ACIT, Circle-3, Kolkata, Kolkata V. M/s AHW Steels Ltd., Kolkata

ITA 960/KOL/2012

• Counselvise Citation: [2016] 121 COUNSELVISE.COM (IT) 3127 (ITAT-KOLKATA)
• Duration Of Justice: 3 year(s) 7 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 03-02-2016
• Appeal Filed By: Department
• Bench Allotted: A
• Assessment Year: 2006-2007
• Appeal Filed On: 18-06-2012
• Court: TRIBUNAL
• Department Lawyers: RAJAT SUBHRA BISWAS
• Assessee Lawyers: ARVIND AGARWAL
• Keywords: Unexplained cash credit; Corroborative evidences; Assessment record; Onus to prove
• Section: 143(3); 133(6); 68

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH: KOL KATA [BEFORE SHRI MAHAVIR SINGH, JM & SHRI WASEEM AHMED , AM] I.T.A NO.960/KOL/2012 ASSESSMENT YEAR: 2006-07 ASSISTANT COMMISSIONER OF INCOME-TAX, VS. M/S. AH W STEELS LTD. CIRCLE-3, KOLKATA. (PAN: AACCA5741M) ( APPELLANT ) ( RESPONDENT ) DATE OF HEARING: 01.12.2015 DATE OF PRONOUNCEMENT: 03.02.2016 FOR THE APPELLANT: SHRI RAJAT SUBHRA BISWAS, CIT , DR FOR THE RESPONDENT: SHRI ARVIND AGARWAL, ADVOCATE ORDER PER SHRI MAHAVIR SINGH, JM: THIS APPEAL BY REVENUE IS ARISING OUT OF ORDER OF C IT(A)-1, KOLKATA IN APPEAL NO.326/CIT(A)-I/C-3/08-09 DATED 29.03.2012. ASSESS MENT WAS FRAMED BY ADDL. CIT, RANGE-3, KOLKATA U/S. 143(3) OF THE INCOME-TAX ACT, 1961 (HEREINAFTER REFERRED TO AS THE ACT) FOR ASSESSMENT YEAR 2006-07 VIDE HIS ORDER DA TED 31.12.2008. 2. THE FIRST ISSUE IN THIS APPEAL OF REVENUE IS AGA INST THE ORDER OF CIT(A) DELETING THE ADDITION MADE BY AO ON ACCOUNT OF UNEXPLAINED CREDI T U/S. 68 OF THE ACT. FOR THIS, REVENUE HAS RAISED FOLLOWING FOUR GROUNDS: 1. THAT THE LD. CIT(A) ERRED IN DELETING THE ADDI TION OF RS.21,87,82,482/- MADE U/S. 68 AS 'UNEXPLAINED CREDIT' WITHOUT APPRECIATION THE FA CT THAT THE ASSESSEE COMPANY FAILED TO RECONCILE THE DIFFERENCES APPEARED ON ACCOUNT OF TR ANSACTIONS MADE WITH M/S. RAM SWARUP INDUSTRIAL CORPORATION. 2. THAT THE LD. CIT(A) ERRED IN DELETING THE ADDITI ON OF RS.21,87,82,482/- WITHOUT CONTROVERT THE FINDINGS OF THE A.O. THAT THE ASSESS EE COMPANY FAILED TO RECONCILE THE DIFFERENCE BY PRODUCING SUPPORTING EVIDENCES. 3. THAT THE LD. CIT(A) ERRED WHILE DELIVERING THE J UDGMENT WITHOUT APPRECIATING THE CANNONS OF JUDGMENT THAT THE ONUS TO PROVE THE TRAN SACTIONS WAS ON ASSESSEE COMPANY. 4. THAT THE LD. CIT(A) ERRED IN DELETING THE ADDITI ON OF RS.21.87 CRORE WITHOUT ALLOWING THE OPPORTUNITY TO THE A.O TO VERIFY THE CONTENTS O F THE PAPER BOOK FILED BY THE ASSESSEE DURING THE APPELLATE STAGE. 3. BRIEFLY STATED FACTS ARE THAT DURING THE COURSE OF ASSESSMENT PROCEEDINGS, ON GOING THROUGH THE DETAILS OF SUNDRY CREDITORS, THE AO NOT ICED THAT THERE IS SUBSTANTIAL DIFFERENCE IN THE BALANCE SHEET AS SHOWN BY THE ASSESSEE AND A S SEEN FROM LEDGER ACCOUNT SUBMITTED 2 ITA NO.960/K/2012 M/S. AHW STEELS LTD. AY 2006-07 BY THE CREDITOR M/S. RAM SWARUP INDUSTRIAL CORPORAT ION (HEREINAFTER RSIC). IN RESPONSE TO NOTICE U/S. 133(6) OF THE ACT, THE CREDITOR RSIC SHOWING THE CREDIT BALANCE AT RS.22,96,80,435/- AS ON 31.03.2006 AS AGAINST THE A MOUNT TO BE SHOWN AS PAYABLE BY THE ASSESSEE AS ON 31.03.2006 AT RS.1,08,97,953/-, THER EBY DIFFERENCE OF RS.21,87,82,482/- WAS ADDED U/S. 68 OF THE ACT BY THE AO. AGGRIEVED, ASSESSEE PREFERRED APPEAL BEFORE CIT(A), WHO