Mr. Satish Kumar, Manimajra V. Income Tax Officer, Chandigarh

ITA 851/CHANDI/2011

• Counselvise Citation: 85121514 RSA 2011
• Duration Of Justice: 2 month(s) 18 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-11-2011
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: A
• Next Hearing Date: 24-11-2011
• Assessment Year: 2007-2008
• Appeal Filed On: 09-09-2011
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Keywords: Opportunity of being heard
• Section: 133(6)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL CHANDIGARH BENCHES A CHANDIGARH BEFORE SHRI H.L.KARWA, HON'BLE, VICE PRESIDENT AND SHRI D.K.SRIVASTAVA, ACCOUNTANT MEMBER ITA NO. 851/CHD/2011 ASSESSMENT YEAR: 2007-08 SHRI SATISH KUMAR, VS THE ITO, MANIMAJRA WARD 3(4), CHANDIGARH PAN NO. ABAPK3054B (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI PRIKSHIT AGGARWAL RESPONDENT BY : SHRI AKHILESH GUPTA DATE OF HEARING : 24.11.2011 DATE OF PRONOUNCEMENT : 28.11.2011 ORDER PER H.L.KARWA, VP THIS APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAIN ST THE ORDER OF CIT(A), CHANDIGARH DATED 15.6.2011 RELATING TO ASSE SSMENT YEAR 2007-08. 2. GROUND NO.1 OF THE APPEAL IS GENERAL IN NATURE A ND HENCE NO COMMENTS ARE REQUIRED. 3. GROUND NO.2 OF THE APPEAL READS AS UNDER:- 2. THAT ON THE FACTS AND IN THE CIRCUMSTANCES AND LEGAL POSITION OF THE CASE, THE WORTHY CIT(A) HAS ERRED I N CONFIRMING ADDITION OF RS. 10,34,827/- (ORIGINALLY MADE BY 2 LD. ASSESSING OFFICER AT RS. 10,84,827/-) WHEREIN L D. ASSESSING OFFICER HAS ERRONESOULY MADE ADDITION BY ADDING DULY EXPLAINED DIFFERENCE IN BALANCE CONFIRMATION O F SOME OF THE SUNDRY CREDITORS. PARTY-WISE DETAILS ARE AS UND ER :- A. SHAH BRIJ BHUSHAN DASS & CO RS. 1,44,628/- B. A.S. COLLECTION RS. 16,804/- C. ANJALI SUITS & SAREES RS. 7,80,577/- D. SHRI KRISHNA TRADERS RS. 40,365/- E. TANZEB SILK & SAREES RS. 22,928/- F. MANSON CREATIONS P. LTD RS. 29,525/- TOTAL RS. 10,34,827/- 4. AT THE TIME OF HEARING OF APPEAL SHRI PRIKSHIT A GGARWAL, LD. COUNSEL FOR THE ASSESSEE DID NOT PRESS FOR GROUND N OS.2 (A), (B), (D), (E) AND (F). ACCORDINGLY, WE DISMISS THESE GROUNDS. 5. THE ONLY GROUND CHALLENGED BY THE ASSESSEE IS G ROUND NO. 2(C) WHICH RELATES TO ADDITION OF RS. 7,80,575/-. 6. BRIEFLY STATED, THE FACTS OF THE CASE ARE THAT T HE ASSESSEE IS RUNNING A CLOTH SHOP DURING THE YEAR IN QUESTION. DURING T HE COURSE OF ASSESSMENT PROCEEDINGS, THE ASSESSING OFFICER REQUIRED THE ASS ESSEE TO FURNISH ALL COPIES OF ACCOUNT OF SUNDRY CREDITORS AS APPEARING IN HIS BOOKS. COPIES OF ACCOUNT OF ASSESSEE IN THE BOOKS OF SUNDRY CREDI TORS (SELLERS) WERE ALSO REQUISITIONED U/S 133(6) OF THE INCOME TAX ACT, 196 1 (IN SHORT 'THE ACT'). ON EXAMINATION, DIFFERENCE WAS FOUND IN CREDIT BALA NCES IN RESPECT OF M/S ANJALI SUITS & SAREES TO THE EXTENT OF RS. 8,30,577 /-. THE ASSESSING 3 