Rungta Engineering Co. Pvt. Ltd., Kolkata V. ITO, WD-3(2), KOLKATA, Kolkata

ITA 794/KOL/2015

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 9466 (ITAT-KOLKATA)
• Duration Of Justice: 1 year(s) 8 month(s) 4 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 08-02-2017
• Appeal Filed By: Assessee
• Bench Allotted: SMC
• Next Hearing Date: 07-09-2016
• Assessment Year: 2009-2010
• Appeal Filed On: 03-06-2015
• Court: TRIBUNAL
• Department Lawyers: MD GHAYAS UDDIN
• Assessee Lawyers: S JHAJHARIA
• Keywords: Business income
• Section: 143(3); 68

Judgement Text

I.T.A. NO. 794/KOL./2015 ASSESSMENT YEAR: 2009-2010 PAGE 1 OF 5 IN THE INCOME TAX APPELLATE TRIBUNAL, KOLKATA SMC BENCH, KOLKATA BEFORE SHRI J. SUDHAKAR REDDY, ACCOUNTANT MEMBER I.T.A. NO. 794/KOL/ 2015 ASSESSMENT YEAR : 2009-2010 RUNGTA ENGINEERING CO. (P) LIMITED,................ ......APPELLANT C/O. SALARPRURIA JAJODIA & COMPANY, 7, C.R. AVENUE, KOLKATA-700 072 [PAN : AABCR 4956 N] -VS.- INCOME TAX OFFICER,................................ ........................RESPONDENT WARD-3(2), KOLKATA, 8/2, ESPLANADE EAST, 3 RD FLOOR, KOLKATA-700 069 APPEARANCES BY: SHRI S. JHAJHARIA, A.R., FOR THE ASSESSEE MD. GHAYAS UDDIN, JCIT, SR. D.R., FOR THE DEPARTMEN T DATE OF CONCLUDING THE HEARING : JANUARY 30, 2017 DATE OF PRONOUNCING THE ORDER : FEBRUARY 08, 2017 O R D E R THIS APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAIN ST THE ORDER OF LD. COMMISSIONER OF INCOME TAX (APPEALS)-I, KOLKATA DAT ED 26.03.2015 FOR THE ASSESSMENT YEAR 2009-10 ON THE FOLLOWING GROUND S:- 1. FOR THAT IN VIEW OF THE FACTS AND IN THE CIRCUMS TANCES, THE AO IS WHOLLY UNJUSTIFIED IN MAKING AN ADDITION OF RS.11,18,000/- AS UNDISCLOSED INCOME U/S 68 AND IN VIEW OF THE FACTS AND IN THE CIRCUMSTANCES THE LD. CIT(A )-I, KOLKATA IS WHOLLY UNJUSTIFIED IN DELETING THE ADDIT ION ONLY TO THE EXTENT OF RS.10,80,000/- AND RETAINING THE ADDITION OF RS.1,00,000/- AND IN VIEW OF THE FACTS AND IN THE CIRCUMSTANCES THE SUM OF RS. 1,00,000/- HAVING BEEN ALSO RECEIVED TOWARDS ADVANCES FOR SALE OF SCRAP AN D ALL THE NECESSARY EVIDENCES IN THIS REGARD HAVING BEEN I.T.A. NO. 794/KOL./2015 ASSESSMENT YEAR: 2009-2010 PAGE 2 OF 5 PRODUCED BEFORE THE AO AND THE LD. CIT(A)-I, KOLKAT A, SUCH ADDITION RETAINED BY THE LD. CIT(A)-I, KOLKATA MAY KINDLY BE DELETED. 2. FOR THAT IN VIEW OF THE FACTS AND IN THE CIRCUMSTANCES, THE AO IS UNJUSTIFIED IN MAKING AN ADDITION OF RS.6,84,008/- IN RESPECT OF OUTSTANDING LIABILITY CARRIED FORWARD FROM EARLIER YEARS AND IN VIEW OF THE FACTS AND IN THE CIRCUMSTANCES THE LD. CIT(A ) IS WHOLLY UNJUSTIFIED IN RETAINING A SUM OF RS.3,70,00 0/- IN RESPECT OF M/S. APEE FASTENERS AND SUCH ACTION OF T HE AO IS WHOLLY BAD, ILLEGAL, UNJUSTIFIED AND UNCALLED FO R AND IN VIEW OF THE FACTS AND IN THE CIRCUMSTANCES THE LD. CIT(A) IS WHOLLY UNJUSTIFIED IN CONFIRMING THE ADDITION TO THE EXTENT OF RS.3,70,000/- AND IN ANYWAY WITHOUT PREJU DICE AND EVEN OTHERWISE THE AMOUNT BEING ONLY CARRIED FORWARD DURING THE YEAR FROM EARLIER YEAR AND THE AMOUNT HAVING NOT BEEN RECEIVED IN THE BOOKS OF ACC OUNT DURING THE YEAR, THE ACTION OF THE AO AS WELL AS TH E LD. CIT(A) IN MAKING SUCH ADDITION IN A.Y 2009-10 IS WH OLLY BAD, ILLEGAL, UNJUSTIFIED AND UNCALLED FOR AND IN V IEW OF THE FACTS AND IN THE CIRCUMSTANCES SUCH ADDITION OF RS.3,70,000/- MAY KINDLY BE DELETED. 