M/s. Sartaj Ahmed Khuroo, Srinagar (J&K) V. The Deputy Commissioner of Income Tax, Kashmir

ITA 501/ASR/2013

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 73191 (ITAT-AMRITSAR)
• Duration Of Justice: 5 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 17-01-2014
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Next Hearing Date: 09-01-2014
• Assessment Year: 2010-2011
• Appeal Filed On: 25-07-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Section: 133(6)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AMRITSAR BENCH; AMRITSAR. BEFORE SH. H.S. SIDHU, JUDICIAL MEMBER AND SH. B.P.JAIN, ACCOUNTANT MEMBER I.T.A. NO.501(ASR)/2013 ASSESSMENT YEAR:2010-11 PAN :AOOPK0391Q M/S. SARTAJ AHMED KHUROO VS. DY. COMMR. OF INCOME T AX, C/O BHAT DURANI & ASSOCIATES, SRINAGAR CIRCLE, FLAT NO.207, IST FLOOR, YATRI BHAWAN SRINAGAR. II, DURGA NAG, DALGATE, SRINAGAR. (APPELLANT) (RESPONDENT) APPELLANT BY:SH.UPENDER BHAT, CA RESPONDENT BY:SH.MAHAVIR SINGH, DR DATE OF HEARING: 09/01/2014 DATE OF PRONOUNCEMENT:17/01/2014 ORDER PER BENCH ; THIS APPEAL OF THE ASSESSEE ARISES FROM THE ORDER OF THE CIT(A), JAMMU, DATED 21.05.2013 RELATING TO ASSESSMENT YEA R 2010-11. THE ASSESSEE HAS RAISED FOLLOWING GROUNDS OF APPEAL: 1. THAT ON THE FACTS AND CIRCUMSTANCES OF THE CASE , LD. CIT(A) HAS ERRED IN NOT TAKING COGNIZANCE OF THE FACT THAT THE AO DID NOT GIVE ADEQUATE OPPORTUNITY TO PRODUCE THE CREDITORS/ VERIFICATION AS REQUESTED BY THE ASSESSEE. ITA NO.501(ASR)/2013 2 2. THAT ON THE FACTS AND CIRCUMSTANCES OF THE CASE, LD. CIT(A) HAS ERRED IN DELETING ALL THE ADDITIONS MADE ON ACCOUN T OF CREDITORS AMOUNTING TO RS.1931350/- IRRESPECTIVE OF THE FACT THAT ALL INFORMATIONS WERE MADE AVAILABLE. 3. THAT THE APPELLANT CRAVES LEAVE TO ADD, ALTER, A MEND OR DELETE ANY OF THE GROUNDS OF APPEAL AT THE TIME OF HEARING AND ALL ABOVE GROUNDS ARE WITHOUT PREJUDICE TO EACH OTHER. 2. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSE E IS A CIVIL CONTRACTOR. THE ASSESSEE HAS DECLARED PURCHASES AMOUNTING TO RS .1,59,36,850/- AND SUNDRY CREDITORS AT RS.28,61429/-. THE ASSESSEE HA S FURNISHED BILLS OF PURCHASES FROM THESE PARTIES, WHICH THE ASSESSEE PL ACED ON RECORD BEFORE THE A.O. THE LEDGER ACCOUNT OF SAID PARTIES WITH REGARD TO PURCHASES WERE ALSO SUBMITTED BEFORE THE A.O. TO CROSS VERY THE PURCHAS ES AND THE CREDITORS. THE INFORMATION U/S 133(6) OF THE ACT WAS SOUGHT FROM T HE CREDITORS AT THE ADDRESSES REFLECTED IN THE BILLS FURNISHED BY THE A SSESSEE ON TEST CHECK BASIS WITH REGARD TO THE FOLLOWING PARTIES: 1) MANZOOR MATERIAL SUPPLIERS 2) MANZOOR AHMAD 3) ALAMDAR ENTERPRISES 4) SHRI JAVED AHMAD 5) GHULAM HASSAN RATHER & SONS ITA NO.501(ASR)/2013 3 2.1 WITH REGARD TO THE PARTIES AT SL. NO. 1 & 2, TH E LETTERS REMAINED UNSERVED AND THE ASSESSEE WAS CONFRONTED, WHO SUBMI TTED THAT THE SAID TWO SUPPLIERS ARE CARRYING ON THEIR BUSINESS AT THE SAM E ADDRESS AS IN THE BILLS ISSUED BY THEM TO THE ASSESSEE AS PER LATEST INFORM ATION SUPPLIED TO THE ASSESSEE. HOWEVER, THESE