ACCORD VM, MUMBAI V. ITO CIR 19(3)(1), MUMBAI

ITA 3319/MUM/2014

• Counselvise Citation: 331919914 RSA 2014
• Duration Of Justice: 1 year(s) 2 month(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 05-08-2015
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Next Hearing Date: 05-08-2015
• Assessment Year: 2008-2009
• Appeal Filed On: 09-05-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Additional evidence
• Section: 133(6)

Judgement Text

, - IN THE INCOME TAX APPELLATE TRIBUNAL SMC BENCH, MUMBAI BEFORE S/SHRI B.R.BASKARAN (ACCOUNTANT MEMBER ) . . , ./ I.T.A. NO . 3319 / MUM/20 14 ( / ASSESSMENT YEAR : 20 08 - 09 ) M/S ACCORD V M 101/102 MAKANI CENTRE, 35, LINKING ROAD, BANDRA (W), MUMBAI - 400050 / VS. INCOME TAX OFFICER, CIRCLE CIRCLE 19(3)(1), ROOM NO.307, 3 RD FLOOR, PIRAMAL CHAMBERS, LALBAUG, PAREL, MUMBAI - 400012 ( / APPELLANT ) .. ( / RESPONDENT ) ./ ./PAN/GIR NO. : AAIFA3018N / APPELLANT BY SHRI J P BAIRAGRA / RSPONDENT BY SHRI K P P R MURTY / DATE OF HEARING : 5 .8 . 201 5 / DATE OF PRONOUNCEMENT : 5 . 8. 201 5 / O R D E R PER B ENCH: THE ASSESSEE HAS FILED THIS APPEAL CHALLENGING THE ORDER DATED 24.2. 2014 PASSED BY THE LD.CIT(A) - 18 , MUMBAI AND IT RELATE S TO THE ASSESSMENT YEAR 20 08 - 09 . 2. THE ASSESSEE IS AGGRIEVED BY THE DECISION OF LD.CIT(A) IN CONFIRMING THE FOLLOWING ADDITIONS MADE BY THE AO: - (A) DISALLOWANCE OF PURCHASES TO THE TUNE OF RS.3,69,688/ - AND ITA NO. 3319 / MUM/20 14 2 (B) ADDITION ON ACCOUNT OF DIFFERENCES IN S UNDRY CREDITORS BALANCE TO THE TUNE OF RS.356,308/ - . 3 . I HEARD THE PARTIES AND PERUSED THE RECORD. DURING THE YEAR UNDER CONSIDERATION, THE ASSESSEE HAD PURCHASED GOODS TO THE TUNE OF RS.1,71,56,421 / - . IN ORDER TO VERIFY THE PURCHASES AND ALSO SUNDRY CR EDITORS BALANCES, THE AO ISSUED NOTICE S UNDER SECTION 133(6) OF THE ACT TO SOME OF THE SUPPLIERS ON RANDOM BASIS REQUEST ING THEM TO FURNISH THE DETAILS OF TRANSACTIONS MADE WITH THE ASSESSEE. ON COMPARISON OF THE DETAILS RECEIVED BY THE AO WITH THE ACCOU NT S OF THE ASSESSEE, IT WAS NOTICED THAT THERE WAS A DIFFERENCE OF RS.3,69,688 / - WITH REGARD TO PURCHASES OF GOODS AND RS.3 , 56,308/ - WITH REGARD TO OUTSTANDING BALANCES. THE AO ASKED THE ASSESSEE TO RECONCILE BOTH THE DIFFERENCES. HOWEVER, THE ASSESSEE SIMPLY SUBMITTED LEDGER ACCOUNT OF THE CONCERNED SUPPLIERS AND HENCE THE AO ASSESSED BOTH THE DIFFERENCES , CITED ABOVE , AS INCOME OF THE ASSESSEE. SINCE THE ASSESSEE FURNISHED CERTAIN ADDITIONAL DETAILS BEFORE THE LD.CIT(A) , HE CALLED FOR A REMAND REPORT FROM THE AO. HOWEVER, THE AO STOOD BY THE ADDITION MADE BY HIM WITH THE REASONING THAT THE ADDITIONAL EVIDENCES FURNISHED BY THE ASSESSE E ARE NOT FOUND TO BE RELIABLE. ACCORDINGLY, THE LD CIT(A) HELD THAT THE ASSESSEE HAS FAILED TO RECONCILE THE DIFFERE NCES AND ACCORDINGLY CONFIRMED BOTH THE ADDITIONS. AGGRIEVED, THE ASSESSEE HAS FILED THIS APPEAL BEFORE THE TRIBUNAL. 