Prakash Food Industries, CHAMPA (CG) V. Incoem Tax Officer-2(2), BILASPUR(CG)

ITA 4/BIL/2013

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 2427 (ITAT-RAIPUR)
• Duration Of Justice: 2 year(s) 11 month(s) 12 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 17-02-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Assessment Year: 2006-2007
• Appeal Filed On: 06-03-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: H M MOHARANA
• Keywords: Deemed to accrue or arise in india
• Section: 143(3); 68

Judgement Text

, RA IPUR IN THE INCOME TA X A PPELLA TE TRIBUNA L, RA IPUR BEFORE S/SHRI MUKUL SHRAW AT ( JM) SHAMIM YAH Y A (AM) , , ./ I.T.A. NO. 04/BLPR/2013 ( / ASSESSMENT YEAR : 2006 - 0 7 ) PRAKASH FOOD INDUSTRIES, KAILASH RICE MILLS, NEAR BUS STAND, CHANDRAPU, DIST: JANJGIR, CHAMPA. / VS. INCOME TAX OFFICER - 2(2), AAYAKAR BHAVAN, VAYPAR VIHAR, BILASPUR ./ ./ PAN/GIR NO. : AAIFP 5902 G ( / AP PELLANT ) .. ( / RESPONDENT ) / APPELLANT BY : NONE / RESPONDENT BY : SHRI H.M.MOHARANA / DATE OF HEARING : 15 - 02 - 2016 / DATE OF PRONOUNCEMENT : 17 - 02 - 2016 / O R D E R PER MUKUL SHRAWAT, JM THIS IS AN APPEAL FILED BY TH E ASSESSEE EMANATING FROM A N ORDER OF THE LD C IT(A), BILASPUR DATED 30.12.2012 FOR THE ASSESSMENT YEAR 206 - 07. TH E GROUNDS RAISED BY THE ASSESSEE ARE REPRODUCED BELOW: 1. IN THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LD CIT (A) ERRED IN CONFIRMING THE ADDITION OF R S.4,37,000/ - MADE BY THE AO U/S.68 ON ACCOUNT OF LOAN TAKEN BY THE APPELLANT FR OM TWO PERSONS. T HE A DDITION MADE BY THE AO IS ILLEGAL, INVALID AND NOT JUSTIFIED. 2 I.T.A. NO. 04/BLPR/2013 ASSESSMENT YEAR :2006 - 07 2. LD CIT(A) ERRED IN CONFIRMING THE DISALLOWANCE OF RS.8,768/ - OUT OF INTEREST ACCOUNT, BEING THE INTEREST ON THE LOAN OBTAINED FROM TWO PERSONS. 2. ON THE DATE OF HEARING, NO ONE HAS APPEA RED ON BEHALF OF THE ASSESSEE BEFORE US. W E HAVE ALSO NOTED THAT THE LD CIT(A) HAD GRANT ED NUMBER OF OPPORTUNITIES, H OWEVER, PROPER COMPLIANCE WAS NOT MADE. T HE ASSESSEE IS A PARTNERSHIP FIRM AND RUNNING A RICE MILL. T HE AO HAD EXAMINED THE CREDITWORTHI NESS OF TWO PARTIES, NAMELY, SHRI SHARAD PATHAK AND SHRI PARMWESHWAR YADAV. T HE AO WAS NOT SATISFIED WITH THE EXPLANATION DUE TO THE REASON THAT THE SAID PARTIES WE RE HAVING LIMITED SOUR CE OF INCOME, WHICH WAS TOO LOW TO ADVANCE THE LOAN TO THE ASSESSEE. THE AO HAD TREATED THE OUTSTANDING BALANCE OF RS.2,40,297/ - AND RS.2,47,812/ - , RESPECTIVELY AS DEEMED INCOME FOR THE YEAR UNDER CONSIDERATION BY INVOKING THE PROVISIONS OF SECTION 68 OF THE I.T.ACT, 1961., V IDE P ARA PASSED UNDER SECTION 143(3) DATED 30.11 .2008. 