The Asstt. Commissioner of Income Tax, Vapi Circle, Vapi V. M/s. Western India Costruction, Daman

ITA 3509/AHD/2016

• Counselvise Citation: [2021] 108 COUNSELVISE.COM (IT) 1583 (ITAT-SURAT)
• Duration Of Justice: 4 year(s) 6 month(s) 2 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-06-2021
• Appeal Filed By: Department
• Order Result: Partly Allowed
• Bench Allotted: DB
• Assessment Year: 2011-2012
• Appeal Filed On: 26-12-2016
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: O P VAISHNAV
• Keywords: Unexplained cash credit
• Section: 143(3); 133(6); 13; 68; 144

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, SURAT BENCH, SURAT BEFORE SHRI PAWAN SINGH, JM & DR. A. L. SAINI, AM ./ITA NO.3509/AHD/2016 ( [ [ / ASSESSMENT YEARS: (2011-12) (VIRTUAL COURT HEARING) THE ACIT, VAPI CIRCLE, VAPI. VS. M/S. WESTERN INDIA CONSTRUCTION, 402, TRISHUL APARTMENT, TIN BATTI, NANI DAMAN, UT OF DAMAN -396191. ./ ./ PAN/GIR NO.: AAAFW2117L (ASSESSEE) (RESPONDENT) ASSESSEE BY : SHRI RAJESH UPADHYAY, AR REVENUE BY : SHRI O. P. VAISHNAV, CIT(DR) / DATE OF HEARING : 25/05/2021 /DATE OF PRONOUNCEMENT : 28/06/2021 / O R D E R PER DR. A. L. SAINI, ACCOUNTANT MEMBER: CAPTIONED APPEAL FILED BY THE REVENUE, PERTAINING TO THE ASSESSMENT YEAR (AY) 2011-12, IS DIRECTED AGAINST THE ORDER PASSED BY THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS), VALSAD [IN SHORT THE LD. CIT(A)] IN APPEAL NO. CIT(A)/VLS/76/14-15/1047 DATED 21.10.2016 WHICH IN TURN ARISES OUT OF AN ASSESSMENT ORDER PASSED BY THE ASSESSING OFFICER UNDER SECTION 144 R.W.S 143(3) OF THE INCOME TAX ACT, 1961 [HEREINAFTER REFERRED TO AS THE ACT]. 2. THE GRIEVANCES RAISED BY THE REVENUE ARE AS FOLLOWS: (1) ON THE FACTS AND IN THE CIRCUMSTANCE OF THE CASE AND IN LAW, THE LD. CIT(A) ERRED IN DELETING THE DISALLOWANCE ON ACCOUNT OF UNPROVED CAPITAL AMOUNTING TO RS.1,67,24,489/- EVEN THOUGH THE PARTNER OF THE FIRM HAD NOT FILED THEIR RETURNS FOR THE AY-2010-11 AND IN THE ABSENCE OF WHICH THE CLAIM OF THE INTRODUCTION OF ADDITIONAL CAPITAL DURING THE YEAR COULD NOT BE CONSIDERED GENUINE/ SUBSTANTIATED. (2) ON THE FACTS AND IN THE CIRCUMSTANCE OF THE CASE AND IN LAW, THE LD. CIT(A) ERRED IN DELETING THE DISALLOWANCE ON ACCOUNT OF UNPROVED SUNDRY CREDITOR OF RS.4,40,156/- BY FAILING TO DISCUSS THE MATTER IN THE ORDER PASSED, THOUGH CONFIRMATION WAS NOT RECEIVED IN THIS CASE AND ALSO THIS MATTER WAS DISCUSSED/REPORTED IN REMAND REPORT. [ PAGE | 2 ITA NO.3509/AHD/201 6 ASSESSMENT YEARS.2011-12 WESTERN INDIA CONSTRUCTION III) IT IS THEREFORE, PRAYED THAT THE ORDER OF THE CIT(A), MAY BE SET-ASIDE AND THAT THE ORDER OF THE ASSESSING OFFICER MAY BE RESTORED. IV) THE ASSESSEE CRAVES TO ADD, MODIFY OR ALTER ANY GROUNDS DURING THE COURSE OF APPEAL PROCEEDINGS. 