DELETED THE ADDITION BY OBSERVING AS UN DER: REGARDING GROUND NO. 4 RELATING TO ADDITION OF RS. 21,87,82,482/- UNDER THE HEAD UNEXPLAINED CREDIT U/S 68 OF THE I.T. ACT, IT IS NO TICED THAT A.O. ISSUED NOTICE U/S 133(6) TO ONE OF THE CREDITORS OF THE ASSESSEE M/S RAM SWARUP INDUSTRIAL CORPORATION WHICH IS A UNIT OF M/S RAM SWARUP INDUSTRIES LTD. THE ASSESSEE HAD MAINTAINED TWO ACCOUNTS OF THIS PARTY IN ITS BOOKS OF ACCOUNTS. AS PER ASSESSEE'S B OOKS OF ACCOUNTS CREDIT BALANCE AS ON 31.03.2006 WAS RS.22,96,80,435/- IN RESPECT OF M/S RAM SWARUP INDUSTRIAL CORPORATION AND AS PER THE ACCOUNTS SUBMITTED BY M/S RAM SWARUP INDUSTRIAL CORPORATION, THE AMOUNT PAYABLE BY THE ASSESSEE TO THE PARTY AS ON 3 1.03.2006 WAS RS.1,08,97,953/-. THE ASSESSEE WAS ASKED TO RECONCILE THE ABOVE DIFFERENC E AND THE RECONCILIATION WAS SUBMITTED BY THE ASSESSEE ON 24.12.2008. THE ASSESSEE DISPUTE D THE ACCOUNTS SUBMITTED BY M/S RAM SWARUP INDUSTRIAL CORPORATION IN ITS RECONCILIATION BEFORE THE ASSESSING OFFICER AND THE STATEMENT OF SHRI NAVIN GUPTA, CHIEF FINANCE OFFICE R OF M/S RAM SWARUP INDUSTRIAL CORPORATION WAS RECORDED BY THE ASSESSING OFFICER O N 31.12.2008 AND THE ADDITION OF RS.21,87,82,482/- ON ACCOUNT OF DIFFERENCE IN THE B ALANCE WAS MADE BY THE ASSESSING OFFICER U/S 68 OF THE I. T. ACT, 1961 BY AN ORDER D T.31.12.2008. THE MAIN DISPUTE IS REGARDING THE PAYMENTS OF RS.14 CRORE ON 31.03.2006 THROUGH ALLAHABAD BANK AND KARUR VYSYA BANK WHICH ACCORDING TO THE CONTENTION OF THE ASSESSEE WAS WRONGLY SHOWN BY M/S RAM SWARUP INDUSTRIAL CORPORATION AND THERE IS DISP UTE REGARDING BILLS WRONGLY DEBITED BY M/S RAM SWARUP INDUSTRIAL CORPORATION FOR WHICH IT IS CONTENDED BY THE ASSESSEE THAT MATERIAL WAS NOT RECEIVED BY THEM TO THE EXTENT OF RS.7,87,82,482/-. DURING THE APPELLATE PROCEEDINGS, THE RECONCILIATION SUBMITTED BY ASSESS EE APPEARS AT PAGE 65 OF THE PAPER BOOK. THE LEDGER ACCOUNT IN THE BOOKS OF THE ASSESS EE APPEARS AT PAGE 66 TO 87 OF THE PAPER BOOK. THE STATEMENT OF SHRI NAVIN GUPTA APPEA RS AT PAGE 119 TO 121 OF THE PAPER BOOK AND IN THE PAPER BOOK ASSESSEE HAS ALSO FURNIS HED COPY OF BANK ACCOUNT IN BANK OF INDIA MAINTAINED BY THE ASSESSEE. THE ASSESSEE HAS ALSO FURNISHED THE COPY OF ACCOUNT IN THE BOOKS OF M/S RAM SWARUP INDUSTRIAL CORPORATION WHICH WAS OBTAINED BY ASSESSEE IN THE INSPECTION OF THE ASSESSMENT RECORDS BEFORE FIL ING OF APPEAL. THE ASSESSEE ALSO FURNISHED THE COPY OF AFFIDAVIT FILED BEFORE THE AS SESSING OFFICER REGARDING DENIAL OF PAYMENT OF RS.14 CRORE MADE BY THE APPELLANT COMPAN Y TO M/S RAM SWARUP INDUSTRIAL CORPORATION AND DENIAL OF TRANSACTION OF RS.7,87,82 ,482/-. THE ASSESSEE HAS ALSO PRODUCED ANNUAL BALANCE SHEET AND PROFIT & LOSS A/C ALONG WITH AUDIT REPORT IN THE PAPER BOOK. AFTER CAREFUL CONSIDERATION OF THE WRITTEN SUBMISSI ON, ASSESSMENT ORDER, REMAND REPORT AND COUNTER COMMENTS OF THE ASSESSEE, IT IS NOTICED THAT THE TRANSACTION OF RS.14 CRORE AS ON 31.03.2006 WAS REVERSED BY M/S RAM SWARUP INDUST RIAL CORPORATION IN THE MONTHS JULY AND OCTOBER, 2006 (PAGE 158 OF THE PAPER BOOK WHICH IS NOTHING BUT PART OF THE LEDGER ALC OF THE ASSESSEE IN THE BOOKS OF M/S RAM SWARUP INDUSTRIAL CORPORATION, WHOSE CERTIFIED COPY WAS GIVEN TO THE ASSESSEE BEFORE FIL ING OF THE APPEAL). THE ASSESSEE COMPANY HAD PRODUCED THE