SHANKARLAL GIDRA, MADURAI V. ITO, WARD - II (3), MADURAI

ITA 2932/CHNY/2019

• Counselvise Citation: [2020] 110 COUNSELVISE.COM (IT) 1935 (ITAT-CHENNAI)
• Duration Of Justice: 1 year(s) 29 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 19-11-2020
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: D
• Assessment Year: 2005-2006
• Appeal Filed On: 21-10-2019
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: G CHANDRABABU A DDL
• Assessee Lawyers: R KUMAR

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL D (SMC) BENCH: CHENNAI , BEFORE SHRI V. DURGA RAO , JUDICIAL MEMBER ./ ITA NO. 29 32 /CHNY/ 20 19 / ASS ESSMENT YEAR: 200 5 - 20 06 SHRI. SHANKARLAL GIDRA, NO.133/1 - 2A, SIVAGANGAI MAIN ROAD, VARICHUR, MADURAI 625 020 [PAN: A DJPG 9316K ] VS. THE INCOME TAX OFFICER, WARD II (3), INCOME TAX DEPARTMENT, NO.2, V.P. RATHINASAMY NADAR ROAD, BIBIKULAM, MADUR AI 625 002. ( /APPELLANT) ( /RESPONDENT) / APPELLANT BY : MR. R. KUMAR , ADVOCATE /RESPONDENT BY : M R . G. CHANDRABABU , A DDL. CIT / DATE OF HEARING : 1 7 . 11 .2020 / DATE OF PRON OUNCEMENT : 19. 1 1 .20 20 / O R D E R PER V. DURGA RAO , JUDICIAL MEMBER : TH IS APPEAL FILED BY THE ASSESSEE IS AGAINST THE ORDER OF THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) - 1 , MADURAI IN . I . T . A NO. 11 /201 9 - 20 DATED 30.09.2019 RELEVANT TO T HE ASSESSMENT YEAR 200 5 - 20 06 . ITA NO 29 32 /CHNY/2019 : - 2 - : 2. THE BRIEF FACTS OF THE CASE IS THAT THE ASSESSEE IS CARRYING ON A BUSINESS OF PURCHASE AND SALE OF GRANITES. THERE WAS A SEARCH OPERATION CONDUCTED IN THE CASE OF THE ASSESSEE. DURING THE COURSE OF EXAMINATION OF ACCOUN TS, IT IS NOTICED THAT THE ASSESSEE HAS PURCHASED KHANDA FROM M/S. SRI HARI TRADING COMPANY, 3/J4, D.D. ROAD, VIRUDHUNAGAR TO A TUNE OF RS.7,38,747/ - . THE ASSESSING OFFICER HAD ISSUED A LETTER DATED 23.04.2007 TO THE SUPPLIER M/S. SRI HARI TRADING COMPANY AND ASKED HIM TO PRODUCE THE ACCOUNTS AS APPEARING IN ITS BOOKS FOR THE SALE OF KHANDA TO THE ASSESSEE. THE LETTER WAS RETURNED AS UNSERVED. THE AUTHORIZED REPRESENTATIVE OF THE ASSESSEE APPEARED BEFORE THE ASSESSING OFFICER AND SUBMITTED THAT HE WILL T RY TO BRING THE SUPPLIER M/S. SRI HARI TRADING COMPANY. HOWEVER, WAS UNABLE TO PRODUCE HIM BECAUSE HIS WHEREABOUTS ARE NOT AVAILABLE AND SUBMITTED THE SAME BEFORE THE ASSESSING OFFICER. THEREFORE, THE ASSESSING OFFICER ISSUED A LETTER ON 10.10.2007 TO TH E COMMERCIAL TAX OFFICER II, VIRUDHUNAGAR WITH A REQUEST TO CONFIRM AS TO WHETHER THE SUPPLIER IS FOUND IN THE RECORDS OF THE SALES TAX A UTHORITIES. THE COMMERCIAL TAX OFFICER, VIRIDHUNAGAR VIDE LETTER DATED 12.10.2007 INTIMATED THAT THE SUPPLIER M/ S. SRI HARI TRADING ITA NO 29 32 /CHNY/2019 : - 3 - : COMPANY WAS GRANTED A SALES TAX REGISTRATION IN TNGST NO.5741268/504643 FOR SUPPLY OF TOOR, MOONG, ORID, LOBA, PEAS, TOORDHALL, MOONGDHALL, ORID DHALL, DHANIA, PEAS DHALL AND DUST ONLY. HE ALSO CONFIRMED THAT THE RELEVANT SALES TAX REGI STRATION WAS CANCELLED WITH EFFECT FROM 01.04.2005. SO, BY CONSIDERING THE REPLY GIVEN BY THE COMMERCIAL TAX OFFICER [CTO], THE ASSESSING OFFICER CAME TO A CONCLUSION THAT IT WAS ONLY A SHAM TRANSACTION. ACCORDINGLY, THE ASSESSING OFFICER CONFIRMED THE A BOVE ADDITION. 