3. IN ADDITION TO THE ABOVE TWO GROUNDS, LATER ON, THE REVENUE HAS SUBMITTED BEFORE THE BENCH THE REVISED GROUND OF APPEAL, WHICH PERTAINS TO GROUND NO.2, ORIGINALLY RAISED BY REVENUE, WHEREIN THE REVENUE HAS AGGRIEVED BY THE DISALLOWANCE ON ACCOUNT OF UNPROVED SUNDRY CREDITORS OF RS.4,40,160/-. THE REVENUE HAS REVISED THIS SECOND ORIGINAL GROUND AND FILED THE ADDITIONAL GROUND WHEREIN THE REVENUE HAS CHALLENGED THE DISALLOWANCE ON ACCOUNT OF UNPROVED SUNDRY CREDITORS TO THE TUNE OF RS.96,96,244/-. THE ADDITIONAL GROUND RAISED BY THE REVENUE IS AS FOLLOWS: (1) ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE ID. CIT(A) ERRED IN DELETING THE DISALLOWANCE ON ACCOUNT OF UNPROVED SUNDRY CREDITORS OF RS.96,96,244/- BY FAILING TO DISCUSS THE MATTER IN THE ORDER PASSED, THOUGH CONFIRMATION WAS NOT RECEIVED IN THIS CASE AND ALSO THIS MATTER WAS DISCUSSED/REPORTED IN REMAND REPORT. (2) THE ASSESSEE CRAVES TO ADD, MODIFY OR AFTER ANY GROUNDS DURING THE COURSE OF APPEAL PROCEEDINGS. 4. NOW, WE SHALL TAKE GROUND NO.1 RAISED BY REVENUE WHICH RELATES TO DISALLOWANCE ON ACCOUNT OF UNPROVED CAPITAL AMOUNTING TO RS.1,67,24,489/-. 5. SUCCINCT FACTS ARE THAT ASSESSEE HAS CLAIMED PARTNER'S CAPITAL TOTALING TO RS.1,67,24,489/- IN THE RETURN OF INCOME. THE ASSESSEE WAS GIVEN SEVERAL OPPORTUNITIES TO FURNISH DETAILS OR SOURCE OF CAPITAL, BUT THE ASSESSEE FAILED TO DO SO DURING THE ASSESSMENT STAGE. THEREFORE, ASSESSING OFFICER HELD THAT ASSESSEE FAILED TO FULFILL THE GENUINENESS OF SUCH CAPITAL VIZ. WHETHER IT HAS BEEN TRANSMITTED THROUGH BANKING OR OTHER INDISPUTABLE CHANNELS AND THE CREDITWORTHINESS OR FINANCIAL STRENGTH OF THE PARTNER. THEREFORE, AN AMOUNT OF RS.1,67,24,489/- WAS DISALLOWED AS UNPROVEN CAPITAL. 6.AGGRIEVED BY THE ORDER OF THE ASSESSING OFFICER, THE ASSESSEE CARRIED THE MATTER IN APPEAL BEFORE THE LD. CIT(A) WHO HAS DELETED THE ADDITION MADE BY THE [ PAGE | 3 ITA NO.3509/AHD/201 6 ASSESSMENT YEARS.2011-12 WESTERN INDIA CONSTRUCTION ASSESSING OFFICER. AGGRIEVED BY THE ORDER OF THE LD. CIT(A), THE REVENUE IS IN APPEAL BEFORE US. 7. WE HAVE HEARD BOTH THE PARTIES AND CAREFULLY GONE THROUGH THE SUBMISSIONS PUT FORTH ON BEHALF OF THE ASSESSEE ALONG WITH THE DOCUMENTS FURNISHED AND THE CASE LAWS RELIED UPON, AND PERUSED THE FACTS OF THE CASE INCLUDING THE FINDINGS OF THE LD. CIT(A) AND OTHER MATERIAL BROUGHT ON RECORD.LEARNED DR FOR THE REVENUE HAS PRIMARILY REITERATED THE STAND TAKEN BY THE ASSESSING OFFICER, WHICH WE HAVE ALREADY NOTED IN OUR EARLIER PARA AND IS NOT BEING REPEATED FOR THE SAKE OF BREVITY. ON THE OTHER HAND, LD COUNSEL FOR THE ASSESSEE HAS DEFENDED THE ORDER PASSED BY THE CIT(A). WE NOTE THAT ACCOUNTS OF THE ASSESSEE ARE AUDITED, WHICH SHOWS CLOSING BALANCE OF THE PARTNER'S CAPITAL AT RS.1,67,24,489/-. AS PER ASSESSEE, THE PARTNERS ARE SH. SANTOSHKUMAR AND SH. SURESHKUMAR. IT IS EXPLAINED BY LD COUNSEL THAT ALL THE MONEY WAS RECEIVED FROM THE SISTER CONCERN M/S TWINS E POWER IN WHICH THEY ARE THE PARTNERS. THE REQUISITE INFORMATION WAS FILED ON 24.03.2014. THE NEW CAPITAL CONTRIBUTION BY SANTOSHKUMAR WAS RS.11,41,500/- AND BY SURESHKUMAR RS.13,14,500/- WHICH WERE RECEIVED THROUGH CHEQUE FROM M/S TWINS E POWER. 