Anupama Industries, Bhubaneswar V. ITO, Ward-2(2), Bhubaneswar

ITA 411/CTK/2017

• Counselvise Citation: [2018] 125 COUNSELVISE.COM (IT) 7233 (ITAT-CUTTACK)
• Duration Of Justice: 9 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-07-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Assessment Year: 2009-2010
• Appeal Filed On: 23-10-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: D K PRADHAN
• Assessee Lawyers: P R MOHANTY
• Keywords: Rejection of books of accounts; Corroborative evidences
• Section: 142(1)

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL CUTTACK BENCH CUTTACK BEFORE SHRI N.S.SAINI, AM & SHRI PA V AN KUMAR GADALE, JM . / ITA NO. 411 /CTK/201 7 ( [ [ / ASSESSMENT YEAR : 20 0 9 - 20 10 ) ANUPAMA INDUSTRIES, PL OT NO.738, RASULGARH, BHUBANESWAR VS. ITO WARD - 4(3), BHUBANESWAR ./ ./ PAN/GIR NO. : A AFFA 9375 D ( / APPELLANT ) .. ( / RESPONDENT ) [ /AS SESSEE BY : SHRI P.R.MOHANTY , AR /REVE NUE BY : SHRI D.K.PRADHAN, DR / DATE OF HEARING : 2 6 / 0 7 /201 8 / DATE OF PRONOUNCEMENT 31 / 07 /201 8 / O R D E R PER SHRI PA V AN KUMAR GADALE, JM : TH IS IS AN APPEAL FILED BY THE ASSESSEE AGAINST THE ORDER OF CIT( A) - 2 , BHUBANESWAR , DATED 30.06.2017 PASSED IN I.T.APPEAL NO. 0314 / 2014 - 15 FOR THE ASSESSMENT YEAR 2009 - 2010 . 2 . THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL : - 1. THE ORDER PASSED BY THE AUTHORITY IS NOT BASED UPON THE FACTS AND THEREFORE NOT MAINTAINABLE BEFORE THE EYES OF LAW; 2. THE NATURE OF BUSINESS OF THE ASSESSEE IS SUCH THAT IT RUNS ON THE BASIS OF TRADE CREDIT GIVEN BY THE SUPPLIERS FROM TIME TO TIME WHICH IS REPAID IN THE TRADE CYCLE - THE AUTHORITY FAILED TO RECOGNIZE IT EVEN AFTE R PRESENTATION OF INFORMATION THERE TO; 3. SINCE THE CASE RELATES TO SOME 8 YEARS BACK, SOME SUPPLIERS HAVE CLOSED THEIR BUSINESS AND ARE NOT TRACEABLE, HENCE ADDING BACK OF SUCH CREDITORS IS NOT CORRECT IN THE EYE OF LAW. 4. THE AUTHORITY HAS MERELY TAKEN THE BENEFITS OF DOUBT AND ADDED RS 40,69,845 TO THE TOTAL INCOME. WITH THIS ADDITION THE TOTAL INCOME BECOMES APPROXIMATELY RS 50,00,000 WHICH IS NOT PRACTICAL WITH THE LEVEL AND NATURE OF TURNOVER OF THE BUSINESS. ITA NO. 411 /CTK/201 7 2 3. BRIEF FACTS OF THE CASE ARE T HAT THE ASSESSEE IS ENGAGED IN MANUFACTURING & TRAINING OF CAST/MILD STEEL SANITARY ITEMS AND PUMP SETS AND FILED THE RETURN OF INCOME ON 30.09.2009 FOR THE A.Y. 2009 - 2010 DECLARING TOTAL INCOME OF RS. 7,82,020/ - . THE RETURN OF INCOME WAS PROCESSED U/S.143(1 ) OF THE ACT. S UBSEQUENTLY THE CASE WAS SELECTED UNDER SCRUTINY AND NOTICES U/S.143(2) & 142(1) OF THE ACT WERE ISSUED. IN COMPLIANCE OF THE SAME, LD. AR