The ACIT, Circle-4, Baroda V. M/s. Shreenath Plastopack Pvt.Ltd., Baroda

ITA 730/AHD/2009

• Counselvise Citation: 73020514 RSA 2009
• Duration Of Justice: 3 year(s) 1 month(s) 24 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-04-2012
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: D
• Next Hearing Date: 23-04-2012
• Assessment Year: 2005-2006
• Appeal Filed On: 05-03-2009
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: B L YADAV SRDR
• Assessee Lawyers: M K PATEL
• Keywords: Opportunity of being heard; Additional evidence
• Section: 133(6); 69

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD BENCH D AHMEDABAD BEFORE SHRI D.K. TYAGI, HONBLE JUDICIAL MEMBER AND SHRI A.K.GARODIA, HONBLE ACCOUNTANT MEMBER ITA NO.730/AHD/2009 & CO NO.86/AHD/2009 (ARISING OUT ITA NO.730/AHD/2009) ASSESSMENT YEAR:2005-06 ASST. COMMISSIONER OF INCOME TAX, CIRCLE-4, BARODA SHREENATH PLASOPACK PRIVATE LTD. C-1/119-121 GIDC ESTATE, WAGHODIA, DIST. BARODA PAN NO.AADCS3113J V/S. V/S. M/S SHREENATH PLASTOPACK P LTD., C-1/119-121 GIDC ESTATE, WAGHODIA, BARODA ACIT, CIRCLE-4, 4 TH FLOOR, AAYAKAR BHAVAN, RACE COURSE CIRCLE, BARODA - 390007 (APPELLANT) .. (RESPONDENT) /BY ASSESSEE SHRI M.K. PATEL, AR /BY REVENUE SHRI B.L. YADAV, SR-DR /DATE OF HEARING 23-04-2012 /DATE OF PRONOUNCEMENT 27-04-2012 O R D E R PER D.K. TYAGI, JUDICIAL MEMBER:- THIS APPEAL BY THE REVENUE AND CROSS OBJECTION (CO FOR SHORT) BY THE ASSESSEE ARE ARISING OUT OF THE ORDER OF COMMISSION ER OF INCOME- TAX(APPEALS)-III, BARODA IN APPEAL NO.CAB/III-229/0 7-08 DATED 18-12-2008. THE ASSESSMENT WAS FRAMED BY THE ITO, WARD-4(3) BAR ODA U/S.143(3) OF THE INCOME-TAX ACT, 1961 (HEREINAFTER REFERRED TO AS T HE ACT) VIDE HIS ORDER DATED 10-12-2007 FOR THE ASSESSMENT YEAR 2005-06. ITA NO. 730/AHD/2009 & CO 86/AHD/2009 A. Y.2005-06 ACIT CIR-4, BRD V. M/S SHREENATH PLASTOPACK P LTD. PAGE 2 FIRST WE TAKE UP REVENUES APPEAL IN ITA NO.730/AHD /2009. 2. THE REVENUE HAS TAKEN EFFECTIVE GROUND AS UNDER: - 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE, THE LEARNED CIT(A) ERRED IN SCALING DOWN THE ADDITION ON ACCOUNT OF DI FFERENCE IN THE LEDGER ACCOUNT OVER LOOKING THE FACT THAT ASSESSEE HAD ADM ITTED AS PER PROCEEDING SHEET DATED 26.11.2007 THAT THE COULD NOT GIVE PROP ER RECONCILIATION IN RESPECT OF ENTRIES IN THE LEDGER ACCOUNT OBTAINED FROM WORL D TRADE IMPEX PT. LTD. U/S. 133(6) OF THE INCOME TAX ACT, 1961. 