Income Tax officer-1, Dewas V. M/s Santosh Beej Utpadak, Sahkari Sanstha Mydt. , Dewas

ITA 704/Ind/2017

• Counselvise Citation: [2019] 118 COUNSELVISE.COM (IT) 1225 (ITAT-INDORE)
• Duration Of Justice: 1 year(s) 4 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 22-03-2019
• Appeal Filed By: Department
• Order Result: Partly Allowed
• Bench Allotted: DB
• Assessment Year: 2009-2010
• Appeal Filed On: 14-11-2017
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: ASHIMA GUPTA
• Assessee Lawyers: S S DESH
• Keywords: Unexplained cash credit; Set aside
• Section: 143(3); 263; 144

Judgement Text

SANTOSH BEEJ UTPADAK SAHAKATI SANSTHA MYDT ITA NO.704/IND/2017 1 , , IN THE INCOME TAX APPELLATE TRIBUNAL, INDORE BENCH, INDORE BEFORE HON'BLE KUL BHARAT, JUDICIAL MEMBER AND HON'BLE MANISH BORAD, ACCOUNTANT MEMBER ITA NO. 704/IND/2017 ASSESSMENT YEAR 2009-10 REVENUE BY SMT. ASHIMA GUPTA ASSESSEE BY SHRI S. S. DESHPANDE, CA DATE OF HEARING 19. 03.2019 DATE OF PRONOUNCEMENT 22 .03.2019 O R D E R PER MANISH BORAD, AM. THE ABOVE CAPTIONED APPEAL IS FILED AT THE INSTANCE OF REVENUE PERTAINING TO ASSESSMENT YEAR 2009-10 AND IS DIREC TED AGAINST THE ORDERS OF LD. COMMISSIONER OF INCOME TAX (APPEALS) (IN SHORT LD.CIT(A)], UJJAIN DATED 28.08.2017 WHICH IS ARIS ING OUT OF THE ORDER U/S 263/144 OF THE INCOME TAX ACT 1961(IN SHO RT THE ACT) DATED 24.03.2015 FRAMED BY ITO01, DEWAS. 2. REVENUE HAS RAISED FOLLOWING GROUNDS OF APPEAL; IN COME TAX OFFICER - 1, AAYAKAR BHAWAN, DEWAS VS. M/S. SANTOSH BEEJ UTPADAK SAHAKARI SANSTHA MYDT, GRAM LOHARI, DEWAS) ( APPELLANT ) (RESPONDENT ) PAN NO. AAFTS2656F SANTOSH BEEJ UTPADAK SAHAKATI SANSTHA MYDT ITA NO.704/IND/2017 2 1. WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES O F THE CASE, THE LD. CIT(A) WAS JUSTIFIED IN DELETING THE ADDITION OF RS .46,82,429/- MADE ON ACCOUNT OF SUBSIDIES RECEIVED. 2. WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) WAS JUSTIFIED IN DELETING THE ADDITION OF RS.2,37,0 0,000/- MADE ON ACCOUNT OF WITHDRAWAL FROM BANK. 3. WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) WAS JUSTIFIED IN DELETING THE ADDITION OFRS.6,36,33 ,239/- MADE ON ACCOUNT OF CREDITORS. (NOTE:- THE ISSUE NO.1 IS COVERED UNDER THE EXCEPT IONS MENTIONED IN PARA 8(C) OF CIRCULAR 21/2015 DUE TO REVENUE AUDIT OBJEC TION ON SUBSIDIES RECEIVED). THE APPELLANT RESERVES HIS RIGHT TO ADD, AMEND OR A LTER THE GROUNDS OF APPEAL ON OR BEFORE THE APPEAL IS FINALLY HEARD FOR DISPOSAL 3. BRIEFLY STATED FACTS AS CULLED OUT FROM THE RECO RDS ARE THAT THE ASSESSEE IS A COOPERATIVE SOCIETY REGISTERED UNDER THE MADHYA PRADESH COOPERATIVE SOCIETIES ACT AND IS FOUNDED