE IN THE ACCOUNTS OF VARIOUS SUNDRY DEBTORS AND CREDITOR S, THE ASSESSING OFFICER HAD NOTICED THAT THERE WAS A DIFFERENCE OF RS. 1,67,710/- IN THE ACCOUNT OF M/S SHREE RADHA PLYWOOD INDUSTRIES (P) L IMITED AND RS. 1,20,152/- IN THE ACCOUNT OF M/S CHOPRA PLYWOOD COM PANY. IT WAS FURTHER NOTICED THAT THE ASSESSEE HAD SHOWN LIABILI TY OF RS. 1,67,710/- IN ITS BOOKS OF ACCOUNT TOWARDS M/S SHREE RADHA PLYWOO D INDUSTRIES (P) LIMITED, WHEREAS NO AMOUNT WAS SHOWN AS RECEIVABLE BY M/S SHREE RADHA PLYWOOD INDUSTRIES (P) LIMITED FROM THE ASSES SEE. SIMILARLY ASSESSEE HAD SHOWN AN AMOUNT OF RS. 1,20,152/- AS L IABILITY TOWARDS M/S CHOPRA PLYWOOD COMPANY, WHEREAS THE PARTY M/S C HOPRA PLYWOOD COMPANY HAS NOT SHOWN ANY AMOUNT RECEIVABLE FROM TH E ASSESSEE. SO, THE ASSESSING OFFICER ASKED THE ASSESSEE TO EXPLAIN /RECONCILE THE DIFFERENCE IN THE ACCOUNT OF THESE TWO PARTIES. HOW EVER, THE DIFFERENCE IN THE ACCOUNT OF M/S SHREE RADHA PLYWOOD INDUSTRIES ( P) LIMITED, WAS EXPLAINED BEFORE THE AO AND THE EXPLANATORY NOTES W ERE APPENDED IN THE REPLY, WHICH READ AS UNDER: NOTE1: M/S. SHREE RADHA PLYWOOD INDUSTRIES (P) LTD: THE FIRM HAD PURCHASED PLANT & MACHINERY WORTH RS.3,67,710/- FROM M/S. SHREE RADHA PLYWOOD INDUSTR IES (P) LTD ON 27.03.2008 AND PAID RS.2,00,000/- VIE CHEQUE NO.839 151. THE BALANCE RS.1,67,710/- WAS SHOWN BY THE PARTY TO BE PAID IN CASH ON THE SAME DATE. DUE TO THE DEATH OF MAIN WORKING PARTNER, IT IS NOT POSSIBLE FOR US TO EXPLAIN WHETHER THE SAME WAS PAI D OUT OF HIS OWN SOURCES OR OUT OF THE FUNDS OF FIRM AND IF OUT OF T HE FUNDS OF FIRM, THE REASON WHY THIS AMOUNT OF CASH PAID WAS NOT RECORDE D IN OUR BOOKS OF ACCOUNTS. BUT IT IS SURE THAT IF IT IS PAID OUT OF THE FUNDS OF THE FIRM, THEN THE SAME MUST HAD BEEN PAID OUT OF THE S ALES PROCEEDS OF THE FIRM, NOT RECORDED IN THE BOOKS OF ACCOUNTS, AS THE FIRM HAD NO OTHER SOURCE OF INCOME. ITA NO.283(ASR)/2015 ASSESSMENT YEAR 21009-10 3 2.2 THE ASSESSEES COUNSEL HAS EXPLAINED DUE TO THE DEATH OF SH. RAJINDER MOHAN, THE DIFFERENCE IN CLOSING BALANCE I N THE COPY OF ACCOUNT CANNOT BE EXPLAINED. IT WAS SUBMITTED THAT NO TRANSACTION HAS BEEN MADE DURING THE YEAR AND HENCE IT WILL HAV E NO AFFECT ON THE QUANTUM OF INCOME OF THE ASSESSEE EARNED DURING THE YEAR. THE ASSESSEE HAS FILED HIS RELY DATED 15.11.2011 AS UND ER: WITH REFERENCE TO THE ASSESSMENT PROCEEDINGS IN TH E ABOVE SAID CASE, IT IS HEREBY SUBMITTED THAT AS EARLIER S AID, WE HAVE TRIED TO LOCATE THE DIFFERENCES WITH THE PARTY. DUE