D.C.I.T Cir - 6,kolkata., Kolkata V. M/s Sangam Shree Collections (P) Ltd., Kolkata

ITA 295/KOL/2013

• Counselvise Citation: 29523514 RSA 2013
• Duration Of Justice: 2 year(s) 8 month(s) 2 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 15-10-2015
• Appeal Filed By: Department
• Bench Allotted: C
• Assessment Year: 2009-2010
• Appeal Filed On: 12-02-2013
• Court: TRIBUNAL
• Department Lawyers: D LAHIRIJCIT LD
• Assessee Lawyers: A K TIBREWAL FCA LD
• Keywords: Additional evidence
• Section: 68; 2; 143(3); 133(6)

Judgement Text

ITA NO. 295/KOL/2013-C-AM M/S. SANGAM SHREE COLLECTIONS P.LTD 1 IN THE INCME TAX APPELLATE TRIBUNAL, C BENCH, KO LKATA BEFORE : SHRI MAHAVIR SINGH,JUDICIAL MEMBER, AND SHRI M. BALAGANESH, ACCOUNTANT MEMBER I.T.A NO. 295/KOL/2013 A.Y : 2009-10 D.C.I.T CIR-6, KOLKATA VS. M/S. SANGAM SHREE CO LLECTIONS PVT. LTD PAN: AAKCS8518A (APPELLANT) (RESPO NDENT) FOR THE APPELLANT/ DEPARTMENT: SHRI D.LAHIRI,JCIT, LD.DR FOR THE RESPONDENT/ASSESSEE: SHRI A.K.TIBREWAL,FCA LD.AR DATE OF HEARING: 09-10-2015 DATE OF PRONOUNCEMENT: 15-10-20 15 ORDER SHRI M.BALAGANESH, AM THIS APPEAL OF THE REVENUE ARISES OUT OF THE ORDER OF THE LEARNED CITA IN APPEAL NO.178/CIT(A)-VI/CIRCLE-6/2011-12 DATED 22 /11/2012 FOR THE ASST YEAR 2009-10 PASSED AGAINST THE ORDER OF ASSESSMENT FRAM ED BY THE LEARNED AO U/S 143(3) OF THE INCOME TAX ACT, 1961 (HEREINAFTER REFERRED T O AS THE ACT). 2. SHRI.D/LAHIRI, JCIT, THE LEARNED DR ARGUED ON B EHALF OF THE REVENUE AND SHRI. A.K.TIBREWAL, FCA, THE LEARNED AR ARGUED ON BEHALF OF THE ASSESSEE. 3. THE ISSUE TO BE DECIDED IN THIS APPEAL IS WHET HER IN THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LEARNED CITA IS JUSTIFIED IN DELET ING THE ADDITION MADE IN THE SUM OF RS. 1,91,24,685/- TOWARDS BOGUS CREDITORS. 3.1. THE BRIEF FACTS OF THIS ISSUE IS THAT THE ASS ESSEE IS ENGAGED IN THE BUSINESS OF TRADING AND PROCESSING OF SAREES. DURING THE COURS E OF ASSESSMENT PROCEEDINGS, ITA NO. 295/KOL/2013-C-AM M/S. SANGAM SHREE COLLECTIONS P.LTD 2 NOTICES U/S 133(6) OF THE ACT WERE ISSUED BY THE LE ARNED AO FOR VERIFICATION OF THE FOLLOWING SUNDRY CREDITORS WHICH COULD NOT BE SERVE D ON THEM DUE TO FOLLOWING COMMENTS BASED ON POSTAL REMARKS:- M/S SUNRISE ENTERPRISES - ADDRESS CANNOT BE LOCATE D - 22,00,000 M/S RAMA ENTERPRISES - PARTY LEFT - 26,08,335 M/S PRIYA SELECTION - NOT KNOWN - 15,28,185 M/S CREATIVE FASHION - NOT KNOWN - 