DCIT, Parwanoo V. M/s Alliance India, Solan

ITA 618/CHANDI/2013

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 80942 (ITAT-CHANDIGARH)
• Duration Of Justice: 1 year(s) 4 month(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 17-10-2014
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 15-10-2014
• Assessment Year: 2006-2007
• Appeal Filed On: 29-05-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: J S NAGAR
• Section: 68; 6

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL CHANDIGARH BENCH B, CHANDIGARH BEFORE SHRI BHAVNESH SAINI, JUDICIAL MEMBER AND SHRI T.R. SOOD, ACCOUNTANT MEMBER ITA NO. 618/CHD/2013 ASSESSMENT YEARS : 2006-07 D.C.I.T. CIRCLE, PARWANOO V M/S ALLIANCE INDIA KHASRA NO. 1348 HILTOP INDUSTRIAL AREA VILLAGE BHATAULI KALAN JHARMAJRI DISTT. SOLAN AAKFA 8946P (APPELLANT) (RESPONDENT) APPELLANT BY: SHRI J.S. NAGAR RESPONDENT BY: SHRI PRIKSHIT AGGARWAL DATE OF HEARING 15.10 .2014 DATE OF PRONOUNCEMENT 17.10.2014 O R D E R PER T.R. SOOD, A.M THIS APPEAL IS DIRECTED AGAINST THE ORDER OF THE LD CIT(A), SHIMLA DATED 13.3.2013. 2. IN THIS APPEAL THE REVENUE HAS RAISED THE FOLLOW ING GROUNDS: 1 ON THE FACTS AND IN THE CIRCUMSTANCES THE LD. C IT(A) HAS ERRED IN DELETING THE ADDITION OF RS. 13,47,866/- M ADE ON ACCOUNT OF DIFFERENCE IN ACCOUNTS TREATED AS INCOME FROM UN DISCLOSED SOURCES U/S 68, IGNORING THE JUDGMENT OF HON'BLE RA JASTHAN HIGH COURT IN THE CASE OF CIT V. JAIPUR UDYOG LTD, 227 ITR 345. 2 IT IS PRAYED THAT THE ORDER OF LD. CIT(A) BE SET ASIDE AND THAT OF THE ASSESSING OFFICER RESTORED. 3 AFTER HEARING BOTH THE PARTIES WE FIND THAT DURIN G ASSESSMENT PROCEEDINGS THE ASSESSING OFFICER CALLED FOR CONFIRMED COPIES OF ACCOUNTS FROM VARIOUS CREDITORS TO VERIFY THE BALANCES AND GENUINENESS OF TRANSACTION. THE A SSESSING OFFICER NOTICED THAT FOLLOWING ACCOUNTS REMAIN UN-R ECONCILED: 2 1 M/S DOVE CHEMICALS RS. 48.80 2 M/S JOSTS ENGG CO. LTD RS. 45,517 3 M/S SHAGUN & CO RS. 19,860 4 M/S SUPREME INDUSTRIES RS. 9,49,756 5 M/S YASHODEEP & CO RS. 2,90,038 6 M/S CHANDIGARH ELECTRO CONTROL RS. 42,646 TOTAL RS. 13,47,865.80 ON ENQUIRY THE ASSESSEE DID NOT FURNISH ANY EXPLANA TION, THEREFORE THIS AMOUNT WAS ADDED U/S 68 OF IT ACT. 4 BEFORE THE LD. CIT(A) FOLLOWING WRITTEN SUBMISSIO NS WERE GIVEN: 3.2 THE APPELLANT HAS MAD THE FOLLOWING SUBMISSION S: THERE ARE 6 PARTIES, ON ACCOUNT OF WHOSE DIFFERENC E IN LEDGER ACCOUNTS THE ADDITION WAS MADE. THE PART-WISE