Besto Tradelink Pvt. Ltd., Ahmedabad V. The ACIT., (OSD)Range-1, Ahmedabad

ITA 666/AHD/2009

• Counselvise Citation: [2011] 134 COUNSELVISE.COM (IT) 6115 (ITAT-AHMEDABAD)
• Duration Of Justice: 2 year(s) 4 month(s) 9 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 08-07-2011
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 04-07-2011
• Assessment Year: 2005-2006
• Appeal Filed On: 27-02-2009
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ALOK JOHRI
• Assessee Lawyers: SUNIL H TALATI
• Keywords: Opportunity of being heard; Additional evidence; Reasonable cause
• Section: 68

Judgement Text

1 IN THE INCOME TAX APPELLATE TRIBUNAL, B BENCH, AHMEDABAD (BEFORE SHRI G. D. AGARWAL, VP AND BHAVNESH SAINI, JM) ITA NO.666/AHD/2009 A. Y. 2005-06 BESTO TRADELINK PVT. LTD., 9 TH FLOOR, B. D. PATEL HOUSE, NARANPURA, AHMEDABAD VS THE A. C.I. T. (OSD), RANGE-1, AHMEDABAD (APPELLANT) (RESPONDENT) FOR ASSESSEE: SHRI SUNIL H. TALATI, AR FOR DEPARTMENT: SHRI ALOK JOHRI, DR O R D E R PER SHRI BHAVNESH SAINI, JM: THIS APPEAL BY ASSESSEE IS DIRECTED AGAINST THE OR DER OF LEARNED CIT(A)-VI, AHMEDABAD DATED 04 TH DECEMBER,2008 FOR ASSESSMENT YEAR 2005-06, CHALLENG ING THE ADDITION OF RS.1,49,73,447/- U/S 68 OF THE IT A CT. 2. THE FACTS OF THE CASE AS NOTED IN THE ASSESSMENT ORDER ARE THAT THE ADVANCE FROM CUSTOMERS OF RS.1,53,15,6 11/- ARE SHOWN AS LIABILITY IN SCHEDULE 11 OF THE BALANCE SH EET. THE AO REQUESTED THE ASSESSEE TO FURNISH THE NAME; ADDRESS OF CUSTOMERS FROM WHOM ADVANCE HAS BEEN ACCEPTED ALONG WITH THE REASONS OF ADVANCE. THE ASSESSEE SUBMITTED THE DETAILS AS UNDER: 2 SR. NO. NAME OF CUSTOMERS AMOUNT 1. HIRAK PACKAGING 4,15,000/- 2. METRO STEEL TRADERS 22,00,000/- 3. METRO TRADERS 28,52,755/- 4. CLASSIC CONSULTANCY PVT. LTD. 21,54,000/- 5. NAVNITLAL & CO. 3,00,000/- 6. NAVRANG ADVERTISING PVT. LTD. 3,00,000/- 7. PEARL ENERGY & INFRASTRUCTURES LTD. 3,42,164/- 8. RLC ENGINEERS PVT. LTD. 80,060/- TOTAL RS. 1,53,15,611/- THIS TABLE IS NOT CORRECT BECAUSE TOTAL OF ADVANCES DOES NOT TALLY. THE REASON IS AS SIMPLE THAT THE ASSESSEE HAS FORGOTTEN TO MENTION THE NAME OF ONE CUSTOMER PRAMUKH AGRO FOODS PVT. LTD. THE CORRECT DETAILS ARE AS UNDER WHICH WERE SUBMITTED BY THE ASSESSEE VIDE SUBMISSION DATED 20-12-2007. DETAILS OF ADVANCE FROM CUSTOMERS AS ON 31/3/2005 AS ON 31/03/200 4 REMARKS AIDER PUBLISHERS PVT. LTD. - 49921 ANDHRA TRADERS - 8326 ASHISH METAL ROLLING MILLS - 600000 DYNAMIC SIZZERS PVT. LTD. - 136866 HIRAK PACKAGING 415000 KINARIWALA SPINNERS - 6988 MAMTA TWISTER PVT. LTD. - 