2. BRIEF FACTS IN THE CASE OF THE ASSESSEE ARE THAT THE ASSESSEE IS A COMPANY ENGAGED IN THE BUSINESS OF MANUFACTURING AN D TRADING OF RAILWAY TRUCK TERMINAL. IT FILED ITS RETURN OF INCOME ON 25 .09.2009 DECLARING TOTAL INCOME OF RS.42,614/-. THE ASSESSING OFFICER COMPLE TED THE ASSESSMENT UNDER SECTION 143(3) ON 27.12.2011 DETERMINING THE TOTAL INCOME AT RS.24,61,320/-, INTER ALIA , MAKING AN ADDITION OF RS.11,80,000/- BEING ADVANCES RECEIVED BY THE ASSESSEE AGAINST ORDERS. T HE ASSESSING OFFICER OBSERVED AS FOLLOWS:- THE ASSESSEE-COMPANY IS ENGAGED IN THE BUSINESS OF MANUFACTURING AND TRADING OF RAILWAY TRUCK TERMINAL. THE DEBTOR L IST CONSISTS OF RAILWAYS AND BIG INDIAN AND MULTINATIONAL COMPANIES. IN VIEW OF THE ABOVE, ADVANCE TAKEN AGAINST ORDER FROM AFORESAID TEN PART IES WERE DOUBTFUL. THE ASSESSEE-COMPANY WAS DULY GIVEN THE OPPORTUNITY ON 20.12.2011 TO SUBSTANTIATE THE GENUINENESS OF THE ADVANCE TAKEN B Y PRODUCING BEFORE THE UNDERSIGNED AFORESAID TEN PERSONS WITH THEIR TR ADE LICENSE, IDENTITY PROOF, ADDRESS PROOF, COPY OF I.T. RETURN, COPY OF FINAL ACCOUNT AND BANK I.T.A. NO. 794/KOL./2015 ASSESSMENT YEAR: 2009-2010 PAGE 3 OF 5 STATEMENT. NEITHER THE AFORESAID DOCUMENTS NOR THOS E TEN PERSONS WERE PRODUCED. INSTEAD THE AR SUBMITTED THE COPY OF LEDG ER ACCOUNT FOR THE FINANCIAL YEAR 2009-10 AND 2010-11 ALONG WITH THE C OPIES OF RELEVANT SALE BILL. THE ACCOUNTS WERE SUBSEQUENTLY SETTLED BY CAS H. THE ASSESSEE- COMPANY MADE NO EFFORT TO PRODUCE THE AFORESAID TEN PERSONS WITH THEIR TRADE LICENSE, IDENTITY PROOF, ADDRESS PROOF, COPY OF I.T. RETURN, COPY OF FINAL ACCOUNT AND BANK STATEMENT FOR VERIFICATION. IN VIEW OF THE ABOVE, IT APPEARS THAT THE TRANSACTIONS WERE NOT GENUINE. THE IDENTITY OF THE TEN PERSONS, THE GENUINENESS OF THE TRANSACTIONS AND TH EIR CREDITWORTHINESS HAS NOT BEEN ESTABLISHED. I AM, THEREFORE, NOT SATI SFIED WITH THE NATURE AND SOURCES OF SUCH CREDIT OF RS.11,80,000/-. THE E NTIRE AMOUNT IS THEREFORE ADDED TO THE BUSINESS INCOME AS PER THE P ROVISION OF SECTION 68. 3. FURTHER AN AMOUNT OF RS.3,70,000/- CLAIMED BY TH E ASSESSEE AS A LIABILITY WAS DISBELIEVED BY THE ASSESSING OFFICER AND ADDED AS BOGUS LIABILITY. ON APPEAL, THE FIRST APPELLATE AUTHORITY CALLED FOR THE REMAND REPORT AND DELETED THE ADDITION OF RS.10,80,000/- O UT OF RS.11,80,000/- MADE BY THE ASSESSING OFFICER AS ADVANCES AGAINST O RDERS RECEIVED AND CONFIRMED AN ADDITION OF RS.1,00,000/-. HE ALSO CON FIRMED THE ADDITION OF RS.3,70,000/- ON THE GROUND THAT THIS IS A BOGUS LI ABILITY. AGGRIEVED, THE ASSESSEE IS IN APPEAL BEFORE THE TRIBUNAL. 