ACIT, Muzaffarnagar V. Shri Surendra Singh, Muzaffarnagar

ITA 4484/DEL/2011

• Counselvise Citation: [2014] 120 COUNSELVISE.COM (IT) 7354 (ITAT-DELHI)
• Duration Of Justice: 2 year(s) 11 month(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 10-09-2014
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: G
• Next Hearing Date: 06-08-2014
• Assessment Year: 2008-2009
• Appeal Filed On: 07-10-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: V K CHADHA
• Keywords: Unexplained cash credit
• Section: 133(6); 68

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL (DELHI BENCH G , NEW DELHI) BEFORE SHRI GEORGE GEORGE K, JUDICIAL MEMBER AND SHRI T.S. KAPOOR, ACCOUNTANT MEMBER I.T.A. NO.4484 /DEL/2011 ASSESSMENT YEAR : 2008-09 ACIT, CIRCLE I, VS. SHRI SURENDRA SINGH, MUZAFFARNAGAR 1267, SOUTH CIVIL LINES, MUZAFFARNAGAR GIR / PAN:AIDPS7125H (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI RAKESH KUMAR, SR. DR RESPONDENT BY : SHRI V.K.CHADHA, ADV. ORDER PER T.S. KAPOOR, AM: THIS IS AN APPEAL FILED BY THE REVENUE AGAINST THE ORDER OF LD. CIT(A) DATED 29.06.2011. THE ONLY GROUND TAKEN BY THE RE VENUE IS THE GRIEVANCE WITH THE ACTION OF LD. CIT(A) BY WHICH HE HAD DELET ED THE ADDITION OF RS.91,52,080/- MADE BY THE ASSESSING OFFICER U/S 68 OF THE INCOME-TAX ACT, 1961. 2. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSE E IS AN INDIVIDUAL AND IS ENGAGED IN THE BUSINESS OF MANUFACTURING OF STEEL R OLLING MILLS PLANT, STEEL MACHINERY AND REPAIR THEREOF IN THE NAME AND STYLE OF M/S. B.S. ENGINEERING WORKS. THE CASE OF THE ASSESSEE WAS SELECTED FOR S CRUTINY. DURING ASSESSMENT PROCEEDINGS, THE ASSESSING OFFICER OBSER VED THAT THE ASSESSEE HAD SHOWN AN AMOUNT OF RS.2,10,91,766/- AS ADVANCE FROM CUSTOMERS IN RESPECT OF 7 PARTIES, THEREFORE THE ASSESSEE WAS RE QUIRED TO FURNISH CONFIRMED ITA NO.4484/DEL/2011 2 COPY OF ACCOUNTS, PAN AND POSTAL ADDRESS OF THE CUS TOMERS. THE ASSESSEE FURNISHED CONFIRMED COPIES OF ACCOUNTS OF SUCH PART IES AND THE ASSESSING OFFICER THEN SOUGHT INFORMATION U/S 133(6) FROM THE SAID SEVEN PARTIES. THE ASSESSING OFFICER OBSERVED THAT NOTICE IN THE CASE OF M/S. PRS ROLLING MILLS WAS RECEIVED THE BACK UNSERVED AND NO REPLY WAS REC EIVED FROM ONE OF THE CUSTOMERS M/S. INDIAN IRON AND STEEL CORPORATION. IN RESPECTS OF ONE CUSTOMER M/S. J A ALLOY PVT. LTD., IT WAS INTIMATED BY IT THAT THERE WAS NO TRANSACTION WITH THE ASSESSEE DURING THE RELEVANT A CCOUNTING PERIOD. THE ASSESSING OFFICER