The Income tax Officer, Jammu ( J&k) V. M/s. JKIETR Kachi Chawni, Jammu

MA 89/ASR/2013

• Counselvise Citation: [2014] 124 COUNSELVISE.COM (IT) 1976 (ITAT-AMRITSAR)
• Duration Of Justice: 9 month(s) 1 day(s)
• Appeal Type: Miscellaneous Application
• Pronouncement Date: 11-06-2014
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Next Hearing Date: 06-06-2014
• Assessment Year: 2007-2008
• Appeal Filed On: 09-09-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: J S BHASIN
• Keywords: Sale consideration of property below Jantri Value; Additional evidence; Question of law; Assessment record
• Section: 133(6); 68

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AMRITSAR BENCH; AMRITSAR. BEFORE SH. A.D. JAIN, JUDICIAL MEMBER AND SH. B.P.JAIN, ACCOUNTANT MEMBER I.T.A. NO.526(ASR)/2013 ASSESSMENT YEAR:2005-06 PAN :AACFS8050C ASSISTANT COMMR. OF INCOME TAX, VS. M/S. SHADI RAM & SONS, CIRCLE-IV, JALANDHAR. VPO LAMBRA, DISTT. JALANDH AR. (APPELLANT) (RESPONDENT) APPELLANT BY:SH.MAHAVIR SINGH, DR RESPONDENT BY:SH. J.S.BHASIN, ADVOCATE DATE OF HEARING: 05/06/2014 DATE OF PRONOUNCEMENT:11/06/2014 ORDER PER B.P.JAIN, AM THIS APPEAL OF THE REVENUE ARISES FROM THE ORDER O F THE CIT(A), JALANDHAR, DATED 29.05.2013 FOR THE ASSESSMENT YEAR 2005-06.THE REVENUE HAS RAISED FOLLOWING GROUNDS OF APPEAL: 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE AND IN LAW THE LD. CIT(A) HAS ERRED IN DELETING THE ADDITIONS ON A CCOUNT OF UNCONFIRMED CREDITORS IN THE NAME OF M/S. ASHWANI V ANASPATI IND. LTD; BARODA (RS.5,00,000/-) AND M/S. SANDEEP & CO. MUMBAI (RS.5,33,516/-). ITA NO.526(ASR)/2013 2 2. IT IS PRAYED THAT THE ORDER OF THE LD. CIT(A) BE SET-ASIDE AND THAT OF THE A.O. BE RESTORED. 3. THE APPELLANT REQUEST FOR LEAVE TO ADD OR AMEND OR ALTER THE GROUNDS OF APPEAL BEFORE THE APPEAL IS HEARD AND DI SPOSED OFF. 2. THE BRIEF FACTS OF THE CASE ARE THAT THE AO DURI NG THE ASSESSMENT ISSUED LETTERS U/S 133(6) OF THE I.T.ACT TO VERIFY THE CREDITORS BUT NO CONFIRMATION WAS RECEIVED FROM FOLLOWING PARTIES: S.NO. PARTY AMOUNT OUTSTANDING 1. M/S. ASHWANI VANASPATI IND. LTD, BARODA 5,00,000 /- 2 M/S. NARENDRA FORWARDERS PVT. LTD. GANDJHIDHAM 6,05,877/- 3. M/S. SANDEEP & CO.; MUMBAI 5,33,516/- THE AO ASKED THE ASSESSEE TO JUSTIFY THE CLAIM OF L IABILITIES IN RESPECT OF THE ABOVE REFERRED PARTIES. IN REPLY, THE ASSESSEE STAT ED THAT AT PRESENT, IT WAS HAVING NO DEALING WITH THESE PARTIES WHO WERE AGENT S AND DUE TO NON RECOVERY BY THEM, THE AMOUNTS WERE OUTSTANDING. NO CONFIRMATION COULD BE FILED BY THE ASSESSEE. THE AO ADDED THE AMOUNT INVO LVED OF RS.16,39,393/- TO THE INCOME OF ASSESSEE. 