Apsara Silk Mills, Surat V. The Addl.CIT., Range-7, Surat

ITA 82/AHD/2008

• Counselvise Citation: [2010] 135 COUNSELVISE.COM (IT) 9287 (ITAT-AHMEDABAD)
• Duration Of Justice: 40 year(s) 10 month(s) 17 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 19-11-2010
• Appeal Filed By: Assessee
• Assessment Year: misc
• Appeal Filed On: 01-01-1970
• Court: TRIBUNAL
• Department Lawyers: R K DHANESTA
• Assessee Lawyers: R N VEPARI

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AT AHMEDABAD AHMEDABAD A BENCH BEFORE SHRI G.D. AGARWAL, VICE-PRESIDENT (AZ) AND SHRI MAHAVIR SINGH, JUDICIAL MEMBER DATE OF HEARING:15.10.10 DRAFTED: 18.10 & 8.11.1 0 ITA NO.82/AHD/2008 [ASSTT.YEAR 2004-05] APSARA SILK MILLS, 20, MODI BLOCK -VS ADDL. COMMISS IONER OF INCOME KAPADIA COMPOUND, LALDARWAJA TAX RANGE-7, SURAT SURAT PAN NO.AAHFA4360J (APPELLANT) (RESPONDENT) REVENUE BY : SHRI R.K. DHANESTA, DR ASSESSEE BY: SHRI R.N. VEP ARI, AR O R D E R PER MAHAVIR SINGH, JUDICIAL MEMBER:- THIS APPEAL BY ASSESSEE IS ARISING OUT OF THE ORDE R OF COMMISSIONER OF INCOME-TAX (APPEALS)-IV, SURAT IN APPEAL NO.CAS-IV/ 254/06-07 DATED 30-10-2007. THE ASSESSMENT WAS FRAMED BY ADDL. CIT, RANGE-7, SU RAT U/S.143(3) OF THE INCOME- TAX ACT,1961 (HEREINAFTER REFERRED TO AS THE ACT) VIDE HIS ORDER DATED 30-11-2006 FOR ASSESSMENT YEAR 2004-05. 2. THE ONLY ISSUE IN THIS APPEAL OF THE ASSESSEE IS AGAINST THE ORDER OF CIT (A) CONFIRMING THE ADDITION MADE BY THE ASSESSING OFFIC ER U/S. 41(1) OF THE ACT IN REGARD TO CREDIT BALANCES OUTSTANDING AMOUNTING TO RS.29,9 2,503/- AND RS.8,36,922/-. 3. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSI NG OFFICER DURING THE COURSE OF ASSESSMENT PROCEEDINGS NOTICED FROM THE BALANCE SHE ET OF THE FIRM THAT THERE ARE VARIOUS CREDIT BALANCES OUTSTANDING AT SR.NO.1 TO 2 3 AND AT SR.NO.24 TO 37. THE A.O. VIDE PARAGRAPH 4.7 HAS MADE ADDITION OF PARTIES AT SR.NO.1 TO 11 AS GIVEN IN THE ASSESSEES PAPER BOOK PAGE NO.7 AS UNDER:- ITA NO.82/AHD/2008 A.Y. 2004-05 APSARA SILK MILLS V. ACIT RNG-7, SRT PAGE 2 SR. NO. NAME OF PARTY. BALANCE AS PER BOOKS OF THE ASSESSEE ON 31.3.04 (RS.) BALANCE AS PER BOOKS OF THE CREDITORS ON 31-3-2004. (RS.) 1. MICKEY TEXTILES 17,06,486 3,64,4 49 2. CENTURY FABRICS 86,461 NIL 3. NAVNEET BHARAT WOOL. 3,97,939 NIL 4. S & S EXPORTS. 1,947 NIL 5. S & R EXPORTS 27,226 27, 282 6. J.K. TEXTILES. 24,264 NIL 7. EKDANT TEXTILES. 7,600 NIL 8. SIDDHI MOULDING WORKS 44,906 NIL 9. SHRI GANESH TEXTILES. 53,000 NIL 10. DEEP TEX. 57,916 NIL 11. PARKAN SPARES. 