APPEARED BEFORE THE AO AND CASE WAS DISCUSSED. THE AO IN THE COURSE OF HEARING PROCEEDINGS FOUND THAT THE ASSESSEE HAS DISCLOSED SUNDRY CREDITORS AND THE AO HAS CALLED FOR THE INFORMATION OF SUNDRY CREDITORS DETAILS AND ALSO ISSUED NOTICE U/S.133(6) OF THE ACT FOR SUBMITTING THE INFORMATION WHEREAS IN MOST OF THE CASES THE INFORMATION WERE SENT BY THE PARTIES WITH REGARD TO MONEY AND OUTSTANDING BALANCE . THE AO HAS INCORPORATED THESE FACTS IN THE ASSESSMENT ORDER AND ALSO THE ASSESSEE FILED EXPLANATION S IN RESPECT OF CREDITORS WHERE DIFFERENCE AROSE AND ALSO THE AO REQUIRED THE ASSESSEE TO REC ONCILE THE OUTSTANDING AMOUNT. THE ASSESSEE FILED RECONCILIATION AND WRITTEN SUBMISSION WHICH HAS BEEN INCORPORATED BY THE AO AT PAGES 2 TO 7. THE AO HAVING CONSIDERED THESE FACTS WAS NOT SATISFIED WITH THE EXPLANATION OF THE ASSESSEE IN RESPECT OF CERTAIN CREDITORS AND, THEREFORE, MADE ADDITION OF RS. 1,17,20,648/ - AS THERE IS A DISPARITY IN THE ACCOUNTS AND THE DETAILS WERE NOT TALLIED AND THE AO PASSED ORDER U/S.143(3) OF THE ACT, DATED 30.12.2011. ITA NO. 411 /CTK/201 7 3 4 . AGGRIEVED BY THE ORDER OF AO, THE ASSESSEE PREFERRED AN APP EAL BEFORE THE CIT(A). IN THE APPELLATE PROCEEDINGS LD. AR MADE SUBMISSION AND ALSO REMAND REPORT WAS CALLED FOR. LD. CIT(A) HAVING GONE THROUGH THE REMAND REPORT AND INFORMATION OF THE AO REFERRED AT PAGE 3 TO 5 AND ALSO CONSIDER THE OBJECTIONS OF THE ASSESSEE AND H AS GRANTED RELIEF TO THE EXTENT OF RS.76,50,803/ - BUT CONFIRMED THE ADDITION OF RS.40,69,845/ - AND PARTLY ALLOWED THE APPEAL OF THE ASSESSEE. 5 . AGGRIEVED BY THE ORDER OF THE CIT(A) THE ASSESSEE FILED THE PRESENT APPEAL BEFORE THE TRIBUNAL. 6 . BEFORE US, LD. AR SUBMITTED THAT THE CIT(A) ERRED IN CONFIRMING THE ADDITION OF RS.40,69,845/ - IRRESPECTIVE OF THE FACT THAT THE ASSESSEES EXPLAINED THE CLOSING BALANCE AVAILABLE AS ON 31.03.2009 AND WHEREVER THERE IS A DIFFERENCE IN AMOUNT AND HAS BEEN PAID IN THE SUBSEQUENT YEARS. THE CONTENTION OF THE LD. AR THAT THE AO HAS NOT REJECTED THE BOOKS OF ACCOUNTS . THE ASSESSEE COOPERATED IN THE ASSESSMENT PROCEEDING AND APPELLATE PROCEEDINGS. LD. AR ALSO RELIED ON THE JUDICIAL DECISION AND PRAYED FOR ALLOWING THE APPEAL. 7 . LD. DR SUP PORTED THE ORDERS OF LOWER AUTHORITIES AND EXPLAINED THAT THE AO H AS CALLED FOR THE INFORMATION FROM THE PARTIES AND NO INFORMATION WAS AVAILABLE EXCEPT THE CONFIRMATION FROM THE PARTIES AND THE DIFFERENCE IN RECONCILIATION OF AMOUNT , THEREFORE, PRAYED FOR DISMISSA L OF THE APPEAL OF THE ASSESSEE. 