SUBMISSION AND DISCUSSION IS AS UNDER: I) M/S DOVE CHEMICALS : DIFFERENCE OF RS. 48.80 A) THE DIFFERENCE OF RS. 48.80 WAS A NEGLIGIBLE FIG URE. THE APPELLANT IS PURCHASING CONSUMABLE STORES FROM THIS PARTY. DU RING THE YEAR UNDER REFERENCE, PURCHASES WORTH RS. 7,77,777.80 WAS MADE FORM THIS PARTY. COPY OF LEDGER A/C OF THIS PARTY IS ENCLOSED. ON TH IS PETTY DIFFERENCE OF RS. 48.80, WHEN A HUGE QUANTUM OF PURCHASE IS BEING MADE FROM THE PARTY, THE DIFFERENCE OF RS. 48.80 WAS PETTY AND HE NCE THE ADDITION MADE WAS UNJUSTIFIED. APPROPRIATE RELIEF IS PRAYED. II) M/S JOSTS ENGG. CO. LTD.: DIFFERENCE OF RS. 45, 517/- A) COPY OF LEDGER ACCOUNT OF THIS PARTY IN THE BOO KS OF THE APPELLANT IS ENCLOSED HEREWITH. B) THE APPELLANT PURCHASED FIXED ASSETS I.E. GOODS STACKER FROM THIS PARTY. THIS PURCHASE HAS BEEN CAPITALIZED AS FIXED ASSET IN THE BOOKS OF THE APPELLANT. COPIES OF INVOICES RAISED BY THE PAR TY ARE ENCLOSED. C) ON ABOVE REFERRED PURCHASES, APPELLANT DEDUCTED AN AMOUNT OF RS.45,517/- ON ACCOUNT OF DISCREPANCY IN THE MATERI AL SUPPLIED. THE PAYMENT WAS MADE AFTER MAKING DEDUCTION OF THIS AMO UNT OF RS. 45,517/- . THIS IS EVIDENT FROM LEDGER ACCOUNT OF THIS PARTY ALSO. HOWEVER, THE PARTY DID NOT POST THE TRANSACTION OF THIS DEDUCTIO N, MADE BY THE APPELLANT, IN HIS BOOKS OF ACCOUNTS. HENCE THERE WA S A DIFFERENCE OF RS. 45,517/- IN THE TRANSACTIONS AND BALANCE AS PER BOO KS OF APPELLANT AND BALANCE AS PER BOOKS OF APPELLANT AND BALANCE AS PE R BOOKS OF PARTY. SINCE, THE DIFFERENCE HAS BEEN CLEARLY EXPLAINED AS WELL AS IS EXPLAINABLE FROM THE BOOKS OF APPELLANT, NO ADDITIO N ON THIS DIFFERENCE WAS REQUIRED. D) THE DIFFERENCE OF RS. 45,517/- IS EXCESS DEDUCTI ON AS PER BOOKS OF THE APPELLANT AND AS PER BOOK OF THE PARTY. THE ADD ITION U/S 68 CAN ONLY BE MADE IN RESPECT OF EXCESS CREDIT AND NOT IN RESP ECT OF EXCESS DEBIT. THEREFORE THE INVOCATION OF PROVISIONS OF SEC 68 ON EXCESS DEBITS, WHICH TOO ARE ON ACCOUNT OF DEDUCTIONS FROM SUPPLIERS BIL LS MADE BY THE APPELLANT, WAS UNJUSTIFIED. E) BY MAKING DEDUCTION FRO AMOUNTS PAYABLE TO THE C REDITORS, THE APPELLANT HAS ALREADY BOOKED THE INCOME . THEREFORE THE ADDITION U/S 68 RESULTED INTO DOUBLE TAXATION OF THE SAME FIGURE. 