M/s. Mangat Rice & General Mills, SHAHKOT V. The Income tax Officer, Nakodar

ITA 616/ASR/2013

• Counselvise Citation: 61620914 RSA 2013
• Duration Of Justice: 1 year(s) 2 month(s) 9 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-12-2014
• Appeal Filed By: Assessee
• Bench Allotted: DB
• Next Hearing Date: 12-11-2014
• Assessment Year: 2007-2008
• Appeal Filed On: 21-10-2013
• Court: TRIBUNAL
• Department Lawyers: TARS HIM LAL
• Keywords: Additional evidence
• Section: 131

Judgement Text

- 1 - ITA NO.616/ASR/2013 IN THE INCOME TAX APPELLATE TRIBUNAL AMRITSAR BENCH, AMRITSAR BEFORE SH. A.D. JAIN, HONBLE JUDICIAL MEMBER, AND SH. B.P. JAIN, HONBLE ACCOUNTANT MEMBER I.T.A. NO.616/ASR/2013 (ASSESSMENT YEA R: 2007-08) M/S MANGAT RICE & GENERAL MILLS, DHANDOWAL ROAD, SHAHKOT. PAN:AABFM5282B(APPELLANT) VS. INCOME TAX OFFICER, NAKODAR (RESPONDENT) APPELLANT BY: SHRI GAURAV DHALL, CA. RESPONDENT BY: SHRI TARS HIM LAL, DR. DATE OF HEARIN G: 12.11.2014 DATE OF PRONOUN CEMENT: 30.12.2014 ORDER PER: B.P. JAIN (AM): THIS APPEAL OF THE ASSESSEE IS ARISING FROM THE OR DER OF LEARNED CIT(A), JALANDHAR DATED 10.09.2013 FOR THE ASSESSME NT YEAR 2007-08. 2. THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS OF AP PEAL. 1. THAT THE ORDER OF THE CIT(A) TO THE EXTENT SUST AINING THE ADDITION AND THE FINDINGS ON THE BASIS OF WHICH IMPUGNED ADDITIONS HAD INITIALLY BEEN MADE IN THE HANDS OF T HE ASSESSEE FIRM IS AGAINST THE LAW AND FACTS OF THE CASE. 2. THAT THE CIT(A) HAD GRAVELY ERRED IN LAW AND FAC TS OF THE CASE WHILE SUSTAINING AN ADDITION OF RS.4,38,87 1-58 IN THE HANDS OF THE ASSESSEE FIRM. 3. THAT THE CIT(A) WHILE SUSTAINING THE ADDITION OF RS.4,38,871-58 HAD THEREIN GRAVELY ERRED IN LAW AND FACTS OF THE CASE IN UPHOLDING THE FINDINGS/OBSERVATIONS OF THE AO ON THE BASIS OF WHICH THE IMPUGNED ADDITION HAD BEEN MADE IN THE HANDS OF THE ASSESSEE FIRM. 4. THAT THE CIT(A) WHILE DELETING AND ADDITION OF R S.4 LAC SO MADE IN THE HANDS OF THE ASSESSEE FIRM HAD HOWEV ER GRAVELY ERRED IN LAW AND FACTS OF THE CASE IN UPHOLDING THE - 2 - ITA NO.616/ASR/2013 FINDINGS/OBSERVATIONS ON THE BASIS OF WHICH THE IMP UGNED ADDITION HAD INITIALLY BEEN MADE BY THE AO. 5. THAT THE CIT(A) WHILE DELETING AN ADDITION OF RS.6,03,837-83 SO MADE IN THE HANDS OF THE ASSESSEE FIRM HAD HOWEVER GRAVELY ERRED IN LAW AND FACTS OF THE CASE IN UPHOLDING THE FINDINGS/OBSERVATIONS