BY THE FARMERS FOR THE ENHANCEMENT OF AGRICULTURE PRODUCE AND ENGAGED IN GRADING OF SEEDS UNDER THE SEEDS CERTIFICATION PROGRAMME RUN B Y THE GOVT. OF MADHYA PRADESH. FOR ASSESSMENT YEAR 2009-10 INCOME OF RS.28,640/- DECLARED IN THE INCOME TAX RETURN SUBMI TTED ON 30.09.2009. ASSESSMENT U/S 143(3) OF THE ACT WAS C OMPLETED ON 23.12.2011 ASSESSING INCOME AT RS.1,86,158/-. THER EAFTER LD. COMMISSIONER OF INCOME TAX PASSED ORDER U/S 263 OF THE ACT DATED 28.3.2014 SETTING ASIDE THE ORDER PASSED BY LD. A.O AND DIRECTING TO ASSESS THE INCOME OF THE ASSESSEE AFRESH IN THE LIGHT OF THE SANTOSH BEEJ UTPADAK SAHAKATI SANSTHA MYDT ITA NO.704/IND/2017 3 DIRECTION GIVEN IN THE ORDER ISSUED U/S 263 OF THE ACT AND IN COMPLIANCE THERE TO LD. A.O INITIATED THE ASSESSMEN T PROCEEDINGS BY ISSUANCE OF NOTICES U/S 143(2)/142(1) OF THE ACT . ON THE DATE OF HEARING REPRESENTATIVE OF THE ASSESSEE SOCIETY MADE A SUBMISSION THAT THE SOCIETY IS DISSOLVED AND SHOWED ITS INABIL ITY TO FILE ANY DETAILS. LD. A.O THEREFORE HAD NO OPTION EXCEPT T O FRAME AN EX- PARTE ASSESSMENT ORDER U/S 144 R.W.S 263 OF THE ACT AND ON THE BASIS OF FINDING OF LD. CIT(A) IN THE ORDER U/S 263 OF THE ACT MADE THE FOLLOWING ADDITIONS; (I) UN ACCOUNTED SUBSIDY NOT CREDITED TO THE PROFIT AND LOSS ACCOUNT RS. 46,82,429/ - (II) UNEXPLAINED CASH WITHDRAWAL RS.2,37,00,000/- (III) UNEXPLAINED CREDITORS RS.6,36,33,293/- TOTAL RS. 9,20,15,722/- INCOME ASSESSED AT RS.9,22,02,280/-. 4. AGGRIEVED ASSESSEE PREFERRED APPEAL BEFORE LD. CIT(A) AND PLACED VARIOUS DETAILS IN SUPPORT OF ITS CONTENTION THAT LD. A.O ERRED IN MAKING THE ADDITIONS AND BASED ON THESE SU BMISSIONS AS WELL AS THE REMAND REPORT LD. CIT(A) DELETED ALL TH E ADDITIONS. SANTOSH BEEJ UTPADAK SAHAKATI SANSTHA MYDT ITA NO.704/IND/2017 4 5. NOW THE REVENUE IS IN APPEAL BEFORE THE TRIBUNAL . 6. LD. DEPARTMENTAL REPRESENTATIVE VEHEMENTLY ARGUE D AND SUPPORTING THE ORDERS OF LD. A.O. 7. PER CONTRA LD. COUNSEL FOR THE ASSESSEE RELYING ON THE ORDERS OF LD. CIT(A) ALSO SUBMITTED THAT THE ALLEGED ADDIT ION FOR RS.46,82,429/- RELATED TO SUBSIDY IS THE LIABILITY AT THE END OF THE YEAR AND NOT THE INCOME. FOR THE ADDITION FOR UNEX PLAINED CASH WITHDRAWAL OF RS.2,37,00,000/-, HE SUBMITTED THAT T HE ALLEGED AMOUNT WAS WITHDRAWAL FROM THE BANK ACCOUNT OF THE SOCIETY FOR THE PURPOSE OF MAKING PAYMENT TO THE FARMERS AGAINS T THE PURCHASES AND THEIR CLAIMS. THIS AMOUNT IN NO CASE CAN BE TREATED AS INCOME. FURTHER WITH REGARD TO THE UNEXPLAINED C REDITORS OF RS.6,36,33,239/- LD. COUNSEL FOR THE ASSESSEE FIRST LY MADE A REFERENCE TO THE SOCIETYS DISSOLUTION CERTIFICATE STATING THAT DURING THE FINANCIAL YEAR 