The ACIT, 3(1), V. M/s Mid India Industries Ltd.,

ITA 646/IND/2006

• Counselvise Citation: [2009] 115 COUNSELVISE.COM (IT) 1494 (ITAT-INDORE)
• Duration Of Justice: 2 year(s) 11 month(s) 1 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 19-10-2009
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Next Hearing Date: 12-10-2009
• Assessment Year: misc
• Appeal Filed On: 17-11-2006
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: V K KARAN
• Assessee Lawyers: S S DESH
• Section: 143(2)

Judgement Text

PAGE 1 OF 6 IN THE INCOME TAX APPELATE TRIBUNAL, INDORE BENCH, INDORE BEFORE SHRI JOGINDER SINGH, JM AND SHRI V.K. GUPTA, AM ITA NO.646/IND/2006 AY : 2002-03 ACIT-3(1), INDORE ..APPELLANT V/S. M/S. MID INDIA INDUSTRIES LTD., 2/3, NEW PALASIA, INDORE (PAN AABCM 3346 F) ..RESPONDENT DEPARTMENT BY : SHRI V.K. KARAN, SR. DR ASSESSEE BY : SHRI S.S. DESHPANDE, CA ORDER PER JOGINDER SINGH, JM THIS APPEAL IS BY THE REVENUE AGAINST THE ORDER OF LD. CIT-(A)-I, INDORE DATED 24.8.2006 FOR THE AY 2002-03 ON THE GROUND THAT THE LD. FIRST APPELLATE AUTHORITY ERRED IN 2. DURING HEARING OF THIS APPEAL, WE HAVE HEARD SHR I V.K. KARAN, LD. SR. DR AND SHRI S.S. DESHPANDE, LD. COUNSEL FOR ASSESSEE. THE LD. SR. DR REQUESTED TO WITHDRAW GROUND NO.4 IN THE GROUNDS OF APPEAL I. E. DELETION OF ADDITION OF RS.3,96,000 OUT OF INTEREST DISALLOWED BY THE ASSES SING OFFICER, CONSEQUENTLY, THIS GROUND OF THE REVENUE IS DISMISSED AS WITHDRAW N. THE GROUND NO.1 RAISED IS THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF TH E CASE, THE LD. FIRST APPELLATE PAGE 2 OF 6 AUTHORITY ERRED IN DELETING THE SUM OF RS.4,24,528/ -, BEING COMMISSION PAYABLE TO M/S. PREMSUKH SHYAMSUKH & SONS WHICH WAS DISALLOWED BY THE ASSESSING OFFICER BY HOLDING THE SAME AS BOGUS LIAB ILITY. THE CRUX OF ARGUMENTS ON BEHALF OF THE REVENUE IS THAT THE ASSE SSEE DID NOT FURNISH ANY EVIDENCE TO SUBSTANTIATE ITS CLAIM AND NO CONFIRMAT ION FROM THE CONCERNED PARTY WAS FILED. IT WAS ALSO PLEADED THAT THE PAYME NT OF COMMISSION CANNOT BE KEPT PENDING INDEFINITELY AND NO EFFORTS WERE MA DE BY THE ASSESSEE. THE ASSESSMENT ORDER WAS SUPPORTED. ON THE OTHER HAND, THE CONTENTION ON BEHALF OF THE ASSESSEE IS IN SUPPORT TO THE IMPUGNED ORDER BY CONTENDING THAT THE COMMISSION CLAIMED WAS DEBITED BY THE PARTIES. OUR ATTENTION WAS INVITED TO PAGE 3 OF THE PAPER BOOK WHICH IS THE RUNNING A/C C ONTAINING VARIOUS TRANSACTIONS, PAGES 6 & 7 OF THE PAPER BOOK, AND EX PLAINED THAT THE COMMISSION PAYABLE WAS ADJUSTED. PLEA WAS ALSO RAIS ED EVEN IF THE COMMISSION IS BOGUS IT SHOULD HAVE BEEN ADJUSTED IN THE YEAR OF ACCOUNT AS THE RUNNING A/C CANNOT BE SAID TO BE BOGUS. 3. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS OF LD. REPRESENTATIVES OF BOTH SIDES AND PERUSED THE MATERIAL AVAILABLE ON THE FIL E. BRIEF FACTS ARE THAT THE ASSESSEE IS A LIMITED COMPANY ENGAGED IN MANUFACTUR ING OF YARN, DECLARED LOSS OF RS.5,65,56,525/- IN ITS RETURN FILED ON 31. 