8 . WE HAVE HEARD RIVAL SUBMISSIONS AND PERUSED THE MATERIAL ON RECORD . PRIMA FACIE WE FOUND THAT THE CIT(A) HAVING CONSIDERED THE ITA NO. 411 /CTK/201 7 4 REMAND REPORT AND THE FINDINGS OF AO AND EXPLANATION S OF THE ASSESSEE HAS GRANTED RELIEF AND SUST AIN ED AN AMOUNT OF RS.40,69,845/ - IN RESPECT OF TWO PA R TS , FIRSTLY THE PURCHASES OF SIX PARTIES MENTIONED IN THE APPELLATE ORDER AT PAGE 8 AND THE CREDITS APPEARING IN THEIR NAMES ARE NOT GENUINE , ACCORDINGLY, THE CIT(A) CONFIRMED AN AMOUNT OF RS.15,69, 168/ - . SECONDLY THE CIT(A) CONFIRMED THE ADDITION OF RS. 25,00,677/ - U/S.68 OF THE ACT, SINCE THE ASSESSEE COULD NOT GET CONFIRMATION FROM THE ABOVE PARTIES AND THERE IS NO SUPPORTING EVIDENCE. IN THE COURSE OF HEARING PROCEEDINGS, LD. AR SUBMITTED THAT THE ASSESSEE HAS TRIED TO GET CONFIRMATION FROM THE PARTIES BUT THE SAME WERE NOT AVAILABLE DUE TO VARIOUS REASONS. THE CONTENTION OF LD. AR THAT THE TRANSACTIONS WERE GENUINE AND ARE NOT DISPUTED AND ALSO THE BOOKS OF ACCOUNTS WERE NOT REJECTED BY THE AO U/S.145( 3) OF THE ACT. LD. AR ALSO RELIED ON THE DECISION THIS BENCH OF THE TRIBUNAL IN THE CASE OF T.BISWANATH PATRO (HUF) VS. DCIT, IN ITA NO.20/CTK/2017, ORDER DATED 31.01.2018 . WE HAVE PERUSED THE ORDER OF TRIBUNAL AND FOUND THAT THE ISSUE HAS BEEN DECIDED BY THE TRIBUNAL IN FAVOUR OF THE ASSESSEE AS THE BOOKS OF ACCOUNTS HAVE BEEN ACCEPTED BY THE AO, THEREFORE, NO ADDITION CAN BE MADE IN RESPECT OF SALES AND PURCHASES. THE OBSERVATIONS OF THE TRIBUNAL IN THIS REGARD ARE AS UNDER : - 10. WE HAVE HEARD THE RIVAL SUBMISSIONS, PERUSED THE ORDERS OF LOWER AUTHORITIES AND MATERIALS AVAILABLE ON RECORD. THE SOLE CRUX OF THE DISPUTE ISSUE IS AGAINST THE ADDITION MADE BY THE ASSESSING OFFICER IN RESPECT OF SUNDRY CREDITORS AND SUNDRY DEBTORS. WE FIND THAT THE SUNDRY CRE DITORS ARE IN RESPECT OF PURCHASES, AS EXPLAINED BY LD A.R. WHICH HAVE BEEN FULLY DISCLOSED WHEREAS THE DIFFERENCE IN SUNDRY DEBTORS IS EXPLAINED IN RESPECT OF SALE, WHICH IS PROPERLY INVOICED AND THERE IS NO DISPUTE. IN THE COURSE OF ASSESSMENT PROCEEDIN GS, THE ASSESSING OFFICER HAS ACCEPTED THE PURCHASES AND SALES. ONLY AFTER THE ASSESSING OFFICER ISSUING LETTERS U/S.133(6) OF THE ACT HAS MADE OBSERVATION THAT THERE IS NO PROPER ITA NO. 411 /CTK/201 7 5 COMPLIANCE AND THE CIT(A) HAS GRANTED RELIEF ON THIS ISSUE AFTER CALLING THE REMAND REPORT. SIMILARLY, IN THE CASE OF SALES, THE ASSESSEE HAS DISCLOSED THE SUNDRY DEBTOR'S RECEIVABLES AND THEY ARE PROPERLY DEALT IN THE BOOKS OF ACCOUNT AS PER THE ACCOUNTING PRINCIPLES. ON THIS ISSUE, THE CIT(A) HAS CALLED COMMENTS FROM THE ASSESSI NG OFFICER AND THE ASSESSING OFFICER HAS FILED REMAND REPORT , ON WHICH, THE CIT(A) HAS ALLOWED RELIEF. WE PERUSED THE ORDER OF THE ASSESSING OFFICER. WE FIND THAT