ACIT,Circle-10, Kolkata, Kolkata V. M/S Traxpo Enterprises Pvt. Ltd., Kolkata

ITA 645/KOL/2012

• Counselvise Citation: [2016] 132 COUNSELVISE.COM (IT) 4999 (ITAT-KOLKATA)
• Duration Of Justice: 3 year(s) 11 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 13-04-2016
• Appeal Filed By: Department
• Bench Allotted: B
• Next Hearing Date: 22-03-2013
• Assessment Year: 2008-2009
• Appeal Filed On: 20-04-2012
• Court: TRIBUNAL
• Department Lawyers: NIRAJ KUMAR CIT LD
• Assessee Lawyers: DEEPAK JAIN B COM LD
• Keywords: Unexplained cash credit; Deemed to accrue or arise in india
• Section: 143(3); 133(6); 131; 68

Judgement Text

ITA NO. 645/KOL/2012-B-AM M/S. TRAXPO ENTERPRISES PVT. LTD 1 IN THE INCOME TAX APPELLATE TRIBUNAL, B BENCH, K OLKATA BEFORE : SHRI N.V. VASUDEVAN, JUDICIAL MEMBER , AND SHRI M. BALAGANESH, ACCOUNTANT MEMBER ITA NO. 645/KOL/2012 A.Y : 2008-09 ACIT, CIRCLE-10, KOLKATA VS. M/S. TRAXPO ENTER PRISES PVT. LTD PAN: AAACT 9277H (APPELLANT) (RE SPONDENT) FOR THE APPELLANT/DEPARTMENT: SHRI NIRAJ KUMAR,CIT, LD.SR.DR FOR THE RESPONDENT/ASSESSEE: SHR I DEEPAK JAIN, B.COM, LD.AR DATE OF HEARING: 07-04-2016 DATE OF PRONOUNCEMENT: 13- 4 -2 016 ORDER SHRI M.BALAGANESH, AM THIS APPEAL OF THE REVENUE ARISES OUT OF THE OR DER OF THE LEARNED CIT(A), XII, KOLKATA IN APPEAL NO. 194/CIT(A)-XII/R-10/10-11 DA TED 06-01-2012 AGAINST THE ORDER OF ASSESSMENT FRAMED BY THE LEARNED AO FOR TH E ASST YEAR 2008-09 U/S. 143(3) OF THE INCOME TAX ACT, 1961 (HEREINAFTER REFERRED T O AS THE ACT). 2. THE REVENUE HAD RAISED THE FOLLOWING GROUNDS BE FORE US :- 1. WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, LD. CIT(A) IS CORRECT IN DELETING THE ADDITION U/S. 68 ON ACCOUNT OF BOGUS LIABILITIES AMOUNTING TO RS.10,62,38,834/- DESPITE THE FAILURE ON THE PART OF THE ASSESSEE TO FURNISH NECESSARY DETAILS A ND DOCUMENTARY EVIDENCES TO JUSTIFY ITS CLAIM. 2. WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, LD. CIT(A) IS CORRECT IN DELETING THE ADDITION U/S. 68 ON ACCOUNT OF BOGUS ITA NO. 645/KOL/2012-B-AM M/S. TRAXPO ENTERPRISES PVT. LTD 2 LIABILITIES AMOUNTING TO RS.2,93,67,494/- DESPITE THE FAILURE ON THE PART OF THE ASSESSEE TO FURNISH NECESSARY DETAILS AND DO CUMENTARY EVIDENCES TO JUSTIFY ITS CLAIM. 3. WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, LD. CIT(A) IS CORRECT IN DELETING THE ADDITION U/S. 68 ON ACCOUNT OF BOGUS LIABILITIES AMOUNTING TO RS. 10,56,92, 541/- DESPIT E THE FAILURE ON THE PART OF THE ASSESSEE TO FURNISH NECESSARY DETAILS A ND DOCUMENTARY EVIDENCES TO JUSTIFY ITS CLAIM. 4. WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, LD. CIT(A) IS CORRECT IN DELETING THE ADDITION TOWARDS PURCHASE SUSPENSE AMOUNTING TO RS.25,73,43,604/- IN SPITE OF THE FACT THAT THE ASSESSEE FAILED TO PROVE THE GENUINENESS OF THE PARTIES AND THEIR IDENTITIES. 3. THE BRIEF FACTS OF GROUND NO. 1 ARE THAT THE ASS ESSEE IS A PRIVATE LIMITED COMPANY ENGAGED IN THE BUSINESS OF TRADING IN CHEMICALS. D URING THE COURSE OF ASSESSMENT PROCEEDINGS, THE LEARNED AO CALLED FOR THE COMPLETE DETAILS OF CURRENT LIABILITIES AND PROVISIONS VIDE QUESTIONNAIRE ISSUED ON 12.10.2010 SHOWING THE NAME AND ADDRESS, OPENING BALANCE, DETAILS OF TRANSACTIONS, CLOSING B ALANCE AND NATURE OF SERVICES RENDERED / TRANSACTIONS IN WHOSE NAMES THERE WAS OU TSTANDING, INCLUDING THE AMOUNTS SQUARED UP DURING THE YEAR . THE ASSESSEE FURNISHE D THE DETAILS CALLED FOR ON 25.11.2010. THE LEARNED AO OBSERVED THAT THE ASSESS