8. DURING THE APPELLATE PROCEEDINGS, THE LD CIT(A) HAD REFERRED THIS MATTER TO THE ASSESSING OFFICER TO VERIFY THE CONTENTION OF THE ASSESSEE. THE ASSESSING OFFICER VIDE REMAND REPORT DATED 20.05.2016, SUBMITTED THE FOLLOWING OBSERVATIONS: 'THE ASSESSEE HAS FURNISHED DETAILS AND EVIDENCES OF CAPITAL ACCOUNT OF SHRI SANTOSHKUMAR NAYAR & SHRI SURESHKUMAR NAYAR IN RESPECT OF THEIR CAPITAL INVESTMENT IN THE FIRM FOR RS.1,67,24,489/-. BREAK UP OF CAPITAL IS AS UNDER: NAME OF PARTNER OPENING BALANCE CAPITAL INTRODUCTION MEREST ON CAPITAL REMUNE RATION SHARE OF PROFLT WITHDRA WALS CLOSING BALANCE SANTOSHKUMAR NAYAR 65,39,305 11,41,500 7,84,716 1,00,000 11,30,823 11,63,214 85,33,130 SURESHKUMAR NAYAR 62,10,756 13,14,500 7,45,291 1,00,000 11,30,823 13,10,011 81,91,359 TOTAL 1,27,50,061 24,56,000 15,30,007 2,00,000 22,61,646 24,73,225 1,67,24,489 OPENING BALANCE OF CURRENT YEAR IS VERIFIED WITH ASSESSEE'S RETURN FOR A. Y. 2010-11 THAT FILED ON 09.10.2010. FIGURES OF INTEREST, REMUNERATION & SHARE OF PROFIT ARE AS PER PROFIT [ PAGE | 4 ITA NO.3509/AHD/201 6 ASSESSMENT YEARS.2011-12 WESTERN INDIA CONSTRUCTION AND LOSS ACCOUNT FOR THE YEAR UNDER CONSIDERATION. REGARDING NEW INTRODUCTION OF CAPITAL IN CURRENT YEAR FOLLOWING VERIFICATION IS MADE. DATE OF ISSUE OF CHEQUE AMOUNT PAID BY SHRI SANTOSH KUMAR FROM M/S TWIN E- TOWERS TO M/S WESTERN INDIA DATE OF ISSUE OF CHEQUE AMOUNT PAID BY SHRI SURESH KUMAR FROM M/S TWINS E-TOWERS TO M/S WESTERN INDIA AMOUNT WITH DRAWN BY M/S TWIN E-TOWERS TO SHRI SANTOSH KUMAR AND SURESH KUMAR. CHEQUE NUMBER: CHEQUE NUMBER 28.04.2010/544502 1,00,000/- 28.04.2010/544502 2,00,000/- 3,00,000/- 11.05.2010/544423 99,000/- 11.05.2010/544423 9,000/- 1,98,000/- 26.05.2010/264711 1,15,000/- 26.05.2010/264711 1,15,000/- 2,30,000/- 10.07.2010/264717 1,15,000/- 10.07.2010/264717 1,15,000/- 2,30,000/- 01.09.2010/264732 2,12,500/- 01.09.2010/264732 2,12,500/- 4,24,000 /- 06.09.2010/264736 1,00,000/ - 06.09.2010/264736 1,00,000/- 2,00,000/- 07.10.2010/264741 1,00,000/- 07.10.2010/264741 1,00,000/- 2,00,000/- 11.10.2010/264742 75,000/- 11.10.2010/264742 75,000/- 1,50,000 /- - - 03.11.2010/54459 1,23,000/- 1,23,000/- 21.12.2010/54469 1, 00,000/- 21.12.2010/54469 1,00,000/- 2,00,000/- 19.01.2011/68445 75, 000/- 19.01.2011/68455 75,000/- 1,50,000/- 05.03.2011/68459 50,000/- - - 50,000/- OBSERVATION & CONCLUSION:- THE ASSESSES HAS FILED CONTRA ACCOUNTS FROM TWIN-E POWER FOR F.Y. 2010-11 IN RESPECT OF SHRI SANTOSHKUMAR& SHRI SURESHKUMAR. HE HAS ALSO FILED COPY OF BANK STATEMENT OF AXIS BANK AND UCO BANK INTO BANK. ABOVE ENTRIES ARE APPEARING IN BANK ACCOUNT OF TWIN-E POWER. THE SAID FIRM M/S. TWIN-E POWER IS ASSESSED TO TAX AT PAN: AAEFT5709M. THE FIRM HAS FILED E-RETURN ON 08.10.2010 FOR A. Y. 2010-11. HOWEVER, BOTH THE PARTNERS HAVE NOT FILED THEIR RETURNS FOR THE YEAR UNDER CONSIDERATION. HENCE, THEIR CAPITAL INVESTMENT CANNOT BE ACCEPTABLE. THEREFORE, IN ASSESSMENT PROCEEDINGS THAN AO HAS MADE ADDITION OF RS.1,67,24,489/- IS IN ORDER.' 