2013-14 THE SOCIETY WAS DISSOLVE D AND ALL THE AMOUNTS WERE CLEARED WHICH ITSELF PROVES THAT ALL T HE LIABILITIES WERE PAID FOR. REFERENCE WAS ALSO MADE OF THE COPIES OF VOUCHERS AND LEDGERS PLACED BEFORE THE LD. CIT(A) TO JUSTIFY THE GENUINENESS OF THE TRANSACTIONS. SANTOSH BEEJ UTPADAK SAHAKATI SANSTHA MYDT ITA NO.704/IND/2017 5 8. WE HAVE HEARD RIVAL CONTENTIONS AND PERUSED THE RECORDS PLACED BEFORE US AND GONE THROUGH THE WRITTEN SUBMI SSION FILED BY LD. COUNSEL FOR THE ASSESSEE. REVENUE IS AGGRIEVED WITH VARIOUS DELETION MADE BY LD. CIT(A). 9. AS REGARDS GROUND NO.1 FOR THE ALLEGED ADDITION OF RS.46,82,429/- RELATING TO SUBSIDY RECEIVED BY THE ASSESSEE, WE FIND THAT LD. CIT(A) DELETED THIS ADDITION GIVIN G FOLLOWING FINDING OF FACT; 6.1 GROUND NO.1 :- THROUGH THIS GROUND OF APPEAL THE APPELLANT HAS CHALLENGED THE ADDITION OF RS,46,82,429/-- ON ACCOUNT OF SUBSIDIES RECEIVED. THE APPELLANT WAS A COOPERATIVE SOCIETY REGISTERED UNDER THE MP COOPERATIVE SOCIETIES ACT BY THE FARME RS AND HAS BEEN DISSOLVED BY THE FARMERS THROUGH THE COMPETENT AUTH ORITY ON 09- 10- 2013 CLOSER CERTIFICATE HAS BEEN SUBMITTED. THE SOC IETY WAS ENGAGED IN GRADING OF SEEDS CERTIFICATION PROGRAMME RUN BY STA TE GOVERNMENT SEED CERTIFICATION AGENCY. THIS SOCIETY WAS WORKING AS A NODAL AGENCY BETWEEN THE FARMERS AND THE SEED CERTIFICATION AGENCY TO RU N SEED CERTIFICATION PROGRAM AS PER THE NORMS OF GOVERNMENT TO FACILITAT E THE FARMERS FOR GETTING FULL AND TRUE VALUE OF THEIR SEEDS BY CERTI FYING. FOR SUCH OPERATIONS OF THE SOCIETY, THE STATE GOVERNMENT PROVIDE SUBSIDY TO THE COOPERATIVE SOCIETY. SANTOSH BEEJ UTPADAK SAHAKATI SANSTHA MYDT ITA NO.704/IND/2017 6 DURING THE YEAR ALSO, THE APPELLANT RECEIVED SUBSID Y FROM MADHYA- PRADESH KISAN KALYAN AND KRISHI VIKAS VIBHAG, BHOPA L. SUCH SUBSIDY IS GIVEN TO THE SOCIETIES FOR DISTRIBUTION OF THE SAME TO THE FARMERS. AS PER THE GUIDELINES ISSUED BY MADHYA PRADESH KISAN KALYA N AND KRISHLI VIKAS VIBHAG, BHOPAL, SEED SUBSIDY OF RS. 500/PER QUINTAL IS PAID TO THE NODAL AGENCY (I.E. THE APPELLANT) FROM WHICH, RS. 400/- I S MEANT FOR PAYMENT TO THE FARMERS FROM WHOM SEEDS ARE PURCHASED BY THE SO CIETY AND REMAINING RS. 100/- IS KEPT WITH THE SOCIETY FOR ME ETING OUT ITS ADMINISTRATIVE EXPENSES. THE SYSTEM OF SUBSIDY AND ITS DISTRIBUTION IS CLEARLY LAID DOWN BY THE DEPARTMENT FOR THE NODAL C OOPERATIVE SOCIETIES. FOR THE YEAR UNDER CONSIDERATION, THE APPELLANT REC EIVED THE FOLLOWING SUBSIDY AMOUNTS: S.NO. DATE BANK AMOUNT - 01 25-11-2008 AXIS BANK DEWAS 4,00,000/- 02 03-02-2009 AXIS BANK DEWAS 4,17,280/- 03 19-02-2009 AXIS BANK DEWAS 1,91,499/- 04 25-02-2009 AXIS BANK