ITO, Paradeep V. Aziz Saheb, Kendrapada

ITA 5/CTK/2012

• Counselvise Citation: [2012] 140 COUNSELVISE.COM (IT) 58414 (ITAT-CUTTACK)
• Duration Of Justice: 2 month(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 16-03-2012
• Appeal Filed By: Department
• Bench Allotted: DB
• Assessment Year: 2008-2009
• Appeal Filed On: 05-01-2012
• Court: TRIBUNAL
• Department Lawyers: S C MOHANTY
• Assessee Lawyers: D K SETH
• Keywords: Assessment record
• Section: 133(6)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, CUTTACK BENCH, CUTTACK BEFORE : SHRI K.K.GUPTA, AM, AND SHRI K.S.S.PRASAD RAO, JM ITA NO. 05/CTK/2012 (ASSESSMENT YEAR 2008 - 09) INCOME - TAX OFFICER, WARD 2, PARADEEP. VERSUS AZIZ SAHEB, PROP. M/S.B.B.TRADING CO., P OST OFFICE LANE, DIST. KENDRAPARA PAN: ARDPS 8103 N (APPELLANT) (RESPONDENT) FOR THE APPELLANT: SHRI S.C.MOHANTY, DR FOR THE RESPONDENT S HRI D.K.SETH, AR DATE OF HEARING : 14.03.2012 DATE OF PRONOUNCEMENT : ORDER SHRI K.K.GUPTA, AM : THIS APPEAL BY THE REVENUE IS ON THE SOLITARY ISSUE THAT THE LEARNED CIT(A) ERRED IN DELETING THE ADDITION MADE ON ACCOUNT OF UNACCOUNTED SUNDRY CREDITORS AMOUNTING TO 9,75,749 WHEN THE ASSESSEE HAD FAILED TO SUBSTANTIATE THE SAME INSPITE OF ADEQUAT E OPPORTUNITIES OFFERED TO HIM. THE REVENUE CONTENDS THAT THE LEARNED CIT(A) IS NOT JUSTIFIED TO GRANT RELIEF TO THE ASSESSEE BY DELETING THE SAME WITHOUT AFFORDING OPPORTUNITY TO THE ASSESSING OFFICER IN VIOLATION TO RULE 46A OF THE INCOME - TAX RULES,1962. 2. THE BRIEF FACTS O N THE ISSUE ARE THAT THE ASSESSEE BEING AN INDIVIDUAL DERIVES INCOME FROM CONSUMABLE ITEMS DECLARING INCOME OF 2,32,570 FOR THE IMPUGNED ASSESSMENT YEAR. DURING THE SCRUTINY PROCEEDINGS U/S.143(3), DUE TO NON - COMPLIANCE, THE ASSESSING OFFICER PASSED THE ORDER U/S.144 BY INTER ALIA CONSIDERING THE BALANCE OUTSTANDING OF TRADE CREDITORS WHEN HE OBSERVED THAT THE OUT STANDING AMOUNT WAS 23,69,244 WHICH REQUIRE VERIFICATION FROM THE CREDITORS WHICH INFORMATION U/S.133(6) HE COLLECTED WHEN FI V E OF THE TRADE CREDITORS CONFIRMED THE BALANCE AS DECLARED BY THE ASSESSEE IN ITS BOOKS OF ACCOUNT. THE ASSESSING OFFICER DID NOT GET INFORMATION FROM M/S.NIRMA LTD., FOR 4,18,170, M/S. S.A.LOGISTIC PVT. LTD., FOR 3,569,403 AND M/S.PERFE TTIVAN ITA NO.05/CTK/2012 2 MELLE INDIA PVT. LTD., FOR 1,98,176. HE SENT NOTICES THROUGH THE ASSESSEE WITH RESPECT TO THESE AMOUNTS NOT HAVING BEEN CONFIRMED BY THE T RADE CREDITORS BUT NOT RESPONDED . THE ASSESSEE SUBMITTED THAT THE BILLS FOR THE PURCHASE OF THE ITEMS