3 III) M/S SHAGUN & CO.: DIFFERENCE OF RS. 19,860/- A) COPY OF LEDGER ACCOUNT OF THIS PARTY IN BOOKS OF APPELLANT IS ENCLOSED. B) RECONCILIATION OF LEDGER OF THE PARTY IS ENCLOSE D. IT IS EVIDENT FROM THE RECONCILIATION THAT THE DIFFERENCE IS EXPLAINED AS WELL AS EXPLAINABLE AND IS NOT RESULTING INTO ANY ADDITIONA L INCOME ON THE PART OF THE APPELLANT. HENCE THE ADDITION MADE U/S 68 WAS UNJUSTIFIED. C) APPROPRIATE RELIEF IS PRAYED. IV) M/S SUPREME INDUSTRIES: DIFFERENCE OF RS. 9,49, 756/- A) COPY OF LEDGER ACCOUNT OF THIS PARTY IN BOOKS OF APPELLANT IS ENCLOSED. B) THE APPELLANT HAS PURCHASED FIXED ASSETS I.E. PL ASTIC CRATES FROM THIS PARTY. C) COPY OF ALL BILLS ISSUED BY THIS PARTY IS ENCLOS ED. D) DURING ASSESSMENT PROCEEDINGS, LD. A.O. CALLED F OR STATEMENT FROM THIS PARTY. THE LD. A.O. SENT HIS LETTER TO TH E HEAD OFFICE OF THIS PARTY WHEREAS THE APPELLANT HAD PURCHASED MATE RIAL FROM DELHI BRANCH OF THIS PARTY. THE HEAD OFFICE OF THIS PARTY REPLIED THAT NO PURCHASES HAVE BEEN MADE BY APPELLANT FROM HEAD OFFICE. HOWEVER, WHEN CONFRONTED BY THE FACT DURING THE ASS ESSMENT PROCEEDINGS, THE APPELLANT FURNISHED COPY OF STATEM ENT FROM DELHI BRANCH OF THE PARTY. COPY OF THIS STATEMENT IS ENCL OSED WITH THE PAPER BOOK ALSO. THIS STATEMENT DULY TALLIES WITH T HE BOOK OF THE APPELLANT. E) WITHOUT UNDERSTANDING & APPRECIATING THE ABOVE F ACTS, LD. A.O. MADE AN ADDITION OF RS. 9,49,756/- U/S 68 OF THE AC T. SINCE, THERE WAS NIL BALANCE OF THIS PARTY A PER BOOKS OF APPELL ANT AS AT CLOSE OF THE YEAR, NO ADDITION U/S 68 WAS REQUIRED. FURTH ER WHEN THERE WAS NO DIFFERENCE BETWEEN BALANCES OF PARTIES, THE ADDITION MADE U/S 68 WAS ILLEGAL AND UNJUSTIFIED. F) ALL THESE FACTS WERE FURNISHED TO THE LD. AO ALS O DURING THE ASSESSMENT PROCEEDINGS. COPY OF LETTER DATED 19.12. 2008 EXPLAINING ALL THE ABOVE FACTS FURNISHED TO LD. A.O . IS ENCLOSED HEREWITH. THEREFORE THE LD. AO HAS ERRED IN NOT APP RECIATING, UNDERSTANDING AND ACCEPTING THE TRUE FACTS AND HAS FINALLY ERRED IN MAKING THE IMPUGNED ADDITION. G) APPROPRIATE RELIEF IS PRAYED. V) M/S YASHODEEP & CO. : DIFFERENCE OF RS. 2,90,038 /- A) COPY OF LEDGER ACCOUNT OF THIS PARTY IN THE BOOK S OF THE APPELLANT IS ENCLOSED HEREWITH. B) COPY OF RECONCILIATION OF LEDGER OF THE PARTY IS ALSO ENCLOSED. C) IT IS EVIDENT FROM THE RECONCILIATION THAT THE M AJOR PART OF REASONS FOR DIFFERENCE IS THE DEDUCTION TOWARDS DEBIT NOTES AND TDS DEDUCTED BY APPELLANT WHICH WAS NOT RECOGNIZED BY T HE ASSESSMENT PROCEEDINGS PELLANT IN ITS BOOKS. THIS I S A FAULT ON PART OF THAT PARTY FOR WHICH NO ADDITION U/S 68 WA S REQUIRED IN THE HANDS OF THE APPELLANT FIRM. D) THE DIFFERENCE OF RS. 2,90,038/- IS EXCESS DEDUC TION AS PER BOOKS OF THE APPELLANT AND AS PER BOOKS OF THE PARTY. THE ADDITION U/S 68 4 CAN ONLY BE MADE IN RESPECT OF EXCESS CREDIT AND NO T IN RESPECT OF EXCESS DEBIT. THEREFORE THE INVOCATION OF PROVISION S OF SEC 68 ON EXCESS DEBITS, WHICH TOO ARE ON ACCOUNT OF DEDUCTIO NS FROM SUPPLIERS BILLS MADE BY THE APPELLANT, WAS UNJUSTIF IED. E) BY MAKING DEDUCTION FROM AMOUNTS PAYABLE TO THE CREDITORS, THE APPELLANT HAS ALREADY BOOKED THE INCOME. THEREFORE THE ADDITION U/S 68 RESULTED INTO DOUBLE TAXATION OF THE SAME FI GURE. F) APPROPRIATE RELIEF IS PRAYED. VI) M/S CHANDIGARH ELECTRO CONTROL: DIFFERENCE OF R S. 42,646/- A) COPY OF LEDGER ACCOUNT OF THIS PARTY IN THE BOOK S OF THE APPELLANT IS ENCLOSED HEREWITH. B) COPY OF RECONCILIATION OF LEDGER OF THE PARTY IS ALSO ENCLOSED. C) IT IS EVIDENT FROM THE RECONCILIATION THAT THE R EASON FOR DIFFERENCE IS THAT SOME BILLS WERE RAISED BY THE PARTY BUT THE APPELLANT HAS NOT RECEIVED THE MATERIAL AND HENCE THE SAID BILL W AS NOT CREDITED BY THE APPELLANT. D) THE DIFFERENCE OF RS. 42,646/- IS EXCESS DEDUCTI ON AS PER BOOKS OF THE APPELLANT AND AS PER BOOKS OF THE PARTY. THE AD DITION U/S 68 CAN ONLY BE MADE IN RESPECT OF EXCESS CREDIT AND NO T IN RESPECT OF EXCESS DEBIT. THEREFORE THE INVOCATION OF PROVISION S OF SEC 68 ON EXCESS DEBITS, WHICH TOO ARE ON ACCOUNT OF DEDUCTIO NS FROM SUPPLIERS BILLS MADE BY THE APPELLANT, WAS UNJUSTIF IED. E) BY MAKING DEDUCTION FROM AMOUNTS PAYABLE TO THE CREDITORS, THE APPELLANT HAS ALREADY BOOKED THE INCOME. THEREFORE THE ADDITION U/S 68 RESULTED INTO DOUBLE TAXATION OF THE SAME FI GURE. F) APPROPRIATE RELIEF IS PRAYED. 2. FURTHER, WE ARE ENCLOSING HEREWITH A SUMMARY SHE ET OF ISSUED INVOLVED WITH ALL THE PARTIES. IT IS EVIDENT FROM T HIS SHEET THAT NO ADDITION U/S 68 WAS REQUIRED IN THE HANDS OF THE APPELLANT F IRM. APPROPRIATE RELIEF IS PRAYED. ON THE BASIS OF ABOVE WRITTEN SUBMISSIONS THE LD. C IT(A) DELETED THE ADDITION. 5 BEFORE US, THE LD. D.R FOR THE REVENUE STRONGLY S UPPORTED THE ORDER OF THE ASSESSING OFFICER AND SUBMITTED TH AT ONE NO INFORMATION WAS FILED BEFORE THE ASSESSING OFFICER AND THEREFORE, THE LD. CIT(A) SHOULD NOT HAVE ALLOWED R ELIEF. 6 ON THE OTHER HAND, LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE PERUSAL OF SUBMISSIONS MADE BEFO RE THE LD. CIT(A) CLEARLY SHOWS THAT ALL THE FACTS WERE EXPLAI NED TO THE ASSESSING OFFICER AND THE ADDITION HAS BEEN MADE WR ONGLY. IN ANY CASE IN MOST OF THE CASES, THE ASSESSEE HAD SHO WN LESSER 5 CREDIT BALANCE THAN SHOWN BY THE CONCERNED PARTIES AND THEREFORE IN NO CASE ADDITION COULD HAVE BEEN MADE U/S 68 OF IT ACT. 7 WE HAVE CONSIDERED THE RIVAL SUBMISSIONS CAREFULL Y AND FIND THAT THIS ISSUE HAS BEEN ADJUDICATED BY THE LD . CIT(A) VIDE PARA NO. 4, 4.1, 4.2 WHICH ARE AS UNDER: 4 THE RIVAL CONTENTIONS HAVE BEEN CAREFULLY CONSID ERED W.R.T. THE FACTS OF THE CASE AND THE RELEVANT DOCUMENTS. IT IS PERTINENT TO NOTE THAT DUE EXPLANATION WAS FURNISHED BY THE ASSE SSEE DURING THE COURSE OF ASSESSMENT PROCEEDINGS IN RESPECT OF EACH ACCOUNT MENTIONED BY THE ASSESSING OFFICER IN THE ASSESSMEN T ORDER. THE ASSESSING OFFICER HAS NOT AT ALL CARES TO DISCUSS THE EXPLANATION FURNISHED BY THE ASSESSEE AND HIS REASONS FOR NOT A CCEPTING THE SAME. THE ASSESSING OFFICER HAS NOT GIVEN ANY DETA ILS AS TO HOW THE AMOUNTS MENTIONED IN THE ASSESSMENT ORDER REMA INED UNRECONCILED AND HOW AN ADDITION U/S 68 OF THE ACT WAS CALLED FOR ON ACCOUNT OF THE UNRECONCILED ENTRIES. IT IS NOTE D THAT BARRING A SMALL ENTRY OF RS. 48/- IN THE ACCOUNT OF M/S DOVE CHEMICALS, THE REMAINING 5 BUSINESS CONCERNS REPORTED A HIGHER CRE DIT BALANCE THAN THE ONE SHOWN BY THE APPELLANT IN ITS BOOKS OF ACCOUNTS. THIS MEANS THAT THE APPELLANT HAD BOOKED ITS CREDITORS A T A LESSER AMOUNT AND HAD NOT CLAIMED HIGHER CREDIT THAN THE O NE REPORTED BY THE GIVEN 5 PARTIES. IT WAS EXPLAINED BY THE APPEL LANT AT THE STAGE OF ASSESSMENT PROCEEDINGS AS WELL AS AT THE STAGE O F APPELLATE PROCEEDINGS WITH THE HELP OF COMPLETE DOCUMENTARY E VIDENCE THAT IT HAD BOOKED LESSER LIABILITIES AS IT HAD MADE CER TAIN DEDUCTIONS FROM THE SUPPLIERS BILLS ON ACCOUNT OF DISCREPANCY IN THE MATERIAL SUPPLIED OR ON ACCOUNT OF TDS OR ON ACCOUNT OF DEBI T NOTES OR ON ACCOUNT OF NON RECEIPT OF MATERIAL, BUT THE GIVEN P ARTIES HAD NOT PASSED THE CORRESPONDING ENTRIES IN THEIR BOOKS OF ACCOUNTS AND WERE STILL SHOWING THE HIGHER AMOUNTS RECEIVABLE FR OM THE APPELLANT. 4.1 IT IS FURTHER NOTED FROM THE RELEVANT DOCUMENTS THAT THE APPELLANT HAD PURCHASED FIXED ASSETS, I.E. PLASTIC CRATES, FROM M/S SUPREME INDUSTRIES AND HAD CAPITALIZED THE SAID EXP ENDITURE. THERE WAS NOTHING PAYABLE TO M/S SUPREME INDUSTRIES BY THE APPELLANT AND HENCE THERE WAS NIL BALANCE IN THE NAME OF THIS PARTY AS PER THE ASSESSEES BOOKS OF ACCOUNTS. THE ASSESSING OFFICER MADE THE ENQUIRIES REGARDING THE TRANSACTIO N OF THE APPELLANT FROM THE HEAD OFFICE OF M/S SUPREME INDUS TRIES WHEREAS THE APPELLANT HAD MADE THE PURCHASES FROM THEIR BRA NCH OFFICE AT DELHI. AS PER THE COPY OF ACCOUNT FURNISHED BY THE DELHI BRANCH OFFICE OF M/S SUPREME INDUSTRIES THERE IS ABSOLUTEL Y NO DIFFERENCE IN THE ACCOUNT STATEMENT OF THE ASSESSEE. BUT THE ASSESSING OFFICER HAS TAKEN NO COGNIZANCE OF THE STATEMENT OF ACCOUNT FURNISHED BY THE DELHI BRANCH OFFICE. INSTEAD HE H AS SIMPLY MADE AN ADDITION OF RS. 9,49,756/- U/S 68 OF THE ACT. 4.2 IN VIEW OF HE DISCUSSION ABOVE, IT IS NOT UNDER STOOD AS TO HOW THE ADDITION U/S 68 OF THE ACT COULD BE MADE BY THE ASSESSING OFFICER ON ACCOUNT OF THE LOWER CREDIT BALANCES SHO WN BY HE ASSESSEE IN ITS BOOKS OF ACCOUNTS IN RESPECT OF TH E ABOVE MENTIONED 5 BUSINESS CONCERNS. IT IS NOT THE ASSES SING OFFICERS CASE THAT THERE WERE CERTAIN CREDIT ENTRIES IN THE BOOKS OF ACCOUNTS OF THE APPELLANT, THE SOURCE OF WHICH REM AINED UNEXPLAINED. IT IS ALSO NOT THE ASSESSING OFFICER S CASE THAT THE APPELLANT HAD CLAIMED EXCESS LIABILITY BY MAKING BO GUS ENTRIES OF CREDITORS. THEREFORE THE ADDITION U/S 68 OF THE AC T IS FOUND TO HAVE BEEN MADE BY THE ASSESSING OFFICER IN A TOTALL Y ARBITRARY 6 MANNER WITHOUT APPRECIATING THE MATERIAL ON RECORD AND THE ACCOUNTS OF THE ASSESSEE. THE SAID ADDITION IS, TH EREFORE NOT FOUND SUSTAINABLE AND IS DIRECTED TO BE DELETED. T HE DIFFERENCE OF RS. 48/- IN THE ACCOUNT OF M/S DOVE CHEMICALS IS F OUND TO BE TOO PETTY TO CALL FOR ANY ADDITION WHEN THE ASSESSEE HA S MADE THE PURCHASES AMOUNTING TO RS. 7,77,777/- FROM THE GIVE N BUSINESS CONCERN. IN OUR OPINION, THE LD. CIT(A) HAS CORRECTLY DECIDE D THE ISSUE. THE LD. CIT(A) WAS CORRECT IN OBSERVING THAT THE AS SESSING OFFICER HAS NOT BOTHERED TO DISCUSS THE EXPLANATION GIVEN BEFORE HIM. OTHER OBSERVATIONS ARE ALSO TOTALLY COR RECT AND IN ANY CASE THE ADDITION CANNOT BE MADE WHERE THE ASSE SSEE IS SHOWING LESSER CREDIT BALANCE THAN WHAT IS SHOWN BY OTHER PARTIES. THIS WAS EXPLAINED BEFORE US BECAUSE OF T HE DEBIT NOTES RAISED BY THE ASSESSEE ON ACCOUNT OF QUANTITA TIVE AND QUALITATIVE ISSUES. THEREFORE WE FIND NOTHING WRON G WITH THE ORDER OF LD. CIT(A) AND CONFIRM THE SAME. 8. IN THE RESULT, APPEAL OF THE REVENUE IS DISMISSE D. ORDER PRONOUNCED IN THE OPEN COURT ON 17.10.2014 SD/- SD/- (BHAVNESH SAINI) (T.R. SOOD) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 17.10.2014 SURESH COPY TO: THE APPELLANT/THE RESPONDENT/THE CIT/THE C IT(A)/THE DR