ITO 8(1)4, MUMBAI V. ABHISHRI PACKAGING P. LTD, MUMBAI

ITA 6091/MUM/2011

• Counselvise Citation: 609119914 RSA 2011
• Duration Of Justice: 3 year(s) 3 month(s) 2 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 05-12-2014
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 26-11-2014
• Assessment Year: 2007-2008
• Appeal Filed On: 02-09-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ASGHAR ZAIN
• Assessee Lawyers: J P BAIRAGARA
• Keywords: Unexplained cash credit; Deemed to accrue or arise in india
• Section: 68

Judgement Text

, IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH, MUMBAI BEFORE S/SHRI R.C. SHARMA, (AM) AND SANJAY GARG, (JM) . . , , , ./I.T.A. NO.6091/MUM/2011 ( / ASSESSMENT YEAR : 2007-08) INCOME TAX OFFICER 8(1)(1), ROOM NO.259A, AAYAKAR BHAVAN, M K ROAD, MUMBAI-400020 / VS. M/S ABHISHRI PACKAGING PVT LTD., TAINWALA HOUSE, OPP PLOT NO.118, ROAD NO.18, MIDC, MAROL, ANDHERI (EAST) MUMBAI-400093 ( / APPELLANT) .. ( ! / RESPONDENT) ./ ' ./PAN/GIR NO. :AAFCA6446G # / APPELLANT BY SHRI ASGHAR ZAIN ! $ # /RESPONDENT BY SHRI J P BAIRAGARA % & $ '( / DATE OF HEARING : 26.11.2014 )* $ '( /DATE OF PRONOUNCEMENT : 5.12.2014 / O R D E R PER R.C. SHARMA, ACCOUNTANT MEMBER: THIS IS AN APPEAL FILED BY THE REVENUE AGAINST THE ORDER OF LD. CIT(A) DATED 20.6.2011 FOR THE ASSESSMENT YEAR 2007-08. 2. FOLLOWING GROUNDS HAVE BEEN TAKEN BY THE REVENUE : 1. 'ON THE FACTS AND IN THE CIRCUMSTANCES OF THE C ASE AND IN LAW, THE LD. CIT(A) ERRED IN DELETING THE ADDITION OF RS.23, 07,416/- SHOWN BY THE ASSESSEE AS A LIABILITY TOWARDS ITS SISTER CONCERN EVEN THOUGH THE ASSESSEE HAD FAILED TO PROVE THE NATURE OF THE CRED IT.' 2. 'ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE AND IN LAW, THE 11D. CIT(A) ERRED IN DELETING THE ADDITION OF RS.23 ,07,416/- ON THE GROUNDS THAT THE TRANSACTION HAD NOT AFFECTED THE PROFITABI LITY OF THE APPELLANT AS IT HAD NOT BEEN ROUTED THROUGH THE P/L ACCOUNT, WITHOU T CONSIDERING THE FACT THAT AN UNEXPLAINED CREDIT IS LIABLE TO BE TAXED AS DEEMED INCOME IN TERMS OF SECTION 68 OF THE ACT, EVEN THOUGH NOT ROUTED TH ROUGH THE P/L ACCOUNT' I.T.A. NO.6091/MUM/2011 2 3. RIVAL CONTENTIONS HAVE BEEN HEARD AND RECORD PE RUSED. 4. FACT IN BRIEF ARE THAT THE ASSESSEE IS DOING JOB WORKS OF SOFT AND HARD LUGGAGE BAGS. DURING THE COURSE OF ASSESSMENT PRO CEEDINGS, THE AO FOUND THAT IN THE LIABILITY SIDE OF THE BALANCE SHEET, T HE ASSESSEE HAD SHOWN SECURITY DEPOSIT PAYABLE RS.23,07,416/- WHICH WAS NOT EXPLAI NED. CONTENTION OF ASSESSEE WAS THAT THE SAMSONITE SOUTH ASIA P LTD IS A ASSOCIATE COMPANY OF THE ASSESSEE COMPANY, THE EXCISE DUTY OF RS.23,0 7,416/- WAS PAID BY SAMSONITE SOUTH ASIA PVT LTD ON ITS MACHINERY WHICH WAS GIVEN TO THE ASSESSEE FOR THE JOB WORK. AS PER AO THE ASSESSEE HAS NOT RECEIVED ANY PAYMENT OF