OFFICER REQUIRED THE ASSESSEE TO SHOW CAUSE AS TO W HY THE DIFFERENCE IN CREDIT BALANCE MAY NOT BE ADDED TO HIS INCOME. THE ASSESSEE FURNISHED EXPLANATION VIDE REPLY DATED 26.8.2009. THE ASSESS ING OFFICER DID NOT ACCEPT THE EXPLANATION OF THE ASSESSEE STATING THAT IN CASE OF M/S ANJALI SUITS & SAREES, SINCE THE ASSESSEE HAD ISSUED A CHE QUE ON 27.3.2006 I.E. IN FINANCIAL YEAR 2006-07, HOW THE SAME CAN BE ACCOUNT ED FOR BY THE ASSESSEE IN THE FINANCIAL YEAR 2007-08. THE ASSESSING OFFIC ER ALSO OBSERVED THAT THE SAME SHOULD HAVE BEEN SHOWN AS CHEQUE PENDING F OR ENCASHMENT IN THE FINANCIAL YEAR 2006-07, WHICH HAS NOT BEEN DONE . THE ASSESSING OFFICER ASKED THE ASSESSEE TO PRODUCE STOCK REGISTE R, BILLS, TRANSPORT RECEIPT OR ANY OTHER DOCUMENTARY EVIDENCE TO SHOW W HICH GOODS AND ON WHICH DATE THESE HAVE BEEN RETURNED BACK OR COPIES OF VAT RETURNS JUSTIFYING SUCH PURCHASE TRANSFERS. ACCORDING TO A SSESSING OFFICER, NO BILLS / GOODS RETURN OR TRANSPORT RECEIPT WAS PRODU CED WHICH CAN PROVE THAT GOODS HAVE BEEN ACTUALLY RETURNED ON THE DATES MENTIONED BY THE ASSESSEE. THE ASSESSING OFFICER ALSO OBSERVED THAT THE ASSESSEE HAS NOT FURNISHED ANY EVIDENCE FOR MAKING ENTRIES IN HIS BO OKS OF ACCOUNT. SINCE THE DIFFERENCE IN CREDIT BALANCE REMAINED UNEXPLAIN ED, ADDITION OF RS. 8,30,575/- WAS MADE TO THE RETURNED INCOME. 7. ON APPEAL, THE CIT(A) ALLOWED A RELIEF OF RS. 50 ,000/- AND SUSTAINED THE ADDITION OF RS. 7,80,575/- FOR THE RE ASONS STATED IN PARAS 4.3, 4.3.1 AND 4.3.2 OF HIS ORDER. NOW THE ASSESSEE IS IN APPEAL BEFORE THE TRIBUNAL AGAINST THE ORDER OF CIT(A). 8. WE HAVE HEARD THE RIVAL SUBMISSIONS AND HAVE ALS O PERUSED THE MATERIALS AVAILABLE ON RECORD. SHRI PRIKSHIT AGGAR WAL, LD. COUNSEL FOR 4 THE ASSESSEE SUBMITTED THAT MAJOR COMPONENT OF CONF IRMED ADDITION IS DUE TO DIFFERENCE OF RS. 7,80,575/- WITH M/S ANJALI SUI TS & SAREES, WHICH IS CLEARLY EXPLAINABLE FROM THE DOCUMENTS SUBMITTED BE FORE THE LOWER AUTHORITIES. SHRI PRIKSHIT AGGARWAL, LD. COUNSEL S UBMITTED THAT COPY OF ACCOUNT OF M/S ANJALI SUITS & SAREES IN ASSESSEES BOOK FOR FINANCIAL YEAR 2006-07 WAS FILED. BESIDES THIS, COPY OF ACC OUNT M/S ANJALI SUITS & SAREES FOR FINANCIAL YEAR 2007-08 IN ASSESSEES BO OK WAS ALSO FILED. COPY OF ASSESSEES ACCOUNT IN THE BOOKS OF M/S ANJA LI SUITS & SAREES FOR FINANCIAL YEAR 2006-07 WAS ALSO FILED. ACCORDING TO LD. COUNSEL FOR THE ASSESSEE THE REASON FOR DIFFERENCE OF RS. 7,80,575/ - IN THE ACCOUNTS OF BOTH THE PARTIES IS THAT GOODS RETURNED OF RS. 7,82 ,127/- BY ASSESSEE TO M/S ANJALI SUITS & SAREES WAS ACCOUNTED FOR BY THE ASSESSEE IN HIS BOOKS ON 2.4.2007 WHEREAS THE SAME WAS ACCOUNTED FOR BY T HE PARTY IN ITS BOOKS ON 31.3.2007. SHRI PRIKSHIT AGGARWAL, LD. COUNSEL FOR THE ASSESSEE ALSO SUBMITTED THAT ASSESSEE RETURNED THE GOODS IN THE N EXT FINANCIAL YEAR I.E. IN APRIL, 