COPY OF THE BANK ACCOUNT M AINTAINED BY IT IN THE BANK OF INDIA. THE COUNTER PARTY I.E. M/S RAM SWARUP INDUST RIAL CORPORATION NEVER PRODUCED ITS BANK ACCOUNTS TO SUBSTANTIATE THE TRANSACTION OF RS .14 CRORES ON 31.03.2006 BEFORE THE ASSESSING OFFICER. THE ASSESSEE WAS MAINTAINING ITS BANK ACCOUNTS WITH BANK OF INDIA AND DURING THE COURSE ASSESSMENT PROCEEDINGS AND REMAND PROCEEDINGS THE ASSESSING OFFICER 3 ITA NO.960/K/2012 M/S. AHW STEELS LTD. AY 2006-07 DID NOT FIND ANY EVIDENCE FOR EXISTENCE OF ANY OTHE R BANK ACCOUNT IN THE NAME OF ASSESSEE COMPANY. THE AUDITED BOOKS OF ACCOUNTS MAINTAINED B Y THE ASSESSEE WERE NOT REJECTED BY THE ASSESSING OFFICER DURING ASSESSMENT PROCEEDINGS AND THE PURCHASES AND SALES WERE CONSIDERED TO BE GENUINE BY THE ASSESSING OFFICER. THE REVERSAL OF THE TRANSACTION OF RS.14 CRORE WAS A UNILATERAL ACT BY THE COUNTER PAR TY. THE ASSESSEE WASNOT GIVEN ANY OPPORTUNITY BY THE ASSESSING OFFICER TO CROSS EXAMI NE SHRI NAVIN GUPTA, CFO OF M/S RAM SWARUP INDUSTRIAL CORPORATION WHICH IS EVIDENT FROM THE ORDER SHEET NOTINGS WHICH ARE PART OF THE PAPER BOOK FURNISHED BY THE ASSESSEE. T HE REVERSAL OF RS.14 CRORE WAS ALSO ADMITTED BY SHRI NAVIN GUPTA IN ANSWER TO QUESTION NO.4 OF THE STATEMENT RECORDED ON 31.12.2008. KEEPING IN VIEW THESE FACTS AND CIRCUMS TANCES, THE ADDITIONS OF RS.14 CRORE CANNOT BE MADE IN THE HANDS OF THE ASSESSEE U/S 68 OF THE I.T. ACT, 1961. REGARDING THE BALANCE ADDITION OF RS.7,87,82,482/-, THE A/R OF THE ASSESSEE REFERRED TO COPY OF ACCOUNT FURNISHED BY M/S RAM SWARUP INDUSTR IAL CORPORATION AND PARTICULARLY THE PAGE NO.180 AND PAGE NO.239 OF THE PAPER BOOK W HERE AMOUNT OF RS.9,37,42,597/- WAS RECONCILED BY M/S RAM SWARUP INDUSTRIAL CORPORA TION BY PASSING A INTERNAL ENTRY IN THEIR BOOKS OF ACCOUNTS FROM DEBTOR A/C TO CREDITOR A/C OF THE APPELLANT. SIMILARLY, AT PAGE 163 AND 224 INTERNAL TRANSFER ENTRIES HAD BEEN MADE BY M/S RAM SWARUP INDUSTRIAL CORPORATION IN ITS OWN BOOKS OF ACCOUNTS FOR AN AMO UNT OF RS.2,70,99,341/-. AT PAGE NO. 160 BEING INDUSTRIAL CORPORATION BOOKS THERE WAS AN REFLECTION OF CLOSING BALANCE AS ON 31.03.2005 FOR AN AMOUNT OF RS.2,88,60,143/- WHILE IN THE BOOKS OF THE APPELLANT THERE WAS NO CLOSING BALANCE IN THE ACCOUNT OF M/S. RAM SWARUP INDUSTRIAL CORPORATION WHICH FORMS PAGE 66 OF THE PAPER BOOK. THE BALANCE AMOUN T OF RS.1,54,78,255/- RELATING TO SUPPLY OF MATERIAL (KINDLY REFER TO THE DETAILS IN PAGE 4 OF THE ASSESSMENT ORDER) BY M/S. RAM SWARUP INDUSTRIAL CORPORATION TO THE APPELLANT WHICH WAS NOT ADMITTED BY THE APPELLANT EVEN AT THE ASSESSMENT STAGE, NO EVIDENCE IN FORM OF ROAD CHALLANS AND ACCEPTED BILLS WAS PRODUCED BEFORE THE ASSESSING OFFICER. K EEPING IN VIEW THE ABOVE FACTS AND CIRCUMSTANCES, THE ADDITION OF DIFFERENCE AMOUNT OF RS.7,87,82,482/- WAS MADE BY THE ASSESSING OFFICER ON THE BASIS OF CONJECTURES AND S URMISES AND WITHOUT ANY EVIDENCE. THEREFORE, THE GROUND NO. 4 IS ALLOWED. AGGRIEVED, NOW REVENUE IS IN APPEAL BEFORE THE TRIB UNAL. 4. WE HAVE HEARD RIVAL SUBMISSIONS AND GONE THROUGH FACTS AND CIRCUMSTANCES OF THE CASE. DURING THE SCRUTINY ASSESSMENT PROCEEDINGS, THE RECONCILIATION STATEMENT ALONG WITH THE RELEVANT DOCUMENTS IN SUPPORT WERE FILED B Y THE ASSESSEE-COMPANY AND AN AFFIDAVIT WAS ALSO FILED CLAIMING THAT THE BALANCE AS