ACIT, CHENNAI V. N.Sivakumar, CHENNAI

ITA 548/CHNY/2014

• Counselvise Citation: [2017] 130 COUNSELVISE.COM (IT) 7522 (ITAT-CHENNAI)
• Duration Of Justice: 3 year(s) 8 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 15-03-2017
• Appeal Filed By: Department
• Bench Allotted: D
• Next Hearing Date: 04-01-2017
• Assessment Year: 2010-2011
• Appeal Filed On: 07-03-2014
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: R. DURAI PANDIAN
• Keywords: Unexplained cash credit; Principle of natural justice; TDS
• Section: 32; 147; 131; 68; 246; 69; 145; 27; 148; 54; 37; 6; 56; 263; 63; 132; 12; 28; 144; 10; 90; 154; 2; 11; 15; 271(1)(b); 139; 92; 13; 22

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL D BENCH: CHENNAI . . . , ! ' .. # $!% , ' () BEFORE SHRI N.R.S. GANESAN, JUDICIAL MEMBER AND SHRI D.S.SUNDER SINGH, ACCOUNTANT MEMBER ! ./ ITA NO.548/MDS/2014 * +* /ASSESSMENT YEAR: 2010-11 & CROSS OBJECTION NO.42/MDS/2014 * +* /ASSESSMENT YEAR: 2010-11 THE ASST. COMMISSIONER OF INCOME TAX, BUSINESS CIRCLE-XV, NO.121, NUNGAMBAKKAM HIGH ROAD, CHENNAI-600 034. VS. SHRI N.SIVAKUMAR, 203, LLYODS ROAD, GOPALAPURAM, CHENNAI-600 086. [PAN: ABEPS 0186 J ] ( ,- /APPELLANT) ( ./,- /RESPONDENT) ,- 0 1 / APPELLANT BY : MR.R.DURAI PANDIAN, JCIT ./,- 0 1 /RESPONDENT BY : MR.T. BANUSEKAR, CA # 0 2' /DATE OF HEARING : 04.01.2017 34+ 0 2' /DATE OF PRONOUNCEMENT : 15.03.2017 / O R D E R PER D.S.SUNDER SINGH , ACCOUNTANT MEMBER : THIS IS AN APPEAL FILED BY THE REVENUE AGAINST THE ORDER DATED 25.11.2013 OF COMMISSIONER OF INCOME TAX (APPEALS-V ), CHENNAI, IN ITA NO.430/13-14(A)-V FOR THE AY 2010-11 AND RAISED THE FOLLOWING GROUNDS: ITA NO.548/MDS/2014 & CO NO.42/MDS/2014 :- 2 -: 1. THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEAL S) IS CONTRARY TO LAW AND FACTS OF THE CASE. 2. THE LD. CIT(A) ERRED IN DELETING THE ADDITION OF UN EXPLAINED CASH CREDIT OF 24 LAKHS( 10 LAKHS + 14 LAKHS) AS THE CREDIT ENTRY IS ON THE SAME DATE 0 4.04.2009 IN THE BOOKS OF THE ASSESSEE. 3. THE LD.CIT(A) ERRED IN DELETING THE ADDITION OF COM MISSION PAID TO MR. JIMLIN OF 58.90 LAKHS AS THE CONFIRMATION LETTER NOT SIGNED BY MR. JIMLIN HIMSELF AND SINGLE JOURNAL ENTRY AS ON 31.03.2010 DEBITING MR. JIMLIN AND CREDITING TO SUSPENSE A/C. 4. THE LD.CIT(A) ERRED IN DELETING THE ADDITION OF UNE XPLAINED CASH CREDIT OF 1,25,82,156/- APPEARING IN THE BALANCE SHEET UNDER THE HEAD ADVANCE FROM CUSTOMERS OF ORIENT WANG FENG. 5. THE LD.CIT(A) ERRED IN DELETING THE CREDIT OF 1,44,50,000/- APPEARING IN THE BALANCE SHEET, UNDER THE HEAD ADVANCE FROM CUSTOMERS OF N SK EXPORTS. 6. THE LD.CIT(A) ERRED IN DELETING THE ADDITION OF UNE XPLAINED CASH CREDIT OF 1,44,50,000/- APPEARING IN THE LEDGER COPY OF SUS PENSE A/C IN THE NAME OF OSCAR GRANITES & MARBLES. 7. THE LD.CIT(A) ERRED IN DELETING THE ADDITION OF UNE XPLAINED CREDIT IN THE NAMES OF PSR GRANITES P. LTD OF 38,22,479/- AND PSR GRANITES OF 29,81,564/- APPEARING IN THE LEDGER COPY OF SUSPENSE A/C. 8. FOR THESE AND OTHER GROUNDS THAT MAY BE ADDUCED AT THE TIME OF HEARING, IT IS PRAYED THAT THE ORDER OF THE LEARNED CIT(A) MAY BE SET-ASI DE AND THAT OF THE ASSESSING OFFICER RESTORED. 2.0 GROUND NOS.1 & 8 ARE GENERAL IN NATURE WHICH DO NO T REQUIRE SPECIFIC ADJUDICATION. 3.0 GROUND NO.2 IS RELATED TO THE ADDITION OF 24 LAKHS AS UN-EXPLAINED CASH CREDIT IN THE BOOKS OF THE ASSESSEE. THE ASSE SSING OFFICER (HEREINAFTER REFERRED TO AS AO) DURING THE ASSESS MENT PROCEEDINGS FOUND THAT THERE WAS A CASH CREDIT IN THE BOOKS OF THE AS SESSEE AMOUNTING TO 62,99,785/- ON 04.04.2009. THE AO CALLED FOR EXPLA NATION FROM THE ASSESSEE IN RESPECT OF SOURCE OF THE CASH CREDIT AN D THE ASSESSEE EXPLAINED THE SOURCE OF 10.00 LAKHS AS AGRICULTURE INCOME ACCUMULATED OVER A PERIOD OF TIME AND WAS LYING WITH THE FRIEND S& RELATIVES AND THE SAME WAS RECEIVED AND CREDITED TO THE CAPITAL ACCOU NT. SIMILARLY, A SUM OF 14.00 LAKHS WAS RELATING TO RENTAL INCOME AND LYING IN AGRICULTURAL OPERATIONS PLOUGHED BACK TO THE BUSINESS AND THE SU M OF 39.00 LAKHS ITA NO.548/MDS/2014 & CO NO.42/MDS/2014 :- 3 -: WAS OUT OF LOANS TAKEN FROM THE FRIENDS AND THE REL ATIVES. THE ENTIRE AMOUNT OF 62,99,785/- WAS RECEIVED BY THE ASSESSEE ON 04.04.2 009 AND CREDITED TO THE CAPITAL ACCOUNT. THE ASSESSEE HAS ADMITTED THE AGRICULTURAL INCOME AS WELL AS RENTAL INCOME IN HIS PERSONAL INCOME TAX RETURNS AND BUT NOT TAKEN TO HIS CAPITAL ACCOUNTS E ARLIER. THE AO NOT BEING IMPRESSED WITH THE EXPLANATION, MADE THE ADDI TION OF 62,99,785/- TO THE RETURNED INCOME ON DELETION OF 24.00 LAKHS. 4.0 AGGRIEVED BY THE ORDER OF THE AO, THE ASSESSEE WEN T ON APPEAL BEFORE THE LEARNED COMMISSIONER OF INCOME TAX(APPEA LS) (HEREINAFTER REFERRED TO AS LD.CIT(A)) AND THE LD.CIT(A) CONFI RMED THE ADDITION OF 39.00 LAKHS AND DELETED THE ADDITION OF 24.00 LAKHS RELATING TO AGRICULTURAL INCOME AND RENTAL INCOME. THEREFORE, THE DEPARTMENT IS ON APPEAL BEFORE US. 5.0 DURING THE APPEAL THE LD.DR ARGUED THAT THE ASSESS EE HAS INTRODUCED A SUM OF 10.00 LAKHS AS CASH CREDIT IN HIS CAPITAL ACCOUNT A ND CLAIMED IT AS ACCUMULATION OF AGRICULTURAL INCOME. SINCE ASSESSEE HAS NEITHER ACCOUNTED THE INCOME AND NOR BROUGHT TO HIS CAPITAL ACCOUNT THE GENUINENESS OF THE TRANSACTION WAS NOT PROVED. THE ASSESSEE HAS NEITHER FURNISHED THE CONFIRMATION NOR FURNISHED THE EVIDEN CE FOR AGRICULTURAL ACCUMULATION AND HENCE THE SOURCE CANNOT BE TREATED AS GENUINE. THE LD.CIT(A) HAS NOT VERIFIED THE GENUINENESS OF TRANS ACTION AND THE ITA NO.548/MDS/2014 & CO NO.42/MDS/2014 :- 4 -: AGRICULTURAL ACCUMULATIONS. THEREFORE THE LD.DR ARG UED THAT