ITO, New Delhi V. Sh Paramjit Singh Saluja, Delhi

ITA 5230/DEL/2012

• Counselvise Citation: [2012] 140 COUNSELVISE.COM (IT) 66023 (ITAT-DELHI)
• Duration Of Justice: 2 month(s) 4 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 14-12-2012
• Appeal Filed By: Department
• Order Result: Partly Allowed
• Bench Allotted: F
• Assessment Year: 2009-2010
• Appeal Filed On: 10-10-2012
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Assessee Lawyers: J M KALRA
• Keywords: Opportunity of being heard
• Section: 133(6)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH F: NEW DELHI BEFORE SHRI JOGINDER SINGH, JUDICIAL MEMBER AND SHRI B.C. MEENA, ACCOUNTANT MEMBER I.T.A. NO.5230/DEL/2012 ASSESSMENT YEAR : 2009-10 INCOME-TAX OFFICER, SHRI PARAMJIT SINGH SALUJA, WARD-29(3), NEW DELHI. VS. 915, KUCHA KABIL, ATTAR , CHANDNI CHOWK, DELHI-110006. PAN : AATPS0350G (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI RAJESH KUMA R, SR. DR. RESPONDENT BY : SHRI J.M. KALRA, A DVOCATE. DATE OF HEARING : 11-12-2012 DATE OF PRONOUNCEMENT : 14-12-2012 O R D E R PER JOGINDER SINGH, JUDICIAL MEMBER THE REVENUE IS AGGRIEVED BY THE IMPUGNED ORDER DATE D 28 TH AUGUST, 2012 PASSED BY THE LEARNED FIRST APPELLATE AUTHORIT Y, NEW DELHI. THE FIRST GROUND RAISED IS THAT THE LEARNED CIT(A) WAS NOT JU STIFIED IN DELETING THE ADDITION OF RS.57,00,174/- AS THE ASSESSEE IS MAINT AINING MERCANTILE SYSTEM OF ACCOUNTING AND CREDIT NOTES PERTAINING TO THIS Y EAR SHOULD HAVE BEEN CREDITED IN THE PROFIT AND LOSS ACCOUNT OF THIS YEA R ONLY. ITA NO.5230/DEL/2012 2 2. DURING HEARING WE HAVE HEARD SHRI RAJESH KUMAR, LEARNED SR. DR AND SHRI J.M. KALRA, LEARNED COUNSEL FOR THE ASSESSEE. THE CRUX OF ARGUMENTS ON BEHALF OF THE REVENUE IS IN SUPPORT TO THE ASSESSME NT ORDER BY FURTHER SUBMITTING THAT THE AMOUNT PAYABLE WAS MORE THAN RS .2 CRORES, PURCHASES ARE ALREADY BOOKED, THE ASSESSEE IS FOLLOWING MERCANTIL E SYSTEM OF ACCOUNTING AND OVER ALL CREDIT NOTES ARE COMING FROM THE SAME SUPPLIER THEN HOW THE CASH SYSTEM CAN BE FOLLOWED. ON THE OTHER HAND, TH E LEARNED COUNSEL FOR THE ASSESSEE STRONGLY DEFENDED THE IMPUGNED ORDER BY IN VITING OUR ATTENTION TO PARA 2 (PAGE 2) OF THE ASSESSMENT ORDER. ON QUESTI ONING FROM THE BENCH REGARDING THE FINALIZATION OF ACCOUNT BY THE ASSESS EE, IT WAS FAIRLY AGREED BY THE LEARNED COUNSEL THAT THE ACCOUNT OF THE ASSESSE E AS WELL AS OF M/S. REID & TAYLOR ARE CLOSING IN MARCH END. 3. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND PER USED THE MATERIAL AVAILABLE ON RECORD. THE FACTS IN BRIEF ARE THAT T HE ASSESSEE IS AN AUTHORIZED WHOLESALER OF M/S. REID & TAYLOR AND IS ENGAGED IN THE SALE OF CLOTH SUPPLIED BY THE SAID COMPANY. AS PER THE BOOKS OF ACCOUNT OF THE ASSESSEE THE OPENING BALANCE, AS ON 1.04.2008, WITH THE SAID COMPANY WAS RS.1,65,60,258/-. DURING THE ASSESSMENT YEAR THE A SSESSEE MADE FURTHER PURCHASES OF RS.3,27,54,912/-. THE ASSESSEE REGULA RLY USED TO RECEIVE CREDIT NOTES. THE ASSESSEE SHOWED SUNDRY CREDITORS OF RS. 2,08,59,662/-, OUT OF ITA NO.5230/DEL/2012 3 WHICH, RS.2,05,73,619/- WAS FROM M/S. REID & TAYLOR . IN ORDER TO VERIFY THE GENUINENESS OF THE CREDITORS THE ASSESSING OFFICER ISSUED LETTERS UNDER SEC. 133(6) TO THE PARTIES. AS PER THE COPY OF ACCOUNT FROM M/S. REID & TAYLOR, A CLOSING DEBIT BALANCE OF RS.1,48,73,445/- WAS MADE AVAILABLE TO THE AO. THE ASSESSEE