4. I HAVE HEARD MR. S. JHAJHARIA, LD. COUNSEL FOR T HE ASSESSEE AND SHRI MD. GHAYAS UDDIN, JCIT, SR. D.R. ON BEHALF OF THE R EVENUE. ON A CAREFUL CONSIDERATION OF THE FACTS AND CIRCUMSTANCES OF THE CASE AND A PERUSAL OF THE PAPERS ON RECORD AND THE ORDERS OF THE AUTHORIT IES BELOW, I HOLD AS FOLLOWS:- THE ONLY ADDITION THAT WAS SUSTAINED BY THE LD. CI T(APPEALS) OUT OF RS.11,80,000/- ADDED BY THE ASSESSING OFFICER WAS A N ADVANCE AGAINST ORDERS RECEIVED FROM ONE MR. CHEDILAL SHARMA. THE A SSESSING OFFICER WRONGLY MENTIONED THIS NAME AS SHRI MODI LAL SHARMA . THE ADVANCE IN QUESTION WAS RECEIVED DURING THE FINANCIAL YEAR 200 8-09 RELEVANT TO ASSESSMENT YEAR 2009-10. THE AMOUNT WAS ADJUSTED AG AINST SALES IN THE I.T.A. NO. 794/KOL./2015 ASSESSMENT YEAR: 2009-2010 PAGE 4 OF 5 FINANCIAL YEAR 2009-10 RELATABLE TO THE ASSESSMENT YEAR 2010-11. THE ASSESSEE HAS FURNISHED COPIES OF BILLS, CHALLANS, E TC. 5. UNDER THESE CIRCUMSTANCES, I FIND THAT THE ISSUE NARROWS DOWN TO THE YEAR OF TAXABILITY. WHILE THE ASSESSING OFFICER MADE THE ADDITION DURING THE ASSESSMENT YEAR 2009-10, THE ASSESSEE OF FERED THE SAME AS TAX, AS SCRAP SALES DURING THE YEAR 2010-11. SCRAP SA LES IS A REVENUE RECEIPT. HENCE, I AM OF THE CONSIDERED OPINION THAT THE ADDITION IN QUESTION CANNOT BE SUSTAINED. IN THE RESULT, GROUND NO. 1 OF THE ASSESSEES APPEAL IS ALLOWED. 6. IN GROUND NO. 2, THE ADDITION IS SUSTAINED BY TH E LD. CIT(APPEALS) ON THE GROUND THAT THE ASSESSEE HAS ONLY PROVIDED L EDGER ACCOUNT FOR THE PERIOD 01.04.2011 TO 31.03.2013 IN SUPPORT OF HIS C ONTENTION THAT THE LIABILITY WAS GENUINE AND STILL OUTSTANDING. THE AD DITION WAS CONFIRMED BECAUSE NO CONFIRMATION OF THE CREDITOR WAS FILED. IN MY VIEW, SUCH AN ADDITION CANNOT BE SUSTAINED. THE LIABILITY OF THE ASSESSEE DID NOT CEASE AND HENCE NO ADDITION CAN BE MADE UNDER SECTION 41( 1) OF THE ACT. THE FACT THAT THE ASSESSEE HAS RECEIVED THE AMOUNT IN Q UESTION IS NOT DISPUTED. IN FACT, THE AMOUNT IN QUESTION WAS NOT R ECEIVED IN THIS YEAR BUT WAS RECEIVED ONLY IN THE PREVIOUS YEAR. THERE IS NO CESSATION OF LIABILITY. UNDER THESE CIRCUMSTANCES, THE ADDITION IS DELETED. 7. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALL OWED. ORDER PRONOUNCED IN THE OPEN COURT ON FEBRUARY 8 TH , 2017. SD/- J. SUDHAKAR REDDY (ACCOUNTANT MEMBER) KOLKATA, THE 8 TH DAY OF FEBRUARY, 2017 COPIES TO : (1) RUNGTA ENGINEERING CO. (P) LIMITED, C/O. SALARPRURIA JAJODIA & COMPANY, 7, C.R. AVENUE, KOLKATA-700 072 (2) INCOME TAX OFFICER, WARD-3(2), KOLKATA, 8/2, ESPLANADE EAST, 3 RD FLOOR, KOLKATA-700 069 I.T.A. NO. 794/KOL./2015 ASSESSMENT YEAR: 2009-2010 PAGE 5 OF 5 (3) COMMISSIONER OF INCOME-TAX (APPEALS)-1, KOLKA TA, (4) COMMISSIONER OF INCOME TAX, KOLKATA (5) THE DEPARTMENTAL REPRESENTATIVE (6) GUARD FILE BY ORDER ASSISTANT REGISTRAR INCOME TAX APPELLATE TRIBUNAL KOLKATA BENCHES, KOLKATA LAHA/SR. P.S.