THE AO HAS RIGHTLY MADE THE ADDITION AND REQUIRED TO BE CONFIR MED. 5.1 APPEARING FOR THE ASSESSEE, LD.COUNSEL ARGUED TH AT THE ASSESSEE WAS HAVING 33.71 ACRES OF AGRICULTURAL LAND AND REC EIVING AGRICULTURAL INCOME REGULARLY. AGRICULTURAL INCOME WAS ADMITTED IN THE RETURN OF INCOME FILED BY THE ASSESSEE REGULARLY. THE ASSESS EE EXPLAINED THAT THE CASH CREDIT MADE ON 04.04.2009 REPRESENTS THE AGRIC ULTURAL INCOME WHICH WAS ACCUMULATED OVER A PERIOD OF TIME. THE LEARNED AUTHORIZED REPRESENTATIVE (HEREINAFTER REFERRED TO AS LD.AR) ALSO EXPLAINED THAT NO CREDIT WAS TAKEN FOR THE SOURCE OF AGRICULTURAL INC OME TOWARDS ANY EXPENDITURE OR INVESTMENT IN THE EARLIER YEARS. TH E LD.CIT(A) ACCEPTED THE SOURCE OF CASH CREDIT PLACING RELIANCE ON THE EVIDENCE FILED BY THE ASSESSEE IN THE FORM OF RETURN OF INCOME. THEREFOR E THE LD.A.R ARGUED THAT SINCE THE ASSESSEE HAS ALREADY ADMITTED THE IN COME IN THE EARLIER YEARS AND NO SOURCE WAS TAKEN FOR CREDIT THE CIT(A) HAS RIGHTLY DELETED THE ADDITION AND NO INTERFERENCE IS CALLED FOR. 5.2 WE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE OR DERS OF THE LOWER AUTHORITIES. IT IS NOT IN DISPUTE THAT THE ASSESSEE IS HOLDING 33.71 ACRES OF AGRICULTURAL LAND AND DECLARED THE AGRICULTURAL INC OMES IN HIS PERSONAL RETURNS AND THE DEPARTMENT HAS ACCEPTED THE AGRICUL TURAL INCOME. IT IS ALSO NOT IN DISPUTE THAT THE ASSESSEE HAS NOT APPLI ED THE AGRICULTURAL ITA NO.548/MDS/2014 & CO NO.42/MDS/2014 :- 5 -: INCOME TO ANY OF THE OUTGOINGS. THEREFORE THE ASSES SEE IS ENTITLED FOR RELIEF FOR ACCUMULATIONS OF AGRICULTURAL INCOME AND WE DO NOT FIND ANY REASON TO SUSPECT THE SOURCE OF 10.00 LAKHS. THEREFORE, THE ORDER OF THE LD.CIT(A) IS CONFIRMED AND THE REVENUES APPEAL ON THIS ISSUE IS DISMISSED. 6.0 THE SECOND ISSUE IN THIS GROUND IS RELATED TO THE ADDITION OF 14.00 LAKHS REPRESENTING THE RENTAL INCOME. THE AO MADE THE ADDITION STATING THAT THERE WAS NO EVIDENCE TO SHOW THAT THE RENTAL INCOME WAS INVESTED IN AGRICULTURAL OPERATIONS AND PLOUGHED BACK TO THE BU SINESS. THE LD.CIT(A) DELETED THE ADDITION STATING THAT THE AO HAS NOT DI SPUTED THE RENTAL INCOME OFFERED BY THE ASSESSEE IN THE EARLIER YEARS . THE LD.CIT(A) IN HIS ORDER REPRODUCED THE DETAILS IN RESPECT OF RENTAL INCOME WHICH ACCOUNTED FOR 11,55,709/- FOR THE AY 2010-11 ALONE. THE ASSESSEE EXPLAINED THAT THE RENTAL INCOME OF TWO YEARS WAS ACCUMULATED AND BROUGHT IN TO THE BUSINESS AND THE LD.CIT(A) OBSERVED THAT THE EXPLAN ATION OF THE ASSESSEE WAS REASONABLE AND ACCEPTED THE SOURCE AND DELETED THE ADDITION. 6.1 WE HEARD BOTH THE PARTIES. IT IS A FACT THAT THE A SSESSEE HAS BEEN ADMITTING THE RENTAL INCOME AND PAID TAXES IN THE E ARLIER YEARS. THE RENTS RECEIVED BY THE ASSESSEE WAS 11,55,709/- FOR THE AY 2010-11. ACCORDING TO THE ASSESSEE, 14.00 LAKHS CREDITED IN THE CAPITAL ACCOUNT REPRESE NTED IN THE RENTAL INCOME RECEIVED BY THE ASSESSEE FOR T HE LAST TWO YEARS. AS ITA NO.548/MDS/2014 & CO NO.42/MDS/2014 :- 6 -: PER THE EXPLANATION AND THE INFORMATION SUBMITTED B Y THE ASSESSEE, THE RENTS RECEIVED BY THE ASSESSEE FOR THE LAST THREE Y EARS WOULD BE AROUND 20.00 LAKHS OUT OF WHICH A SUM OF 14.00 LAKHS WAS CREDITED TO THE CAPITAL ACCOUNT. THERE WAS NO DISPUTE THAT THE ASS ESSEE HAS RECEIVED RENTS AND OFFERED IN THE INCOME TAX RETURNS. THE A O HAS NOT GIVEN ANY FINDINGS THAT THE RENTAL INCOME RECEIVED BY THE ASS ESSEE WAS EITHER APPLIED IN OTHER INVESTMENTS OR SPENT FOR PERSONAL PURPOSES. WHEN THE ASSESSEE HAS EXPLAINED THE SOURCE AS RENTAL INCOME WHICH WAS DECLARED IN THE INCOME TAX RETURNS THERE IS NO CASE FOR ANY SUS PICION UNLESS AN EVIDENCE BROUGHT ON RECORD TO SHOW THE RENTAL INCOM E WAS ALREADY SPENT. THE AO HAS NOT BROUGHT ON RECORD ANY EVIDENCE TO PR OVE THAT THE RENTAL INCOME CLAIMED BY THE ASSESSEE WAS NOT AVAILABLE WI TH HIM. THEREFORE, WE HOLD THAT THE SOURCE FOR THE CREDIT OF 14.00 WAS EXPLAINED BY THE ASSESSEE AND THERE IS NO CASE FOR MAKING ANY ADDITI ON U/S 68. ACCORDINGLY WE UPHOLD THE ORDER OF THE LD.CIT(A) AND DISMISS GROUND NO.2 OF THE REVENUE. 6.2 GROUND NO.3 IS RELATED TO THE ADDITION OF 58,90,000/- TOWARDS COMMISSION PAID TO MR.JIMLIN. DURING THE ASSESSMEN T PROCEEDINGS, THE AO FOUND FROM THE PROFIT AND LOSS ACCOUNT THAT A SUM O F 58,90,000/- WAS DEBITED TO THE COMMISSION ACCOUNT. THE AO DISALLOW ED THE COMMISSION PAID TO MR.JIMLIN SINCE THE CONFIRMATION LETTER W AS NOT SIGNED BY MR.JIMLIN. THE AO VERIFIED THE SIGNATURE OF THE ASS ESSEE WITH THE PASSPORT ITA NO.548/MDS/2014 & CO NO.42/MDS/2014 :- 7 -: WHICH DOES NOT TALLY WITH IT AND HENCE THE AO VIEWE D THAT THE CONFIRMATION LETTER WAS NOT SIGNED BY HIM. THERE WAS NO WRITTEN AGREEMENT BETWEEN THE ASSESSEE AND MR.JIMLIN RELATED TO THE PAYMENT O F COMMISSION BY THE ASSESSEE. THE BILLS WERE RAISED FOR THE COMPANIES OF M/S.XIAMEN ORIENT WANG FENG INDUSTIRAL CO. LTD. AND M/S.XIAMEN HANNYU AN IMP. & EXP. CO. LTD., BUT CLAIMED THAT THE COMPANY RECEIVED THE PAY MENT AFTER DEDUCTION OF COMMISSION PAYABLE TO MR.JIMLIN. THE ASSESSEE A LSO SUBMITTED TWO INVOICES BEFORE THE AO BUT COULD NOT ESTABLISH THE LINK BETWEEN THE SHIPPING BILL AND BANK REMITTANCES CERTIFICATES. T HEREFORE, THE AO WAS OF THE OPINION THAT IT WAS NOT ESTABLISHED BY THE ASSE SSEE THAT THE COMMISSION WAS PAID FOR BUSINESS PURPOSE AND DISBEL IEVED THE PAYMENT OF COMMISSION AND MADE THE ADDITION TO THE RETURNED IN COME. THE ASSESSEE EXPLAINED BEFORE THE LD.CIT(A) THAT THE ASSESSEE RE CEIVED THE NET AMOUNT FROM CHINA AFTER DEDUCTING THE COMMISSION OF MR.JIM LIN. THE AO HAS MISTAKEN THE NAME OF MR.LIN YUAN WHICH WAS APPEARIN G IN THE