I.T.O.,Ward-1(1), Aligarh V. Shri Surendra Singh Malhotra, Hapur

ITA 50/AGR/2011

• Counselvise Citation: 5020314 RSA 2011
• Duration Of Justice: 9 month(s) 1 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 16-11-2011
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Next Hearing Date: 15-11-2011
• Assessment Year: 2007-2008
• Appeal Filed On: 15-02-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: A K SHARMA
• Assessee Lawyers: PARAM JEET SINGH F
• Section: 133(6); 68; 6

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AGRA BENCH, AGRA BEFORE SHRI H.S. SIDHU, JUDICIAL MEMBER AND SHRI B.P. JAIN, ACCOUNTANT MEMBER ITA NO.50/AGR/2011 ASSESSMENT YEAR: 2007-08 INCOME TAX OFFICER, VS. SHRI SURENDRA SINGH MALH OTRA, WARD 1(1), ALIGARH. PROP. M/S. ISHAR METALS, MEERUT ROAD, HAPUR. (PAN: ABFPM 3930 P). (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI A.K. SHARMA, JR. D.R. RESPONDENT BY : SHRI VINOD GOYAL, ADVOCATE & SHRI PARAM JEET SINGH, F.C.A. DATE OF HEARING : 15.11.2011 DATE OF PRONOUNCEMENT : 16.11.2011 ORDER PER BENCH : THIS APPEAL OF THE REVENUE ARISES FROM THE ORDER OF LD. CIT(A), GHAZIABAD DATED 15.11.2010 FOR THE ASSESSMENT YEAR 2007-08. 2. THE REVENUE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL:- 1. THE ORDER OF THE LD. CIT(APPEALS) IS ERRONEOUS IN LAW AND ON FACTS IN DELETING THE ADDITION OF ` 26,21,580/- SINCE THE CREDITORS WE4E NOT VERIFIED AND REMAINED UNEXPLAINED. ITA NO.50/AGR/2011 A.Y. 2007-08 2 2. THE LD. CIT(APPEALS) HAS ERRED IN LAW AND ON FAC TS IN DELETING THE ADDITION OF ` 2,45,594/-. 3. THE ORDER OF LD. CIT(A) BE SET ASIDE AND THE ORD ER OF THE A.O. BE RESTORED. 3. THE BRIEF FACTS OF THE CASE IN GROUND NO.1 ARE T HAT THE ASSESSEE HAS DECLARED THE FOLLOWING SUNDRY CREDITORS AS AT THE END OF THE YEAR RELEVANT TO THE ASSESSMENT YEAR 2007-08 :- I) M/S. KRISHNA TRADERS ` 20,99,736/- II) M/S. CHADDA BROTHERS ` 3,00,000/- III) M/S. CHAATWAL METALS ` 1,05,000/- IV) M/S. RAMAN ENTERPRISES ` 13,75,653/- 4. THE ASSESSEE DURING THE ASSESSMENT PROCEEDINGS P RODUCED COPY OF ACCOUNTS, CONFIRMATION, PAN AND NAMES AND ADDRESSES OF THE CR EDITORS. THE CREDITORS WERE ISSUED NOTICE UNDER SECTION 133(6) OF THE INCOME TA X ACT WHICH WAS NOT RESPONDED AND THEY WERE NOT PRODUCED BY THE ASSESSEE IN RESPO NSE TO THE NOTICE UNDER SECTION 142(1). THE ASSESSEE IN THE FOLLOWING YEAR HAD MAD E THE PAYMENTS IN CASH TO M/S KRISHNA TRADERS. AS REGARDS THE CREDITOR M/S CHADD A BROTHERS, THE SAME HAD BEEN ADJUSTED IN THE FOLLOWING YEAR AGAINST SOME OTHER D EBTOR M/S. IRMAZ TRADING COMPANY, MEERUT. THE ASSESSING OFFICER CONSIDERED 50% OF THE AMOUNT STANDING AS AT THE CLOSE OF THE YEAR IN THE CASE OF M/S. KRI SHNA TRADERS AND M/S. CHADDA BROTHERS AS BOGUS UNDER SECTION 68 OF THE ACT AND A CCORDINGLY MADE AN ADDITION OF ITA NO.50/AGR/2011 A.Y. 2007-08 3 ` 11,99,868/-. AS REGARDS THE OTHER CREDITORS, THE A SSESSEE HAD NOT SUBMITTED PAN OF THE SAID CREDITORS AND IN THE ABSENCE OF ANY EXP LANATION, THE SAID AMOUNT WAS ADDED TO THE INCOME OF THE ASSESSEE UNDER SECTION 6 8 OF THE ACT. THE LD. CIT(A) DELETED THE ADDITION FOR THE REASON THAT THE ASSESS EE HAD SUBMITTED THE CONFIRMATION HAVING NAME ADDRESS AND PAN AND THESE ARE NOT THE F RESH CREDITS. 5. THE LD. DEPARTMENTAL REPRESENTATIVE APPEARING FO R THE REVENUE RELIED UPON THE ORDER OF THE A.O. 6. THE LD. COUNSEL FOR THE ASSESSEE SHRI VINOD GOYA L, ADVOCATE RELYING UPON THE ORDER OF THE LD. CIT(A) ARGUED THAT THESE ARE T RADE CREDITORS AND THEREFORE, CANNOT BE A SUBJECT MATTER OF ADDITIONS UNDER SECTI ON 68 OF THE ACT. MOREOVER, THE SAID CREDITORS ARE THE OLD CREDITORS WHICH HAVE BEE N ACCEPTED BY THE DEPARTMENT IN THE RELEVANT YEARS. ALSO OUTSTANDING LIABILITY OF THE SUNDRY CREDITORS CANNOT BE HELD 50% AS BOGUS AND REMAINING AS GENUINE WHICH IS AGAI NST THE PRINCIPLES OF LAW. 7. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE FACTS OF THE CASE. WE ARE CONVINCED WITH THE ARGUMENTS MADE BY SHRI VINOD GOYAL, ADVOCATE, THE LD. COUNSEL FOR THE ASSESSEE THAT THE SUNDRY CREDITORS OUTSTANDING AS AT THE END OF THE YEAR RELEVANT TO THE IMPUGNED ASSESSMENT YEAR ARE O LD CREDITORS AND THEREFORE, THEY CANNOT BE THE SUBJECT MATTER OF ADDITION U/S. 68 OF THE ACT DURING THE ITA NO.50/AGR/2011 A.Y. 2007-08 4 IMPUGNED YEAR. MOREOVER, THE SUNDRY CREDITORS HAVI NG BEEN ACCEPTED BY THE DEPARTMENT IN THE EARLIER YEAR IS NOT UNDER DISPUTE . MOREOVER, IT IS QUITE ILLOGICAL TO MAKE A DISALLOWANCE OF THE OUTSTANDING SUNDRY CR EDITORS AT THE RATE OF 50% AND TREAT IN THE SAME BREATH THE REST OF THE AMOUNT AS GENUINE. THEREFORE, THE ASSESSING OFFICER IS NOT JUSTIFIED IN MAKING SUCH A DDITION AND WE FIND NO INFIRMITY IN THE ORDER OF THE LD. CIT(A) ON THE ISSUE. THUS, GROUND NO.1 OF THE REVENUE IS DISMISSED. 