3. WH EN THE MATTER WAS CARRIED BEFORE THE FIRST APPELLATE AUTHORITY, IT WAS SUBMITTED AS UNDER: THE LD A.R. SUBMITTED THAT THE APPELLANT HAS FILED THE CONFIRMATION LETTERS OF THE CREDITORS, COPY OF THEIR I.T.RETURNS, INDICATING THEIR PAN AND INCOM E. T HEY WERE PRODUCED BEFORE THE AO FOR HIS CROSS EXAMINATION. T HE ALLEGED OUTSTANDING CREDITS WERE ALREADY LYING DEPOSITED WITH THE FIRM M/S. KAILASH CHAND RAMESH KUMAR AND BY MAKING THE WITHDRAWALS FROM THE ACCOUNT OF THAT FIRM THROUGH BANKING CHANNE LS, THE SUM WERE TRANSFERRED/CHANNELIZED TO THE BOOKS OF ACCOUNT OF THE APPELLANT FIRM THROUGH CHEQUES. T HE BORROWINGS FROM THE FI RM . M/S. KAILASH CHAND RAMESH KUMAR HAS BEEN EXPLAINED VIDE REPLY DATED 24.10..2008 ALONGWITH COPY OF LEDGER ACCOUNT OF TH E APPELLANT FIRM FROM THE BOOKS OF ACCOUNT OF THE LATTER, COPY OF THE BANK STATEMENT AND HENCE, THE APPELLANT FIRM 3 I.T.A. NO. 04/BLPR/2013 ASSESSMENT YEAR :2006 - 07 HAS NO FURTHER RESPONSIBILITY TO FURNISH ANYTHING MORE TO ESTABLISH THE OUTSTANDING WITH LOAN CREDITORS. H E RELIED ON VARIOUS JUDICIAL PRONO UNCEMENTS LIKE CIT VS. METACHEEM INDUSTRIES, 245 ITR 160(MP),; S.HASLIMAT VS CIT(1963) 49 ITGR 273 (MAD), ETC AND SUBMITTED THAT SINCE THE APPELLANT FIRM HAS PROVED THE THREE REQUIREMENTS OF SECTION 68, THE BURDEN SHIFTS TO THE REVENUE TO PROVE THAT THE CR EDITS ARE UNEXPLAINED. 4. HOWEVER, THE LD CIT(A) WAS NOT CONVINCED AND UPHELD THE ACTION OF THE AO. 5. W E HAVE ALREADY STATED THAT NO ONE APPEARED ON BEHALF OF THE ASSESSEE. WE HAVE PERUSED THE ORDERS OF AUTHORITIES BELOW AND THEREUPON NOTICED THAT B OTH THE PARTIES WERE HAVING OLD CREDIT S WITH ANOTHER FIRM M/S. KAILASH CHAND RAMESH KUMAR. T HE ACCUMULATED BALANCES WERE RS.2,40,297/ - AND RS.2,47,812/ - , RESPECTIVELY AS ON 31.3.2006. IT HAS ALSO BEEN RECORDED BY THE LD CIT(A) THAT THE OUTSTANDING BALANCE OF THE SAID TWO PARTIES WERE FOUND RECORDED IN THE ACCOUNT OF M/S. KAILASH CHAND RAMESH KUMAR. I T HAS ALSO BEEN RECORDED BY LD CIT(A) THAT THE ASSESSEE HAS FURNISHED THE STATEMENT OF INCOME, CAPITAL ACCOUNT AND INCOME TAX RETURNS ALONGWITH BANK STATEM ENT OF SHRI PARAMESWAR YADAV, RAIGARH. I T WAS INFORMED THAT SHRI PARMESWHAR YADAV WAS DERIVING INCOME FROM RUNNING OF A DAIRY. I N THE CASE OF OTHER PARTY, SHRI SHARAD PATHAK IS CONCERNED, HIS SOURCE OF INCOME W A S INCOME FROM SUPPLY OF LABOURERS. THERE W AS A REFERENCE OF BANK ACCOUNT AS WELL. S INCE ADDRESSES OF TWO PARTIES WERE RECORDED IN THE BANK ACCOUNT, THEREFORE, THE ASSESSEE HAS CLAIMED THAT THE 4 I.T.A. NO. 04/BLPR/2013 ASSESSMENT YEAR :2006 - 07 IDENTITY OF BOTH PARTIES WAS ESTABLISHED. H OWE VER, LD CIT(A) WAS NOT CONVINCED AND CONFIRMED THE ACTION OF THE AO BY UPHOLDING THE ADDITION OF RS.4,87,,000/ - . 