DCIT, Ludhiana V. Sh. Suraj Dev Dada, Ludhiana

ITA 732/CHANDI/2017

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 5086 (ITAT-CHANDIGARH)
• Duration Of Justice: 2 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 04-07-2017
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: Not Allotted
• Assessment Year: 2013-2014
• Appeal Filed On: 27-04-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: CHANDRA KANTA
• Keywords: Business income
• Section: 68

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DIVISION BENCH, CHANDIGARH BEFORE MS. DIVA SINGH, JUDICIAL MEMBER AND SHRI B.R.R. KUMAR, ACCOUNTANT MEMBER ITA NO.732/CHD/2017 ASSESSMENT YEAR: 2013-14 THE DCIT VS. SH. SURAJ DEV DADA CIRCLE 5 PROP. M/S DADA MOTORS LUDHIANA SAVITRI COMPLEX, DHOLEWAL CHOWK LUDHIANA PAN NO. ABPPD2272B (APPELLANT) (RESPONDENT) ASSESSEE BY : SH. PARIKSHIT AGGARWAL REVENUE BY : MS. CHANDRAKANTA DATE OF HEARING : 27/06/2017 DATE OF PRONOUNCEMENT : 04/07/2017 ORDER PER B.R.R. KUMAR A.M. THIS APPEAL HAS BEEN FILED BY THE REVENUE AGAINST THE ORDER OF THE LD. CIT(A)-2, LUDHIANA DT. 03/02/2017. 2. REVENUE HAS RAISED THE FOLLOWING GROUNDS OF APPE AL: 1. THAT THE WORTHY CIT(A)-2, LUDHIANA HAS ERRED ON THE FACTS AS WELL AS IN LAW IN DELETING ADDITION OF RS. 2,04,38,739/- MADE ON A CCOUNT OF DISALLOWANCE OF SUNDRY CREDITOR U/S 68 OF THE I.T. ACT, 1961. 2. THAT THE WORTHY CIT(A)-2, LUDHIANA HAS NOT APPRE CIATED THE FACTS THAT INSPITE OF PROVIDING VARIOUS OPPORTUNITIES, THE ASS ESSEE WAS NOT ABLE TO PROVIDE CONFIRMATION OF CREDITORS AMOUNTING TO RS. 2,04,38, 739/- 3. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE HA D FILED ITS RETURN OF INCOME DECLARING INCOME OF RS. 2,01,11,910/- ON 03/09/2013 . THE ASSESSEE IS ENGAGED IN TRADING OF VEHICLES AND SPARE PART, RUNNING OF VEHI CLE WORKSHOP, INSURANCE COMMISSION, DMA COMMISSION FROM BANKS AND FINANCE C OMPANIES UNDER PROPRIETOR CONCERN M/S DADA MOTORS. 4. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE AO OBSERVED THAT THE ASSESSEE HAD SHOWN CURRENT LIABILITIES & PROVISIONS UNDER SCHEDULE-10 AT RS. 67.90 CRORES. DURING THE ASSESSMENT PROCEEDING THE ASSESSEE WAS ASKED TO FURNISH THE FOLLOWING DETAILS: 3. CURRENT LIABILITIES:- 2 AS PER BALANCE SHEET AS ON 31/03/2013 CURRENT LIABI LITIES AND PROVISIONS HAVE BEEN SHOWN AT RS. 68,51,31,561/- OUT OF WHICH LIABI LITIES ARE AT RS. 67,90,97,231/-. DETAILS SHOULD BE FURNISHED AS UNDER:- I. AGE ANALYSIS OF LIABILITIES / CREDITORS YEAR WIS E SHOULD BE FURNISHED. II. NAME & ADDRESS OF THE CREDITORS ALONGWITH THEIR PAN AND NATURE OF THE