DEWAS 36,73,650/- TOTAL 46,82,429/- SUBSIDY OF SEED CERTIFICATION IS PAID BY MADHYA PRA DESH KISAN KALYAN AND KRISHI VIKAS VIBHAG, BHOPAL. SUBSIDY IS FIXED @ RS. 500/- PER QUINTAL FROM WHICH RS. 400/- IS MEANT FOR PAYMENT TO FARMERS WHO TAKE PART IN SEED CERTIF ICATION PROGRAM AND SUPPLY SEED TO THE APPELLANT AND REMAINING RS. 100/ IS MEANT FOR TAKING CARE THE ADMINISTRATIVE EXPENDITURE OF THE SOCIETIE S. THE SUBSIDY IS RELEASED ON THE BASIS OF SUPPLIES MA DE BY THE SOCIETY IN THE YEAR. ON THE BASIS OF SUPPLY OF SEEDS SUBSIDY I S CALCULATED AND IN THE SANTOSH BEEJ UTPADAK SAHAKATI SANSTHA MYDT ITA NO.704/IND/2017 7 DUE COURSE PAID TO THE SOCIETIES. SUCH PAYMENT OF S UBSIDIES ON SEED SUPPLY TAKES ONE OR TWO YEARS OF RELEASE FROM THE S TATE GOVERNMENT DEPARTMENT. AFTER RECEIVING SUBSIDY BY THE SEED CERTIFICATION S OCIETIES, THE FARMERS' SHARE OF RS. 4001- PER QUINTAL IS PAID AS PER THEIR SUPPLIES AND AFTER MAKING PAYMENT TO THE FARMERS, THE BALANCE PORTION OF RS. 1001- PER QUINTAL IS RECOGNIZED BY THE APPELLANT AS ITS INCOM E. DURING THE YEAR UNDER CONSIDERATION, THE AFORESAID AMOUNT OF SUBSID Y RS. 46,82,429/- WAS RECEIVED BY THE APPELLANT PERTAINING TO EARLIER YEARS AND THE SAME WAS PAID IN THE NEXT FINANCIAL YEAR I.E. 2009-10. THEREFORE, THE AFORESAID AMOUNT OF RS. 46,82,429/- IS SHOWN AS LIABILITY BY THE APPELLANT IN ITS BALANCE SHEET AS OF 31-03-2009 . FARMERS' SHARE @ RS. 400/- PER QUINTAL FROM THE AFORESAID AMOUNT OF RS. 46,82,429/- WAS PAID DURING THE FINANCIAL YEAR 2009-10 AND AN AMOUN T OF RS. 31,89,3811- SHOWN IN PROFIT AND LOSS ACCOUNT ALONG WITH OTHER PAYMENT OF SUBSIDIES TO THE FARMERS. DURING THE FINANCIAL YEAR 2008-09 I.E. AY 2009-10 A SUM OF RS. 22,33,6701- WAS SHOWN AS SUBSIDY INCOME IN THE PROFIT AND LOSS ACCOUNT OF THE APPELLANT. AS PER SCHEDULE - 1 'CURRENT LIABILITIES' OF THE BALANCE SHEET AS OF 31 -03- 2009 WHEREIN A SUM OF RS. 5(77,169/- IS SHOWN AS SUBSIDY PAYABLE BREAK-UP OF WHICH IS AS UNDER: C. OPENING BALANCE ON 01-04-2008 RS.4,94 ,740/- D. SUBSIDY RECEIVED DURING THE YEAR RS.46,82 ,429/- TOTAL RS.52,77,169/- THEREFORE, IN VIEW OF THE ABOVE, IT IS CLEAR THAT T HE SUM 0 46,82,429/ ... IS SANTOSH BEEJ UTPADAK SAHAKATI SANSTHA MYDT ITA NO.704/IND/2017 8 LIABILITY AND NOT INCOME OF THE YEAR. THE INCOME OF :: THE YEAR I.E. RS. 22,33,670/- IS DULY SHOWN IN THE PROFIT AND LO ACCOUNT OF THE A PPELLANT. THE PAYMENT OF SUBSIDY HAS BEEN DULY SUPPORTED BY E VIDENCES REGARDING PAYMENT OF SUBSIDY AMOUNT FROM THE ABOVE TO THE FAR MERS IN THE NEXT FOLLOWING YEAR I.E. FY 2009-10. THE APPELLANT FURNI SHED THE COPIES OF VOUCHERS DULY RECEIPTED BY THE FARMERS AND BENEFICI ARIES WHO