TO DEATH OF MAIN PARTNER SH. RAJINDER MOHAN, WE ARE UNABLE TO E XPLAIN THE DIFFERENCES WITH THE PARTY. IN LIEU OF THAT WE ARE READY TO SURRENDER RS. 1 LAC ONLY SUBJECT TO NO PENALTY, IN OUR ABOVE SAID CASE. HOWEVER, THE EXPLANATION OFFERED BY THE ASSESSEE A ND OFFER OF SURRENDER WAS NOT ACCEPTED BY THE ASSESSING OFFICER AND HE PR OCEEDED TO MAKE AN ADDITION OF RS. 1,67,710/- TO THE RETURNED INCOME O F THE ASSESSEE ON ACCOUNT OF CESSATION OF LIABILITY IN THE CASE OF M/ S SHREE RADHA PLYWOOD INDUSTRIES (P) LIMITED AS NO AMOUNT WAS SHOWN AS RE CEIVABLE FROM THE ASSESSEE BY THAT PARTY. IN THE SAME WAY, ANOTHER AD DITION OF RS. 1,20,152/- WAS ALSO MADE BY THE ASSESSING OFFICER O N ACCOUNT OF DIFFERENCE IN ACCOUNT IN THE CASE OF M/S CHOPRA PLY WOOD COMPANY AS IN THE OPINION OF MG OFFICER, THE ASSESSEE HAS SHOWN E XCESS LIABILITY OF RS. 1,20,152/- IN THE CASE OF M/S CHOPRA PLYWOOD COMPAN Y. THE ASSESSMENT IN THIS CASE WAS ULTIMATELY COMPLETED BY THE ASSESSING OFFICER VIDE ORDER UNDER SECTION 143(3) OF THE ACT DATED 14.12.2011 AT AN ASSESSED INCOME OF RS.3,16,910/- WHICH INCLUDES ABO VE REFERRED ADDITIONS. PENALTY PROCEEDINGS UNDER SECTION 271(1) (C) OF THE ACT FOR FURNISHING INACCURATE PARTICULARS OF INCOME TO THE EXTENT OF ADDITIONS MADE WERE ALSO INITIATED. 3. THE LD. CIT(A) CONFIRMED THE ADDITION. ITA NO.283(ASR)/2015 ASSESSMENT YEAR 21009-10 4 4. THE LD. COUNSEL FOR THE ASSESSEE HAS CONTENDED T HAT THE LD. CIT(A) HAS ERRED IN CONFIRMING THE ADDITION WITHOUT APPREC IATING EITHER THE SUBMISSIONS OF THE ASSESSEE OR FACTUAL POSITION 5. ON THE OTHER HAND, THE LD. DR HAS PLACED STRONG RELIANCE ON THE IMPUGNED ORDER. 6. THE ASSESSEE HAS FILED THE FOLLOWING WRITTEN SUB MISSIONS BEFORE THE LD. CIT(A): THE SECOND GROUND OF APPEAL IS THAT THE LEARNED ASS ESSING OFFICER HAS ERRED IN MAKING AN ADDITION OF RS.287,862 WHICH IS WITHOUT ANY BASIS AND MATERIAL ON RECORD. THE FACTS OF THE CASE ARE THAT THE ADDITION OF RS.287.862 COMPRISES OF TWO ADDITIONS, ONE OF RS.167.710 AND THE OTHER OF RS.120.152. AS FAR AS T HE ADDITION OF RS.167,862 IS CONCERNED, IT IS SUBMITTED THAT THIS ADDITION HAS BEEN MADE ON ACCOUNT OF DIFFERENCE IN THE CLOSING BALANC E IN THE ACCOUNT WITH M/S SHREE RADHA PLYWOOD INDUS (P) LTD. THIS AD DITION HAS BEEN DISCUSSED AT PARA NO. 2 OF THE ASSESSMENT ORDE R. IT EMERGES FROM THE ASSESSMENT ORDER ITSELF THAT THE DIFFERENC E IN THE BALANCE WITH THE ABOVE REFERRED PARTY WAS ON ACCOUNT OF THE FACT THAT THE PARTY WHICH HAD SUPPLIED PLANT & MACHINERY IN THE M ONTH OF MARCH 2008 WORTH RS.367,710 HAD SHOWN RECEIPT OF CHEQUE F OR RS. 200,000 ON THE SAME DATE AND THE BALANCE AMOUNT WAS SHOWS AS RECEIVED IN CASH ALSO ON THE SAME DATE. COPY OF THE ACCOUNT OF THE ASSESSEE IN THE BOOKS OF THAT PARTY IS ENCLOSED AT PAGE NO. 1. IT WAS EXPLAINED BY THE ASSESSEE DURING THE ASSESSMENT PRO CEEDINGS THAT DUE TO THE DEATH OF THE MAIN WORKING PARTNER IT WAS NOT POSSIBLE TO EXPLAIN THE DIFFERENCE IN THE ABOVE ACCOUNT. IT WAS ALSO EXPLAINED THAT THE PAYMENT IN THE EARLIER YEAR COULD HAVE BEE N MADE BY THE WORKING PARTNER OUT OF HIS OWN SOURCES. IT IS PERTI NENT TO MENTION THAT THE ASSESSING OFFICER HAS HIMSELF CONFIRMED IN PARA NO. 2.3 THAT THE DIFFERENCE IN THE ACCOUNT RELATED TO THE YEAR E NDING 31/3/2008 AS THE CASH PAYMENT OF RS.167,710 WAS PAID TO THE P ARTY ON 27/3/3018 WHICH WAS NOT RECORDED IN THE BOOKS OF AC COUNTS. WITH THESE FACTS ITSELF, NO ADDITION IS CALLED FOR IN TH E YEAR ENDING 31/3/2009 I.E. ASSESSMENT YEAR 2009-10 SINCE THERE IS NO TRANSACTION IN THE ACCOUNT OF THE , PARTY EITHER IN THE BOOKS OF THE ASSESSEE OR IN THE BOOKS OF THE PARTY CONCERNED. TH E VARIATION IN ACCOUNT IS CLEARLY DUE TO TRANSACTIONS OF THE PRECE DING ASSESSMENT YEAR WHICH CANNOT BE THE REASON FOR MAKING ANY ADDI TION FOR THE YEAR UNDER APPEAL. THE ASSESSING OFFICER HAS MISDIR ECTED HIMSELF IN MAKING ADDITION OF RS. 167,710 IN THE YEAR ENDING 3 1/3/2009 AND NECESSARY RELIEF MAY PLEASE BE ALLOWED. ITA NO.283(ASR)/2015 ASSESSMENT YEAR 21009-10 5 REGARDING THE DIFFERENCE OF RS. 120,152 IN ACCOUNT WITH M/S CHOPRA PLYWOOD, CUSTOMER OF THE ASSESSEE, IT IS SUBMITTED THAT AS PER THE ACCOUNT OF THE ASSESSEE IN THE BOOKS OF THE PARTY, THERE WAS NO OPENING BALANCE. COPY OF THE RELEVANT ACCOUNT IS EN CLOSED AT PAGE NO. 2. COPY OF ACCOUNT OF THE PARTY IN THE BOOKS OF THE ASSESSEE IS ENCLOSED AT PAGE NO. 3. THE PARTY HAS SHOWN PURCHAS ES MADE AT RS.21,304 FOR WHICH PAYMENT WAS ALLEGED BY MADE IN CASH IN MARCH 2009 BUT NO SUCH PAYMENT WAS ACTUALLY RECEIVE D BY THE ASSESSEE. IF PAYMENT HAD BEEN MADE, THE SAME WOULD HAVE BEEN ACCOUNTED FOR AS IT WAS ONLY AGAINST SALES MADE TO ' THE PARTY. IN ANY CASE THE NON RECORDING OF CASH PAYMENTS MADE BY THE PARTY IN THE BOOKS OF THE ASSESSEE DOES NOT AFFECT THE TAXAB LE INCOME AND NO ADDITION IS CALLED FOR. THE PAYMENT IS AGAINST SALE S WHICH HAVE ALREADY STANDS REFLECTED AS INCOME UNDER THE HEAD S ALES. AS IN THE ABOVE CASE, THE BALANCE DIFFERENCE IN ACCOUNT WITH THE PARTY