EE WAS NOT ABLE TO FURNISH THE ADDRESSES OF THE PARTIES IN MANY CASES. THE LEARNE D AO OBSERVED THAT THE ASSESSEE HAD DERIVED INTEREST INCOME OF RS. 1.12 CRORES AND MISCELLANEOUS INCOME OF RS. 50.44 LAKHS BUT HAD TOTALLY RETURNED INCOME ONLY AT RS. 5 3 LAKHS, WHICH GOES TO PROVE THAT THE ASSESSEE HAD INCURRED LOSS IN HIS CHEMICAL BUSINESS . HE DOUBTED THE VERACITY OF THE CREDITORS SUBMITTED BY THE ASSESSEE AND CALLED FOR FURTHER INFORMATION AS FOLLOWS:- (I) ADDRESS OF CREDITORS (II) DETAILS OF CREDITOR BALANCE ON ACCOUNT OF PURC HASE SUSPENSE OF RS. 73.80 CRORES. ITA NO. 645/KOL/2012-B-AM M/S. TRAXPO ENTERPRISES PVT. LTD 3 (III) COMPLETE DETAILS OF CREDITOR PARTIES WITH NAM E AND SPECIFIC ADDRESSES AND IN CASE OF OLD CREDIT BALANCE , PLEASE FURNISH ORIG INAL DATE OF TRANSACTIONS. THE LEARNED AO LISTED OUT THE NAMES OF THE SUNDRY C REDITORS FOR WHOM THE ASSESSEE COULD NOT SUBMIT THE COMPLETE ADDRESSES AS BELOW:- NAME OF SUNDRY CREDITORS CLOSING BALANCE (RS.) AMRIT CHEM 2,74,136 BHARAT PETROLEUM CORPORATION LTD 8,87,341 BROKERAGE AND COMMISSION 2,50,033 DAGA ENGINEERING INDUSTRIES LTD 11,190 DEV OVERSEAS 2,39,200 ESCORT ENTERPRISES 7,05,000 INTEGRATED SERVICES 2,34,135 J.BAXI & CO 12,983 JAY AMI PLYMERS PVT. LTD 3,48,750 MAHAVIR CHEMICALS 82,426 MANGAL DAS & COMPANY 4,750 MARC INFOTECH 8,00,521 PCN PURE CHEM PVT. LTD 5,13,504 PIONEER DYE-CHEM CORPORATION 3,78,674 RAVO ORGANICS LTD 4,46,100 SUMUDERA SHIPPING LINE INDIA PVT.LTD 3,078 SHIV PRAKASH TRANSPORT SERVICE 7,460 SOMU & CO. 24,010 STANDARD CON. PVT. LTD 2,398 STORAGE CHARGES PAYABLE 5,06,76,360 ITA NO. 645/KOL/2012-B-AM M/S. TRAXPO ENTERPRISES PVT. LTD 4 STORAGE CHARGES PAYABLE (AEGIS) 7,22,776 STORAGE CHARGES PAYABLE (FSWAI) 3,34,84,055 SUMES ORGANICS PVT. LTD 1,52,852 SUSPENSE A/C 1,50,21,380 THE ANDDHRA PTEROCHEM LTD 3,41,852 WASON MOTORS 64,734 WEST BENGAL CORPORATION 1,19,150 YOG PETRO PVT. LTD 1,00,000 OUTSTANDING LIABILITIES 3,29,986 10,62,38,834 THE LEARNED AO FOR WANT OF PROPER DETAILS TO BE FU RNISHED BY THE ASSESSEE CONCLUDED THE FOLLOWING :- - THAT THE ASSESSEE HAD FAILED TO SUBSTANTIATE THE GENUINENESS AND VERACITY OF THE ALLEGED TRANSACTIONS WITH CREDIBLE DOCUMENTARY EVID ENCES AND COMPLETE POSTAL ADDRESSES. - THAT SINCE THE ASSESSEE HAS NOT EVEN PROVIDED THE PAN, THE EXISTENCE OF THESE PARTIES IS DOUBTED. - THAT FURTHER , FOR GETTING CREDITS FROM ANY PERSO N OR CONCERN, PHYSICAL EXISTENCE OF SUCH PERSON OR CONCERN AS WELL AS GENUINENESS OF TRANSACTIONS, AS A RESULT OF WHICH OUTSTANDING BALANCES STOOD IN THEIR BOOKS, HA VE TO BE PROVED. IT WAS NOT ASCERTAINABLE AS TO HOW THE CREDIT BALANCES APPEARE D IN THE NAMES OF THE AFORESAID PARTIES IN THE ASSESSEES BOOKS. THIS FACT ALONE P UTS A BIG QUESTION MARK ON THE GENUINENESS OF THE ALLEGED TRANSACTIONS. ITA NO. 645/KOL/2012-B-AM M/S. TRAXPO ENTERPRISES PVT. LTD 5 - THAT THE ASSESSEE HAS FAILED TO PRODUCE THE COPY OF BANK STATEMENT OR ANY OTHER CREDIBLE DOCUMENTARY EVIDENCE WHATSOEVER IN THIS RE GARD. - THAT NOTICES U/S 133(6) AND SUMMONS U/S 131 OF TH E ACT COULD NOT BE ISSUED AS THE ASSESSEE DID NOT DISCHARGE HIS PRIMARY ONUS TO FURNISH THE PROPER AND COMPLETE POSTAL ADDRESSES. IN FACT, BY NOT SUBMITT ING THE PROPER ADDRESSES AND DETAILS LIKE SUSPENSE ACCOUNT , THE ASSESSEE HAS PR EVENTED THE DEPARTMENT FROM MAKING ANY INDEPENDENT VERIFICATION OF THESE PARTIE S. - THAT IT APPEARS THAT THE ASSESSEE HAS UNILATERALL Y SHOWN ALL THESE PARTIES AS HIS CREDITORS IN SPITE OF HAVING CARRIED ON NO TRANSACT IONS WITH THEM. BASED ON THESE OBSERVATIONS, THE LEARNED AO BROUGHT THE CLOSING BALANCES OF THESE CREDITORS AMOUNTING TO RS. 10,62,38,834/- AS UNEXPL AINED CASH CREDIT U/S 68 OF THE ACT TREATING THE SAME AS BOGUS LIABILITIES. 