PASSPORT AND MR.JIMLIN IS ALSO CALLED AS MR.LIN YUAN. THE A SSESSEE FURNISHED THE THE WORKSHEET, RANDOM INVOICES AND INWARD REMITTANC E CERTIFICATES ISSUED BY THE SBI, SIRUTHOZHIL BRANCH BEFORE THE LD.CIT(A) AND THE LD.CIT(A) PLACING RELIANCE ON THE EVIDENCES PRODUCED BY THE A SSESSEE DELETED THE ADDITION AND HENCE THE REVENUE IS IN APPEAL BEFORE US. 6.3 THE LEARNED DEPARTMENTAL REPRESENTATIVE (HEREINAFT ER REFERRED TO AS LD.DR) ARGUED THAT THERE WAS A DIFFERENCE IN S IGNATURE IN THE ITA NO.548/MDS/2014 & CO NO.42/MDS/2014 :- 8 -: CONFIRMATION LETTER FILED BY THE ASSESSEE AND THERE WAS NO AGREEMENT SUPPORTING THE SERVICES RENDERED BY THE MR.JIMLIN F OR PAYMENT OF COMMISSION. CONFIRMATION LETTER WAS SIGNED BY THE CONSOLIDATED AGENT INSTEAD OF MR.JIMLIN. THE LD.DR FURTHER ARGUED THA T BILLS WERE RAISED FOR COMPANIES OF M/S.XIAMEN ORIENT WANG FENG INDUSTIRAL CO. LTD., & M/S.XIAMEN HANNYUAN IMP. & EXP. CO. LTD., BUT THE C OMPANY CLAIMED THAT THE AMOUNT WAS RECEIVED BY THE ASSESSEE COMPAN Y AFTER DEDUCTION OF THE COMMISSION PAYMENT OF MR.JIMLIN WHICH WAS NOT E STABLISHED WITH THE RELEVANT INVOICE AND HENCE THE LD.DR CONTENDED THAT THE ASSESSEE HAS NOT PROVED THAT MR.JIMLIN HAS RENDERED THE SERVICES TO THE ASSESSEE COMPANY AND THE PAYMENT WAS MADE FOR THE BUSINESS PURPOSE. ACCORDING TO THE LD.DR, DISALLOWANCES MADE BY THE AO REQUIRED TO BE CONFIRMED. 6.4 PER CONTRA, THE LD.A.R ARGUED THAT THE SERVICES OF MR.JIMLIN HAS BEEN ENGAGED BY THE ASSESSEE COMPANY DUE TO OPERATIONAL AND LOGISTIC PROBLEMS IN CHINA.. THE MAJOR EXPORTS WERE FOR CHI NA AND IT IS DIFFICULT TO CARRY ON THE BUSINESS WITHOUT THE KNOWLEDGE OF CHIN ESE LANGUAGE AND BUSINESS PRACTICE OF CHINA. IT IS NECESSARY TO ENG AGE A LOCAL CONSULTANT FOR CARRYING ON THE BUSINESS IN CHINA AND THE ASSES SEE HAS ENGAGED MR.JIMLIN AS AN AGENT FOR ASSISTING HIM IN CHINA. T HE LD.CIT(A) OBSERVED THAT IT IS A NORMAL PRACTICE FOR ANY EXPORTER TO EN GAGE LOCAL PERSON TO FACILITATE THE BUSINESS OPERATIONS CONVENIENTLY AND SMOOTHLY AND THE TRANSACTIONS BETWEEN THE ASSESSEE AND M/S.XIAMEN OR IENT WANG FENG ITA NO.548/MDS/2014 & CO NO.42/MDS/2014 :- 9 -: INDUSTRIAL CO. LTD., ARE NOTHING BUT NORMAL REGULAR BUSINESS TRANSACTIONS INVOLVING PURCHASE AND SALE OF GRANITE BLOCKS. THE ASSESSEE HAS RECEIVED THE REMITTANCES ONLY AFTER DEDUCTING THE COMMISSION THROUGH BANKING CHANNELS AND AO HAS NOT BROUGHT ON RECORD, ANY EVID ENCE TO SHOW THAT THE AMOUNT DEDUCTED TOWARDS COMMISSION WAS BROUGHT BACK TO INDIA BY THE ASSESSEE. 6.5 WE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MAT ERIAL PLACED BEFORE US. THE AO DISBELIEVED THE CONFIRMATION LETTER SINCE T HE CONFIRMATION LETTER WAS SIGNED BY MR.LIN YUAN, DIRECTOR OF M/S.X IAMEN ORIENT WANG FENG INDUSTRIAL CO. LTD. THE ASSESSEES AR PRODUCE D THE COPY OF THE PASSPORT, WHEREIN IT WAS MENTIONED AGAINST THE NAME OF THE MR.JIMLIN AS MR.JIMLIN ALIAS MR.LIN YUAN. THEREFORE, THE CONFUS ION REGARDING THE SIGNATORY OF THE CONFIRMATION LETTER STANDS CLEARED AND ESTABLISHED THAT MR.JIMLIN WHO HAPPENS TO BE ONE OF THE DIRECTORS OF M/S.XIAMEN ORIENT WANG FENG INDUSTRIAL CO. LTD., HAS SIGNED THE CONFI RMATION LETTER AND RECEIVED THE COMMISSION FROM THE ASSESSEE. THE COPY OF THE CONFIRMATION LETTER ALSO SOLVES SUSPICION REGARDING M/S.XIAMEN O RIENT WANG FENG INDUSTRIAL CO. LTD., SINCE MR.JIMLIN WAS ONE OF THE DIRECTORS. THE LD.CIT(A) OBSERVED THAT THE COMMISSIONS/TRANSACTION S BETWEEN THE M/S.XIAMEN ORIENT WANG FENG INDUSTRIAL CO. LTD., & M/S.XIAMEN ITA NO.548/MDS/2014 & CO NO.42/MDS/2014 :- 10 -: HANNYUAN IMP. & EXP. CO. LTD., ARE REGULAR BUSINESS TRANSACTIONS INVOLVING PURCHASE AND SALE OF GRANITE BLOCKS AND T HE AGENTS ARE CALLED CONSOLIDATED AGENTS. THE SALE REMITTANCES ARE REMI TTED TO THE ASSESSEE NET OF COMMISSION FROM THE EXPORTING COUNTRIES. TH E COMMISSION PAYMENT WAS DEDUCTED FROM THE BILL AND THE BALANCE WAS ONLY REMITTED TO INDIA. THIS IS THE EVIDENCED FROM THE BANK REMITTA NCES AND ALSO THE DETAILS OF BREAKUP OF COMMISSION PAID FROM THE ORDE R OF THE LD.CIT(A). FROM THE TOTAL SALE OF 3303.51 CUBIC METERS AGGREGA TING THE USD 15,50,044.00, THE SUM OF USD 1,30,889.00 EQUIVALENT TO INDIAN CURRENCY OF 58.90 LAKHS WAS DEDUCTED FROM THE INVOICE AND THE B ALANCE ONLY WAS REMITTED TO THE ASSESSEE. THEREFORE, THE GENUINENESS OF THE PAYMENT CANNOT BE SUSPECTED. THE ASSESSEE IS AN IN DIAN EXPORTER, MAJOR EXPORTS TO CHINA AND THE CHINESE LANGUAGE NOT KNOWN TO THE ASSESSEE AND THE BUSINESS PRACTICE AND THE POLITICAL ATMOSPHERE AND THE LOCAL ATMOSPHERE IS QUITE DIFFERENT AND UNFAMILIAR TO THE ASSESSEE. THEREFORE, THE ASSESSEE HAS NO OPTION EXCEPT TO ENGAGE THE LOC AL AGENTS TO FACILITATE THE SMOOTH FUNCTIONING AND TO CARRY OUT THE EXPORT OPERATIONS AT CHINA. THEREFORE, THE ENGAGEMENT OF THE SERVICES OF THE CO NSOLIDATED AGENTS ALSO IS NOT DOUBTFUL. SINCE THE CONFIRMATION LETTER FUR NISHED BY THE MR.JIMLIN WHO HAS RECEIVED THE COMMISSION AND IT WAS DEDUCTED AT SOURCE AND THE BALANCE AMOUNT WAS REMITTED AND CONFIRMATION LETTER SAYS THAT THE RECIPIENT HAS RECEIVED COMMISSION TOWARDS SALE OF G RANITES, WE DO NOT SEE ITA NO.548/MDS/2014 & CO NO.42/MDS/2014 :- 11 -: ANY REASON TO SUSPECT THE PAYMENT TO MR.JIMLIN. AC CORDINGLY, WE CONFIRM THE ORDER OF THE LD.CIT(A). GROUND NO.3 OF THE REV ENUE IS DISMISSED. 