PERTAINS TO EARLIER YEARS FOR WHICH NO ADVERSE INFE RENCE CAN BE DRAWN FOR THE YEAR UNDER APPEAL. SINCE THERE IS NO DIFFERENCE IN ACCOUNT IN THE YEAR UNDER APPEAL EXCEPT FOR THE CAS H PAYMENTS ALLEGEDLY MADE BY THE PARTY, NO ADDITION WAS CALLED FOR PARTICULARLY WHEN THE PARTY WAS A CUSTOMER. TO PLACE ALL THE FACTS ON RECORD, WE MAY SUBMIT TH AT DURING THE ASSESSMENT PROCEEDINGS THE ASSESSEE HAD OFFERED TO TAX A SUM OF RS. 1 LAKH TO COVER THE DIFFERENCE IN ACCOUNT WITH THE PARTIES SUBJECT TO NO PENALTY. THIS OFFER WAS CONVEYED THROUGH LETT ER DATED 15/11/2011 BUT THIS OFFER WAS NOT ACCEPTED DIRECTLY AS WELL AS INDIRECTLY. IN PARA NO. 2.3 THE ASSESSING OFFICER H AS CLEARLY STATED IN THE CONTEXT OF THE REPLY DATED 15/11/2011 THAT IT W AS NOT ACCEPTABLE. THE OFFER OF RS. 1 LAKH WAS A CONDITION AL OFFER AND SINCE THE ASSESSING OFFICER INITIATED THE PENALTY PROCEED INGS, THE OFFER THUS STOOD REJECTED/ DECLINED. ATTENTION IS ALSO DRAWN T O THE DECISION OF THE CALCUTTA HIGH COURT IN THE CASE OF MAYNAK PODDA R (HUF) VS. WTO REPORTED AT 18TCTR 362 WHEREIN IT WAS HELD THAT WHERE THE ASSESSEE HAD CONCEDED AN ISSUE BY FILING A REVISED RETURN OFFERING AN ITEM TO TAX BEFORE THE ASSESSING OFFICER UNDER A MISTAKEN BELIEF, HE COULD STILL AGITATE THE MATTER IN APPEAL. IN FAC T IT HAS BEEN HELD BY THE JURISDICTIONAL HIGH COURT IN THE CASE OF CIT VS . SMT. SUDERSHAN GUPTA REPORTED AT 10 DTR184 THAT THE OFFER OF THE A SSESSEE HAS TO BE ACCEPTED IN TOTO OR IT HAS TO BE IGNORED. IF THE DEPARTMENT DOES NOT ALLOW THE ASSESSEE TO BUY PEACE OF MIND, THE ASSESS EE IS ALSO NOT BOUND TO PAY THE TAX. COPY OF THE ABOVE DECISION IS ENCLOSED AT PAGE NO. 4 TO 6 [PLEASE SEE PAGE NO. 4J). IN VIEW OF THE ABOVE, IT IS ABUNDANTLY CLEAR THAT T HE ADDITION OF RS. 287,862 WAS TOTALLY UNJUSTIFIED AND THE SAME NEEDS TO BE DELETED AT YOUR HANDS. ITA NO.283(ASR)/2015 ASSESSMENT YEAR 21009-10 6 7. THE LD. CIT(A), HOWEVER, CONFIRMED THE ADDITION, OBSERVING AS FOLLOWS: 5.2 I HAVE CONSIDERED THE OBSERVATIONS OF THE ASSES SING OFFICER AS MADE BY HIM IN THE ASSESSMENT ORDER. I HAVE ALSO CO NSIDERED WRITTEN SUBMISSIONS FILED BY THE ASSESSEE VIDE LETT ER DATED 28.04.2015 IN CONNECTION WITH THE ISSUE UNDER REFER ENCE. ON CAREFUL CONSIDERATION OF THE RIVAL CONTENTIONS, I AM OF THE OPINION THAT THE PLEA TAKEN BY THE LD. AR OF THE ASSESSEE THAT THE A MOUNT OF DIFFERENCE IN ACCOUNTS OF THE PARTIES UNDER REFEREN CE CANNOT BE ASSESSED IN THE YEAR UNDER CONSIDERATION IS NOT ACC EPTABLE AS IT