31,41,380 M/S VANDANA ENTERPRISE - - NOT KNOWN - 32,05,930 M/S SOHINI FASHION - NOT KNOWN - 29,03 ,990 M/S MERLIN SAREE CENTRE - NOT KNOWN - 20,57,490 M/S SURUCHI SAREE EMPORIUM - NOT KNOWN - 14,79,37 5 ------------------- 1,91,24,685 ------------------ THE ASSESSEE HAD SUBMITTED CONFIRMATIONS FROM THE A FORESAID PARTIES DURING THE COURSE OF ASSESSMENT PROCEEDINGS. ACCORDING TO LE ARNED AO, THE ASSESSEE WAS NOT ABLE TO PRODUCE THE FOLLOWING DOCUMENTS AND DETAILS :- A) RETURN OF INCOME /ACKNOWLEDGEMENT RECEIPT B) AUDITED ACCOUNTS WERE NOT SUBMITTED BY ANY OF THE S UPPLIERS / CREDITORS TO SUBSTANTIATE THE CREDITWORTHINESS/ CAPACITY TO U NDERTAKE SUCH TRANSACTIONS C) THE ASSESSEE COULD NOT SUBSTANTIATE ON WHAT BASIS T HE ABOVE PARTIES WERE CHOSEN TO SUPPLY MATERIALS TO THE ASSESSEE D) THE ASSESSEE COULD NOT PRODUCE PROPER EVIDENCE OF T RANSPORT OF MATERIALS E) THE ASSESSEE COULD NOT PRODUCE INSURANCE DOCUMENTS ETC OF THE AFORESAID PARTIES ALONG WITH LEDGER. THE LEARNED AO THOUGHT THAT HENCE IN THE ABSENCE OF ABOVE DOCUMENTARY PROOF, THE GENUINENESS OF THE TRANSACTION IS NOT PROVED AN D BROUGHT TO TAX THE ENTIRE OUTSTANDING SUNDRY CREDITORS OF RS. 1,91,24,685/- TREATING THE SAME AS BOGUS CREDITORS. ON FIRST APPEAL, THE LEARNED CITA DELETED THE ADDIT ION MADE TOWARDS BOGUS CREDITORS BY RELYING ON THE CONTENTIONS OF THE ASSESSEE AND T HE VARIOUS EVIDENCES FILED BY THE ASSESSEE PROVING THE FACT THAT THESE CREDITORS WERE DULY SETTLED IN THE SUBSEQUENT ITA NO. 295/KOL/2013-C-AM M/S. SANGAM SHREE COLLECTIONS P.LTD 3 ASSESSMENT YEARS. AGGRIEVED, THE REVENUE IS IN APP EAL BEFORE US ON THE FOLLOWING GROUNDS:- 1. WHETHER ON THE FACTS AND CIRCUMSTANCES OF THE C ASE, LD. CIT(A) ERRED IN LAW IN DELETING THE ADDITION MADE O F RS.1,91,24,685/- AS BOGUS CREDITORS. 2. WHETHER ON THE FACTS AND CIRCUMSTANCES OF THE C ASE, LD.CIT(A) ERRED IN LAW IN DELETING THE ADDITION MAD E ON ACCOUNT OF BOGUS CREDITORS BY VIOLATING RULES 46A O F IT RULES. 3. THAT THE APPELLANT CRAVES FOR LEAVE TO ADD, DELE TE OR MODIFY ANY OF THE GROUNDS OF APPEAL BEFORE OR AT TH E TIME OF HEARING. 