80928 METRO STEEL TRADERS 2200000 - CONFIRMATION LETTER FILED METRO TRADERS 2852755 - CONFIRMATION LETTER FILED 3 CLASSIC CONSULTANCY PVT. LTD. 2154000 - CONFIRMATION LETTER FILED NAVNITLAL & CO. 300000 - CONFIRMATION LETTER FILED NAVRANG ADVERTISING PVT. LTD. 300000 - CONFIRMATION LETTER FILED PEARL ENERGY & INFRASTRUCTURES LTD. 342164 29235597 PRAMUKH AGRO FOODS PVT. LTD. 6671632 - CONFIRMATION LETTER FILED RLC ENGINEERS PVT. LTD. 80060 - TRANS POWER ENGINEER LTD. - 2135822 TOTAL RS. 1,53,15,611 32254448 THE ASSESSEE WAS DIRECTED TO FURNISH PAN NUMBER OF PERSONS FROM WHOM ADVANCE HAD BEEN RECEIVED ALONG WITH THE DETAILS OF ITEMS SUPPLIED AGAINST THESE ADVANCES. SPECIFIC NOTICE WAS ALSO ISSUED TO THE ASSESSEE. THE ASSESSEE FILED REPLY ON DATED 20-12- 2007 IN WHICH CONFIRMATION OF M/S. PRAMUKH AGRO FOODS PVT. LTD. AND RLC ENGINEERS PVT. LTD. WAS ATTACHED. THE ASSESSEE HAD ALSO SUBMITTED CONFIRMATION OF FIVE PARTIES ALONG WITH THE REPLY. THE AO WAS HOWEVER, NOT SATISFIED WITH THE REPLY OF THE ASSESSEE AND MADE FOLLOWING OBSERVATIONS:- (1) THE ASSESSEE HAS FAILED TO FURNISH THE DETAILS OF ITEMS SUPPLIED AGAINST THE ADVANCES RECEIVED BY THE ASSESSEE DURING THE YEAR UNDER CONSIDERATION. (2) THE REPRESENTATIVE OF THE ASSESSEE HAS CONSUMED MORE TIME KNOWING THE FACT THAT THE TIME LIMIT TO PASS AN ASSESSMENT ORDER EXPIRES 4 ON 31/12//2007 IN THIS CASE. HE VIDE LETTER DATED 5/12/2007 REQUESTED 15 DAYS TIME TO FURNISH THE DETAILS. THE REPRESENTATIVE OF THE ASSESSEE DID NOT APPEAR BEFORE ME AND SUBMITTED THE DETAILS TO THE TAX ASSISTANT ON 20/12/2007 WHERE THE DAK (POST) IS RECEIVED IN THIS SITUATION, THE INTENTION OF THE ASSESSEE IS VERY CLEAR. THE REPRESENTATIVE OF THE ASSESSEE DID NOT EXPLAIN THE ISSUE BEFORE ME. THESE DETAILS WERE RECEIVED BY ME ON 28/12/07. (3) IT IS SEEN FROM CONFIRMATIONS RECEIVED FROM CUSTOMER FROM WHOM ADVANCES HAD BEEN OBTAINED BY THE ASSESSEE COMPANY THAT IN ALL CASES, NO SALES ARE BEING REFLECTED. WHY SALES HAVE NOT BEEN MADE IS KNOWN TO ASSESSEE ONLY. (4) THE ASSESSEE HAS FAILED TO FURNISH CONFIRMATION LETTERS FROM PEARL ENERGY & INFRASTRUCTURES LTD. IN THIS CASE, THE ADVANCES HAVE REDUCED FROM RS.2,92,35,597 IN A. Y. 2004-05 TO RS.3,42,164 IN A. Y. 2005-06 (IN THE YEAR UNDER CONSIDERATION). ON PERUSAL OF SALES ACCOUNT OF THE ASSESSEE COMPANY, IT IS CLEAR THAT NO SALES WERE MADE TO PEARL ENERGY & INFRASTRUCTURES LTD. THEN HOW ADVANCES HAVE REDUCED, IS NOT CLEAR. THE CORRECT FACTS ARE KNOWN TO THE ASSESSEE ONLY. THE SALES ACCOUNT OF THE ASSESSEE COMPANY FOR A. Y. 2005-06 