K.Gokul (Indl), Erode V. ITO, Erode

ITA 641/CHNY/2013

• Counselvise Citation: [2019] 112 COUNSELVISE.COM (IT) 6076 (ITAT-CHENNAI)
• Duration Of Justice: 5 year(s) 8 month(s) 29 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 10-01-2019
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: C
• Next Hearing Date: 28-06-2017
• Assessment Year: 2009-2010
• Appeal Filed On: 11-04-2013
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: S RANGARAJAN
• Assessee Lawyers: S SRIDHAR
• Section: 133A

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH: CHENNAI . . . , ! ' , # '$ BEFORE SHRI N.R.S. GANESAN, JUDICIAL MEM BER AND SHRI INTURI RAMA RAO, ACCOUNTANT MEMBER ./ ITA NO.641, 642 & 643/CHNY/2013 % &% /ASSESSMENT YEAR: 2009-10 SHRI K. GOKUL (INDL), PROP. GOKUL & GOKUL, NO.3, NACHIAPPA 2 ND STREET, ERODE 638 001. [PAN: ACQPG 4007K] SHRI T.P.KATHIRVEL (HUF), PROP. TEX INDIA, NO.3, NACHIAPPA 2 ND STREET, ERODE 638 001. [PAN: AABHT 4592H] SHRI T.P.KATHIRVEL (INDL), PROP. THE HIDUSTAN TEXTILES, NO.3, NACHIAPPA 2 ND STREET, ERODE 638 001. [PAN: AEQPK 6175G] VS. THE INCOME TAX OFFICER, WARD-1(2), ERODE. ( '( /APPELLANT) ( )*'( /RESPONDENT) '( + , / APPELLANT BY : SHRI S. SRIDHAR, ADVOCATE )*'( + , /RESPONDENT BY : SHRI S.RANGARAJAN, JCIT - + .# /DATE OF HEARING : 08.01.2019 /0& + .# / DATE OF PRONOUNCEMENT : 10.01.2019 / O R D E R PER INTURI RAMA RAO, ACCOUNTANT MEMBER : ITA NO.641,642 & 643/CHNY/2013 (AY: 2009-10) :- 2 -: ITA NO.641/CHNY/2013 IN THE CASE OF SHRI K. GOKUL ( INDL) : THIS IS AN APPEAL FILED BY THE ASSESSEE DIRECTED AG AINST THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS)-I, COIM BATORE (CIT(A) FOR SHORT) DATED 24.01.2013 FOR THE ASSESSMENT YEAR (AY ) 2009-10. THE ASSESSEE RAISED THE FOLLOWING GROUNDS OF APPEAL : 1. THE ORDER OF THE COMMISSIONER OF INCOME TAX (APP EALS) COIMBATORE DATED 24-01-2013 IN I.T.A. NO.292/11-12 FOR ASST.YEAR 2009-10 IS CONTRARY TO LAW, FACTS AND IN CIRCUMSTANCES OF THE CASE. 2. THE COMMISSIONER OF INCOME TAX (APPEALS) ERRED I N SUSTAIN THE ADDITION OF RS.27,18,954/- IN RESPECT O F SUNDRY CREDIT BALANCES ON A FINDING THAT THERE IS NO LIABI LITY AND UNDER PROVISION OF SEC 41, THERE IS CESSATION OF LI ABILITY WARRANT ADDITION ON ACCOUNT OF BOGUS CREDITORS. 3. THE COMMISSIONER OF INCOME TAX (APPEALS) ERRED IN NOT APPRECIATING THE FACT THAT THE CREDITORS BALANCES A PPEARS IN THE BOOKS OF ACCOUNT RIGHT FROM THE YEAR 1998-99. 