HAVE RECEIVED SUBSIDY PAYMENT @ 4001- PER QUINTAL FROM THE APPELLANT. THE LEDGER ACCOUNT 'UPSANCHALAK KRISHI (SUBSIDY) AND 'S UBSIDY' ACCOUNT WHEREIN, YOUR HONOR WILL FIND THAT AFTER PAYMENT OF SUBSIDY TO THE FARMERS, REMAINING AMOUNT OF RS. 31,89,381.15 IS SH OWN AS INCOME IN THE PROFIT AND LOSS ACCOUNT FOR THE YEAR 2009-10 HA S BEEN FURNISHED. THE ABOVE EVIDENCES HAVE BEEN FORWARDED TO THE AO F OR HIS COMMENTS. THE AO IN THE REMAND REPORT SUBMITTED ONLY THAT THE EVIDENCES HAVE NOT BEEN SUBMITTED DURING THE COURSE OF ASSESSMENT PROC EEDINGS. THE AO HAS NOT MADE ANY ADVERSE COMMENTS ON THE SUBMISSION MADE BY THE APPELLANT. THEREFORE, THE ADDITION MADE BY THE AO A MOUNTING TO RS. 46,82,429/- IS DELETED. THEREFORE, THE APPEAL ON THIS GROUND IS ALLOWED. THE ABOVE FINDING OF FACT HAS NOT BEEN CONTROVERTE D BY THE REVENUE AUTHORITIES BY PLACING ANY ADVERSE MATERIAL ON RECORDS AND THE SAME IS VERIFIABLE FROM THE FINANCIAL STATEMENT S PLACED IN THE PAPER BOOK. WE THEREFORE FIND NO REASON TO INTERFE RE IN THE FINDINGS OF LD. CIT(A) OF DELETING OF RS.46,82,429/-. GROUN D NO.1 OF REVENUES APPEAL STANDS DISMISSED. SANTOSH BEEJ UTPADAK SAHAKATI SANSTHA MYDT ITA NO.704/IND/2017 9 10. APROPOS GROUND NO.2 WHEREIN THE REVENUE CHALLEN GED THE DELETION OF RS.2,37,00,000/- ON ACCOUNT OF WITHDRAW AL. WE FIND THAT THERE IS NO DISPUTE BY THE REVENUE AUTHORITIES THAT THE ALLEGED AMOUNT WAS WITHDRAWN FROM THE BANK ACCOUNT OF THE S OCIETY WHEREIN REGULAR SALES ARE CREDITED. MERELY MAKING A WITHDRAWAL OF CASH FROM THE BANK CANNOT GIVE IT A SHAPE OF UNEXP LAINED CREDIT AS MADE BY THE LD. A.O. LD. CIT(A) HAS RIGHTLY APPREC IATED THE FACT THAT THE ALLEGED AMOUNT WITHDRAWN FROM THE BANK FOR MAKING PAYMENT TO THE FARMERS CANNOT BE TREATED AS INCOME OF THE APPELLANT. WE FIND NO INCONSISTENCY IN THE FINDING OF LD. CIT(A). GROUND NO.2 OF THE REVENUE STANDS DISMISSED. 11. APROPOS GROUND NO.3 BY WHICH THE REVENUE CHALLE NGED THE ADDITION OF RS. 6,36,33,239/- ON ACCOUNT OF CREDITO RS. RECORDS SHOWS THAT AS ON 31.03.2009 UNDER THE HEAD SCHEDULE -I FOR CURRENT LIABILITIES AN AMOUNT OF RS.6,46,48,296/- HAS BEEN SHOWN IN THE AUDITED BALANCE SHEET WHICH INCLUDES THE SUBSIDY PA YABLE OFRS.51,77,169/- AND THE SUNDRY CREDITORS OF GOODS AT RS.5,94,71,127/-. SANTOSH BEEJ UTPADAK SAHAKATI SANSTHA MYDT ITA NO.704/IND/2017 10 12. LD. A.O ON THE BASIS OF THE DIRECTION GIVEN IN THE ORDER U/S 263 OF THE ACT MADE AN ADDITION FOR UNEXPLAINED CAS H CREDIT OF RS.6,36,33,239/- WHICH HAS BEEN DELETED BY LD. CIT( A) MAKING FOLLOWING OBSERVATION; 6.3 GROUND NO.3 :- THROUGH THIS GROUND OF APPEAL THE APPELLANT HAS CHALLENGED THE ADDITIONOFRS.6,36,33,2391- ON