ITO, Meerut V. U.P. Dyeing & Printing Works, Meerut

ITA 638/DEL/2015

• Counselvise Citation: [2019] 115 COUNSELVISE.COM (IT) 8435 (ITAT-DELHI)
• Duration Of Justice: 4 year(s) 8 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 09-10-2019
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: D
• Next Hearing Date: 03-04-2017
• Assessment Year: 2010-2011
• Appeal Filed On: 02-02-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: NAINA SOIN KAPIL
• Keywords: Set aside

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH D, NEW DELHI BEFORE SH. BHAVNESH SAINI, JUDICIAL MEMBER AND SH. R. K. PANDA, ACCOUNTANT MEMBER ITA NO.614/DEL/2015 ASSESSMENT YEAR: 2010-11 M/S. U. P. DYEING & PRINTING WORKS, 154, SUBHASH BAZAR, MEERUT PAN NO.AAAFU2202L VS. INCOME TAX OFFICER WARD- 2 (4) MEERUT (APPELLANT) (RESPONDENT) ITA NO.638/DEL/2015 ASSESSMENT YEAR: 2010-11 INCOME TAX OFFICER WARD- 2 (4) MEERUT VS. M/S. U. P. DYEING & PRINTING WORKS, 154, SUBHASH BAZAR, MEERUT (APPELLANT) (RESPONDENT) APPELLANT BY SH. SANJAY MALIK, CA SH. SANKALP MALIK, CA RESPONDENT BY SMT. NAINA SOIN KAPIL, SR. DR. DATE OF HEARING: 01/08/2019 DATE OF PRONOUNCEMENT: 09/10/2019 ORDER PER R.K PANDA, AM: THESE ARE CROSS APPEALS. THE FIRST ONE IS FILED BY THE ASSESSEE AND THE SECOND ONE FILED BY THE REVENUE AN D ARE DIRECTED AGAINST THE ORDER DATED 28.11.2014 OF THE CIT(A), M EERUT RELATING TO A.Y.2010-11. FOR THE SAKE OF CONVENIENCE THESE W ERE HEARD TOGETHER AND ARE BEING DISPOSED OF BY THIS COMMON O RDER. PAGE | 2 ITA NO. 614/DEL/2015 ( BY ASSESSEE) 2. THERE IS A DELAY OF TWO DAYS IN FILING OF THIS A PPEAL BY THE ASSESSEE FOR WHICH ASSESSEE HAS FILED A CONDONATION PETITION ALONGWITH AN AFFIDAVIT EXPLAINING THE REASONS FOR D ELAY. AFTER HEARING BOTH THE SIDES AND CONSIDERING THE CONTENTS OF THE CONDONATION APPLICATION FILED ALONGWITH AFFIDAVIT, THE DELAY IS CONDONED. 3. THE GROUNDS RAISED BY THE ASSESSEE ARE AS UNDER :- 1. THAT ON FACTS AND IN LAW AND IN THE CIRCUMSTANCES OF THE CASE, THE DIFFERENCE BETWEEN THE BALANCES AS PER TH E ACCOUNTS OF VARIOUS TRADE CREDITORS AND THE BALANCES REFLECTE D IN THE BOOKS OF ACCOUNT OF THE ASSESSEE HAVING BEEN FULLY SUBSTANTIATED THERE WAS NO LEGAL BASIS TO TREAT SUCH DIFFERENCE AS INCOME CHARGEABLE TO TAX. 2. THE AUTHORITIES BELOW ON FACTS AND IN LAW AND THE GROUNDS TAKEN AND BASIS ADOPTED WENT WRONG TO TREAT RS.44,9317/- AS INCOME. THE ADDITION DESERVES TO BE DELETED BEING VOID, ILLEGAL AND WITHOUT JURISDICTION. 