The Ad CIT, Range-4, Visakhapatnam., Visakhapatnam V. M/s Rajam Poly Packs Ltd, Rajam., Rajam

ITA 350/VIZ/2009

• Counselvise Citation: [2010] 135 COUNSELVISE.COM (IT) 2814 (ITAT-VISAKHAPATNAM)
• Duration Of Justice: 1 year(s) 3 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 24-09-2010
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: DB
• Next Hearing Date: 06-09-2010
• Assessment Year: 2006-2007
• Appeal Filed On: 16-06-2009
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: J SIRI KUMAR
• Keywords: Set aside

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL VISAKHAPATNAM BENCH, VISAKHAPATNAM BEFORE: SHRI SUNIL KUMAR YADAV, JUDICIAL MEMBER AND SHRI BR BASKARAN, ACCOUNTANT MEMBER ITA NO. 350 /VIZAG/ 20 09 ASSESSMENT YEAR : 2006 - 07 ADDL. CIT, RANGE - 4 VISAKHAPATNAM RAJAM POLY PACKS LTD RAJAM (APPELLANT) VS. (RESPONDENT) PAN NO.AABCR 0489G APPELLANT BY: SHRI J. SIRI KUMAR, DR RESPONDENT BY: SHRI Y.A. RAO, CA ORDER PER SHRI S.K. YADAV, JUDICIAL MEMBER : - THIS APPEAL IS PREFERRED BY THE REVEN UE AGAINST THE ORDER OF THE CIT(A) ON A SOLITARY GROUND THAT CIT(A) HAS ERRED IN DELETING THE ADDITIONS OF RS.28,50,099/ - HAVING IGNORED THE FACT THAT ASSESSEE COULD NOT EXPLAIN SATISFACTORILY THE ENTRY OF LAND TRANSACTIONS OF RS.1 LAKH IN CASH. 2. BRIEF F ACTS BORNE OUT FROM THE RECORD ON THE IMPUGNED ISSUE ARE THAT DURING THE COURSE OF ASSESSMENT PROCEEDINGS, ASSESSING OFFICER VERIFIED THE CASH BOOK PRODUCED BY THE ASSESSEE COMPANY AND NOTICED CERTAIN DISCREPANCIES IN THE ENTRIES MADE IN THE CASH BOOK I.E. CASH BALANCE AS ON 31.10.2005 WAS SHOWN AT RS.10,20,006.65PS. W HEREAS THE CASH BALANCE AS ON 1.1.2005 (WRONGLY MENTIONED, IT SHOULD BE 1.11.2005) WAS RS.1,20,008.65PS. AND THE CASH BALANCE AS ON 31.1.2006 WAS RS.4,88,550.89PS., WHEREAS THE CASH BALANCE AS ON 1.12.2006 (WRONGLY MENTIONED, IT SHOULD BE 1.2.2006) WAS RS.16,68,058.81PS. IN VIEW OF THE ABOVE DISCREPANCIES, THE ASSESSING OFFICER ISSUED A SHOW CAUSE LETTER TO THE ASSESSEE COMPANY AND DIRECTED TO FURNISH THE CASH RECONCILIATION STATEMENT. IN RES PONSE TO THE SAME, ASSESSEE VIDE LETTER DATED 30.12.2008 SUBMITTED THE EXPLANATION RECONCILING THE CASH BALANCE WITH THE SUBMISSION THAT THOUGH THE CASH BOOK WAS MAINTAINED IN THE COMPUTER , THE COMPUTER OPERATOR FAILED TO TAKE INTO CONSIDERATION THE WITHDR AWALS OF THE CASH MADE FROM BANK , BY MISTAKE. IT WAS FURTHER CONTENDED THAT SUCH WRONG STATEMENT OF CASH BALANCE WERE KEPT IN CASH BOOK BY MISTAKE. SUBSEQUENTLY BASED UPON THE 2 ACTUAL TRANSACTIONS ON THE BASIS OF CROSS VERIFICATIONS MADE WITH THE BANK STA TEMENT, THE REVISED CASH BOOK WAS FURNISHED BEFORE THE A.O. FOR VERIFICATION. THE A.O. WAS NOT CONVINCED WITH THE EXPLANATIONS OF THE ASSESSEES AND HE MADE AN ADDITION OF DIFFERENTIAL AMOUNT OF RS.28,5 0 ,099/ - AS THE CONCEALED INCOME OF THE ASSESSEE COMPA NY AND THE SAME WAS ADDED TO THE RETURNED INCOME. 3. ASSESSEE PREFERRED AN APPEAL BEFORE THE CIT(A) WITH THE SUBMISSION THAT RECONCILIATION WAS PLACED BEFORE THE A.O. BUT HE DID NOT EXAMINE THE SAME. THE ASSESSEE AGAIN SUBMITTED A COPY OF THE BANK STAT EMENT ALONG WITH RECONCILIATION STATEMENT WITH THE SUBMISSIONS THAT THE INVOCATION OF PROVISIONS OF 145(1)(I) OF THE ACT FOR REJECTING THE BOOKS OF ACCOUNT WAS NOT PROPER. BEING CONVINCED WITH THE EXPLANATIONS OF THE ASSESSEE, THE CIT(A) CONCLUDED THAT RE JECTION OF THE BOOKS OF ACCOUNTS WAS NOT PROPER AND ACCORDINGLY DELETED THE ENTIRE ADDITIONS. 