OUTSTANDING BALANCE SHOULD BE FURNISHED TOGETHER WI TH COPY OF ACCOUNT. III. YOU HAVE SHOWN PROVISIONS OF RS. 60.34 LACS. D ETAILS OF BREAK-UP OF PROVISIONS CREATED SHOULD BE FURNISHED. IN RESPONSE, THE ASSESSEE PROVIDED ONLY A LIST OF S UNDRY CREDITORS TOTALING 13644 ENTRIES BUT THE ASSESSEE FAILED TO DISCHARGE THE ON US OF PROVIDING THE COMPLETE NAME & ADDRESS OF THE CREDITOR, PAN OF THE CREDITOR AND THE AGE ANALYSIS OF THE CREDITOR AND ALSO COPY OF ACCOUNT OF THE CREDITOR I .E. THE ASSESSEE HAD FAILED TO DISCHARGE THE ONUS OF PROVIDING THE IDENTITY AND GE NUINENESS OF THE CREDITORS. 4. IN RESPONSE TO THE QUERY THE ASSESSEE HAS SUBMIT TED CONFIRMATION FROM SIX PARTIES TO THE TUNE OF RS. 49.82 CRORES. FURTHER TH E ASSESSEE HAS SUBMITTED RECONCILIATION REGARDING THE CHEQUE ISSUED BUT NOT PRESENTED, SUPPLIERS ACCOUNT CONSISTING OF CREDITORS WITH CONFIRMATION COPY OF B ILLS TO ESTABLISH GENUINENESS OF TRANSACTION AND THE APPEAL OF THE CREDITOR UNCLAIME D WHICH HAVE BEEN RETURNED BACK IN THE SUBSEQUENT YEARS. HOWEVER THE ASSESSEE COULD NOT SUBMITTED THE CONFIRMATION PERTAINING TO 13644 CRED ITORS AMOUNTING TO RS. 20438739/-. THE AO HAS BROUGHT THIS AMOUNT TO TAX U NDER SECTION 68 BEING THE SUNDRY CREDITOR FOR WHICH NO CONFIRMATION HAVE BEEN FILED WITH THE ASSESSEE. 5. BEFORE THE LD. CIT(A) THE ASSESSEE HAS MADE FOLL OWING SUBMISSIONS: (4) THAT NO ADDITION HAS NEVER BEEN MADE U/S 68 OF THE INCOME TAX ACT ON THE ISSUE OF SUNDRY CREDITORS IN ANY OF THE EARLIER AND SUCCE EDING YEARS EXCEPT THE YEAR UNDER APPEAL. (5) THAT THE ONUS OF PROVING IDENTITY OF THE CREDI TORS, GENUINESS OF TRANSACTIONS AND MENTIONING OF PAN WHEREVER REQUIRED UNDER LAW DULY DISCHARGED BY THE APPELLANT BY PROVIDING POSTAL ADDRESSES, CUSTOMERS CODE AND PAN WHEREVER APPLICABLE. (6) THAT THE CONFIRMATIONS OF THE CREDITORS HAVE B EEN FURNISHED TO THE EXTENT OF RS.58.40 CRORES OUT OF 60.44 CRORES WHICH WORKS OUT TO NEARLY 97%. THIS ALSO CONFIRMS THE GENUINESS AND FLAWLESS MAINTENANCE OF ACCOUNTS OF THE SUNDRY CREDITORS AS PER THE HISTORY OF THE CASE. (7) THAT THE REMAINING CONFIRMATIONS OF RS.2.04 CRO RES COULD NOT BE FURNISHED BECAUSE OF THE PAUCITY OF TIME GIVEN BY THE A.O. FOR COMPLI ANCE OF THE STATUTORY NOTICES AND OTHER CONSTRAINTS OF THE APPELLANT BUT ALL THE CREDITORS OF RS.2.04 CRORES ARE DULY SETTLED IN THE SUCCEEDING YEARS AS BROUGHT TO THE NOTICE OF THE A. O. DURING THE ASSESSMENT PROCEEDINGS. A CHART SHOWING THE MODE OF SETTLEMENT AND THE YEAR IS ENCLOSED AS ANNEXURE 'B'FOR YOUR READY REFERENCE. (8) IT IS ALSO REITERATED THAT SECTION 68 IS NOT AP PLICABLE IN THE APPELLANT'S CASE AS ALL THE CREDITS OF RS.2.04 CRORES ARE BUSINESS RECEIPTS AS HELD BY IT AT CHANDIGARH BENCH CITED IN 132 TAXMAN 148 AND ITAT CHENNAI BENCH CITED IN 8 3 TTJ 352. 