4. FACTS OF THE CASE, IN BRIEF, ARE THAT THE ASSES SEE IS A PARTNERSHIP FIRM ENGAGED IN THE BUSINESS OF MANUFAC TURE OF PRINTED HANDLOOM / POWER LOOM CLOTH AND CLOTH PRINT ING. IT FILED ITS RETURN OF INCOME ON 15.10.2010 DECLARING TOTAL INCOME OF RS.56,360/-. DURING THE COURSE OF ASSESSMENT PROCE EDINGS THE AO NOTED THAT ASSESSEE HAS SHOWN SUNDRY CREDITORS T O THE TUNE OF RS.1,22,75,695/-. ON THE BASIS OF DETAILS FURNI SHED BY THE ASSESSEE THE AO ISSUED LETTERS U/S. 133 (6) TO CERT AIN CREDITORS. FROM THE CONFIRMATIONS RECEIVED FROM SOME OF THE CR EDITORS HE PAGE | 3 NOTED DIFFERENCE IN THE CASE OF THE FOLLOWING CREDI TORS :- NAME DIFFERENCE AMOUNT AMIT TEXTILE RS.1,33,784/- KUNAL TECH FAB INDIA RS.10428/- NEW INDIA COLOUR RS.2000/- VISHAL DYEING CHEMICAL RS.7008/- M/S. MAYA INTERNATIONAL PVT. LTD. RS.35034/- S. R. TEXTILE RS.261063/- 5. HE, THEREFORE, ASKED THE ASSESSEE TO EXPLAIN THE DIFFERENCE AND ASKED HIM TO EXPLAIN AS TO WHY IT SHOULD NOT BE ADDED TO THE TOTAL INCOME OF THE ASSESSEE. IN ABSENCE OF ANY REPLY FROM THE SIDE OF THE ASSESSEE, THE AO MADE ADDITION OF R S.4,49,317/-. 6. IN APPEAL THE LD. CIT(A) CONFIRMED THE ADDITION ON THE GROUND THAT AO BY HIS OWN ENQUIRY HAD BROUGHT IN PO SITIVE EVIDENCE AND THE ASSESSEE FAILED TO OFFER ANY EXPLA NATION BEFORE THE AO. THEREFORE, HE REJECTED THE EXPLANATION GIVE N BY THE ASSESSEE BEFORE HIM AND SUSTAINED THE ADDITION OF RS.4,49,317/- MADE BY THE AO. 7. AGGRIEVED WITH SUCH ORDER OF THE CIT(A), THE ASS ESSEE IS IN APPEAL BEFORE THE TRIBUNAL. 8. THE LD. COUNSEL FOR THE ASSESSEE STRONGLY CHALLE NGED THE ORDER OF THE CIT(A) IN CONFIRMING THE ADDITION OF R S.4,49,317/-. HE SUBMITTED THAT IT IS A CASE WHERE SUNDRY CREDITO RS SHOWN BY THE ASSESSEE IS LESS THAN THE FIGURES GIVEN BY THE RESPECTIVE PARTIES. FURTHER THE ASSESSEE HAS PAID BACK AMOUNT TO THE SUNDRY CREDITORS IN THE SUBSEQUENT YEARS. HE SUBMI TTED THAT PAGE | 4 THE AO HAS NOT DISALLOWED ANY PURCHASES AND HAS ACC EPTED THE TRADING ACCOUNT, THEREFORE, NO ADDITION SHOULD HAVE BEEN MADE. THE LD. COUNSEL FOR THE ASSESSEE FILED THE FOLLOWIN G DETAILS TO SUBSTANTIATE THE ITEM WISE DIFFERENCE IN THE CASE O F THE CREDITORS. THE LD. CIT (A) IN PARA NO. 4.2 OF HIS ORDER SIMPLY STATED THAT RECONCILIATION STATEMENT CANNOT BE CONSIDERED AT THIS STAGE. HOWEVER THE FACTS IS RECONCILIATION STATEMENT WAS F ILED BEFORE THE AO AS WELL AS CIT (A). AN INDEX WAS ALSO FILED B EFORE THE LD. CIT (A) WHICH HAS BEEN OVERLOOKED. REFERRED TO PAG E NO. 110 & 111 OF THE PAPER BOOK. PAGE NO. 1 OF THE PAPER BOOK SHOWS THE BALANCE OF T RADE CREDITORS IN THE BOOKS OF THE ASSESSEE AND BALANCE W ITH THE SUPPLIERS IN THEIR BOOKS AND THE DIFFERENCE, IT IS S EEN THAT THE DIFFERENCE IS CREDIT DIFFERENCE. (I.E. THE BALANCE PAYABLE IS LESS) RECONCILIATION STATEMENT WAS FILED AT PAGE NO.2 AND 3 OF THE INDEX PAPER BOOK. THE SAME WAS FILED BEFORE LD. CIT (A ) ALSO AND NOT CONSIDERED BY HIM. IN CASE OF NEW INDIAN COLOR COMPANY, THE CONFIRMATI ON WAS FILED AT PAGE NO.7 AND THE DIFFERENCE WAS ONLY BECAUS E OF OPENING BALANCE OF RS.1671.81. THUS LD. CIT (A) WAS WRONG ON FACTS ON