9. AFTER TAKING THE REMAND REPORT, LD CIT(A) OBSERVED THAT ALL THE CAPITAL INTRODUCED BY THE PARTNERS HAS BEEN RECEIVED FROM THE SISTER CONCERN THROUGH CHEQUES. THE SISTER CONCERN M/S TWIN E POWER FILES ITS RETURN OF INCOME. BUT THE ASSESSING OFFICER HAS COMMENTED THAT THE PARTNERS HAS NOT FILED THE RETURN FOR THIS YEAR SO ADDITION OF RS.1,67,24,489/- BE MADE.THE UNDISPUTED FACTS ARE THAT WHATEVER CAPITAL INTRODUCED BY THE PARTNERS IN THEIR CAPITAL ACCOUNT, STANDS EXPLAINED. THE OPENING BALANCE DOES NOT SUFFER FROM ANY INFIRMITY. SIMILARLY, ADDITIONS ON ACCOUNT OF INTEREST, REMUNERATION, PROFIT AND ENTRIES OF WITHDRAWALS HAVE ALSO NOT BEEN DISPUTED. IN VIEW OF ALL THIS, NO ADDITION CAN BE MADE IN THE HAND OF THE ASSESSEE OF THE TOTAL OUTSTANDING CAPITAL BALANCE AT THE END OF THE YEAR IN THE CAPITAL ACCOUNTS OF THE PARTNERS SIMPLY BECAUSE THE PARTNERS HAVE NOT FILED THEIR RETURN OF INCOME. AS THE ENTRIES OF CREDIT AND DEBIT IN THE CAPITAL ACCOUNTS OF [ PAGE | 5 ITA NO.3509/AHD/201 6 ASSESSMENT YEARS.2011-12 WESTERN INDIA CONSTRUCTION THE PARTNERS HAS BEEN ADMITTED AS GENUINE SO THE ADDITION OF RS.1,67,24,489/- BEING THE TOTAL OF OUTSTANDING CAPITAL BALANCE OF THE PARTNERS IN THE BOOKS OF THE ASSESSEE WAS DELETED BY LD CIT(A). WE NOTE THAT HON`BLE HIGH COURT OF MADRAS IN THE CASE OF SMT. B. JAYALAKSHMI, [2018] 96 TAXMANN.COM 486 (MADRAS), HELD THAT WHERE COMMISSIONER (APPEALS) ON BASIS OF REMAND REPORT OF ASSESSING OFFICER, ALLOWED CLAIM OF ASSESSEE, REVENUE WAS NOT ENTITLED TO MAINTAIN AN APPEAL BEFORE TRIBUNAL AGAINST SAID ORDER OF COMMISSIONER (APPEALS). THAT BEING SO, WE DECLINE TO INTERFERE WITH THE ORDER OF ID. CIT(A) IN DELETING THE AFORESAID ADDITIONS. HIS ORDER ON THIS ADDITION IS, THEREFORE, UPHELD AND THE GROUNDS OF APPEAL OF THE REVENUE ARE DISMISSED. 10.NOW, WE SHALL TAKE ADDITIONAL GROUND RAISED BY THE REVENUE AS WELL AS ORIGINAL GROUND NO.2 RAISED BY THE REVENUE WHICH RELATES TO UNPROVED SUNDRY CREDITORS TO THE TUNE OF RS.96,96,244/-. 11. BRIEF FACTS QUA THE ISSUE ARE THAT ASSESSEE HAS CLAIMED UNSECURED LOAN TOTALING TO RS.40,73,500/- AND SUNDRY CREDITORS OF RS. 1,77,34,189/- IN THE RETURN OF INCOME. THE ASSESSEE WAS GIVEN SEVERAL OPPORTUNITIES TO FURNISH DETAILS OR CONFIRMATIONS OF SUCH CREDITORS, BUT THE ASSESSEE FAILED TO DO SO. THEREFORE, AN AMOUNT AGGREGATING TO RS.2,18,07,689/- WAS DISALLOWED BY ASSESSING OFFICER AS UNPROVEN UNSECURED LOAN AND SUNDRY CREDITORS. 12. AGGRIEVED BY THE ORDER OF THE ASSESSING OFFICER, THE ASSESSEE CARRIED THE MATTER IN APPEAL BEFORE THE LD. CIT(A) WHO HAS PARTLY DELETED THE ADDITION MADE BY THE ASSESSING OFFICER OBSERVING AS FOLLOWS: DURING THE ASSESSMENT PROCEEDINGS, THE ASSESSING OFFICER MADE THE ADDITION FOR WANT OF RESPONSE FROM THE ASSESSEE. BUT ON THE OTHER HAND, THE AR OF THE ASSESSEE SUBMITTED DURING APPELLATE PROCEEDINGS THAT REPLIES WERE FILED ON 24.03.2014. IN THE INTEREST OF NATURE JUSTICE A REMAND REPORT WAS CALLED FOR FROM THE ASSESSING OFFICER. IN THE REMAND REPORT, THE ASSESSING OFFICE OBSERVED THAT THE BREAKUP OF THE AMOUNT OF RS.2,18,07,689/- IS AS UNDER: A. UNSECURED