The ITO, Ward-1, Palanpur V. M/s. Navkar Enterprise, Palanpur

ITA 2937/AHD/2011

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 94499 (ITAT-AHMEDABAD)
• Duration Of Justice: 3 year(s) 10 month(s) 1 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-09-2015
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 28-09-2015
• Assessment Year: 2008-2009
• Appeal Filed On: 28-11-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: NARENDRA SINGH
• Section: 143(3); 68

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD B BENCH (BEFORE SHRI RAJPAL YADAV, JUDICIAL MEMBER & SHRI ANIL CHATURVEDI, ACCOUNTANT MEMBER) ITA NO: 2937/AHD/2011 (ASSESSMENT YEAR: 2008-09) I.T.O., WARD-1, PALANPUR V/S M/S. NAVKAR ENTERPRISE B- 108 SHEETAL SHOPPING CENTRE, CITY LIGHT ROAD, PALANPUR (APPELLANT) (RESPONDENT) PAN: AAFFN6492E APPELLANT BY : SHRI NARENDRA SINGH, SR. D .R. RESPONDENT BY : SHRI ANIL KSHATRIYA, A.R ( )/ ORDER DATE OF HEARING : 28-09-2015 DATE OF PRONOUNCEMENT : 30 -09-2015 PER ANIL CHATURVEDI, ACCOUNTANT MEMBER 1. THIS APPEAL FILED BY THE REVENUE IS AGAINST THE ORD ER OF CIT(A)-XX, AHMEDABAD DATED 27.09.2011 FOR A.Y. 2008-09. ITA NO 2937/ AHD/2011 . A.Y. 2008-09 2 2. THE RELEVANT FACTS AS CULLED OUT FROM THE MATERIAL ON RECORD ARE AS UNDER. 3. ASSESSEE IS A PARTNERSHIP FIRM STATED TO BE ENGAGED IN THE BUSINESS OF TRADING OF DIAMONDS. ASSESSEE ELECTRONICALLY FILED ITS RETU RN OF INCOME FOR A.Y. 2008-09 ON 29.09.2008 DECLARING TOTAL INCOME OF RS. 6,890/-. THE CASE WAS SELECTED FOR SCRUTINY AND THEREAFTER THE ASSESSMENT WAS FRAMED UNDER SECTION 143(3) VIDE ORDER DATED 30.12.2010 AND THE TOTAL IN COME WAS DETERMINED AT RS. 2,89,82,490/-. AGGRIEVED BY THE ORDER OF A.O., ASSESSEE CARRIED THE MATTER BEFORE LD. CIT(A) WHO VIDE ORDER DATED 27.09 .2011 GRANTED SUBSTANTIAL RELIEF TO THE ASSESSEE. AGGRIEVED BY TH E AFORESAID ORDER OF LD. CIT(A), REVENUE IS NOW IN APPEAL BEFORE US AND HAS RAISED THE FOLLOWING EFFECTIVE GROUND:- 1. THE LD. COMMISSIONER OF INCOME-TAX (APPEALS)-XX, AHMEDABAD HAS ERRED IN LAW AND ON FACTS IN DELETING THE ADDITION OF RS.2,89,75 ,600/- MADE BY THE ASSESSING OFFICER ON ACCOUNT OF OUTSTANDING TRADE SUNDRY CRED ITORS. 4. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, A.O NO TICED THAT ASSESSEE HAD SHOWN TURNOVER OF RS. 3.97 CRORE, THE GROSS PROFIT OF RS. 5,01,965/- BEING 1.26% AND NIL NET PROFIT. ON FURTHER PERUSING THE B ALANCE SHEET, HE NOTICED THAT THERE WERE OUTSTANDING CREDITORS TO THE EXTENT OF RS. 2, 89,75,600/- (THE LIST OF CREDITORS ARE LISTED AT PAGE 2 OF THE ORDER ). THE ASSESSEE WAS ASKED TO FURNISH COMPLETE POSTAL ADDRESS, COPY OF ACCOUNTS, NATURE OF TRANSACTIONS OF THOSE CREDITORS. A.O NOTED THAT ASSESSEE DID NOT PR ODUCE THE CREDITORS NOR FURNISHED THE COMPLETE ADDRESS. A.O THEREFORE CONCL UDED THAT THE NON FURNISHING