DISALLOWING THE SAME. A CHART WAS ALSO FIL ED WHICH SHOWS BALANCE, BILLS AND PAYMENT MADE BY THE FIRM, W HICH WAS FURNISHED AT PAGE NO. 39 OF THE PAPER BOOK. (REF ER PAGE NO. 37) IN CASE OF SR TEXTILES, THE CONFIRMATION WAS FILED AT PAGE NO. 12 AND THE DIFFERENCE WAS ONLY BECAUSE OF BILL WAS ENT ERED LATER AS GOODS WERE INSPECTED AND PURCHASE WAS DONE IN SUBSEQUENT DATE WHEN THE GOODS WAS APPROVED AND BILL WAS SETTLED, THUS LD. CIT (A) WAS WRONG ON FACTS ON DISA LLOWING THE PAGE | 5 SAME. A CHART WAS ALSO FILED WHICH SHOWS BALANCE, BI LLS AND PAYMENT MADE BY THE FIRM, WHICH WAS FURNISHED AT PAG E NO. 39 OF THE PAPER BOOK. (REFER PAGE NO. 39) IN CASE OF AMIT TEXTILES, THE CONFIRMATION WAS FILE D AT PAGE NO. 19 AND THE DIFFERENCE WAS ONLY BECAUSE OF GOODS RECEI VED IN THE OPENING DATE OF NEXT YEAR WAS DULY ENTERED IN PU RCHASES BY THE ASSESSEE., THUS LD. CIT (A) WAS WRONG ON FACT S ON DISALLOWING THE SAME. A CHART WAS ALSO FILED WHICH S HOWS BILLS AND PAYMENT MADE BY THE FIRM, WHICH WAS FURNISHED A T PAGE NO. 39 OF THE PAPER BOOK. (REFER PAGE NO. 39). IN CASE OF KUNAL TEX FAB, THE CONFIRMATION WAS FILE D AT PAGE NO.21 AND THE DIFFERENCE WAS ONLY BECAUSE OF CHEQUES DEBITED IN SUBSEQUENT FINANCIAL YEAR, THUS LD. CIT(A) WAS WR ONG ON FACTS ON DISALLOWING THE SAME. A CHART WAS ALSO FIL ED WHICH SHOWS BALANCE, BILLS AND PAYMENT MADE BY THE FIRM, W HICH WAS FURNISHED AT PARA NO.39 OF THE PAPER BOOK. (RE FER PAGE NO.31). IN CASE OF VISHAI DYES & CHEMICALS, THE CONFIRMATIO N WAS FILED AT PAGE NO. 32 AND THE DIFFERENCE WAS ONLY BECAUSE OF BALANCE OF PETTY EXPENSES DEBITED TO THE TUNE OF RS. 200 AND BILL ISSUED ON 31 ST MARCH, WHICH WAS RECEIVED IN NEXT FINANCIAL YEAR. THERE WAS AN OPENING BALANCE OF RS. 9308/- AND THE SAME W AS DULY RECONCILED, HOWEVER LD. CIT (A) WAS WRONG ON FACTS O N DISALLOWING THE SAME. A CHART WAS ALSO FILED WHICH S HOWS BALANCE, BILLS AND PAYMENT MADE BY THE FIRM, WHICH F URNISHED AT PAGE NO. 40 OF THE PAPER BOOK. (REFER PAGE NO. 3 2) IN CASE OF MAYA INTERNATIONAL, COPY OF ACCOUNT WAS FILED AT PAGE NO. 33 & 34, THE DIFFERENCE WAS ONLY BECAUSE O F TWO BILLS IN ONE THERE IS A DIFFERENCE OF RS.2545/- AND IN SEC OND BILL, IT PAGE | 6 WAS ENTERED LATER AS GOODS WERE INSPECTED AND PURCHA SE WAS DONE IN SUBSEQUENT DATE WHEN THE GOODS WAS APPROVED A ND BILL WAS SETTLED, THUS LD. CIT (A) WAS WRONG ON FAC TS ON DISALLOWING THE SAME. A CHART WAS ALSO FILED WHICH S HOWS BALANCE, BILLS AND PAYMENT MADE BY THE FIRM, WHICH WAS FURNISHED AT PAGE NO. 41 OF THE PAPER BOOK. 9. RELYING ON VARIOUS DECISIONS HE SUBMITTED THAT T HE ADDITION MADE BY THE ASSESSING OFFICER AND THE CIT( A) SHOULD BE DELETED. 10. THE LD. DR ON THE OTHER HAND HEAVILY RELIED ON THE ORDER OF THE AO AND THE CIT(A). 