ON THE BASIS OF WHICH THE IMP UGNED ADDITION HAD INITIALLY BEEN MADE BY THE A.O. 3. THE ASSESSEE IN THE PRESENT CASE HAS FILED ADDITION AL EVIDENCE. WITH REGARD TO THE SAID ADDITIONAL EVIDENCE, NOTHIN G HAS BEEN PLACED ON RECORD TO SUBSTANTIATE THAT THE SAID ADDITIONAL EVI DENCE COULD NOT BE PRODUCED BEFORE THE AUTHORITIES BELOW AND THE CASE HAS BEEN DECIDED BY BOTH THE AUTHORITIES BELOW WITHOUT GIVING SUFFICIEN T OPPORTUNITY TO THE ASSESSEE AS REGARDS SUCH EVIDENCE. MOREOVER, THE TR IBUNAL HAS NOT REQUIRED SUCH ADDITIONAL EVIDENCE TO BE PRODUCED. A CCORDINGLY, IN SUCH CIRCUMSTANCES AND FACTS OF THE CASE, THE ADDITIONAL EVIDENCE FILED BY THE ASSESSEE IS NOT ADMITTED AND THE SAME IS REJECTED. 4. GROUND NO. 1 IS GENERAL IN NATURE AND THEREFORE, THEY DO NOT REQUIRE ANY ADJUDICATION. 5. GROUND NO. ARE 2,3,4 WITH REGARD TO SUSTENANCE O F ADDITION OF RS.4,38,871.58 AND GROUND NO. IS 5 WITH REGARD TO D ELETION OF ADDITION OF RS.6,03,837.83. THE BRIEF FACTS OF THE CASE ARE TH AT THE ASSESSEE HAS DECLARED AMONGST OTHER CREDITORS, THE FOLLOWING TWO CREDITORS NAMELY (I) M/S JAI RAM JAGDISH CHANDER, MEHATPUR 6,03,837.83 ( II) M/S SOHAN SINGH SAT PAL SINGH, MEHATPUR 8,38,871.58. WITH REGARD TO M/S JAI RAM JAGDISH CHANDER, MEHATPUR, SUMMONS U/S. 131 OF THE INCOME T AX ACT, 1961 WERE ISSUED ON 08.07.2009 FOR APPEARING ON 15.07.2009. S TATEMENT OF SHRI - 3 - ITA NO.616/ASR/2013 JAGDISH CHANDER PROP. M/S. JAI RAM JAGDISH CHANDER, MEHATPUR WAS RECORDED AND COPY OF ACCOUNT OF M/S MANGAT RICE & G ENERAL MILLS WAS OBTAINED. IN HIS STATEMENT SH. JAGDISH CHANDER DEPO SED THAT THEY HAVE NOTHING TO RECEIVE FROM M/S. MANGAT RICE & GENERAL MILLS, SHAHKOT AS ON 01.04.2006 I.E, YEAR ENDING 31.03.2007. HE HAS FURT HER DEPOSED THAT RS. 9,03.837.83 WERE RECOVERED FROM M/S MANGAT RICE & G ENERAL MILLS FROM 12.04.2004 TO 11.11.2005, THE PAYMENT IS STATED TO HAVE BEEN RECEIVED IN CASH AT RS.20,000/- EACH DURING THIS PERIOD I.E., R S. 4,00,000/- IN F.Y. 2004-05 AND RS. 5,03,837.83 IN F.Y. 2005-06. AS IS EVIDENT NO DEBIT BALANCE WAS OUTSTANDING IN THE BOOKS OF M/S JAI RAM JAGDISH CHANDER, MEHATPUR AS ON 01.04.2006. THE ASSESSEE WAS SUPPLIE D, COPY OF THE STATEMENT AND COPY OF ACCOUNTS AS APPEARING IN THEI R BOOKS OF ACCOUNT ON 09.11.2009 ALONG WITH ACCOUNTS RELATING TO OTHER PA RTIES VIDE SHOW CAUSE NOTICE DATED 09.11.2009. THE ASSESSEE IN HIS REPLY DATED 07.12.2009 HAS STATED THAT AS PER THE BOOKS OF ACCOUNT THE CREDIT BALANCE IS RS.6,03,837.83. THE ASSESSEE HAS SUBMITTED THAT TH E ASSESSEE FIRM HAS PAID RS.3 LACS DURING THE FINANCIAL YEAR 2003-04 AN D THEREAFTER, THE FIRM WAS LEFT WITH NO FUNDS AND SO, PAYMENTS WERE DISCON TINUED. THE FIRM IS LEFT WITH NO STOCKS AND THERE WAS NO INFLOW FROM AN Y SOURCE. THE ASSESSEE FIRM ADMITS TO PAY LIABILITY WHICH ARE ACTUALLY PAY ABLE TO THE SAID CREDITORS. 5.1. WITH REGARD TO M/S SOHAN SINGH SAT PAL SINGH, MEHATPUR, SUMMONS U/S. 131 OF THE INCOME TAX ACT, 1961 WAS ISSUED ON 08.07.2009 FOR - 4 - ITA NO.616/ASR/2013 APPEARING ON 15.07.209. STATEMENT OF SH. GURSHARAN SINGH S/O SH. SAT PAL SINGH & SMT. GURDIP KAUR PROP. OF THE FIRM, HAVING GENERAL POWER OF ATTORNEY, WAS RECORDED AND COPY, OF ACCOUNT OF M/S. MANGAT RICE & GENERAL MILLS WAS OBTAINED AS APPEARING IN THEIR BO OKS OF ACCOUNT. IN HIS STATEMENT SH. GURSHARAN SINGH DEPOSED THAT THEY HAV E NOTHING TO RECEIVE FROM M/S. MANGAT RICE & GENERAL MILS, SHAHKOT AS ON 01.04.2006 I.E. YEAR ENDING 21.03.2007. HE HAS FURTHER DEPOSED THAT HE HAS SOLD PADDY TO M/S. MANGAT RICE & GENERAL MILLS, SHAHKOT FROM THE PERIOD OF 01.04.2000 TO 12.10.2000 FOR CONSIDERATION OF RS.14,88,871.58. OUT OF THIS RS.6,50,000/- HAVE BEEN STATED TO BE RECEIVED AGAIN ST THIS SALE ON DIFFERENT DATES I.E. RS.1,00,000/- ON 25.11.2000, RS.2,00,000 ON 29.03.2001& RS.3,50,000/- ON 31.03.2001, BALANCE AMOUNT OF RS. 8,38,871.58 IS STATED TO HAVE BEEN RECEIVED IN THE F.Y.2006-07. IN REPLY TO A QUESTION SH. GURSHARAN SINGH HAS CATEGORICALLY DENIED TO HAVE AN Y DEBIT BALANCE IN THE NAME OF M/S MANGAT RICE & GENERAL MILLS, SHAHKOT IN THEIR BOOKS OF ACCOUNT. THE ASSESSEE WAS SUPPLIED COPY OF THE STAT EMENT AND COPY OF ACCOUNTS AS APPEARING IN THEIR BOOKS OF ACCOUNT ON 09.11.2009 ALONG WITH ACCOUNTS RELATING TO OTHER PARTIES VIDE SHOW CAUSE NOTICE DATED 09.11.2009 ALONG WITH ACCOUNTS RELATING TO OTHER PARTIES VIDE SHOW CAUSE NOTICE DATED 09.11.2009. THE ASSESSEE IN HIS REPLY DATED 07.12.2 009 HAS STATED THAT AS PER THE BOOKS OF ACCOUNT THE CREDIT BALANCE IS RS.6 ,03.837.83. THE ASSESSEE SUBMITTED THE EXPLANATION THAT HE HAS RECE IVED RS.4,00,000/- - 5 - ITA NO.616/ASR/2013 DURING THE F.Y.2006-07 AND PAYMENT @ 20,000/- EACH. THE AMOUNT IS STILL PAYABLE TO THE CREDITORS. 