M/s Sermon Agency, Kanpur V. Asstt. Commissioner of Income Tax, Kanpur

ITA 803/LKW/2013

• Counselvise Citation: 80323714 RSA 2013
• Duration Of Justice: 7 month(s) 29 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 22-08-2014
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Next Hearing Date: 13-08-2014
• Assessment Year: 2004-2005
• Appeal Filed On: 24-12-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ALOK MITRA
• Assessee Lawyers: SHYAM PEAREY KAUSHAL
• Keywords: Principle of natural justice
• Section: 143(3); 234B; 12

Judgement Text

1 IN THE INCOME TAX APPELLATE TRIBUNAL LUCKNOW BENCH SMC , LUCKNOW BEFORE SHRI A. K. GARODIA, ACCOUNTANT MEMBER ITA NO.803/LKW/2013 ASSESSMENT YEAR:2004 - 2005 M/S SERMON AGENCY, 50/238, HALSEY ROAD, KANPUR. PAN:AAXFS5416P VS. A.C.I.T., CENTRAL CIRCLE - VI, KANPUR. (APPELLANT) (RESPONDENT) APPELLANT BY SHRI SHYAM PEAREY KAUSHAL, ADVOCATE RESPONDENT BY SHRI ALOK MITRA, D.R. DATE OF HEARING 13/08/2014 DATE OF PRONOUNCEMENT 2 2 /08/2014 O R D E R THIS IS AN ASSESSEES APPEAL DIRECTED AGAINST THE ORDER PASSED BY LEARNED CIT(A) - I, KANPUR DATED 06/09/2013 FOR THE ASSESSMENT YEAR 2004 - 2005. 2. THE GROUNDS RAISED BY THE ASSESSEE ARE AS UNDER: 1. THAT THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) - I, KANPUR VIDE HIS ORDER DAT ED 06 - 09 - 2013 IN APPEAL NO.CIT(A) - I/724/ACIT - CC - VI/KNP/2006 - 07/126 FOR ASSTT. YEAR 2004 - 05 HAS ERRED IN LAW BY CONFIRMING THE ADDITIONS MADE BY THE ASSESSING OFFICER I.E. THE ASSTT. COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE - VI, KA NPUR ON ACCOUNT OF SUNDRY CREDITORS FOUND UNVERIFIED BY HIM VIZ. CREDITORS(1) SWISS REINZ INTERNATIONAL, 14 - B, MADHUR INDER ENCLAVE, PASCHIM VIHAR NEW ROHTAK ROAD, NEW DELHI - 110041 AT RS.58,330/ - AND (2) M/S. BRIGHT CERAMICS, FLAT NO.17, KAMTA EXTENSI ON NEAR WATER TANK MAJRI 2 KARAL, DELHI - 110081 AT RS.43,466/ - , BOTH TOTALING TO RS.1,01,796/ - WHICH ADDED BACK TO THE INCOME OF THE ASSESSEE FIRM WHEREAS THE INCOME OF THE FIRM WAS RETURNED AS NIL, AND THE DETAILS OF A/CS AND OTHER DOCUMENTS WHICH WER E FILED SINCE VOUCHED AND ARE OPEN TO FULL VERIFICATION. HENCE, THE ADDITIONS REQUIRED TO BE QUASHED ACCORDINGLY. 2. THAT THE LEARNED ASSESSING OFFICER ACIT - CC - VI, KANPUR VIDE HIS ORDER DT. 12 - 12 - 06 U/S 143(3) FOR ASSTT. YEAR 2004 - 05 COMPLETED THE ASSESSM ENT IN A VERY HASTY AND ARBITRARY MANNER AND DID NOT CONSIDER THE DETAILS OF A/CS AND DOCUMENTS WHICH WERE FILED IN THE MATTERS OF AFORESAID CREDITORS AND ONLY ON THE BASIS OF UNSERVED SPEED POST LETTERS WHICH WERE SENT BY THE A.O. TO THE AFORESAID CREDITO RS HE ADDED BACK THEIR CREDIT BALANCES TO THE TUNE OF RS.1,01,796/ - (58330/ - + RS.43466/ - ) TO THE INCOME OF THE AFORESAID ASSESSEE FIRM AND HAS CREATED A HUGE DEMAND OF RS.48,201/ - WHICH INCLUDED INTEREST U/S 234B AT RS.11,680/ - WHICH ALL SUMS REQUIRED TO BE QUASHED AND WAIVED ACCORDINGLY. 3. THAT THE LEARNED ASSESSING OFFICER ACIT - CC - VI, KANPUR HAS ALSO ISSUED A PENALTY NOTICE U/S 271(1) (C) OF I.T.ACT 1951 FOR ASSESSMENT YEAR 2004 - 05 WHEREAS ALL THE PARTICULARS OF A/CS AND DOCUMENTS WHICH WERE FILED IN T HE CASE ARE FULLY VOUCHED AND OPEN TO FULL VERIFICATION BUT WITHOUT CONSIDERING THE DETAILS AND ALSO THE NATURAL JUSTICE OF LAW HE MADE AFORESAID ADDITIONS ON ACCOUNT OF CREDITORS AND TREATING THE MATTERS UNDER CONCEALMENT AND UN - NECESSARILY HAS ISSUED SUC H PENALTY NOTICE WHICH REQUIRED TO BE QUASHED ACCORDINGLY. 