4 . THE LD. COUNSEL APPEARING FOR THE ASSESSEE INVITED OUR ATTENTION TO THE COP Y OF THE RECONCILATION STATEMENT S FURNISHED IN THE PAPER B OOK AND SUBMITTED THAT THE SALES SHOWN IN THE SUPPLIERS ACCOUNT IN THE MONTH OF FEBRUARY , 2008 AND MARCH , 2008 HAS ACTUALLY BEEN ACCOUNTED FOR BY THE ASSESSEE IN THE MONTH OF APRIL , 2008. SINCE THERE WAS CHANGE OF ACCOUNTING YEAR, THE VALUE OF PURCHASES AND ALSO THE OUTSTANDING BALANCE ITA NO. 3319 / MUM/20 14 3 AS ON 31.3.2008 HAS DIFFERED AND HENCE THE SAME HAS RESULTED IN THE DIFFERENCES IN PURCHASE S ACCOUNT AS WELL AS IN SUNDRY C REDITORS BALANCES. ACCORDINGLY, THE LD A.R SUBMITTED THAT THERE IS NO OMISSION OF ANY OF THE PURCH ASES AS PRESUMED BY THE AO. THE LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE ACCOUNT S OF THE ASSESSEE HAVE BEEN DULY AUDITED UNDER THE PROVISIONS OF INCOME TAX ACT AND THE AUDIT REPORT WAS ALSO FILED BY THE ASSESSEE. HE FURTHER SUBMITTED THAT THE ASSESS EE MAKES PURCHASES UPON RECEIPT OF THE ORDERS ONLY AND SUPPLY THE GOODS ON ONE TO ONE BASIS AND HENCE THE ASSESSEE DOE S NOT MAINTAIN ANY STOCK . HE FURTHER SUBMITTED THAT THE ASSESSEE HAS DULY RECONCILED THE DIFFERENCES IN PURCHASES ACCOUNT, WHICH ALSO EXP LAINS THE DIFFERENCE IN SUNDRY CREDITORS BALANCES ACCOUNT. 5. HE FURTHER SUBMITTED THAT THE PURCHASES WERE MADE BY THE ASSESSEE ON CREDIT AND HENCE THE ACCOUNTING OF PURCHASE BILLS IN THE SUCCEEDING YEAR HAS RESULTED IN DIFFERENCES BOTH IN PURCHASES A CCOUNT AS WELL AS IN SUNDRY CREDITORS ACCOUNT. HENCE THE ADDITION MADE IN RESPECT OF DIFFERENCE IN SUNDRY CREDITORS BALANCE HAS RESULTED IN DOUBLE ADDITION OF THE SAME AMOUNT. ACCORDINGLY, HE SUBMITTED THAT THE LD CIT(A) WAS NOT JUSTIFIED IN CONFIRMING B OTH THE ADDITIONS AND ACCORDINGLY PRAYED THAT BOTH ADDITIONS MADE BY DELETED. 6 . ON THE CONTRARY, THE LD. DR SUBMITTED THAT THE ASSESSEE DID NOT FURNISH PROPER RECONCILIATION STATEMENT S BEFORE THE AO AND DETAILS FURNISHED BY IT BEFORE THE LD. CIT(A) WER E NOT ACCEPT ED BY THE AO. ACCORDINGLY, HE SUBMITTED THAT , IN THE ABSENCE OF PROPER EXPLANATION S FORTHCOMING FROM THE ASSESSEE, THE LD. CIT(A) HAS CONFIRMED BOTH THE ADDITIONS. ITA NO. 3319 / MUM/20 14 4 7 . HAVING HEARD THE RIVAL SUBMISSIONS, I AGREE , IN PRINCIPLE , WITH THE ASSESS EE THAT THE ADDITION