4. THE COMMISSIONER OF INCOME TAX (APPEALS) OUGHT TO BE APPRECIATED THE FACT THAT THE CREDIT PERIOD WILL BE NORMALLY 3 TO 6 MONTHS IN THE TEXTILE INDUSTRY, WHEREAS IN THE APPELLANT'S CASE BALANCES ARE APPEARING IN THE BOOKS FOR MORE T HAN 8 TO 10 YEARS WHICH CANNOT BE A FACT IN REALITY. 5. THE COMMISSIONER OF INCOME TAX (APPEALS) OUGHT TO BE APPRECIATED THE FACT THAT THESE CREDITORS WERE PAID EVEN 8 TO 10 YEARS BACK. 6. THE COMMISSIONER OF INCOME TAX (APPEALS) FAILED TO APPRECIATE THE FACT THAT THE APPELLANT'S CASE DOES NOT FALL UNDER THE PROVISIONS OF SEC. 41 ATTRACTING CESSATIO N OF LIABILITY. 7. THE COMMISSIONER OF INCOME TAX (APPEALS) FAILED TO CONSIDER THE FACT THAT NO BENEFIT RESULTED TO THE A PPELLANT (THROUGH THE SUNDRY CREDITORS BALANCES) DURING THE YEAR UNDER CONSIDERATION. 8. FOR THE ABOVE REASONS AND FOR ANY OTHER REASONS THAT MAY BE ADDUCED AT THE TIME OF HEARING, IT IS PRAYED THAT THE ABOVE ADDITIONS MAY KINDLY BE DELETED. ITA NO.641,642 & 643/CHNY/2013 (AY: 2009-10) :- 3 -: 3. THE BRIEF FACTS OF THE CASE ARE AS UNDER: THE APPELLANT IS AN INDIVIDUAL CARRYING ON THE BUS INESS OF TRADING IN CLOTH UNDER THE NAME AND STYLE OF GOKUL & GOKUL. T HERE WAS A SURVEY OPERATIONS U/S. 133A OF THE INCOME TAX ACT, 1961 (F OR SHORT THE ACT) IN THE PREMISES OF THE APPELLANT ON 02.12.2009. DURIN G THE COURSE OF SURVEY PROCEEDINGS, IT WAS FOUND THAT THERE WERE UN PROVED SUNDRY CREDITORS TO THE EXTENT OF RS. 48,08,259/- OUT OF W HICH IT IS STATED THAT THE APPELLANT HAD AGREED TO OFFER TO TAX A SUM OF RS. 3 6,69,139/-. HOWEVER, IN THE RETURN OF INCOME FILED, THE ADMITTED INCOME WAS NOT INCLUDED ON THE GROUND THAT THE SUNDRY CREDITORS RELATES TO THE EAR LIER YEARS AND DOES NOT RELATE T THE YEAR UNDER CONSIDERATION. IT IS FURTH ER STATED THAT IN RESPECT OF BALANCE OUTSTANDING IN THE NAME OF ONE SHRI K.VIJAY , THE SAME WAS SHOWN AS RECEIVABLE BY THE SAID SHRI K. VIJAY. HOW EVER, THE AO BROUGHT A SUM OF RS. 36,69,139/- AS UNPROVED CREDITORS. 4. BEING AGGRIEVED, AN APPEAL WAS PREFERRED BEFORE LD. CIT(A), WHO VIDE IMPUGNED ORDER DELETED THE ADDITION ON ACCOUNT OF CREDIT IN THE NAME OF SHRI K. VIJAY FOR RS.8,87,344/- AND THE BAL ANCE AMOUNT OF ADDITION WAS CONFIRMED BY HIM. BEING AGGRIEVED, THE APPELLANT IS IN APPEAL BEFORE US IN THE IN THE PRESENT APPEAL. 5. IT IS STATED THAT IN THE SUBSEQUENT ASSESSMENT Y EAR, THE VERIFICATION OF SUNDRY CREDITORS WAS CARRIED OUT BY THE AO, WHER EIN IT IS FOUND THAT THIS ITA NO.641,642 & 643/CHNY/2013 (AY: 2009-10) :- 4 -: SUNDRY CREDITORS WERE PAID EIGHT YEARS BACK AND THE REFORE, IT IS SUBMITTED THAT THE ISSUE BE REMANDED TO THE FILE OF AO TO COM PLETE THE ASSESSMENT IN THE LIGHT OF THE FINDINGS OF THE AO FOR THE AY 2 010-2011. 