Income Tax Officer, Ward -4, Margao., Margao V. M/s Sea hath Canning Company., Goa

ITA 412/PAN/2014

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 93583 (ITAT-PANAJI)
• Duration Of Justice: 7 month(s) 9 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 13-07-2015
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Next Hearing Date: 13-07-2015
• Assessment Year: 2011-2012
• Appeal Filed On: 04-12-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ANAND SHANKAR MARATHE
• Assessee Lawyers: PRADEEP KULKARNI
• Keywords: Business income
• Section: 131

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL PANAJI BENCH, PANAJI BEFORE SHRI N.S. SAINI , HONBLE ACCOUNTANT MEMBER AND SHRI GEORGE MATHAN, HONBLE JUDICIAL MEMBER ITA NO. 412 /PNJ/201 4 (ASST. YEAR : 20 11 - 1 2 ) ITO, WARD - 4, MARGAO GOA. VS. M/S. SEAHATH CANNING CO . , PLOT NO.8, MARGAO INDUSTRIAL ESTATE, CURTORIM, ST. JOSE DE AREAL, SALCETE, GOA . PAN NO. AAGFS 4960 H (APPELLANT) ASSESSEE BY : SHRI PRADEEP KULKARNI CA DEPARTMENT BY : SHRI ANAND SHANKAR MARATHE - DR DATE OF HEARING : 13 / 0 7 /2015 . DATE OF PRONOUNCEMENT : 13 / 0 7 /201 5 . O R D E R PER N.S. SAINI , ACCOUNTANT MEMBER THIS IS AN APPEAL FILED BY THE REVENUE AGAINST THE ORDER OF COMMISSIONER OF INCOME TAX (APPEALS) PANAJI, DATED 2 2/0 9 /201 4. 2. THE SOLE GROUND OF APPEAL TAKEN BY THE REVENUE IN THIS APPEAL IS THAT THE COMMISSIONER OF INCOME TAX (APPEALS) ERRED IN ALLOWING RELIEF OF RS. 17,52,777/ - BEING ADDITION MADE BY THE ASSESSING OFFICER UNDER THE BUSINESS INCOME ON NON - EXISTENT LIABILITIES CLAIMED TO HAVE BEEN INCURRE D BY THE ASSESSEE. 3 . WE HAVE HEARD RIVAL SUBMISSIONS , PERUSED THE ORDER OF THE LOWER AUTHORITIES AND THE MATERIALS AVAILABLE ON RECORD. 2 ITA NO. 412 /PNJ/2014 4 . BRIEF FACTS OF THE CASE ARE THAT THE ASSESSING OFFICER OBSERVED THAT THE ASSESSEE HAS SHOWN RS. 17,52,777/ - AS OUTSTANDING DUES TO M/S.B.A.M. FISHERIES . IN REPLY TO THE LET T ER ISSUED BY THE ASSESSING OFFICER, SHRI MUSHTAQ AHMAD, PROPRIETOR OF M/S. B.A.M. FISHERIES DENIED THAT HE HAD ANY TRANSACTIONS WITH THE ASSESSEE IN THE FINANCIAL YEAR 2010 - 11 RELATING TO T HE ASSESSMENT YEAR 2011 - 12 . THEREFORE, THE ASSESSING OFFICER MADE THE ADDITION OF RS. 17,52,777/ - AS NON - EXISTENT LIABILITIES IN THE HANDS OF THE ASSESSEE. 