IS 5 REPRODUCED HEREUNDER FOR READY REFERENCE. HENCE, DOUBT IS RAISED AFTER CONSIDERING THE FACTS AS NARRATED ABOVE. (5) FURTHER, IT IS ALSO SEEN THAT NO SALES HAVE BEE N MADE TO ANY PERSONS FROM WHOM ADVANCES HAVE BEEN RECEIVED BY THE ASSESSEE. IN THE CASE OF PRAMUKH AGRO FOODS PVT. LTD., IT IS OBSERVED THAT DURING THE WHOLE YEAR, THE ASSESSEE RECEIVED RS.1,20,21,632 FROM PRAMUKH AGRO FOODS PVT. LTD. VIDE VARIOUS ENTRIES AND THE SUM OF RS.53,50,000 WAS PAID VIDE VARIOUS ENTRIES. NOWHERE SALES ARE REFLECTED. THE ACTIVITIES OF THE ASSESSEE IN RESPECT OF ADVANCES ARE SUSPICIOUS. (6) PAN OF METRO STEEL TRADERS AND METRO TRADERS ARE THE SAME (APJMP 1089D) AS PER CONFIRMATION LETTERS. THE AO AFTER EXAMINING THE DETAILS/TABLE NOTED THAT IN FACT A SUM OF RS.1,49,73,447/- HAS BEEN CREDITED IN THE BOOKS OF ACCOUNTS OF THE ASSESSEE DURING THE YEAR UNDER CONSIDERATION IN RESPECT OF THE SAME EIGHT PARTIES. THE AO, THEREFORE, NOTED THAT GENUINENESS OF THESE ADVANCES ARE DOUBTFUL AND ARE BOGUS IN NATURE AS NO TRADING IS DONE AGAINST THESE ADVANCES. THE A O, THEREFORE DID NOT FIND THE REPLY OF THE ASSESSEE TO BE SATISFACTORY AND MADE THE ADDITION OF RS.1,49,73,44 7/- U/S 68 OF THE IT ACT. THE ASSESSEE CHALLENGED THE ADDITION BEFORE THE LEARNED CIT(A) AND WRITTEN SUBMISSION WAS FILED WHICH IS REPRODUCED IN THE 6 APPELLATE ORDER IN WHICH IT WAS BRIEFLY EXPLAINED T HAT CONFIRMATION LETTERS OF ALL THE CREDITORS ALONG WIT H THEIR PAN WERE FILED EXCEPT IN THE CASE OF HIRAK PACKAGIN G WHICH IS NOW OBTAINED AND ENCLOSED WITH THE WRITTEN SUBMISSION WITH REQUEST THAT SAME MAY BE ADMITTED A S ADDITIONAL EVIDENCE IN RULE 46A OF THE IT RULES. TH E ONUS ON THE ASSESSEE U/S 68 OF THE IT ACT IS DISCHARGED. THE AO MAINLY MADE ADDITION BECAUSE THERE WAS NO TRADING DONE IN THE AFORESAID ACCOUNTS . IN CASE AO DOUBTED THE GENUINENESS OF THE ADVANCES, HE SHOULD HAVE MADE ENQUIRY FROM THEM WHO ARE EXISTING ON THE RECORDS OF THE INCOME TAX DEPARTMENT. ALL TH E TRANSACTIONS WERE DONE THROUGH ACCOUNT PAYEE CHEQUES. THE ASSESSEE RELIED UPON THE DECISION OF T HE HONBLE GUJARAT HIGH COURT IN THE CASE OF ROHINI BUILDERS 256 ITR 360 AS WELL AS DECISION OF THE HON BLE SUPREME COURT IN THE CASE OF ORISSA CORPORATION PVT . LTD. 159 ITR 78. THE LEARNED CIT(A) HOWEVER, DID NO T ACCEPT CONTENTION OF THE ASSESSEE AND NOTED THAT TH E ASSESSEE HAS NOT SATISFIED THE RIGOROUS TEST UNDER RULE 46A OF THE IT RULES, THEREFORE, ADDITIONAL EVIDENCE WAS NOT ADMITTED. HE HAS NOTED THAT EXCEPT FILING OF TH E CONFIRMATION NO EVIDENCE WAS FILED TO