THEN CONFRONTED THE ASSESSEE AS T O WHY THESE BE NOT ADDED TO THE INCOME OF THE ASSESSEE AS UNEXPLAINED CREDIT S. THE REPLY OF THE ASSESSEE WAS NOT FOUND SATISFACTORY BY THE ASSESSIN G OFFICER THEREFORE, HE MADE ADDITION OF RS.91,52,080/- IN RESPECT OF THREE PARTIES AS DETAILED BELOW: M/S. INDIAN IRON & STEEL CORPORATION LTD. RS.86,0 0,000/- M/S. PRS ROLLING MILLS PVT. LTD. RS.02,52,480/- M/S. J A ALLOY PVT. LTD. RS.02,99,600/- 3. AGGRIEVED WITH THE ADDITION, THE ASSESSEE FILED APPEAL BEFORE LD. CIT(A) AND MADE VARIOUS SUBMISSIONS INCLUDING THE F ACT THAT THE AMOUNT OF RS.86 LACS INCLUDED ON OPENING BALANCE OF RS.31 LAC S AND ONLY RS.55 LACS WAS RECEIVED DURING THE YEAR. IT WAS FURTHER SUBM ITTED THAT THE BALANCES OF OTHER TWO PARTIES WERE CONTINUING FROM EARLIER YEAR AND NO TRANSACTION WAS CARRIED OUT DURING THE YEAR. IT WAS FURTHER SUBMIT TED THAT IN RESPECT OF M/S. INDIAN IRON AND STEEL CORPORATION, THE ASSESSEE HAD RAISED BILLS IN THE NEXT FINANCIAL YEAR AND AS EVIDENCE, A COPY OF LEDGER AC COUNT FOR THE NEXT YEAR WAS ALSO SUBMITTED. LD. CIT(A) AFTER CONSIDERING T HE SUBMISSIONS OF THE ASSESSEE, DELETED THE ADDITION MADE BY THE ASSESSIN G OFFICER BY HOLDING AS UNDER: ITA NO.4484/DEL/2011 3 THE FACTS OF THE CASE, SUBMISSIONS MADE BY THE APP ELLANT, REMAND REPORT OF THE A.O. AND REJOINDERS OF THE APPELLANT HAVE BEEN CAREFULLY CONSIDERED. IT IS OBSERVED THAT ON FACTUAL VERIFICA TION OF THE CONFIRMED COPY OF ACCOUNTS AND BALANCE SHEETS OF M/S INDIA IR ON & STEEL CORPORATION LTD., M/S P.R.S. ROLLING MILLS PVT. LTD AND M/S JAY AAY ALLOYS PVT. LTD., IT IS GATHERED THAT THE AMOUNT OF RS.91,52,080/- INCLUDES OLD BALANCES OF RS.31,00,000/-, RS.2,53,48 0/- AND RS.2,99,600/- RESPECTIVELY OF THE AFORESAID PARTIES . THE NEW ADVANCES ARE ONLY TO THE EXTENT OF RS.55,00,000/- OF M/S IND IA IRON & STEEL CORPORATION LTD., THE REJOINDER TO THE REMAND REPOR T OF THE A.O.., THE APPELLANT HAS .REITERATED SUBMISSIONS MADE BEFORE T HE A.O. AND HAS CONTENDED THAT IN THE ASSESSMENT ORDER WHILE REJECT ING THE CONTENTIONS MADE BY THE APPELLANT, THE A.O. HAS MERELY MENTIONE D THAT 'THE COUNSEL OF THE ASSESSEE HAS NOT SUBMITTED ANY SATIS FACTORY REPLY IN THIS REGARD' AND REPLY DATED 20.12.2010 IN COMPLIANCE TO THE LETTER DATED 16.12.2010 HAS NOT BE .N CONSIDERED AT ALL. THUS TH E OBSERVATION MADE BY THE A.O. AS MENTIONED ABOVE IS GENERAL IN NATURE AND NOTHING SPECIFIC HAS BEEN POINTED OUT BY HIM AS TO HOW THE SUBMISSIONS MADE BY THE APPELLANT WERE