3.2. THE LEARNED DR VEHEMENTLY SUPPORTED THE ORDE R OF THE LEARNED AO. HE FURTHER ARGUED THAT THERE WAS VIOLATION OF RULE 46A BY THE LEARNED CITA BY ACCEPTING TO ADDITIONAL EVIDENCES FILED BY THE ASSESSEE BEFOR E THE LEARNED CITA WITHOUT GIVING SUFFICIENT OPPORTUNITY TO THE LEARNED AO FOR HIS VE RIFICATION. IN RESPONSE TO THIS, THE LEARNED AR ARGUED THAT THERE WAS NO VIOLATION OF R ULE 46A AS ADMITTEDLY, ALL THE EVIDENCES FILED BEFORE THE LEARNED CITA BY THE ASSE SSEE WERE SOUGHT TO BE SUBJECTED TO VERIFICATION BY THE LEARNED AO IN THE REMAND PRO CEEDINGS. BUT THE LEARNED AO SOUGHT NOT TO GIVE ANY REMAND REPORT DESPITE SUFFIC IENT OPPORTUNITIES AND TIME GIVEN TO HIM FOR THE REBUTTAL OF THE EVIDENCES FILED BEFORE HIM. ACCORDINGLY THE LEARNED CITA PROCEEDED TO DISPOSE OFF THE APPEAL BASED ON THE EV IDENCES FILED BEFORE HIM. HENCE THE SAME CANNOT BE CONSTRUED AS A VIOLATION OF RULE 46A. IN SUPPORT OF HIS CONTENTIONS, HE RELIED ON THE DECISION OF ITO VS M/S BHAVYA LAKHANI TRADERS & SUPPLIERS P LTD IN ITA NO. 5409 / DEL / 2010 DATED 16.10.2012. 3.3. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERU SED THE MATERIALS AVAILABLE ON RECORD INCLUDING THE PAPER BOOK FILED BY THE ASSESS EE NUMBERING FROM PAGES 1 TO 83. WE FIND THAT THE ENTIRE SUNDRY CREDITORS THAT WERE THE SUBJECT MATTER OF ADDITION BY THE LEARNED AO HAVE BEEN DULY DISCHARGED BY ACCOUNT PAY EE CHEQUES TO THE CONCERNED PARTIES IN THE SUBSEQUENT ASSESSMENT YEARS FOR WHIC H NECESSARY EVIDENCES IN THE FORM OF LEDGER ACCOUNT OF CREDITORS AND THE BANK STAEMEN TS OF THE ASSESSEE ARE FILED IN THE ITA NO. 295/KOL/2013-C-AM M/S. SANGAM SHREE COLLECTIONS P.LTD 4 PAPER BOOK. WE FIND THAT THE FACTUAL AND CATEGORIC AL FINDINGS RECORDED BY THE LEARNED CITA IN HIS ORDER WITH REGARD TO EACH OF THE SUNDRY CREDITORS HAVE NOT BEEN REFUTED BY THE REVENUE BEFORE US. WE ALSO FIND THAT THE ISSUE OF THE CONCERNED SUNDRY CREDITORS COULD NOT BE FOUND OR THEY HAD CHANGED THEIR LOCATI ON HAVE BEEN DULY ADDRESSED BY THE LEARNED CITA IN PARA 7 PAGE 8 OF HIS ORDER. MOREO VER, IT IS PERTINENT TO NOTE THE LEARNED AO HAS PROCEEDED THE ENTIRE TRANSACTION TRE ATING IT AS LOAN CREDITORS WHEREAS THE SUBJECT MENTIONED PARTIES ARE TRADE CREDITORS. IF THERE IS ANY GRIEVANCE ON THE SAME, THE LEARNED AO COULD ONLY DISALLOW THE PURCHASES MA DE FROM SUCH BOGUS CREDITORS. THE ASSESSEE HAD FILED CONFIRMATIONS FROM ALL THE C ONCERNED SUNDRY CREDITORS BEFORE THE LOWER AUTHORITIES. THERE IS NO SCOPE FOR ADDIN G THE TRADE CREDITORS AS INCOME WITHOUT CORRESPONDINGLY DISTURBING THE PURCHASES / TRADE EXPENSES, QUANTITY OF PURCHASES AND GENUINENESS OF THE PAYMENTS MADE BY A CCOUNT PAYEE CHEQUES TO THOSE CONCERNED SUNDRY CREDITORS. WE HOLD THAT WHEN THE TRADING RESULTS AND