PROVE THE SOU RCE OF THE CREDIT. ASSESSEE SHALL HAVE TO PROVE IDENTIT Y OF THE CREDITORS, CAPACITY OF SUCH CREDITORS TO ADVANC E THE MONEY AND LASTLY THE GENUINENESS OF THE TRANSACTION . HE HAS NOTED THAT MERE FILING OF CONFIRMATION LETTE R WOULD NOT DISCHARGE THE ONUS LAY UPON THE ASSESSEE AND RELIED UPON THE DECISIONS IN THE CASES OF BHARA TI PRIVATE LIMITED VS CIT, 111 ITR 951 (CAL.) AND CIT VS 7 UNITED COMMERCIAL & INDUSTRIAL CO. PVT. LTD., 187 I TR 596 (CAL.). HE HAS ALSO NOTED THAT MERE PAYMENT THROUGH ACCOUNT PAYEE CHEQUE IS NOT SACROSANCT NOR CAN IT MAKE A NON-GENUINE TRANSACTION GENUINE AND RELIED UPON THE DECISION IN THE CASE OF CIT VS PREC ISION FINANCE PVT. LTD., 208 ITR 465 (CAL.) AND THE DECIS ION IN THE CASE OF NIZAMWOOL AGENCY VS CIT, 193 ITR 318 (ALL.) THE LEARNED CIT(A) ALSO NOTED THAT AS PER CONFIRMATIONS IN THE CASES OF METRO STEEL TRADERS A ND METRO TRADERS THE PAN IS SAME AND ASSESSEE FAILED T O FILE CONFIRMATION IN THE CASE OF PEARL ENERGY & INFRASTRUCTURES. THE LEARNED CIT(A) ALSO NOTED THAT THE REPLY IS FILED IN THE DAK AND ASSESSEE FAILED TO AP PEAR BEFORE THE AO TO EXPLAIN THE GENUINENESS OF THE ADVANCES IN QUESTION. COPY OF INCOME TAX RETURNS AN D ORDERS ARE NOT FILED. THE LEARNED CIT(A) ACCORDINGL Y CONFIRMED THE ADDITION AND DISMISSED THE APPEAL OF THE ASSESSEE. 3. THE LEARNED COUNSEL FOR THE ASSESSEE REITERATED THE SUBMISSIONS MADE BEFORE THE AUTHORITIES BELOW. HE HAS SUBMITTED THAT THE AMOUNT IN QUESTION THOUGH WA S SHOWN AS ADVANCE FROM CUSTOMERS BUT IT WAS IN FACT LOAN AND ADVANCES. THE HEAD WAS SHOWN AS ADVANCE FROM CUSTOMERS IN ORDER TO AVOID THE CONSEQUENCES FROM THE OFFICE OF REGISTRAR OF COMPANIES. DUE TO ABOVE REASON, NO SALES OR TRANSACTIONS HAVE BEEN SHOWN AGAINST THESE PARTIES. HE HAS SUBMITTED THAT ONCE ADDITION IS MADE BY THE AO U/S 68 OF THE IT AC T, THE REASONS GIVEN BY THE AO FOR REJECTING THE CLAIM OF 8 THE ASSESSEE THAT NO SALES HAVE BEEN MADE AGAINST THESE PARTIES WOULD NOT BE RELEVANT. HE HAS SUBMITT ED THAT SINCE CONFIRMATION OF ALL THE PARTIES HAVE BEE N FILED SHOWING THEIR PAN AND THE TRANSACTIONS WERE ROUTED THROUGH ACCOUNT PAYEE CHEQUES, THEREFORE, AUTHORITIES BELOW SHOULD NOT HAVE DOUBTED THE GENUINENESS OF THE TRANSACTIONS. HE HAS SUBMITTED T HAT ASSESSEE FILED REPLY BEFORE THE AO ON 20-12-2007 (P B- 14) IN WHICH IT WAS ALSO REQUESTED TO THE AO THAT I F HE WAS NOT SATISFIED WITH THE EVIDENCES ON RECORD, THEREFORE, SAME MAY BE INTIMATED TO THE ASSESSEE WH O IS PREPARED TO GIVE DETAILS/EXPLANATIONS/DOCUMENTS IN SUPPORT THEREOF. BUT