UNSATISFACTORY SO AS TO CALL REJECTION. ON THE OTHER HAND, THE APPELLANT HAS FILED CONFIRMED COPIE S OF ACCOUNTS OF THE AFORESAID PARTIES WITH THE COMPLETE ADDRESSES AND P ANS. THE OLD BALANCES OF RS. 31,00,000/-, RS. 2,53,480/- AND 2,9 9,600/- OF PARTIES M/S INDIA IRON & STEEL CORPORATION LTD, M/S .R.S. R OLLING MILLS PVT. LTD AND M/S JAY AAY ALLOY PVT. LTD. RESPECTIVELY HA S THUS BEEN WRONGLY ADDED U/S 68 OF THE ACT IN THE RELEVANT ACC OUNTING PERIOD WHEREAS, THE NEW ADVANCES ARE ONLY FOR RS. 55,00,00 0/- OF M/S INDIA IRON & STEEL CORPORATION LTD. THE A.O. IN THE REMAN D REPORT HAS ALSO NOT DISPUTED THE AFORESAID DOCUMENTS. IN HIS REPLIE S THAT THE APPELLANT WAS ABLE TO DISCHARGE ITS PRIMARY ONUS OF SUBMITTIN G THE RELEVANT DETAILS, CONFIRMATIONS, ADDRESSES, PANS, CERTIFICAT E OF INCORPORATION, VAT REGISTRATION 'CERTIFICATE, CENTRAL EXCISE REGIS TRATION CERTIFICATE, BALANCE SHEET ETC. THERE WAS NO ADVERSE MATERIAL ON RECORD TO HOLD THAT THE ADVANCE MADE AT RS.91,52,080/- WAS NOT GEN UINE. FURTHER, FROM THE VARIOUS JUDICIAL PRONOUNCEMENTS CITED ABOV E, IT IS SETTLED LEGAL POSITION THAT UNLESS THE A.O. IS ABLE TO CONT ROVERT SO MANY DOCUMENTARY EVIDENCES PLACED ON RECORD, IT WOULD NO T BE PROPER TO, SUSTAIN ADDITION UNDER SECTION 68 OF THE I.T. ACT, 1961. IN OTHER WORDS, THE APPELLANT HAS PRODUCED ALL THE NECESSARY EVIDEN CES NOT ONLY TO PROVE THE IDENTITY OF THE PARTIES BUT ALSO- TO PROV E THE CREDITWORTHINESS ITA NO.4484/DEL/2011 4 AND GENUINENESS OF THE TRANSACTIONS. THE EVIDENCES FILED ARE SUFFICIENT TO ESTABLISH THE GENUINENESS OF THE AMOUNTS, CREDIT WORTHINESS OF THE CREDITORS AND THEIR IDENTITY COULD NOT BE DISPUTED. 4. AGGRIEVED, THE REVENUE IS IN APPEAL BEFORE US. 5. LD. D.R. AFTER READING FORM THE RELEVANT PARA OF THE ASSESSMENT ORDER, ARGUED THAT NOTICE ISSUED BY THE ASSESSING OFFICER TO ONE OF THE PARTIES M/S. INDIA IRON & STEEL CO. HAD RETURNED BACK AND, THERE FORE, THE ASSESSEE COULD NOT ESTABLISH THE GENUINENESS AND CREDITWORTHINESS OF THE ABOVE SAID PARTY. 6. LD. A.R. ON THE OTHER HAND ARGUED THAT THE ASSES SING OFFICER HAD PASSED HIS ORDER WITHOUT CONSIDERING THE SUBMISSION S MADE BY THE ASSESSEE THROUGH ITS VARIOUS SUBMISSIONS VIDE LETTERS DATED 23.12.2009, 15.09.2009, 05.10.2010, 29.10.2010, 24.11.2010 AND 20.12.2010. IT WAS SUBMITTED THAT THE ADVANCES WERE GENUINE BUSINESS TRANSACTIONS AND THE ASSESSEE HAD MADE SALES IN THE NEXT FINANCIAL YEAR AND IN THIS RESPEC T, OUR ATTENTION WAS INVITED TO PAPER