5.1 FURTHER BEFORE THE LD. CIT(A), ASSESSEE HAS ALS O FILED DETAILS AS TO HOW THE SUNDRY CREDITORS WERE SETTLED AND SQUARED OFF IN TH E SUBSEQUENT YEARS. THE SUNDRY CREDITORS WERE ON ACCOUNT OF INSURANCE, RC, EXTENDED WARRANTY ETC. 3 5.2 LD. CIT(A) DELETED THE ADDITION ON THE GROUND T HAT AO HAS COMPLETELY IGNORED THE FACT PUT FORWARD BEFORE AT THE TIME OF ASSESSMENT PROCEEDING THAT ALL THE CREDITORS OF RS. 2.04 CRORES ARE DULY SETTL ED IN THE SUCCEEDING YEARS. 6. BEFORE US THE LD. DR CONTENDED THAT INSPITE OF M ANY OPPORTUNITIES THE ASSESSEE HAS NOT FILED CONFIRMATION LETTERS THUS FA ILED TO DISCHARGE THE PRIMARY ONUS REGARDING GENUINENESS OF THE SUNDRY CREDITOR A ND HENCE THE ADDITION WAS WARRANTED. 7. WE HAVE GONE THROUGH THE DOCUMENTS FILED BEFORE US AND ALSO SUBMISSIONS MADE BEFORE THE LOWER AUTHORITIES. THE AMOUNT BROUGHT TO TAX UNDER SECTION 68 PERTAINS TO OUTSTANDING BALANCE OF 1364 4 PARTIES AND THE AMOUNT RANGING FROM RS. 28. THE ASSESSEE HAS ALSO PRODUCED DOCUMENTS AS TO HOW THE CREDIT BALANCE WERE ADJUSTED / SQUARED OFF IN THE S UBSEQUENT YEARS. IT IS ALSO PERTINENT TO NOTE THAT THE SUNDRY CREDITOR PERTAINS TO AY 2011-12 AND 2012-13 TOO. 8. THE LD. AR FURTHER RELIED ON THE DECISION OF HON BLE DELHI HIGH COURT IN CASE OF CIT VS. TULIP FINANCE LTD. [2008] 15 DTR 18 5 WHEREIN IT HAS BEEN HELD THAT ADVANCES RECEIVED FROM THE CUSTOMERS BY WAY OF SECU RITY DEPOSITS WERE DULY ACCOUNTED FOR AND FOR AND WERE ADJUSTED AGAINST THE FINAL SALE PRICE CALLS FOR NO ADDITION UNDER SECTION 68. LD. AR ALSO RELIED UPON THE DECISION OF HONBLE RAJASTHAN HIGH COURT IN CASE OF SMT. HARSHILA CHORD IA VS. ITO[2008] 298 ITR 349 WHEREIN IT WAS HELD THAT CASH RECEIVED FROM CUSTOME RS AND ADJUSTED AGAINST SALE DO NOT CALL FOR ADDITION UNDER SECTION 68. SIM ILARLY IN CASE OF PR. CIT VS. DUTTA AUTOMOBILES(P) LTD. [2016] 287 CTR 0684 (CAL) IT WA S OBSERVED THAT SECTION 68 HAD NO APPLICABILITY IN CASE OF AMOUNT RECEIVED AND ADJUSTED AGAINST THE DELIVERY OF THE VEHICLES. 9. KEEPING IN VIEW THE FACTS AND THE CASE LAWS CITE D IT IS HEREBY HELD THAT THE LD. CIT(A) HAS RIGHTLY DELETED THE ADDITION AND NO INTERFERENCE CALLED FOR. 10. IN THE RESULT APPEAL FILED BY THE REVENUE IS DI SMISSED. SD/- SD/- (DIVA SINGH) (B.R.R.KUMAR) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED : AG COPY TO: THE APPELLANT, THE RESPONDENT, THE CIT, TH E CIT(A), THE DR