3. THIS GROUND RELATES TO ADDITION OF RS.22,63,833/ - MADE BY ASSESSING OFFICER ON ACCOUNT OF DIFFERENCE IN RESPECT OF ACCO UNT WITH M/S WORLD TRADE IMPEX LTD.(WTIL FOR SHORT) WHICH HAS BEEN REDUCED T O RS.2,37,166/- BY LD. CIT(A). THE BRIEF FACTS ARE THAT DURING THE COURSE OF ASSESSMENT PROCEEDINGS, ASSESSING OFFICER ASKED FOR COPY OF THE LEDGER ACCO UNT OF THE ASSESSEE APPEARING IN THE BOOKS OF ACCOUNT OF WTIL U/S. 133( 6) OF THE ACT. ON PERUSAL OF THE SAME, IT WAS NOTICED THAT THE CLOSING BALANC E OF THAT ACCOUNT AS ON 31 ST MARCH, 2005 WAS NOT TALLYING. THE ASSESSEE WAS ASKE D TO RECONCILE THE SAME. IN THE ABSENCE OF ANY REPLY FROM THE ASSESSEE, THE AO ADDED THE DIFFERENCE OF RS.22,63,833/- TO THE TOTAL INCOME OF THE ASSESSEE. 4. BEFORE LD. CIT(A) THE CONTENTION OF THE ASSESSEE WAS THAT BOOKS OF ACCOUNT OF THE ASSESSEE ARE AUDITED UNDER BOTH THE COMPANYS ACT AS WELL AS UNDER INCOME-TAX ACT. THE ENTRIES PERTAINING TO ALL TRANSACTIONS WITH WTIL WERE DULY REFLECTED IN THE BOOKS OF ACCOUNT OF THE ASSESSEE AND THE BOOKS WERE CORRECT AND COMPLET IN ALL RESPECTS. ONCE THE BOOK RESULTS ARE ACCEPTED, IT WOULD BE INCORRECT TO MAKE THE ADDITION IN THE H ANDS OF THE ASSESSEE ON THE BASIS OF DIFFERENCE ATTRIBUTABLE TO ANOTHER PARTY. THE DIFFERENCE MIGHT NOT HAVE BEEN RECORDED IN THE BOOKS OF WTIL IN THEIR BOOKS O F ACCOUNT. AS PER THE ASSESSEE THE DIFFERENCE WAS QUANTIFIED AT RS.2,37,1 66/- AND NOT RS.22,63,833/- AS WORKED OUT BY THE AO. IT WAS REQU ESTED THAT ADDITION DESERVES TO BE DELETED. THIS ADDITIONAL EVIDENCE WI TH REGARD TO RECONCILIATION ON CLOSING STOCK IN RESPECT OF ACCOUNT OF WTIL WAS SENT TO AO BY THE LD. CIT(A) FOR HIS REMAND REPORT. IN THE REMAND REPORT, THE AO DEFENDED THE ITA NO. 730/AHD/2009 & CO 86/AHD/2009 A. Y.2005-06 ACIT CIR-4, BRD V. M/S SHREENATH PLASTOPACK P LTD. PAGE 3 ADDITION MADE BY HIM. THE ASSESSEES CONTENTION WAS THAT DIFFERENCE IN THE ACCOUNT OF THE ASSESSEE-COMPANY VIS--VIS THE ACCOU NT OF THE WTIL WAS TO THE TUNE OF RS.2,37,166/- ONLY AND IN SUPPORT OF WH ICH NECESSARY DETAILS WERE ALSO FILED BEFORE LD. CIT(A). 5. AFTER TAKING INTO CONSIDERATION THE SUBMISSION O F THE ASSESSEE LD. CIT(A) RESTRICTED THIS ADDITION TO RS.2,37,166/- BY OBSERVING AS UNDER VIDE PARA-4.3 OF HIS ORDER:- 4.3 I HAVE CONSIDERED THE SUBMISSIONS OF THE COUNS EL AND FACTS OF THE CASE. THE ASSESSING OFFICER MAD THE ADDITION WITHOUT DISC USSING THE FIGURES AS TO HOW HE ARRIVED AT THE DIFFERENCE OF RS.20,231,333/- AND