3. IT WAS SUBMITTED BY LEARNED A.R. OF THE ASSESSEE THAT THE COPY OF LEDGER ACCOUNT OF ONE PARTY I.E. M/S SWISS REINZ INTERNATIONAL FOR THE PRESENT YEAR IS AVAILABLE ON PAGE NO. 1 OF THE PAPER BOOK AND THE SAME FOR THE NEXT YEAR IS AVAILABLE ON PAGE NO. 2 OF THE PAPER BOOK. REGARDING THE SECOND PARTY I.E. M/S BRIGHT CERAMICS, HE SUBMITTED THAT THE COPY OF 3 LEDGER ACCOUNT FOR THE PRESENT YEAR IS AVAILABLE ON PAGE NO. 18 AND THE SAME FOR THE NEXT YEAR IS AVAILABLE ON PAGE NO. 19 OF THE PAPER BOOK. HE SUBMITTED THAT IN BOTH THESE CASES , THE PURCHASE AMOUNT IS MUCH MORE THAN THE ADDITION MADE BY THE ASSESSING OFFICER AND THE ADDITION HAS BEEN MADE ONLY IN RESPECT OF THE OUTSTANDING AMOUNT IN THE NAME OF THESE CREDITORS. HE SUBMITTED THAT ONLY BECAUSE PARTIES WERE NOT AVAILABLE AT THE AD DRESS GIVEN, IT CANNOT BE SAID THAT THE CREDIT OR PARTIES ARE BOGUS. HE ALSO SUBMITTED THAT THE PAYMENT WAS MADE IN THE NEXT YEAR MUCH BEFORE THE ASSESSMENT PROCEEDINGS AND THEREFORE, THE ASSESSEE WAS NOT IN A POSITION TO CONTACT THESE TWO PARTIES. 4. LE ARNED D.R. OF THE REVENUE SUPPORTED THE ORDERS OF THE AUTHORITIES BELOW. 5. I HAVE CONSIDERED THE RIVAL SUBMISSIONS. I FIND THAT THE ADDITIONS WERE MADE BY THE ASSESSING OFFICER ONLY TO THE EXTENT OF OUTSTANDING CREDIT BALANCE IN THE NAME OF THESE TWO PAR TIES AS ON 31/03/2004. I FIND THAT IN RESPECT OF ONE PARTY I.E. M/S SWISS REINZ INTERNATIONAL, TOTAL PURCHASE IN THE PRESENT YEAR WAS TO THE EXTENT OF RS.1.30 LAC AND THE CREDIT BALANCE AS ON 31/03/2004 WAS RS.0.58 LAC. SIMILARLY, IN THE CASE OF SECOND P ARTY I.E. M/S BRIGHT CERAMICS, IT IS SEEN THAT THE TOTAL PURCHASE WAS TO THE EXTENT OF RS.2.58 LAC AND THE OUTSTANDING AMOUNT AS ON 31/03/2004 WAS AROUND RS.0.63 LAC. THE ASSESSING OFFICER HAS MADE THE ADDITION OF OUTSTANDING AMOUNT ONLY IN THE NAME OF TH ESE PARTIES, WHICH MEANS THAT THE ASSESSING OFFICER HAS ACCEPTED THE PURCHASES MADE FROM THESE PARTIES TO THE EXTENT PAYMENTS WERE ALREADY MADE BY THE ASSESSEE IN THE PRESENT YEAR. IT ALSO PROVES THAT THE IDENTITY IS ALSO ACCEPTED BY THE ASSESSING OFFICER . I ALSO FIND THAT EVEN THE OUTSTANDING AMOUNT WAS PAID 4 BY THE ASSESSEE TO THESE PARTIES ON 03/12/2005 IN THE CASE OF FIRST PARTY I.E. M/S SWISS REINZ INTERNATIONAL AND ON 02/03/2006 IN THE CASE OF SECOND PARTY I.E. M/S BRIGHT CERAMICS. I ALSO FIND THAT AS PER THE ASSESSMENT ORDER , THE ASSESSING OFFICER ASKED THE ASSESSEE TO PRODUCE THESE PARTIES IN THE NOTICE DATED 03/11/2006. IT MEANS THAT WHEN THE ASSESSING OFFICER ASKED THE ASSESSEE TO PRODUCE THESE PARTIES, THERE WAS NO OUTSTANDING BALANCE OF THESE PARTIES IN THE BOOKS OF THE ASSESSEE AND THE ENTIRE PAYMENT WAS MADE BEFORE THIS DATE. UNDER THESE FACTS, IT CANNOT BE SAID THAT MERELY BECAUSE THE ASSESSEE COULD NOT PRODUCE THESE PARTIES, IT SHOULD BE ALLEGED OR ACCEPTED THAT THESE PARTIES ARE BOGUS PAR TICULARLY WHEN THE ASSESSING OFFICER HAS ACCEPTED THE PURCHASES TO THE EXTENT OF PAYMENT MADE BY THE ASSESSEE IN THE PRESENT YEAR ITSELF. CONSIDERING ALL THESE FACTS, I AM OF THE CONSIDERED OPINION THAT THE ADDITION MADE BY THE ASSESSING OFFICER IS NOT JU STIFIED. I, THEREFORE, DELETE THE SAME. 6. IN THE RESULT, THE APPEAL OF THE ASSESSEE STANDS ALLOWED. (ORDER WAS PRONOUNCED IN THE OPEN COURT ON THE DATE MENTIONED ON THE CAPTION PAGE) SD/. ( A. K. GARODIA ) ACCOUNTANT MEMBER D ATED : 2 2 /08/2014 *C.L. SINGH COPY FORWARDED TO: 1 . APPELLANT 2 . RESPONDENT 3 . CIT(A) 4 . CIT 5 . DR ASSISTANT REGISTRAR