30,580 57, 540 ACCORDING TO THE A.O. THERE IS DIFFERENCE IN THE BO OKS OF ACCOUNT, AS PER THE BOOKS OF ACCOUNTS OF THE ASSESSEE THERE IS OUTSTANDING CREDI T BALANCE BUT AS PER THE BOOKS OF ACCOUNTS OF THE CREDITORS THERE NIL BALANCE. FURTHE R, ACCORDING TO THE ASSESSING OFFICER, AS PER INFORMATION PROVIDED BY THE ASSESSE E ON PAGE-7 OF ASSESSEES PAPER BOOK ITEM NO.12 TO 23 THE OUTSTANDING IN RESPECT OF FOLLOWING PARTIES, NOTICE U/S.133(6) WAS SENT BUT WAS NOT RECEIVED OR RECEIVE D BUT RESULTS AS UNDER:- SR. NO. NAME OF THE PARTY. BALANCE AS PER BOOKS OF THE ASSESSEE ON 31-3-2004. BALANCE AS PER BOOKS OF THE CREDITORS ON 31-3-2004. 12 KANNIGTON FABRICS P.LTD., 1,32,167 NOTICE U /S.133(6) RETURNED UNSERVED WITH THE ENDORSEMENT THAT THE PARTY IS 13 SATISH BHATIA 2,95,343 DO 14 NAGALIA YARNS 64,000 DO 15 HEMRAJ & SONS 30,045 PARTY LEFT THE PLAC E 16 ABHINAV FABRICS 50,000 17 INDIA TEX 36,000 NOTICE SERVED BUT REPLY NOT RECEIVED 18 MAHAVFIR SYNTHETICS 48,365 DO 19 PARAS INTERNATIONAL 34,000 DO 20 VALSON IND. LTD. 55,328 DO 21 ALFIYA SILK MILLS 3,373 DO ITA NO.82/AHD/2008 A.Y. 2004-05 APSARA SILK MILLS V. ACIT RNG-7, SRT PAGE 3 23 BHAVESH SHAH 2,54,828 DO TOTAL 34,41,774 4,49,271 DIFFERENCE OF ABOVE ADDED. 29,92,503 ======== 4. ACCORDINGLY, THE ASSESSING OFFICER NOTED THE DIF FERENCE AT RS.29,92,503/- BEING CESSATION OF LIABILITY AND THE ASSESSEE HAD S QUARED UP THESE LIABILITIES OUT OF UNEXPLAINED SOURCE AND MADE ADDITION. SUBSEQUENTLY, THE AO ADDED RS.8,36,922/- IN RESPECT OF THE FOLLOWING PARTIES SR. NO. SR. NO AS PER ORDER. NAME OF PARTY DATE LOAN INTEREST TOTAL. 1 28 BHAVANI FABRICS CHEQUE RECEIVED LESS:ADJUSTED AGAINST SALES IN F.Y.00-01 & 01-02 OUTSTANDING BALANCE FROM 1.4.2002. 10.02.2001 50,000 5,326 44,674 44,674 2. 29 VIDHATA TEXTILES CHEQUE RECEIVED. OUTSTANDING BALANCE FROM 31.3.2004. 13.03.2004 30,000 ------------ 30,000 ------------ 30,000 3. 30 JALPAC INDIA OPENING BALANCE OUTSTANDING BALANCE FROM 1.4.2000. 01.04.2000 4,22,714 4,22,714 4. 31 HIRO INDUSTRIES OPENING BAL. OUTSTANDING BALANCE FROM 1.4.2000. 01.04.2000 1,46,134 1,46,134 5. 32 UMA CHOPRA OPENING BAL. INTEREST 01.04.2000 2,12,000 48,000 ITA NO.82/AHD/2008 A.Y. 2004-05 APSARA SILK MILLS V. ACIT RNG-7, SRT PAGE 4 CREDITED LESS:INTEREST PAID. OPENING BAL. INTEREST CREDITED. LESS: INT. PAID. OPENING BAL. INTEREST CREDITED. OPENING BAL. LESS: INT. PAID CLOSING BAL. 01.04.2001 01.04.2002 01.04.2003 31.03.2004 2,12,000 2,12,000 2,12,000 1,22,800 89,100 36,000 12,000 48,000 30,800 29,200 48,000 77,200 77,200 - 89,100 6. 