ITO WD 6(3)(1), MUMBAI V. GLOBAL SOFTECH P. LTD, MUMBAI

ITA 3265/MUM/2009

• Counselvise Citation: 326519914 RSA 2009
• Duration Of Justice: 42 year(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 04-01-2012
• Appeal Filed By: Department
• Assessment Year: misc
• Appeal Filed On: 01-01-1970
• Court: TRIBUNAL
• Department Lawyers: A K NAYAK
• Assessee Lawyers: RAJEEV KHANDELWAL
• Section: 68

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES G , MUMBAI BEFORE SHIRI R. S. SYAL, AM AND SHRI D. K. AGARWAL, JM ITA NO. : 6777/MUM/2008 ASSESSMENT YEAR : 2002-03 M/S. GLOBAL SOFTECH LTD. KRISHNA HOUSE, RAGHUVANSHI MILLS COMPOUND, SENAPATI BAPAT MARG, LOWER PAREL (W), MUMBAI-400 020 PAN NO: AABCG 1089 R VS. INCOME - TAX OFFICER, WARD-6(3)(1), AAYKAR BHAVAN, M.K. ROAD, MUMBAI (APPELLANT) (RESPONDENT) & ITA NO. : 3265/MUM/2009 ASSESSMENT YEAR : 2002-03 INCOME - TAX OFFICER, WARD-6(3)(1), AAYKAR BHAVAN, M.K. ROAD, MUMBAI VS. M/S. GLOBAL SOFTECH LTD. KRISHNA HOUSE, RAGHUVANSHI MILLS COMPOUND, SENAPATI BAPAT MARG, LOWER PAREL (W), MUMBAI-400 020 PAN NO: AABCG 1089 R (APPELLANT) (RESPONDENT) A SSESSEE BY : SHRI RAJEEV KHANDELWAL DEPARTMENT BY : S HRI A. K. NAYAK DATE OF HEARING : 22.12.2011 DATE OF PRONOUNCEMENT : 04.01.2012 ORDER PER R. S. SYAL, AM : THESE TWO APPEALS ONE BY THE ASSESSEE AND THE OTHE R BY THE REVENUE RELATE TO THE ASSESSMENT YEARS 2002-03. ITA NOS :6777/MUM/2008 & 3265/MUM/2009 M/S. GLOBAL SOFTECH LTD. 2 ITA NO. : 6777/MUM/2008 (ASSESSM ENT YEAR : 2002-03) 2. IT IS A RECALLED MATTER IN AS MUCH AS AN EAR LIER EX PARTE ORDER PASSED BY THE TRIBUNAL WAS SUBSEQUENTLY RECALLED VI DE ITS LATER ORDER DATED 19.08.2011. 3. THE ASSESSEE, THROUGH FIRST GROUND OF IN ITS APP EAL, IS AGGRIEVED AGAINST THE CONFIRMATION OF ADDITION OF `. 75,30,000/-. THE FACTS APROPOS THIS GROUND ARE THAT THE ASSESSEE HAD SHOWN CREDIT BALANCE IN THE NAME OF M/S. KRISHNA KNITWEAR TECHNOLOGY LTD. AND SHREE GANESH KNITTING & MANUFACTURING MILLS LTD. AMOUNTING TO `. 66,80,000/- AND `. 8,50,000/- RESPECTIVELY TOTALLING `. 75,30,000. SIMULTANEOUS WITH THE CREDITING OF ACCOUNTS OF THESE TWO PARTIES, THE ASS ESSEE HAD ALSO DEBITED THE BANK ACCOUNT WITH THE EQUAL AMOUNT. THE A.O. ON VERIFICATION OF BANK BALANCE SHOWN BY THE ASSESSEE IN ITS BOOKS OF ACCOUNTS OBSERVED THAT THERE WAS A DIFFERENCE IN SUCH BALANCE WHEN CO MPARED WITH THAT COMING FROM THE BANK STATEMENT. WHEREAS ASSESSEES BOOKS OF ACCOUNTS DEPICTED BALANCE OF `. 29,038/-, BANK PASS BOOK SHOWED `. 63,02,488/-. ON BEING CALLED UPON TO EXPLAIN THE REASONS FOR DIF FERENCE IN THESE TWO BALANCES, THE ASSESSEE FURNISHED THE BANK RECONCILI ATION STATEMENT INDICATING A SUM OF `. 