THE ASSESSING OFFICER HAS DOUBTED THE BALANCE OF SUNDRY CREDITORS BUT AS FAR AS THE BOOKS OF ACCOUNT ARE CONCERNED, IT IS NOT DISPUTE THAT THE ASSESSING OFFICER HAVING ACCEPTED THE PURCHASE AND SALES, THE ASSESSEE BEING A DEALER IN MEDICINES, THERE CANNOT BE ANY REASON FOR THE ASSESSING OFFICER TO TAKE A DIFFERENT VIEW IN RESPECT OF CREDITORS. AC CORDINGLY, WE ARE OF THE SUBSTANTIVE VIEW THAT SINCE THE BOOKS OF ACCOUNTS HAVE BEEN ACCEPTED BY THE ASSESSING OFFICER, THERE CANNOT BE ANY ADDITION WITH RESPECT OF SALES AND PURCHASES. AS THERE IS NO DEFECT IN THE PURCHASES AND SALES, THE ADDITION IN RESP ECT OF SUNDRY CREDITORS AND SUNDRY DEBTORS CANNOT BE SUSTAINED. WE SUPPORT OUR VIEW RELYING ON THE DECISION OF ALLAHABAD BENCH OF THE TRIBUNAL IN THE CASE OF JCIT VS. MATHURA DAS ASHOK KUMAR (2006) 101 TTJ 810 (ALL), WHEREIN, IT WAS HELD THAT WHEN PURCHASE S ARE ACCEPTED TO BE GENUINE BALANCE REMAINING OUTSTANDING AT THE END OF THE YEAR AGAINST SUCH, PURCHASES CANNOT BE TREATED AS BOGUS LIABILITY AND ADDITION MADE ON THAT BASIS CANNOT BE SUSTAINED. FURTHER, THE ITAT VISAKHAPATAM IN THE CASE ITO VS JAYANGA ANITHA (2016) 46 CCH 407 HAS HELD THAT WHEN TRADING RESULTS I.E. SALES AND PURCHASES HAD BEEN ACCEPTED AS GENUINE, NO ADDITION U/S.68 OF THE ACT COULD BE MADE FOR UNEXPLAINED SUNDRY CREDITORS. WE, ACCOR DINGLY, DIRECT THE ASSESSING OFFICER TO DELETE THE ADDITION MADE BY THE ASSESSING OFFICER. 9. IN THE INSTANT CASE, WE FIND THAT THE AO HAS DOUBTED THE BALANCE OF SUNDRY CREDITORS, HOWEVER, DURING THE COURSE OF ASSESSMENT PROCEEDINGS THE AO HAS A CCEPTED T HE PURCHASES AND SALES WHEREAS A FTER CALLING FOR REMAND REPORT FROM THE AO, THE CIT(A) GRANTED THE RELIEF. WE FIND THAT SINCE THE BOOKS OF ACCOUNTS HAVE NOT BEEN REJECTED BY THE ASSESSING OFFICER, THERE CAN BE NO ADDITION IN RESPECT OF PURCHASES FROM SUNDRY CREDITORS . ACCORD INGLY, WE RESPECTFULLY FOLLOW THE ABOVE JUDICIAL PRECEDENCE OF TRIBUNAL AND DIRECT THE AO TO DELETE THE ADDITION MADE U/S.68 OF THE ACT. ITA NO. 411 /CTK/201 7 6 10 . IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWED . O RDER PRONOUNCED IN THE OPEN COURT ON THIS 31 / 07 / 201 8 . SD/ - ( N.S.SAINI ) SD/ - ( PA V AN KUMAR GADALE ) / ACCOUNTANT MEMBER / JUDICIAL MEMBER CUTTACK ; DATED 31 / 0 7 /201 8 . . / PKM , SENIOR PRIVATE SECRETARY / COPY OF THE ORDER FO RWARDED TO : / BY ORDER, ( SENIOR PRIVATE SECRETARY ) , / ITAT, CUTTACK 1. / THE APPELLANT - ANUPAMA INDUSTRIES, PLOT NO.738, RASULGARH, BHUBANESWAR 2. / THE RESPONDENT - ITO WARD - 4(3), BHUBANESWAR 3. ( ) / THE CIT(A), 4. / CIT 5. , , / DR, ITAT, CUTTACK 6. [ / GUARD FILE. //TRUE COPY// ITA NO. 411 /CTK/201 7 7