BOOK PAGES 28-30 WHERE A COPY OF ACCOUNT O F M/S. INDIAN IRON AND STEEL CORPORATION LTD. FOR THE FINANCIAL YEAR 2008- 09 WAS PLACED. SIMILARLY, OUR ATTENTION WAS ALSO INVITED TO PAPER BOOK PAGES 31-43 WHERE COY OF INVOICES RAISED IN THE NAME OF INDIAN IRON & STEEL CORPORATION LTD. WAS PLACED. IN RESPECT OF OTHER TWO PARTIES, IT WAS SUB MITTED THAT OPENING BALANCES DID NOT BELONG TO THE YEAR UNDER CONSIDERA TION AND THERE WAS NO TRANSACTION DURING THE YEAR. ALL THESE WERE OPENIN G BALANCE AND HENCE THE ADDITION U/S 68 OF THE ACT WAS RIGHTLY DELETED BY L D. CIT(A). 7. WE HAVE HEAD RIVAL PARTIES AND HAVE GONE THROUGH THE MATERIAL PLACED ON RECORD. WE FIND THAT OUT OF RS.86 LACS, CREDIT BALANCE IN THE ACCOUNT OF M/S. INDIAN IRON AND STEEL CORPORATION LTD. OF RS.3 1 LACS WAS OPENING BALANCE AS IS APPARENT FROM PAGE 27 OF THE PAPER BO OK WHERE A CONFIRMED ITA NO.4484/DEL/2011 5 COPY OF THE ACCOUNT OF THE SAID PARTY IS PLACED. T HE ASSESSEE DURING THE PRESENT YEAR, RECEIVED RS.55 LACS FROM THE ABOVE SA ID PARTY AND IN THE NEXT YEAR INVOICES WORTH RS.2.85 CRORES WERE RAISED BY T HE ASSESSEE AGAINST WHICH THE PAYMENTS WERE ALSO RECEIVED DURING THE NEXT YEA R. THE ASSESSEE HAD ALSO PROVIDED RELEVANT PARTICULARS IN RESPECT OF PAN AND CONFIRMATION COPIES OF ACCOUNT OF THE SAID PARTY. THEREFORE, LD. CIT(A) H AD RIGHTLY DELETED THE ADDITION AS THE AMOUNT OUTSTANDING DO NOT REPRESENT ATTRACT SECTION 68 OF THE ACT AS IT IS A PART OF GENUINE BUSINESS TRANSACTION . AS REGARDS THE ADDITION ON ACCOUNT OF OPENING BALANCES IN RESPECT OF OTHER TWO PARTIES, WE FIND THAT THE ASSESSEE HAD SUBMITTED CONFIRMED COPIES OF ACCOUNTS AND AMOUNTS OUTSTANDING REPRESENT THE OPENING BALANCE AND THERE FORE, LD. CIT(A) HAD RIGHTLY DELETED THE ADDITION ON THIS ACCOUNT. 8. IN VIEW OF THE ABOVE, WE DO NOT FIND ANY INFIRMI TY IN THE ORDER OF LD. CIT(A) AND THEREFORE, APPEAL FILED BY THE REVENUE I S DISMISSED. 9. ORDER PRONOUNCED IN THE OPEN COURT ON 10 TH SEPTEMBER, 2014. SD./- SD./- (GEORGE GEORGE K) (T.S . KAPOOR) JUDICIAL MEMBER ACCOUNTANT MEMBER DATE: 10 TH SEP., 2014 SP COPY FORWARDED TO:- 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT 4. THE CIT (A)-, NEW DELHI. 5. THE DR, ITAT, LOKNAYAK BHAWAN, KHAN MARKET, NEW DEL HI. TRUE COPY. BY ORDER (ITAT, NEW DELHI). ITA NO.4484/DEL/2011 6 DATE OF HEARING DATE OF DICTATION DATE OF TYPING DATE OF ORDER SIGNED BY BOTH THE MEMBERS & PRONOUNCEMENT. DATE OF ORDER UPLOADED ON NET & SENT TO THE BENCH CONCERNED.