3.1. THE BRIEF FACTS OF GROUND NO.2 ARE THAT DURI NG THE COURSE OF ASSESSMENT PROCEEDINGS, THE LEARNED AO OBSERVED THAT FOR THE F OLLOWING SUNDRY CREDITORS, THE NOTICES U/S 133(6) OF THE ACT HAD RETURNED UNSERVE D :- SL.NO. NAME OF THE PARTY CLOSING BALANCE AS PER ASSESSEES BOOKS ( IN RS.) DIFFERENCE IN CLOSING BALANCE ( IN RS.) 1. URMI CHEMICALS 11,83,988 11,83,988 2. HONEST CHEMICAL PVT. LTD 6,00,000 6,00, 000 3. AMIT TRADERS 15,57,490 15,57,490 4. JAY LAMINATES (P) LTD 27,28,755 27,28,755 5. LOTUS GLOBAL LIMITED 53,00,000 53,00,000 6. NAVIN CHEMICAL ENTERPRISES 18,00,000 18,00, 000 7. NESTOR PHARMACEUTICALS LTD 19,09,991 19,09, 991 ITA NO. 645/KOL/2012-B-AM M/S. TRAXPO ENTERPRISES PVT. LTD 6 8. PARITEJ MOLUCULE PVT. LTD 3,49,749 3,49 ,749 9. PRICELESS INVESTRADE PVT. LTD 7,08,603 7,08,603 10. SANCHAY HOLDING LTD 3,18,130 3,18,130 11. SHREE GIRIRAJ ENTERPRISES 45,16,112 45,16 ,112 12. SUDARSHAN CHEMICALS 12,85,151 12,85,151 13. VERTEX CHEMICALS PVT. LTD 4,44,827 4, 44,827 14. SUPER CHEMICALS PVT. LTD 10,53,619 10,53, 619 15. K P ENTERPRISES 22,03,133 22,03,133 16. SAHASTRA EXPORTS PVT. LTD 34,07,946 34,0 7,946 TOTAL 2,93,67,494 THE ASSESSEE VIDE ORDER SHEET ENTRY DATED 27.12.201 0 WAS CONFRONTED WITH THE AFORESAID LIST AND WAS ASKED TO PRODUCE THE PARTIES IN PERSON OR FILE THE COMPLETE DETAILS LIKE PAN, COMPLETE POSTAL ADDRESS, COPY OF BANK STATEMENT, COPY OF INVOICE AND LEDGER ACCOUNT AND PROOF OF FILING IT RETURNS BY TH ESE PARTIES. FOR WANT OF DETAILS FROM THE SIDE OF THE ASSESSEE, THE LEARNED AO BROUGHT TH E BALANCES OF THE AFORESAID PARTIES TO THE TUNE OF RS. 2,93,67,494/- TO TAX AS UNEXPLAI NED CASH CREDIT U/S 68 OF THE ACT TREATING THE SAME AS BOGUS LIABILITIES. 3.2. THE BRIEF FACTS OF GROUND NO. 3 ARE THAT WHER EVER THE ASSESSEE HAD FURNISHED THE COMPLETE POSTAL ADDRESS OF THE CREDITORS, THE LEARN ED AO MADE INDEPENDENT ENQUIRIES BY SENDING NOTICES U/S 133(6) OF THE ACT AND FOUND THAT THE CLOSING BALANCES DID NOT MATCH IN THE FOLLOWING CASES :- SL.NO NAME OF THE PARTY CLOSING BALANCE AS PER REPLY ( IN RS.) CLOSING BALANCE AS PER ASSESSEES BOOKS ( IN RS.) DIFFERENCE IN CLOSING BALANCE ITA NO. 645/KOL/2012-B-AM M/S. TRAXPO ENTERPRISES PVT. LTD 7 ( IN RS.) 1. ADANI ENTERPRISE NIL 57,33,829 57,33,829 2. BHAGERIA DYECHEM 6,82,022 23,73,740 16,91,718 3. SHUBHAM CHEMICALS & SOLVENTS NIL 8,348 8,348 4. CENTURY PLYBOARD (INDIA) LTD 64,033 47,49,484 46,85,451 5. DISHMAN PHARMACEUTICALS & CHEMICALS LTD 21,75,000 3,76,059 17,98,941 6. RISHI KARAN LOGISTICS PVT. LTD 6,86,214 10,35,606 3,49,392 7. PEC LTD 25,66,32,508 44,10,63,362 8,04,75,506 8. KETUS ENTERPRISES 2,45,580 1,78,105 67,475 9. B.R. AGROTECH NIL 16,00,000 16,00,000 10. ACME SOLVENTS PVT. LTD NIL 25,00,000 25,0 0,000 11. ASHOK ALCO CHEM LTD NIL 2,96,761 2,96, 761 12. ELPEE OVERSEAS PVT. LTD NIL 2,53,321 2,5 3,321 13. SURBHEE POLYMERS PVT. LTD NIL 52,68,000 52,68,000 14. VINISION CHEMICAL NIL 9,63,799 9,63,799 10,56,92,541 BASED ON THE ABOVE, THE LEARNED AO OBSERVED THAT TH E ASSESSEE HAD BOOKED BOGUS SUNDRY CREDITROS IN THE NAME OF THESE PARTIES AND T HE ASSESSEE COULD NOT RECONCILE THE DIFFERENCES IN BALANCES. HERE THE LEARNED AO OBSER VED THAT THE ASSESSEE HAD ONLY PROVED THE EXISTENCE