5. ON APPEAL BEFORE THE COMMISSIONER OF INCOME TAX (APPEALS), THE ASSESSEE SUBMITTED THAT IN RESPONSE TO THE SUMMON S ISSUED U/S. 131 OF THE ACT, DATED 11/ 02 /2014 SHRI MOHAMMAD ASIF , PARTNER OF SEAHATH CANNING CO. STATED IN REPLY TO THE QUESTION NO.4 THAT HIS FATHER WAS DOING BUSINESS OF FISH AND HE DISCONTINUED THE SAME AND HE USED THE UNUSED DELIVERY CHALLANS OF HIS FATHER TO EXHAUST THEM . IN REPLY TO QUESTION NO.5 AS TO HOW THE BILLS WERE ISSUED AND IN WHOSE NAME, HE STATED THAT THE DELIVERY CHALLANS QUOTE THE QUANTITY AND THE PRICE WAS DECIDED LATER - ON , WHICH WAS NOTED DOWN AND THAT THERE WAS NO PROOF OF ANY BILL TO PROVE THE SAME. THEREFORE , THE ASSESSEE SUBMITTED THAT THE SUPPLIER HAS ADMITTED THE FACT OF DOING BUSINESS WITH THE ASSESSEE AND ALSO THE FACT OF UTILISING THE BILLS OF HIS FATHER BY MISTAKE. THE COM MISSIONER OF INCOME TAX (APPEALS) ON THE ABOVE FACTS HELD THAT THE ASSESSING OFFICER MADE THE ADDITION U/S. 41(1) FOR CESSATION OF LIABILITY AS ON 31/03/2011 , THE NAME OF THE CONCERN , IN WHOSE NAME THE LIABILITY TO PAY WAS SHOWN IN THE BOOKS OF ACCOUNTS OF THE ASSESSEE , IS M/S. B.A.M. FISHERIES. THE AMOUNT OUTSTANDING AS ON 31/03/2011 IS RS.17,52,777/ - . HE OBSERVED THAT THE ASSESSING OFFICER HAS REPRODUCED THE ENTIRE LEDGER ACCOUNT OF THIS PARTY AND IT IS SEEN THAT OPENING BALANCE WAS RS. 5,77,587/ - AND PURCHASES DURING THE YEAR IS RS.32,95,190/ - . THE ASSESSEE HAS MADE PAYMENTS O F RS. 21,20,000/ - DURING THE YEAR AND THE CLOSING BALANCE OF RS. 17,52,777/ - . HE FURTHER OBSERVED THAT DURING THE YEAR , THE FIRST PURCHASE MADE BY THE ASSESSEE 3 ITA NO. 412 /PNJ/2014 WAS ON 10 TH APRIL, 2010 AND THEREAFTER THE ASSESSEE HAS SHOWN PURCHASES OF FISH THROUGHOUT THE YEAR ON REGULAR BASIS. THE FISH ING IS BANNED IN GOA DURING THE MONTHS OF JUNE AND JULY AND THE ASSESSEE HAS NOT SHOWN ANY PURCHASES AFTER 31 ST MAY TILL END OF JULY . THE NEXT PURCHASE AFTER 10 TH OF JULY IS SHOWN ON 2 ND OF AUGUST . THEREFORE, IT CAN CONCLUSIVELY BE SAID THAT THE ASSESSEE HAS RECORDED ITS PURCHASES CORRECTLY. THE LAST PURCHASE OF FISH IS RECORDED ON 15/03/2011 AND LAST PAYMENT DURING THE YEAR WAS MADE ON 28/02/2011 FOR TOTAL AMOUNT OF RS. 70,000/ - . IT I S CLEAR THAT IT IS A RUNNING ACCOUNT AND THEREFORE THE LIABILITY TO PAY AT THE END OF THE YEAR CANNOT BE SAID TO HAVE CEASED TO EXIST . THE ASSESSING OFFICER WAS CONFUSED BECAUSE OF THE NAMES OF B.A.M. FISHERIES AND B.A.M. RESPECTIVELY. DURING RECORDING OF STATEMENT, THE CREDITOR HAS CONFIRMED THE EXISTENCE OF SUCH TRANSACTIONS AND THEREFORE HE OPINED THAT THE ASSESSING OFFICER HAS REA CHED AN INCORRECT CONCLUSION THAT THE LIABILITY HAS CEASED TO EXIST. ACCORDINGLY, COMMISSIONER OF INCOME TAX (APPEALS) DIRECTED THE ASSESSING OFFICER TO DELETE THE ADDITION. 6. DEPARTMENTAL REPRESENTATIVE SUPPORTED THE ORDER OF THE ASSESSING OFFICER WHEREAS AUTHORIZED REPRESENTATIVE OF THE ASSESSEE SUPPORTED THE ORDER OF THE COMMISSIONER OF INCOME TAX(APPEALS) . 