8. AS REGARDS TO GROUND NO.2 OF THE REVENUE, THE AS SESSEE PRODUCED QUANTITATIVE DETAILS OF OPENING AND CLOSING STOCK. ON PERUSAL OF BOOKS OF ACCOUNT AND STOCK REGISTER, THE A.O. OBSERVED THAT THE ASSE SSEE HAS DECLARED WASTAGE OF 1211.285 KGS. AND CLOSING STOCK HAS BEEN DECLARED A S NIL, WHEREAS THE ASSESSEES PROFIT & LOSS ACCOUNT DOES NOT SHOW ANY MANUFACTURI NG WORK AND THEREFORE, WASTAGE CLAIMED CANNOT BE ALLOWED. ACCORDINGLY, TH E A.O. ADDED THE STOCK OF DRAW PIPE OF ` 2,45,594/- TO THE INCOME OF THE ASSESSEE. THE LD. CIT(A) AT PARAGRAPH NO.5.2 OF HIS ORDER OBSERVED THAT THE ASS ESSING OFFICER HAS NOT BEEN ABLE TO FIND ANY DEFECT IN THE BOOKS OF ACCOUNT AND THE SALES TAX AUTHORITIES HAVE ACCEPTED THE SALES ACCOUNTS AS FURNISHED BY THE ASS ESSEE. THE EXPLANATION OF THE ASSESSEE THAT THE BUSINESS HAD BEEN CLOSED AND THE BALANCE STOCK HAD BEEN SOLD AS SCRAP AND THE SALE OF THE SAME HAS DULY BEEN INCORP ORATED IN THE BOOKS OF ACCOUNT ITA NO.50/AGR/2011 A.Y. 2007-08 5 HAS BEEN ACCEPTED AND THE LD. CIT(A) ACCORDINGLY DE LETED THE ADDITION MADE BY THE A.O. 9. WE HAVE HEARD THE ARRIVAL CONTENTIONS AND PERUSE D THE FACTS OF THE CASE. THERE IS NOTHING ON RECORD THAT THE A.O. HAD REJECT ED THE BOOKS OF ACCOUNT OF THE ASSESSEE, TRADING RESULT HAVING BEEN ACCEPTED AND T HE EXPLANATION OF THE ASSESSEE THAT BUSINESS HAVING BEEN CLOSED IS NOT UNDER DISPU TE. THE STOCK SOLD AS SCRAP HAS BEEN ACCOUNTED FOR IN THE BOOKS OF ACCOUNT. NO SUC H DEFECT HAS BEEN POINTED OUT BY THE A.O. THAT SUCH SALE OF SCRAP HAD NOT BEEN AC COUNTED FOR IN THE BOOKS OF ACCOUNT. THEREFORE, IN THE CIRCUMSTANCES AND FACTS OF THE CASE, THE A.O. IS NOT JUSTIFIED IN MAKING THE ADDITION AND THAT TOO THE D OUBLE ADDITIONS, ONCE THE ASSESSEE HAVING DECLARED AS SALES OF THE STOCK AS SCRAP AND SECONDLY BY MAKING THE ADDITION BY THE A.O. AGAIN OF THE SAME STOCK AS INCOME OF TH E ASSESSEE. SUCH DOUBLE ADDITIONS ARE NOT ADMISSIBLE UNDER LAW. IN THE CIR CUMSTANCES AND THE FACTS OF THE CASE, WE FIND NO INFIRMITY IN THE ORDER OF THE LD. CIT(A) WHO HAS RIGHTLY DELETED THE ADDITION MADE BY THE A.O. THUS, GROUND NO.2 OF THE REVENUE IS DISMISSED. 10. GROUND NO.3 IS GENERAL IN NATURE AND THEREFORE, DO NOT REQUIRE ANY ADJUDICATION. ITA NO.50/AGR/2011 A.Y. 2007-08 6 11. IN THE RESULT, APPEAL OF THE REVENUE IN ITA NO. 50/AGR/2011 IS DISMISSED. (ORDER PRONOUNCED IN THE OPEN COURT ON 16.11.2011) SD/- SD/- (H.S. SIDHU) (B.P. JAIN) JUDICIAL MEMBER ACCOUNTANT MEMBER DATE: 16 TH NOVEMBER, 2011 PBN/* COPY OF THE ORDER FORWARDED TO: APPELLANT/RESPONDENT/CIT CONCERNED/CIT(APPEALS) CO NCERNED/D.R., ITAT, AGRA BENCH, AGRA/GUARD FILE. BY ORDER ASSISTANT REGISTRAR INCOME-TAX APPELLATE TRIBUNAL, AGRA TRUE COPY