3. ON APPEAL, THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) HAD CONFIRMED THE ORDER OF THE ASSESSING OFFICER. 4 . WE HAVE HEARD BOTH THE SIDES, PERUSED THE MATERIALS AVAILABLE ON RECORD AND GONE THROUGH THE ORDERS OF THE AUTHORITIES BELO W. 5 . IN THIS CASE, THE ASSESSING OFFICER HAS DOUBTED THE PURCHASE MADE BY THE ASSESSEE FROM M/S. SRI HARI TRADING COMPANY AND A LETTER WAS ISSUED TO THE COMPANY BUT HOWEVER THE LETTER HAD RETURNED UN - SERVED. THEREAFTER, THE LETTER WAS RETURNED TO THE CO MMERCIAL TAX OFFICER [CTO] AND THE COMMERCIAL TAX OFFICER REPLIED STATING THAT M/S. SRI HARI TRADING COMPANY WAS GRANTED SALES TAX REGISTRATION UP TO 01.04.2005. THEREFORE, THE EXISTENCE ITA NO 29 32 /CHNY/2019 : - 4 - : OF THE ASSESSEE CANNOT BE DOUBTED. THE DOUBT OF THE ASSESSING OFFIC ER IS THAT M/S. SRI HARI TRADING COMPANY IS NOT AT ALL AVAILABLE AND THAT THE TRANSACTION MADE BY THE ASSESSEE IS A BOGUS TRANSACTION. FURTHER, FOR THAT REASON GIVEN BY THE ASSESSING OFFICER IS THAT THE LETTER THAT WAS ISSUED WAS UN - SERVED. HOWEVER, THE COMMERCIAL TAX OFFICER CONFIRMED THE EXISTENCE OF M/S. SRI HARI TRADING COMPANY AND THEREFORE THE FINDING OF THE ASSESSING OFFICER IS NOT CORRECT. ONCE THE COMMERCIAL TAX OFFICER HAD CONFIRMED THE EXISTENCE OF THE ASSESSEE , THE ASSESSING OFFICER OUGHT TO HAVE ISSUED A SUMMON U/S.131 OF THE INCOME TAX ACT, 1961 . THE ASSESSING OFFICER WITHOUT FOLLOWING ANY PROCEDURE THAT CONTEMPLATED UNDER THE INCOME TAX ACT, 1961, SIMPLY DISBELIEVED THE EXPLANATION OF THE ASSESSEE AND CAME TO A CONCLUSION THAT IT IS A BOGUS TRANSACTION. IN OUR OPINION, THE ASSESSING OFFICER HAS NOT MADE A PROPER ENQUIRY AND CONCLUDED THE ASSESSMENT , WITHOUT CONSIDERING THE EXPLANATION OF THE ASSESSEE. IN VIEW OF THE ABOVE, THE ORDER PASSED BY THE ASSESSING OFFICER AND THAT CONFIRMED BY THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) CANNOT SURVIVE. THUS, THE ITA NO 29 32 /CHNY/2019 : - 5 - : ORDER PASSED BY THE LEARNED COMMISSIONE R OF INCOME TAX (APPEALS) IS CANCELLED AND THE APPEAL OF THE ASSESSEE IS ALLOWED. 6 . IN THE RESULT, THE APPEAL OF THE A SSESSEE IN ITA NO. 29 32 /CHNY/2019 IS ALLOWED. ORDER PRONOUNCED ON 19 TH NOVEMBER , 20 20 IN CHENNAI. SD/ - ( ) ( V. DURGA RAO ) /JUDICIAL MEMBER / CHENNAI, / DATED: 19 TH NOVEMBER , 2020 IA, SR. PS / COPY TO: 1. / APPELLANT 2. / RESPONDENT 3. ( ) / CIT(A) 4. / CIT 5. / DR 6. / GF