6. FROM THE SIDE OF THE REVENUE, SHRI H.M.MOHARANA, LD D.R. APPEARED AND SUPPORTED THE ORDERS OF AUTHORITIES BELOW. 7. ON CAREFUL EXAMINATION OF FACTS, WE ARE OF THE CONSIDERED OPINION THAT THE BASI C REQUIREMENTS OF SECTION 68 HAVE BEEN DISCHARGED BY THE ASSESSEE BY FURNISHING THE RELEVANT EVIDENCES. T HE EVIDENCES WHICH WERE FURNISHED BY THE ASSESSEE WERE CONFIRMATION LETTERS OF THE CREDITORS, COPIES OF I.T.RETURNS, PAN NOS, INCOME DECLARED AND THE BANK ACCOUNTS. I T IS ALSO WORTH TO MENTION THAT THERE WAS AN OUTSTANDING CREDIT BALANCE WITH FIRM M/S. KAILASH CHAND RAMESH KUMAR. T HE UNDISPUTED FACT WAS THAT THE SAID LIABILITY WAS TRANSFERRED TO THE ACCOUNT OF THE ASSESSEE FIRM. I N A SITUATION WHEN THE OUTSTANDING BALANCES WERE TRANSFERRED IN THE BOOKS OF ACCOUNT OF THE ASSESSEE AND THE ASSESSEE WAS IN A POSITION TO FURNISH CONFIRMATION LETTERS, RESPECTIVE INCOME TAX RETURNS, ETC, THEN THE ADDITION WAS NOT JUSTIFIABLE. THE PRELIMINARY ONUS WAS DISCH ARGED BY THE ASSESSEE. T HE AO HAS NOT CHALLENGED THE CORRECTNESS OF THE EVIDENCES FILED BY THE ASSESSEE. WE H AVE EXAMINED THE CASE LAWS AS DISCUSSED BY THE LD CIT(A) BUT IT IS NOT A CASE THAT MERELY A BANK ACCOUNT WAS NOT MAINTAINED AND MERELY INCOME TAX RETURN WAS FIL ED BUT THE FACTS OF THE CASE WERE THAT THE ASSESSEE WAS HAVING DOCUMENTARY EVIDENCE TO ESTABLISH THE CREDITWORTHINESS AS WELL AS NATURE OF TRANSACTION. S INCE THE ACCOUNTS HAVE BEEN TRANSFERRED FROM ONE FIRM TO 5 I.T.A. NO. 04/BLPR/2013 ASSESSMENT YEAR :2006 - 07 ANOTHER FIRM, HENCE, WE ARE O F THE CONSIDERED OPINION THAT THE LD CIT(A) WAS NOT JUSTIFIED IN CONFIRMING THE ADDITION. W E HEREBY REVERSE SUCH FI NDINGS. G ROUND NO.1 OF THE ASSESSEE IS ALLOWED. 8. AS FAR AS GROUND NO.2 IS CONCERNED, SAME IS CONSEQUENTIAL IN NATURE , HENCE, DISALLOWANC E OF INTEREST APPEARS TO BE NOT ACCORDING TO LAW. H ENCE, THIS GROUND IS ALLOWED. 9. IN THE RESULT, APPEAL FILED BY THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 17 /02/2016 . S D/ - SD/ - ( , ) ( , ) SHAMIM Y AHY A , ACCOUNT ANT MEMBER MUKUL SHRA WA T , JUDICIAL M EM BER RAIPUR , DATED / 02 /20 1 6 . . ./ PARIDA , SR. PS / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT : PRAKASH FOOD INDUSTRIES, KAILASH RICE MILLS, NEAR BUS STAND, CHANDRAPU, DI ST: JANJGIR, CHAMPA. 2. / THE RESPONDENT : INCOME TAX OFFICER - 2(2), AAYAKAR BHAVAN, VAYPAR VIHAR, BILASPUR 3. ( ) / THE CIT(A) - BILASPUR 4. / CIT , BILASPUR 5. , , / DR, ITAT , RAIP UR 6. / GUARD FILE. / BY ORDER, //TRUE COPY// SR. PS, ITAT, CAMP: RAIPUR