6. WE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE M ATERIAL ON RECORD. THE ONLY ISSUE IN THE PRESENT APPEAL RELAT ES TO THE ADDITION ON ACCOUNT OF UNPROVED SUNDRY CREDITORS TO THE EXTENT OF RS. 27,18,954/-. ADMITTEDLY, THESE SUNDRY CREDITORS DOES NOT EXISTS, IT IS A MERE FICTITIOUS ENTRY IN THE BOOKS OF ACCOUNT. THEN, THE QUESTION THAT COMES UP FOR CONSIDERATION IS THE YEAR IN WHICH THE ADDITION IS REQUIRED TO BE MADE. IT IS SETTLED POSITION OF LAW THAT THE ADDITION IN RES PECT OF CREDIT ENTRY CAN BE MADE ONLY IN THE YEAR IN WHICH CREDIT WAS INTRODUCE D FOR THE FIRST TIME IN THE BOOKS OF ACCOUNT. IN THE PRESENT CASE, IT IS T HE CONTENTION OF THE APPELLANT THAT THE CREDITORS WERE SQUARED OFF IN TH E SUBSEQUENT PERIOD OUT OF THE UNACCOUNTED MONEY. THEREFORE, THE ADDITION C AN BE MADE ONLY IN THE YEAR IN WHICH THE CREDITS WERE SQUARED OFF BY U SING UNACCOUNTED MONEY AND THEREFORE, WE REMIT THE ISSUE BACK TO THE AO FOR THE LIMITED PURPOSE OF VERIFICATION OF THE YEAR IN WHICH THE CR EDITS WERE SQUARED OFF BY USING UNACCOUNTED MONEY AND MAKE THE ADDITION IN THAT YEAR IN ACCORDANCE WITH THE LAW. UNDER THESE CIRCUMSTANCES , THE APPEAL FILED BY APPELLANT IS PARTLY ALLOWED FOR STATISTICAL PURPOSE . ITA NO.641,642 & 643/CHNY/2013 (AY: 2009-10) :- 5 -: 8. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS PARTLY ALLOWED FOR STATISTICAL PURPOSES. ITA NO.642 & 643/CHNY/2013 : 9. THE FACTS AND CIRCUMSTANCES OF THE APPEALS IN IT A NO.642 & 643/CHNY/2013 ARE IDENTICAL TO THE FACTS IN ITA NO. 641/CHNY/2013, WHEREIN WE REMITTED THE ISSUE BACK TO THE FILE OF A SSESSING OFFICER WITH A DIRECTION TO MAKE ADDITION OF UNPROVED CREDITORS IN THE YEAR IN WHICH THE CREDITORS WERE SQUARED OFF BY USING UNACCOUNTED MON EY. SIMILARLY, FOR PARITY OF REASONING, WE REMIT THE ISSUE BACK TO THE FILE OF ASSESSING OFFICER WITH THE DIRECTION TO MAKE ADDITION IN THE YEAR IN WHICH THE SUNDRY CREDITORS WERE PAID BY USING UNACCOUNTED MONEY AFTE R DUE VERIFICATION. 10. IN THE RESULT, BOTH THE APPEALS FILED BY THE AS SESSEE ARE PARTLY ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED ON THE 10 TH DAY OF JANUARY, 2019 IN CHENNAI SD/- SD/- ( . . . ) (N.R.S. GANESAN) /JUDICIAL MEMBER ( ! ' ) (INTURI RAMA RAO) # /ACCOUNTANT MEMBER /CHENNAI, 1 /DATED: 10 TH JANUARY, 2019. EDN, SR. P.S + ).23 43&. /COPY TO: 1. '( /APPELLANT 4. - 5. /CIT 2. )*'( /RESPONDENT 5. 36 ). /DR 3. - 5. ( )/CIT(A) 6. 7% 8 /GF ITA NO.641,642 & 643/CHNY/2013 (AY: 2009-10) :- 6 -: