S,Govindaraj, CHENNAI V. ITO, Tiruppur

ITA 579/CHNY/2014

• Counselvise Citation: [2014] 120 COUNSELVISE.COM (IT) 7139 (ITAT-CHENNAI)
• Duration Of Justice: 5 month(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 20-08-2014
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 18-08-2014
• Assessment Year: 2009-2010
• Appeal Filed On: 10-03-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: GURU BHASHYAM
• Assessee Lawyers: DR ANITHA SUMANTH
• Keywords: Additional evidence
• Section: 68; 144

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH, CHENNAI . . . , ! '# $% , & #'$ #( BEFORE DR. O.K.NARAYANAN, VICE-PRESIDENTAND SHRI VIKAS AWASTHY, JUDICIAL MEMBER # ./ ITA NO. 579/MDS/2014 & ) *) / ASSESSMENT YEAR : 2009-10 SHRI S. GOVINDARAJ, PROP. M/S G.R. APPARELS, NO.1-B, S.V. COLONY, 4 TH STREET, P.N. ROAD, TIRUPUR 641 602. PAN : ADVPG 2995 G V. THE INCOME TAX OFFICER, WARD I(3), TIRUPUR. (%,/ APPELLANT) (./%,/ RESPONDENT) %, 0 # / APPELLANT BY : DR. ANITHA SUMANTH, ADVOCATE ./%, 0 # / RESPONDENT BY : SHRI GURU BHASHYAM, JCIT # 1 0 23 / DATE OF HEARING : 18 TH AUGUST, 2014 45* 0 23 / DATE OF PRONOUNCEMENT : 20 TH AUGUST, 2014 / O R D E R PER VIKAS AWASTHY, JUDICIAL MEMBER: THE APPEAL HAS BEEN FILED BY THE ASSESSEE ASSAIL ING THE ORDER OF COMMISSIONER OF INCOME TAX (APPEALS)-II, C OIMBATORE, DATED 23/12/2013, FOR THE ASSESSMENT YEAR 2009-10. 2. THE ASSESSEE IS IN THE BUSINESS OF MANUFACTURING AND EXPORT OF HOSIERY GARMENTS. THE ASSESSEE FILED HIS RETURN OF INCOME FOR THE 2 I.T.A. NO. 579/MDS/14 ASSESSMENT YEAR 2009-10 ON 25/03/2011 DECLARING INC OME OF ` 8,61,110/-. THE CASE OF THE ASSESSEE WAS SELECTED FOR SCRUTINY AND NOTICE UNDER SECTION 143(2) OF THE INCOME-TAX A CT, 1961 (HEREINAFTER REFERRED TO AS THE ACT) WAS ISSUED T O THE ASSESSEE ON 29/08/2011. DURING THE COURSE OF SCRUTINY ASSESSME NT, THE ASSESSING OFFICER OBSERVED THAT THE ASSESSEE HAS SH OWN SUNDRY CREDITORS TO THE TUNE OF ` 1,73,86,730/-. TO VERIFY THE GENUINENESS OF CREDITORS, THE ASSESSING OFFICER ISSUED LETTERS TO THE FOLLOWING PARTIES:- 1. M/S THIRUMALA TEXTILE PROCESS, TPR 2. M/S SPK GARMENTS 3. M/S VIVEKA GARMENTS 4. M/S SKV GARMENTS 5. M/S DSP PROCESS 6. M/S TOGMA KNIT WEAR 7. M/S ESPEE FABRICS OUT OF THE ABOVE SAID 7 CREDITORS, THE LETTERS ISSU ED TO 5 PARTIES WERE RETURNED UNDELIVERED WITH ENDORSEMENT NO SUCH PERSON. IN RESPECT OF ONE OF THE SUNDRY CREDITORS, I.E. M/S ES PEE FABRICS, THE ASSESSEE FURNISHED THE ACCOUNT DETAILS, WHICH WERE VERIFIED TO BE GENUINE BY THE A.O. IN RESPECT OF FOLLOWING 4 PART IES, THE ASSESSING OFFICER MADE ADDITION UNDER SECTION 68 AS UNPROVED CREDITORS,:- 1. M/S SPK GARMENTS ` 16,91,845 2. M/S VIVEHA GARMENTS ` 14,97,955 3. M/S SKV GARMENTS ` 41,57,746 4. M/S TOGMA KNIT WEAR ` 5,61,125 TOTAL ` 79,08,671 3 I.T.A. NO. 579/MDS/14 AGGRIEVED BY THE ASSESSMENT ORDER DATED 30/12/201 1, THE ASSESSEE PREFERRED AN APPEAL BEFORE THE CIT(APPEALS ). THE CIT(APPEALS), VIDE IMPUGNED ORDER, DISMISSED THE AP PEAL AS THE ASSESSEE WAS NOT ABLE TO FURNISH CONFIRMATIONS FROM ANY OF THE PARTIES TO SUPPORT HIS CLAIM. NOW, AGGRIEVED BY THE ORDER OF CIT(APPEALS), THE ASSESSEE HAS COME IN SECOND APPEAL BEFORE THE TRIBUNAL. 