RS.2,21,500/-. IN THE PAPER BOOK SUBMITTED IT IS SEEN THAT AS PER REPLY D ATED 30 TH NOVEMBER, 2007 TO THE ASSESSING OFFICER, THE APPELLANT SUBMITTED A CHART BY WHICH THE CLOSING BALANCE AS PER APPELLANTS BOOKS OF ACCOUNT AND CLO SING BALANCE AS PER WTIL BOOKS OF ACCOUNT WERE SUBMITTED AND AS PER THAT THE APPELLANT WAS MAINTAINING TWO ACCOUNTS IN RESPECT OF WTIL, BARODA AND ONE ACCOUNT IN RESPECT OF WTIL, MUMBAI (LOAN ACCOUNT). AS AGAINST THIS WTIL WAS MAINTAINING ONLY ONE ACCOUNT AT BARODA AND ONE AT M UMBAI. HE DETAILS OF THESE ACCOUNTS ARE AS UNDER: CLOSING BALANCE AS PER OUR BOOKS OF ACCOUNTS CLOSING BALANCE AS PER ACCOUNT OF WTIL DIFFERENCE WTIL 2,01,01,325.12 2,21,42,658.93 WTIL MUMBAI (LOAN ACCOUNT) 43,63,450.64 45,84,950.64 WTIL (LOAN ACCOUNT) 25,00,000,00 0 TOTAL 2,69,64,775.76 2,67,27,609.57 2,37,166.19 IN VIEW OF THE ABOVE, IT IS CLEAR THAT THE NET DIFF ERENCE BY TAKING ALL THE ACCOUNTS MAINTAINED BY THE APPELLANT AND WTIL COMES TO RS.2,37,166/-. THIS DIFFERENCE IS NOT EXPLAINED BY THE APPELLANT AND TH EREFORE, THE SAME IS TO BE ADDED AS APPELLANTS INCOME. CONSIDERING THIS THE D ISALLOWANCE MADE BY THE ASSESSING OFFICER IS RESTRICTED TO RS.2,37,166/- WH ICH REMAINED UNRECONCILED. THE BALANCE ADDITION IS DELETED. 6. AGGRIEVED BY THIS ORDER OF THE LD. CIT(A) REVENU E IS IN APPEAL BEFORE US. 7. AT THE TIME OF HEARING LD. SR-DR VEHEMENTLY ARGU ED AND SUPPORTED THE ORDER PASSED BY ASSESSING OFFICER AND FURTHER SUBMI TTED THAT WHILE AO WAS ITA NO. 730/AHD/2009 & CO 86/AHD/2009 A. Y.2005-06 ACIT CIR-4, BRD V. M/S SHREENATH PLASTOPACK P LTD. PAGE 4 ASKED TO GIVE HIS COMMENTS ON THE SUBMISSION OF THE ASSESSEE. THE AO HAS DEFENDED THE ADDITION MADE BY HIM AND THEREFORE THE ORDER PASSED BY AO MAY KINDLY BE UPHELD AND THAT OF LD. CIT(A) MAY KIN DLY BE SET ASIDE. 8. LD. COUNSEL FOR THE ASSESSEE ON THE OTHER HAND P LACING RELIANCE ON THE SUBMISSION MADE BEFORE LD. CIT(A) AND THE ORDER OF LD. CIT(A) FURTHER RELIED ON THE ASSESSMENT ORDER PASSED BY REVENUE IN THE CA SE OF WTIL IN WHICH ALSO IT WAS HELD THAT THERE WAS DIFFERENCE OF RS.2, 37,166/- ONLY BETWEEN THE ACCOUNTS OF THE ASSESSEE AND THE WTIL AND THEREFORE THE LD. CIT(A) HAS RIGHTLY RESTRICTED THIS ADDITION TO RS.2,37,166/- I N HIS ORDER AND SAME MAY KINDLY BE UPHELD. 