ACIT, New Delhi V. M/s White Metals Industries (P) Ltd., New Delhi

ITA 5479/DEL/2010

• Counselvise Citation: [2011] 134 COUNSELVISE.COM (IT) 4299 (ITAT-DELHI)
• Duration Of Justice: 4 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 13-04-2011
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: I
• Next Hearing Date: 06-04-2011
• Assessment Year: 2006-2007
• Appeal Filed On: 06-12-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: A K KHANNA
• Keywords: Unexplained investment; Wrong claim

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL IN THE INCOME TAX APPELLATE TRIBUNAL IN THE INCOME TAX APPELLATE TRIBUNAL IN THE INCOME TAX APPELLATE TRIBUNAL (DELHI BENCH I : NEW DELHI) (DELHI BENCH I : NEW DELHI) (DELHI BENCH I : NEW DELHI) (DELHI BENCH I : NEW DELHI) BEFORE SHRI A.D. JAIN, JUDICIAL MEMBER AND BEFORE SHRI A.D. JAIN, JUDICIAL MEMBER AND BEFORE SHRI A.D. JAIN, JUDICIAL MEMBER AND BEFORE SHRI A.D. JAIN, JUDICIAL MEMBER AND SHRI K.D. RANJAN, ACCOUNTANT MEMBER SHRI K.D. RANJAN, ACCOUNTANT MEMBER SHRI K.D. RANJAN, ACCOUNTANT MEMBER SHRI K.D. RANJAN, ACCOUNTANT MEMBER ITA NO.5479/DEL./2010 ITA NO.5479/DEL./2010 ITA NO.5479/DEL./2010 ITA NO.5479/DEL./2010 (ASSESSMENT YEAR : 2006 (ASSESSMENT YEAR : 2006 (ASSESSMENT YEAR : 2006 (ASSESSMENT YEAR : 2006- -- -07) 07) 07) 07) ACIT, CIR.18(1), ACIT, CIR.18(1), ACIT, CIR.18(1), ACIT, CIR.18(1), VS. VS. VS. VS. WHITE METALS INDUSTRIES (P) WHITE METALS INDUSTRIES (P) WHITE METALS INDUSTRIES (P) WHITE METALS INDUSTRIES (P) LTD., LTD., LTD., LTD., NEW DELHI. NEW DELHI. NEW DELHI. NEW DELHI. 9009 9009 9009 9009- -- -11, D.B. GUPTA ROAD, 11, D.B. GUPTA ROAD, 11, D.B. GUPTA ROAD, 11, D.B. GUPTA ROAD, PAHARGANJ, PAHARGANJ, PAHARGANJ, PAHARGANJ, NEW DELHI. NEW DELHI. NEW DELHI. NEW DELHI. (PAN/GIR NO.AAACW1497Q) (PAN/GIR NO.AAACW1497Q) (PAN/GIR NO.AAACW1497Q) (PAN/GIR NO.AAACW1497Q) (APPELLANT) (APPELLANT) (APPELLANT) (APPELLANT) (RESPONDENT) (RESPONDENT) (RESPONDENT) (RESPONDENT) ASSESSEE BY : SHRI A.K. KHANNA, ASSESSEE BY : SHRI A.K. KHANNA, ASSESSEE BY : SHRI A.K. KHANNA, ASSESSEE BY : SHRI A.K. KHANNA, REVENUE BY : MS. BANITA DEVI NAORAM, SR.DR REVENUE BY : MS. BANITA DEVI NAORAM, SR.DR REVENUE BY : MS. BANITA DEVI NAORAM, SR.DR REVENUE BY : MS. BANITA DEVI NAORAM, SR.DR ORDER ORDER ORDER ORDER PER A.D. JAIN: JM PER A.D. JAIN: JM PER A.D. JAIN: JM PER A.D. JAIN: JM THIS IS DEPARTMENTS APPEAL FOR ASSESSMENT YEAR 2006-07, TAKING THE FOLLOWING GROUNDS: '1. THE LD.CIT(A) HAS ERRED ON FACTS AND IN LAW BY DE LETING ADDITION OF RS.40 LACS MADE U/S 69A ON ACCOUNT OF FALSE CLAIM OF REPAYMENT OF LOAN BY THE ASSESSEE ON THE BASIS O F THE EXPLANATION THAT THE CHEQUE OF RS.40 LACS ISSUED BY THE ASSESSEE WAS NOT PRESENTED BY THE OTHER PARTY M/S K.L.J .. PLASTICIZERS IN THE BANK IN ORDER TO EARN MORE INTERE ST, IGNORING THAT (II) IF THE ASSESSEE HAD ANY INTENTION OF SQUARING UP THE LOAN ACCOUNT DURING THE FINANCIAL YEAR 2005-06 THEN IT WOULD HAVE PERSUADED M/S K.L.J PLASTICIZERS TO PRESENT THE CHEQUE IN THE BANK INSTEAD OF REVERSING OF 22.4.2006 THE CONCERNED ENTRY MADE IN ITS BOOKS ON 31.3.2006. 