33 VINODINI DALAL OPENING BAL. ADD:LOAN RECD. INT. CREDITED. LESS: INT. PAID. OPENING BAL. INTEREST CREDITED. LESS: INT. PAID. OPENING BAL. INT. CREDITED. OPENING BAL OUTSTANDING BALANCE ON 01.04.2000 01.04.2001 01.04.2002 01.04.2003 31.03.2007 15,000 15,000 _____ 30,000 ------------- 30,000 30,000 7,200 7,200 0 7,200 3,600 3,600 7,200 10,.800 40,800 7. 35. MADHUKANT CHUNAWALA. OPENING BAL. INT. CREDITED LESS: INT. PAID. OPENING BAL. 01.04.2000 01.04.2001 50,000 50,000 9,000 9,000 0 INT. CREDITED. LESS: INT. PAID. OPENING BAL. INT. CREDITED. OPENING BAL. OUTSTANDING BALANCE ON TOTAL ADDITION MADE ON A/C.OF 01.04.2002 01.04.2003 31.03.2007 50,000 50,000 8,12,622 9,000 4,500 4,500 9,000 13,500 24,300 63,500 8,36,922 THE ASSESSING OFFICER NOTED THAT THE ASSESSEE COULD NOT FILE THE CONFIRMATIONS AND HE MADE ADDITION OF RS.8,36,922/-. AGGRIEVED, THE A SSESSEE PREFERRED APPEAL BEFORE THE CIT (A). ITA NO.82/AHD/2008 A.Y. 2004-05 APSARA SILK MILLS V. ACIT RNG-7, SRT PAGE 5 5. THE CIT (A) CONFIRMED THE ABOVE ADDITIONS BY GIV ING FOLLOWING FINDINGS IN HIS APPELLATE ORDER:- I HAVE GONE THROUGH THE REPLY OF THE APPELLANT BUT I DO NOT FIND ANY MERITS IN THE SAME. THE LD. A.R. HAS CITED THE DECISION OF HO NBLE ITAT. KOCHI IN THE CASE OF POPULAR VEHICLE AND SERVICES LTD., 5 SOT 73 9 WHEREIN IT WAS HELD THAT SECTION 41(1) WOULD BE INVOKED ONLY WHEN KIT W AS ESTABLISHED THAT THE CREDITORS HAVE GIVEN UP THEIR CLAIM OR THE LIABILIT Y CEASED TO EXIST BY OPERATION OF LAW. THIS CITATION ITSELF GOES AGAINST THE APPEL LANT AS POINTED OUT BY THE AO THE BALANCES WHICH WERE CONFIRMED BY THE CREDITORS AS APPEARING IN THEIR BOOKS WERE SUBSTANTIALLY LOWER THAN THE ONE SHOWN B Y THE APPELLANT IN ITS BOOKS OF ACCOUNTS THAT WOULD MEAN THAT THE CREDITOR S HAD GIVEN UP THEIR CLAIM IN RESPECT OF THE DIFFERENCE BETWEEN THE TWO BALANC ES. FURTHER THE APPELLANTS SUBMISSION THAT SOME OF THE CREDITORS WERE PAID SUB SEQUENTLY IS ALSO NOT SUPPORTED BY ANY EVIDENCE. FURTHER, THE CREDITORS A PPEARING FROM THE SR.NOS.24 TO 37 OF THE CHART ON PAGE-3 OF THE ORDER WERE ALL SISTER CONCERNS THERE WAS NO JUSTIFICATION IN NOT FURNISHING THEIR CONFIRMATIONS, IF THE CREDIT BALANCES CLAIMED BY APPELLANT WERE CORRECT. I AM OF THE CONSIDERED VIEW THAT NON-FILING OF CONFIRMATIONS OF SISTER CONCERNS ON THE GROUND THAT SOME OF THEM LEFT THE CITY SHOWS THAT THE CREDIT BALANCES SHOWN BY APPELLANT WERE BOGUS AND THEREFORE ADDITION ON THIS GROUND HAS RIGHTLY B EEN MADE BY THE AO. THE ENTIRE ADDITION THEREFORE, IS CONFIRMED. 