OF THE CREDITORS BUT FAILED TO PROVE THE GENUINENESS AND VERACITY OF THE ALLEGED TRANSACTIONS WITH CREDIBLE DOCUMENTA RY EVIDENCES. THE LEARNED AO ITA NO. 645/KOL/2012-B-AM M/S. TRAXPO ENTERPRISES PVT. LTD 8 TREATED THE AFORESAID PARTIES AS BOGUS LIABILITIES. IN CASES WHERE THERE IS MORE BALANCE AS PER THE ASSESSEES REPLY BUT THE SAME IS NOT REF LECTED IN THE BOOKS OF THE ASSESSEE , IT WAS TREATED AS UNDISCLOSED PURCHASES AS THE ASSESSE E FAILED TO ACCOUNT FOR THE SAME IN ITS BOOKS OF ACCOUNTS. ACCORDINGLY, HE BROUGHT THE AFORESAID CREDITORS TO TAX AS UNEXPLAINED CASH CREDIT U/S 68 OF THE ACT TREATING THEM AS BOGUS LIABILITIES. 3.3. THE BRIEF FACTS OF GROUND NO. 4 ARE THAT DURI NG THE COURSE OF ASSESSMENT PROCEEDINGS, FROM THE DETAILS OF CURRENT LIABILITIE S AND PROVISIONS FILED BY THE ASSESSEE, THE LEARNED AO OBSERVED THAT THE ASSESSEE HAS SHOWN PURCHASE SUSPENSE OF RS. 73,80,73,509/-. THE ASSESSEE STATED THAT THE PURC HASE SUSPENSE REPRESENTS GOODS THAT WERE SOLD TO CERTAIN PARTIES WHO COULD NOT TAKE DEL IVERY OF THE SAME AND ACCORDINGLY THE ASSESSEE WAS FORCED TO RE-PURCHASE THE SAME FRO M THE FOLLOWING PARTIES TO THE TUNE OF RS. 25,73,43,604/- :- DIFFERENCE IN PURCHASE (SUSPENSE) SL.NO. NAME OF THE PARTY PARTICULARS AMOUNT IN RS. 1. BHAGERIA DYE CHEM LTD REPURCHASEOF978.846MT ANIL INE OIL SOLD TO BHAGERIA DYE CHEM LTD, AND THE INVOICE NOT RECEIVED. 7,24,34,604 2. KUTCH CHEMICAL INDUSTRIES REPURCHASE OF 395MT CAUSTIC SODA FLAKES SOLD TO KUTCH CHEMICAL INDUSTRIES LTD, AND THE INVOICE NOT RECEIVED. 75,05,000 3. KUTCH CHEMICAL INDUSTRIES REPURCHASE OF 2645MT CAUSTIC SODA FLAKES SOLD TO KUTCH CHEMICAL INDUSTRIES LTD, AND THE INVOICE NOT 60,06,000 ITA NO. 645/KOL/2012-B-AM M/S. TRAXPO ENTERPRISES PVT. LTD 9 RECEIVED 4. KUTCH CHEMICAL INDUSTRIES REPURCHASE OF 1286MT CAUSTIC SODA FLAKES SOLD TO KUTCH CHEMICAL INDUSTRIES LTD, AND THE INVOICE NOT RECEIVED 2,44,34,000 5. BLOOM DECOR LTD REPURCHASE OF 155MT PHENOL SOLD TO BLOOM DECOR LTD, AND THE INVOICE NOT RECEIVED 1,16,25,000 6. DUJODWALA PRODUCTS LTD REPURCHASE OF 350MTPHENO L SOLD TO DUJODWALA PRODUCTS LTD, AND THE INVOICE NOT RECEIVED 2,62,50,000 7. GOLDEN LAMINATES LTD REPURCHASE OF 350MT PHENOL SOLD TO GOLDEN LAMINATES LTD, AND THE INVOICE NOT RECEIVED 1,38,75,000 8. BHARAT INSECTICIDES LTD REPURCHASE OF 100 MT PHENOL SOLD TO BHARAT INSECTICIDES LTD, AND THE INVOICE NOT RECEIVED 75,00,000 9. HEMANI ORGANICS & CHEMICALS LTD REPURCHASE OF 65MT PHENOL SOLD TO HEMANI ORGANICS & CHEMICALS LTD, AND THE INVOICE NOT RECEIVED. 48,75,000 10. SAHASTRAA EXPORTS LTD REPURCHASE OF 75 MT PHENO L SOLD TO SAHASTRAA EXPORTS LTD, AND THE INVOICE NOT 56,25,000 ITA NO. 645/KOL/2012-B-AM M/S. TRAXPO ENTERPRISES PVT. LTD 10 RECEIVED 11. SHUBHAM CHEMICALS & SOLVENTS LTD REPURCHASE OF 250MT PHENOL SOLD TO SHUBHAM CHEMICALS & SOLVENTS LTD, AND15000000 THE INVOICE NOT RECEIVED. 1,87,50,000 12. SUNDEK INDIA LTD REPURCHASE OF 200MT PHENOL SOLD TO SUNDEK INDIA LTD, AND THE INVOICE NOT RECEIVED 15,00,0000 13. AAREM CHEMICALS LTD REPURCHASE OF 450MT PHENOL SOLD TO AAREM CHEMICALS LTD, AND THE INVOICE NOT RECEIVED 3,37,50,000 14. BR AGROTECH LTD REPURCHASE OF 40MT SOLVENT C9 SOLD TO BR AGROTECH LTD, AND THE INVOICE NOT RECEIVED 16,00,000 15. KETUL CHEM PVT.LTD REPURCHASE OF 40MT TOLUENE SOLD TO KETUL CHEM PVT. LTD AND THE INVOICE NOT RECEIVED 37,40,000 16. ACME SOLVENTS PVT.LTD REPURCHASE OF 50MT ISOPRO PYL ALCOHOL SOLD TO ACME SOLVENTS SOLD TO ACME SOLVENTS PVT. LTD AND THE INVOICE NOT RECEIVED. 