THE AO WITHOUT GIVING ANY FURT HER OPPORTUNITY TO THE ASSESSEE PASSED THE ORDER ON 28- 12- 2007. COPIES OF ALL THE CONFIRMATIONS ARE FILED IN THE PAPER BOOKS WHICH HAVE NOT BEEN VERIFIED BY THE AO FROM THE RECORD OF THE DEPARTMENT. HE HAS SUBMITTED THAT IN THE CASES OF METRO STEEL TRADERS AND METRO TRADERS, THE PAN IS SAME BECAUSE BOTH THE CONCERNS WERE OWNED BY THE INDIVIDUAL PROPRIETOR. HE HAS SUBMITTED THAT IN THE CASE OF PEARL ENERGY & INFRASTRUCTURE LTD. BALANCE HAS REDUCED AS NOTED BY THE AO IN THE ASSESSMENT YEAR; THEREFORE, NO ADDITION COULD BE MADE. 4. ON THE OTHER HAND, THE LEARNED DR RELIED UPON ORDERS OF THE AUTHORITIES BELOW AND SUBMITTED THAT THE ASSESSEE HAS NOW TAKEN A NEW PLEA FOR EXPLAINING TH E CREDITS IN THE FORM OF AVOIDING CONSEQUENCES OF ROC OFFICE; THEREFORE, NO BENEFIT SHOULD BE GIVEN TO TH E 9 ASSESSEE. NO SUCH DETAILS WERE FILED BEFORE THE AUTHORITIES BELOW. NO REASONS WERE EXPLAINED WHY ADVANCES WERE TAKEN. THE EXPLANATION OF THE ASSESSE E IS AGAINST PUBLIC INTEREST. THE ASSESSEE FILED DETA ILS (PB-11) AS ADVANCES FROM CUSTOMERS. THE ASSESSEE DID NOT SHOW THE AMOUNT IN QUESTION AGAINST UNSECUR ED LOANS (PB-7). THEREFORE, VERIFICATION OF NEW PLEA O F THE ASSESSEE IS REQUIRED AT THE LEVEL OF THE AO. HE HAS SUBMITTED THAT THE ASSESSEE FAILED TO PROVE CREDITWORTHINESS OF THE CREDITORS. ASSESSEE DID NOT MAKE ANY REQUEST TO SUMMON THE PARTIES FOR EXAMINATION. THE ONUS UPON ASSESSEE TO PROVE GENUINE CREDITS IS NOT DISCHARGED. ASSESSEE HAS FAI LED TO EXPLAIN WHY FIFTEEN DAYS TIME WAS SOUGHT FROM TH E AO FOR FILING THE REPLY WHEN THE ASSESSEE WAS AWARE THAT THESE ARE NOT ADVANCES RECEIVED FROM THE CUSTOMERS. THE PAN OF TWO PARTIES ARE SAME, THEREFORE, IT CREATES DOUBT. THE LEARNED DR, THEREF ORE, SUBMITTED THAT SINCE ASSESSEE FAILED TO PROVE THAT NO SALES HAVE BEEN MADE TO THESE PARTIES AGAINST WHOM ADVANCES HAVE BEEN SHOWN, ADDITION MAY BE CONFIRMED. 5. WE HAVE CONSIDERED RIVAL SUBMISSIONS AND MATERIAL ON RECORD. IT IS NOT IN DISPUTE THAT THE ASSESSEE FILED ALL THE CONFIRMATION LETTERS FROM TH E CREDITORS BEFORE THE AO EXCEPT IN THE CASE OF HIRAK PACKAGING WHICH WAS ALSO FILED BEFORE THE LEARNED CIT(A). COPIES OF THE SAME ARE FILED IN THE PAPER B OOK WHICH SHOWS THAT THE CREDITORS HAVE CONFIRMED GIVIN G OF 10 LOAN TO THE ASSESSEE THROUGH ACCOUNT PAYEE CHEQUES AND THEY ALL ARE ASSESSED TO TAX ALSO. THEIR PAN IS ALSO MENTIONED ON THE CONFIRMATION LETTER. IN THE CASE O F PEARL ENERGY & INFRASTRUCTURE, THE AO NOTED IN THE ASSESSMENT ORDER THAT THE ADVANCE AGAINST THIS PART