6. AGGRIEVED NOW THE ASSESSEE CAME IN SECOND APPEAL BEFORE US. WE HAVE HEARD THE RIVAL CONTENTIONS AND GONE THROUGH THE FA CTS AND CIRCUMSTANCES OF THE CASE. WE FIND FROM THE ABOVE THAT THERE ARE THREE C ATEGORIES OF OUTSTANDING BALANCES. AS CLAIMED BY THE ASSESSEE, THE FIRST CAT EGORY IS WHERE THERE IS BALANCE IN THE BOOKS OF ACCOUNT OF THE ASSESSEE BUT THERE IS N O BALANCE IN THE BOOKS OF CREDITORS AND IT IS THE CASE OF THE REVENUE THAT TH ERE IS NO BALANCE IN THE BOOKS OF CREDITORS AND THEY HAVE NOT TO RECEIVE ANY AMOUNT F ROM THE ASSESSEE. THE PROVISIONS OF SECTION 41(1) WERE RIGHTLY INVOKED BY THE ASSESSING OFFICER IN THE FIRST CATEGORY OF CASES, AS THE CREDITORS HAVE NOT TO REC EIVE ANYTHING FROM THE ASSESSEE- FIRM AND ACCORDINGLY THE LIABILITY CEASED TO EXIST AS PER SECTION 41(1) OF THE ACT. ACCORDINGLY IN RESPECT OF THE FIRST CATEGORY, THE D IFFERENCE IN THE BALANCES ADDED BY THE AO AND CONFIRMED BY CIT(A) IS SUSTAINED. 7. SECOND CATEGORY, WHERE NOTICES UNDER SECTION 133 (6) RETURNED UNSERVED EITHER WITH THE ENDORSEMENT THAT THE PARTY IS UNKNO WN OR PARTY LEFT THE PLACE OR NO NOTICE WAS REPLIED. THE AO WILL FURTHER PROVIDE AN OPPORTUNITY TO THE ASSESSEE TO GIVE CORRECT ADDRESSES SO THAT HE CAN MAKE FURTHER INQUI RIES IN RESPECT TO WHETHER THE LIABILITY SUBSISTS OR NOT. ACCORDINGLY, IN RESPECT TO PARTIES AT SR.NOS.12 TO 23 OF THE ITA NO.82/AHD/2008 A.Y. 2004-05 APSARA SILK MILLS V. ACIT RNG-7, SRT PAGE 6 ABOVE CHART ARE SET ASIDE TO THE FILE OF THE AO TO BE EXAMINED AFRESH IN THE LIGHT OF ABOVE DIRECTIONS. 8. COMING TO THE THIRD CATEGORY OF OUTSTANDING BALA NCES, THE ASSESSEES CLAIM IS THAT THESE ARE OUTSTANDING LOANS ON WHICH INTEREST IS PAID FROM THE SISTER CONCERNS. THE LD. COUNSEL FOR THE ASSESSEE BEFORE US STATED T HAT THESE ARE REGULAR PARTIES FROM WHOM THE ASSESSEE IS MAKING PURCHASES AND THIS IS RUNNING ACCOUNT AND OUTSTANDING IS LOAN AMOUNT ON WHICH INTEREST IS PAI D ON REGULAR BASIS. THE AO AGREEING TO HIS VIEW, SHOULD HAVE VERIFIED THESE PA RTIES FROM WHOM ASSESSEE HAS OBTAINED LOAN ON WHICH INTEREST IS PAID OR CREDITED . IN VIEW OF THIS FACT, WE SET ASIDE THIS ISSUE ALSO TO THE FILE OF THE AO TO VERIFY THE CONTENTIONS OF THE ASSESSEE, WHETHER THESE ARE OUTSTANDING EXISTING PARTIES OR NOT. ACCO RDINGLY THIS ISSUE IS ALSO SET ASIDE TO THE FILE OF THE AO. 9. I N THE RESULT, THE APPEAL OF THE ASSESSEE IS ALLOWED PARTLY FOR STATISTICAL PURPOSES. ORDER PRONOUNCED ON THIS DAY OF 19 TH NOV,2010 SD/- SD/- ( G.D.AGARWAL ) ( MAHAVIR SINGH ) (VICE PRESIDENT) (JUDICIAL MEMBER) AHMEDABAD, DATED : 19/11/2010 *DKP COPY OF THE ORDER FORWARDED TO :- 1. THE ASSESSEE. 2. THE REVENUE. 3. THE CIT(APPEALS)-XVI, AHMEDABAD 4. THE CIT CONCERNS. 5. THE DR, ITAT, AHMEDABAD 6. GUARD FILE. BY ORDER, /TRUE COPY/ DEPUTY / ASSTT.REGISTRAR ITAT, AHMEDABAD