9. HEARD BOTH THE PARTIES AND PERUSED THE MATERIALS AVAILABLE ON RECORD. WE FIND THAT FROM PAGES 81 TO 84 OF THE PAPER BOOK SUBMITTED BY ASSESSEE, THE ASSESSMENT ORDER DATED 30-11-2007 PASSED IN THE CASE OF WTIL IS AVAILABLE PARAS-3.3 AND 3.4 OF THIS ORDER READ AS U NDER:- 3.3 ON PERUSAL OF THE DETAILS FILED BY THE ASSESSE E COMPANY, IT IS SEEN THAT IT HAS ENTERED INTO CERTAIN TRANSACTIONS WITH AN ASSOC IATE CONCERN, M/S. SHREENATH PLASTOPACK PRIVATE LTD., A SUMMON U/S. 13 1 OF THE ACT WAS ISSUED ON 19-11-2007 TO M/S. SHREENATH PLASTOPACK PVT. LTD . TO PRODUCE THE COPY OF ACCOUNT OF THE ASSESSEE COMPANY AS APPEARING IN THE IR BOOKS OF ACCOUNT FOR FY 2004-05, RELEVANT TO THE A.Y. 2005-06. IN RESPON SE TO THE SAID SUMMONS, M/S. SHRENATH PLASTOPACK PVT. LTD., SUBMITTED THE C OPIES OF ACCOUNT VIDE THEIR LETTER DTD. 26-11-2007. IT IS SEEN THAT THERE WAS A DISCREPANCY IN THESE ACCOUNT AS SUBMITTED BY M/S SHREENATH PLASTOPACK PV T. LTD. VIS--VIS THE ACCOUNTS, AS APPEARING IN THE BOOKS OF THE ASSESSEE COMPANY. THESE ARE TABULATED AS UNDER: ANALYSIS OF ACCOUNT OF SHREENATH PLAATOPACK PVT. LT D. CL. BAL. AS PER B/SHREE OF ASSESSEE COMPANY RS. CL.BALANCE AS PER ACCOUNT OF SNPP RS. DIFFERENCE RS, WTI.LTD 2,21,42,658.93 2,01,01,325.12 W.T.I.L. MUMBAI LOAN ACCOUNT 45,84,950.64 43,63,450.64 WTIL 000 25,00,000 TOTAL 2,67,27,609.57 2,69,54,775.76 RS.2,37,166.19 ITA NO. 730/AHD/2009 & CO 86/AHD/2009 A. Y.2005-06 ACIT CIR-4, BRD V. M/S SHREENATH PLASTOPACK P LTD. PAGE 5 3.4 THE ASSESSEE COMPANY HAS NOT BEEN ABLE TO EXPLA IN THE DIFFERENCE OF RS.2,37,166/- AS PER THE CHART TABULATED ABOVE. IT IS, THEREFORE, CLEAR THAT THE BOOKS OF ACCOUNT OF THE ASSESSEE COMPANY ARE INCOMP LETE IN AS MUCH AS THE CORRECT PROFIT OF THE BUSINESS CANNOT BE DERIVED TH EREFROM. IT IS CLEAR FROM THE ABOVE THAT IN THE CASE OF WTIL THE REVENUE HAS ACCEPTED THAT THERE WAS A DISCREPANCY IN THE ACCOUNTS OF THE ASSESSEE AND WTIL TO THE EXTENT OF RS.2,37,166/- ONLY AND NOT OF RS.22,63,83 3/-. IN VIEW OF THIS UNDISPUTED FINDING OF THE REVENUE IN THE CASE OF WT IL WE FIND NO FAULT WITH THE ORDER OF LD. CIT(A) IN RESTRICTING THIS ADDITIO N TO RS.2,37,166/- ON ACCOUNT OF DIFFERENCE IN RESPECT OF ACCOUNT WITH WTIL AND T HEREFORE THE ORDER PASSED BY LD. CIT(A) IS HEREBY UPHELD. THIS GROUND OF REVE NUES APPEAL IS DISMISSED. COMING TO ASSESSEES CO NO.86/AHD/2009. 10. THE ONLY EFFECTIVE GROUND TAKEN BY THE ASSESSEE IN ITS CO RELATES TO ADDITION OF RS.8 LAKH MADE BY ASSESSING OFFICER U/S 69 OF THE ACT WHICH HAS BEEN CONFIRMED BY LD. CIT(A). 