7.0 GROUND NO.4 IS RELATED TO THE UNEXPLAINED CASH CRE DIT OF 1,25,82,156/- RELATING TO ADVANCE FROM CUSTOMERS OF M/S.XIAMEN ORIENT WANG FENG INDUSTRIAL CO. LTD. DURING THE ASSESSMEN T PROCEEDINGS, THE AO FOUND THAT THERE WAS A CREDIT BALANCE IN SUSPEN SE A/C IN THE NAME OF M/S.XIAMEN ORIENT WANG FENG INDUSTRIAL CO. LTD TO T HE EXTENT OF 1,35,42,370/-. THE ASSESSEE FURNISHED THE BREAKUP O F DETAILS FROM M/S.XIAMEN ORIENT WANG FENG INDUSTRIAL CO. LTD ONLY FOR A SUM OF 1,25,10,821/- AS PER THE DETAILS GIVEN BELOW: DATE ACCOUNT HEAD AMOUNT 18.02.2010 GLOBAL MAO YI PRIVATE LTD. 5,78,915.00 29.03.2010 FUJIAN QUANZHOURUFIA STONE CO. LTD. 22,47,376.00 30.03.2010 FUJIAN QUANZHOURUFIA STONE CO. LTD. 12,72,630.00 31.03.2010 FDBP 84,11,900.56 TOTAL 1,25,10,821.56 THE ASSESSEE DID NOT FURNISH THE DETAILS FOR THE B ALANCE AMOUNT OF 10,31,549/- AND THE AO MADE THE ADDITION OF THIS AM OUNT TO THE RETURNED INCOME. 7.1 THE AO NOTICED MISMATCH IN THE NAMES AND OBSERVED THAT THE ASSESSEE HAS RECEIVED THE ABOVE AMOUNTS AS UNDER: ITA NO.548/MDS/2014 & CO NO.42/MDS/2014 :- 12 -: DATE AMOUNT SOURCE OF CREDIT/DEBIT 18.02.2010 5,78,915.00 GLOBAL MAO YI PRIVATE LTD., SINGAPORE 31.03.2010 22,47,376.00 LEGACY ARTS AND CRAFTS CO. LTD., PHILIPPINES 31.03.2010 12,72,630.00 SEASON CORPORATION LTD., MAX SHARE CTR, HONGKONG THE ASSESSEE HAS STATED THAT THE ABOVE AMOUNTS WER E RECEIVED FROM M/S.XIAMEN ORIENT WANG FENG INDUSTRIAL CO. LTD., BU T ASSESSEE HAS NOT FURNISHED THE DETAILS REGARDING THE IDENTITY AND GE NUINENESS OF THE TRANSACTION. FROM THE DETAILS GIVEN IN THE ABOVE RE FERRED TABLES, THE AO OBSERVED THE MISMATCH IN THE NAMES OF THE PERSONS F ROM WHOM THE AMOUNTS WERE RECEIVED. THE AMOUNTS WERE FROM OTHER THAN M/S.XIAMEN ORIENT WANG FENG INDUSTRIAL CO. LTD AND FURTHER THE ASSESSEE ALSO DID NOT FURNISH THE EVIDENCE REGARDING FDBP. THEREFORE, TH E AO HAS ADDED THE ENTIRE AMOUNT OF ADVANCE AMOUNTING TO 1,25,42,370/- TO THE RETURNED INCOME. 7.2 IN THE FIRST APPEAL BEFORE THE LD.CIT(A), THE ASSE SSEE EXPLAINED, OUT OF TOTAL EXPORT SALES OF USD 18,49,661.24, SALES AMOUNTING TO USD 15,50,044.04 APPROX 84% WAS MADE THROUGH M/S.XIAMEN ORIENT WANG FENG INDUSTRIAL CO. LTD., AND THE SALES WERE M ADE EITHER TO M/S.XIAMEN ORIENT WANG FENG INDUSTRIAL CO. LTD., OR TO THE NOMINATED CUSTOMERS. AS SEEN FROM THE OBSERVATION OF THE AO A SUM OF 84,11,900/- WAS RECEIVED THROUGH FDBP WITH A CREDIT FACILITY EXTENDED BY THE BANKS UNDER THE FOREIGN DISCOUNT BILLS PURCHASE D AND THE BALANCE AMOUNT OF 40,98,921/- WAS RECEIVED FROM THE ASSOCIATES OF M/S .XIAMEN ITA NO.548/MDS/2014 & CO NO.42/MDS/2014 :- 13 -: ORIENT WANG FENG INDUSTRIAL CO. LTD., ON TWO DIFFER ENT DATES. THE LD.CIT(A) DELETED THE ADDITIONS OF 1,25,10,821/- HOLDING THAT THE TRANSACTIONS ARE CROSS VERIFIABLE AND THE ENTIRE AM OUNT OF 1,25,10,821/- WAS RECEIVED AGAINST THE SALE OF GRANITE BLOCKS AND SUPPORTED BY INVOICES, SHIPPING BILLS, ETC. THE LD.CIT(A) HAS CONFIRMED TH E ADDITION OF 10,31,549/- WHICH REMAINED UNEXPLAINED. 7.3 AGGRIEVED BY THE ORDER OF LD.CIT(A), THE DEPARTMEN T IS ON APPEAL BEFORE US. THE LD.DR ARGUED THAT THE AMOUNT OF 1,35,42,370/- WAS OUTSTANDING IN SUSPENSE A/C AS ON 31.03.2010. S USPENSE A/C MEANS THE DETAILS WERE NOT RECONCILED AS ON 31.03.2010. THE ASSESSEE HIMSELF PLACED THE AMOUNTS IN SUSPENSE A/C AND CREATED TH E SUSPENSE REGARDING SOURCE OF THE CREDITS. IT IS AN UNDISPUTED FACT THA T THE AMOUNTS WERE OUTSTANDING AS ADVANCES IN THE BALANCE SHEET AS ON 31.03.2010 AND IT IS THE BURDEN OF THE ASSESSEE TO PROVE THE GENUINENESS OF OUTSTANDING ADVANCE BY PROVIDING THE NECESSARY EVIDENCE REGARDI NG THE IDENTITY, CAPACITY AND CREDITWORTHINESS OF THE CREDITOR. THE ASSESSEE HAS NOT PRODUCED ANY EVIDENCE BEFORE THE AO. FURTHER, THE LD.DR ARGUED THAT BEFORE THE LD.CIT(A) ALSO, THE ASSESSEE HAS NOT FUR NISHED ANY SUCH EVIDENCE TO PROVE THE GENUINENESS, CREDITWORTHINESS AND CAPACITY OF CREDITORS. THE LD.CIT(A) DELETED THE ADDITION MERE LY ON ASSUMPTION THAT M/S.XIAMEN ORIENT WANG FENG INDUSTRIAL CO. LTD., IS THE MAJOR IMPORTER OF THE ASSESSES PRODUCT AND THE ASSESSEE HAS RECEIVED AN AMOUNT OF ITA NO.548/MDS/2014 & CO NO.42/MDS/2014 :- 14 -: 1,25,42,000/- AGAINST THE SALE OF GRANITE BLOCKS WH ICH WAS CROSS VERIFIABLE. THE LD.DR FURTHER SUBMITTED THAT THE A SSESSEE HAS NOT EVEN PROVED THE GENUINENESS OF THE OUTSTANDING OR SALES OF GRANITES WITH TRANSACTION TO TRANSACTION, IDENTITY AND REASONS FO R KEEPING THE BALANCE IN ADVANCES UNDER THE HEAD CREDITORS. THEREFORE, THE LD.DR OF THE VIEW THAT THE ISSUE NEEDS DETAILED VERIFICATION. THEREFORE, THIS ISSUE SHOULD GO BACK TO AO FOR FURTHER VERIFICATION. ON THE OTHER HAND, THE LD.AR RELIED ON THE ORDER OF THE LD.CIT(A). 7.4 WE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MAT ERIAL PLACED ON RECORD. THERE WAS AN OUTSTANDING AMOUNT OF 1,35,42,370/- IN THE NAME OF M/S.XIAMEN ORIENT WANG FENG INDUSTRIAL CO. LTD. WHI CH WAS RECEIVED FROM GLOBAL ENTERPRISE PVT. LTD., ON 18.02.2010, ON 29.0 3.2010 & ON 30.03.2010 AND A SUM OF 84,11,900/- WAS FDBP AMOUNT. THE BALANCE AMOUNT OF 10,31,549/- WAS NOT EXPLAINED BY THE ASSESSEE WHICH WAS ADDED BY THE AO AND CONFIRMED BY THE LD.CIT(A). FDB P AMOUNT WAS THE BILLS RECEIVED FROM THE CUSTOMERS WHICH WERE DISCOU NTED IN THE BANK AND THE NOMENCLATURE EXTENDED BY THE BANK IS FOREIGN DI SCOUNT BILLS PURCHASED (IN SHORT FDBP). ALL THE AMOUNTS INCLU DING THE FDBP AMOUNTS WERE EXPLAINED TO BE RELATED TO THE ADVANCES RECEIV ED FROM THE CUSTOMERS FOR SUPPLY OF GRANITE AS STATED BY THE ASSESSEE. T HE ASSESSEE ALSO STATED THAT A SUM OF 1,25,10,821/- WAS RELATED TO THE SALES MADE TO M/S. XIAMEN ITA NO.548/MDS/2014 & CO NO.42/MDS/2014 :- 15 -: ORIENT WANG FENG INDUSTRIAL CO. LTD. OR THEIR CUSTO MERS. NO CONFIRMATION HAS BEEN SUBMITTED BY THE ASSESSEE FROM THE RESPECT IVE CUSTOMERS WHO MADE THE PAYMENT OF ADVANCE. FDBP BILLS DISCOUNTED