3. DR. ANITHA SUMANTH, ADVOCATE, APPEARING ON BEHAL F OF THE ASSESSEE, SUBMITTED THAT THE ASSESSEE COULD NOT FUR NISH CONFIRMATION LETTERS BEFORE THE ASSESSING OFFICER A ND THE CIT(APPEALS) AS THEY DID NOT GIVE SUFFICIENT OPPORT UNITY OF HEARING TO FURNISH THE CONFIRMATION LETTERS. ONLY ONE OPPORTU NITY WAS GRANTED BY THE CIT(APPEALS). NOW, THE ASSESSEE HAS GOT CON FIRMATION LETTERS FROM ALL THE SUNDRY CREDITORS IN SUPPORT OF HIS CLAIM. THE LD. COUNSEL FOR THE ASSESSEE FURTHER SUBMITTED THAT THE AUTHORITIES BELOW HAVE ERRED IN MAKING ADDITION OF ` 79,08,671/- UNDER SEC.68 AND HAVE ERRED IN NOT CONSIDERING OPENING BALANCE O F ` 47,07,189.25 AS ON 01/04/2008. THE LD. COUNSEL ALSO PLACED ON R ECORD THE COPIES OF CONFIRMATION LETTERS IN THE FORM OF ADDITIONAL E VIDENCE. 4 I.T.A. NO. 579/MDS/14 4. ON THE OTHER HAND, SHRI GURU BHASHYAM, JCIT, REP RESENTING THE DEPARTMENT, VEHEMENTLY SUPPORTED THE ORDER OF C IT(APPEALS). THE LD. D.R. CONTENDED THAT THE ASSESSEE HAD NOT FU RNISHED CONFIRMATION LETTERS FROM THE CONCERNED CREDITORS E ITHER BEFORE THE ASSESSING OFFICER OR BEFORE THE CIT(APPEALS). NO R EASON WHATSOEVER HAS BEEN GIVEN BY THE ASSESSEE AS TO WHY CONFIRMATION LETTERS WERE NOT FILED BEFORE THE AUTHORITIES BELOW . THE LD. D.R. POINTED OUT THAT THE ASSESSING OFFICER HAD GIVEN FI VE OPPORTUNITIES TO PRODUCE EVIDENCE IN SUPPORT OF HIS CLAIM BUT THE AS SESSEE DID NOT PRODUCE ANY DOCUMENT OR CONFIRMATION LETTER BEFORE THE A.O. EVEN BEFORE THE CIT(APPEALS), THE ASSESSEE DID NOT FILE CONFIRMATION LETTERS FROM THE CONCERNED PARTIES. IN ORDER TO SU PPORT HIS SUBMISSIONS, THE LD. D.R. PLACED RELIANCE ON THE DE CISION OF HON'BLE GUJARAT HIGH COURT IN THE CASE OF FAIRDEAL FILAMENT S LTD. V. CIT REPORTED AS 302 ITR 173 (GUJARAT) AND THE DECISION OF AGRA BENCH OF THE TRIBUNAL IN THE CASE OF SHIVANGI STEEL (P.) LTD. V. ACIT REPORTED AS 147 ITD 166 (AGRA). THE LD. D.R. PRAYE D FOR DISMISSING THE APPEAL OF THE ASSESSEE. 5. WE HAVE HEARD THE SUBMISSIONS MADE BY THE REPRESENTATIVES OF BOTH SIDES AND HAVE PERUSED THE ORDERS OF AUTHORITIES BELOW. THE LD. COUNSEL FOR THE ASSESSE E HAS FILED PETITION FOR ADMISSION OF ADDITIONAL EVIDENCE UNDER RULE 29 OF THE 5 I.T.A. NO. 579/MDS/14 INCOME TAX (APPELLATE TRIBUNAL) RULES. THE ASSESSE E HAS FILED ADDITIONAL EVIDENCE IN THE FORM OF CONFIRMATION LET TERS FROM THE CONCERNED PARTIES. THE LD. COUNSEL HAS CONTENDED T HAT THE ADDITION UNDER SECTION 68 HAS BEEN MADE ONLY FOR THE REASON THAT THE ASSESSEE COULD NOT PRODUCE CONFIRMATION LETTERS FRO M THE CONCERNED CREDITORS. THE ASSESSEE DESPITE HIS BEST EFFORTS, COULD NOT CONTACT THE PARTIES FOR OBTAINING CONFIRMATION LETTERS. TH E ASSESSING OFFICER HAD SOUGHT CONFIRMATION LETTERS FROM 7 CREDITORS. HOWEVER, ONLY THREE PARTIES COULD BE VERIFIED AT THE TIME OF ASSE SSMENT PROCEEDINGS. ACCORDINGLY, THE ASSESSING OFFICER MA DE ADDITION IN RESPECT OF THE REMAINING UNPROVED CREDITORS. NOW, IN SUPPORT OF THE CLAIM, THE ASSESSEE HAS PLACED ON RECORD CONFIRMATI ON LETTERS FROM THE CONCERNED PARTIES ALONG WITH THE REGISTRATION C ERTIFICATES ISSUED BY COMMERCIAL TAXES DEPARTMENT TO THE CREDITORS. 