RS.23,07,416/- FROM SAMSONITE SOUTH ASIA PVT LTD, ACCORDINGLY THE SAME WAS TREATED AS BOGUS TAX LIABILITY AND ADDITION WAS MAD E. 5. BY THE IMPUGNED ORDER, THE LD. CIT(A) DELETED T HE ADDITION AFTER HAVING FOLLOWING OBSERVATIONS : 2.3.1 I HAVE CAREFULLY CONSIDERED THE CONTENTIONS OF THE APPELLANT AND ALSO GONE THROUGH THE DOCUMENTS AS ARE AVAILABLE ON RECORD. I FIND THAT THE ID. AO HAS MADE ADDITION WITHOUT APPRECIATING THE R EPLY OF THE APPELLANT. IT IS A CLEAR FACT THAT THE MACHINERY IN QUESTION WAS NOT OWNED BY THE APPELLANT. THE MACHINERY IS OWNED BY M/S. SAMSONITE ASIA P. LTD AND THE SAME WAS GIVEN BY THEM TO APPELLANT WHO IS JOB WORK ER OF M/S. SAMSONITE ASIA P. LTD. M/S. SAMSONITE ASIA P. LTD RAISED A BI LL WHICH IS IN THE NATURE OF EXCISE DUTY PAID BY THEM ON THE PLANT & MACHINER Y SUPPLIED TO THE APPELLANT. THE APPELLANT SHOWS THIS AS A LIABILITY TOWARDS M/S. SAMSONITE ASIA P. LTD WITHOUT ROUTING IT THROUGH ITS P & L AC COUNT. THEREFORE, THE APPELLANT DID NOT ROUTE THIS ENTRY THROUGH ITS P & L ACCOUNT AND AS SUCH TRANSACTIONS HAS NOT EFFECTED ON THE PROFITABILITY OF THE APPELLANT. THE LD. AO TREATED THIS AS NOT A GENUINE LIABILITY DESPITE THE FACT THAT THE OTHER PARTY I.E. M/S. SAMSONITE ASIA P. LTD IS SHOWING TH IS IN THEIR BOOKS OF ACCOUNTS ALSO. THEREFORE, THE ACTION OF THE LD. AO IN TREATING THE SAID LIABILITY AS INGENUINE IS BASED ON CONJECTURES AND SURMISES WHICH CAN .NOT BE SUSTAINED IN LAW. BOTH THE PARTIES IN THE TRANSA CTIONS ARE AGREEING FOR THE REVERSAL OF ENTRY WITHOUT EFFECTING THE PROFITA BILITY OF THE APPELLANT. NO ADVERSE INFERENCE THUS CAN BE DRAWN. IN VIEW OF THE ABOVE, THE ADDITION MADE BY THE ID. AO IS DELETED AND THIS GROUND OF AP PEAL IS ACCORDINGLY ALLOWED. 6. IT WAS ARGUED BY THE LD. DR THAT THE ASSESSEE W AS NOT IN RECEIPT OF ANY AMOUNT FROM M/S. SAMSONITE ASIA P. LTD, ACCORDINGLY, THE AO W AS JUSTIFIED IN TREATING THE LIABILITY APPEARING IN THE BALANCE SH EET AS NON-GENUINE. I.T.A. NO.6091/MUM/2011 3 7. ON THE OTHER HAND, THE LD AR CONTENTED THAT THE ASSESSEE WAS DOING THE BUSINESS OF JOB WORK OF M/S. SAMSONITE ASIA P. LTD AND FOR THIS PURPOSE M/S. SAMSONITE ASIA P. LTD PROVIDED REQUISITE RAW MATE RIAL AND MACHINERY IN THE PREMISES OF THE ASSESSEE. THE MACHINERY WAS BELONGI NG TO M/S. SAMSONITE ASIA P. LTD. WHEN THE MACHINERY WAS MOVED FROM THE PREM ISES OF M/S. SAMSONITE ASIA P. LTD THE BILL WAS RAISED ON THE ASSESSEE FO R THE AMOUNT OF EXCISE DUTY OF RS,.23,07,416/- PAID ON THE MACHINERY BY M/S SAMSO NITE ASIA P.LTD.. THIS AMOUNT WAS SHOWN AS LIABILITY IN THE BALANCE-SHEET, WHICH WAS LIABLE TO BE REVERSIBLE WHEN THE MACHINERY WAS RETURNED BACK T O M/S. SAMSONITE ASIA P. LTD. OUR ATTENTION WAS ALSO INVITED BY THE LD. AR TO THE COPY OF INVOICE NO.50 DATED 17.5.2006 RAISED BY M/S. SAMSONITE ASIA P. L TD , COPY OF TAX INVOICE NO.57 DATED 25.5.2006 AND A COPY OF TAX INVOICE NO. 209 DATED 2.1.2007 RAISED BY M/S SAMSONITE ASIA P. LTD, A COPY OF FORM R G 23-A (PART-II) BEING ENTRY BOOK OF DUTY CREDIT. OUR ATTENTION WAS ALSO INVITE D TO THE CONFIRMATION RECEIPT FROM M/S. SAMSONITE ASIA P. LTD. ACCORDINGLY, IT WAS PL EADED THAT THE ASSESSEE HAD SHOWN AN AMOUNT OF EXCISE DUTY LIABILITY IN THE BALANCE SHEET SINCE THIS WAS REVERSIBLE AT THE TIME OF RETURN OF MACHINERY BA CK TO M/S SAMSONITE ASIA P LTD. 8. WE HAVE CONSIDERED THE RIVAL CONTENTIONS CAREFUL LY AND GONE THROUGH THE ORDERS OF AUTHORITIES BELOW AND FOUND FROM THE RECO RD THAT M/S. SAMSONITE ASIA P. LTD HAS GIVEN JOB WORK TO THE ASSESSEE. ACCORDI NGLY, RAW MATERIAL AND MACHINERY WAS PROVIDED TO THE ASSESSEE. THIS MATER IAL WAS REMOVED FROM M/S. SAMSONITE ASIA P. LTD, NASIK PLANT AND SAME WAS INS TALLED AT ASSESSEE'S FACTORY AT UMBARGAON FOR DOING JOB WORK OF M/S. SAMSONITE. WHENEVER ANY EXCISE REGISTERED UNIT REMOVES THE MATERIAL FROM ONE PLACE TO ANOTHER PLACE THEN THEY HAVE TO PAY THE EXCISE AMOUNT TO THE EXCISE DEPARTM ENT. ACCORDINGLY, THE SAMSONITE HAS PAID THE EXCISE ON MACHINE GIVEN TO A SSESSEE M/S ABHISHRI PACKAGING PVT.LTD, UMBERGAON FOR JOB WORK. THE XER OX COPIES OF THE INVOICES RAISED BY THE SAMSONITE HAVE BEEN FILED BEFORE THE AO AND THEY DEBITED TO ABHISHRI PACKAGING PVT LTD ACCOUNT THE AMOUNT OF EXCISE DUTY SO PAID. 9. THE XEROX COPY OF THE RG-23A FOR THE MONTH OF MAY 2006 JAN 2007 WAS ALSO FILED BEFORE THE AO. THE AMOUNT IS NOT PAID T ILL DATE TO SAMSONITE AND KEPT I.T.A. NO.6091/MUM/2011 4 AS DEPOSIT IN SAMSONITE ACCOUNT. WHEN THE MACHINE W ILL BE RETURNED AT THAT TIME THE AMOUNT WILL BE CREDITED TO EXCISE DEPARTMENT A ND DEBITED TO SAMSONITE. 10. IT IS CLEAR FROM THE ABOVE THAT THE AMOUNT PAYA BLE TO SAMSONITE WAS A BONAFIDE ENTRY. WE HAVE ALSO VERIFIED THE CONFIRMA TION OF SAMOSNITE TO THE EFFECT THAT THEY HAVE TO RECEIVE AN AMOUNT OF RS.2 3,07,416/- FROM THE ASSESSEE. THE DETAILED OF FINDINGS RECORDED BY THE LD. CIT(A) AT PARA 2.3.1 HAVE NOT BEEN CONTROVERTED BY LD. DR BY BRINGING ANY POSITIVE M ATERIAL ON RECORD. ACCORDINGLY, WE DO NOT FIND ANY REASON TO INTERFERE WITH THE ORDER OF LD. CIT(A) FOR DELETING THE ADDITION OF RS.23,07,416/-. 11. IN THE RESULT, THE APPEAL FILED BY THE REVENUE IS DISMISSED. THE ABOVE ORDER WAS PRONOUNCED IN THE OPEN COURT ON 5TH DEC , 2014. )* % + , - 5TH DEC , 2014 * $ & 5 SD SD ( / SANJAY GARG) ( . . ,/ R.C. SHARMA ) / JUDICIAL MEMBER / ACCOUNTANT MEMBER % 7& MUMBAI 5TH DEC,2014. . . ./ SRL , SR. PS !'# $#%! / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. ! / THE RESPONDENT. 3. % 8' ( ) / THE CIT(A)- CONCERNED 4. % 8' / CIT CONCERNED 5. 9: '; , ( ; , % 7& / DR, ITAT, MUMBAI CONCERNED 6. < =& / GUARD FILE. % / BY ORDER, TRUE COPY > (ASSTT. REGISTRAR) ( ; , % 7& /ITAT, MUMBAI