3. BEFORE, THE CIT(A), THE LD. COUNSEL FOR THE ASSE SSEE FILED WRITTEN SUBMISSIONS, WHICH ARE AVAILABLE AT PAGES 2 TO 5 OF THE ORDER OF THE CIT(A). THE SAID SUBMISSIONS WERE SENT TO THE AO FOR COMMEN TS, WHO SUBMITTED THE ITA NO.526(ASR)/2013 3 COMMENTS, WHICH ARE AVAILABLE IN THE ORDER OF THE C IT(A) AT PAGES 5 TO 7. THE LD. CIT(A) AFTER ADMITTING THE ADDITIONAL EVIDE NCE WITH REGARD TO M/S. NARENDRA FORWARDERS P. LTD; GANDHIDHAM AND AFTER CO NDUCTING ENQUIRY AND TAKING INTO ACCOUNT THE COMMENTS OF THE ASSESSEE AN D THAT OF THE A.O. AND CONSIDERING THE SUBMISSIONS OF THE ASSESSEE SUSTAIN ED THE ADDITION OF RS.91,287/- BEING THE AMOUNT WHICH REMAINED UNRECON CILED WITH RESPECT TO M/S. NARENDRA FORWARDERS P. LTD; GANDHIDHAM AND DEL ETED THE REST OF THE ADDITION WITH REGARD TO THE SAID CREDITOR. WITH REG ARD TO THE OTHER CREDITORS M/S. ASHWANI VANASPATI LTD AND M/S. SANDIP & CO; TH E LD. CIT(A) DELETED THE ADDITION AND THE RELEVANT FINDINGS OF THE LD. C IT(A) ARE REPRODUCED FOR THE SAKE OF CONVENIENCE, AS UNDER: IT IS CLAIMED BY THE ASSESSEE THAT THESE CREDITS D OESNT RELATE TO THIS AY AND WERE OLD CREDITS CARRIED FORWARD HENCE NO AD DITIONS CAN BE MADE IN RESPECT OF THE CREDITS IN THE NAME OF M/S. ASHWANI VANASPATI LTD. RS.5,00,000/- AND M/S. SANDIP & CO. (RS.5,33,5 16). I HAVE GONE THROUGH THE ASSESSMENT RECORDS WHERE COPIES OF ACCO UNTS OF BOTH THE PARTIES ARE PLACED ON RECORDS AND THE CONTENTION OF ASSESSEE IS FOUND TO BE CORRECT. THE CREDIT OF RS.5,00,000/- IN THE N AME OF M/S. ASHANI VANASPATI LTD. IS CARRIED FORWARD AT LEAST FROM AY 02-03 AND THE CREDIT IS STATIC TILL DATE. IN CASE OF M/S. SANDIP & CO. THE LAST TRANSACTION IS IN AY 03-04 AND THERE IS NO FURTHER TRANSACTION THEREAFTER. IN VIEW OF THIS THE ARGUMENT OF ASSESSE E HAS LOT OF FORCE AND IT IS HELD THAT NO ADDITION COULD BE MADE IN AN Y OTHER AY ( I.E. THIS AY) THAN THE AY TO WHICH THE CREDITS RELATES. IN VI EW OF THIS THE ADDITION IN PRESENT AY IS DELETED. IT IS FURTHER CL AIMED BY ASSESSEE THAT THESE CREDITS ARE WRITTEN BACK AS INCOME OF ASSESSE E IN AY 08-09 AND DUE TAXES ARE PAID. IT IS ALSO TO CLARIFY THAT AS P ER COMMENTS OF AO THE ITA NO.526(ASR)/2013 4 CREDITS WERE PROVED TO BE BOGUS BY THIS ACT OF WRIT ING BACK THE AMOUNTS, BUT EVEN THIS ARGUMENT COULD ONLY BE APPL IED IN THE AY TO WHICH THE CREDITS RELATES AND NOT TO THE PRESENT A Y. IN VIEW OF THIS, THE ADDITION MADE ON ACCOUNT OF CREDITS IN THE NAME S OF M/S. ASHWANI VANASPATI LTD. AND M/S. SANDIP & CO. IS DELETED. 4. THE LD. JCIT(DR), MR. MAHAVIR SINGH, ARGUED THAT THERE IS NO DISPUTE THAT THESE ARE THE OLD CREDITORS BUT AT THE SAME TI ME THESE WERE WRITTEN BACK BY THE ASSESSEE IN THE ASSESSMENT YEAR 2008-09 IMME DIATELY AFTER COMPLETION OF ASSESSMENT ON 31/12/2007, WHICH PROVE S THAT THE SAID CREDITORS ARE BOGUS. THE LD. DR FURTHER ARGUED THAT THE LD. CIT(A) CONDUCTED THE ENQUIRY WITH REGARD TO THE CREDITOR I.E. M/S. NARENDRA