LOANS RS.40,73,500/- B. SUNDRY CREDITORS RS. 1,73,80,759/- C. DEPOSITS FROM DHARTI CONSTRUCTION RS.3,53,430/- [ PAGE | 6 ITA NO.3509/AHD/201 6 ASSESSMENT YEARS.2011-12 WESTERN INDIA CONSTRUCTION IN REGARD TO THE UNSECURED LOANS, THE ASSESSING OFFICER DID NOT POINT OUT ANY DEFECT IN THEM BECAUSE IN SOME OF THE CASES THE CONFIRMATION ALONG WITH PAN AND ADDRESS WERE RECEIVED BY THE ASSESSING OFFICER. NOTICES U/S 133(6) OF THE ACT, WERE ALSO ISSUED AND IN THE CASES WHERE NO CONFIRMATION WAS RECEIVED, AN INTIMATION IN THIS REGARD WAS SENT TO THE ASSESSING OFFICERS OF THE UNSECURED LOANEES FOR FURTHER ACTION. I HAVE GIVEN MY CAREFUL THOUGHTS TO THE RIVAL SUBMISSIONS AS WELL AS THROUGH THE REMAND REPORT AND COUNTER COMMENTS OF THE AR OF THE ASSESSEE. AS THE ASSESSING OFFICER HAS NOT SPECIFICALLY POINTED OUT ANY DEFECT IN THE UNSECURED LOANS SO NO ADDITION IN REGARD TO UNSECURED LOANS OF RS.40,73,500/- WAS ASKED. IN VIEW OF THIS, THE ADDITION MADE OF RS.40,73,500/- OF OUTSTANDING UNSECURED LOANS IN THE BALANCE SHEET IS DELETED. IN REGARD TO THE SUNDRY CREDITORS OF RS.1,73,80,759/-, THE ASSESSING OFFICER MADE THIS ADDITION FOR WANT OF RESPONSE FROM THE ASSESSEE DURING THE ASSESSMENT PROCEEDINGS. HOWEVER, DURING THE APPELLATE PROCEEDINGS, THE AR OF THE ASSESSEE SUBMITTED THAT THE REQUISITE REPLY WAS FILED ON 24.03.2014. IN THE INTEREST OF NATURE JUSTICE A REMAND REPORT WAS CALLED FOR FROM THE ASSESSING OFFICER. IN THE REMAND REPORT 20.05.2016, THE ASSESSING OFFICER HAS DEALT WITH THIS ISSUE AT LENGTH. ENQUIRIES U./S 133(6) OF THE ACT WERE MADE AND AS A RESULT, THE ASSESSING OFFICER OBSERVES THAT IN A NUMBER OF CASES EITHER THE NOTICES WERE RECEIVED BACK UNSERVED OR NO REPLY WAS RECEIVED. SIMILARLY, IN SOME CASES THERE WERE DIFFERENCES IN THE AMOUNT OUTSTANDING. A DETAILED CHART WAS PREPARED AND WAS SUBMITTED ALONG WITH THE REMAND REPORT BY THE ASSESSING OFFICER. FOR THE SAKE OF CONVENIENCE THE SAME CHART IS REPRODUCED BELOW: AS PER ASSESSEE'S REPLY AS PER BALANCE SHEET AS ON 31.03.2010. AUDIT REPORT AND AUDITED ACCOUNTS ARE AVAILABLE IN THE FILE OF THE ASSESSEE. NAME DATE OF ISSUE OF 133(6) REPLY RECEIVED FROM 'A' OPENING DURING THE YEAR CLOSING MARCH'10 MARCH'11 REMARKS A V 4 PROMOTIONS 09.09.2015 UNSERVE D N 423734 440156 THE NOTICE SERVED TO THE PARTY HAS BEEN RECEIVED UNSERVED AND HENCE VERIFICATION COULD NOT BE POSSIBLE B PADMINI TRANSPORT 09.09.2015 SERVED/ 14.09.15 868077 868077 NO REPLY RECEIVED FROM 'A' HENCE THE SAME COULD NOT BE VERIFIED C MARUTI STEEL 09.09.2015 SERVED/ 15,09.15 461585 779904 -DO- D NATIONAL ELECTRICAIS 09.09.2015 SERVED/ 15.09.15 466812 466812 -DO E SHREE SAI TRANSPORT 09.09.2015 SERVED/ 15.09,15 853500 525500 DO F KESAR STEEL SUPPLIERS 09.09.2015 SERVED/ 15.09.15 R 2012364 2012364 1875364 1787364 A DIFFERENCE IN THE FIGURES BETWEEN ASSESSEE AND PARTY IS NOTED G ARNBICA STEEL SUPPLIERS 09.09.2015 SERVED/ 15.09.15 R 26,58,99 2 12,28,791 14,30,201 2658992 700201 -DO- H SANDIPKUMAR JAYKU MAR SHAH & CO 09.09.2015 SERVED/ 15.09.15 75755 