OF REQUIRED DETAILS BY THE ASSESSEE WAS WITH THE INTENTION TO PREVENT THE DEPARTMENT FROM CARRYING OUT DETAILED I NVESTIGATIONS OF THE CREDITORS. THE COPY OF THE CONFIRMATIONS AND AFFIDA VITS AND VARIOUS OTHER ITA NO 2937/ AHD/2011 . A.Y. 2008-09 3 DETAILS THAT WERE FILED BY THE ASSESSEE WERE NOT FO UND ACCEPTABLE TO THE A.O. HE THEREFORE CONCLUDED THAT ASSESSEE HAS FAILED TO SATISFACTORILY EXPLAIN THE NATURE AND SOURCE OF CREDITS DESPITE VARIOUS OPPORT UNITIES GRANTED TO THE ASSESSEE. HE ACCORDINGLY CONSIDERED THE AMOUNT OF R S. 2,89,75,600/- BEING THE BALANCE SHOWN BY ASSESSEE AS AMOUNT PAYABLE TO VARIOUS CREDITORS AS INCOME OF THE ASSESSEE U/S. 68 OF THE ACT AND ADDED IT TO THE INCOME. AGGRIEVED BY THE ORDER OF A.O., ASSESSEE CARRIED TH E MATTER BEFORE LD. CIT(A) WHO DELETED THE ADDITION BY HOLDING AS UNDER :- 3.2 I HAVE CONSIDERED THE FACTS OF THE CASE, THE EV IDENCES FURNISHED DURING THE ASSESSMENT PROCEEDINGS AND THE WRITTEN SUBMISSIONS REPRODUCED ABOVE. I AM INCLINED TO ACCEPT THE CONTENTIONS OF THE APPELLANT. OUT OF THE 24 CREDITO RS, APPELLANT MADE PURCHASE OF DIAMONDS FROM 23 CREDITORS (THE 24 TH CREDITOR BEING TOWARDS THE PURCHASE OF COMPUTER BY THE APPELLANT). THOUGH MOST OF THE PURCHASES WERE M ADE IN CASH, IT IS SEEN THAT THE SALE PROCEEDS WERE RECEIVED BY THE APPELLANT THROUGH BAN KING CHANNEL. SINCE NO SALES CAN BE EFFECTED WITHOUT MAKING PURCHASES, HOLDING THE PURC HASES TO BE BOGUS DOES NOT STAND TO REASON. AS OBSERVED BY THE AO HIMSELF ALL THE CREDI TORS WERE PAID OFF IN THE SUCCEEDING YEAR. THERE IS NOTHING ON RECORD TO SHOW THAT THE G P RETURNED BY THE APPELLANT IS BELOW THE GP IN THIS LINE OF BUSINESS. AO DID NOT POINT O UT ANY DEFECTS IN THE BOOKS OF ACCOUNT. MAKING SUCH HUGE ADDITION IGNORING THE COPIES OF RE TURNS OF INCOME, COPIES OF AFFIDAVITS AND COPIES OF CONFIRMATION OF ACCOUNTS FURNISHED BY THE APPELLANT AND WITHOUT MAKING ANY OUTSIDE ENQUIRY OR CONTROVERTING THE APPELLANT' S CONTENTIONS (SUPPORTED BY EVIDENCES) IS UN-WARRANTED. IMPUGNED ADDITION IS DELETED. THIS GROUND OF APPEAL IS ALLOWED. 5. AGGRIEVED BY THE AFORESAID ORDER OF LD. CIT(A), REV ENUE IS NOW IN APPEAL BEFORE US. 6. BEFORE US, LD. D.R. POINTED TO THE VARIOUS FINDINGS AND OBSERVATIONS MADE BY THE A.O AND SUBMITTED THAT ASSESSEE DESPITE BEING G RANTED VARIOUS OPPORTUNITIES, DID NOT FURNISH THE REQUIRED DETAILS CALLED FOR BY THE A.O AND ITA NO 2937/ AHD/2011 . A.Y. 2008-09 4 IN SUCH A SITUATION THE A.O WAS FULLY JUSTIFIED IN MAKING ADDITION U/S. 68 OF THE ACT. HE FURTHER SUBMITTED THAT LD. CIT(A) HAS P ROCEEDED ON DIFFERENT FACTS AND DELETED THE ADDITION. HE THEREFORE SUBMIT TED THAT IN THE PRESENT FACTS, THE ORDER OF A.O NEEDS TO BE UPHELD. THE LD. A.R. ON THE OTHER HAND REITERATED THE SUBMISSIONS MADE BEFORE A.O AND LD. CIT(A) AND FURTHER SUBMITTED THAT