AC COUNT OF CREDITORS. AS PER THE BALANCE SHEET AS OF 31-03-200 9 OF THE APPELLANT, TOTAL 'SUNDRY CREDITORS' VIDE SCHEDULE - 1 'CURRENT LIABILITIES' IS RS. 6,46,48,296/-. HOWEVER, THE ASSESSING OFFICER HAS ADDED A SUM OF RS. 6,36,33,239/- UNDER THE HEAD OF SUNDRY CREDITORS WHICH DIFFERS FROM THE AMOUNT OF THE BALA NCE SHEET OF THE APPELLANT. AS PER THE PRACTICE OF THE APPELLANT AND OTHER SEED CERTIFICATION SOCIETIES, SEEDS ARE PURCHASED IN THE SEASON WHICH IS FINANCIAL YEAREND AND KEPT IN STOCK. SEEDS ARE PURCHASED ON C REDIT AND SUCH CREDITS ARE STANDING IN THE ACCOUNT OF SUNDRY CREDITORS. FURTHER, THE CREDITORS ARE ALSO STANDING FCFR PURCH ASES MADE DURING THE YEAR WHICH ARE SOLD AND PAYMENT OF SALES ALSO RECEIVED AFTER A LONG TIME. DUE TO THIS DELAY IN THE CYCLE O F PURCHASES ON CREDIT AND SALES ON CREDIT, THE FIGURES OF SUNDRY C REDITORS PILE-UP YEAR AFTER YEAR. DURING THE YEAR UNDER CONSIDERATIO N, THE APPELLANT WAS HAVING STOCK OF RS. 3,87,72,468/- WHICH WAS ON CREDIT PURCHASES FROM THE FARMERS. APART FROM THIS, CREDIT ORS ALREADY STANDING IN THE BOOKS OF THE APPELLANT MADE THE CLO SING BALANCE AS ON 31-03-2009 TO RS. 6,46,48,296/-. SANTOSH BEEJ UTPADAK SAHAKATI SANSTHA MYDT ITA NO.704/IND/2017 11 THE ASSESSING OFFICER ADDED A SUM OF RS. 6,36,33,23 9/- UNDER THIS HEAD STATING THAT THE APPELLANT FAILS TO GET THE VE RIFICATION OF SUNDRY CREDITORS AND DID NOT OFFERED ANY EXPLANATIO N FOR THE SAME. THE SOCIETY WAS DISSOLVED ON 09-10-2013 AND THE COMPETE NT GOVERNMENT AUTHORITY CERTIFIED THAT ALL THE CLAIMS AND LIABILITIES OR THE SOCIETY WERE ALREADY PAID AND AT THE TIME OF DI SSOLUTION, THERE WAS NO DUES OVER THE APPELLANT SOCIETY. THE APPELLANT SOCIETY PAID TO ALL SUCH CREDITORS AG AINST THEIR BALANCES. THEREFORE, MAKING PAYMENT OF THE LIABILITY IN THE F OLLOWING YEARS PROVES THAT THE LIABILITY IS GENUINE AND CREATED BY A ROUTINE BUSINESS TRANSACTION. THE SOCIETY IS FORMED BY THE FARMERS FOR FARMERS AN D THEREFORE, TAKING SEEDS ON CREDIT AND MAKING PAYMENT FOR THE S AME AFTER RECEIPTS FROM SALE PROCEEDS IS A PRUDENT GENUINE BU SINESS TRANSACTION. DURING THE COURSE OF ORIGINAL ASSESSMENT PROCEEDING S, THE LEARNED ASSESSING OFFICER ASKED THE APPELLANT SOCIETY TO PR ODUCE SOME SUNDRY CREDITORS WHI9H WERE PRODUCED BEFORE HIM BUT THE SAME WERE REJECTED DUE TO UNAVAILABILITY OF ID PROOFS BY THE CREDITORS. TO ESTABLISH GENUINENESS OF THE SUNDRY CREDITORS, T HE APPELLANT SOCIETY PRESENTED THE FOLLOWING EVIDENCES A. SOCIETY DISSOLUTION CERTIFICATE STATING THAT THERE IS NO LIABILITY OF T HE SOCIETY ON THE DATE OF DISSOLUTION AND ALL EARLIER LIABILITIES HAVE BEEN DULY PAID BY THE SOCIETY. SANTOSH BEEJ UTPADAK SAHAKATI SANSTHA MYDT ITA NO.704/IND/2017 12 B. COPIES OF VOUCHERS AND LEDQERS: OF THE CREDITORS T O WHOM PAYMENTS HAVE BEEN MADE IN THE NEXT FOLLOWING YEARS JUSTIFYING THE GENUINENESS OF TRANSACTION. C. COPIES OF SAMPLE PURCHASE BILLS FROM THE FARMERS AG AINST WHICH SUCH SUNDRY CREDITORS HAVE BEEN CREATED. THEREFORE, IN VIEW OF THE ABOVE, IT IS ESTABLISHED THAT THE CREDITORS OF RS. 6,46,48,296/- ARE CREATED OUT OF GENUINE BUSINESS TRANSACTION, HAVE BEEN PAID IN THE NEXT FOLLOWING YEARS AND HAVE BEEN CERTIFIED BY ANOTHER GOVERNMENT AUTHORITY AS GENUINE LIABILIT Y OF THE SOCIETY. THEREFORE, THE ADDITION MADE BY THE AO AMOUNTING TO RS.6,36,33,239/- IS DELETED. THEREFORE, THE APPEAL ON THIS GROUND IS ALLOWED. FROM THE PERUSAL OF THE ABOVE FINDING OF LD. CIT( A), WE OBSERVE THAT SPECIFIC REFERENCE HAS BEEN MADE TO TH E DISSOLUTION CERTIFICATE OF THE SOCIETY DATED 9.10.2013 FOR THE ALLEGED CERTIFICATION THAT ALL THE CLAIMS AND LIABILITIES OF THE SOCIETY WERE ALREADY PAID AND AT THE TIME OF DISSOLUTION THERE WAS NO DUES O F THE APPELLANT SOCIETY. RIDING ON THIS OBSERVATION, LD. CIT(A) TO OK A VIEW THAT THE SUNDRY CREDITORS LIABILITY WHICH STOOD ON 31.03.200 9 MAY HAVE BEEN PAID TO THE PARTIES CONCERNED IN THE SUBSEQUENT YEA RS AND THERE WAS NO LIABILITY LEFT ON THE DATE OF THE DISSOLUTIO N. TO EXAMINE THE GENUINENESS OF THE SUNDRY CREDITORS LD. CIT(A) ALSO PERUSED THE SANTOSH BEEJ UTPADAK SAHAKATI SANSTHA MYDT ITA NO.704/IND/2017 13 COPIES OF VOUCHERS AND LEDGERS OF THE CREDITORS AN D SOME SAMPLE PURCHASE BILLS. 13. NOW AS FAR AS THE SOCIETYS DISSOLUTION CERTIFI CATE DATED 9.10.2013 (PLACED AT PAGE 86 OF THE PAPER BOOK) IS CONCERNED WHICH IS PREPARED IN HINDI AND PASSED BY THE OFFICE OF CO -OPERATIVE SOCIETY, DISTRICT DEWAS, WE FIND THAT ASSESSEE SOC IETY WAS ASKED TO APPEAR ON 8.10.2013 WITH NECESSARY DOCUMENTS TO PRO VE THAT THE SOCIETY IS REGULARLY WORKING. PUBLIC NOTICE WAS AL SO GIVEN ON 1.10.2013. ON THE DATE OF HEARING I.E ON 8.10.2013 NONE APPEARED ON BEHALF OF THE SOCIETY NOR ANY RECORDS WERE PLACE D THROUGH ANY AUTHORIZED PERSON. DUE TO SUCH NON PRESENCE AND NO N FILING OF DETAILS, OFFICER OF THE CO-OPERATIVE SOCIETY PASSED THE ORDER THAT THE SOCIETY IS NOT WORKING FOR THE PURPOSES FOR WHICH I T HAS BEEN REGISTERED AND THEREFORE THE REGISTRATION OF THE SO CIETY IS CANCELLED. IT NOWHERE TRANSPIRES FROM THE REGISTRATION CERTIFI CATE THAT THE ASSESSEE SOCIETY FURNISHED NECESSARY DETAILS TO PRO VE THAT THERE EXISTS NO ASSETS AND LIABILITIES OF THE SOCIETY AS ON THE DATE OF DISSOLUTION AND THEREFORE THE PLEA TAKEN BY THE LD . COUNSEL FOR THE ASSESSEE THAT THE CERTIFICATE DATED 9.10.2013 ALLEG EDLY CERTIFYING SANTOSH BEEJ UTPADAK SAHAKATI SANSTHA MYDT ITA NO.704/IND/2017 14 THAT ALL THE CLAIMS AND LIABILITIES OF THE SOCIETY WERE ALREADY PAID CANNOT STAND FOR. 14. FURTHER FROM PERUSAL OF THE LIST OF SUNDRY CRED ITORS PLACED AT PAGE 33 & 34 OF THE PAPER BOOK WHICH IS THE PART OF THE SCHEDULE-I OF THE AUDITED BALANCE SHEET, WE FIND THAT THE OUTS TANDING AMOUNT OF EACH OF THE CREDITORS ARE MOSTLY OF HUGE AMOUNTS RANGING FROM RS. 1 LAKH TO 90 LAKHS. IT HAS BEEN ACCEPTED BY TH E LD. COUNSEL FOR THE ASSESSEE THAT THE PAYMENTS TO ALL THESE PARTIES HAVE BEEN MADE IN CASH BUT NO CONFIRMATION HAS BEEN FILED FROM ANY OF THE PARTIES. WE CAN TAKE FEW INSTANCES OF THE FOLLOWING SUNDRY C REDITORS OF WHICH HUGE AMOUNT WAS OUTSTANDING AS ON 31.3.2009. S.NO. PARTICULARS AMOUNT 1 CHATTISGA D RAJYA BEEJ KRISHI VIBHAG RS.51,48,262 2 GANGARAM SHOBARA M NA P AK H EDI RS.11,02,000 3 KALU NAGIRKHA LO HARI RS.11,07,700 4 MAIYARAM MUNNALAL RS.14,62,800 5 RADH EYSHYAM CHANDRA SINGH RS.16,24,450 6 UP SANCHALAK DEWAS RS.77,69,592 7 SUNDRY CREDITORS FOR GOODS RS.90,79,377 THE ABOVE LIST WHICH ARE FEW OF THE TOTAL LIST OF TOTAL SUNDRY CREDITORS. IT IS APPARENTLY NOT EASY FOR US TO ACC EPT THE GENUINENESS OF THE SUNDRY CREDITORS AS THE CASH PAYMENTS WERE M ADE TO THEM BECAUSE THERE IS NO EVIDENCE PLACED ON RECORD IN TH E SHAPE OF SANTOSH BEEJ UTPADAK SAHAKATI SANSTHA MYDT ITA NO.704/IND/2017 15 CONFIRMATION LETTER, PERMANENT ACCOUNT NUMBER AND I DENTITY PROOF. 15. THE BASIS TAKEN BY LD. CIT(A) TO DELETE THE ADD ITION FOR THE UNEXPLAINED CASH CREDITS, IN OUR VIEW REQUIRES ONE MORE ROUND OF EXAMINATION WITH THE DIRECTION TO THE ASSESSEE TO P LACE EVIDENCE ON RECORD TO PROVE THE GENUINENESS OF THE SUNDRY CREDI TORS FOR THE PURCHASES MADE BY THEM AND ALSO TO PROVE THAT PAYME NTS HAVE BEEN MADE TO THEM. IF NECESSARY LD. CIT(A) MAY CAL L FOR A REMAND REPORT FROM ASSESSING OFFICER. TO CARRY OUT THIS EX ERCISE WE SET ASIDE THE ISSUE RAISED IN GROUND NO.3 OF THE REVENU ES APPEAL TO THE FILE OF LD. CIT(A) FOR AFRESH ADJUDICATION AND ALSO DIRECT THE ASSESSEE TO REMAIN PRESENT ON THE DATE OF HEARING WITH NECES SARY DETAILS TO EXPLAIN THE GENUINENESS OF SUNDRY CREDITORS. GROUN D NO.3 IS ALLOWED FOR STATISTICAL PURPOSES. 16. IN THE RESULT APPEAL OF THE REVENUE IS PARTLY A LLOWED FOR STATISTICAL PURPOSES. THE ORDER PRONOUNCED IN THE OPEN COURT ON 22.03.201 9. SD/- SD/- ( KUL BHARAT) (MANISH BORAD) JUDICIAL MEMBER ACCOUNTANT MEMBER / DATED : 22 MARCH, 2019 /DEV COPY TO: THE APPELLANT/RESPONDENT/CIT CONCERNED/CIT (A) CONCERNED/ DR, ITAT, INDORE/GUARD FILE. BY ORDER, ASSTT.REGISTRAR, I.T.A.T., INDORE