Y HAS REDUCED IN THE ASSESSMENT YEAR UNDER APPEAL, WOULD SHOW THAT NO FRESH ADVANCE HAS BEEN RECEIVED BY THE ASSESSEE FROM THIS PARTY IN THE ASSESSMENT Y EAR UNDER APPEAL. THEREFORE, THERE WAS NO NECESSITY TO FILE ANY CONFIRMATION IN THAT CASE. THE ASSESSEE EXPLAIN ED BEFORE AO THAT THE AMOUNT IN QUESTION WAS RECEIVED FROM VARIOUS PARTIES AS ADVANCE FROM CUSTOMERS INSTEAD OF UNSECURED LOANS. THE AO ASKED FOR THE REASONS OF ADVANCE AND ASKED THE ASSESSEE TO FURNIS H DETAILS OF GOODS SUPPLIED ALONG WITH NECESSARY EVIDENCES TO SUCH CUSTOMERS. BUT THE ASSESSEE FAILE D TO FURNISH THE DETAILS OF ITEMS SUPPLIED AGAINST TH E ADVANCES. THE AO, THEREFORE, NOTED FROM CONFIRMATIO NS THAT NO SALES HAVE BEEN REFLECTED AGAINST ALL THE P ARTIES AGAINST WHOM ADVANCES HAVE BEEN SHOWN. THE AO ULTIMATELY MADE THE ADDITION U/S 68 OF THE IT ACT F OR FAILURE ON THE PART OF THE ASSESSEE TO EXPLAIN CASH CREDITS. THE ONUS U/S 68 OF THE IT ACT IS UPON ASSE SSEE TO PROVE GENUINE CREDITS THROUGH EVIDENCES AND MATERIAL ON RECORD. IN ORDER TO PROVE GENUINE CREDI TS U/S 68 OF THE IT ACT, THE ASSESSEE SHALL HAVE TO PR OVE IDENTITY OF THE CREDITORS, THEIR CREDITWORTHINESS A ND THE GENUINENESS OF THE TRANSACTIONS. THERE IS NO FURTHE R ONUS UPON THE ASSESSEE TO PROVE OTHER THINGS. SINCE THE AO MADE ADDITION U/S 68 OF THE IT ACT AND LEARN ED 11 COUNSEL FOR THE ASSESSEE ADMITTED BEFORE US THAT TH E AMOUNT IN QUESTION IS RECEIVED AS ADVANCE AND LOAN WOULD PROVE THAT THE ASSESSEE SHALL HAVE TO DISCHAR GE ONUS REQUIRED U/S 68 OF THE IT ACT. MAY BE, INITIAL LY ASSESSEE HAS SHOWN THE AMOUNT AS ADVANCES FROM CUSTOMERS WOULD NOT REQUIRE THE ASSESSEE TO PROVE A S TO WHY SALES HAVE NOT BEEN MADE TO THESE PARTIES. T HE ASSESSEE SHALL HAVE TO EXPLAIN CREDIT ENTRIES APPEA RING IN THE BOOKS OF ACCOUNTS OF THE ASSESSEE. THE AO REJECTED THE EXPLANATION OF THE ASSESSEE MAINLY ON THE REASONS THAT THE ASSESSEE FAILED TO FURNISH THE DET AILS OF THE ITEMS SUPPLIED TO THE CUSTOMERS AND THAT THE CONFIRMATIONS FROM THE PARTIES SHOWS THAT NO SALES HAVE BEEN REFLECTED IN THEIR CASES. ONCE THE CASE I S CONSIDERED U/S 68 OF THE IT ACT, THE REASONS FOR REJECTION GIVEN BY THE AO WOULD NOT BE RELEVANT. TH E ASSESSEE SHALL HAVE TO PROVE THE NECESSARY INGREDIE NTS OF SECTION 68 OF THE IT ACT AS NOTED ABOVE, THEREFO RE, THE REASONS GIVEN BY THE AO FOR NOT MAKING SALES TO THE PARTIES FROM WHOM ADVANCES HAVE BEEN TAKEN WOULD BE IRRELEVANT U/S 68 OF THE IT ACT. THE LEARN ED COUNSEL FOR THE ASSESSEE RIGHTLY CONTENDED THAT IN THE CASE OF METRO STEEL TRADERS AND