6. THE LD. D.R. HAS OPPOSED ADDITIONAL EVIDENCE SOU GHT TO BE BROUGHT ON RECORD BY ASSESSEE. IN SUPPORT, THE LD. D.R. PLACED RELIANCE ON THE DECISIONS OF THE HON'BLE GUJARAT HI GH COURT AND AGRA BENCH OF THE TRIBUNAL. IN THE CASE OF FAIRDEA L FILAMENTS LTD. V. CIT (SUPRA), THE ASSESSEE FAILED TO SHOW THAT SU FFICIENT OPPORTUNITY WAS NOT GRANTED BY THE AUTHORITIES BELO W. THE HON'BLE HIGH COURT OBSERVED THAT BOTH THE APPELLATE AUTHORI TIES HAD CONCURRENTLY CONCLUDED THAT SUFFICIENT OPPORTUNITIE S WERE GRANTED TO 6 I.T.A. NO. 579/MDS/14 THE ASSESSEE. THE TRIBUNAL DECLINED TO ADMIT ADDIT IONAL EVIDENCE UNDER RULE 29 OF THE IT(AT) RULES, AS THE ASSESSEE WAS NON CO- OPERATIVE, NEGLIGENT AND RECALCITRANT. THE HON'BL E HIGH COURT IN THE BACKGROUND OF THESE FACTS, DECLINED TO REVERSE THE FINDINGS OF THE TRIBUNAL. IN THE CASE OF SHIVANGI STEEL (P.) LTD. V. ACIT ( SUPRA), THE ASSESSEE WAS NON-COOPERATIVE AND DID NOT ATTEND ASS ESSMENT PROCEEDINGS. THE A.O. WAS CONSTRAINED TO MAKE ASSE SSMENT UNDER SECTION 144 OF THE ACT. EVEN IN FIRST APPELLATE PR OCEEDING THE ASSESSEE SOUGHT LARGE NUMBER OF ADJOURNMENTS BUT DI D NOT PRODUCE ANY DOCUMENT. WHEREAS, IN THE PRESENT CASE, A PERUSAL OF THE RE CORDS SHOWS THAT A.O. HAD GRANTED FIVE HEARING OPPORTUNIT IES TO THE ASSESSEE. THE ASSESSEE HAD PROVIDED THE ADDRESSES OF CREDITORS AS AVAILABLE IN HIS RECORDS. IT IS NOT THE CASE OF REVENUE THAT THE ASSESSEE HAS NOT COOPERATED OR IS NEGLIGENT IN PROS ECUTING HIS CASE. IT IS A CASE WHERE THE ASSESSEE COULD NOT GE T CONFIRMATION LETTERS IN TIME FROM CREDITORS. IT IS ALLEGED THAT THE FIRST APPELLATE AUTHORITY HAS NOT GRANTED SUFFICIENT OPPORTUNITY TO THE ASSESSEE TO FILE CONFIRMATION LETTERS. THUS, THE CASE LAWS ON WHICH THE LD. D.R. HAS PLACED RELIANCE ARE DISTINGUISHABLE ON FACTS IT SELF. 7 I.T.A. NO. 579/MDS/14 7. BE THAT AS IT MAY, NOW THE ASSESSEE HAS PLACED O N RECORD CONFIRMATION LETTERS FROM THE CREDITORS. WE ARE OF CONSIDERED OPINION THAT IN ORDER TO VERIFY THE GENUINENESS OF CONFIRMATION LETTERS, THE MATTER NEEDS REVISIT TO A.O. ACCORDIN GLY, WE REMIT THE ISSUE BACK TO THE FILE OF ASSESSING OFFICER TO DECI DE THE ISSUE AFRESH AFTER VERIFYING THE VERACITY OF CONFIRMATION LETTER S AND CONSIDERING OPENING BALANCE OF THE CREDITORS. 8. THE IMPUGNED ORDER IS SET ASIDE. THE APPEAL OF THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSE. ORDER PRONOUNCED ON WEDNESDAY, THE 20 TH OF AUGUST, 2014 AT CHENNAI. SD/- SD/- ( ... ) ( '# $% ) (DR. O.K. NARAYANAN) (VIKAS AWASTHY) /VICE-PRESIDENT & #'$ /JUDICIAL MEMBER /CHENNAI, H' /DATED, THE 20 TH AUGUST, 2014. KRI. 'I 0 .&2J' K'*2 /COPY TO: 1. %, /APPELLANT 2. ./%, /RESPONDENT 3. 1 L2 () /CIT(A)-II, COIMBATORE 4. 1 L2 /CIT-III, COIMBATORE 5. 'MN .&2& /DR 6. N) O /GF.