11. WE HAVE CONSIDERED THE RIVAL ARGUMENTS MADE BY BOTH THE SIDES, PERUSED THE ORDERS OF THE AO AND THE CIT(A) AND THE PAPER BOOK FILED ON BEHALF OF THE ASSESSEE. WE HAVE ALSO CONSIDERED THE VARIOUS DECISIONS CITED BEFORE US. WE FIND THE AO IN THE INSTANT CASE MADE ADDITION OF RS.4,49,317 /- TO THE TOTAL INCOME OF THE ASSESSEE ON THE GROUND THAT THE RE IS DIFFERENCE BETWEEN THE BALANCE SHOWN BY THE ASSESSE E AND THE CONFIRMATION RECEIVED IN THE CASE OF SIX PARTIES TH E DETAILS OF WHICH IS GIVEN AT PARA 4 OF THIS ORDER. IT IS THE SUBMISSION OF THE LD. COUNSEL FOR THE ASSESSEE THAT THE FIGURES S HOWN BY THE ASSESSEE IS LESS AS COMPARED TO THE FIGURES IN THE CONFIRMATION GIVEN BY THE SUNDRY CREDITORS. FURTHER THE ASSESSEE HAS RECONCILED THE DIFFERENCE IN GIVING REASONS AND, TH EREFORE, THERE IS NO NEED TO MAKE THE ADDITION. WE FIND SUFFICIENT FORCE IN THE ABOVE ARGUMENT OF THE LD. COUNSEL FOR THE ASSESSEE. A PERUSAL OF THE DETAILS FILED IN THE PAPER BOOK SHOWS THAT T HE ASSESSEE PAGE | 7 HAS FILED THE FOLLOWING DETAILS BEFORE THE AO AS CE RTIFIED IN THE PAPER BOOK. 12. WE FIND THE VARIOUS DETAILS FURNISHED BY THE AS SESSEE BEFORE THE CIT(A) WERE SUMMARILY REJECTED BY HIM ON THE GR OUND THAT THE ASSESSEE HAS NOT FURNISHED ANY EXPLANATION BEFORE T HE AO. IN OUR OPINION THE ASSESSEE IN THE INSTANT CASE HAS FULLY DISCHARGED THE ONUS CAST ON HIM BY GIVING SUFFICIENT REASONS BEFOR E THE AO AND CIT(A) REGARDING THE DISCREPANCIES IN THE ACCOUNTS . FURTHER IT IS SUMMER Y OF DIFFERENCE IN BALANCE OF SUNDRV CREDITORS S.NO. NAME OF SUPPLIERS BALANCE AS PER SUPPLIERS BALANCE AS PER DIFF. U.P DYEING 1 NEW INDIA COLOUR COMPANY 476,282.81 474,611.00 1,671.81 DIFF. IN OPENING BALANCE CR. 2 S.R TEXTILES 428,130.00 167,067.00 261,063.00 SOME BILLS TAKEN IN NEXT F.Y ON 17.05.2010 CR. 3 AMIT TEXTILES 1,009,654.00 875,870.00 133,784.00 BILL NO. 217 DT. 27.03.2010 TAKEN IN NEXT F.Y ON 01.04.2010 CR. 4 KUNAL TEX FAB 75,651.00 65,222.00 10,429.00 CHEQUE PAYMENT NOT TAKEN BY KUNAL TEX FAB UP DYEING SHOWN ON 29.04.2009 CR. 5 VISHAL DYES & CHEMICALS 741,919.00 748,927.00 ( - ) 7,008.00 DIFF. IN OPENING BALANCE RS. 93087- BALANCE EXCESS ENTERED BY VISHAL DYES & RS. 2300/- ENTERED BY VISHAL DYES ON 01.04.2010 DR. 6 MAYA INTERNATIONAL TOTAL ACTUAL DIFFERENCE 1,062,011.00 3,793,647.81 434,959.81 1.026.991.00 3.358.688.00 35,020.00 448,975.81 RS. 2545/- BILL DIFF. & RS. 32475/- BILL TAKEN IN NEXT F.Y ON 15.05.2010 THE A.O ADDED ALL THE SIX ITEMS CR. NOTE: IT IS A CASE WHERE LIABILITY PAYABLE IS LESS THAN T HE CREDITORS CLAIMING WITH, HENCE NO ADDITION SHALL BE MADE ON THIS SCORE PAGE | 8 A CASE WHERE THE LIABILITY PAYABLE IS LESS THAN THE BALANCE SHOWN BY THE CREDITORS IN 5 OUT OF THE 6 CASES. FURTHER THE AO HAS NOT DISPUTED THE PURCHASES FROM THE SAID PARTIES AND HA S ACCEPTED THE TRADING RESULTS. CONSIDERING