METRO TRADERS THE PAN IS SAME BECAUSE BOTH THE FIRMS HAVE BEEN OWNED BY ONE PROPRIETOR. THE SAME IS ALSO CLEAR FROM THE CONFIRMATION LETTERS WHICH HAVE BEEN SIGNED BY THE SAME PERSON AS PROPRIETOR. ONE PERSON CAN BE PROPRIETOR OF NUMBER OF FIRMS BUT THE PAN WOULD BE IN THE NAME OF THE PROPRIETOR (INDIVIDUAL). THEREFORE, THERE IS NOTHING WRONG IN THE CONFIRMATION FILED BY THE 12 ASSESSEE. THE ASSESSEE IN THE CASE OF M/S. HIRAK PACKAGING FILED THE CONFIRMATION BEFORE THE LEARNED CIT(A) AND REQUEST WAS MADE TO ADMIT THE SAME UNDER RULE 46A OF THE IT RULES. THE ASSESSEE EXPLAINED BEFORE THE LEARNED CIT(A) SINCE THE AFORESAID PARTY HAS STOPPED THE BUSINESS TRANSACTION WITH THE ASSESSEE AND THE CREDITOR WAS NOT READILY AVAILABLE AT THE T IME OF ASSESSMENT WAS BEING COMPLETED, THE CONFIRMATION WA S FILED AT THE LATER STAGE BEFORE THE LEARNED CIT(A). THE ABOVE REASONABLE CAUSE OF THE ASSESSEE WAS NOT CONSIDERED IN PROPER PERSPECTIVE BY THE LEARNED CIT(A). THE ABOVE REASON WOULD SHOW THAT ASSESSEE WAS PREVENTED BY SUFFICIENT CAUSE FROM PRODUCING TH IS CONFIRMATION BEFORE THE AO AT THE ASSESSMENT STAGE. THEREFORE, THE LEARNED CIT(A) SHOULD HAVE ADMITTED THE ADDITIONAL EVIDENCE AT THE APPELLATE STAGE. THEREFO RE, WE DO NOT APPROVE THE FINDINGS OF THE LEARNED CIT(A ) IN REFUSING TO ADMIT ADDITIONAL EVIDENCE IN THE FORM O F CONFIRMATION LETTER FROM M/S. HIRAK PACKAGING. WE M AY ALSO NOTE HERE THAT THOUGH THE ASSESSEE FILED REPLY DATED 20-12-2007 AT THE DAK COUNTER (PB-14 RECEIVED BY AO ON 28-12-2007) BUT THE ASSESSEE IN THIS REPLY SPECIFICALLY NOTED THAT THE DETAILS SUBMITTED THERE IN WOULD SATISFY THE AO AND IN CASE THE AO IS NOT SATI SFIED WITH THE SAME, PLEASE LET THE ASSESSEE MAY KNOW WHO IS PREPARED TO GIVE DETAILS/EXPLANATIONS/DOCUMENTS IN SUPPORT THEREOF. THE AO INSTEAD OF ASKING FURTHER DETAILS OR EVIDENCES FROM THE ASSESSEE, WITHOUT CRO SS VERIFYING THE DETAILS PASSED THE ASSESSMENT ORDER O N THE SAME DAY I.E. ON 28-12-2007. IT WOULD SHOW THAT 13 THE AO DID NOT GIVE SUFFICIENT OPPORTUNITY TO THE ASSESSEE TO PLACE THE DOCUMENTS ON RECORD IN SUPPOR T OF THE CONFIRMATIONS. SINCE ALL THE CREDITORS ARE ASSESSED TO TAX AND TRANSACTIONS WERE ROUTED THROUG H BANKING CHANNEL, THEREFORE, BEFORE REJECTING THE EXPLANATION OF THE ASSESSEE, THE AO SHOULD HAVE MAD E SOME ENQUIRIES INTO THE MATTER INDEPENDENTLY IN ORD ER TO SUPPORT HIS FINDINGS. HOWEVER, THE AO REJECTED T HE EXPLANATION OF THE ASSESSEE ON IRRELEVANT CONSIDERATIONS AS TO WHY SALES HAVE NOT BEEN REFLEC TED AGAINST THE PARTIES FROM WHOM ADVANCES HAVE BEEN RECEIVED, THE PAN IS SAME IN CASE OF TWO OF THE CREDITORS AND THAT THE BALANCE OF ADVANCES HAS REDU CED IN THE ASSESSMENT YEAR UNDER APPEAL IN THE CASE OF PEARL ENERGY & INFRASTRUCTURES LTD. SINCE NO SALES HAVE BEEN MADE TO THE CUSTOMERS FROM WHOM ADVANCES HAVE BEEN RECEIVED, THE AO FORMED HIS VIEW THAT THE ADVANCES ARE DOUBTFUL AND BOGUS IN NATURE. SUCH FINDINGS OF THE AUTHORITIES BELOW CANNOT BE SUSTAIN ED IN LAW. SIMILARLY, LEARNED COUNSEL FOR THE ASSESSEE RE LIED UPON THE DECISION IN THE CASE OF ROHINI BUILDERS (S UPRA) BUT IN THAT CASE FACTS ARE CLEARLY DISTINGUISHABLE. IN THIS CASE, SOME OF THE CREDITORS WERE PRODUCED BEFORE AO AND THEIR STATEMENTS ON OATH WERE RECORDED. COPIES OF ASSESSMENT ORDERS WERE PRODUCED. THE AO DID NOT DISALLOW INTEREST IN RELATION TO THE CREDITS IN THE ASSESSMENT YEAR UNDER APPEAL AS WELL AS IN SUBSEQUENT YEAR ON WHICH TDS WAS ALSO DEDUCTED. THE TRIBUNAL, THEREFORE, FOUND THAT ASSESSEE HAD DISCHARGED THE INITIAL ONUS IN TERMS OF SECTION 68 OF THE 14 IT ACT. CONSIDERING THE TOTALITY OF THE FACTS OF TH E CASE IN THE LIGHT OF THE ABOVE DISCUSSION, WE ARE OF THE VIEW THAT FURTHER OPPORTUNITY SHOULD BE GIVEN TO THE ASSESSEE TO PLACE ON RECORD THE RELEVANT DOCUMENTS TO SUPPORT THE CONFIRMATION LETTERS IN ORDER TO PROVE THE CREDITWORTHINESS OF THE CREDITORS WHO ARE ASSESSED TO INCOME TAX. WE ACCORDINGLY, SET ASIDE THE ORDERS OF THE AUTHORITIES BELOW AND RESTORE THIS ISSUE TO THE FIL E OF AO WITH DIRECTION TO RE-DECIDE THIS ISSUE BY GIVING REASONABLE SUFFICIENT OPPORTUNITY OF BEING HEARD TO THE ASSESSEE. ASSESSEE MAY PLACE ON RECORD SOME EVIDENCES OR MATERIALS BEFORE THE AO IN ORDER TO PR OVE CREDITWORTHINESS OF THE CREDITORS LIKE COPY OF THE BANK ACCOUNTS OF THE CREDITORS IN SUPPORT OF THE CONTENT IONS THAT THE TRANSACTIONS WERE ROUTED THROUGH BANKING CHANNEL AND THAT THE CREDITORS WERE HAVING SUFFICIE NT FUNDS IN THEIR ACCOUNTS. SINCE IN THE CASE OF M/S. PEARL ENERGY & INFRASTRUCTURES LTD. NO FRESH ADVANCE IS T AKEN IN THE ASSESSMENT YEAR UNDER APPEAL, THERE IS NO NE ED TO FURNISH THESE EVIDENCES. THE AO ON EXAMINING THE SE DETAILS/DOCUMENTS SHALL PASS THE ORDER IN ACCORDANC E WITH LAW. 6. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN OPEN COURT ON 08-07-2011. SD/- SD/- (G. D. AGARWAL) VICE PRESIDENT (BHAVNESH SAINI) JUDICIAL MEMBER DATE : 08-07-2011 LAKSHM IKANT/ 15 COPY OF THE ORDER FORWARDED TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT CONCERNED 4. THE DR, ITAT, 5. GUARD FILE BY ORDER, //TRUE COPY//- DY.R/AR, ITAT, AHMEDABAD