SUPPLIERS HAVE NO PERMANEN T PLACE WHERE THEY COULD DISPLAY THEIR NAMES. THE PARTY AT SL.NO.3, AF TER RECEIVING LETTER U/S 133(6) DENIED OF HAVING ANY TRANSACTION WITH THE AS SESSEE. THE PARTY AT SL.NO.4 REFUSED OF HAVING ANY TRANSACTION WITH THE ASSESSEE. AS REGARDS PARTY AT SL.NO.5, THE LETTER REMAINED UNSERVED. THE AO CO NFRONTED THE ASSESSEE WITH REGARD TO NON-CONFIRMATION BY THE PARTIES AND NOT SATISFIED WITH THE EXPLANATION OF THE ASSESSEE MADE AN ADDITION OF THE TOTAL PURCHASES MADE FROM THE SAID PARTIES AMOUNTING TO RS.31,74,200/- A FTER TREATING THE SAID PURCHASES AS BOGUS. 3. BEFORE THE LD. CIT(A), THE ASSESSEE SUBMITTED TH E EXPLANATION, COPIES OF ACCOUNTS AND CONFIRMATION OF THE PARTIES AND THE LD. CIT(A) OBSERVED THAT WITH REGARD TO MANZOOR MATERIAL SUPPLIER, MANY TRAN SACTIONS ARE THROUGH CHEQUES AND SOME ARE THROUGH CASH BELOW RS.20,000/- AND ACCORDINGLY DELETED THE ADDITION OF RS.12,77,850/- (WRONGLY MEN TIONED AS RS.12,42,850/-) BUT CONFIRMED THE REST OF THE TRANS ACTIONS WITH DIFFERENT FOUR ITA NO.501(ASR)/2013 4 PARTIES AS MENTIONED HEREINABOVE I.E. WITH REGARD TO JAVED AHMAD MIR, GHULAM HASSAN RATHER, MANZOOR AHMAD AND M/S. ALAMD AR ENTERPRISES. 4. THE LD. COUNSEL FOR THE ASSESSEE, MR. UPENDER BH AT, CA SUBMITTED THAT THE ASSESSEE HAD SUBMITTED BEFORE THE AO AS WE LL AS LD. CIT(A) THAT THESE MATERIAL SUPPLIERS DO NOT HAVE PERMANENT ADDR ESS, AUDITED BOOKS OF ACCOUNT WERE PLACED BEFORE THE AUTHORITIES BELOW IS NOT IN DISPUTE. ALL THE PARTIES HAVING MADE CHEQUE PAYMENTS ALONGWITH CASH PAYMENTS IS A MATTER OF RECORD, AS PER COPY OF THE LEDGER ACCOUNT IN THE BOOKS OF THE ASSESSEE PLACED ON RECORD. THERE IS NOT EVEN A SINGLE ACCOUN T WHICH DOES NOT HAVE THE CHEQUE PAYMENT TO ANY OF THE PARTY. THEREFORE, THE REVENUE CANNOT ARGUE THAT THE IDENTITY IS NOT ESTABLISHED. MOST OF THE P AYMENTS HAVE BEEN MADE THROUGH A/C PAYEE CHEQUES IS A MATTER OF RECORD AND THEREFORE, GENUINENESS OF THE TRANSACTION OF THESE PARTIES CANNOT BE DOUBT ED AND ACCORDINGLY CREDITWORTHINESS CAN ALSO NOT BE DOUBTED OF THE SAI D PARTIES, WHICH IS THE MAIN OBJECTION OF THE AO, WHO HAS DOUBTED THE IDENT ITY, CREDITWORTHINESS AND GENUINENESS OF THE SAID PARTIES. IN THE FACTS AND CIRCUMSTANCES OF THE CASE, EVEN IF THE CREDITORS ARE NOT TRACEABLE AND T HE LETTERS REMAINED UNSERVED, THE ASSESSEE CANNOT BE PENALIZED AND WHOL E OF THE PURCHASES WHERE THE PAYMENTS HAVE BEEN MADE THROUGH A/C PAYEE CHEQUES OR THROUGH ITA NO.501(ASR)/2013 5 CASH CANNOT BE DOUBTED AND PARTIES ITSELF CANNOT BE TREATED AS BOGUS. ACCORDINGLY, THE LD. COUNSEL FOR THE ASSESSEE PRAYE D TO DELETE THE ADDITION CONFIRMED BY THE LD. CIT(A). 5. THE LD. DR, SH. MAHAVIR SINGH, ON THE OTHER HAND , RELIED UPON THE ORDERS OF THE AUTHORITIES BELOW. 6. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE FACTS OF THE CASE. WITH REGARD TO THE PURCHASES MADE FROM THE SAID FIV E PARTIES, THERE IS NO DISPUTE TO THE FACT ON PERUSAL OF THE COPIES OF ACC OUNTS THAT THE ASSESSEE HAD MADE THE PAYMENTS THROUGH A/C PAYEE CHEQUES AS WELL TO ALL THE FIVE PARTIES. THE PAYMENTS HAVE BEEN MADE TO THE SAID PARTIES IN CASH AS WELL IS ALSO NOT DENIED. THE AO HAS NOT REJECTED THE BOOKS OF ACCOUN T AND HAS NOT INVOKED THE PROVISIONS OF SECTION 145(3) OF THE ACT. ON THE OTHER HAND, THE AO HAS ACCEPTED THE CONTRACT RECEIPTS ARE ALSO NOT IN DISP UTE. AT THE OUTSET, ONCE THE CONTRACT RECEIPTS HAVE BEEN ACCEPTED BY THE AO, THE N SUCH CONTRACT RECEIPTS CAN BE POSSIBLE ONLY WHEN CERTAIN PURCHASES ARE MAD E. IT IS ALSO NOT IN DISPUTE THAT ALL THE AFORESAID FIVE PARTIES HAVE MA DE PAYMENTS THROUGH A/C PAYEE CHEQUES, AS MENTIONED HEREINABOVE. IT IS ALSO NOT IN DISPUTE THAT THE CASH PAYMENTS HAVE ALSO BEEN MADE BY THESE PARTIES ON DIFFERENT OCCASIONS. THEREFORE, IT IS NOT UNDER DOUBT THAT THE IDENTITY OF THE SAID PARTIES CANNOT BE ITA NO.501(ASR)/2013 6 UNDER DISPUTE. THE VERY BASIS ON WHICH THE AO HAD M ADE ADDITION IS THAT THE ASSESSEE HAS NOT BEEN ABLE TO ESTABLISH THE IDENTIT Y, CREDITWORTHINESS AND GENUINENESS OF THE SAID PARTIES. EVEN THE LETTERS REMAINED UNSERVED AND THE SUPPLIERS I.E. PARTIES WHO HAD SUPPLIED THE GOODS TO THE PARTIES AT CHANGED ADDRESSES AND DID NOT CONFIRM THE SAME OR THE LETTE RS ARE NOT SERVED UPON THEM BECAUSE THEY HAVE CHANGED THE ADDRESSES, THEN THE ASSESSEE CANNOT BE PENALIZED BY HOLDING THE SAID PURCHASES IN TOTO AS BOGUS OR TREATING THE SAID PARTIES AS BOGUS PARTIES. THE DUTY OF THE AO IS TO DEDUCE THE CORRECT INCOME IN THE FACTS AND CIRCUMSTANCES OF THE CASE. IN THE PRESENT CASE, THE ASSESSEE HAS DEFINITELY MADE THE PURCHASES FROM THE MANY PAR TIES INCLUDING THE ABOVE SAID FIVE PARTIES WHOSE IDENTITY CANNOT BE DOUBTED. AS REGARDS THE GENUINENESS AND CREDITWORTHINESS OF THE TRANSACTION S WITH THE SAID FIVE PARTIES, THE ASSESSEE DEFINITELY HAD MADE PURCHASES EVEN IF THE LETTERS REMAINED UNSERVED OR THE PARTIES HAVE DENIED SINCE THE AO HAS NOT REJECTED THE BOOKS OF ACCOUNT U/S 145(3) OF THE ACT AND CONT RACT RECEIPTS IN TOTO HAVE BEEN ACCEPTED. THUS, IN THE FACTS AND CIRCUMSTANCES , NO ADDITION CAN BE MADE ON ACCOUNT OF THE PURCHASES, ONCE THE BOOKS OF ACCOUNT HAVE NOT BEEN REJECTED AND PROVISIONS OF SECTION 145(3) OF THE AC T ARE NOT INVOKED BY THE AO. IN THE FACTS AND CIRCUMSTANCES, THE AO IS NOT J USTIFIED IN MAKING ANY ADDITION ON ACCOUNT OF SAID FIVE PARTIES. THE ADDIT IONS SUSTAINED BY THE LD. ITA NO.501(ASR)/2013 7 CIT(A) ARE DIRECTED TO BE DELETED. ACCORDINGLY, ALL THE GROUNDS OF THE ASSESSEE ARE ALLOWED. 7. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IN ITA NO.501(ASR)/2013 IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 17TH JANUARY, 2014. SD/- SD/- (H.S. SIDHU) (B.P. JAIN) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 17TH JANUARY, 2014 /SKR/ COPY OF THE ORDER FORWARDED TO: 1. THE ASSESSEE:M/S. SARTAJ AHMAD KHUROO, SRINAGAR. 2. THE DCIT, SRINAGAR CIRCLE 3. THE CIT(A), JAMMU 4. THE CIT, JAMMUS 5. THE SR DR, ITAT, AMRITSAR. TRUE COPY BY ORDER (ASSISTANT REGISTRAR) INCOME TAX APPELLATE TRIBUNAL, AMRITSAR BENCH: AMRITSAR