OUT OF THE TOTAL 24 CREDITORS, 8 CRE DITORS WERE ASSESSED TO TAX AND WERE HAVING THE PAN NUMBER AND HAVE ALSO FILED THE RETURN OF INCOME. HE POINTED TO THE COPIES OF THE RETURN OF INCOME OF THOSE CREDITORS WHICH WERE PLACED IN PAPER BOOK. WITH RESPECT TO THE OTHE R 16 CREDITORS, HE SUBMITTED THAT THEY ARE NOT ASSESSED TO TAX BUT HAV E FILED THE COPY OF CONFIRMATION AND HAVE ALSO GIVEN AFFIDAVITS WHEREIN THEY HAVE CONFIRMED TO HAVE SOLD THE DIAMONDS TO THE ASSESSEE AND ALSO CON FIRMED THE RECEIPT OF PAYMENT IN SUBSEQUENT FINANCIAL YEARS. HE SUBMITTED THAT THE AFFIDAVITS GIVEN BY THE CREDITORS HAVE NOT BEEN FOUND TO BE FALSE. H E FURTHER SUBMITTED THAT ASSESSEE HAD VOLUNTEERED TO PRODUCE THE CREDITORS F OR VERIFICATION FOR WHICH IT HAD SOUGHT SOMETIME BUT THE SAME WAS NOT GRANTED BY THE A.O. HE THEREFORE SUBMITTED THAT ASSESSEE HAS DISCHARGED TH E INITIAL BURDEN CAST UPON ASSESSEE AND IN SUCH CIRCUMSTANCES NO ADDITION U/S. 68 WAS CALLED FOR AND HE THUS SUPPORTED THE ORDER OF LD. CIT(A). 7. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL ON RECORD. THE ISSUE IN THE PRESENT CASE IS WITH RESPECT TO ADDITI ON OF UNPAID CREDITORS U/S. 68 OF THE ACT. BEFORE US, IT WAS ASSESSEES SUBMISS ION THAT OUT OF THE 24 CREDITORS, 8 CREDITORS ARE ASSESSED TO TAX AND HAVE FILED THE RETURN OF INCOME AND THE COPY OF THE ACKNOWLEDGED RETURN OF INCOME H AS ALSO BEEN PLACED ON RECORD. WITH RESPECT TO THE OTHER CREDITORS WHO ARE NOT ASSESSED TO TAX, ASSESSEE HAS FILED THE CONFIRMATIONS AND THE AFFIDA VITS. BEFORE US, NOTHING ITA NO 2937/ AHD/2011 . A.Y. 2008-09 5 HAS BEEN PLACED ON RECORD BY REVENUE TO DEMONSTRATE THAT THE AFFIDAVITS FILED BY THE CREDITORS ARE FALSE. FURTHER, THE SUBM ISSIONS OF THE ASSESSEE HAVE ALSO NOT BEEN CONTROVERTED BY REVENUE. LD. CIT(A) A LSO WHILE DELETING THE ADDITION HAS NOTED THAT A.O HAD IGNORED THE COPIES OF RETURNS OF INCOME, COPIES OF AFFIDAVITS AND CONFIRMATIONS FILED BY THE ASSESSEE AND HAD NOT MADE ANY OUTSIDE ENQUIRY OR CONTROVERTED THE ASSESS EES CONTENTIONS. HE HAS FURTHER NOTED THAT NO SALES COULD BE EFFECTED WITHO UT MAKING PURCHASES AND IN SUCH CIRCUMSTANCES, THE PURCHASES COULD NOT BE C ONSIDERED TO BE BOGUS. BEFORE US, REVENUE HAS NOT PLACED ANY MATERIAL ON R ECORD TO CONTROVERT THE FINDINGS OF LD. CIT(A). WE THEREFORE FIND NO REASON TO INTERFERE WITH THE ORDER OF LD. CIT(A) AND THUS THE GROUND OF REVENUE IS DISMISSED. 8. IN THE RESULT, THE APPEAL OF REVENUE IS DISMISSED. ORDER PRONOUNCED IN OPEN COURT ON 30 - 09 - 2015 . SD/- SD/- (RAJPAL YADAV) (ANIL CHATURVEDI) JUDICIAL MEMBER ACCOUNTANT MEMBER AHMEDABAD: TRUE COPY RAJESH COPY OF THE ORDER FORWARDED TO: - 1. THE APPELLANT. 2. THE RESPONDENT. 3. THE CIT (APPEALS) 4. THE CIT CONCERNED. 5. THE DR., ITAT, AHMEDABAD. 6. GUARD FILE. BY ORDER DEPUTY/ASSTT.REGISTRAR ITAT,AH MEDABAD