75,30,000/-, AS REPRESENTING CHEQUES RECEIVED BUT NOT DEPOSITED IN THE BANK. IT WAS ARGUED THAT T HE ASSESSEE RECEIVED CHEQUES FROM THESE TWO PARTIES ON 31.3.2002, AND TH E SAME WERE NOT DEPOSITED IN THE BANK ACCOUNTS BECAUSE THOSE PARTIE S ADVISED THE ASSESSEE NOT TO DEPOSIT SUCH CHEQUES IN THE BANK AC COUNT. IT WAS UNDER THESE CIRCUMSTANCES, THE ASSESSEE ARGUED THAT THE A MOUNT IN QUESTION WAS DEBITED TO THE BANK ACCOUNT AND CREDITED TO THE BANK ACCOUNTS OF THESE TWO PARTIES. THE A.O. WAS NOT CONVINCED WITH THE SUBMISSIONS ADVANCED ON BEHALF OF THE ASSESSEE IN THIS REGARD A ND HENCE MADE AN ITA NOS :6777/MUM/2008 & 3265/MUM/2009 M/S. GLOBAL SOFTECH LTD. 3 ADDITION FOR THE SAID SUM. THE LEARNED CIT(A) ALSO CONFIRMED THE ADDITION. 4. AFTER CONSIDERING THE RIVAL SUBMISSIONS AND PERU SING THE RELEVANT MATERIAL ON RECORD IT IS OBSERVED THAT THE ADDITION HAS BEEN MADE U/S.68 OF THE I.T. ACT. ADDITION UNDER THIS SECTION IS MADE, WHEN THE ASSESSEE FAILS TO PROVE THE GENUINENESS OF A SUM CR EDITED BY IT IN THE BOOKS OF ACCOUNTS. WE ARE REALLY UNABLE TO APPRECI ATE THE BASIS ON WHICH SUCH ADDITION CAN BE MADE U/S 68 FOR THE OBVI OUS REASON THAT THE ASSESSEE DID NOT AT ALL GET THAT CHEQUES ENCASH ED, WHICH WERE RECEIVED FROM THESE TWO PARTIES ON THE LAST DAY OF THE ACCOUNTING YEAR. IT WAS ONLY A MATTER OF PASSING ENTRY, DEBITING TO THE BANK ACCOUNT AND CREDITING THE BANK ACCOUNTS OF THESE TWO PARTIES. S UBSEQUENTLY, IN A LATER YEAR, THE SAID ENTRIES HAVE BEEN REVERSED. CO NFIRMATION FROM THESE TWO PARTIES STATING THAT THE CHEQUES WERE ISSUED BY THEM AND THEY FURTHER ADVISED THE ASSESSEE NOT TO DEPOSIT SUCH CH EQUES IN ITS BANK ACCOUNT, ARE AVAILABLE ON RECORD. THUS IT FAIRLY IN DICATES THAT THE CREDIT IN THESE TWO ACCOUNTS IS NOTHING BUT NEUTRALISED BY THE DEBIT IN THE BANK ACCOUNT AND THERE IS NO INFLOW OF ANY MONEY WI TH THE ASSESSEE EITHER IN CASH OR THROUGH BANKING CHANNEL. FURTHER, THE BANK RECONCILIATION STATEMENT HAS DIVULGED THAT THESE CH EQUES WERE NOT DEPOSITED IN THE BANK ACCOUNT AS ON 31.03.2002. IN THAT VIEW OF THE MATTER, WE ARE OF THE CONSIDERED OPINION THAT THERE IS NO BASIS WHATSOEVER FOR MAKING ANY ADDITION UNDER THESE CIRC UMSTANCES U/S.68 OF THE ACT. WE, THEREFORE, ORDER FOR THE DELETION O F THESE ADDITIONS. 5. THE SECOND GROUND OF THE ASSESSEES APPEAL IS AG AINST CANCELLATION OF CHEQUE ISSUED BY THE ASSESSEE AMOUN TING TO `. 12,45,000/- IN FAVOUR OF M/S. KSL & INDUSTRIES LTD . AND FURTHER TWO ITA NOS :6777/MUM/2008 & 3265/MUM/2009 M/S. GLOBAL SOFTECH LTD. 4 CHEQUES OF `. 