REFLECTED IN THE BOOKS OF ACCOUNT OF THE ASSESSEE VIS--VIS THE BOOKS OF ACCOUNT OF RSIC AS REFLECTED IN THEIR BOOKS, WERE AS PER ENTRIES IN THE REGULAR BOOKS OF ACCOUNT AND THE RECONCILIATION STATEMENT WAS IN CONFIRMATORY WITH THE BOOKS OF ACCOUNTS OF ASSESSEE . WE FIND FROM THE FACTS OF THE CASE THAT AS PER THE BOOKS OF RSIC SHOWED A CLOSING CRED IT BALANCE OF RS.1,08,97,953/- AS ON 31.03.2006 IN THE NAME OF THE ASSESSEE. FURTHER RSI C IN THEIR LEDGER FOR THE SUBSEQUENT YEAR I.E. FOR 31.03.2007 HAVE SHOWN THE SAME AMOUNT AS OPENING BALANCE UNDER THE PARTY LEDGER AS DEBTORS. THE CLOSING CREDIT BALANCE AS RE FLECTED BY THE ASSESSEE IN THEIR BOOKS IS RS.22,96,80,435/-. IT IS THIS DIFFERENCE BETWEEN THE CLOSING BALANCE AS REFLECTED BY RSIC AND AS PER THE BOOKS OF ASSESSEE HAS BEEN ADDE D BACK BY THE A.O. 4 ITA NO.960/K/2012 M/S. AHW STEELS LTD. AY 2006-07 5. THE ASSESSEE FILED RECONCILIATION STATEMENT AND THE FIRST ENTRY AS PAYMENT SHOWN BY RSIC IS OF RS.14,00,00,000/-. IN THE AFFIDAVIT F ILED BY THE ASSESSEE (PAPER BOOK PAGE 113 & 114), IT WAS CLEARLY MENTIONED THAT NO SUCH P AYMENT HAS BEEN MADE BY THE ASSESSEE TO RSIC. FROM LEDGER ACCOUNT OF RSIC FOR S UBSEQUENT YEAR, THE SAID AMOUNT OF RS.14,00,00,000/- HAVE BEEN REVERSED BY THEM ON 01. 07.2006 AND 01.10.2006 (PAPER BOOK PAGE 158). THE NEXT AMOUNT IN THE RECONCILIATI ON STATEMENT IS RS.9,37,42,597/- FOR WHICH IT HAS BEEN STATED THAT RSIC HAS TRANSFERRED THIS SUM TO THE CREDIT ACCOUNT FROM THEIR DEBTOR A/C OF ASSESSEE TO THE CREDITOR A/C OF ASSESSEE IN THEIR BOOKS. (PAGE 180 OF ASSESSEE PAPER BOOK) THE PARTY BEING THE DEBTOR A/C OF ASSESSEE IN RSIC BOOKS OF ACCOUNT. THE CREDIT LEDGER A/C OF ASSESSEE IN THE B OOKS OF RSIC HAVE BEEN FILED BY THEM DURING THE SCRUTINY PROCEEDINGS WHERE THIS CONTRA-E NTRY IS REFLECTED (ASSESSEE PAPER BOOK PAGE 221 TO PAGE 239). AS REGARDS THE NEXT ENTRY OF RS.2,70,99,341/-, THE SAME TREATMENT HAS BEEN DONE BY RSIC IN THEIR BOOKS I.E. THEY HAVE TRANSFERRED FROM THE DEBTOR A/C TO CREDITOR A/C OF ASSESSEE IN THEIR BOO KS. PAGE 163 OF ASSESSEES PAPER BOOK, WHERIN THE DEBTOR A/C OF ASSESSEE IN RSIC, WH ERE, AS ON 31ST AUGUST 2005, THE SAID ENTRY HAS BEEN REFLECTED AS 'AHW STEEL LIMITED CRS'. THE CREDITOR A/C LEDGER AS REFERRED TO HEREIN ABOVE, WHICH ALSO CONFIRM THE SA ME. ( PAGE 224 OF ASSESSEES PAPER BOOK). THE NEXT AMOUNT OF RS.2,88,574/- AND RS.2,93 ,150/- IS WITH REGARD TO TWO SALE BILLS AS ISSUED BY RSIC AS PER DETAIL MENTIONED IN THE RECONCILIATION STATEMENT, BUT WERE NOT ENTERED BY THEM IN THEIR LEDGER OF ASSESSEE. TH E BILLS ARE IN PAPER BOOK AT PAGES 90 & 91. THE ASSESSEE HAD SHOWN IT AS THEIR PURCHASE AND BOOKED IT IN THEIR BOOKS OF ACCOUNT. THE NEXT AMOUNT IS WITH REGARD TO THE AMOUNT EXCESS DEBITED BY ASSESSEE IN THEIR BOOKS IN THE LEDGER A/C OF RSIC FOR A SUM OF RS.27,91,751 /-. IN THIS REGARD, PAPER BOOK PAGE 86 BEING THE CREDIT LEDGER A/C OF RSIC IN THE BOOKS OF ASSESSEE, AND PAPER BOOK PAGE 180 BEING THE DEBIT A/C OF ASSESSEE IN RSIC. TWO SA LE BILLS ON 28TH MARCH 2006 OF RS.28,60,000/- EACH WAS WRONGLY ENTERED BY ASSESSEE IN THEIR LEDGER AS RS.2,86,000/- AND RS.28,60,000/- WHICH WAS SUBSEQUENTLY RECTIFIED BY THE PARTIES IN THE NEXT YEAR. AS REGARD TO THE ENTRIES WHERE RSIC HAS SHOWN AS SALES BY THEM TOTALING TO RS.1,54,78,255/- AND THE ASSESSEE HAS CATEGORICALLY DENIED THAT THEY HAVE NOT RECEIVED ANY SUCH MATERIALS UNDER THE BILL NOS. AND THE QUANTITY AND AMOUNT AS MENTIONED IN THE RECONCILIATION AS ALLEGED BY THE PARTY. 