4 . NOW THE REVENUE HAS PREFERRED AN APPEAL BEFORE THE TRIBUNAL WITH THE SUBMISSION THAT THE RECONCILIATION STATEMENT WAS FILED BEFORE THE ASSESSING OFFICER ON 30 .12.2008 AND ON THE SAME DAY THE ASSESSMENT ORDER WAS PASSED. THEREFORE, T HE RECONCILIATION STATEMENT WAS NOT FILED BEFORE THE ASSESSING OFFICER WELL IN TIME SO IT WAS NOT EXAMINED AND THE CIT(A) HAS RELIED UPON THE RECONCILIATION STATEMENT WITHOUT VERIFY ING THE DETAILS FURNISHED THEREIN. HE COULD HAVE CALLED FOR THE REMAND REPORT OR COULD HAVE VERIFIED HIMSELF THE DETAILS OF THE RECONCILIATION STATEMENT. BUT HE DID NOT DO SO AND HE OUTRIGHTLY ACCEPTED THE EXPLANATIONS OF THE ASSESSEE AND DELETED THE AD DITIONS. 5 . THE LD. COUNSEL FOR THE ASSESSEE ON THE OTHER HAND HAS CONTENDED THAT S O ME DETAILS WERE FURNISHED ON 20.12.2008 WHICH WERE EXAMINED BY THE A.O. BUT WITHOUT GIVING ANY REASONS, THE EXPLANATION FURNISHED BY THE ASSESSEE WERE REJECTED. IT IS FO R THE ASSESSING OFFICER TO POINT OUT THE DEFECT SPECIFICALLY IN THE BOOKS OF ACCOUNTS BEFORE REJECTING THE SAME U/S 145(1) OF THE ACT. 3 6 . HAVING HEARD THE RIVAL SUBMISSIONS AND FROM A CAREFUL PERUSAL OF THE RECORD, WE FIND THAT ASSESSMENT WAS COMPLETED ON 31.12.2008 AND IN THE ASSESSMENT ORDER, THE A.O. HAS DISCUSSED THE LETTER DATED 20.12.2008 IN WHICH DISCREPANCIES WERE EXPLAINED TO SOME EXTENT. BUT FROM THE ASSESSMENT ORDER IT IS ALSO NOTICED THAT ASSESSING OFFICER HAS ALSO FIXED THE DATE OF HEARING FOR FILING THE RECONCILIATION STATEMENT OF THE DISCREPANCIES ON 30.12.2008. BUT NOTHING IS BORNE OUT FROM THE ASSESSMENT ORDER THAT ANY EXPLANATIONS WERE FURNISHED ON 30.12.2008. IT WAS ONLY A DISCUSSION OF ONE LETTER DATED 20.12.2008. WHEREAS THE ASSESSEE HAS RELIED UPON THE EXPLANATIONS THROUGH ITS LETTER DATED 30.12.2008. WE HAVE ALSO PERUSED THE ORDER OF THE CIT(A) AND WE FIND THAT THE EXPLANATIONS FURNISHED BY THE ASSESSEES WERE NOT PROPERLY EXAMINED EITHER BY CIT(A) OR BY THE ASSESSING OFFICER UNDER A REMAND PROCEEDINGS. THEREFORE, WE ARE OF THE VIEW THAT CIT(A) HAS ACCEPTED THE EXPLANATIONS OF DISCREPANCIES WITHOUT VERIFYING THE DETAILS EITHER THROUGH HIMSELF OR THROUGH THE ASSESSING OFFICER UNDER REMAND PROCEEDINGS. IT WAS ALSO BROUGHT TO OUR NOTI CE THAT THE BOOKS OF ACCOUNTS OF THE ASSESSEES WERE PROPERLY AUDITED AND THE DISCREPANCIES WERE NOTICED IN THE AUDITED BOOKS OF ACCOUNTS. THEREFORE IT IS ALL THE MORE NECESSARY FOR THE AUTHORITIES TO EXAMINE THE EXPLANATION OF THE DISCREPANCIES FILED BY T HE ASSESSEES. BUT IT WAS NOT DONE BY ANY OF THEM. WE THEREFORE OF THE VIEW THAT ISSUE WAS NOT PROPERLY EXAMINED BY THE LOWER AUTHORITIES. WE ACCORDINGLY, SET ASIDE THE ORDER OF THE CIT(A) AND RESTORE THE MATTER TO THE FILE OF THE A.O. WITH A DIRECTION T O EXAMINE THE EXPLANATIONS OF THE DISCREPANCIES FILED ALONG WITH THE EVIDENCE BEFORE THE CIT(A) OR THE A.O. 7 . IN THE RESULT, THE APPEAL OF THE REVENUE IS ALLOWED FOR STATISTICAL PURPOSES. PRONOUNCED IN THE OPEN COURT ON 24.9 .20 10 SD/ - SD/ - (BR BASKARAN) (SUNIL KUMAR YADAV) ACCOUNTANT MEMBER JUDICIAL MEMBER VG/SPS VISAKHAPATNAM, DATED 24 TH SEPTEMBER , 20 10 4 COPY TO 1 THE ADDL. CIT, RANGE - 4, VISAKHAPATNAM 2 M/S. RAJAM POLY PACKS LTD., PONDURU ROA D, RAJAM 3 THE CI T, VISAKHAPATNAM 4 THE CIT (A) , VISAKHAPATNAM 5 THE DR, ITAT, VISAKHAPATNAM. 6 GUARD FILE. BY ORDER SENIOR PRIVATE SECRETARY INCOME TAX APPELLATE TRIBUNAL VISAKHAPATNAM