M/s. Mydeen Packagings, CHENNAI V. ITO, Pondicherry

ITA 517/CHNY/2011

• Counselvise Citation: 51721714 RSA 2011
• Duration Of Justice: 3 year(s) 10 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 22-01-2015
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 22-01-2015
• Assessment Year: 2007-2008
• Appeal Filed On: 22-03-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: P RADHAKRISHNAN
• Assessee Lawyers: S SRIDHAR
• Keywords: Unexplained cash credit
• Section: 131; 68; 40A(3)

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH, CHENNAI .. , , ! '# BEFORE SHRI B.R.BASKARAN, ACCOUNTANT MEMBER AND SHRI VIKAS AWASTHY, JUDICIAL MEMBER ./ ITA NO.517/MDS/2011 / ASSESSMENT YEAR : 2007-08 M/S. MYDEEN PACKAGINGS, NO.C-12, INDUSTRIAL ESTATE, THATTANCHAVADY, PONDICHERRY 605 009. PAN: AAGFM 9123 N APPELLANT) V. THE INCOME TAX OFFICER, WARD I(1), PONDICHERRY 605 009. RESPONDENT) / APPELLANT BY : SHRI S. SRIDHAR, ADVOCATE / RESPONDENT BY : SHRI P.RADHAKRISHNAN, JCIT !' / DATE OF HEARING : 22.01.2015 #$ !' / DATE OF PRONOUNCEMENT: 22.01.2015 $ / O R D E R PER VIKAS AWASTHY, JUDICIAL MEMBER THE APPEAL HAS BEEN FILED BY THE ASSESSEE IMPUGNI NG THE ORDER OF THE COMMISSIONER OF INCOME-TAX(APPEALS)-XI I, CHENNAI, DATED 11.01.2011 FOR THE ASSESSMENT YEAR 2007-08. T HE ASSESSEE HAS FILED APPEAL WITH ELABORATE 16 GROUNDS . HOWEVER, - - I.T.A. NO.517/MDS/2011 2 THE CRUX OF THE ISSUES RAISED BY THE ASSESSEE IN AP PEAL ARE AS UNDER:- (I) GROSS PROFIT ADDITION OF ` 12,35,816/- ON UNACCOUNTED PURCHASES; (II) DISALLOWANCE OF ` 14,08,973/- UNDER SECTION 40A(3) OF THE INCOME-TAX ACT, 1961 (IN SHORT 'THE ACT'); A ND (III) UNEXPLAINED CREDIT OF ` 22,08,042/- UNDER SECTION 68 OF THE ACT. 2. THE BRIEF FACTS OF THE CASE AS EMANATING FROM TH E RECORD ARE: THE ASSESSEE IS A PARTNERSHIP FIRM AND IS ENGAGED I N MANUFACTURING OF PRINTED POLYTHENE POUCHES. THE AS SESSEE FILED ITS RETURN OF INCOME FOR ASSESSMENT YEAR 2007-08 ON 26.03.2009 DECLARING INCOME OF ` 8,310/-. THE CASE OF THE ASSESSEE WAS SELECTED FOR SCRUTINY AND NOTICE UNDER SECTION 143( 2) WAS ISSUED TO THE ASSESSEE ON 12.08.2009. DURING THE COURSE O F SCRUTINY ASSESSMENT, A SWORN STATEMENT OF SHRI T.E.A. HALEED , MANAGING PARTNER OF THE ASSESSEE FIRM WAS RECORDED UNDER SE CTION 131 OF THE ACT ON 21.12.2009. ON THE BASIS OF THE STATEME NT, FOLLOWING ADDITIONS WERE MADE BY THE A.O.:- GROSS PROFIT ADDITION ON UNACCOUNTED PURCHASES ` 12,35,816/- DISALLOWANCE UNDER SECTION 40A(3) ` 14,08,973/- UNEXPLAINED CREDITS UNDER SECTION 68 ` 22,08,042/- - - I.T.A. NO.517/MDS/2011 3 AGGRIEVED BY THE ASSESSMENT ORDER DATED 31.12.200 9, THE ASSESSEE PREFERRED AN APPEAL BEFORE THE CIT(APP EALS). THE CIT(APPEALS) VIDE IMPUGNED ORDER UPHELD THE FINDING S OF THE ASSESSING OFFICER AND DISMISSED THE APPEAL OF THE A SSESSEE . AGAINST THE ORDER OF THE FIRST APPELLATE AUTHORIT Y, THE ASSESSEE HAS COME IN SECOND APPEAL BEFORE THE TRIBU NAL. 3. SHRI S. SRIDHAR, ADVOCATE, APPEARING ON BEHALF O F THE ASSESSEE, SUBMITTED THAT THERE ARE DISCREPANCIES AN D CONTRADICTIONS IN THE ASSESSMENT PROCEEDINGS. THE REVENUE AUTHORITIES VISITED THE FACTORY PREMISES ON 15.12.2 009. THE STATEMENT OF THE MANAGING PARTNERS OF THE ASSESSEE- FIRM WAS RECORDED ON 21.12.2009. IN THE STATEMENT, ONE OF T HE QUESTIONS, WHICH WAS PUT TO THE ASSESSEE WAS WITH REGARD TO PU RCHASE REGISTER. THE SAID PURCHASE REGISTER IS THE SOLE D OCUMENT FOR MAKING ADDITIONS. HOWEVER, THE SAID REGISTER WAS I MPOUNDED BY THE