495162 MO REPLY RECEIVED FROM 'A 1 HENCE THE THE ABOVE DISCREPANCIES WERE CONFRONTED TO THE ASSESSEE DURING THE REMAND PROCEEDINGS. FROM THE REPLY RECEIVED, THE ASSESSING OFFICER CONCLUDED AS UNDER: 'THE ASSESSEE HAS MADE REPLY ON 18.01.2016 IN FOLLOWING MANNER: [ PAGE | 7 ITA NO.3509/AHD/201 6 ASSESSMENT YEARS.2011-12 WESTERN INDIA CONSTRUCTION (I) AMBICA STEEL SUPPLIERS: AS PER ASSESSEE'S BOOKS, CREDIT BALANCE IS RS.7,00,201/-, HOWEVER, AS PER PARTIES CONFIRMATIONS, THE SAME IS RS.14,30,201/-. THE ASSESSEE EXPLAIN THAT THE PARTY HAS CREDITED RS.7,30,000/- IN THEIR ACCOUNTS, BUT, NO SUCH PAYMENT WAS MADE BY THE ASSESSEE. (II) M/S. KESAR STEEL'SUPPLIERS:: REGARDING THIS PARTY, IT IS STATED THAT THE DIFFERENCE IS ON ACCOUNT OF OPENING BALANCE AND THERE IS NO TRANSACTIONS IN THE YEAR UNDER ASSESSMENT. THE ASSESSES HIMSELF HAS CONFIRMED THAT IN CASE OF M/S. AMBICA STEEL SUPPLIER, NO PAYMENT OF RS. 7,30,000/- WAS MADE, HOWEVER, THE PARTY HAS CONFIRMED SUCH PAYMENT U/S. 133(6) OF THE ACT. FURTHER, IN THE CASES OF SANDIPKUMAR JAYKUMAR SHAH & CO., SAI SUPPLIERS, SHREE BHAGVATI TRADERS, MONICA ROOFING, SCAFF ROOFING, SHY ENGINEERING, THE ASSESSEE DID NOT GIVE ANY REPLY AND HENCE THE SAME COULD NOT BE VERIFIED. IN SITARAM CHAUHAN & SUPER FLOORING THERE IS A DISCREPANCY NOTED IN THE FIGURES BETWEEN ASSESSEE AND THE PARTY AND NO RECONCILIATION HAS BEEN OFFERED BY THE ASSESSEE IN THIS REGARD. ALSO IN THE CASE OF M/S. BHAKTI SALES AGENCY, THE ACCOUNT IS DIFFER BY RS.10,150/-. THE OTHER CASES OF M/S KHETESHWAR HARDWARE ELECTRICALS, HASANALI BHAI AND SONS AND VIJAY BUILDERS THERE IS NO DISCREPANCY NOTED. ON THE BASIS OF ABOVE FACTS AND OBSERVATIONS, IT IS AMPLY CLEAR THAT IN MANY CASES CREDITORS ACCOUNT BALANCES ARE DIFFER FROM THAT OF ASSESSEE'S ACCOUNT. THEREFORE, LEGAL INFERENCE CAN BE DRAWN THAT THE ASSESSEE HAS EITHER INFLATED PURCHASES OR MADE OUT OF BOOKS PAYMENT. IN VIEW OF THE ABOVE FINDINGS AND FROM ALL THE FACTS IT IS EVIDENT THAT CREDITORS ACCOUNT BALANCE OF RS.1,73,80,759/- IS VERY MUCH IN DOUBT HENCE, THE AO HAS MADE ADDITION IN HIS ASSESSMENT ORDER U/S.143(3).' WHEN ASKED TO GIVE COUNTER COMMENTS ON THE ABOVE OBSERVATIONS OF THE ASSESSING OFFICER, THE AR OF THE ASSESSEE SUBMITTED AS UNDER: 'ON PAGE 2 & 3 OF REMAND REPORT THE A.O. HAS GIVEN ELABORATE CHART REGARDING OPENING BALANCE AND CLOSING BALANCE OF EACH DEPOSITOR. THE A.O. HAS ALSO GIVEN RESULT OF HIS ENQUIRY UNDER SECTION 133(6) OF THE ACT, UPON ALL THE DEPOSITORS. NOTICES WERE SERVED AND DEPOSITORS HAVE DULY COMPLIED A.O'S NOTICE ACCEPT ONE M/S. V 4 PROMOTIONS. THE ASSESSEE HAS MADE REPLY AND RECONCILIATION OF ACCOUNT IN RESPECT OF FOLLOWING PARTIES. SR. NO. NAME OF CREDITOR REMARKS 1 PADMINI ENTERPRISES NO DIFFERENCE. ACCOUNT TALLIED. 2 PAD MINI TRANSPORT NO DIFFERENCE. ACCOUNT TALLIED. 3 MARUTI STEELS OPENING BALANCE C/F. - NO TRANSACTION IN CURRENT YEAR. PAGE 3 OF REMAND REPORT. 4 NATIONAL ELECTRICALS 5 SHREE SAI TRANSPORT OPENING BALANCE RS. 8,53,500/- . PAYMENT MADE RS.3,00,000/- IN THIS YEAR. THERE IS NO NEW CREDIT TRANSACTION IN THE YEAR OF APPEAL. 