THE DY. CIT-1(1), RAIPUR (CG) V. SHRI M. CHALAPATI RAO, RAIPUR (CG)

ITA 54/BIL/2013

• Counselvise Citation: [2016] 132 COUNSELVISE.COM (IT) 1421 (ITAT-RAIPUR)
• Duration Of Justice: 2 year(s) 9 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 22-04-2016
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Assessment Year: 2009-2010
• Appeal Filed On: 15-07-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SHEETAL VERMA
• Assessee Lawyers: R B DOSHI
• Keywords: Unexplained cash credit
• Section: 133(6); 68

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL RAIPUR BENCH, RAIPUR BEFORE SHRI SHAMIM YAHYA , HONBLE ACCOUNTANT MEMBER & SHRI PARTHA SARATHI CHAUDHURY , HONBLE JUDICIAL MEMBER ITA NO. 54 / R PR /201 3 (ASST. YEAR : 200 9 - 1 0 ) DCIT - 1(1 ), RAIPUR. VS. SHRI M. CHALAPATI RAO, PROP. RATNAM INDUSTRIES, HIG - 18, MARUTI ENCLAVE, TATIBANDH, RAIPUR. PAN NO. AFHPR 4931 H (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI R.B. DOSHI ADV. DEPARTMENT BY : SMT. SHEETAL VERMA - DR . DATE OF HEARING : 21 / 04/2016 . DATE OF PRONOUNCEMENT : 22 / 04 /201 6 . O R D E R PER SHAMIM YAHYA , ACCOUNTANT MEMBER THIS APPEAL BY THE REVENUE IS DIRECTED AGAINST THE ORDER OF COMMISSIONER OF INCOME TAX (APPEALS), RAIPUR , DATED 2 1 /0 3 /201 3 AND PERTAINS TO ASSESSMENT YEAR 200 9 - 1 0. 2. REVENUE HAS RAISED THE FOLLOWING GROUND OF APPEAL: - WHETHER IN LAW AND ON FACTS & CIRCUMSTANCES OF THE CASE, THE CIT(A) HAS ERRED IN DELETING THE ADDITION OF RS. 42,95,432/ - MADE BY THE ASSESSING OFFICER UNDER SEC. 6 8 OF THE IT ACT, 1961 . 3 . IN THIS CASE , THE A.O HAS STATED THAT THE APPELLANT WAS ASKED TO PROVIDE DETAILS OF SUNDRY CREDITORS WITH NAME, ADDRESS AND AMOUNT 2 ITA NO. 84 / RPR /201 3 OUTSTANDING AGAINST IT; THAT THE SAME WERE VERIFIED FROM THE BOOKS OF ACCOUNTS PRODUCED BEFORE US FOR VERIFICATION ON TEST BASIS; THAT ON THE BASIS OF ADDRESS PROVIDED BY THE APPELLANT OF THE CREDITORS, CERTAIN CREDITORS WERE ISSUED LETTER U/S 133(6) OF TH E INCOME TAX ACT, 1961 TO REPLY TO SPECIFIC POINTS AND CONFIRM THEIR OUTSTANDING BALANCES IN THE BOOKS OF THE APPELLANT; THAT REPLIES WERE RECEIVED FROM THE CREDITORS WHICH ARE PLACED IN RECORD, EXCEPT ONE CREDITOR M/S SEVEN HILLS OVERSEAS LIMITED OF BHUWA NESHWAR AGAINST WHICH TOTAL CREDIT STAND FOR RS.42,95,432/ - IN THE BOOKS OF THE APPELLANT AS ADVANCE FROM CUSTOMERS; THAT SUCH CREDITOR HAS NOT REPLIED TO SUCH LETTER; THAT ON THE VERIFICATION OF LEDGER ENTRIES IN PARTY'S ACCOUNT, THERE ARE ONLY TWO ENTRIE S I.E. ONE DEBIT ENTRY OF RS.5,04,568/ - ON 28.02.2009 FOR SALE AND SECOND ENTRY