5 ITA NO.960/K/2012 M/S. AHW STEELS LTD. AY 2006-07 6. WE FURTHER FIND FROM THE RECONCILIATION FILED B Y THE ASSESSEE AND THE EXPLANATION THAT NO OPPORTUNITY OF CROSS-EXAMINATION WAS PROVID ED TO THE ASSESSEE DESPITE THE FACT THAT IT WAS ONLY ON THE STATEMENT OF THE CHIEF FINA NCE CONTROLLER, THE AO RELIED UPON HIS STATEMENT AND MADE ADDITION OF RS.2L.88 CRORES. THE AO NOWHERE ASKED RSIC TO PRODUCE THE BILLS AND THE EVIDENCE OF DELIVERY OF T HE MATERIAL I.E. ROAD CHALLAN AND ACCEPTED CHALLAN COPY BY ASSESSEE OF THE MATERIALS AS ALLEGED TO HAVE BEEN SOLD BY THEM. NO ENQUIRY WHATSOEVER WAS MADE BY THE AO AND IT WAS SIMPLY ON THE STATEMENT OF SRI NAVIN GUPTA, THE CFO OF RSIC WAS RELIED ON BY HIM A ND ADDITION MADE. SIMILARLY, ANOTHER AMOUNT OF RS.6,50,000/- TRANSFERRED FROM TH E CREDIT ACCOUNT OF ASSESSEE AND THE BOOKS OF RSIC TO DEBTOR A/C OF ASSESSEE IN THE BOOK S OF RSIC. PAPER BOOK PAGE 166 BEING THE DEBTOR A/C IN THE BOOKS OF RSIC, WHERE, O N 30TH SEPTEMBER 2005, THE ENTRY HAS BEEN MADE, AND PAGE 224, BEING THE CREDIT A/C O F ASSESSEE IN RSIC, WHERE THE CORRESPONDING ENTRY HAS BEEN MADE. THE NEXT AMOUNT OF RS.2,88,60,143/- IS WITH REGARD TO THE SALE BILL, AS REFLECTED AS ON 31ST MARCH 200 5, IN THE DEBTOR A/C OF ASSESSEE, IN THE BOOKS OF RSIC AS SALE BILL. BUT, ONCE AGAIN, NO SUC H PURCHASES HAVE BEEN MADE BY ASSESSEE AND NO VERIFICATION WITH REGARD TO THE SAL E BILL OF RSIC AND/OR ROAD CHALLAN AND/OR DELIVERY EVIDENCE WAS VERIFIED BY THE AO. FR OM THE LEDGER A/C WHICH IS AT PAGE 160 OF ASSESSEES PAPER BOOK, RSIC IS SHOWING THE S UM AS 31ST MARCH 2005. THIS AMOUNT IN ANY CASE IS OF THE EARLIER YEAR AND NOT O F THE YEAR UNDER CONSIDERATION. FROM THE LEDGER A/C IN THE BOOKS OF ASSESSEE OF RSIC WHI CH IS AT PAGE 66, THERE IS NO OPENING BALANCE AND THE FIRST ENTRY OF PURCHASE WAS MADE ON 27TH APRIL 2005. THE LAST ENTRY IS WITH REGARD TO THE PURCHASE BILL WRONGLY ENTERED BY ASSESSEE IN THE ACCOUNT OF RAM SWARUP BARS & ROES INSTEAD OF RSIC AMOUNTING TO RS. 4,36,436/-. THE COPY OF THE BILL HAS BEEN FILED AT PAGE 88 BEING THE BILL ISSUED BY RSIC. 7. FROM THE ABOVE RECONCILIATIONS AND THE EXPLANA TIONS, WE FIND THAT RECONCILIATION IS SUPPORTED BY EVIDENCE WHICH ARE ON RECORD, AND T HERE IS NO DIFFERENCE IN THE BALANCE IN THE BOOKS OF ACCOUNT OF ASSESSEE AND THAT OF RSIC. EVEN THE CIT(A) HAS REMANDED THE MATTER TO AO, WHO VIDE HIS REMAND REPORT EXPLAINED THE ISSUE AS UNDER:- THE ADDITIONS U/S 68 OF THE ACT WAS MADE AS THE DI FFERENCE IN THE FIGURES OF CREDITORS AS PER A/CS. O F THE ASSESSEE-CO. WERE GROSSLY DEFERRED FROM WHAT RECEIV ED IN THE REPLY VIDE NOTICE U/S 133(6) OF THE ACT WHEREIN IT WAS FOUND THAT THE SUNDRY CREDITOR VIZ. RAMSWARUP INDUSTRIAL CORPORATION SHOWING RS.L,08,97,953/- AS ON 31.03.2006 AGAINST THE ASSES SEE'S FIGURE OF CREDIT BALANCE OF RS.22,96,80,435/- . 