2 (III) THERE IS NO EVIDENCE THAT THE CHEQUE OF RS.40 LACS ISSUED BY THE ASSESSEE ON 31.3.2006 WAS ACTUALLY GIVEN BY IT TO MIS K.L.J. PLASTICIZERS. (IV) IN THE FACTS AND CIRCUMSTANCES OF THE CASE THE EXPLANATION OF THE ASSESSEE THAT MIS K.L.J. PLASTICISERS D ID NOT PRESENT THE CHEQUE FOR PAYMENT WITH THE INTENTIO N OF EARNING MORE INTEREST IS NOT ACCEPTABLE. (V) SINCE THE ACCOUNTS OF THE AS4E FOR THE F.Y.2005-0 6 HAVE BEEN AUDITED AND THE AUDIT REPORT IS SIGNED BY THE AU DITORS ON 1.9.2006 THE CORRECT BALANCE OF `40 LACS SHOULD HA VE BEEN REFLECTED IN THE BALANCE SHEET AS ON 31.3.2006 INSTEAD OF SHOWING NIL BALANCE. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE TH E CIT(A) HAS ERRED IN DELETING THE ADDITION OF `40 LAC S MADE U/S 69A ON ACCOUNT OF WRONG CLAIM OF THE PAYMENT OF LOAN AS ON 31.3.2006 BY THE ASSESSEE TO M/S SHIVAS PLAST. 2. THE ASSESSEE, A LIMITED COMPANY WAS, DURING THE YEAR, CARRYING ON BUSINESS OF TRADING IN ALUMINIUM PRODUCTS. IT CLAIM ED REPAYMENTS OF LOANS OF RS.40 LAKHS TO K.L.J. PLASTICIZERS. IT WAS C ONTENDED THAT AT THE TIME OF RECEIVING THE LOAN ACCOUNT PAYEE POST DA TED CHEQUE HAD BEEN ISSUED TO THE PARTY, THE INTEREST UP TO 31.3.2006 WAS CHARGED AND PAID TO THE PARTY IN ADVANCE ON 24.11.2005; THAT SIN CE THE POST DATED CHEQUE HAD BEEN GIVEN AND INTEREST UP TO 31.3.2006 H AD ALREADY BEEN PAID; THAT THE ASSESSEE MADE ENTRY IN ITS BOOKS OF ACCOUN T BY CREDITING THE BANK AND DEBITING THE PARTY; THAT THE CHEQUE OF `40 LAKHS REMAINED OUTSTANDING AND WAS DULY REFLECTED IN THE BA NK RECONCILIATION STATEMENT, AS NOT CLEARED; THAT THE PARTY ALSO FILED C ONFIRMATORY STATEMENT, STATING `40 LAKHS TO BE OUTSTANDING BALANCE SINCE THE CHEQUE HAD NOT BEEN PUT IN THE BANK; THAT IT WAS ONL Y SUBSEQUENTLY, I.E., ON 23.11.2006, THAT THE CHEQUE WAS CLEARED; AN D THAT INTEREST THEREON WAS DULY PAID AND TDS WAS MADE. STATEMENT OF ACCOUNT, BANK STATEMENT AND PARTYS ACCOUNT WERE SUBMITTED. 3 3. THE AO, HOWEVER, REJECTED THE STAND TAKEN BY THE ASSESSEE. IT WAS OBSERVED THAT THE ASSESSEE HAD SHOWN THE ACCOUNT AS IS SQ UARED UP;, I.E., NIL BALANCE, WHEREAS THE PARTY HAD NOT SHO WN IT AS NIL BALANCE; THAT THE ASSESSEE HAD ISSUED A CHEQUE ON 31.3.2006, WHICH WAS PASSED ON 23.11.2006; THAT THE PARTY HAD SHOWN THIS TRA NSACTION AS NOT SQUARED UP, FOR THE YEAR ENDING 31.3.2006; THAT THE ASSESSEE HAD FAILED TO MAKE PROPER ENTRIES IN ITS BOOKS OF ACCOUNT; THAT THE AMOUNT OF `40 LAKHS HAD BEEN RECEIVED AS LOAN, IT HAD BEEN SQ UARED UP UNILATERALLY ONLY; AND THAT THE AMOUNT OF `40 LAKHS WAS THEREFORE, UNACCOUNTED INVESTMENT. 