WAS ASKED TO EXPLAIN THE DIFFERENCE IN THE CLOSING BALANCE SHOWN BY THE ASSESSEE AMOUNTING TO RS.2,05,73,619/- AS SHOWN BY M/S. REID & TAYLOR AT RS.1,48,73,445/-. THE ASSESSEE VIDE LE TTER DATED 16 TH DECEMBER, 2011 MADE HIS SUBMISSIONS WHICH HAVE BEEN REPRODUCE D IN THE ASSESSMENT ORDER. THE STAND OF THE REVENUE IS THAT IF THE ASS ESSEE WANTED TO SQUARE UP THE ACCOUNT, M/S. REID & TAYLOR WILL ONLY ACCEPT RS .1,48,73,445/- AND NOT RS.2,05,73,619/- AS SHOWN BY THE ASSESSEE. THE DIF FERENCE OF RS.57,00,174/- WAS ADDED TO THE INCOME OF THE ASSESSEE BY THE AO. ON APPEAL, THE LEARNED CIT(A) CONCLUDED THAT THERE IS NO ACTUAL CESSATION OF LIABILITY, THEREFORE, THERE IS NO APPLICATION OF PROVISION OF SEC. 41(1) AND THUS, THE ADDITION WAS DELETED. THE AGGRIEVED REVENUE IS IN APPEAL BEFORE THIS TRIBUNAL. IF THE TOTALITY OF FACTS IS ANALYZED UNDISPUTEDLY THE ASSE SSEE IS FOLLOWING MERCANTILE SYSTEM OF ACCOUNTING, THEREFORE, THE CREDIT NOTES R ELATE TO PURCHASE. EVEN THE CREDIT NOTES ARE COMING FROM THE SAME SUPPLIER. C ONSEQUENTLY WE ARE OF THE OPINION THAT FRESH EXAMINATION IS REQUIRED AT THE L EVEL OF THE ASSESSING OFFICER TO EXAMINE THE AUTHENTICITY OF THE CLAIM OF THE ASSESSEE. EVEN IN ITA NO.5230/DEL/2012 4 REPLY DATED 16 TH DECEMBER, 2011, ADDRESSED TO THE ITO BY THE ASSESS EE (PARA 3) THE ASSESSEE HIMSELF HAS MENTIONED THAT FROM THE STATEMENT OF ACCOUNT OF M/S. REID & TAYLOR VARIOUS TRANSACTIONS OF CREDIT N OTES RELATING TO PREVIOUS YEARS HAVE BEEN ACCOUNTED FOR IN THE ASSESSMENT YEA R 2009-10 AND THE ASSESSEE CANNOT ACCOUNT FOR THESE TRANSACTIONS IN T HE RELEVANT YEARS ON MERCANTILE BASIS. IN PARA 5 OF THE SAME LETTER IT HAS BEEN CLAIMED THAT THE ASSESSEE HAS ACCOUNTED FOR ALL CREDIT NOTES RECEIVE D BEFORE FINALIZATION OF BOOKS AND THE OTHER CREDIT NOTES WHICH WERE RECEIVE D AFTER THE CLOSE OF THE BOOKS HAVE BEEN ENTERED/ACCOUNTED FOR IN SUBSEQUENT YEARS. THE ASSESSING OFFICER HAS NOT EXAMINED THIS CLAIM OF THE ASSESSEE . THEREFORE, FROM THIS ANGLE ALSO THE ISSUE REQUIRES RECONSIDERATION. CON SEQUENTLY, WE REMAND THIS ISSUE TO THE FILE OF THE ASSESSING OFFICER FOR FRES H EXAMINATION. THE ASSESSEE BE PROVIDED DUE OPPORTUNITY OF BEING HEARD WITH FUR THER LIBERTY TO FURNISH EVIDENCE, IF ANY, TO SUBSTANTIATE HIS CLAIM. THIS GROUND IS, THEREFORE, ALLOWED FOR STATISTICAL PURPOSES ONLY. 4. THE NEXT GROUND PERTAINS TO ADDITION OF RS.18,50 0/-. THE CRUX OF ARGUMENTS ON BEHALF OF THE REVENUE IS IDENTICAL TO THE GROUND RAISED WHEREAS THE LEARNED COUNSEL FOR THE ASSESSEE DEFENDED THE I MPUGNED ORDER. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND PERUSED THE MA TERIAL AVAILABLE ON RECORD. THERE IS A FINDING IN THE IMPUGNED ORDER T HAT THE OUTSTANDING LIABILITY WAS IN RESPECT OF M/S. S. KUMAR LIMITED A ND THE SAME HAS BEEN WRITTEN OFF AND TAKEN AS INCOME IN ASSESSMENT YEAR 2012-13. CONSEQUENTLY, ITA NO.5230/DEL/2012 5 WE FIND NO INFIRMITY IN THE CONCLUSION DRAWN IN THE IMPUGNED ORDER ON THIS ISSUE. IT IS AFFIRMED. 5. FINALLY, APPEAL OF THE REVENUE IS PARTLY ALLOWED FOR STATISTICAL PURPOSES. 6. THIS ORDER IS PRONOUNCED IN THE OPEN COURT ON 14 TH DECEMBER, 2012. SD/- SD/- ( B.C. MEENA) (JOGINDER SINGH) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 14 TH DECEMBER, 2012. COPY OF THE ORDER FORWARDED TO:- 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR BY ORDER *MG DEPUTY REGISTRAR, ITAT.