6 ITA NO.960/K/2012 M/S. AHW STEELS LTD. AY 2006-07 THE ASSESSEE WAS ASKED TO EXPLAIN/RECONCILE THE SUB STANTIAL DIFFERENCE IN THE BALANCE SHOWN BY THE ASSESSEE IN ITS BOOKS AND AS SHOWN BY THE PARTY IN THE REPLIES RECEIVED VIDE NOTICE U/S 133(6) OF THE ACT. THE ASSESSEE, HOWEVER PRODUCE ITS RECONCILIATION WI TH M/S RAMSWARUP INDUSTRIAL CORPORATION FOR THE YEAR UNDER CONSIDERATION I.E. F.Y. 05-06. FURTHER, THE ASSESSEE-CO, SUBMITTED AS AFFIDAVIT ON 30.12.08 CONTENDING THAT THE ALLEGED PAYMENT OF RS .14 CRORES ON 31.03.2006 HAS CREDITED BY THE M/S RAMSWA RUP INDUSTRIAL CORPORATION IN THEIR BOOKS WAS NEVER MADE BY THE ASSESSEE-CO. FURTHER, THE ASSESSE E-CO. ALSO CONTENDED THAT THE TRANSACTIONS AMOUNTIN G TO RS.1,59,14,691/- ON VARIOUS DATES, AMOUNTING TO RS.2,88,60,143/- HAS WRONGLY DEBITED TO THE ASSESSE E'S ACCOUNTS. THE CRUX OF THE MATER UNDER CONSIDERATION IS THAT T HE LD. AO HAS THE OPPORTUNITY TO CROSS VERIFY THE RECONCILIATION AS SUBMITTED BY THE ASSES SEE-CO. AND FOR THAT THE CFO OF M/S. RAMSWARUP INDUSTRIAL CORPORATION, SRI NAVEEN GUPTA, WAS PRODU CED BY THE ASSESSEE-CO. HIMSELF BEFORE THE A.O. THE STATEMENTS OF NAVEEN GUPTA, CFO WERE RECORDED WHERE IN HE DEFERRED THAT DIFFERED TO WHAT THE ASSESSEE HAS STATED ITS AFFIDAVIT, IBID. SRI GUPTA, STATED T HAT THE CHEQUES WERE ACTUALLY RECEIVED BY THEM ON 31.03.2006 AND THAT IS WHY THE AMOUNTS WERE CREDITE D. HE HAS STATED THAT THE CHEQUES WERE RECEIVED BUT CHEQUES NO. HAS BEEN MENTIONED IN THE LEDGER A/C. D UE TO THE ERROR OF THE DATA ENTRY OPERATORS WHICH I S IN DIRECT CONTRADICTION TO WHAT THE ASSESSEE HAS ST ATED IN ITS SUBMISSION THAT THE CHEQUES WERE NEVER ISSUED TO THE PARTY. SRI GUPTA HAS STATED IN REPLY TO QUESTION NO.14 THAT HE DOES NOT AGREE WITH THE RECONCILIATION OF M/S. AHW STEELS LTD. HE FURTHER S TATED THAT THE STATEMENT OF A/C M/S. RAMSWARUP INDUSTRIAL CORPORATION WAS PM THE BASIS OF ACTUAL T RANSACTION THAT WERE CARRIED OUT. IN SUCH CIRCUMSTANCES, WHERE ASSESSEE RECONCILIATIO N IS NOT BASED ON CONCRETE EVIDENCES AND FURTHER IT WAS SUBMITTED BY THE PARTY THAT THE TRAN SACTION WERE ACTUALLY MADE I.E. M/S RAMSWARUP INDUSTRIAL CORPORATION. THE RECONCILIATION OF THE A SSESSEE-CO. DOES NOT STAND PROVED. THUS THE AO CORRECTLY MADE THE ADDITION. FURTHER, TAKING INTO ACCOUNT THE FACTS AND CIRCUMST ANCES OF THE CASE, SUPRA, THE RECONCILIATION OF THE ASSESSEE-CO. IS NOT ACCEPTABLE. THE COPY OF THE STATEMENT OF SRI NAVEEN GUPTA, CFO OF M/S. RAMSWARUP INDUSTRIAL CORPORATION WHICH IN ITSELF IS AN EVIDENCE MAY BE PRODUCED TO YOU, IF REQUIRED. IN VIEW OF THE ABOVE THE REMAND REPORT MAY KINDLY B E TREATED AS SUBMITTED. 8. WE FIND FROM THE FACTS OF THE CASE THAT THE AO R ELYING ON THE SUBMISSIONS TAKEN U/S 133(1) OF ONE SRI NAVIN GUPTA OF RSIC, HAD ADDE D THE DIFFERENCE OF RS.21.88 CRORES TO THE INCOME OF THE ASSESSEE BY INVOKING THE PROVI SION OF SECTION 68 OF THE ACT. WE FUETHER FIND THAT THOUGH FULL DETAILS AND DOCUMENTS AND LEDGER COPY OF RSIC FOR THE YEAR ENDED 31ST MARCH 2006 AND ALSO OF 31 ST MARCH 2007 WAS PUT ON RECORD. THE STATEMENT WAS RECORDED BY THE AO ON THE LAST DATE OF PASSING OF THE ASSESSMENT ORDER ON 31ST DECEMBER AND MADE HIS CONCLUSION BASED ON THE SUBMI SSION OF SRI NAVIN GUPTA BUT NO OPPORTUNITY WHATSOEVER WAS PROVIDED TO THE ASSESSEE FOR CROSS-EXAMINATION BY THE AO. 7 ITA NO.960/K/2012 M/S. AHW STEELS LTD. AY 2006-07 THE ASSESSEE HAS EXPLAINED BEFORE US IN ENTIRETY TH E RECONSILATION AND ALSO EXPLAINED THE DISCREPANCIES. THE ASSESSEE REFERRING TO PAGE 65 E XPLAINED THE ENTRIES AS REFLECTED IN THE RECONCILIATION