25,00,000 17. PREMIER SOLVENTS PVT. LTD REPURCHASE OF 16MT BU TYL 9,92,000 ITA NO. 645/KOL/2012-B-AM M/S. TRAXPO ENTERPRISES PVT. LTD 11 ACETATE SOLD TO PREMIER SOLVENTS PVT. LTD AND THE INVOICE NOT RECEIVED. 18. SANJAY CHEMICALS (INDIA) LTD REPURCHASE OF 21MT ACETONE SOLD TO SANJAY CHEMICALS (INDIA) PVT. LTD, AND THE INVOICE NOT RECEIVED. 8,82,000 25,73,43,604 THE LEARNED AO FURTHER OBSERVED FROM THE NOTICES I SSUED U/S 133(6) OF THE ACT TO THE AFORESAID PARTIES, THE CLOSING BALANCES DID NOT MAT CH. THE LEARNED AO FURTHER OBSERVED THAT THE FEW PARTIES WERE SELECTED ON TEST CHECK BASIS AND NOTICES U/S 133(6) OF THE ACT WERE ISSUED FOR THIRD PARTY VERIFICATION . IN SOME OF THE CASES, HE ALSO OBSERVED THAT THE NOTICES WERE SERVED, REPLIES WERE AWAITED TILL THE DATE OF PASSING OF THE ASSESSMENT ORDER. THE LEARNED AO OBSERVED THA T THE ASSESSEE COULD NOT RECONCILE THE DIFFERENCES IN CLOSING BALANCES OF CREDITORS. HENCE THE LEARNED AO BROUGHT THE AFORESAID CREDITORS TO TAX TREATING THEM AS BOGUS L IABILITIES. 4. ON FIRST APPEAL, THE ASSESSEE REFERRED TO TH E DETAILS OF SUNDRY CREDITORS AND ARGUED THAT THE LEARNED AO OUGHT NOT TO HAVE MADE ANY ADDI TION IN RESPECT OF OPENING BALANCE OF SUNDRY CREDITORS U/S 68 OF THE ACT AS AD MITTEDLY, ONLY THE CREDITS DURING THE YEAR ALONE , IF AT ALL, COULD BE SUBJECTED TO TAX A S DEEMED INCOME U/S 68 OF THE ACT. IT WAS ALSO ARGUED WITH SPECIFIC REFERENCE TO THE DECISION OF THE CO-ORDINATE BENCH OF AHMEDABAD TRIBUNAL IN THE CASE OF DCIT VS ALIDHARA TAXPRO ENGINEERS PVT LTD REPORTED IN (2011) 43 SOT 1 (AHM.) WHEREIN IT WAS HELD THAT NEITHER PROVISIONS OF SECTION 68 NOR PROVISIONS OF SECTION 41(1) OF THE A CT COULD BE APPLIED EVEN WHEN THE CREDITS WERE OLD BEING CARRIED FORWARD FROM EARLIER YEARS AND THE LIABILITY STILL CONTINUED TO EXIST IN THE BALANCE SHEET. THE ASSESS EE ALSO TRIED TO EXPLAIN THAT SOME OF ITA NO. 645/KOL/2012-B-AM M/S. TRAXPO ENTERPRISES PVT. LTD 12 THE LIABILITIES WERE REQUIRED TO BE ADJUSTED AGAINS T CERTAIN DEBIT BALANCES APPEARING AS SUNDRY DEBTORS IN THE BALANCE SHEET AND MANY OF SUC H ADJUSTMENTS HAD ALREADY BEEN MADE IN SUBSEQUENT YEARS. THE LEARNED CIT(A) ALSO OBSERVED THAT ASSESSEE HAD GIVEN DETAILED EXPLANATION WITH SPECIFIC REFERENCES TO VA RIOUS ANNEXURES FILED BEFORE HIM IN RESPECT OF ALL SUCH CREDIT ENTRIES APPEARING IN THE BOOKS OF ACCOUNT AND MOST OF WHICH WERE BEING CARRIED FORWARD FROM EARLIER YEAR AND AL SO OBSERVED THAT SOME OF THE CREDITS WERE MADE DUE TO WRONGLY ENTRY IN THE BOOKS OF ACCO UNTS IN AS MUCH AS THE AMOUNT WHICH SHOULD HAVE BEEN CREDITED TO SOME OTHER ACCOU NTS HAD BEEN WRONGLY CREDITED TO SUCH ACCOUNTS AND MOST OF SUCH ENTRIES HAD ALREADY BEEN RECTIFIED BY APRIL 2010 AND MUCH BEFORE THE CASE HAD BEEN TAKEN UP BY THE LEARN ED AO AND HENCE IT CANNOT BE SAID THAT THE ASSESSEE DID NOT OFFER ANY EXPLANATIO N. THE ASSESSEE ALSO TRIED TO ARGUE THAT VARIOUS CASE LAWS RELIED UPON BY THE LEARNED A O WERE RENDERED IN THE CONTEXT OF SECTION 68 OF THE ACT. IN THE INSTANT CASE, WHETHE R AT ALL THE PROVISIONS OF SECTION 68 OF THE ACT COULD BE INVOKED KEEPING IN VIEW THE FACT T HAT MOST OF THE CREDITS ARE BEING CARRIED FORWARD FROM EARLIER YEAR AND THE MISTAKES COMMITTED WERE DULY RECTIFIED SUBSEQUENTLY. ACCORDINGLY HE ASSAILED THE RELIANCE PLACED ON VARIOUS DECISIONS BY THE LEARNED AO. IT WAS ALSO MENTIONED THAT ALL THE CR EDITS ARE EITHER IN RESPECT OF PURCHASES MADE OR IN RESPECT OF EXPENSES