IS, THE ASSESSEE TO PROVE THAT THE LIABILITY SHOWN BY T HE ASSESSEE IN ITS BOOKS OF ACCOUNT ACTUALLY EXISTS DURING THE YEAR UN DER CONSIDERATION. IN SPITE OF VARIOUS OPPORTUNITIES, T HE ASSESSEE COULD NOT RECONCILE THE DIFFERENCE AND COULD NOT PROVE TH AT THE LIABILITY ACTUALLY EXIST WHICH MEANS THAT THE LIABILITY SHOWN IN THE BOOKS OF ACCOUNT OF THE ASSESSEE IN THE CASE SUNDER REFERENCE IS NOT GENUINE AND IT TANTAMOUNT TO CESSATION OF LIABILITY IN THE YEAR UNDER CONSIDERATION. IN MY CONSIDERED OPINION, THE PROV ISIONS OF SECTION 41(1) OF THE ACT ARE ATTRACTED IN THE CASE OF THE A SSESSEES AS THE LIABILITY TO THE EXTENT OF RS.2,87,862/- SHOWN BY T HE ASSESSEE DOES NOT ACTUALLY EXISTS WHICH IS ALSO IN ADMITTED FACT. THE OFFER OF SURRENDER MADE BY THE ASSESSEE ITSELF INDICATES THA T THE LIABILITY DOES NOT ACTUALLY EXIST AND IS NOT GENUINE. 5.3. IN THE ABOVE STATED FACTS AND IN THE CIRCUMSTA NCES OF THE CASE, THE ADDITION OF RS.2,87,862/- MADE BY THE AO BY INV OKING PROVISIONS OF SECTION 41(1) OF THE ACT ON ACCOUNT O F CESSATION OF LIABILITY IS, THEREFORE, UPHELD. IN THE RESULT, GRO UND NO. 1 AND 2 OF THE APPEAL TAKEN BY THE ASSESSEE ARE DISMISSED. 8. FROM THE ABOVE OBSERVATIONS OF THE LD. CIT(A), I T IS EVIDENT THAT THE LD. CIT(A) HAS NOT CONSIDERED THE ASSESSEES ELABOR ATE WRITTEN SUBMISSIONS, WHICH STAND REPRODUCED IN THE IMPUGNED ORDER ITSELF. THIS HAS RENDERED THE ORDER UNDER APPEAL A NON-SPEAKING ORDER, PASSED AS A RESULT OF COMPLETE NON-READING AND MISREADING OF T HE MATERIAL BROUGHT ON RECORD THE GRIEVANCE OF THE ASSESSEE IN THIS REG ARD IS THUS JUSTIFIED AND IS ACCEPTED AS SUCH. ITA NO.283(ASR)/2015 ASSESSMENT YEAR 21009-10 7 9. ACCORDINGLY, THE MATTER IS REMITTED TO THE LD. C IT(A) TO BE DECIDED AFRESH, IN ACCORDANCE WITH LAW, ON CONSIDERING THE ASSESSEES WRITTEN SUBMISSIONS FILED BEFORE THE LD. CIT(A). THE ASSESS EE SHALL BE ALLOWED DUE AND ADEQUATE OPPORTUNITY TO SUPPORT ITS CASE AND T HE ASSESSEE, NOT DOUBT, SHALL CO-OPERATE IN THE FRESH ASSESSMENT PRO CEEDINGS. 10. IN THE RESULT, THE APPEAL IS ALLOWED FOR STATI STICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON /03/ 2016. (A.D. JAIN) JUDICIAL MEMBER DATED: /03/2016 COPY OF THE ORDER FORWARDED TO: 1. THE ASSESSEE:M/S. STAR PLYWOOD, VILL. BASSI KASSON, HOSHIARPUR. 2. THE ITO, WARD-1, HOSHIARPUR. 3. THE CIT(A), JALANDHAR. 4. THE CIT, JALANDHAR. 5. THE SR DR, ITAT, AMRITSAR. TRUE COPY BY ORDER (ASSISTANT REGISTRAR) INCOME TAX APPELLATE TRIBUNAL, AMRITSAR BENCH: AMRITSAR.