11. THE BRIEF FACTS OF THE CASE ARE THAT DURING THE ASSESSMENT PROCEEDINGS ASSESSING OFFICER OBSERVED THAT ASSESSEE HAS ACCEPT ED UNSECURED LOAN OF RS.8 LAKH. THE ASSESSEE WAS ASKED TO PROVIDE THE DE TAILS OF UNSECURED LOAN ACCEPTED ALONG WITH CONFIRMATION FROM THE DEPOSITOR WITH NAME AND ADDRESS, PAN NO. AND MODE OF PAYMENT. IT WAS INFORMED BY THE ASSESSEE THAT IN THE SCHEDULE OF UNSECURED LOAN FORMING PART OF AUDITED ACCOUNTS THE NAME OF THE DEPOSITOR IS INCORRECTLY STATED AS SHRI AMANVEER SI NGH. IN FACT, THE LOAN OF RS.8 LAKH HAS BEEN TAKEN FROM MS. MANJIT KAUR. A SU MMON WAS ISSUED TO MS MANJIT KAUR ASKING DETAILS FOR BOOKS OF ACCOUNT, CE RTIFIED COPY OF BANK ACCOUNT PARTICULARS OF ASSESSMENT OF INCOME PAN ETC. HOWEVE R, MS MANJIT KAUR FAILED TO ATTEND AND FURNISH THE REQUISITES DETAILS BEFORE THE ASSESSING OFFICER. ACCORDINGLY, THE AO DISALLOWED RS.8 LAKH TREATING I T AS NON-GENUINE AND ADDED TO THE TOTAL INCOME OF THE ASSESSEE. ITA NO. 730/AHD/2009 & CO 86/AHD/2009 A. Y.2005-06 ACIT CIR-4, BRD V. M/S SHREENATH PLASTOPACK P LTD. PAGE 6 12. BEFORE LD. CIT(A) THE CONTENTION OF THE ASSESSE E WAS THAT AMOUNT WAS RECEIVED BY HIM FROM MS MANJIT KAUR BY WAY OF ACCOU NT PAYEE CHEQUE, COPY OF WHICH WAS FILED BEFORE LD. CIT(A) CONFIRMATION O F THE DEPOSITOR WAS ALSO FILED AND THEREFORE IT WAS CONTENDED THAT SINCE ASS ESSEE HAS DISCHARGED THE ONUS U/S.68 OF THE ACT THE ADDITION MADE BY AO MAY KINDLY BE DELETED. LD. CIT(A) HOWEVER, CONFIRMED THE ACTION OF AO BY OBSER VING AS UNDER:- 5.3 I HAVE CONSIDERED THE SUBMISSIONS OF THE COUNSE L AND FACTS OF THE CASE. THE APPELLANT HAS SHOWN THE LOAN TAKEN OF RS. 8 LAC S FROM MANJIT KAUR. I HAVE GONE THROUGH THE CONFIRMATION GIVEN BY THE APPELLAN T WHICH IS WITHOUT PAN. ON VERIFICATION BY THE ASSESSING OFFICER, THE DEPOS ITOR DID NOT TURN UP., THE APPELLANT MADE NO EFFORTS TO PRODUCE THE DEPOSITOR. THE PRIMARY ONUS ON THE APPELLANT IS TO SUBMIT CONFIRMATION OF THE DEPOSITO R WITH PAN. IN THE ABSENCE OF THE DEPOSITORS PAN, CREDITWORTHINESS IS NOT PRO VED. IN VIEW OF THIS, THE APPELLANT HAS NOT DISCHARGED ITS ONUS AT ALL. IN VI EW OF THE FACTS NARRATED BY THE ASSESSING OFFICER, THE CREDIT BECOMES UNEXPLAIN ED SINCE CREDITWORTHINESS OF THE LENDER IS NOT PROVED. THE DECISION RELIED UP ON BY THE APPELLANT HAS NOT APPLICABLE SINCE THE APPELLANT IS NOT DISCHARGED IT S ONUS AT ALL. THE ADDITION IS CONFIRMED IN VIEW OF THIS. 13. FURTHER, AGGRIEVED NOW THE ASSESSEE IS IN APPEA L BEFORE US. 14. AT THE TIME OF HEARING LD. COUNSEL