4. BY VIRTUE OF THE IMPUGNED ORDER, THE CIT(A) DELE TED THE ADDITION MADE BY THE AO, WHICH IS WHAT HAS BROUGHT THE DEPARTM ENT BEFORE US. 5. LD.DR HAS CONTENDED THAT THE ADDITION HAS BEEN WRO NGLY DELETED; THAT IN FACT, IT WAS A FALSE CLAIM OF THE ASSE SSEE THAT THE AMOUNT OF `40 LAKHS REPRESENTED THE PAYMENT OF LOAN; THAT THE CIT(A) DID NOT APPRECIATE THAT THERE IS NO EVIDENCE THAT TH E CHEQUE OF `40 LAKHS ISSUED BY THE ASSESSEE ON 31.3.2006 WAS ACTUALLY GIVE N BY IT TO M/S K.L.J. PLASTICIZERS; THAT IT WAS NOT ACCEPTABLE THA T THE PARTY DID NOT PRESENT THE CHEQUE FOR PAYMENT WITH THE INTENTION OF EARNING MORE INTEREST; THAT PROPER ENTRIES WERE NOT MADE BY THE ASSE SSEE IN ITS BOOKS. 6. LD.COUNSEL FOR THE ASSESSEE, ON THE OTHER HAND, HAS STR ONGLY RELIED ON THE IMPUGNED ORDER. 7. IT HAS BEEN CONTENDED THAT THE AO REJECTED THE ASSE SSEES CONTENTION ON THE SOLE REASONING THAT THE ENTRIES IN T HE BOOKS OF ACCOUNT HAD NOT BEEN PROPERLY MADE AND THE ACCOUNT DID NOT STAND SQUARED UP; THAT WHEN THE MATTER WAS REMANDED TO THE AO, HE SUBMITTED THAT SINCE THE TRANSACTIONS HAD NOT BEEN REFL ECTED IN THE 4 BALANCE-SHEET, THE SAME HAD BEEN TREATED AS UNEXPLAINE D CASH CREDIT, WHEREAS IN THE ASSESSMENT ORDER, THE ADDITION HAD BEEN M ADE, CONSIDERING IT AS UNACCOUNTED INVESTMENT; THAT OTHERWI SE TOO, THE ACCOUNT DID STAND SQUARED UP, AS ALSO CONFIRMED BY THE PARTY AND THE AO HAD MADE THE ADDITION WRONGLY; AND THAT THE CIT( A) HAS CORRECTLY DELETED THE ADDITION WRONGLY MADE. 8. HAVING HEARD THE PARTIES AND HAVING PERUSED THE MA TERIAL ON RECORD, WE DO NOT FIND ANY ERROR IN THE ORDER OF TH E CIT(A). THAT THE AMOUNT OF `40 LAKHS STOOD SQUARED UP, WAS SUBSTANTIATED B Y THE BANK RE-CONCILIATION STATEMENT, WHICH STOOD DULY FURNISHED BEFORE THE AO. AS RIGHTLY NOTED BY THE CIT(A), IT WAS ONLY BECAUSE TH E PARTY HAD NOT PRESENTED THE CHEQUE TO THE BANK FOR PAYMENT, THAT T HERE HAD BEEN A CONFUSION. HOWEVER, THE CONFIRMATION TENDERED BY TH E PARTY LEAVES THE MATTER DOUBTLESS, BESIDE THE FACT OF THE RECONCILIATIO N BY THE BANK. 9. IN VIEW OF THE ABOVE, FINDING NO ERROR WHATSOEVER THEREIN, THE ORDER OF THE CIT(A) IS CONFIRMED. THE GRIEVANCE SOUG HT TO BE RAISED BY THE DEPARTMENT BY WAY OF THE GROUNDS OF APPEAL TAKEN , DOES NOT CARRY ANY FORCE. THE SAME STANDS REJECTED. 10. IN THE RESULT, THE APPEAL OF THE DEPARTMENT IS DI SMISSED. ORDER PRONOUNCED IN OPEN COURT ON 13.4.2011. SD/- SD/- (K.D. RANJAN) (K.D. RANJAN) (K.D. RANJAN) (K.D. RANJAN) (A.D. JAIN) (A.D. JAIN) (A.D. JAIN) (A.D. JAIN) ACCOUNTANT MEMBER ACCOUNTANT MEMBER ACCOUNTANT MEMBER ACCOUNTANT MEMBER JUDICIAL MEMBER JUDICIAL MEMBER JUDICIAL MEMBER JUDICIAL MEMBER DATED, APRIL DATED, APRIL DATED, APRIL DATED, APRIL 13, 2011. 13, 2011. 13, 2011. 13, 2011. SKB SKB SKB SKB COPY FORWARDED TO: COPY FORWARDED TO: COPY FORWARDED TO: COPY FORWARDED TO: 1.APPELLANT 1.APPELLANT 1.APPELLANT 1.APPELLANT 2.RESPONDENT 2.RESPONDENT 2.RESPONDENT 2.RESPONDENT 3.CIT 3.CIT 3.CIT 3.CIT 4.CIT(A) 4.CIT(A) 4.CIT(A) 4.CIT(A)- -- -XXI, NEW DELHI. XXI, NEW DELHI. XXI, NEW DELHI. XXI, NEW DELHI. 5 5.CIT(ITAT), NEW DELHI. 5.CIT(ITAT), NEW DELHI. 5.CIT(ITAT), NEW DELHI. 5.CIT(ITAT), NEW DELHI. AR ARAR AR/ITAT /ITAT /ITAT /ITAT