STATEMENT. AS PER THE BOOKS OF RSIC, THE BALANCE AS ON 31ST MARCH, 2006 IN THEIR BOOKS SHOWED A CLOSING CREDIT BALANCE OF R S.1,08,97,953/-. RSIC IN THEIR LEDGER FOR THE SUBSEQUENT YEAR I.E. FOR 31 ST MARCH, 2007 ENDING HAVE SHOWN THE SAME AMOUNT AS OPENING BALANCE UNDER THE PARTY LEDGER AS DEBTORS. THIS CAN BE SEEN FROM PAGE 158 OF ASSESSEES PAPER BOOK. THE CLOSING CREDIT BALANCE A S REFLECTED BY ASSESSEE IN THEIR BOOKS IS RS.22,96,80,435/-. (IT IS THIS DIFFERENCE BETWEE N THE CLOSING BALANCE AS REFLECTED BY RSIC AND AS PER THE BOOKS OF ASSESSEE HAS BEEN ADDE D BACK BY THE AO). IN THE RECONCILIATION STATEMENT, THE FIRST ENTRY AS PAYMEN T SHOWN BY RSIC IS OF RS.14,00,00,000/-. IN THE AFFIDAVIT FILED BY ASSESS EE WHICH IS AT ASSESSEES PAPER BOOK PAGES 113 & 114, IT WAS CLEARLY MENTIONED THAT, NO SUCH PAYMENT HAS BEEN MADE BY ASSESSEE TO RSIC WHICH THEY HAVE ALLEGED. FROM THE LEDGER ACCOUNT OF RSIC FOR THE SUBSEQUENT YEAR, THE SAID AMOUNT OF RS.14,00,00,000 /- HAVE BEEN REVERSED BY THEM ON IST JULY 2006 AND IST OCTOBER, 2006. THIS FACT IS VERIF IED FROM ASSESSEES PAPER BOOK PAGE 158. 9. FURTHER, NEXT AMOUNT IN THE RECONCILIATION STATE MENT IS RS.9,37,42,597.69 FOR WHICH IT HAS BEEN STATED THAT RSIC HAS TRANSFERRED THIS SUM TO THE CREDIT ACCOUNT FROM THEIR DEBTOR A/C OF ASSESSEE TO THE CREDITOR A/C OF ASSESSEE IN THEIR BOOKS. THIS IS VERIFIED FROM ASSESSEES PAPER BOOK PAGE 180 BEING DEBTOR A/C OF ASSESSEE IN RSIC BOOKS (WHERE ON 31ST MARCH 2006 THEY HAVE INTERNALL Y TRANSFERRED FROM THE DEBTOR A/C TO THE CREDITOR A/C THE SAID SUM). THE CREDIT LEDGE R A/C OF ASSESSEE IN THE BOOKS OF RSIC HAVE BEEN FILED BY THEM DURING THE SCRUTINY P ROCEEDINGS WHERE THIS CONTRA-ENTRY IS REFLECTED, IS BEING FILED IN CONTINUOUS IN ASSESSEE S PAPER BOOK PAGE 221 TO PAGE 239. THE NEXT ENTRY OF RS.2,70,99,341/-, THE SAME TREATM ENT HAS BEEN DONE BY RSIC IN THEIR BOOKS I.E. THEY HAVE TRANSFERRED FROM THE DEBTOR A/ C TO CREDITOR A/C OF ASSESSEE IN THEIR BOOKS. THIS IS VERIFIED FROM ASSESSEES PAPER BOOK PAGE 163 BEING THE DEBTOR A/C OF ASSESSEE IN RSIC, WHERE, ON 31ST AUGUST 2005, THE S AID ENTRY HAS BEEN REFLECTED AS 'AHW STEEL LIMITED CRS'. THE CREDITOR A/C LEDGER AS REFERRED TO HEREIN ABOVE ALSO CONFIRM THE SAME. NEXT AMOUNT OF RS.2,88,574/- AND RS.2,93,150/- IS WITH REGARD TO TWO SALE BILLS AS ISSUED BY RSIC AS PER DETAIL MENTIONE D IN THE RECONCILIATION STATEMENT, BUT 8 ITA NO.960/K/2012 M/S. AHW STEELS LTD. AY 2006-07 WERE NOT ENTERED BY THEM IN THEIR LEDGER OF ASSESSE E. THE BILLS ARE AT ASSESSEES PAPER BOOK PAGE 90 & 91. THE ASSESSEE HAD SHOWN IT AS THE IR PURCHASE AND HAD RECORDED IT IN THEIR BOOKS OF ACCOUNT ACCORDINGLY. NEXT AMOUNT IS WITH REGARD TO THE AMOUNT OF EXCESS DEBITED BY ASSESSEE IN THEIR BOOKS IN THE LEDGER A/ C OF RSIC FOR A SUM OF RS.27,91,751/- . LD. COUNSEL FOR THE ASSESSEE REFERRED TO ASSESSEE S PAPER BOOK PAGE 86 BEING THE CREDIT LEDGER A/C OF RSIC IN THE BOOKS OF ASSESSEE, AND AS SESSEES PAPER BOOK PAGE 180 BEING THE DEBIT A/C OF ASSESSEE IN RSIC. TWO SALE BILLS O N 28TH MARCH 2006 OF RS.28,60,000/- EACH WAS WRONGLY ENTERED BY ASSESSEE IN THEIR LEDGE R AS RS.2,86,000/- AND RS.28,60,000/- WHICH WAS SUBSEQUENTLY RECTIFIED BY THE PARTIES IN THE NEXT YEAR. 10. WITH REGARD TO THE ENTRIES WHERE RSIC HAS SHOW N AS SALES