IN BANK TOWARDS THE SUPPLIES MADE BY THE ASSESSEE. FURTHER, NAME AND AD DRESS AND DETAILS RELATING TO THE FOREIGN CUSTOMERS REQUIRED TO BE SU BMITTED BY THE ASSESSEE BEFORE THE AO TO ESTABLISH THE GENUINENESS AND CORR ECTNESS OF THE OUTSTANDING BALANCES AND ITS ORIGIN OF SOURCE WITH TRANSACTION. THOUGH, ASSESSEE STATED THAT ALL THE TRANSACTIONS RELATED T O THE SALE TRANSACTIONS BUT NOT RECONCILED THE ADVANCES WITH THE SALE BILLS ONE TO ONE BASIS. IN THE ABSENCE OF RECONCILIATION, IT IS NOT ESTABLISHE D WHETHER THE SALES HAVE ALREADY BEEN MADE TO THE CUSTOMERS OR YET TO BE MAD E. IN CASE, THE SALES HAVE BEEN EXECUTED NECESSARY REVERSING ENTRIES TO B E PASSED IN THE BOOKS OF ACCOUNTS BY NULLIFYING THE OUTSTANDING BALANCES. IN ANY CASE, THERE WAS AN OUTSTANDING BALANCE IN THE BALANCE SHEET AND THE BURDEN OF THE ASSESSEE HAS NOT BEEN DISCHARGED BY PROVIDING THE C ONFIRMATION AND THE EXACT NATURE OF TRANSACTION WITH RELEVANT BILLS. T HEREFORE, WE ARE OF THE CONSIDERED OPINION THAT THE ISSUE SHOULD GO BACK TO THE FILE OF THE AO FOR VERIFICATION OF THE GENUINENESS OF THE OUTSTANDING BALANCE AND THE ASSESSEE SHOULD SUBMIT THE NECESSARY EVIDENCE TO PR OVE THE OUTSTANDING BALANCE AS GENUINE BY FURNISHING NECESSARY EVIDENCE BEFORE THE AO. THE AO IS FREE TO MAKE NECESSARY ENQUIRIES AND DECIDE T HE ISSUE AFRESH ON MERITS. ACCORDINGLY, THE ISSUE RELATING TO THE ADDI TION OF 1,25,82,156/- IS ITA NO.548/MDS/2014 & CO NO.42/MDS/2014 :- 16 -: SET-ASIDE TO THE FILE OF AO FOR FRESH CONSIDERATION ON MERITS. GROUND NO.4 OF THE REVENUE IS ALLOWED FOR STATISTICAL PURPOSE. 8.0 GROUND NO.5 IS RELATED TO UNEXPLAINED CASH CRED IT IN THE NAME OF NSK EXPORTS AMOUNTING TO 1,03,45,310/- 8.1 THE AO FOUND THAT A SUM OF 1,04,17,467/- WAS OUTSTANDING IN THE NAME OF M/S.NSK EXPORTS UNDER THE HEAD SUSPENSE A/ C AS ON 31.03.2010. THE AO CALLED FOR THE DETAILS AND THE ASSESSEE FURNISHED THE DETAILS AS UNDER: DATE ACCOUNT HEAD AMOUNT 03.09.2009 TRV GLOBAL TRADING 38,34,858.00 20.04.2009 DHANESH IMPEX 33,00,000.00 26.06.2009 DHANESH IMPEX 1,00,000.00 17.08.2009 DHANESH IMPEX 5,00,000.00 18.08.2009 DHANESH IMPEX 1,50,000.00 31.03.2010 SAIPRABHA GRANITES 1,40,379.00 31.03.2010 SHRI IMPEX 10,63,948.00 03.03.2010 M & G SONS 50,000.00 06.10.2009 SUSPENSE - RECEIPT 7,06,125.00 24.02.2010 A.S.SHIPPING AGENCIES 5,00,000.00 TOTAL 1,03,45,310.00 8.2 THE ASSESSEE HAS PROVIDED THE DETAILS FOR BREAKUP OF THE AMOUNT FOR 1,03,45,310/- AGAINST THE OUTSTANDING BALANCE OF 1,04,17,467/-. THE AO OBSERVED THAT THE ASSESSEE COULD NOT PROVIDE ANY EVIDENCE REGARDING THE RECEIPT OF THE SAID AMOUNT FROM NSK EXPORTS AND IT WAS SHOWN AGAINST THE DIFFERENT NAMES AND THERE WAS COMPLETE MISMATCH IN THE NAMES. THEREFORE, THE AO MADE ADDITION U/S.68 OF INCOME TA X ACT. BEFORE THE ITA NO.548/MDS/2014 & CO NO.42/MDS/2014 :- 17 -: LD.CIT(A), THE ASSESSEE STATED THAT M/S.NSK EXPORT WAS WRONGLY MENTIONED AND THERE WAS NO PARTY BY NAME M/S.NSK E XPORTS AND IT WAS NSK WHICH MEANS MR.N.SHIVKUMAR, THE ASSESSEE HIMSEL F. FURTHER, IT WAS STATED BY THE ASSESSEE THAT ALL THE ABOVE SUMS WERE RECEIVED BY MR.SHIVAKUMAR IN THE BANK ACCOUNT MAINTAINED WITH T HE SBI, SIRUTHOZHIL BRANCH, CHENNAI, AND BROUGHT INTO THE BUSINESS AND SHOWN UNDER THE HEAD ADVANCES. THE ASSESSEE ALSO EXPLAINED THE DET AILS AS UNDER: 38,34,858/- RECEIVED FROM TRV GLOBAL TRADING: ASSE SSEE IS A PARTNER IN M/S.TRV GOBAL TRADING CO., AND THE AMOUN T WAS RECEIVED TO MEET THE TEMPORARY REQUIREMENT OF FUNDS THROUGH BANK ACCOUNT. THE ASSESSEE ALSO SUBMITTED A COPY OF BANK STATEMEN T AND THE PARTNERSHIP DEED BEFORE THE LD.CIT(A). 40.50 LAKHS RECEIVED FROM M/S.DANESH PVT. LTD.: THE AMOUNT HAS RECEIVED FROM THE ABOVE GRANITE COMPANY FOR ARRANGI NG THE GOODS FOR VARIOUS DEEDS. THE ASSESSEE HAS FURNISHED A CO PY OF BANK STATEMENT, CONFIRMATION LETTER BEFORE THE LD.CIT(A) . 1,40,379/- RECEIVED FROM SAI BROKER GRANITES AND 10,63,948/- FROM SALEM: THESE AMOUNTS WERE NOT RECEIVED PHYSICA LLY FROM THE PARTIES AND THE AMOUNTS REPRESENTS CREDITS ALLOWED TO THE ABOVE PARTIES IN THE NORMAL COURSE OF BUSINESS. 50,000/- RECEIVED FROM M&G SONS: THE AMOUNT WAS RE CEIVED AS ADVANCE FROM THE CUSTOMERS FOR SUPPLY OF GRANITE BL OCKS. THE ITA NO.548/MDS/2014 & CO NO.42/MDS/2014 :- 18 -: AMOUNT WAS RECEIVED THROUGH BANK AND BANK STATEMENT WAS PRODUCED BEFORE THE LD.CIT(A). 7,06,125/- MISCELLANEOUS RECEIPTS: THESE AMOUNTS RE PRESENT REIMBURSEMENT OF COSTS/EXPENSES PAID BY THE ASSESSE E AT THE QUERIES TO GET THEIR JOBS COMPLETED ON PRIORITY FRO M THE CONTRACTS AT THE QUERIES. THESE AMOUNTS ARE PAID BACK TO THEM B Y THE QUARRY OWNERS AT REGULAR PERIODICAL INTERVALS. 5 LAKHS FROM M/S.AS SHIPPING AGENCIES PVT. LTD.: TH E ASSESSEE STATED THAT THIS AMOUNT HAS BEEN RECEIVED BY THE AP PELLANT AS SECURITY DEPOSIT AGAINST THE LEASE OF FLAT NO.85, B LOCK-A, TURN BULLS ROAD, NANDANAM, CHENNAI 600 035. THE RENTAL INCO ME OF THIS FLAT HAS ALREADY BEEN SHOWN IN THE RETURN OF INCOME. A COPY OF THE LEASE AGREEMENT HAS ALSO BEEN SUBMITTED BY THE ASSESSEE B EFORE THE LD.CIT(A). THE LD.CIT(A) DELETED THE ADDITION OF 1,03,45,310/- HOLDING THAT THE APPELLANT HAS EXPLAINED THE TRANSACTIONS AND TH E TRANSACTIONS ARE NOTHING BUT SALE PROCEEDS RECEIVED AGAINST THE SALES. THE LD.CIT(A) CONFIRMED THE ADDITION OF 72,157/- FOR NON-SUBMISSION OF THE DETAILS. 