M/s Jaitu Steels, Indore V. The DCIT 1(1), Indore

ITA 34/IND/2011

• Counselvise Citation: 3422714 RSA 2011
• Duration Of Justice: 7 month(s) 10 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 16-12-2011
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: DB
• Next Hearing Date: 01-11-2011
• Assessment Year: 2006-2007
• Appeal Filed On: 06-05-2011
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: R A VERMA
• Assessee Lawyers: GIRISH AGARWAL; ASHISH GOYAL S
• Keywords: Income from undisclosed sources
• Section: 68

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL , INDORE BENCH, INDORE BEFORE SHRI JOGINDER SINGH, J.M. AND SHRI R.C.SHARM A, A.M. PAN NO. : AABFJ2315G I.T.A.NO. 34 /IND/201 1 A.Y. : 200 6 - 07 M/S. JAITU STEELS. 6,9,10 & 11, INDUSTRIAL ESTATE, SECTOR B, SANWER ROAD, INDORE VS. DCIT, 1(1), INDORE. APPELLANT RESPONDENT APPELLANT BY : SHRI GIRISH AGARWAL AND SHRI ASHISH GOYAL, ADVOCATES. RESPONDENT BY : SHRI R. A. VERMA, SR. DR DATE OF HEARING : 03 .0 7 .2012 DATE OF PRONOUNCEMENT : 04 . 0 7 .201 2 O R D E R PER R. C. SHARMA, A.M. THIS IS AN APPEAL FILED BY THE ASSESSEE AGAINST THE ORDER OF CIT(A) DATED 16.12.2002 FOR THE 2006-07. 2. THE ONLY GROUND PRESSED BY THE LD. AUTHORIZED REPRESENTATIVE DURING THE COURSE OF HEARING RELATE S TO -: 2: - 2 ADDITION OF RS. 9 LAKHS U/S 68 OF THE INCOME-TAX AC T, 1961, IN RESPECT OF TRADE CREDIT IN THE NAME OF MEHTA STEELS AND SAURABH SALES CORPORATION. 3. RIVAL CONTENTIONS HAVE BEEN HEARD AND RECORDS PERUSED. BRIEF FACTS OF THE CASE ARE THAT THE ASSES SEE IS A PARTNERSHIP FIRM AND HAS BEEN ENGAGED IN THE BUSINE SS OF MANUFACTURING AND TRADING OF IRON & STEEL MS ROUN D/BAR. DURING THE ASSESSMENT PROCEEDINGS, THE ASSESSING OF FICER NOTED CREDITS IN THE NAMES OF M/S. MEHTA STEEL AND M/S. SAURABH SALES AMOUNTING TO RS. 3 LAKHS AND RS. 6 LA KHS RESPECTIVELY. IN RESPONSE TO A QUERY ON THE QUESTIO N OF GENUINENESS OF THE UNSECURED LOANS, THE ASSESSEE FU RNISHED CONFIRMATIONS IN RESPECT OF CREDITORS EXCEPT IN THE SE TWO CASES, I.E. OF M/S. MEHTA STEEL AND OF M/S. SAURABH SALES. IT WAS CLAIMED THAT THE SAME ARE NOT UNSECURED LOANS BUT A RE ADVANCES FROM CUSTOMERS. ON EXAMINATION OF ACCOUNTS OF THESE PARTIES, THE ASSESSING OFFICER NOTED THAT THE AMOUNT WAS CREDITED ON 15.7.05 IN THE CASE OF M/S. MEHTA STEEL AND ON 1.9.05 IN THE CASE OF M/S. SAURABH SALES. THE AMOUN T REMAINED OUTSTANDING THROUGH OUT THE YEAR IN THE AC COUNTS -: 3: - 3 WHICH WAS CLAIMED TO BE ADJUSTED IN THE SUBSEQUENT YEARS BUT NO DETAILS AND EVIDENCE THEREOF WERE FILED BEFORE T HE ASSESSING OFFICER DURING THE ASSESSMENT PROCEEDINGS. THE ASSE SSING OFFICER FURTHER NOTED FROM THE ACCOUNTS OF M/S. MEH TA STEELS OF THE NEXT YEAR THAT SALES OF RS. 1,02,502/- WAS S HOWN ON 2.9.06 AGAINST WHICH PAYMENT WAS SHOWN TO BE RECEIV ED ON 15.9.06. THE ASSESSING OFFICER, THEREFORE, NOTED TH AT THERE IS NO JUSTIFICATION OF MAKING PAYMENT OF RS. 1,02,502/ - BY M/S. MEHTA STEELS AGAINST THE PURCHASE OF THE MATERIAL O F THAT AMOUNT WHEN ADVANCE OF RS. 3 LAKHS WAS OUTSTANDING IN THEIR ACCOUNT. THE ASSESSING OFFICER ALSO NOTED THAT EVEN AFTER THE ACCOUNTING PERIOD 2006-07, CREDIT BALANCE OF THE PA RTY STOOD AT RS. 1,18,568/-. THE ASSESSING OFFICER, THEREFORE , NOTED THAT THE ASSESSEE TRIED TO PAINT A PICTURE OF ADVANCE FR OM CUSTOMERS WITH A MOTIVE OF ESCAPING THE RIGOURS OF SECTION 68 AND HELD THAT THE ASSESSEE FAILED TO DISCHARGE ITS BURDEN OF ESTABLISHING THE GENUINENESS OF CREDIT IN QUESTION AND IT HAS INTRODUCED ITS OWN INCOME FROM UNDISCLOSED SOURCES IN THE FORM OF THIS CREDIT. -: 4: - 4 4. BY THE IMPUGNED ORDER, THE LD. CIT(A) CONFIRMED THE ADDITION OF ASSESSING OFFICER AND THE ASSESSEE IS I N FURTHER APPEAL BEFORE US. 5. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND HAVE GONE THROUGH THE ORDERS OF THE AUTHORITIES BELOW AN D FOUND FROM RECORD THAT THE ASSESSEE HAD SHOWN RECEIPT OF RS. 3 LAKHS FROM M/S. MEHTA STEELS AND RS. 6 LAKHS FROM SAURABH SALES DURING THE YEAR UNDER CONSIDERATION. THE AMOUNT WAS RECEIVED AS ADVANCE AGAINST ORDER AND IT WAS NOT CASH CREDIT . THE ASSESSEE HAS ALSO FURNISHED CONFIRMATION OF ACCOUNT FROM BOTH THE PARTIES. THE STATEMENT OF ACCOUNT IN CASE OF M/ S. MEHTA STEELS DULY DESPTACHED THE TRANSACTIONS ENTERED IN THE BY THE ASSESSEE. THIS STATEMENT ALSO MENTIONS THE SALES TA X REGISTRATION NUMBER, ADDRESS AND CONTACT DETAILS OF THE SAID PARTIES. IN THE CASE OF M/S. SAURBH SALES CORPORATI ON, STATEMENT OF ACCOUNTS OF THE ASSESSEE IN THE BOOKS OF M/S. SAURABH SALES CORPN. FOR THE PERIOD 1ST APRIL, 2005 , TO 31 ST MARCH, 2007, WAS ALSO FILED. THE SAID STATEMENT DES CRIBED THE TRADING (SALE/PURCHASE) TRANSACTION OF THE ASSESSEE WITH M/S. SAURABH SALES CORPORATION. THE STATEMENT ALSO MENTI ONS THE -: 5: - 5 INCOME TAX PAN, ADDRESS AND CONTACT DETAILS OF THE SAID PARTY. THE AMOUNT OF THE SAID PARTY WAS ADJUSTED WITH THE ACCOUNTS OF M/S. BIRANI ISPAT PVT.LTD. FOR WHICH STATEMENT O F ACCOUNTS WAS SUBMITTED BEFORE THE LOWER AUTHORITIES. THE SAI D STATEMENT OF ACCOUNT GIVES DETAILS OF ACCOUNT OF M/S. SAURABH SALES CORPORATION IN THE BOOKS OF M/S. BIRANI ISPAT PVT.L TD, FOR THE PERIOD 1 ST APRIL, 2005, TO 31 ST MARCH, 2007, ALONG WITH INCOME TAX PAN, ADDRESS AND CONTACT DETAILS OF THE SAID PA RTY. A LETTER DATED 11.7.2005 WRITTEN BY MEHTA STEELS TO THE ASSE SSEE FIRM WAS ALSO PLACED BEFORE THE LOWER AUTHORITIES, WHICH CLEARLY INDICATE THAT AMOUNT WAS GIVEN BY THEM AS AN ADVANC E FOR PURCHASE OF GOODS. FURTHER LETTER DATED 5.4.2006, W HICH WAS REPLIED BY THE ASSESSEE VIDE ITS LETTER DATED 14.8. 2006 CLEARLY INDICATES THE NATURE OF TRANSACTIONS AND THE GENUIN ENESS OF RECEIPT OF AMOUNT AS AN ADVANCE AGAINST SAME. IT AP PEARS THAT THE ASSESSING OFFICER HAS NOT CONSIDERED THESE CORR ESPONDENCE AND CONFIRMATIONS FILED BY THE ASSESSEE, WHICH GOES TO THE ROOT OF THE ISSUE FOR DECIDING GENUINENESS OF THE TRANSA CTION. IN RESPECT OF AMOUNT RECEIVED FROM SAURABH STEELS CORP ORATION WE FOUND THAT IN THE SUBSEQUENT YEAR, THE AMOUNT OF SAID -: 6: - 6 PARTY WAS ADJUSTED WITH THE ACCOUNTS OF M/S. BIRANI ISPAT PRIVATE LIMITED FOR WHICH STATEMENT OF ACCOUNT WAS ALSO ENCLOSED. WITHOUT CONSIDERING ALL THESE DOCUMENTARY EVIDENCES, THE ASSESSING OFFICER HAS JUMPED TO THE CONCLUSION THAT THE ASSESSEE WAS UNABLE TO PROVE THE GENUINENE SS AND CREDITWORTHINESS OF LOAN CREDITORS U/S 68 OF THE IN COME-TAX ACT, 1961. WE DO NOT FIND ANY MERIT IN THE ORDER OF ASSESSING OFFICER, WHICH IS BEING SET ASIDE. IN THE INTEREST OF JUSTICE, WE RESTORE BOTH THESE ISSUES TO THE FILE OF ASSESSING OFFICER FOR DECIDING AFRESH AFTER CONSIDERING THE DOCUMENTS FIL ED BY THE ASSESSEE AS DISCUSSED HEREINABOVE AND TO DECIDE THE ISSUE AFRESH. 6. IN THE RESULT, THE APPEAL IS ALLOWED IN PART FOR STATISTICAL PURPOSES. THIS ORDER HAS BEEN PRONOUNCED IN THE OPEN COURT ON 4 TH JULY, 2012. SD/ - SD/ - (JOGINDER SINGH) (R. C. SHARMA) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED :04 TH JULY, 2012. CPU* 347