10.2002 WHICH WAS PROCESSED U/S 143(1)(I) ON 13.3.2003. SINCE THE CASE WAS SELE CTED FOR SCRUTINY, THEREFORE, STATUTORY NOTICE U/S 143(2) OF THE ACT D ATED 17.10.2003 WAS SERVED UPON THE ASSESSEE TO WHICH THE ASSESSMENT PROCEEDIN GS WERE ATTENDED FROM PAGE 3 OF 6 TIME TO TIME, WRITTEN SUBMISSIONS ALONG WITH BOOKS OF A/C WERE FILED AND THE SAME WERE TEST-CHECKED BY THE ASSESSING OFFICER. IN ITS FINAL ACCOUNTS ON THE TOTAL TURNOVER OF RS.7,66,73,663/-, THE ASSESSEE DE CLARED LOSS OF RS.6,89,31,661/-. DURING ASSESSMENT PROCEEDINGS, IT WAS FOUND FROM THE BOOKS OF ACCOUNT THAT AN AMOUNT OF RS.4,24,558/- WA S PAYABLE TO M/S. PREMSUKH SHYMOKH & SONS, PRATAPGARH. ON ASKING BY T HE ASSESSING OFFICER, THE ASSESSEE VIDE LETTER DATED 17.3.2005 CLAIMED TH AT THE IMPUGNED COMMISSION WAS PAYABLE IN FY 1999-00 AND DUE TO FIN ANCIAL CRISIS, IT COULD NOT BE PAID. THE ASSESSING OFFICER WAS OF THE VIEW THAT THIS CLAIM OF THE ASSESSEE WAS NOTHING BUT A DEVICE TO ADJUST THE PROFIT AS NO COMMISSION AGENT WILL WAIT FOR SUCH A LONG TIME. IT WAS FURTHER FOUND THAT THE ASSESSEE WAS TO RECOVER RS.10,00,093/- FROM THE SAID CONCERN TO WHOM THE AM OUNT WAS ADVANCED FOR PURCHASE OF RAW MATERIAL. AS PER THE REVENUE, IT WA S MERELY A FAKE LIABILITY, CONSEQUENTLY, THE IMPUGNED AMOUNT WAS ADDED TO THE INCOME OF THE ASSESSEE. ON APPEAL, THE LD. FIRST APPELLATE AUTHOR ITY DELETED THE ADDITION WHICH IS UNDER CHALLENGE BEFORE THIS TRIBUNAL BY TH E REVENUE. UNDER THE AFOREMENTIONED FACTS, WE ARE NOT IN AGREEMENT WITH THE CONCLUSION DRAWN BY THE LD. ASSESSING OFFICER SIMPLY BECAUSE SOME AMOUN T REMAINED OUTSTANDING, ITS GENUINENESS CANNOT BE DOUBTED UNLESS AND UNTIL CONTRARY EVIDENCE IS BROUGHT ON RECORD. THE LIABILITY CANNOT BE SAID TO BE BOGUS FIRSTLY BECAUSE IT IS AVAILABLE IN THE RUNNING A/C AND SECONDLY THE AMOUN T WAS CLAIMED AS DEDUCTION IN FY 1999-00. THERE IS NOTHING ON RECORD THAT THE IMPUGNED PAGE 4 OF 6 AMOUNT WAS FORGONE BY THE CONCERNED PERSON/COMMISSI ON AGENT. EVEN OTHERWISE, THERE IS A HUGE LOSS TO THE ASSESSEE AND EVEN IF IT IS ADMITTED TO BE BOGUS, STILL NO TAX LIABILITY ARISES TO THE ASSESSE E AND SECONDLY IT SHOULD HAVE BEEN ADJUSTED IN THE YEAR OF ACCOUNT. IF WE ADMIT T HE VERSION OF THE LD. DR STILL THERE IS NO GAIN TO THE REVENUE, CONSEQUENTLY , WE HAVE NOT FOUND ANY INFIRMITY IN THE CONCLUSION DRAWN BY THE LD. CIT(A) . HIS STAND IS AFFIRMED, CONSEQUENTLY, THIS GROUND OF THE REVENUE IS HAVING NO MERIT, THEREFORE, DISMISSED. 