6 KESAR STEEL SUPPLIERS THERE IS NO NEW CREDIT TRANSACTION IN THE YEAR [ PAGE | 8 ITA NO.3509/AHD/201 6 ASSESSMENT YEARS.2011-12 WESTERN INDIA CONSTRUCTION 7 AMBICA STEEL SUPPLIERS UNDER APPEAL. PAYMENT OF OLD CREDIT BALANCE IS MADE IN PART, IN THIS YEAR. 8 SANDEEPKUMAR JAYKUMAR SHAH & COMPANY THE NOTICES HAVE NOT RESPONDED A.O'S NOTICE. HOWEVER, NOTICES WERE SERVED UPON THEM. CREDIT ENTRIES ARE SUPPORTED BY BILLS AND PAYMENTS ARE THROUGH ACCOUNT PAYEE CHEQUES. RELATED EXPENSES WERE ALLOWED. NON- RECEIPT OF REPLY FROM THE CREDITOR CANNOT ATTRACT PROVISION OF SECTION 68 OR SECTOR, 41(1) OF I. T ACT. 9 SAI SUPPLIERS 10 SHREE BHAGWATI TRADERS 11 MONICA ROOFING 12 SCAFF ROOFING 13 SHY ENGINEERING 14 BHAKTI SALES AGENCIES THERE IS NO DISCREPANCY. 15 KHETESHWAR HARDWARE & ELECTRICALS THERE IS NO DISCREPANCY. 16 HASANALIBHAI & SONS THERE IS NO DISCREPANCY. 17 VIJAY BUILDERS THERE IS NO DISCREPANCY. LR ACTT OBSERVATION IS LEGALLY NOT CORRECT ONLY ON THE BASIS OF HIS REMAND REPORT. ' AFTER GOING THROUGH THE REMAND REPORT AS WELL AS THE COUNTER COMMENTS OF THE AR OF THE ASSESSEE, THE FOLLOWING POSITION EMERGES: A) ACCOUNTS WHERE NO DISCREPANCY WAS FOUND. I) PADMANI ENTERPRISE II) PADMANI TRANSPORT B) ACCOUNTS WHERE NO TRANSACTIONS TOOK PLACE DURING THE YEAR AND THE OPENING BALANCES ARE THE CLOSING BALANCES. I) M/S MARUTI STEELS II) M/S NATIONAL ELECTRICALS C) ACCOUNTS WHERE DISCREPANCIES WERE FOUND AND EXPLANATION GIVEN/NO EXPLANATION GIVEN. I) M/S AMBIKA STEEL SUPLLIERS - THE DIFFERENCE IN BALANCE IS RS.7,30,000/-. WHICH THE ASSESSEE CLAIMS THAT THE OTHER PARTY HAS SUO MOTO CREDITED THE AMOUNT WITHOUT RECEIVING ANY AMOUNT FROM THE ASSESSEE. II) M/S SANDEEP KUMAR JAY KUMAR - CLOSING BALANCE RS.4,95,172/- III) SAI SUPPLIERS - CLOSING BALANCE IS RS.3,22,100/- IV) SHRI BHAGWATI TRADERS - CLOSING BALANCE IS RS.8,22,477/- V) MONICA ROOFING - CLOSING BALANCE IS RS.2,53,325/- VI) SCAFF WORLD - CLOSING BALANCE IS RS.3,40,029/- [ PAGE | 9 ITA NO.3509/AHD/201 6 ASSESSMENT YEARS.2011-12 WESTERN INDIA CONSTRUCTION VII) SHY ENGINEERING - CLOSING BALANCE IS RS.1,83,478/- VIII) BHAKTI SALES AGENCIES - DIFFERENCE BALANCE IS RS.10,150/- IN RESPECT OF ALL THESE SUNDRY CREDITORS, THE ASSESSING OFFICER OBSERVED THAT THE ASSESSEE DID NOT FILE ANY REPLY. BUT THE AR OF THE ASSESSEE SUBMITTED THAT NOTICES WERE NOT RESPONDED BY THE SUNDRY CREDITORS BUT THE CREDIT ENTRIES ARE SUPPORTED BY BILLS. RELATED EXPENSES WERE ALLOWED AND PAYMENTS WERE MADE THROUGH CHEQUES. NON-RECEIPT OF REPLY FROM THE CREDITORS CANNOT ATTRACT SECTION 68 OR SECTION 41(1) OF THE ACT. I HAVE GIVEN MY CAREFUL THOUGHTS TO THE RIVAL SUBMISSIONS AND DO NOT AGREE WITH THE CONTENTION OF THE AR OF THE ASSESSEE. THE AR OF THE ASSESSEE WAS DUTY BOUND TO EXPLAIN THE CREDITS APPEARING IN THE BOOKS OF ACCOUNTS AND SHOULD HAVE PRODUCED THE RELATED BILLS AND VOUCHERS BEFORE THE ASSESSING OFFICER DURING THE REMAND PROCEEDINGS. THE ASSESSING OFFICER HAS OBSERVED NO REPLY IN RESPECT OF THESE CREDITORS WAS FILED. IN THE CIRCUMSTANCES, THE ADDITION ON ACCOUNT OF THESE UNEXPLAINED CREDIT ENTRIES IS CALLED FOR. HENCE, THE ASSESSING OFFICER IS DIRECTED TO MAKE THE ADDITION ON ACCOUNT OF THESE EIGHT ABOVE MENTIONED SUNDRY CREDITORS. THEREFORE, THIS LIMB OF THE GROUND OF APPEAL IS PARTLY ALLOWED. 