8.1 AGGRIEVED BY THE ORDER OF THE LD.CIT(A) THE REVENU E IS ON APPEAL BEFORE US. ITA NO.548/MDS/2014 & CO NO.42/MDS/2014 :- 19 -: APPEARING FOR THE REVENUE, THE LD.DR ARGUED THAT T HOUGH THE ASSESSEE HAS PRODUCED THE BANK STATEMENT, PARTNERSH IP DEEDS AND CONFIRMATIONS BEFORE THE LD.CIT(A) AND THE LD.CIT(A ) HAS NOT CALLED FOR THE REMAND REPORTS AND GIVEN AN OPPORTUNITY TO THE AO TO DEFEND THE CASE. NO EVIDENCE WHATSOEVER HAS BEEN PRODUCED BY THE ASSESSEE BEFORE THE AO TO SUBSTANTIATE THE OUTSTANDING ADVANCES IN THE NAME OF M/S.NSK EXPORTS. THEREFORE, THE LD.DR ARGUED THAT THE OUTS TANDING ADVANCE WAS NOT PROVED AND THE ADDITION SHOULD BE CONFIRMED. A LTERNATIVELY, THE LD.DR SUBMITTED THAT THE CASE SHOULD GO BACK TO THE AO FO R FURTHER VERIFICATION. ON THE OTHER HAND, THE LD.AR DEFENDED THE ORDER OF THE LD.CIT(A) AND ACCORDING TO HIM, THE LD.CIT(A) RIGHTLY DELETED THE ADDITION OF 1,03,45,310/-. 8.2 WE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MAT ERIAL PLACED BEFORE US. THERE WAS AN OUTSTANDING BALANCE OF 1,04,17,467/- AS ON 31.03.2010 IN THE NAME OF M/S.NSK EXPORTS WHICH WAS ACCEPTED BY BOTH THE PARTIES. OUT OF THE SAID AMOUNT, THE LD.CIT(A) HAS DELETED THE AMOUNT OF 1,03,45,310/- AND CONFIRMED THE ADDITION OF 72,157/-. THE LD.CIT(A) OBSERVED THAT THE ADDITION MADE BY THE AO AMOUNTING TO 1,03,45,310/- IS NOTHING BUT SALE PROCEEDS RECEIVED AGAINST THE SALES AND SALE-WISE INVOICES/BILLS WERE PRODUCED BEFORE THE L D.CIT(A). IN THE CASE OF TRV GOLBAL TRADING, THE AMOUNT WAS RECEIVED FOR MEETING THE ITA NO.548/MDS/2014 & CO NO.42/MDS/2014 :- 20 -: TEMPORARY REQUIREMENTS OF FUNDS AND IN THE CASE OF DHANESH IMPEX THE AMOUNT WAS RECEIVED FOR THE PURPOSE OF FOR ARRANGIN G GOODS FOR THEM FROM QUARRY OWNERS AND NO DETAILS OF DATES OF SUPPLY WAS FURNISHED BEFORE THE LD.CIT(A). IN THE CASE OF SAI GRANITES AND SHRI IM PEX CREDITS WERE JOURNAL ENTRIES IN THE CASE OF MISCELLANEOUS RECEIP TS, IT WAS REIMBURSEMENT OF EXPENSES AND IN THE CASE OF A.S.SH IPING AGENCIES THE AMOUNT WAS FOR SECURITY DEPOSIT. THE OBSERVATION O F THE LD.CIT(A) WAS THE TRANSACTIONS WERE SALES. THE EXPLANATION WAS AP PARENTLY CONTRADICTORY TO THE OBSERVATION OF THE LD.CIT(A). IT IS NOT CLE AR FROM THE ORDER, ON WHAT BASIS THE LD.CIT(A) LANDED IN CONCLUSION TO HO LD THAT THE TRANSACTIONS WERE NOTHING BUT THE SALE PROCEEDS. THE EVIDENCE I N THE FORM OF BANK STATEMENT, PARTNERSHIP DEEDS, CONFIRMATIONS, PRODUC ED BY THE ASSESSEE BEFORE THE LD.CIT(A) WAS NOT MADE AVAILABLE TO THE AO. THE LD.DR STATED THAT THE ADVANCES RECEIVED FROM THE TRV GLOBAL, DAN ESH IMPEX & JOURNAL ENTRIES IN THE CASE OF SAI PRABHA GRANITES, A.S. SH IPPING AGENCIES, MG & SONS AND REIMBURSEMENT OF MISCELLANEOUS EXPENSES RE QUIRED TO BE VERIFIED TO FIND OUT THE FACT. IN THE ABSENCE OF TH E EVIDENCE REGARDING GENUINENESS OF THE TRANSACTIONS, THE LD.DR RIGHTLY SUGGESTED FOR REMITTING THE MATTER BACK TO THE FILE OF AO. THEREFORE, WE H OLD THAT THE CASE SHOULD BE REMITTED BACK TO THE AO FOR FURTHER VERIFICATION . THE ASSESSEE IS DIRECTED TO SUBMIT NECESSARY EVIDENCES TO PROVE THE GENUINENESS OF THE OUTSTANDING AND RECONCILE THE SALES MADE WITH THE SALES ACCOUNT ON PARTY TO PARTY BASIS OR ONE TO ONE BASIS BEFORE THE AO. I N THE RESULT, THE ISSUE IS ITA NO.548/MDS/2014 & CO NO.42/MDS/2014 :- 21 -: SET-ASIDE TO THE FILE OF AO WHO WILL DECIDE THE MAT TER AFRESH ON MERITS AFTER GIVING OPPORTUNITY TO THE ASSESSEE. GROUND N O.5 OF THE REVENUE IS ALLOWED FOR STATISTICAL PURPOSE. 9.0 GROUND NO.6 IS RELATED TO THE ADDITION OF 1,44,50,000/-CASH CREDITS OUTSTANDING IN THE NAME OF OSCAR GRANITES & MARBLES . AN AMOUNT OF 1,86,56,000/- WAS OUTSTANDING IN THE ABOVE NAME AS ON 31.03.2010 UNDER THE HEAD SUSPENSE A/C. THOUGH THE AMOUNT W AS OUTSTANDING IN THE NAME OF OSCAR GRANITES & MARBLES, THE ASSESSEE REPLIED THAT THE AMOUNTS WERE RECEIVED FROM TRV GLOBAL EXPORTS, SHRI N.SHIVKUMAR HIMSELF AND M/S.XIAMEN ORIENT WANG FENG INDUSTRIAL CO. LTD. THE AO NOTICED THAT THE AMOUNTS WERE IN FACT RECEIVED FROM TRV GLOBAL EXPORTS, VENKATARAMAN, NAGARAJ AND VENI EXPORTS AND THE AMOU NT OF 41,46,579/- FROM M/S.XIAMEN ORIENT WANG FENG. THE ASSESSEE DID NOT SUBMIT ANY PROOF OF IDENTITY AND GENUINENESS OF THE TRANSACTIO NS .HENCE THE LD.AO HAS ADDED THE ENTIRE AMOUNT TO THE RETURNED INCOME. THE LD.CIT(A) CONFIRMED THE ADDITION OF 42,06,000/-COMPRISING OF THE AMOUNT RECEIVED FROM M/S.XIAMEN ORIENT WANG FENG AND A SUM OF 59,241/- FOR NO EXPLANATION AND LACK OF DOCUMENTARY EVIDENCE AND DE LETED THE REMAINING ADDITION OF 1,44,50,000/-.AGGRIEVED BY THE ORDER OF THE LD.CIT( A) THE REVENUE IS IN APPEAL BEFORE US. ITA NO.548/MDS/2014 & CO NO.42/MDS/2014 :- 22 -: 9.1 WE HEARD BOTH THE PARTIES AND PERUSED THE MATERIAL PLACED ON RECORD. THE LD.CIT(A) STATED IN THE APPELLATE ORDER THAT THE ASSESSEE HAS EXPLAINED THE RECEIPTS TO THE EXTENT OF 1,85,96,579/- WHICH WERE RECEIVED FROM TRV GLOBAL EXPORTS A SUM OF 1,11,5000/- AND DATE WISE TALLIED, AS PER THE ASSESSMENT ORDER. BUT ON VERIFI CATION OF THE ASSESSMENT ORDER, NO SUCH ENDORSEMENT OF THE AO WAS FOUND. IN THE APPEAL HEARING THE LD.AR SUBMITTED THAT THE AMOUNT WAS RECEIVED FROM TRV GLOBAL TO MEET THE FUND REQUIREMENTS OF GANESH GRANITES. IN RESPECT OF 24.00 LAKHS IT WAS EXPLAINED AS WITHDRAWALS MADE ON VARIOUS DATES AND RETURN OF THE SAME ADVANCES BY THE CUSTOMERS ON REJECTION OF MATERIAL SUPPLY AND THE DEPOSITS WERE MADE BY SHRI N.SHIVA KUMAR. IN RESPECT OF ADVANCES RECEIVED FROM M/S.VENI EXPORTS SUM OF 9.00 LAKHS STATED TO BE ADVANCE RECEIVED FROM THE CUSTOMER DEP OSITED IN THE BANK ACCOUNT. IT IS EVIDENCED FROM THE ASSESSMENT ORDER AND THE EXPLANATION OF THE ASSESSEE THAT THE OUTSTANDING IN THE NAME OF OSCAR GRANITES & MARBLE WAS WRONG CLASSIFICATION AND THE REASONS FOR KEEPING THE ABOVE AMOUNTS IN THE NAME OF OSCAR GRANITES & MARBLES WAS NOT EXPLAINED BY THE