6. THE LEARNED CIT(A) AFTER CONSIDERING THE SUBMISS ION OF THE ASSESSEE PARTLY ALLOWED THE APPEAL OF THE ASSESSEE WITH REGA RD TO THE ADDITION OF RS.8,38,871.58 AND THE RELEVANT OBSERVATION OF THE LEARNED CIT(A) IN PARA 6.2, 6.3 & 6.4 ARE REPRODUCED AS UNDER FOR THE SAKE OF CONVENIENCE. 6.2 I HAVE CONSIDERED THE OBSERVATION OF THE ASSES SING OFFICER AS MADE IN THE ASSESSMENT ORDER AS WELL AS WRITTEN SUBMISSI ONS OF THE ASSESSEE FIRM FILED VIDE LETTER DATED NIL ON 06.02.2013. I H AVE ALSO CONSIDERED THE OTHER MATERIAL BROUGHT ON RECORD INCLUDING VARIOUS JUDICIAL PRONOUNCEMENTS RELIED UPON BY THE ASSESSEE FIRM. AF TER CAREFULLY EXAMINING THE MATERIAL BROUGHT ON RECORD, THE ASSES SMENT ORDER AND WRITTEN SUBMISSIONS FILED BY THE ASSESSEE, I AM OF THE OPINION THAT THE ASSESSEE FIRM HAS ABSOLUTELY FAILED TO REBUT THE AL LEGATION OF THE ASSESSING OFFICER THAT THE PAYMENTS, HAVE BEEN MADE BY THE ASSESSEE FIRM OUT OF UNEXPLAINED SOURCES IN VIEW OF THE FACT THAT PROP. OF M/S SOHAN SINGH SATPAL SINGH, THE RECIPIENT, HAS CATEGORICALL Y ADMITTED ON OATH IN HIS/HER STATEMENT THAT THE OUTSTANDING DUES HAVE AL READY BEEN RECOVERED BY THEM DURING THE F.YS. 2005-06 & 2006-07 AND NO A MOUNT IS DUE FROM THE ASSESSEE FIRM AS ON 31.03.2007. THE PLEA OF THE ASSESSE FIRM THAT IT WAS NOT LEFT WITH ANY STOCK AS ON 31.03.2005 WILL A LSO NOT HELP AS THE PAYMENTS WERE ALLEGEDLY MADE FROM UNEXPLAINED SOURC ES OF THE ASSESSE FIRM. THIS MAY ALSO BE TRUE THAT THE PARTNERS OF TH E ASSESSEE FIRM HAVE BEEN DECLARED PROCLAIMED OFFENDERS BY THE COURT BUT THIS FACT ITSELF WILL NOT PROVE THAT THE ASSESSEE FIRM HAS NOT MADE ANY P AYMENT TO THE RECIPIENT WHO CATEGORICALLY ADMITTED TO HAVE RECEIV ED THE PAYMENT DURING F.YS.2005-06 & 2006-07. IT IS ALSO APPARENT THAT NO PAYMENT IS POSSIBLE TO BE MADE THROUGH THE BOOKS OF ACCOUNT AS THE ASSESSEE FIRM HAS NOT TRANSACTED ANY BUSINESS DURING THE YEAR UND ER REFERENCE. 6.3 I HAVE ALSO NOTED THAT THE CATEGORICALLY FINDIN G OF THE ASSESSING OFFICER THAT THE PAYMENT HAS BEEN MADE BY THE ASSES SEE FIRM DURING THE F.YS.2005-06 &2006-07 OUT OF UNEXPLAINED SOURCES. I N THESE FACTS AND CIRCUMSTANCES OF THE CASE, I AM OF THE OPINION THAT THE ENTIRE ADDITION CANNOT BE MADE DURING THE YEAR UNDER CONSIDERATION AS ONLY RS.4,38,871.58 HAS BEEN PAID DURING THE YEAR UNDER REFERENCE AND RS.4,0,00/- HAS BEEN PAID IN F.Y.2005-06. THE ASSES SING OFFICER HAS ALSO NOT INVOKED THE PROVISIONS OF SECTION 41(1) OF THE INCOME TAX ACT,1961 IN THIS CASE AS THE LIABILITY IS STILL SHOWN AS OUTSTA NDING IN THE BOOKS OF THE ASSESSEE FIRM. I AM, THEREFORE, OF THE CONSIDERED O PINION THAT THE ASSESSING OFFICER IS NOT JUSTIFIED IN MAKING ENTIRE ADDITION IN THE YEAR UNDER CONSIDERATION. 