7. DEPARTMENTAL REPRESENTATIVE COULD NOT POINT OUT ANY SPECIFIC ERROR IN THE ORDER OF THE COMMISSIONER OF INCOME TAX(APPEALS) . FURTHER, IN THE STATEMENT RECORDED U/S. 131 DATED 11/02/2014 CREDITOR SHRI MOHAMMAD ASIF , PARTNER OF SEAHATH CANNING COMPANY HAS ADMITTED TO HAVE DONE BUSINESS WITH THE ASSESSEE AND HAS ACCEPTED THE MISTAKES THAT THE CHALLANS WERE ISSUED ON THE UN U TILIZED DELIVER CHALLANS OF HIS FATHER , WHO HA D DISCONTINUED THE BUSINESS , AND THEREFORE THERE WAS CONFUSION IN THE NAMES. FURTHER, THE COMMISSIONER OF INCOME TAX (APPEALS) HAS FULLY ANALYSED THE ACCOUNT OF THE CREDITOR AND HAS FOUND THAT DURING THE ENTIR E YEAR, THERE WERE TRANSACTIONS OF PURCHASES AND 4 ITA NO. 412 /PNJ/2014 SALES AND THEREFORE IT CANNOT BE SAID THAT THERE WAS CESSATION OF LIABILITY DURING THE YEAR AND THE ADDITION CAN BE MADE U/S. 41(1) OF THE ACT AS DONE BY THE ASSESSING OFFICER . 8. AFTER CONSIDERING THE ENTIRE FACTS AND CIRCUMSTANCE OF THE CASE, WE ARE OF THE CONSIDERED OPINION THAT THE LIABILITY BEING INCURRED DURING THE YEAR UNDER CONSIDERATION AND THE ACCOUNT BEING RUNNING ACCOUNT THROUGHOUT THE YEAR HAVING BOTH THE PURCHASES AND THE PAYMENTS TO THE SUPPLIER , T HE SAID LIABILITY REMAINING AT THE END OF THE YEAR CANNOT BE TREATED AS A NON - EXISTEN T LIABILITY WITHOUT BRINGING ANY MATERIAL ON RECORD TO THE CONTRARY. THE COMMISSIONER OF INCOME TAX (APPEALS) AFTER APPRECIATING THE ENTIRE FACTS HAS RIGHTLY D ELETED THE ADDITION MADE BY THE ASSESSING OFFICER, HENCE, WE DO NOT FIND ANY MERIT IN THIS GROUND OF THE APPEAL, WHICH IS DISMISSED. 9. IN THE RESULT, APPEAL OF THE REVENUE IS DISMISSED. ORDER PRONOUNCED IN THE COURT AT THE CLOSE OF THE HEARING ON MONDAY , THE 13 TH DAY OF JULY , 201 5 AT GOA . S D / - S D / - (GEORGE MATHAN) (N.S.SAINI) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED : 13 TH JU LY , 201 5 . VR/ - COPY TO: 1 . THE APPELLANT 2 . THE RESPONDENT 3 . THE CIT 4 . THE CIT(A) 5 . THE D.R 6 . GUARD FILE. BY ORDER 5 ITA NO. 412 /PNJ/2014 DATE INITIAL ORIGINAL DICTATION PAD IS ENCLOSED IN THE FILE 1. DRAFT DICTATED ON 13 .0 7 .2015 SR.PS 2. DRAFT PLACED BEFORE AUTHOR 14 .07 .2015 SR.PS 3. DRAFT PROPOSED & PLACED BEFORE THE SECOND MEMBER 14 /07 /2015 JM/AM 4. DRAFT DISCUSSED/APPROVED BY SECOND MEMBER 14 /0 7 /2015 JM/AM 5. APPROVED DRAFT COMES TO THE SR.PS/PS 14 /07 /2015 SR.PS 6. DATE OF PRONOUNCEMENT 13 /0 7 /2015 SR.PS 7. FILE SENT TO THE BENCH CLERK 14 /07 /2015 SR.PS 8. DATE ON WHICH FILE GOES TO THE HEAD CLERK 9. DATE OF DISPATCH OF ORDER