NET PROFIT DECLARED BY THE ASSESSEE HAS NOT BEEN DISPUTED BY T HE LEARNED AO, THERE CANNOT BE ANY ADDITION TOWARDS BOGUS CREDITORS MORE SO IN THE FACTS AND CIRCUMSTANCES OF THIS CASE. WE ALSO FIND THAT THIS ISSUE IS COVERED BY THE ORDER OF THIS TRIBUNAL IN ITA NO. 1591/KOL/2011 DATED 18.9.2015 IN THE CASE OF ACIT V S ASHIRBAD REAL ESTATE & TRANSPORT PVT LTD WHEREIN IT WAS HELD THAT :- 5.3. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERU SED THE MATERIALS AVAILABLE ON RECORD. WE FIND THAT THE LEARNED DR D ID NOT REFUTE THE FINDINGS GIVEN BY THE LEARNED CITA WITH REGARD TO T HE FACT THAT THE ASSESSEE HAD FULLY DISCHARGED ITS ONUS BY GIVING TH E NAME AND ADDRESS OF THE SUNDRY TRADE CREDITOR M/S BIJAY HARDWARE STORES BEFORE THE LEARNED AO. WE FIND THAT THE PROVISIONS OF SECTION 68 OF THE ACT COULD NOT BE INVOKED FOR THE TRADE CREDITORS. WE HOLD THAT THE ASSESSEE HAD DULY DISCHARGED ITS ONUS BY PLACING ALL THE DETAILS OF T HE SUNDRY CREDITOR BEFORE THE LEARNED AO AND JUST BECAUSE NO REPLY HAS BEEN F URNISHED BY THE SAID CREDITOR TO THE LEARNED AO U/S 133(6) OF THE ACT , THAT CANNOT AUTOMATICALLY LEAD TO A SITUATION THAT THE SAID CRE DITOR IS NOT HAVING ANY CREDITWORTHINESS. WE ALSO FIND THAT THE LEARNED AO HAD NOT DISPUTED THE GENUINITY OF THE PURCHASES, SALES AND TRADING RESUL TS OF THE ASSESSEE. WE FIND THAT THE CASE LAW RELIED ON BY THE LEARNED CIT A ON THE DECISION OF ITA NO. 295/KOL/2013-C-AM M/S. SANGAM SHREE COLLECTIONS P.LTD 5 HONBLE ALLAHABAD HIGH COURT IN THE CASE OF CIT VS PANCHAM DASS JAIN REPORTED IN 205 CTR 444 IS WELL PLACED. IN THAT CA SE, THEIR LORDSHIPS HAD HELD AS UNDER:- THE TRIBUNAL HAS RECORDED A CATEGORICAL FINDING OF FACT BASED ON APPRECIATION OF MATERIALS AND EVIDENCE ON RECORD TH AT THE AO HAD ACCEPTED THE PURCHASES, SALES AS ALSO THE TRADING R ESULT DISCLOSED BY RESPONDENT ASESSEE. IT HAD RECORDED A FINDING THAT THE AFORESAID TWO AMOUNTS REPRESENTED THE PURCHASES MADE BY THE ASSES SEE ON CREDIT AND , THEREFORE, THE PROVISIONS OF SECTION 68 OF THE ACT COULD NOT BE ATTRACTED IN THE PRESENT CASE. WE FULLY AGREE WITH THE VIEW TA KEN BY THE TRIBUNAL ON THIS ISSUE, IN AS MUCH AS, ON THE BASIS OF THE FIND INGS RECORDED BY IT THAT THESE TWO AMOUNTS REPRESENTED PURCHASES MADE BY THE RESPONDENT ASSESSEE ON CREDIT AND THE PURCHASES AND SALES HAVI NG BEEN ACCEPTED BY THE DEPARTMENT, THE QUESTION OF ADDITION OF THE AFO RESAID TWO AMOUNTS U/S 