2007 AND ACCOUNTED FOR THE GOODS RETURNED TRANSACTION CORRECTLY IN HIS BOOKS OF ACCOUNT. IT IS OPPOSITE PARTY WHO ACCOUNTED FOR RECEIPTS OF GOODS RETURNED IN MARCH 2007 ONLY, ON A LOGIC THAT SINCE SALES OF THOSE GOODS WERE RETURNED IN FINANCIAL YEAR 2006-07, THE RETURN OF THOSE GOODS ALSO NEEDS TO BE RECORDED IN FINANCIAL YEAR 2006-07 . THIS COULD BE AN ERROR IN WRONG / LATE / EARLY POSTING OF AN ACCOUNT ING VOUCHER, BUT THE INCOME, IF ANY, HAS NOT BEEN CONCEALED. SHRI PRIKS HIT AGGARWAL, LD. COUNSEL FOR THE ASSESSEE ALSO SUBMITTED THAT THE AS SESSING OFFICER OBTAINED THE COPY OF ACCOUNT OF M/S ANJALI SUITS & SAREES FOR FINANCIAL YEAR 2006-07/ THE SAID PARTY HAS ALSO FILED CONFIR MATION LETTER, WHICH READS AS UNDER:- TO WHOM IT MAY CONCERN 5 CERTIFIED THAT WE HAVE RECEIVED SALES RETURN WORTH RS. 782127.00 FROM M/S KALA KRAITI FASHION SCAPE, MANI MAJRA, CHANDIGARH IN THE MONTH OF APRIL 2007. SINCE ALL T HE SALES MADE TO THE PARTY DURING THE FINANCIAL YEAR 2006-07 WAS ENTERED IN THE BOOKS IN THE FINANCIAL YEAR 2006-07 ITSELF, WE HAVE MADE THE ENTRY OF SALES RETURN IN THE FINANCIA L YEAR 2006-07 ALTHOUGH THE SAME WAS PHYSICALLY RECEIVED I N THE FINANCIAL YEAR 2007-08 I.E. IN THE MONTH OF APRIL 2 007. GOODS AND AMOUNT OF SALES RETURN WAS SETTLED WITH T HE PARTY IN THE FINANCIAL YEAR 2006-07 ON DIFFERENT OCCASION S BUT THE GOODS WERE ACTUALLY RECEIVED IN THE MONTH OF APRIL, 2007. SO, IN ORDER TO ARRIVE AT THE TRUE PROFITABILITY OF THE FIRM, WE HAVE MADE THE ENTRY OF SALES RETURN IN THE YEAR OF SALE OF THOSE SALES RETURN I.E. FINANCIAL YEAR 2006 -07. FOR ANJALI SUITS 7 SARESS SD/- PROPRIETOR 9. WE FIND THAT THE ASSESSING OFFICER HAS NOT CONSI DERED THE ABOVE CONFIRMATION LETTER FILED BY M/S ANJALI SUITS & SAR EES. THERE IS NO DISCUSSION IN THE ASSESSMENT ORDER REGARDING THE AF ORESAID CONFIRMATION LETTER. ADMITTEDLY, THIS LETTER HAS BEEN OBTAINED BY THE ASSESSING OFFICER U/S 133(6) OF THE ACT. IN OUR VIEW, THE ABOVE CONF IRMATION LETTER GOES TO THE ROOT OF THE MATTER. CONSIDERING THE ENTIRE FAC TS AND CIRCUMSTANCES OF THE PRESENT CASE, WE SET ASIDE THE ORDER OF CIT(A) AND REMAND THE MATTER TO ASSESSING OFFICER WITH A DIRECTION TO DECIDE THE ISSUE REGARDING THE ADDITION OF RS. 7,80,575/- APPEARING IN THE NAME OF M/S ANJALI SUITS & SAREES. THE ASSESSING OFFICER SHOULD DECIDE THE IS SUE AFRESH ON MERITS IN ACCORDANCE WITH LAW AFTER AFFORDING A DUE AND REASO NABLE OPPORTUNITY OF BEING HEARD TO THE ASSESSEE. 6 10. FOR STATISTICAL PURPOSES, THE APPEAL IS ALLOWED PARTLY AS INDICATED ABOVE. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 28 TH DAY OF NOVEMBER, 2011. SD/- SD/- (D.K.SRIVASTAVA) (H.L.KARWA) ACCOUNTANT MEMBER VICE PRESIDENT DATED : NOVEMBER, 2011 RKK COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT 4. THE CIT(A) 5. THE DR TRUE COPY BY ORDER ASSISTANT REGISTRAR