INCURRED A ND ALL OF WHICH ARE SUPPORTED BY BILLS AND CHALLANS AND PAYMENTS IN ALL THE CASES HA VE BEEN MADE BY ACCOUNT PAYEE CHEQUES ONLY AND HENCE APPLICABILITY OF PROVISIONS OF SECTION 68 OF THE ACT WOULD NOT ARISE. IT WAS ALSO ARGUED BEFORE THE LEARNED CIT( A) THAT CERTAIN DEBIT BALANCES OF SUNDRY CREDITORS WERE ALSO ADDED BY THE LEARNED AO AS BOGUS LIABILITIES WHICH WERE POINTED OUT BEFORE THE LEARNED CIT(A) BY THE ASSESS EE. IT WAS ALSO ARGUED THAT WITH REGARD TO THE ADDITION OF RS. 10,62,38,834/- AT PAG E 8 OF THE ASSESSMENT ORDER, THE LEARNED AO HAD CONSIDERED THE FIGURE OF STORAGE CHA RGES PAYABLE (FSWAI) AT RS. 3,34,84,055/- AS AGAINST THE CORRECT AMOUNT OF RS. 34,84,055/- THEREBY MAKING EXCESS ADDITION OF RS. 3 CRORES. WITH REGARD TO THE ADDIT ION MADE IN THE SUM OF RS. 25,73,43,604/- TOWARDS PURCHASE SUSPENSE, IT WAS PL EADED THAT BECAUSE OF GLOBAL RECESSION , CERTAIN MATERIALS SOLD BY THE ASSESSEE COMPANY DURING THE YEAR ENDED ITA NO. 645/KOL/2012-B-AM M/S. TRAXPO ENTERPRISES PVT. LTD 13 31.3.2008 WERE NOT LIFTED BY THE PURCHASERS AND HEN CE ASSESSEE COMPANY INSTEAD OF REDUCING THE SALES BY THE AMOUNT OF SUCH BILLS, ON ACCOUNT OF BUSINESS EXPEDIENCY SHOWED SUCH TRANSACTIONS AS RE-PURCHASE OF SUCH MAT ERIALS AND ENTERED THE SAME IN PURCHASE SUSPENSE ACCOUNT. THE COMPLETE DETAILS OF THE SAME PARTY WISE WERE FURNISHED BEFORE THE LEARNED CIT(A). IT WAS ALSO E XPLAINED THAT SINCE THE PURCHASERS HAD NOT LIFTED THE GOODS SOLD AND HAD NOT ACCOUNTED FOR SUCH PURCHASES IN THEIR BOOKS OF ACCOUNTS BY DEBITING THE PURCHASES ACCOUNT AND C REDITING THE ACCOUNT OF THE ASSESSE COMPANY, NOTHING COULD BE FOUND AS RECORDED IN THEI R BOOKS OF ACCOUNTS. THE REASON FOR CREDITING PURCHASE SUSPENSE ACCOUNT IN THE BOOK S OF ASSESSEE COMPANY WAS EXPLAINED THAT AS AND WHEN THE MATERIALS SOLD WERE LIFTED BY THE BUYERS , THE PURCHASE SUSPENSE ACCOUNT WOULD GET ADJUSTED AND IN ORDER TO KEEP TRACK OF THE LIFTING OF MATERIALS BY THE CONCERNED PARTIES. HENCE IT WAS AR GUED THAT UNDER NO CIRCUMSTANCES, THE SAME COULD BE TREATED AS DEEMED INCOME IN THE H ANDS OF THE ASSESSEE U/S 68 OF THE ACT. THE LEARNED CIT(A) APPRECIATED THE CONTENTIONS OF THE ASSESSEE AND DELETED THE ADDITIONS MADE ON ACCOUNT OF SUNDRY CREDITORS AS BO GUS LIABILITIES AND ON ACCOUNT OF PURCHASE SUSPENSE. AGGRIEVED , THE REVENUE IS IN A PPEAL BEFORE US. 5. THE LEARNED DR ARGUED THAT LOT OF ADDITIONAL E VIDENCES WERE FILED BEFORE THE LEARNED CIT(A) BY THE ASSESSEE AND PRAYED FOR ONE M ORE OPPORTUNITY TO BE GIVEN TO THE LEARNED AO FOR HIS VERIFICATION. IN RESPONSE T O THIS, THE LEARNED AR REITERATED THE VARIOUS SUBMISSIONS MADE BY THE ASSESSEE BEFORE THE LEARNED CIT(A) WITH SPECIFIC REFERENCE TO RELEVANT PAGES OF THE PAPER BOOK FILED BY THE ASSESSEE IN RESPECT OF EACH OF THE ADDITIONS AND FURTHER ARGUED THAT THE LEARNED C IT(A) HAD PASSED THIS ORDER AFTER OBTAINING REMAND REPORT FROM THE LEARNED AO. IN R EJOINDER, THE LEARNED DR STATED THAT THE LEARNED AO HAD ONLY STATED IN HIS REMAND R EPORT, DUE TO PAUCITY OF TIME, HE IS NOT ABLE TO LOOK INTO THE VARIOUS ADDITIONAL DETAIL S FILED BY THE ASSESSEE AND ACCORDINGLY THE LEARNED DR RE-EMPHASIZED THE ARGUMENT THAT THE MATTER REQUIRES TO GO BACK TO THE FILE OF THE LEARNED AO. ITA NO. 645/KOL/2012-B-AM M/S. TRAXPO ENTERPRISES PVT. LTD 14 6. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERU SED THE MATERIALS AVAILABLE ON RECORD INCLUDING THE DETAILED PAPER BOOK FILED BY T HE ASSESSEE. FROM THE BARE PERUSAL OF THE DETAILS FILED IN THE PAPER BOOK, IT IS VERY CLEAR THAT THE LEARNED AO HAD EVEN TREATED THE DEBIT BALANCES OF SUNDRY CREDITORS AS U NEXPLAINED CASH CREDIT U/S 68 OF THE ACT BY TREATING THEM AS BOGUS LIABILITIES. WE FIND THAT THERE IS AN ARITHMETICAL ERROR COMMITTED BY THE LEARNED AO THEREBY MAKING EXCESS A DDITION OF RS 3 CRORES TOWARDS STORAGE CHARGES PAYABLE (FSWAI). WE ALSO FIND FROM THE DETAILS IN THE PAPER BOOK AND THE ARGUMENTS OF THE LEARNED AR THAT THE ASSESSEE H AD HEAVILY TRANSACTED WITH A PUBLIC SECTOR UNDERTAKING, A GOVERNMENT OF INDIA ENTERPRIS ES, M/S PEC LTD. THE DETAILS OF TRANSACTIONS WITH PEC LTD ARE AS FOLLOWS:- (I) ASSESSEE HAS BEEN IMPORTING MATERIAL FROM OVER SEAS BUT THE LETTER OF CREDITS WERE ESTABLISHED BY THIRD PARTIES LIKE PEC LTD AND OTHER COMPANIES. THE CREDITS IN PURCHASE SUSPENSE ACCOUNT DURING THE YEAR ENDED 31.3.2008 IS FOR THE IMPORTS OF MATERIAL, THE LETTER OF CREDIT FOR W HICH WERE ESTABLISHED BY THIRD PARTIES, AND THE INVOICES HAS NOT BEEN RAISED ON AS SESSEE BY THIRD PARTIES WHO ESTABLISHED THE LETTER OF CREDITS. (II) IT HAS BEEN PRACTICE OF PEC LTD WHICH HAS ESTA BLISHED MOST OF THE LETTER OF CREDITS FOR THE IMPORTS OF ASSESSEE ON SALE OF THE MATERIAL IMPORTED IN ONE PARTICULAR CONSIGNMENT. (III) THE GOODS IMPORTED BY THE THIRD PARTIES WERE BEING SOLD DURING THE YEAR ENDED 31.3.2008 AND SALE INVOICE HAS BEEN RASIED BY ASSESSEE. (IV) IN ABSENCE OF PURCHASE INVOICE, ASSESSEE MADE THE ENTRIES FOR PURCHASES ON THE BASIS OF AGREEMENT BETWEEN THE COMPANIES WHICH HAS ESTABLISHED THE LETTER ITA NO. 645/KOL/2012-B-AM M/S. TRAXPO ENTERPRISES PVT. LTD 15 OF CREDITS FOR THE IMPORT OF ASSESSEE AND CREDITED THE PURCHASE SUSPENSE ACCOUNT DURING THE YEAR ENDED 31.3.2008 AND ON THE DAY OF S ETTLING THE ACCOUNTS FOR A PARTICULAR CONSIGNMENT, PURCHASE SUSPENSE ACCOUNT I S DEBITED AND RESPECTIVE PARTY WHICH HAS ESTABLISHED THE LETTER OF CREDITS F OR THE IMPORT OF ASSESSEE IS CREDITED. (V) THE DETAILS OF LETTER OF CREDITS ESTABLISHED BY THIRD PARTIES FOR THE IMPORTS OF ASSESSEE TOGETHER WITH COPY OF AGREEMENT BETWEEN AS SESSEE AND THE THIRD PARTY , SALES INVOICES AND BOND TRANSFER AGREEMENTS WERE FU RNISHED BEFORE THE LOWER AUTHORITIES. (VI) FURTHER , THE DELIVERY OF SOME OF THE SALES MA DE BY ASSESSEE WERE NOT TAKEN BY THE BUYERS BECAUSE OF THE FALLING PRICES DUE TO GLOBAL RECESSION AND SALES WERE CANCELLED AND THE MATERIALS WERE RE-PURCHASED BY ASSESSEE FROM SUCH PARTIES. WE FIND THAT THE ASSESSEE HAD FILED COMPLETE DETAIL S AND WORKINGS OF THE AFORESAID TRANSACTIONS WITH REGARD TO GROUND NO. 4 RAISED BY THE REVENUE BEFORE US INCLUDING THE NOTE ON RE-PURCHASE OF MATERIASL FROM THE PARTIES T O WHOM MATERIALS WERE SOLD. THESE ARE ENCLOSED IN PAGES 183 TO 213 OF THE PAPER BOOK. 6.1. THE LEARNED DR ARGUED THAT MOST OF THE DETAILS WERE FILED AND EXPLAINED IN DETAIL BY THE ASSESSEE BEFORE THE LEARNED CIT(A) AND THE L EARNED AO HAD NOT GIVEN ANY REMARKS ABOUT THE SAME IN HIS REMAND REPORT. HE PL EADED THAT IN THE INTEREST OF JUSTICE, THE CASE MAY BE REMANDED BACK TO THE FILE OF THE LE ARNED AO WITH A SPECIFIC DIRECTION TO RELOOK INTO THE DETAILS FILED BY THE ASSESSEE. HE FURTHER ARGUED THAT IF THE LEARNED AO HAD NOT UTILIZED THE OPPORTUNITY OF VERIFICATION (AS STATED BY THE LEARNED AR) IN ITA NO. 645/KOL/2012-B-AM M/S. TRAXPO ENTERPRISES PVT. LTD 16 THE REMAND PROCEEDINGS, THEN THE LEARNED CIT(A) OUG HT TO HAVE VERIFIED THE SAME IN DETAIL AND THEN GRANTED