IS CREDIT ON 03.03.2009 BY PASSING JOURNAL ENTRY OF RS.48,00,000/ - , THUS RESULT OF CREDIT BALANCE OF RS.42,95,432/ - IN SUCH PARTY'S ACCOUNT; THAT THE APPELLANT HAS FAILED TO OB TAIN AND SUBMIT THE CONFIRMATION OF CREDIT BALANCE OF SUCH PARTY; THAT THE APPELLANT WHO WAS REQUIRED TO SUBMIT NEXT YEAR'S DETAILS IN SUCH CREDITOR'S ACCOUNT TO INDICATE THAT SUCH CREDIT IS EITHER PAID /ADJ USTED OR CLEARED THROUGH SALES ETC; THE ENQUIRY WA S ALSO CONDUCTED BY THE INSPECTOR OF THE OFFICE; THAT IT ALSO REVEALED THAT THERE IS NO SUCH COMPANY LOCATED AT THE ADDRESS GIVEN BY THE APPELLANT; THAT FURTHER INQUIRY CONDUCTED FROM THE NEARBY BUSINESS HOUSES REVEALED THAT - SUCH COMPANY HAS NO MAJOR BUSIN ESS AS SUCH AND MERELY IS AN ENTRY PROVIDER; THAT THE APPELLANT HAS FAILED TO FULFIL THE FOLLOWING INGREDIENTS OF SECTION 68 OF THE INCOME TAX ACT WHICH IS: - 3 ITA NO. 84 / RPR /201 3 (I) TO PROVIDE IDENTITY OF THE CREDITOR; (II) CREDITWORTHINESS OF SUCH CREDITOR AND (III) GENUINENESS OF THE TRANSACTION THE A.O STATED THAT THE CREDIT BALANCE OF RS.42,95,432/ - REMAINS UN CONFIRMED . HENCE, HE ADDED THE SAME TO THE INCOME OF THE ASSESSEE. 4 . UPON HEARING THE ASSESSEES APPEAL, THE LD. CIT(A) DECIDED THE ISSUE IN FAVOUR OF THE ASSESSEE . HE HELD AS UNDER: - 6. I HAVE CAREFULLY GONE THROUGH THE ASSESSMENT ORDER, AND SUBMISSIONS OF THE APPELLANT AND THE REMAND REPORT DATED 08.03.2013 RECEIVED FRO M THE A.O. THE SINE QUA NON OF THE APPELLANT'S SUBMISSION IS THAT THE APPELLANT HAD RECEIVED ADVANCE AGAINST SALE AND THAT THE UNEXPLAINED CASH CREDIT UNDER QUESTION WAS SQUARED UP IN THE SUBSEQUENT YEAR AGAINST THE SALES MADE BY THE APPELLANT IN THE NORMA L COURSE OF THE BUSINESS. THE APPELLANT DID FURNISH SUFFICIENT EVIDENCES IN THE FORM OF AUDITED FINANCIAL STATEMENTS OF REKTOR MINES AND MINERALS LIMITED (FORMERLY KNOWN AS SEVEN HILLS OVERSEAS LIMITED), CORRESPONDENCE BETWEEN THE APPELLANT AND SAID PARTY, BANK OF THE APPELLANT TO ESTABLISH THAT THE PAYMENT WAS RECEIVED THROUGH PROPER BANKING C OPY OF ACCOUNT OF THE SAID PARTY, COPIES OF SALES INVOICES RAISED BY THE APPELLANT TO THE SAID PARTY AGAINST SALE OF GOODS, COPY OF ACCOUNT OF THE SAID PARTY FOR THE SUBSEQUENT YEAR I.E. P.Y 2009 - 10 TO ESTABLISH THAT THE APPELLANT DID RECEIVE FURTHER PAYME NTS FROM THE SAID PARTY AND THE SAME WAS ADJUSTED AGAINST THE SALES MADE BY THE APPELLANT TO THE SAID PARTY, SEARCH REPORT FROM COMPANY SECRETARIES, MOA/AOA OF THE SAID PARTY. FROM THE PERUSAL OF DOCUMENTS FURNISHED BY THE APPELLANT, PRIMA FACIE, IT WAS QU ITE APPARENT THAT THE APPELLANT IS REGULARLY TRANSACTING BUSINESS WITH THE SAID PARTY AND ADVANCE WAS RECEIVED IN THE NORMAL COURSE OF THE BUSINESS, HENCE, THE A.O WAS DIRECTED TO SUBMIT REMAND REPORT ON VERACITY OF THE EVIDENCES FURNISHED BY THE APPELLANT , PARTICULARLY, AS THE SAID DOCUMENTS WERE VITAL IN DETERMINING THE OUTCOME OF THE APPEAL. IN THE REMAND REPORT, THE A.O REITERATED THE CONTENTS OF THE ASSESSMENT ORDER. I HAVE CAREFULLY EXAMINED THE EVIDENCES PLACED BEFORE ME A COPY OF WHICH WAS ALSO FURN ISHED TO THE A.O, I AM OF THE CONSIDERED OPINION THAT MERELY BECAUSE THE APPELLANT COULD NOT FURNISH THE CONFIRMATION OF ACCOUNT FROM THE SAID PARTY OWING TO RIGID ATTITUDE OF THE SAID PARTY, ADVERSITY CANNOT BE HELD AGAINST THE APPELLANT. 4 ITA NO. 84 / RPR /201 3 CONVERSELY, MERE NON SERVICE OF THE LETTER OR NON RESPONSIVENESS OF THE CREDITOR IS NOT DECISIVE TO HOLD THAT THE CREDITOR IS BOGUS, THE CIRCUMSTANTIAL EVIDENCES ARE ALSO VERY VITAL TO COME TO A JUDICIOUS CONCLUSION. I AM CONVINCED THAT THE APPELLANT HAS BEEN ABLE TO DISC HARGE THE ONUS THAT LAY ON IT U/S 68 I.E. TO ESTABLISH THE IDENTITY AND CREDITWORTHINESS OF THE CREDITOR AND GENUINENESS OF THE TRANSACTION. 5. THEREAFTER , LD. CIT(A) REFERRED TO SEVERAL CASE LAWS FOR THE PROPOSITION THAT THE ASSESSING OFFICER HAS FAILED TO ESTABLISH HIS CASE AND HAS NOT DISCHARGED REQUISITE BURDEN CAST ON HIM. IN THIS REGARD, LD. CIT(A) REFERRED TO THE FOLLOWING CASE LAWS: - 1) KISHAN CHAND CHELLA RAM V . CIT (125 ITR 713) 2) CIT V . DAYA CHAND JAIN VAIDYA (98 ITR 280) 3) 26 ITR 776 (SC) 4) 37 ITR 288 (SC) 5) 63 ITR 449 (SC) 6) SREELEKHA BANERJEE AND OTHERS V. CIT (49 ITR 112) 7) UMACHARAN SHAW & BROS. V. CIT (37 ITR 271) ACCORDINGLY, LD. CIT(A) DELETED THE ADDITION. 6. AGAINST THE ABOVE ORDER, THE REVENUE IS IN APPEAL . 7 . WE HAVE HEARD BOTH THE COUNSEL AND PERUSED THE RECORD. L D. DEPARTMENTAL REPRESENTATIVE SUPPORTED THE ORDER OF THE ASSESSING OFFICER. 5 ITA NO. 84 / RPR /201 3 8 . PER CONTRA, LD. A R SUBMITTED THAT ASSESSING OFFICER HAS FAILED TO UNDERSTAND BY AC COUNTING ENTRIES AND THE FACTS OF THE CASE. LD. COUNSEL SUBMITTED THAT THE ASSESSEE HAS RECEIVED THE ADVANCE AT ITS HEAD OFFICE F ROM THE CONCERNED PARTY. THEREAFTER, THE AMOUNT INVOLVED WAS TRANSFERRED TO THE ASSESSEES BRANCH OFFICE BY JOURNAL ENTRY AS THE TRANSACTIONS RELATED TO THE SAID PARTY W ERE TO BE EXECUTED FROM THERE. LD . COUNSEL STATED THAT THIS ACCOUNTING ENTRY HAS NOT BEEN PROPERLY UNDERSTOOD BY THE ASSESSING OFFICER. LD . COUNSEL SUBMITTED THAT AGAINST THE ABOVE ADVANCE, THE ASSESSEE HAS DULY MADE SALES PARTLY IN THE CURRENT YEAR AS WELL