4. GROUNDS NO.2 & 3, RAISED PERTAINS TO DELETING TH E ADDITION OF RS.5,40,000/- AND RS.3 LAKHS MADE BY THE ASSESSING OFFICER DISALLOWING THE QUALITY CLAIM TO M/S. ATTAR FILTER LTD. AND M/S. JY OTI OVERSEAS LTD. RESPECTIVELY. THE CRUX OF THE ARGUMENTS ON BEHALF OF THE REVENUE IS THAT THE ASSESSEE MADE SUPPLIES TO THE IMPUGNED PARTIES AND IT WAS SE TTLED WITH A DEBIT NOTE. IT WAS PLEADED BY THE LD. DR THAT NO FURTHER DETAILS/C LARIFICATION WERE FILED DURING ASSESSMENT PROCEEDINGS. IT WAS POINTED OUT THAT THE CLAIM OF DEBIT NOTE, PROOF OF SUPPLY, QUALITY STANDARD PROOF WERE NOT FILED BY THE ASSESSEE. PLEA WAS ALSO RAISED THAT BEFORE COMING TO ANY CONCLUSION, THE LD . FIRST APPELLATE AUTHORITY WAS SUPPOSED TO PROVIDE OPPORTUNITY TO THE ASSESSIN G OFFICER. IN NUTSHELL, ASSESSMENT ORDER WAS SUPPORTED. ON THE OTHER HAND, THE LD. COUNSEL FOR ASSESSEE POINTED OUT THAT THERE WAS NO DISPUTE THAT CLAIM WAS THERE FOR WHICH MEETING WAS HELD, FOR WHICH PROOF WAS FURNISHED BEF ORE THE ASSESSING OFFICER AND IT WAS SETTLED DURING THE YEAR. IN NUTSHELL, IM PUGNED ORDER WAS DEFENDED. PAGE 5 OF 6 5. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS OF LD. REPRESENTATIVES OF BOTH SIDES AND PERUSED THE MATERIAL AVAILABLE ON THE FIL E. BRIEF FACTS ARE THAT ON VERIFICATION OF BOOKS OF ACCOUNT BY THE ASSESSING O FFICER, IT WAS FOUND THAT THE ASSESSEE COMPANY CLAIMED RS.5,40,000/- TO M/S. ATTA R FILTER LTD. AND ALSO ALLOWED QUALITY CLAIM AND SURETY OF RS.3 LAKHS IN T HE NAME OF M/S. JYOTI OVERSEAS LTD. ON QUERY FROM THE ASSESSING OFFICER V IDE LETTER DATED 17.3.2005, THE MINUTES OF THE MEETING HELD WITH CON CERNED PARTIES WERE PRODUCED WHEREIN THE CLAIM OF IMPUGNED AMOUNT WAS A GREED. AS PER THE REVENUE, THE NECESSARY DOCUMENTARY EVIDENCES WERE N OT FURNISHED. WE HAVE PERUSED THE PAPER BOOK (PAGE 1C) CONTAINING MINUTES OF THE MEETING HELD BETWEEN THE ASSESSEE AND M/S. ATTAR FILTER WHEREIN MR. VICKY JAIN (FROM M/S. ATTAR FILTER LTD.), MR. D.C. JAIN (FROM ASSESSEE) A ND SHRI I.M. AGRAWAL (M/S. TECHNO TEXTILES P. LTD.). AS PER THE SETTLEMENT, SH RI VICKY JAIN CONFIRMED THAT THERE WAS A CREDIT BALANCE OF RS.85,292/- AND AFTER MAKING A DEBIT NOTE OF RS.5,80,000/-, IT WAS SETTLED WITH THE ASSESSEE. AF TER INCORPORATING NECESSARY DEDUCTIONS/ADDITIONS, THE FULL AND FINAL PAYMENTS W ERE RELEASED AS HAS BEEN MENTIONED IN THE SETTLEMENT. ADMITTEDLY, IT IS A PU BLIC LIMITED COMPANY, WHEREIN A LOSS OF RS.5 CRORES HAS BEEN CLAIMED, CON SEQUENTLY, NO BUSINESSMAN WILL ALLOW TO INCREASE IT FURTHER. FOR ARGUMENT SAKE, EVEN IF WE PRESUME THE ASSERTION OF THE REVENUE TO BE CORRECT, SUCH DISALLOWANCES WOULD NOT BRING ANY REVENUE TO THE DEPARTMENT BEING LOSS. EVEN OTHERWISE, THERE IS NO REASON TO DISBELIEVE THE DISCOUNT CLAIMED WHEN I T IS SUPPORTED BY PROPER PAGE 6 OF 6 MINUTES OF THE COMPANY DULY SUPPORTED BY LEDGER A/C AND OTHER SUPPORTING DOCUMENTS. IN VIEW OF THIS FACT, WE HAVE NOT FOUND ANY INFIRMITY IN THE IMPUGNED ORDER. 6. GROUNDS NO.5 & 6 IN THE GROUNDS OF APPEAL ARE GE NERAL IN NATURE REQUIRES NO DELIBERATION FROM OUR SIDES. IN THE RESULT, APPEAL OF THE REVENUE IS HAVING NO MERIT, THEREFORE, DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 19.10.2009. SD/- SD/- (V.K. GUPTA) (JOGINDER SINGH) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 19.10.2009 !VYAS! COPY TO: APPELLANT/RESPONDENT/CIT/CIT(A)/DR