ASSESSEE. SIMILARLY, SCRUTINY OF THE DETAILS R EVEAL THAT THE AMOUNTS WERE RECEIVED FROM THE TRV GLOBAL EXPORT, MR.VENKAT ARAMAN, MR.NAGARAJ AND M/S.VENI EXPORTS AS AGAINST THE OUTSTANDING IN OSCAR GRANITES WHICH IS A MISMATCH. IN THE EXPLANATION OFFERED BY THE ASSESSEE BEFORE THE LD.CIT(A), 24.00 LAKHS WAS DEPOSITED BY MR.SHIVAKUMAR FROM THE ITA NO.548/MDS/2014 & CO NO.42/MDS/2014 :- 23 -: WITHDRAWALS WHEREAS, AS PER BANK ACCOUNT IT WAS DEP OSITED IN THE NAME OF MR.NAGARAJ. ON CAREFUL ANALYSIS OF THE ASSESSMENT O RDER, LD.CIT(A)S ORDER AND THE EXPLANATION OF THE ASSESSEE IT LEADS TO CONFUSION RATHER THAN CLARITY. THOUGH THE ASSESSEE HAS CLAIMED THAT THE AMOUNT OF 1,11,50,000/- WAS RECEIVED FROM THE TRV GLOBAL EXPO RTS WHETHER IT WAS RECEIVED BY THE ASSESSEE HIMSELF OR RECEIVED BY THE OSCAR GRANITES REMAINED UNEXPLAINED. NO CONFIRMATION WAS FURNISHE D BY THE ASSESSEE AND NO VERIFICATION WAS MADE BY THE LD.CIT(A). THE REFORE, WE ARE OF THE CONSIDERED OPINION THAT THE ENTIRE CREDIT OF 1,44,50,000/- REQUIRES THOROUGH VERIFICATION TO FIND OUT THE NATURE OF ACT UAL TRANSACTION AND THE GENUINENESS OF OUTSTANDING. THEREFORE, WE REMIT TH E MATTER BACK TO THE FILE OF AO WHO IN TURN MAKE FURTHER VERIFICATIONS R EGARDING THE GENUINENESS OF THE OUTSTANDING BALANCE AND THE SOURCE. THE ASSE SSEE IS DIRECTED TO PRODUCE THE CONFIRMATIONS AND SUBMIT THE REQUIRED I NFORMATION TO SUBSTANTIATE ITS CLAIM BEFORE THE AO. ACCORDINGLY , GROUND NO.6 OF THE REVENUE IS ALLOWED FOR STATISTICAL PURPOSES. 10.0 GROUND NO.7 IS RELATED TO THE ADDITION OF 38,52,479/- OUTSTANDING IN THE NAME OF PSR GRANITES PVT. LTD., AND 29,81,564/- IN THE NAME OF PSR GRANITES. THE ABOVE AMOUNTS WERE OUTSTANDING IN SUSPENSE A/C AS ON 31.10.2010. ITA NO.548/MDS/2014 & CO NO.42/MDS/2014 :- 24 -: 10.1 IN THE CASE OF PSR GRANITES, THE ASSESSEE SUB MITTED THE BREAKUP AS FOLLOWS: ON 25.04.2009 SHIVAKUMAR 8,50,000/- ON 23.02.2010 AIR SHIPPING AGENCIES 6,74,540/- ------------------ TOTAL - 15,24,840/- ------------------ THE ASSESSEE DID NOT FURNISH THE DETAILS FOR THE R EMAINING AMOUNT OF 14,57,023/-. THOUGH THE AMOUNT WAS OUTSTANDING IN THE NAME OF PSR GRANITES, AS PER THE DETAILS FURNISHED BY THE ASSES SEE, THE AMOUNTS WERE IN FACT CREDITED TO THE ACCOUNT OF SHRI N.SHIVAKUMA R AND AIR SHIPPING AGENCIES. THE ASSESSEE HAS NOT FURNISHED THE EXPLA NATION FOR KEEPING THE ABOVE AMOUNTS IN THE NAME OF PSR GRANITES PVT. LTD. , AND SOURCE AND NATURE OF THE TRANSACTION WAS NOT EXPLAINED. THE A SSESSEE DID NOT FURNISH ANY RECONCILIATION TO ESTABLISH THE GENUINENESS, ID ENTITY OF THE ABOVE CREDITOR WITH THE RELEVANT INVOICES, SALE BILLS, ET C. THEREFORE, THE AO MADE THE ADDITION OF 29,81,564/- U/S.68 OF INCOME TAX ACT. 11.0 IN THE CASE OF PSR GRANITES PVT. LTD., THE A SSESSEE REPLIED THAT THE AMOUNT WAS ACTUALLY RELATED TO PURCHASE MADE FO RM PSR GRANITES PVT. LTD., BUT ERRONEOUSLY ACCOUNTED IN M/S.XIAMEN ORIEN T WANG FENG. INDUSTRIAL CO. LTD. THE AMOUNT OUTSTANDING WAS 36,45,727/- AGAINST THE ACCOUNT OF CREDITORS, BUT IN THE BALANCE SHEET IT W AS REPORTED AS ITA NO.548/MDS/2014 & CO NO.42/MDS/2014 :- 25 -: 38,22,479/- THE ASSESSEE ALSO DID NOT FURNISH THE PROOF AND CONFIRMATION FROM THE CREDITORS. THEREFORE, THE AO MADE THE ADDITION OF 38,22,479/- AS AN UNEXPLAINED CASH CREDIT IN THE HA NDS OF THE ASSESSEE. THE LD.CIT(A) DELETED THE ADDITION HOLDING THAT IT WAS A NORMAL BUSINESS TRANSACTION AND THE TAX WAS DEDUCTED. 11.1 AGGRIEVED BY THE ORDER OF THE LD.CIT(A), THE DEPAR TMENT HAS FILED APPEAL BEFORE US. THE LD.DR ARGUED THAT THE AMOUNT WAS OUTSTANDING I N THE NAME OF PSR GRANITES PVT. LTD., WHEREAS THE ASSESSEE CLAIMS THAT THE AMOUNT WAS RELATED TO SHRI N.SHIVAKUMAR AND A.S. SHIPPING AGEN CIES. THE ASSESSEE NEITHER FURNISHED THE CONFIRMATION LETTERS FROM A. S SHIPPING AGENCIES IN THE CASE OF PSR GRANITES AND M/S.XIAMEN ORIENT WANG FENG INDUSTRIAL CO. LTD/ PSR GRANITES PVT. LTD FOR THE OUTSTANDING A MOUNTS. SIMILARLY IN THE CASE OF SHRI N.SHIVAKUMAR THE SOURCE REQUIRED TO BE EXPLAINED AND THE EVIDENCE HAS TO BE FURNISHED. THE ASSESSEE HAS NOT FILED ANY EVIDENCE BEFORE THE AO. THOUGH, THE LD.CIT(A) STATED THAT I T WAS NORMAL BUSINESS TRANSACTION SUPPORTED BY TDS CERTIFICATES, NO EVID ENCE WAS FURNISHED BEFORE THE AO. THEREFORE, THE LD.DR OF THE OPIN ION THAT THE CASE SHOULD BE REMITTED BACK TO THE AO. ON THE OTHER HAND, THE LD.AR ARGUED THAT IT WAS A NORMAL BUSINESS TRANSACTION, THE TAX WAS DEDU CTED BY THE ASSESSEE ITA NO.548/MDS/2014 & CO NO.42/MDS/2014 :- 26 -: AND ALL THE EVIDENCES WERE FURNISHED BEFORE THE LD. CIT(A) AND HENCE THE ORDER OF THE LD.CIT(A) TO BE CONFIRMED. 11.2 WE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MAT ERIAL PLACED ON RECORD. AS PER THE AO, IT IS SEEN THAT THE ASSESSEE HAS NO T FURNISHED ANY EVIDENCE TO PROVE THE TRANSACTION AS GENUINE. THE ASSESSEE HAS NOT EXPLAINED THE SOURCE FOR THE CREDIT INTO THE ACCOUN T OF SHRI N.SHIVAKUMAR IN THE CASE OF PSR GRANITES PVT. LTD., AND NO CONFI RMATION OF A.S SHIPPING AGENCIES WAS FURNISHED BEFORE THE AO. SIMILARLY, N O CONFIRMATION WITH REGARD TO PSR GRANITES PVT. LTD./PSR GRANITES, WAS FURNISHED BEFORE THE AO. THE FACT THAT THE AMOUNTS ARE OUTSTANDING UNDE R SUSPENSE A/C IN THE NAME OF PSR GRANITES PVT. LTD., AND THE PSR GRA NITES PVT. LTD., IS NOT DISPUTED. WHEN THE ASSESSEE IS SHOWING OUTSTANDING BALANCES IN THE BALANCE SHEET, IT IS THE BURDEN ON THE ASSESSEE TO PROVE THE TRANSACTIONS ARE GENUINE BY FURNISHING NECESSARY EVIDENCE TO EST ABLISH THE IDENTITY, GENUINENESS AND CORRECTNESS OF THE TRANSACTION. IT APPEARS THAT NO PROPER RE-CONCILIATION WAS DONE BY THE ASSESSEE AT THE TIM E OF FINALIZING THE BOOKS OF ACCOUNTS. THOUGH, THE ASSESSEE CLAIMING T HAT THE OUTSTANDING REPRESENTS THE SALES NO EVIDENCE HAS BEEN PRODUCED BY THE ASSESSEE BEFORE THE AO TO SUBSTANTIATE THE SALES. THE LD.CI T(A) ALSO DID NOT CALL FOR REMAND REPORT. THEREFORE, WE ARE OF THE CONSIDERED OPINION THAT THIS ISSUE REQUIRED FURTHER VERIFICATION BY THE AO. ACC ORDINGLY, WE SET-ASIDE ITA NO.548/MDS/2014 & CO NO.42/MDS/2014 :- 27 -: THE ORDERS OF THE LOWER AUTHORITIES AND REMIT BACK THE MATTER TO THE FILE OF AO WITH INSTRUCTIONS TO MAKE FRESH ENQUIRIES AND DE CIDE THE MATTER AFRESH ON MERITS. GROUND NO.7 OF THE REVENUE IS ALLOWED F OR STATISTICAL PURPOSE. 12.0 CROSS-OBJECTION NO.42/MDS/2014 1. FOR THAT THE ORDER OF THE COMMISSIONER OF INCOME TA X (APPEALS) IS CONTRARY TO LAW, FACTS AND CIRCUMSTANCES OF THE CASE TO THE EXTENT P REJUDICIAL TO THE INTEREST OF THE APPELLANT AND IS OPPOSED TO THE PRINCIPLES OF EQUIT Y, NATURAL JUSTICE AND FAIR PLAY. 2. FOR THAT THE COMMISSIONER OF INCOME TAX (APPEALS) E RRED IN CONFIRMING THE ADDITION OF 39,00,000/- BEING LOANS TAKEN IN CASH FROM RELATIVE S OF THE RESPONDENT AS UNEXPLAINED CASH CREDIT U/S.68. 3. FOR THAT THE COMMISSIONER OF INCOME TAX (APPEALS) E RRED IN CONCLUDING THAT THE RESPONDENT HAS NOT ESTABLISHED THE IDENTITY, CAPACI TY TO LEND AND GENUINENESS OF THE RELATIVES WITHOUT GRANTING SUFFICIENT OPPORTUNITY T O THE RESPONDENT. 4. FOR THAT THE COMMISSIONER OF INCOME TAX (APPEALS) E RRED IN UPHOLDING THE ADDITION OF THE FOLLOWING CREDITS U/S.68 AS UNEXPLAINED CREDITS : NAME OF THE PARTY AMOUNT IN ORIENT WANG FENG 10,31,549.00 NSK EXPORTS 72,157.00 OSCAR GRANITES & MARBLES 42,06,000.00 TOTAL 53,09,706.00 12.1 GROUND NO.1 IS GENERAL IN NATURE WHICH DOES NOT RE QUIRE SPECIFIC ADJUDICATION. 12.2 GROUND NOS.2 & 3 ARE RELATED TO THE CONFIRMATION O F ADDITION OF 39,00,000/- U/S.68 OF THE INCOME TAX ACT. THE ASSES SEE HAS CREDITED A SUM OF 62,99,785/- ON 04.04.2009 IN THE CAPITAL ACCOUNT AN D THE SOURCE WAS EXPLAINED AS LOAN TAKEN IN CASH FROM RELATIVES. THOUGH, ASSESSEE STATED THAT THE CONFIRMATIONS WERE FILED BUT NO SU CH ENDORSEMENT WAS ITA NO.548/MDS/2014 & CO NO.42/MDS/2014 :- 28 -: MADE BY THE AO IN THE ASSESSMENT ORDER. THE AO MAD E THE ADDITION FOR NOT ESTABLISHING THE IDENTITY. THE LD.CIT(A) CONFI RMED THE ADDITION STATING THAT THE ASSESSEE HAS NOT PROVED THE IDENTITY, CAPA CITY AND GENUINENESS OF THE TRANSACTION. THE ASSESSEE FILED A CROSS OBJECT ION IN APPEAL NO.548/2014 OF REVENUE. THE LD.COUNSEL APPEARING F OR THE ASSESSEE ARGUED THAT THE LOANS WERE GENUINE AND CONFIRMATION S WERE FURNISHED BEFORE THE AO AND NO ADDITION WAS CALLED FOR. HOWE VER, NO EVIDENCE WAS PRODUCED BY THE ASSESSEE BEFORE THIS TRIBUNAL EVIDE NCING THE CONFIRMATION HAVING FILED BEFORE THE AO/CIT(A). FURTHER, NO FRE SH CONFIRMATIONS OR NAY EVIDENCE FILED BEFORE US TO PROVE THE GENUINENESS O F LOANS AND SOURCES. THEREFORE, WE DO NOT INCLINE TO INTERFERE WITH THE ORDER OF THE LD.CIT(A) AND THE ASSESSEES GROUND ON THIS ISSUE IS DISMISSE D. 12.4 GROUND NO.4 IS RELATED TO THE ADDITION MADE U/S.68 OF INCOME TAX ACT AS UNDER: NAME OF THE PARTY AMOUNT IN ORIENT WANG FENG 10,31,549.00 NSK EXPORTS 72,157.00 OSCAR GRANITES & MARBLES 42,06,000.00 TOTAL 53,09,706.00 12.5 I) M/S.XIAMEN ORIENT WANG FENG INDUSTIRAL CO. LTD., 10,31,549/-: BEFORE THE AO THE ASSESSEE DID NOT FURNISH THE DETA ILS AND THE SOURCE OF THE CREDIT WAS NOT EXPLAINED AND HENCE TH E AO MADE THE ADDITION. THE ASSESSEE EXPLAINED BEFORE THE LD.CIT (A) THAT THE ITA NO.548/MDS/2014 & CO NO.42/MDS/2014 :- 29 -: AMOUNT OF 10,39,549/- WAS ON ACCOUNT OF DISCOUNTS RETAINED BY THE COMMISSION AGENT AS WE ALL BANK CHARGES. THE LD.CI T(A) REJECTED THE EXPLANATION OF THE ASSESSEE AND CONFIRMED THE A DDITION. DURING THE APPEAL HEARING, THE LD.AR DID NOT BRING ANY EVI DENCE TO SHOW THAT THE AMOUNT REPRESENT THE COMMISSION OR THE BAN K CHARGES. SIMILARLY, NO EVIDENCE WAS PROVIDED EXPLAINING THE SOURCES. THEREFORE, WE DO NOT FIND ANY INFIRMITY IN THE ORDE R OF THE LD.CIT(A) AND THE IS CONFIRMED. II) NSK EXPORTS 72,157/-: THE AO MADE THE ADDITION OF 72,157/- SINCE THE ASSESSEE FAILED TO FURNISH THE DETAILS. THE LD.CIT(A) CONFIRMED THE A DDITION AS PER FINDINGS OF THE AO. BEFORE US ALSO, NO EVIDENCE OR RECONCILIATION WAS FURNISHED EXPLAIN THE SOURCE. THEREFORE, THE ORDER OF THE LD.CIT(A) IS CONFIRMED. III) OSCAR GRANITES 42,06,000/-: THE AMOUNT WAS ADDED FOR NON-SUBMISSION OF DETAILS BY THE AO AND FOR THE SAME REASON THE LD.CIT(A) CONFIRMED THE ADD ITION. THE LD.AR ARGUED THAT THE AMOUNT RELATED TO SALES MADE TO OSCAR GRANITES AND MARBLES ON THE LAST DAY OF THE YEAR I. E. 31.03.2010. IN GROUND NO.6 OF REVENUES APPEAL THIS ISSUE WAS REMI TTED BACK TO THE FILE OF THE AO FOR FRESH ADJUDICATION. THEREFO RE, WE REMIT THE ISSUE RELATING TO THE ADDITION OF 42,06,000/- ALSO TO THE FILE OF AO TO ITA NO.548/MDS/2014 & CO NO.42/MDS/2014 :- 30 -: VERIFY AND DECIDE THE ISSUE AFRESH ON MERITS. THE ASSESSEES GROUND ON THIS ISSUE IS ALLOWED FOR STATISTICAL PURPOSE. GROUND NO.4 OF CROSS-OBJECTIONS IS PARTLY ALLOWED. 12.6 IN THE RESULT, THE ASSESSEES CROSS-OBJECTIONS ARE PARTLY ALLOWED. 13.0 IN THE RESULT, THE APPEAL OF THE ASSESSEE ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 15 TH MARCH, 2017, AT CHENNAI. SD/- SD/- ( . . . ) (N.R.S. GANESAN) /JUDICIAL MEMBER ( ' . . # $!% ) (D.S.SUNDER SINGH) ' /ACCOUNTANT MEMBER /CHENNAI, 5! /DATED: 15 TH MARCH, 2017. TLN 0 .2$6 76+2 /COPY TO: 1. ,- /APPELLANT 4. # 82 /CIT 2. ./,- /RESPONDENT 5. 6 9 .2 /DR 3. # 82 ( ) /CIT(A) 6. * < /GF