13. AGGRIEVED BY THE ORDER OF THE LD. CIT(A), THE REVENUE IS IN APPEAL BEFORE US. 14. WE HAVE HEARD BOTH THE PARTIES AND CAREFULLY GONE THROUGH THE SUBMISSIONS PUT FORTH ON BEHALF OF THE ASSESSEE ALONG WITH THE DOCUMENTS FURNISHED AND THE CASE LAWS RELIED UPON, AND PERUSED THE FACTS OF THE CASE INCLUDING THE FINDINGS OF THE LD. CIT(A) AND OTHER MATERIAL BROUGHT ON RECORD. DURING THE COURSE OF HEARING, LD COUNSEL SUBMITTED A CHART FOR CREDITORS RECONCILIATION, WHICH IS REPRODUCED BELOW: PARTICULARS PAGE NO. AMOUNT TOTAL SUNDRY CREDITORS AS PER AUDITED ACCOUNTS 30- (P/B) 17380758 LESS: AO ALLOWED CREDIT AS PAYMENT MADE TO CREDITORS IN SUBSEQUENT YEARS NO INQUIRY FROM AO 44-46- (P/B) 7510698 9870060 NO DIFFERENCE IN BALANCE OF FOLLOWING CREDITORS: PADMINI ENTERPRISE 38-(P/B) 2017053 PADMINI TRANSPORT 868077 KHETESHWAR HARDWARE 37-(P/B) 150064 [ PAGE | 10 ITA NO.3509/AHD/201 6 ASSESSMENT YEARS.2011-12 WESTERN INDIA CONSTRUCTION BHAKTI SALES 490637 HASANALI 514639 VIJAY BUILDERS 520001 4560471 5309589 ON]Y OPENINGLBALANCE NO CREDIT IN CURRENT YEAR: MARUTII STEEL 4&& 4J- CIT(A) 779904 NATIONAL ELECTRONICS 466812 1246716 4062873 CIT(A) UPHELD ADDITIONS: AMBICA STEEL 43- CIT(A) 736600 SANDEEP KUMAR 495172 SAI SUPPLIER 322100 BHAGWATI TRADERS 822477 MONICA ROOFING 253325 SCAFF WORLD 340029 SHY ENGINEERING 183478 BHAKTI SALES AGENCY(BALANCE RS. 480487/- DIFFERENCE IN BALANCE RS. 10150/- IS DIRECTED TO BE ADDED) 480487 3633668 429205 DEPARTMENT HAS DISPUTED CREDIT OF V-4 PROMOTERS IN APPEAL MEMO 423724 5481 [ PAGE | 11 ITA NO.3509/AHD/201 6 ASSESSMENT YEARS.2011-12 WESTERN INDIA CONSTRUCTION WE HAVE GONE THROUGH THE ABOVE RECONCILIATION OF SUNDRY CREDITORS AND NOTE THAT THE SAID RECONCILIATION OF SUNDRY CREDITORS WAS NOT EXAMINED BY THE LD.ASSESSING OFFICER DURING ASSESSMENT STAGE. THEREFORE, WE ARE OF THE VIEW THAT SAID RECONCILIATION CHART OF SUNDRY CREDITORS SHOULD BE VERIFIED BY LD.ASSESSING OFFICER. THEREFORE, WE REMIT THIS ISSUE BACK TO THE FILE OF THE ASSESSING OFFICER WITH THE DIRECTION TO VERIFY THE ABOVE RECONCILIATION OF CREDITORS AND ALLOW THE CLAIM OF THE ASSESSEE IN ACCORDANCE WITH LAW. ADDITIONAL GROUND RAISED BY THE REVENUE IS ALLOWED FOR STATISTICAL PURPOSES. 15. IN THE RESULT, THE APPEAL OF THE REVENUE IS PARTLY ALLOWED FOR STATISTICAL PURPOSES. ORDER IS PRONOUNCED ON 28/06/2021 BY PLACING RESULT ON NOTICE BOARD. SD/- SD/- (PAWAN SINGH) (DR. A.L. SAINI) JUDICIAL MEMBER ACCOUNTANT MEMBER LWJR /SURAT / DATE: 28/06/2021 / SAMANTA COPY OF THE ORDER FORWARDED TO 1. THE ASSESSEE 2. THE RESPONDENT 3. THE CIT(A) 4. CIT 5. DR/AR, ITAT, SURAT 6. GUARD FILE BY ORDER / / TRUE COPY / / ASSISTANT REGISTRAR/SR. PS/PS ITAT, SURAT