THE TOTALITY OF TH E FACTS OF THE PRESENT CASE AND CONSIDERING THE SUBMISSION MADE BY THE LD. COUNSEL FOR THE ASSESSEE BEFORE THE AO AND THE CIT( A), WE ARE OF THE CONSIDERED OPINION THAT THE CIT(A) WAS NOT JUST IFIED IN SUSTAINING THE ADDITION OF RS.4,49,317/- ON ACCOUNT OF DIFFERENCE IN THE ACCOUNTS OF THE CREDITORS. WE, THEREFORE, SE T ASIDE THE ORDER OF THE CIT(A) AND DIRECT THE AO TO DELETE THE ADDIT ION. 13. THE APPEAL FILED BY THE ASSESSEE IS ACCORDINGLY ALLOWED. ITA NO.638/DEL/2015 ( BY REVENUE) 14. THE GROUNDS OF THE REVENUE IS AS UNDER :- 1. WHETHER IN THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) WAS CORRECT IN LAW AND FACTS IN NOT REMANDIN G THE MATTER FOR PROPER AND COMPLETE VERIFICATION OF SUNDRY CREDITOR S WORTH RS. 72,71,723/- WHICH WERE UNCONFIRMED BALANCES. 2. WHETHER IN THE FACTS AND CIRCUMSTANCES OF THE CASE , THE LD. CIT(A) WAS CORRECT IN LAW AND FACTS IN ACCEPTING TH E VERSION OF THE ASSESSEE REGARDING UNCONFIRMED BALANCES OF SUNDRY C REDITORS WORTH RS. 72,71,723/- WITHOUT PROPER VERIFICATION. 3. THAT THE APPELLANT CRAVES LEAVE TO ADD, MODIFY AND / OR DELETE ANY GROUND(S) OF APPEAL. 4. IN THE FACTS AND CIRCUMSTANCES OF THE CASE, THE OR DER OF THE CIT(A), MEERUT MAY BE SET ASIDE AND THAT OF THE A.O . RESTORED. 15. AFTER HEARING BOTH THE SIDES, WE FIND THE TAX E FFECT INVOLVED IN THE GROUNDS RAISED BY THE REVENUE IS ADMITTEDLY BELOW RS.50 LAKHS. THEREFORE, IN VIEW OF THE CBDT CIRCULAR NO. 17/2019 DATED 8 TH AUGUST, 2019 RAISING THE MONETARY LIMITS FOR FILIN G OF THE PAGE | 9 APPEALS BY THE REVENUE BEFORE THE TRIBUNAL TO RS.50 LAKHS AND THE SUBSEQUENT CLARIFICATION DATED 20 TH AUGUST, 2019 TO THE EFFECT THAT THE SAID CIRCULAR IS APPLICABLE EVEN TO PENDIN G APPEALS, THE APPEAL FILED BY THE REVENUE IS NOT MAINTAINABLE. AC CORDINGLY, THE SAME IS DISMISSED. 16. IN THE RESULT, THE APPEAL FILED BY THE REVEN UE IS DISMISSED AND THE APPEAL FILED BY THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 09.10.2019. SD/- SD/- (BHAVNESH SAINI) (R.K PANDA) JUDICIAL MEMBER ACCOUNTANT MEMBER *NEHA* DATE:- 09.10.2019 COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(APPEALS) 5. DR: ITAT ASSISTANT REGISTRAR ITAT NEW DELHI DATE OF DICTATION DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE DICTATING MEMBER DATE ON WHICH THE APPROVED DRAFT COMES TO THE SR.PS /PS DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE THE D ICTATING MEMBER FOR PRONOUNCEMENT DATE ON WHICH THE FAIR ORDER COMES BACK TO THE SR. PS/ PS DATE ON WHICH THE FINAL ORDER IS UPLOADED ON THE WE BSITE OF ITAT 09.10.2019 DATE ON WHICH THE FILE GOES TO THE BENCH CLERK 09.10.2019 DATE ON WHICH FILE GOES TO THE HEAD CLERK. THE DATE ON WHICH FILE GOES TO THE ASSISTANT REGIST RAR FOR SIGNATURE ON THE ORDER DATE OF DISPATCH OF THE ORDER