68 OF THE ACT DID NOT ARISE IN AS MUCH AS THE PROVI SIONS OF SECTION 68 OF THE ACT WOULD NOT BE ATTRACTED ON THE PURCHASES MADE ON CREDIT. IN VIEW OF THE AFORESAID FACTS AND CIRCUMSTANCES AN D RESPECTFULLY FOLLOWING THE JUDICIAL PRECEDENTS AS STATED SUPRA, WE ARE NOT INCLINED TO INTERFERE WITH THE FINDINGS OF THE LEARNED CITA ON THIS GROUND. ACCORDINGLY, THE GROUND NO. 2 RAISED BY THE REVENUE IS DISMISSED . ACCORDINGLY, WE FIND NO INFIRMITY IN THE ORDER OF T HE LEARNED CITA IN THIS REGARD. HENCE THE GROUND NO.1 RAISED BY THE REVENUE IS DISMISSED. 3.4. WITH REGARD TO THE SECOND GROUND OF THE REV ENUE FOR VIOLATION OF RULE 46A ISSUE, WE FIND THAT THE CASE RELIED UPON BY THE LEARNED AR ON THE DECISION OF ITO VS M/S BHAVYA LAKHANI TRADERS & SUPPLIERS P LTD IN ITA NO. 5409 / DEL / 2010 DATED 16.10.2012 IS VERY WELL PLACED, WHEREIN IT WAS HELD THAT :- WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED TH E RECORDS. WE FIND THAT THERE IS NO COGENCY IN THE GROUND RAISED BY THE REVENUE THAT LD. COMMISSIONER OF INCOME TAX (A) HAS NOT DULY AFFORDE D ADEQUATE OPPORTUNITY TO THE ASSESSING OFFICER TO CONSIDER TH E SUBMISSIONS AND EVIDENCES FILED BEFORE HIM AT THE APPELLATE STAGE. THE LD. COMMISSIONER OF INCOME TAX (A) HAS DULY SENT THE DOCUMENTS FURNI SHED BY THE ASSESSEE AT THE APPELLATE STAGE TO THE ASSESSING OFFICER FOR A REMAND REPORT. UNDER ITA NO. 295/KOL/2013-C-AM M/S. SANGAM SHREE COLLECTIONS P.LTD 6 THE CIRCUMSTANCES, THERE CANNOT BE ANY ISSUE THAT A SSESSING OFFICER WAS NOT PROVIDED ADEQUATE OPPORTUNITY IN THIS REGARD . THE FACTS AND CIRCUMSTANCES OF THE CASE LAW RELIED UPON BY THE LEARNED AR IS EXACTLY SIMILAR TO THE FACTS OF THE INSTANT CASE. HENCE W E HOLD THAT THERE IS NO VIOLATION OF RULE 46A BY THE LEARNED CITA IN THIS REGARD. ACCOR DINGLY, THE GROUND NO.2 RAISED BY THE REVENUE IS DISMISSED. 4. IN THE RESULT, THE APPEAL OF THE REVENUE IS DISM ISSED. THIS ORDER IS PRONOUNCED IN OPEN COURT ON 15 / 10 /2015 1.. THE APPELLANT/DEPARTMENT: DCIT, CIR-6, ROOM N O.17, 6 TH FL., AAYKAR BHAWAN, P-7, CHOWRINGHEE SQ, KOL-69. 2 THE RESPONDENT/ASSESSEE- M/S. SANGAM SHREE COLLE CTIONS (P) LTD 65, SIR HARIRAM GOENKA ST., KOL-7. 3 4.. /THE CIT, / THE CIT(A) 5. DR, KOLKATA BENCH 6. GUARD FILE. TRUE COPY, BY ORDER, ASSTT REGISTRAR ** PRADIP SPS SD/- ( MAHAVIR SINGH, JUDICIAL MEMBER ) SD/- (M. BALAGANESH, ACCOUNTANT MEMBER) DATE 15 /10/2015 COPY OF THE ORDER FORWARDED TO: