DCIT, Circle-2(1), Bhubaneswar V. M/s. Orissa State Co-Operative Marketing Federation Limited, Bhawanipatna

ITA 63/CTK/2017

• Counselvise Citation: [2020] 110 COUNSELVISE.COM (IT) 3203 (ITAT-CUTTACK)
• Duration Of Justice: 3 year(s) 8 month(s) 29 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 20-11-2020
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Next Hearing Date: 30-06-2020
• Assessment Year: 2010-2011
• Appeal Filed On: 22-02-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: P R MOHANTY
• Keywords: Rejection of books of accounts
• Section: 201

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL CUTTACK BENCH CUTTACK BEFORE SHRI C.M. GARG, JM & SHRI L.P. SAHU, AM ITA NO. 63 /CTK/20 1 7 ( / A SSESSMENT Y EAR : 201 0 - 2011 ) DCIT, CENTRAL CIRCLE - 2 (1) , BHUBANESWAR VS. M/S ORISSA STATE COOPERATIVE MARKETING FEDERATION LIMITED, OLD STATION ROAD, CUTTACK ROAD, BHUBANESWAR - 751006 PAN NO. : A AAAO 0258 K ( / APPELLANT ) .. ( / RESPONDENT ) /REVENUE BY : SHRI SUBHENDU DUTTA , DR /ASSESSEE BY : SHRI P.R.MOHANTY, ADVOCATE / DATE OF HEARING : 20 / 11 /20 20 / DATE OF PRONOUNCEMENT : 20 / 11 /20 20 / O R D E R PER L.P.SAHU, AM : TH IS IS AN APPEAL FILED BY THE REVENUE AGAINST THE ORDER DATED 1 5.11.2016 , PASSED BY THE CIT(A) - 2 , BHUBANESWAR FOR THE ASSESSMENT YEAR S 201 0 - 201 1, ON THE FOLLOWING GROUNDS : - 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LD. CIT (A) IS NOT JUSTIFIED IN LAW AS WELL AS ON FACTS IN - DELETING THE DISALLOWANC E OF PROVISION FOR UNRECONCILED OD AND CC LOAN OF RS. 1,91,32,790/ - . 2. THE APPELLANT CRAVES TO ALTER, AMEND OR ADD ANY OTHER GROUND THAT MAY BE CONSIDERED NECESSARY IN COURSE OF THE APPEAL PROCEEDING. 2. BRIEF FACTS OF THE CASE ARE THAT THE A ASSESSEE IS INVOLVED IN THE BUSINESS OF TRADING AND DISTRIBUTION OF FERTILIZER, PADDY, RICE, AND RENTAL BUSINESS. THE CASE WAS SELECTED FOR SCRUTINY AND STATUTORY NOTICES WERE ISSUED TO THE ASSESSEE. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, IT WAS NOTICED BY TH E AO THAT THE STATUTORY AUDIT OF ACCOUNTS OF THE ITA NO. 63 /CTK/201 7 2 ASSESSEE IS NOT YET OVER, THEREFORE, HE REJECTED THE BOOKS OF ACCOUNTS U/S.145(3) OF THE ACT AFTER COMMUNICATING TO THE AUTHORIZED REPRESENTATIVE OF THE ASSESSEE. THE AO FURTHER NOTICED THAT IN THE PROFIT AN D LOSS ACCOUNT THE ASSESSEE HAS DEBITED A SUM OF RS. 1, 91,32,790/ - UNDER THE HEAD PROVISION FOR UNRECONCILED OD AND CC LOAN AND THE PROVISIONS ARE NOT ADMISSIBLE DEDUCTION AS PER THE INCOME TAX ACT. ACCORDINGLY, THE AO ISSUED NOTICE TO THE ASSESSEE ON 15.03 .2013 ASKING THEREIN TO EXPLAIN AS TO WHY THIS SHALL NOT BE DISALLOWED AND ADDED BACK TO THE TOTAL INCOME OF THE ASSESSEE . IN RESPONSE TO THE SAID NOTICE, THE ASSESSEE SUBMITTED HIS REPLY ON 21.03.2013 WHICH READS AS UNDER : - 'THE AMOUNT OF RS. 1,91,32,790 1 - HAS ALREADY ROLLING IN THE ACCOUNTS UNDER THE HEAD PROVISION FOR 'UNRECONCILED OD & CC LOAN' SINCE LONG UNDER CURRENT LIABILITIES. AT PRESENT TO FURNISH THE APPROPRIATE COMPLIANCE IS REQUIRE SOME TIME. FURTHER, THE CONCERNED STATUTORY AUDITOR IS OUT OF STATION. THEREFORE IT IS REQUESTED THAT TIME EXTENSION MAY BE ALLOWED TO SUBMIT THE PROPER COMPLIANCE.' FURTHER THE ASSESSEE COULD NOT EXPLAIN TO THE SATISFACTION OF THE AO IN THIS REGARD. ACCORDINGLY, THE AO DISALLOWED THE AMOUNT OF RS.1,91,32,790/ - CLAI MED UNDER THE HEAD PROVISION FOR UNRECONCILED OD AND CC LOAN. 3. FEELING AGGRIEVED FROM THE ORDER OF AO, THE ASSESSEE FILED AN APPEAL BEFORE THE CIT(A) AND THE CIT(A) DELETED THE ADDITIONS MADE BY THE AO. 4. AGGRIEVED FURTHER FROM THE ORDER OF CIT(A), THE ASSESSEE IS IN APPEAL BEFORE THE INCOME TAX APPELLATE TRIBUNAL. ITA NO. 63 /CTK/201 7 3 5. LD. CIT - DR BEFORE US RELIED ON THE ORDER OF AO AND SUBMITTED THAT THE CIT(A) WAS NOT JUSTIFIED TO DELETE THE ADDITIONS MADE BY THE AO BECAUSE THE PROVISIONS ARE NOT ALLOWED AS PER THE INCO ME TAX ACT. IT WAS DEBITED IN THE FINAL ACCOUNT SUBMITTED BY THE ASSESSEE IN THE PROFIT AND LOSS ACCOUNT. IN THE FINAL ACCOUNT SUBMITTED BY THE ASSESSEE BEFORE THE CIT(A), THIS AMOUNT HAS BEEN DEBITED UNDER THE HEAD PROVISION FOR UNRECONCILED OD AND CC LOA N , WHICH HAS BEEN IGNORED BY THE CIT(A). THEREFORE, LD. CIT - DR SUBMITTED THAT THE ORDER OF AO DESERVES TO BE RESTORED. 6. ON THE OTHER HAND, LD. AR OF THE ASSESSEE RELIED ON THE ORDER OF CIT(A) AND SUBMITTED THAT THE CIT(A) WAS FULLY JUSTIFIED TO DELETE TH E ADDITION MADE BY THE AO AFTER CONSIDERING THE PROFIT AND LOSS ACCOUNT, BALANCE SHEET AND FINAL PROFIT AND LOSS ACCOUNT AND THE BALANCE SHEET. THE AO HAS MADE ADDITION ON THE BASIS OF PROVISIONAL PROFIT AND LOSS ACCOUNT AND THE BALANCE SHEET BUT ON PERUS AL OF THE FINANCIAL STATEMENT NO WHERE IT IS APPEARING IN THE PROFIT AND LOSS ACCOUNT. THEREFORE, THE AO WAS NOT JUSTIFIED TO MAKE ADDITION ON THIS ACCOUNT AND THE CIT(A) HAS RIGHTLY DELETED THE ADDITION MADE BY THE AO. 7. AFTER HEARING BOTH THE SIDES AND PERUSING THE ENTIRE MATERIAL AVAILABLE ON RECORD, WE NOTICED THAT THE CIT(A) HAS DELETED THE ADDITION MADE BY THE AO AFTER OBSERVING AS UNDER : - ITA NO. 63 /CTK/201 7 4 4. GROUND NO.2: - IN THIS GROUND THE APPELLANT HAS CHALLENGED THE ADDITION MADE BY THE ASSESSING OFFICE R OF RS.1,91,32,790/ - BEING PROVISION FOR UNRECONCILED OD AND CC LOAN. IT IS CLAIM OF THE APPELLANT THAT FOR COMPUTATION OF TOTAL INCOME THE ASSESSING OFFICER HAS CONSIDERED NET PROFIT AS PER PROVISIONAL P&L ACCOUNT, IN WHICH NO PROVISION OF RS. 1,91,32,79 0/ - ON ACCOUNT OF UNRECONCILED OD & CC LOAN HAS BEEN DEBITED. I HAVE GONE THROUGH THE PROVISIONAL P&L ACCOUNT AND COMPUTATION OF TOTAL INCOME OF THE APPELLANT. I FIND THAT THE PROVISION OF RS. 1,91,32,790/ - HAS - BEEN DEBITED TO THE FINAL ACCOUNTS AND NOT TO THE PROVISIONAL ACCOUNTS. SINCE THE ASSESSING OFFICER HAS DETERMINED THE APPELLANT'S TOTAL INCOME ON THE BASIS OF PROVISIONAL ACCOUNTS, THE ADDITION MADE BY THE ASSESSING OFFICER OF RS. 1,91,32,790/ - CAN NOT BE SUSTAINED AND IS ORDERED TO BE DELETED. THIS GROUND OF APPEAL IS ALLOWED. ON PERUSAL OF THE ABOVE FINDINGS RECORDED BY THE CIT(A) , WE DO NOT WANT TO INTERFERE WITH THE ORDER OF CIT(A). IN FACT, THE PROVISIONS DEBITED INTO PROFIT AND LOSS ACCOUNT WITHOUT CREATING ANY LIABILITY IS NO T ALLOWABLE UNDER THE INCOME TAX ACT BUT IN THE FINANCIAL STATEMENTS PRODUCED BEFORE US, WE ALSO DO NOT FIND ANYWHERE THAT THE PARTICULAR AMOUNT HAS BEEN DEBITED INTO THE PROFIT AND LOSS ACCOUNT. THEREFORE, THE FINDINGS RECORDED BY THE CIT(A) IN THIS REGAR D ARE JUSTIFIED. ACCORDINGLY, WE UPHOLD THE ORDER OF THE CIT(A) WITH REGARD TO DELETION OF ADDITION MADE BY THE AO UNDER THE HEAD PROVISION FOR UNRECONCILED OD AND CC LOAN AND DISMISS THE SOLE GROUND RAISED BY THE REVENUE . 8 . IN THE RESULT, THE APPEAL OF T HE REVENUE IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 20 / 11 / 20 20 . S D/ - ( C.M.GARG ) S D/ - (L.P.SAHU) / JUDICIAL MEMBER / ACCOUNTANT MEMBER CUTTACK ; DATED 20 / 11 /20 20 PRAKASH KUMAR MISHRA, SR.P.S. ITA NO. 63 /CTK/201 7 5 / COPY OF THE ORDER FORWARDED TO : / BY ORDER, ( SENIOR PRIVATE SECRETARY ) , /ITAT, CUTTACK 1. / THE APPELLANT - DCIT, CENTRAL C IRCLE - 2(1) , BHUBANESWAR 2. / THE RESPONDENT - M/S ORISSA STATE COOPERATIVE MARKETING FEDERATION LIMITED, OLD STATION ROAD, CUTTACK ROAD, BHUBANESWAR - 751006 3. ( ) / THE CIT(A), 4. / CIT 5. , , / DR, ITAT, CUTTACK 6. / GUARD FILE. //TRUE COPY//