6.4 IN VIEW OF THE ABOVE STATED FACTS AND IN THE CI RCUMSTANCES OF THE CASE, I AM OF THE OPINION THAT AN ADDITION OF RS. 4 ,38,871.58 CAN ONLY BE MADE DURING THE YEAR UNDER CONSIDERATION WHICH CAN BE SAID TO HAVE - 6 - ITA NO.616/ASR/2013 MADE OUT OF UNEXPLAINED SOURCES OF THE ASSESSEE FIR M. THEREFORE, ADDITION MADE BY THE ASSESSING OFFICER IS CONFIRMED TO THE EXTENT OF RS.4,38,871.58 ONLY AND THE BALANCE ADDITION OF RS. 4,00,000/- IS DIRECTED TO BE DELETED. IN THE RESULT, GROUND OF APPEAL NO.2 TAKEN BY THE ASSESSEE IS PARTLY ALLOWED. 7. WITH REGARD TO THE ADDITION OF RS.6,03,837.83 TH E RELEVANT OBSERVATIONS OF THE LEARNED CIT(A) VIDE PARA 7.2 TO 7.4 WHICH ARE REPRODUCED FOR THE SAKE OF CONVENIENCE AS UNDER: 7.2. I HAVE CONSIDERED THE OBSERVATION OF THE ASSE SSING OFFICER AS MADE IN THE ASSESSMENT ORDER AS WELL AS WRITTEN SUB MISSIONS OF THE ASSESSEE FIRM FILED VIDE LETTER DATED NIL ON 06.02. 2013. I HAVE ALSO CONSIDERED THE OTHER MATERIAL BROUGHT ON RECORD INC LUDING VARIOUS JUDICIAL PRONOUNCEMENTS RELIED UPON BY THE ASSESSEE FIRM. AFTER CAREFULLY EXAMINING THE MATERIAL BROUGHT ON RECORD, THE ASSES SMENT ORDER AND WRITTEN SUBMISSIONS FILED BY THE ASSESSEE, I AM OF THE OPINION THAT THE ASSESSEE FIRM HAS ABSOLUTELY FAILED TO REBUT THE AL LEGATION OF THE ASSESSING OFFICER THAT THE PAYMENTS HAVE BEEN MADE BY THE ASSESSEE FIRM OUT OF UNEXPLAINED SOURCES IN VIEW OF THE FACT THAT PROP. OF M/S JAI RAM JAGDISH CHANDER, THE RECIPIENT, HAS CATEGORICALLY A DMITTED ON OATH IN HIS/HER STATEMENT THAT THE OUTSTANDING DUES HAVE AL READY BEEN RECOVERED BY THEM DURING THE F.YS.204-05 AND 2005-06 AND NO A MOUNT IS DUE FROM THE ASSESSEE FIRM AS ON 01.04.2006. THE PLEA OF THE ASSESSEE FIRM THAT IT WAS NOT LEFT WITH ANY STOCK AS ON 31.03.2005 WILL A LSO NOT HELP AS THE PAYMENTS WERE ALLEGEDLY MADE FROM UNEXPLAINED SOURC ES OF THE ASSESSEE FIRM. THIS MAY ALSO BE TRUE THAT THE PARTNERS OF TH E ASSESSEE FIRM HAVE BEEN DECLARED PROCLAIMED OFFENDERS BY THE COURT BUT THIS FACT ITSELF WILL NOT PROVE THAT THE ASSESSEE FIRM HAS NOT MADE ANY P AYMENT TO THE RECIPIENT WHO CATEGORICALLY ADMITTED THE RECEIPT OF PAYMENT DURING F. YS.2004-05 AND 2005-06. IT IS ALSO APPARENT THAT NO PAYMENT IS POSSIBLE TO BE MADE THROUGH THE BOOKS AS THE ASSESSEE FIRM H AS NOT TRANSACTED ANY BUSINESS DURING THE YEAR UNDER REFERENCE. 7.3. I HAVE ALSO NOTED THE CATEGORICALLY FINDING OF THE ASSESSING OFFICER THAT THE PAYMENT HAS BEEN MADE BY THE ASSES SEE FIRM DURING THE F.YS. 2004-05 AND 2005-06 OUT OF UNEXPLAINED SOURCE S. IN THESE FACTS AND CIRCUMSTANCES OF THE CASE, I AM OF THE OPINION THAT THE ADDITION CANNOT BE MADE DURING THE YEAR UNDER CONSIDERATION AS NO PAYMENT HAS BEEN MADE DURING THE YEAR UNDER REFERENCE. THE ASSE SSING OFFICER HAS ALSO NOT INVOKED THE PROVISIONS OF SECTION 41(1) OF THE INCOME TAX ACT,1961 IN THIS CASE AS THE LIABILITY IS STILL SHO WN AS OUTSTANDING IN THE BOOKS OF THE ASSESSEE FIRM. I AM, THEREFORE, OF THE OPINION THAT THE ASSESSING OFFICER IS NOT JUSTIFIED IN MAKING ADDITI ON IN THE YEAR UNDER CONSIDERATION AS THE PAYMENT HAVE BEEN MADE IN EARL IER YEARS. 7.4. IN VIEW OF THE ABOVE STATED FACTS AND IN THE C IRCUMSTANCES OF THE CASE, I AM OF THE OPINION THAT THE ASSESSING OFFICE R IS NOT JUSTIFIED IN MAKING ADDITION OF RS.6,03,837.83 IN THE YEAR UNDER CONSIDERATION. THEREFORE, ADDITION OF RS.6,03,837.83 MADE BY THE A SSESSING OFFICER IS - 7 - ITA NO.616/ASR/2013 DIRECTED TO BE DELETED. IN THE RESULT, GROUND OF AP PEAL NO.2.1 TAKEN BY THE ASSESSEE IS ALLOWED. 8. LEARNED COUNSEL FOR THE ASSESSEE ARGUED THAT WIT H RESPECT TO THE ADDITION OF RS.4,38,871.58 THAT THE AO HAS NOT INVO KED THE PROVISIONS OF SECTION 41(1) OF THE ACT AND THE LIABILITY IS STILL OUTSTANDING IN THE BOOKS OF ASSESSEE FIRM. THE LEARNED CIT(A) HAS NOT JUSTIF IED IN CONFIRMING THE ADDITION OF RS.4,38,871.58 SINCE THE FACTS WITH REG ARD TO THE SAID AMOUNT ARE IDENTICAL TO THE FACTS W.R.T RS.4,00,000/- WHIC H HAS BEEN DELETED BY THE LEARNED CIT(A). HE FURTHER ARGUED WITH REGARD TO TH E ADDITION OF RS.6,03,837.83, THE LEARNED CIT(A) VIDE HIS ORDER I N PARA 7.2 TO 7.4 HAS CUT AND PASTED THE FINDINGS WITH RESPECT TO THE FIR ST ADDITION IN PARA 6.2 TO 6.4 OF HIS ORDER AND REPRODUCED THE SAME IN PARA 7 .2 TO 7.4 EXCEPT THE CHANGE IN QUANTUM I.E. THE CIT(A) HAS NOT APPLIED H IS MIND. 9. ON THE OTHER HAND, LEARNED DR RELIED UPON THE OR DER OF THE AO AND ARGUED THAT THE CREDITORS HAVE DENIED OF HAVING ANY OUTSTANDING BALANCES AS AT THE END OF THE YEAR AND DURING THE STATEMENT RECORDED BY THE AO OF THE CREDITORS, IT HAS BEEN STATED THAT ALL THE BALA NCES RECEIVABLE FROM THE ASSESSEE HAS BEEN RECEIVED AND NOTHING IS DUE FROM THE ASSESSEE. IT WAS ARGUED THAT IF AT ALL ANY AMOUNT HAS TO BE PAID BY THE ASSESSEE, WHERE IS THE CLAIM BY THE CREDITOR; AND ALSO WHY THE AMOUNT HAS NOT BEEN PAID SO FAR THOUGH ARGUED THAT THE CREDITOR IS NOT TRACEABL E. AS THE CREDITOR HAS STATED TO HAVE RECEIVED THE PAYMENT FROM ASSESSEE A ND THE ASSESSEE CLAIMS THE AMOUNT IS STILL PAYABLE THEN WHERE IS THE CORRE SPONDENCE OR ANY SUIT FILED BY THE CREDITOR. NOTHING IS PLACED ON RECORD BY ASSESSEE SINCE THE - 8 - ITA NO.616/ASR/2013 ASSESSEE HAS RECEIVED ALL THE PAYMENTS, OUTSIDE THE BOOKS OF ACCOUNT. THEREFORE, ARGUMENT MADE BY THE LEARNED AR THAT PAY MENTS HAVE NOT BEEN MADE TO THE CREDITORS AND THEY ARE STILL OUTSTANDIN G IS WITHOUT ANY EVIDENCE. THE LEARNED AR HAS NOT REBUTTED THE FINDI NG OF THE AUTHORITIES BELOW WITH REGARD TO THE STATEMENT MADE BY THE CRED ITORS AND THE COPY OF THE ACCOUNT SUBMITTED BY THE CREDITORS WITH REGARD TO THE PAYMENT RECEIVED BY THEM FROM THE ASSESSEE. NOTHING HAS BEE N PRODUCED ON RECORD TO PROVE THE SAID STATEMENT OF THE CREDITORS AS FAL SE. THEREFORE, IN THE CIRCUMSTANCES AND FACTS OF THE CASE AND THE CASES R ELIED UPON IN THE ORDER OF THE AO, LEARNED DR PRAYED TO CONFIRM THE ORDER O F THE LEARNED CIT(A). 10. WE HAVE HEARD THE RIVAL CONTENTION AND PERUSED THE FACTS OF THE CASE. AS REGARDS THE CREDITS OUTSTANDING IN THE NAM E OF M/S JAI RAM JAGDISH CHANDER, MEHATPUR, THE STATEMENT OF SHRI JA GDISH CHANDER PROPRIETOR OF THE SAID CREDITOR WAS RECORDED AND A COPY OF ACCOUNT IN THEIR BOOKS OF ACCOUNT WAS SUBMITTED TO THE AO. THE CREDI TOR SUBMITTED THAT THE PAYMENT HAS BEEN RECEIVED IN CASH @ 20,000/- EACH T OTALING TO RS.4,00,000/- DURING THE F.Y 2004-05 AND RS.5,03,83 7.83 DURING THE F.Y 2005-06 AND NO DEBIT BALANCE WAS OUTSTANDING IN THE BOOKS OF THE CREDITOR AS ON 1.4.2006. WHEREAS THE ASSESSEE HAD STATED THA T IT HAS PAID ONLY RS.3,00,000/- FROM 17.07.2003 TO 1.8.2003 AND BALAN CE AMOUNT IS STILL PAYABLE. THE LEARNED AR HAS NOT ABLE TO REBUT THE F INDINGS OF THE AO AND LEARNED CIT(A) WITH REGARD TO THE STATEMENT RECORDE D OF SH JAGDISH CHANDER AND THE COPY OF THE ACCOUNTS SUBMITTED BY T HE SAID CREDITOR. THE - 9 - ITA NO.616/ASR/2013 ASSESSEE HAS ADMITTED TO HAVE PAID RS.3,00,000/- ON LY BUT DENIES THE PAYMENT OF RS.6,03,837.83. AS REGARDS THE PLEADING OF THE ASSESSEE THAT THE FIRM WAS NOT LEFT WITH ANY STOCK AS ON 31.3.200 5 WILL NOT HELP THE ASSESSEE THAT THE PAYMENTS WERE ALLEGEDLY NOT MADE FROM THE UNEXPLAINED SOURCES TO THE ASSESSEE FIRM. 11. SIMILARLY, IDENTICAL FACTS ARE AVAILABLE IN THE CASE OF M/S SOHAN SINGH SAT PAL SINGH, MEHATPUR. 11.1. THE LEARNED CIT(A) IN BOTH THE CREDITORS HAS OBSERVED THAT THE FIRM HAS ABSOLUTELY FAILED TO REBUT THE ALLEGATION OF TH E AO THAT THE PAYMENT HAS BEEN MADE BY THE ASSESSEE FIRM OUT OF UNEXPLAIN ED SOURCES IN VIEW OF THE FACT THAT THE CREDITOR HAS STATED IN HIS STATEM ENT RECORDED BY THE AO THAT NO AMOUNT IS DUE FROM THE ASSESSEE AS ON 31 ST MARCH,2007. IT WAS FURTHER OBSERVED BY THE LEARNED CIT(A) THAT PLEADIN GS OF THE ASSESSEE FIRM THAT IT WAS LEFT WITH THE NO STOCK TO MAKE THE FURT HER PAYMENTS WILL NOT HELP THE ASSESSEE SINCE THE PAYMENTS ALLEGEDLY HAVE BEEN MADE FROM THE UNEXPLAINED SOURCES OF THE ASSESSEE FIRM. 11.2. ON THE OTHER HAND, LEARNED CIT(A) HAS DEL ETED THE ADDITION OF RS.4,00,000/- IN THE CASE OF M/S SOHAN SINGH SAT PA L SINGH, MEHATPUR AND RS.6,03,837.83 IN THE CASE OF M/S JAI RAM JAGDISH C HADER, MEHATPUR. THE LEARNED CIT(A) HAS ALSO OBSERVED THAT AO HAS NOT IN VOKED THE PROVISIONS OF SECTION 41(1) OF THE ACT. THE FINDINGS OF THE LE ARNED CIT(A) ARE UNSUSTAINABLE AS DISCUSSED IN PARA 6.2 TO 6.4 WHICH IN FACT HAVE BEEN CUT PASTED IN PARA 7.2 TO 7.4 EXCEPT THE CHANGE IN THE QUANTUM. IN THE - 10 - ITA NO.616/ASR/2013 CIRCUMSTANCES AND THE FACTS OF THE CASE LEARNED CIT (A) IS REQUIRED TO PASS A REASONED ORDER AFTER PROVIDING ADEQUATE OPPORTUN ITY OF BEING HEARD TO THE ASSESSEE. ACCORDINGLY, GROUND NO. 2 TO 5 OF THE ASSESSEE ARE SET ASIDE TO THE FILE OF LEARNED CIT(A) TO DECIDE THE APPEAL DE NOVO WITH THE DIRECTION GIVEN HERE AND ABOVE. THUS, APPEAL OF THE ASSESSEE IS ALLOWED FOR THE STATISTICAL PURPOSE. 12. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS ALLOWED FOR THE STATISTICAL PURPOSE. ORDER PRONOUNCED IN THE OPEN COURT ON 30 TH DECEMBER, 2014. SD/- SD/- (A.D. JAIN) (B.P. JAIN) JUDICIAL MEMBER ACCOUNTANT MEMB ER DATED: 30.12.2014 PK. PS COPY OF THE ORDER FORWARDED TO: 1. THE ASSESSEE: M/S MANGAT RICE & GENERAL MILLS. 2. INCOME TAX OFFICER, NAKODAR. 3. THE CIT(A), 4. THE CIT, 5. THE SR DR, I.T.A.T., TRUE COPY BY ORDER (ASSISTANT REGISTRAR) INCOME TAX APPELLATE TRIBUNAL, AMRITSAR BENCH: AMRITSAR.