16,000/- AND `. 750/- ISSUED TO OTHER PARTIES WHICH WERE NOT ENCASHED. THE FACTS OF THIS GROUND ARE SIMILAR TO THAT OF GROUND NO.1 DISPOSED OF ABOVE WITH THE ONLY DIFFERENCE THA T WHEREAS IN GROUND NO.1 THE ASSESSEE RECEIVED CERTAIN CHEQUES AND DID NOT DEPOSIT IN THE BANK ACCOUNT, AND THROUGH THIS GROUND IT ISSUED CHE QUES AND ADVISED THE RECIPIENT PARTIES NOT TO DEPOSIT THE CHEQUES DU E TO CERTAIN COMMERCIAL REASONS. SINCE THOSE CHEQUES WERE ISSUED BY THE ASSESSEE , THESE WERE RECORDED IN THE BOOKS OF ACCOUNT, BUT DU E TO THEIR STOPPING FOR ENCASHMENT LED TO NOT PASSING OF ANY CONSEQUENT IAL ENTRY BY THE BANK. THE REASONS GIVEN BY US FOR DELETING THE ADDI TION IN GROUND NO. 1 SQUARELY APPLY TO THIS GROUND AS WELL. HERE ALSO, T HE A.O. HAS MADE THE ADDITION BY CONSIDERING THE BANK RECONCILIATION STA TEMENT FURNISHED BY THE ASSESSEE, INDICATING THE CHEQUES ISSUED BUT NOT ENCASHED BEFORE THE CLOSE OF THE YEAR. FOLLOWING THE VIEW TAKEN HER E ABOVE, WE ALLOW THIS GROUND OF APPEAL. 6. IN THE RESULT, THIS APPEAL IS ALLOWED. ITA NO. : 3265/MUM/2009 (ASSESSM ENT YEAR : 2002-03) 7. THIS APPEAL ARISES OUT OF THE ORDER PASSED BY TH E LEARNED CIT(A) U/S. 154 OF THE I.T. ACT. THE EARLIER ORDER PASSED BY THE LEARNED FIRST APPELLATE AUTHORITY UPHOLDING THE ADDITIONS, WHIC H HAVE BEEN DISCUSSED BY US IN THE ABOVE APPEAL WAS PASSED EX PARTE QUA THE ASSESSEE. THEREAFTER, AN APPLICATION U/S. 154 WAS F ILED. THE LEARNED CIT(A) GOT CONVINCED WITH THE SUBMISSIONS ADVANCED BY THE ASSESSEE AND ORDERED FOR THE ADDITIONS OF `. 75,30,000/- AND `. 12,56,750/-. THE REVENUE IS IN APPEAL AGAINST THE DELETION OF THESE TWO APPEALS. ITA NOS :6777/MUM/2008 & 3265/MUM/2009 M/S. GLOBAL SOFTECH LTD. 5 8. HAVING HEARD BOTH THE SIDES AND PERUSED THE RELE VANT MATERIAL ON RECORD IT IS OBSERVED THAT WHILE DISPOSING OF THE A PPEAL IN ITA NO.6777/MUM/2008 ABOVE WE HAVE CONSIDERED THE ADDI TIONS ON MERITS AND HAVE ORDERED FOR THEIR DELETION. IN THAT VIEW OF THE MATTER, THE FILING OF APPLICATION BY THE ASSESSEE U/S.154 O F THE I.T. ACT AND THE PASSING OF CONSEQUENTIAL ORDER HAVE BECOME ACADEMIC . THIS APPEAL IS, THEREFORE, NOT ALLOWED AS HAVING BECOME ACADEMIC. 9. IN THE RESULT, THE APPEAL IS DISMISSED ORDER PRONOUNCED ON THIS 04 TH DAY OF JANUARY, 2012. SD/- SD/- ( D. K. AGARWAL ) ( R. S. SYAL ) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI, DT: 04.01.2012 ROSHANI COPY FORWARDED TO : 1. THE APPELLANT, 2. THE RESPONDENT, 3. THE C.I.T. 4. CIT (A) 5. THE DR, G- BENCH, ITAT, MUMBAI //TRUE COPY// BY ORDER ASSISTANT REGISTRAR ITAT, MUMBAI BENCHES, MUMBAI