RELIEF TO THE ASSESSEE, IF WARRANTED. JUST BECAUSE THE LEARNED AO HAD NOT REMARKED IN THE REMAND REPORT, THE LEARN ED CIT(A) CANNOT BRUSH ASIDE HIS DUTIES CONTEMPLATED IN SECTION 250(4) OF THE ACT. WE FIND LOT OF FORCE IN THE ARGUMENTS OF THE LEARNED DR ON THIS ASPECT. FOR TH E SAKE OF CONVENIENCE, THE PROVISIONS OF SECTION 250(4) OF THE ACT ARE REPRODU CED BELOW:- SECTION 250 PROCEDURE IN APPEAL (4) THE COMMISSIONER (APPEALS) MAY, BEFORE DISPOSIN G OF ANY APPEAL, MAKE SUCH FURTHER INQUIRY AS HE THINKS FIT, OR MAY DIRECT THE ASSESSING OFFICER TO MAKE FURTHER INQUIRY AND REPORT THE RESU LT OF THE SAME TO THE COMMISSIONER (APPEALS). 6.2. THOUGH WE FIND THAT THE LEARNED CIT(A) HAD R EFERRED TO VARIOUS ANNEXURES IN HIS APPELLATE ORDER WHICH WOULD AMOUNT TO HIS VERIFICAT ION, BUT ON PERUSAL OF THE DETAILS FILED BEFORE US, WE FIND THAT THERE ARE CERTAIN DET AILS SUCH AS SUSPENSE ACCOUNTS, WHICH ASSESSEE HIMSELF HAD ADMITTED IN THE NARRATION THAT DETAILS OF CREDITS ARE NOT AVAILABLE AND HENCE CREDITED TO SUSPENSE ACCOUNTS. HENCE THE LEARNED AO IS JUSTIFIED IN INVOKING THE PROVISIONS OF SECTION 68 OF THE ACT IN RESPECT OF SUCH TRANSACTIONS. HOWEVER, FROM THE TOTALITY OF THE FACTS AND CIRCUMS TANCES OF THE CASE, AND IN VIEW OF THE VOLUMINOUS DETAILS FILED IN THE PAPER BOOK BY T HE ASSESSEE, WE HOLD THAT IT WOULD BE FIT AND APPROPRIATE , IN THE INTEREST OF JUSTICE AN D FAIR PLAY, TO SET ASIDE ALL THE ISSUES RAISED IN THE GROUNDS OF APPEAL TO THE FILE OF THE LEARNED AO, WITH THE FOLLOWING DIRECTIONS :- (I) NO ADDITION NEED TO BE MADE ON THE OPENING BALA NCES OF SUNDRY CREDITORS (CURRENT LIABILITIES AND PROVISIONS) IN T HE ASSESSMENT YEAR UNDER APPEAL ; (II) NO ADDITION NEED TO BE MADE ON THE DEBIT BALAN CES OF SUNDRY CREDITORS (CURRENT LIABILITIES AND PROVISIONS) IN THE ASSESSM ENT YEAR UNDER APPEAL ; ITA NO. 645/KOL/2012-B-AM M/S. TRAXPO ENTERPRISES PVT. LTD 17 (III) THE LEARNED AO TO MAKE EXTENSIVE VERIFICATION OF CURRENT LIABILITIES AND PROVISIONS , IN ACCORDANCE WITH LAW, IN RESPECT OF ACCOUNTS WHERE THERE WERE TRANSACTIONS DURING THE YEAR ; (IV) THE LEARNED AO IS DIRECTED TO ALLOW SET OFF OF DEBIT BALANCES WITH CREDIT BALANCES IN RESPECT OF THE SAME PARTIES WHIL E DECIDING THE ISSUE; (V) THE ASSESSEE IS DIRECTED TO CO-OPERATE WITH THE LEARNED AO AND FURNISH NECESSARY EVIDENCES AND DOCUMENTS IN SUPPORT OF ITS CONTENTIONS IN THE FORM OF RECONCILIATION STATEMENTS, CONFIRMATION OF BALANCES ETC. (VI) THE ASSESSEE IS ALSO DIRECTED TO ADDUCE EVIDEN CES BEFORE THE LEARNED AO IN RESPECT OF RECTIFICATIONS STATED TO HAVE BEEN CARRIED OUT IN SUBSEQUENT YEARS FOR THE WRONG CREDIT ENTRIES MADE IN THE EARLIER YEARS AND ALSO PRODUCE EVIDENCES FOR PAYMENTS / SETTLEMENTS M ADE TO VARIOUS CREDITORS IN SUBSEQUENT YEARS. ACCORDINGLY, THE GROUNDS RAISED BY THE REVENUE ARE ALLOWED FOR STATISTICAL PURPOSES. 7. IN THE RESULT, THE APPEAL OF THE REVENUE IS AL LOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 13 -4- 2016 SD/- SD/- ( N.V. VASUDEVAN, JUDICIAL MEMBER ) (M. BALAGANESH , ACCOUNTANT MEMBER) DATE 13 -4 -2016 COPY OF THE ORDER FORWARDED TO:- 1.. THE APPELLANT/DEPARTMENT: THE ACIT, CIRCLE-10, KOLKATA, P-7 CHOWRINGHEE SQUARE, 3 RD FL., KOLKATA-700 069. 2 THE RESPONDENT/ASSESSEE: M/S. TRAXPO ENTERPRISES PVT. LTD 42/1 STRAND ROAD, KOLKATA-07. 3 /THE CIT, 4.THE CIT (A) ITA NO. 645/KOL/2012-B-AM M/S. TRAXPO ENTERPRISES PVT. LTD 18 5. DR, KOLKATA BENCH 6. GUARD FILE. TRUE COPY, BY ORDER, ASSTT REGISTRAR **PRADIP SPS