FOR THE ASSE SSEE SUBMITTED THAT ONLY GROUND ON WHICH LD. CIT(A) HAS CONFIRMED THE ADDITI ON MADE BY ASSESSING OFFICER IS DUE TO THE FACT THAT ALONG WITH CONFIRMA TION LETTER PAN DETAILS WERE NOT FILED BEFORE HIM. THE COPY OF THE SAME WAS FILE D NOW BEFORE US AND IT WAS PRAYED THAT NOW THE ADDITION MADE BY AO AND SUSTAIN ED BY LD. CIT(A) MAY KINDLY BE DELETED. 15. LD. SR-DR ON THE OTHER HAND ARGUED THAT SINCE P AN WAS NOT BEFORE THE AUTHORITIES BELOW THE MATTER MAY BE RESTORED BACK T O THE FILE OF AO FOR FRESH ADJUDICATION AFTER VERIFYING THE PAN DETAILS NOW FI LED BEFORE THE TRIBUNAL. 16. HEARD BOTH THE PARTIES AND PERUSED THE RECORD A ND WE FIND THAT ASSESSING OFFICER HAS MADE THIS ADDITION OF RS.8 LA KH AS BEFORE HIM THE NECESSARY DETAILS IN SUPPORT OF THE CLAIM THAT THIS AMOUNT WAS RECEIVED BY ASSESSEE FROM MS. MANJIT KAUR WERE NOT FILED BY ASS ESSEE. BEFORE LD. CIT(A) ITA NO. 730/AHD/2009 & CO 86/AHD/2009 A. Y.2005-06 ACIT CIR-4, BRD V. M/S SHREENATH PLASTOPACK P LTD. PAGE 7 CONFIRMATION OF MS MANJIT KAUR AND COPY OF ACCOUNT PAYEE CHEQUE WAS FILED. HOWEVER, LD. CIT(A) DID NOT GIVE RELIEF TO THE ASSE SSEE AS HE WAS OF THE VIEW THAT UNLESS DEPOSITORS PAN IS ON RECORD CREDITWORT HINESS OF THE DEPOSITOR CANNOT BE VERIFIED AND THEREFORE THE ASSESSEE HAS N OT DISCHARGED ITS ONUS ABOUT THE CREDITWORTHINESS OF THE DEPOSITOR. SINCE THE COPY OF PAN OF MS MANJIT KAUR HAS BEEN FILED BY ASSESSEE BEFORE US WE DEEM IT PROPER THAT MATTER BE SENT BACK TO THE FILE OF ASSESSING OFFICE R FOR FRESH ADJUDICATION AFTER VERIFYING THE PAN DETAILS OF THE DEPOSITOR AND AFTE R SATISFYING HIMSELF ABOUT THE CREDITWORTHINESS OF THE DEPOSITOR. NEEDLESS TO SAY AO WILL PROVIDE REASONABLE OPPORTUNITY OF BEING HEARD TO ASSESSEE. THIS GROUND OF ASSESSEES CO IS ALLOWED FOR STATISTICAL PURPOSES. 17. IN THE RESULT, APPEAL OF REVENUE IS DISMISSED AND T HAT OF ASSESSEES CO IS ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN OPEN COURT ON THE DATE MENTIONE D HEREINABOVE AT CAPTION PAGE. SD/- SD/- (A.K.GARODIA) (D.K. TYAGI) (ACCOUNTANT MEMBER) (JUDICIAL MEMBER) AHMEDABAD, *DKP - 27/04/2012 '#$ % & ' ' ' ' ())*+, ())*+, ())*+, ())*+, '-+ '-+ '-+ '-+ / COPY OF ORDER FORWARDED TO:- 1. ',/* 01 / APPELLANT 2. (2301 / RESPONDENT 3. %)5 3 36 / CONCERNED CIT 4. 3 36- ',/* / CIT (A) 5.+8 9/3 ()))5, 3 ',/*/3 ')5, '#$ % /DR, ITAT, AHMEDABAD 6. 9 <= > ?* / GUARD FILE. BY ORDER/ ' , /TRUE COPY/ @,/# 3 , / 3 ',/*/3 ')5, '#$ % &