AS TO THE LARGE EXTENT TO ASSESSMENT YEAR 2010 - 11 . THESE HAVE BEEN ACCEPTED BY THE DEPARTMENT. ONCE , THE AMOUNT IS ALREADY TREATED AS INCOME (SALES IN THE NEXT YEAR), THERE IS NO QUESTION OF TREATING THE SAME AS UNEXPLAINED CASH CREDIT IN THE CURRENT YEAR . LD.COUNSEL FURTHER SUBMITTED THAT THE ASSESSEE HAS DONE LARGE AMOUNT OF TRANSACTIONS WITH THE SAID PARTY . MERE INABILITY TO OBTAIN CONFIRMATION FROM THE SAID PARTY CANNOT BE TREATED AS REASON TO ADD PRO PERLY EXPLAINED ENTRY AS UNDISCLOSED CASH CREDIT . LD. COUNSEL FURTHER SUBMITTED THAT EXCEPT FOR ISSUING NOTICE UNDER SEC. 133(6) , THE ASSESSING OFFICER HAS NOT TAKEN ANY FURTHER ACTION TO ENSURE COMPLIANCE FROM THE SAID PARTY , W H EN THE ASSESSING OFFICER HAS DUE RE S ORTS AVAILABLE IN THE FORM OF PROVISIONS CONTAINED IN SEC. 131. LD. COUNSEL SUBMITTED THAT IN IDENTICAL CASE, THE HON'BLE APEX C OURT IN THE CASE OF CIT V ORISSA CORPORATION LTD. (159 ITR 78) HAS HELD THAT IN CASE OF OUTSTATI O N PARTIES, IF ASSESSING OFFICER CHOOSES 6 ITA NO. 84 / RPR /201 3 TO TAKE NO ACTION , OTHER THAN HE ISSUED LETTER UNDER SEC. 133( 6 ) , N ON - RESPONSE OF THESE LETTERS CANNOT LEAD TO A DISBELIEVE OF THE CREDIT. LD . COUNSEL SUBMITTED THAT THIS CASE LAW IS SQUARELY APPLICABLE ON THE FACTS OF THE CASE. LD. COUNSEL FURTHER STATED THAT THE ASSESSING OFFICER HAS MADE A REFERENCE TO THE ENQUIRY MADE BY THE INCOME TAX INSPECTOR . LD . COUNSEL SUBMITTED THAT ASSESSEE HAS NEVER BEEN CONFRONTED WITH THIS ENQUIRY DONE BEHIND BACK OF THE ASSESSEE. LD . COUNSEL SUBMITTED THAT IT IS NOW SETTLED LA W FROM THE APEX COURT THAT ENQUIRY DONE BEHIND BACK OF THE ASSESSEE CANNOT BE A BASIS OF DRAWING ADVERSE INFERENCE , UNLESS THE ASSESSEE IS CONFRONTED WITH THE SAME AND GIVEN AN OPPORTUNITY TO SUBMIT ITS CASE. 9 . UPON CAREFUL CONSIDERATION, WE FIND THAT LD. COUNSEL OF THE ASSESSEES SUBMISSIONS ABOVE , ARE FULLY COGENT. THE CASE LAWS RELIED UPON BY HIM , ARE ALSO APPLICABLE ON THE FACTS OF THE CASE. ACCORDINGLY, IN THE BACK GROUND, AFORESAID DISCUSSION AND PRECEDENTS, WE DO NOT FIND ANY INFIRMITY IN THE ORDER OF THE LD. CIT(A). ACCORDINGLY, WE UPHOLD THE SAME. 10. IN THE RESULT, THIS APPEAL FILED BY THE REVENUE STANDS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 22 /04/2016 . SD/ - SD/ - ( PARTHA SARATHI CHAUDHURY ) ( SHAMIM YAHYA ) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED : 22 ND APRIL , 201 6 . 7 ITA NO. 84 / RPR /201 3 VR/ - COPY TO: 1 . THE ASSESS E E. 2 . THE REVENUE. 3 . THE CIT 4 . THE CIT(A) 5 . THE D.R . 6 . GUARD FILE. BY ORDER ASSISTANT REGISTRAR I.T.A.T., RAIPUR.