BY THEM TOTALING TO RS.1,54,78,255/- AND THE ASSESSEE HAS CATEGORICALLY DENIED THAT THEY HAVE NOT RECEIVED ANY SUCH MATERIALS UNDER THE BILL NOS. AND THE QUAN TITY AND AMOUNT AS MENTIONED IN THE RECONCILIATION AS ALLEGED BY THE PARTY. WE FIND THA T NO OPPORTUNITY OF CROSS-EXAMINATION WAS PROVIDED TO THE ASSESSEE. IT WAS ONLY ON THE ST ATEMENT OF THE CHIEF FINANCE CONTROLLER, THE AO RELIED UPON HIS STATEMENT AND MA DE ADDITION OF RS.2L.88 CRORES. LD. COUNSEL FOR THE ASSESSEE REFERRED TO SHORT NOTES ON GROUNDS OF APPEAL. ACCORDING TO HIM, THE AO SHOULD HAVE ASKED RSIC TO PRODUCE THE B ILLS AND THE EVIDENCE OF DELIVERY OF THE MATERIAL I.E. ROAD CHALLAN AND ACCEPTED CHALLAN COPY BY ASSESSEE OF THE MATERIALS. NO ENQUIRY WHATSOEVER WAS MADE BY THE AO. IT WAS SI MPLY ON THE STATEMENT OF SRI NAVIN GUPTA, THE CFO OF RSIC WAS RELIED UPON BY HIM AND ADDITION WAS MADE. NEXT AMOUNT OF RS.2,88,60,143/- IS WITH REGARD TO THE SA LE BILL, AS REFLECTED AS ON 31ST MARCH 2005, IN THE DEBTOR A/C OF ASSESSEE, IN THE BOOKS O F RSIC AS SALE BILL. BUT, ONCE AGAIN, NO SUCH PURCHASES HAVE BEEN MADE BY ASSESSEE AND NO VERIFICATION WITH REGARD TO THE SALE BILL OF RSIC AND/OR ROAD CHALLAN AND/OR DELIVERY EV IDENCE WAS VERIFIED BY THE AO. FROM THE LEDGER A/C WHICH IS AT ASSESSEES PAPER BO OK AT PAGE 160, RSIC IS SHOWING THE SUM AS ON 31ST MARCH 2005. THIS AMOUNT IN ANY C ASE IS OF THE EARLIER YEAR AND NOT OF THE YEAR UNDER CONSIDERATION. FROM THE LEDGER A/C I N THE BOOKS OF ASSESSEE OF RSIC WHICH IS AT ASSESSEES PAPER BOOK PAGE 66, THERE IS NO OPENING BALANCE AND THE FIRST ENTRY OF PURCHASE WAS MADE ON 27TH APRIL 2005. NEXT AMOUN T OF RS.8,088/- IS WITH REGARD TO THE PURCHASE BILL LESS CREDITED BY ASSESSEE IN THEI R BOOKS. REFERENCE WAS MADE TO PAPER BOOK PAGE 180, WHERE, ON 16TH MARCH 2006, THE ENTRY IN THE RSIC IN THE DEBIT LEDGER 9 ITA NO.960/K/2012 M/S. AHW STEELS LTD. AY 2006-07 ACCOUNT OF ASSESSEE, AMOUNT SHOWN AS RS.2,08,388/- , WHEREAS ASSESSEE IN THEIR BOOKS HAVE MADE AN ENTRY OF RS.2,00,300/- THAT'S THE DIFF ERENCE AMOUNT COMES TO RS.8,088/-. THE LAST ENTRY IS WITH REGARD TO THE PURCHASE BILL WRONGLY ENTERED BY ASSESSEE IN THE ACCOUNT OF RAM SWARUP BARS & ROES INSTEAD OF RSIC A MOUNTING TO RS.4,36,436/-. THE COPY OF THE BILL HAS BEEN FILED AT ASSESSEES PAPER BOOK AT PAGE 88 BEING THE BILL ISSUED BY RSIC. FROM THESE RECONCILIATIONS AND THE EXPLANA TIONS AND ALSO THE EXPLANATIONS AND CLARIFICATIONS SUBMITTED IN THE SHORT NOTES ON GROU NDS OF APPEAL, WE FIND THAT THE RECONCILIATION IS SUPPORTED BY EVIDENCE WHICH ARE O N RECORD, AND THERE IS NO DIFFERENCE IN THE BALANCE IN THE BOOKS OF ACCOUNT OF ASSESSEE THA T OF RSIC, AND HENCE, THE DIFFERENCE OF THE ADDITION AS MADE BY THE AO OF RS.21.88 CRORES I S RIGHTLY DELETED BY CIT(A) AND HENCE WE CONFIRM THE SAME. 9. IN THE RESULT, THE APPEAL OF REVENUE IS DISMISSE D. 10. ORDER IS PRONOUNCED IN THE OPEN COURT ON 03.02. 2016 SD/- SD/- (WASEEM AHMED) (MAHAVIR SINGH) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED : 3RD FEBRUARY, 2016 JD. SR. P.S COPY OF THE ORDER FORWARDED TO: 1 . APPELLANT ACIT, CIRCLE-3, KOLKATA. 2 RESPONDENT M/S. AHW STEELS LTD., 12, LORD SINHA RO AD, KOLKATA-700 071. 3 . THE CIT(A), KOLKATA 4. 5. CIT KOLKATA DR, KOLKATA BENCHES, KOLKATA / TRUE COPY, BY ORDER, ASSTT. REGISTRAR .