FROM THOSE PARTIES HAVE BEEN INCORPORATED IN THE BOOKS OF ACCOUNT MAY KINDLY BE VERIFIED. THE ASSESSING OFFICER CONSIDERED THIS AS THE ASSESSEE DELIBERATE LY AVOIDING THE FURNISHING OF THE CONFIRMATIONS TREATED THEM AS BOGUS CREDITORS AND ADDED TO THE TOTAL INCOME. IT MAY BE MENTIONE D THAT THE ASSESSING OFFICER HAD ALSO MADE SOME OTHER ADDITIONS WHICH WERE CONSIDERED FIT FOR DELETION BY THE LEARNED CIT(A). T HE LEARNED CIT(A) ON THE ASSESSEES CONTENTION BEFORE HIM GAVE A CATEGORICALLY FINDING THAT THESE TRADE CREDITORS HAD HIGHER OPENING BALANCE AS ON 1.4.2007 AND THEREFORE, THE BALANCE AS ON 31.3.200 7 COULD NOT BE HELD AS BOGUS CREDIT DELETED THE SAME. 3. TH E LEARNED DR SUBMITTED THAT THE LEARNED CIT(A) CONSIDERED EVIDENCES IN VIOLATION TO RULE 46A OF THE I.T.RULES,1962 INSOFAR AS THE ASSESSING OFFICER HAD CATEGORICALLY CALLED FOR INFORMATION UNDER THE PROVISIONS OF SECTION 133(6) AND IT ALSO ISSUED NOTICE TO THE ASSESSEE DUE TO NON - COMPLIANCE OF FURNISHING CONFIRMATION S BY THOSE PARTIES WOULD BE TREATED AS BOGUS CREDIT HAS BEEN NOT CONSIDERED BY THE LEARNED CIT(A) INSOFAR AS THE ASSESSEE DID NOT PRODUCE THE BALANCES OF THOSE PARTIES AS ON 1.4.2007 FOR THE ASS ESSING OFFICER TO CONSIDER WHICH IS HIGHER THAN THE AMOUNTS AS DEPICTED IN THE CLOSING BALANCE AS CONSI DERED BY THE ASSESSING OFFICER AS BOGUS. THE TRADE CREDITORS ARE ON ACCOUNT OF PURCHASE DURING THE YEAR CANNOT BE EQUATED WITH THE OPENING BALANCE AS CON SIDERED BY THE LEARNED CIT(A) IN VIOLA TION TO THE PROVISIONS OF RULE 46A. HE PRAYED THAT THE ISSUE BE RESTORED TO THE FILE OF THE ASSESSING OFFICER IN THE LIGHT OF THE SUBMISSION OF THE ASSESSEE APPELLANT BEFORE THE LEARNED CIT(A). ITA NO.05/CTK/2012 3 4. THE LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED THAT THERE IS NO VIOLATION TO THE PROVISIONS OF RULE 46A OF THE I.T.RULES,1962 INSOFAR AS THE OPENING BALANCES OF THE TRADE CREDITORS WHO HAVE SOME RESIDUAL CREDIT BALANCE ON THE CLOSE OF THE PREVIOUS YEAR RELEVANT TO THE IMPUGNE D AY CANNOT BE HELD AS INFORMATION AVAILABLE APART FROM INFORMATION SOUGHT FOR AND NOT MADE AVAILABLE TO THE ASSESSING OFFICER. THE ASSESSING OFFICER WAS HOLDING THE PURCHASE VOUCHERS FOR THE IMPUGNED ASSESSMENT YEAR WHEN THE LEARNED CIT(A) WAS APPRISED OF THE FA C T THAT THE TRADE CREDITORS ARE NOT BOGUS. THE ASSESSEE OWED MORE TO THOSE VERY CREDITORS AS ON 31.3.2007 WAS NOTED BY THE ASSESSING OFFICER INDICATING THAT IF AT ALL THE SUM OF 9,75,749 IS TO BE CONSIDERED AS BOGUS THEN IT STANDS COVERED BY THE OPENING CR EDIT BALANCE OF THOSE VERY PARTIES TOTALING TO 13,76,843. THEREFORE, THERE IS NEITHER A CASE FOR ADDITION U/S.68 NOR A CASE FOR TAXATION IN THE IMPUGNED ASSESSMENT YEAR WAS CONSIDERED BY THE LEARNED CIT(A) IN ACCORDANCE WITH THE PROVISIONS OF THE I.T.ACT AND NOT BY VIOLATING THE PROVISIONS TO RULE 46A OF THE I.T.RULES,1962. 5. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL ON RECORD. ON CAREFUL CONSIDERATION OF THE FACTS AND CIRCUMSTANCES OF THE CASE, WE ARE INCLINED TO UPHOLD THE ORDER OF TH E LEARNED CIT(A). THE ASSESSING OFFICER COULD NOT RECEIVE THE CONFIRMATION OF THE SAID PARTIES AFTER HAVING RECEIVED CONFIRMATION FROM THE REMAINING PARTIES I.E., 23,69,224 LESS 9,75,749. THEREFORE, THE LEARNED CIT(A) WAS WITHIN HIS JURISDICTION TO CONSIDER THE OPENING BALAN CE OF THOSE VERY PARTIES WHICH WAS MORE THAN THE AMOUNT OWED BY THE ASSESSEE TO THEM AT THE END OF THIS FINANCIAL YEAR RELEVANT TO THE IMPUGNE D ASSESSMENT YEAR. THEREFORE, THERE IS NO MATERIAL WITH THE AS SESSING OFFICER TO HOLD THAT THE SE PARTIES AS BOGUS WHEN THE INFORMATION WAS NOT RECEIVED FROM THEM. THE LEARNED CIT(A), THEREFORE, IN OUR CONSIDERED VIEW, DID NOT VIOLATE THE PROVISIONS OF RULE 46A WHEN THE ITA NO.05/CTK/2012 4 INFORMATION AS AVAILABLE WAS CONSIDERED BY THE LEARNED CIT(A) IN THE ASSESSMENT RECORDS. WE ARE ALSO INCLINED TO HOLD A VIEW THAT TRADE CREDITORS CANNOT BE SUBJECTED TO TAXATION U/S.68 WHEN THE ASSESSING OFFICER HAS RESORTED TO VERIFICATION A ND FINDS THE PURCHASERS PROPERLY VOUCHED WHICH IN TURN IS THE CONFIRMATION BY TRADE CREDITORS WHO ALSO MENTION OUTSTANDING IF ANY AS ON 31.3.2007. IT CANNOT BE SAID THAT THE ASSESSING OFFICER HAD TO DEAL WITH THE BOGUS CREDITORS WHEN HE HIMSELF HAS ACCEPTE D THE TRADING OF CONSUMAB LES BEING THE BUSINESS OF THE ASSESSEE ALLOWING PURCHASES AGAINST THE SALES AND THE STOCK REMAINING WITH IT. WE DO NOT FIND ANY MERIT IN THE CONTENTION OF THE REVENUE ON THIS SCORE. THEREFORE, FOR THE REASONS DISCUSSED ABOVE, THE A PPEAL OF THE REVENUE IS DISMISSED. 6. IN THE RESULT, THE APPEAL OF THE REVENUE IS DISMISSED. SD/ - SD/ - (K.S.S.PRASAD RAO) JUDICIAL MEMBER (K.K.GUPTA) ACCOUNTANT MEMBER DATE: 16.03.2012 H.K.PADHEE, SENIOR PRIVATE SECRETARY. COPY OF THE ORDER FORWARDED TO : 1. THE APPELLANT: INCOME - TAX OFFICER, WARD 2, PARADEEP. 2. THE RESPONDENT: AZIZ SAHEB, PROP. M/S.B.B.TRADING CO., POST OFFICE LANE, DIST. KENDRAPARA 3. THE CIT, 4. THE CIT(A), 5. THE DR, CUTTACK 6. GUARD FILE (IN DUPLICATE) TRUE COPY, BY ORDER, SENIOR PRIVATE SECRETARY.