ASSESSING OFFICER ON 29.12.2009. IT IS HIGHLY IMPROBABLE THAT BEFORE IMPOUNDING OF THE REGISTER, IT WAS PUT TO TH E ASSESSEE AT THE TIME OF RECORDING HIS STATEMENT UNDER SECTION 1 31 OF THE ACT ON 21.12.2009. THE LD. COUNSEL FOR THE ASSESSEE FU RTHER SUBMITTED THAT THE PURCHASE REGISTER WAS NEVER IN P OSSESSION OF - - I.T.A. NO.517/MDS/2011 4 THE ASSESSEE. THE ACCOUNTS WERE MAINTAINED BY THE ACCOUNTANT WHO HAD LATER ESTRANGED RELATIONS WITH THE MANAGING PARTNERS OF THE ASSESSEE-FIRM. IT WAS AT HIS INSTANCE THAT THE PURCHASE REGISTER WAS PLANTED. THE SAID REGISTER WAS NOT IM POUNDED FROM THE BUSINESS PREMISES OF THE ASSESSEE. THE LD.COUN SEL FOR THE ASSESSEE CONTENDED THAT THE ADDITION HAS BEEN MADE MERELY ON THE BASIS OF THE STATEMENT OF THE MANAGING PARTNER OF THE ASSESSEE-FIRM. THERE IS NO CORROBORATIVE EVIDENCE IN SUPPORT OF THE ADDITIONS MADE. THE STATEMENT WAS RECORDED UND ER UNDUE INFLUENCE, THEREFORE, IT HAS GOT NO EVIDENTIARY VAL UE. IN ORDER TO SUPPORT HIS SUBMISSIONS, THE LD. COUNSEL PLACED REL IANCE ON THE DECISION OF HON'BLE MADRAS HIGH COURT IN THE CASE O F CIT V. S. KHADER KHAN SON REPORTED IN 300 ITR 157 AND CBDT IN STRUCTION DATED 10.03.2013. 4. ON THE OTHER HAND, SHRI P. RADHAKRISHNAN, JCIT, REPRESENTING THE DEPARTMENT, STRONGLY SUPPORTED THE FINDINGS OF THE CIT(APPEALS). THE LD. D.R. CONTENDED THAT THE ASSESSEE IN HIS SWORN STATEMENT RECORDED UNDER SECTION 131 OF T HE ACT HAD ADMITTED THE CONTENTS OF THE LEDGER CONTAINING DETA ILS OF PURCHASES. - - I.T.A. NO.517/MDS/2011 5 5. WE HAVE HEARD THE SUBMISSIONS MADE BY THE REPRESENTATIVES OF BOTH THE SIDES AND HAVE PERUSED THE ORDERS OF AUTHORITIES BELOW. WE HAVE ALSO EXAMINED THE DOCUM ENTS PLACED ON RECORD IN THE FORM OF PAPER-BOOK BY THE R EVENUE WHICH CONTAINS THE STATEMENT OF THE ASSESSEE DATED 21.12.2009, MEMO DATED 29.12.2009 VIDE WHICH THE REGISTER CONTA INING DETAILS OF PURCHASE FROM APRIL 2006 TO MARCH 2007 W AS IMPOUNDED, ETC. A PERUSAL OF THE IMPUGNED ORDER SH OWS THAT THE BASIS OF ALL THE THREE ADDITIONS IS PRIMARILY A PUR CHASE REGISTER. IN THE STATEMENT RECORDED ON 21.12.2009, THE ASSESSEE HAS ADMITTED THE CONTENTS OF THE REGISTER. HOWEVER, IT IS SURPRISING THAT THE REGISTER WHICH WAS IMPOUNDED ON 29.12.2009 WAS USED BY THE REVENUE FOR QUESTIONING THE ASSESSEE ON 21.1 2.2009. THE REVENUE HAS FAILED TO ANSWER THIS QUESTION. TH IS CASTS A SERIOUS SHADOW OF DOUBT OVER THE PROCEEDINGS AND TH E MANNER IN WHICH THE ASSESSMENT HAS BEEN FRAMED. THE BASIS FO R ALL THE ADDITIONS IS THE PURCHASE REGISTER. IF THE PURCHAS E REGISTER IS FABRICATED/PLANTED, THEN THE ENTIRE ASSESSMENT IS V ITIATED. IN THE PECULIAR FACTS OF THE CASE, WE ARE OF THE CONSIDERE D VIEW THAT THE CASE FILE NEEDS A REVISIT TO THE ASSESSING OFFICER. THE IMPUGNED ORDER IS SET ASIDE AND THE FILE IS REMITTED BACK TO THE ASSESSING - - I.T.A. NO.517/MDS/2011 6 OFFICER TO EXAMINE THE TRUE FACTS OF THE CASE, ESPE CIALLY, THE VERACITY OF THE PURCHASE REGISTER WHICH IS THE BASI S FOR ALL THE ADDITIONS. 6. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALL OWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT AT THE TIME OF HEARING, ON THURSDAY, THE 22 ND OF JANUARY, 2015 AT CHENNAI. SD/- SD/- ( %&&%' ) ( ( ') *&+&*,-.,/,0) 12.,-34,-567) ' 8'399:;05,05<=>?=/ @ 8' /JUDICIAL MEMBER A@ /CHENNAI, B8 /DATED, THE 22 ND JANUARY, 2015. KRI. 8C D(E( /COPY TO: 1. /APPELLANT 2. /RESPONDENT 3. F ) /CIT(A)-XII, CHENNAI-34 4. F /CIT, PONDICHERRY 5. (GH I /DR 6. HJK /GF.