MADE TOWARDS THE DIFFERENCE IN SUNDRY CREDITORS BALANCE HAS RESULTED IN DOUBLE ADDITION SINCE THE ASSESSEE HAS ACCOUNTED FOR THE CREDIT PURCHASE S IN THE SUBSEQUENT YEARS, MEANING THEREBY, THE DIFFERENCE IN PURCHASE S ACCOUNT AS WELL AS SUNDRY CREDITORS ACCOUNT HAS ARISEN ON ACCOUNT OF OMISSION TO ACCOUNT THE CREDIT PURCHASES DURING THE CURRENT YEAR . THUS THE DIFFERENCE IN PURCHASES ACCOUNT (A DEBIT ITEM) AND DIFFERENCE IN SUNDRY CREDITORS ACCOUNT ( A CREDIT ITEM) IS THE RESULT OF CREDIT PURCHASES ONLY UNDER DOUBLE ENTRY SYSTEM OF ACCOUNTING. 8. IT IS STATED THAT THE ASSESSEE DOES NOT MAINTAIN STOCK AND IT PLACES ORDERS FOR PURCHASES UPON RECEIPT OF SALES ORDERS. THE DIFFERENCES IN PURCHASES LISTED OUT BY THE ASSESSING OFFICER PE RTAINED TO THE MONTHS OF FEB & MARCH, 2008 AND IT IS EXPLAINED THAT THE SAID PURCHASES HAVE BEEN ACCOUNTED IN THE SUCCEEDING YEAR IN THE MON TH OF APRIL, 2008. THUS, ACCORDING TO THE ASSESSEE, IF ONE COMBINE S BOTH THE ACCOUNTING YEARS, THERE SHOULD NOT BE ANY CASE OF OMISSION OF PURCHASES AS PRESUMED BY THE AO. IN SUPPORT OF THE SAID SUBMISSIONS, THE ASSESSEE HAS FURNISHED RECONCILIATION STATEMENT S RECONCILING THE DIFFERENCE S IN PURCHASE S ACCOUNT WHICH SHALL HAVE IMPACT IN SUNDRY CREDITORS ACCOUNT ALSO. I NOTICE THAT THE SAID RECONCILIATION STATEMENTS HAVE NOT BEEN CONSIDERED BY TAX AUTHORITIES . WHEN THESE FACTS WERE PUT BEFORE THE LD. DR, BOTH THE PARTIES AGREED THAT THIS ISSUE MAY BE RESTORED TO THE FILE OF AO FOR EXAMIN ING THE SAME AFRESH BY CONSIDERI NG THE RECONCILIATION STATEMENT S FURNISHED BY T HE ASSESSEE . 9 . ACCORDINGLY, I SET ASIDE THE ORDER OF LD. CIT(A) ON BOTH THE ISSUES AND RESTORE TH E M TO THE FILE OF THE AO WITH A DIRECTION TO EXAMINE THE ISSUE AFRESH BY DULY CONSIDERING THE RECONCIL I ATION STATEMENT S AND ALSO IN THE LIGHT OF DISCUSSIONS MADE SUPRA, BY AFFORDING ENOUGH OPPORTUNITY TO ITA NO. 3319 / MUM/20 14 5 THE ASSESSEE. I MAY MAKE IT CLEAR THAT IF THE ASSESSEE HAS ACCOUNTED FOR THE CREDIT PURCHASES IN THE SUCCEEDING YEAR, THERE IS NO QUESTION OF MAKING ANY A DDITION DURING THE YEAR UNDER CONSIDERATION ON ACCOUNT OF PURCHASES AS WELL AS SUNDRY CREDITORS. 10 . IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSES . . PRONOUNCED ACCORDINGLY ON 5 TH AUGUST 2015. 5 TH AUGUST, 2015 SD ( . . / B.R. BASKARAN) / ACCOUNTANT MEMBER MUMBAI: 5 TH AUG , 2015 . . . ./ SRL , SR. PS / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RES PONDENT. 3. ( ) / THE CIT(A) - CONCERNED 4. / CIT CONCERNED 5. , , / DR, ITAT, MUMBAI CONCERNED 6. / GUARD FILE. / BY ORDER, (ASSTT. REGISTRAR) , /ITAT, MUMBAI