FORWARDERS (P) LTD; BUT HE DID NOT CONDUCT ENQUIRY WITH REGARD TO THE PRESENT TWO CREDITORS. THEREFORE, THE ADDITION MAD E BY THE AO WITH REGARD TO THE SAID BOGUS CREDITORS IS CORRECT ADDITION AN D THE LD. CIT(A) IS NOT JUSTIFIED IN DELETING THE ADDITION, SO MADE BY THE A.O. 5. THE LD. COUNSEL FOR THE ASSESSEE, MR. J.S. BHASI N, ADVOCATE, ON THE OTHER HAND, ARGUED AT THE OUTSET THAT THE INFORMAT ION U/S 133(6) OF THE ACT WAS CALLED FOR FROM THE SAID CREDITOR BUT NO CONFIR MATION WAS RECEIVED FROM THE SAID CREDITOR. IT IS NOT THE CASE OF THE REVENU E THAT NOTICES U/S 133(6) WERE NOT SERVED ON THE CREDITOR. IT WAS FURTHER AR GUED BY SH.J.S.BHASIN, ADVOCATE THAT NOTHING HAS BEEN MENTIONED BY THE AO WHETHER THE SAID ADDITION HAS BEEN MADE U/S 68 OF THE ACT OR U/S 41( 1) OF THE ACT. AS REGARDS ITA NO.526(ASR)/2013 5 THE PROVISIONS OF SECTION 68, WHICH WERE READ BY TH E LD. COUNSEL FOR THE ASSESSEE THAT THE SAID SECTION IS NOT APPLICABLE TO THE PRESENT FACTS AND CIRCUMSTANCES OF THE CASE, SINCE THE SUM IS NOT FOU ND CREDITED IN THE BOOKS OF THE ASSESSEE FOR THE IMPUGNED PREVIOUS YEAR RELEVAN T TO THE ASSESSMENT YEAR 2005-06. CERTAINLY, THESE CREDITORS BELONG TO THE P RECEDING YEAR WHICH FACT IS NOT IN DISPUTE. AS REGARDS THE PROVISIONS OF SECTIO N 41(1), WHICH ARE ALSO NOT APPLICABLE. IN THE PRESENT FACTS AND CIRCUMSTANCES OF THE CASE, THE ASSESSEE HAS NOT OBTAINED ANY BENEFIT BY WAY OF REMISSION O R CESSATION THEREOF. ACCORDINGLY, THE SAID SECTION 41 IS NOT APPLICABLE IN THE PRESENT FACTS AND CIRCUMSTANCES OF THE CASE. HE FURTHER INVITED OUR A TTENTION TO EXPLANATION (1) TO SECTION 41, WHICH AMENDMENT WAS BROUGHT IN FINAN CE (NO.2) ACT, 1996 W.E.F. 1.4.1997 THAT ANY REMISSION OR CESSATION SHA LL INCLUDE THE REMISSION OR CESSATION OF ANY LIABILITY BY A UNILATERAL ACT. TH E ASSESSEE BY UNILATERAL ACT HAS CEASED THE LIABILITY THEREOF DURING THE ASSESSM ENT YEAR 2008-09 AND HAVE INCLUDED THE SAME IN THE INCOME OF THE ASSESSEE AND PAID THE TAXES DUE THEREON. THEREFORE, IN THE FACTS AND CIRCUMSTANCES, NO ADDITION CAN BE MADE BY THE AO AND THE ADDITION DELETED BY THE LD. CIT(A ) IS CORRECT. HE RELIED UPON THE DECISION OF THE HONBLE PUNJAB & HARYANA H IGH COURT IN THE CASE OF CIT VS. GP INTERNATIONAL LTD; REPORTED IN (2010) 325 ITR 25, WHERE THE FACTS OF THE CASE WERE THAT THE AMOUNT WAS PAYABLE TO A CREDITOR BY THE ITA NO.526(ASR)/2013 6 ASSESSEE, WHICH WAS SHOWN AS PAYABLE AS LIABILITY I N THE BOOKS OF ACCOUNT, WHICH WAS NOT WRITTEN BACK. IT WAS HELD THAT THE AF ORESAID LIABILITY CANNOT BE SAID TO HAVE CEASED TO EXIST AND IT CANNOT BE TREAT ED AS INCOME BY INVOKING THE PROVISIONS OF SECTION 41(1) OF THE ACT. HE ALSO INVITED OUR ATTENTION TO THE DECISION OF THE HONBLE SUPREME COURT IN THE CASE O F CIT VS. LOVELY EXPORTS (P) LTD (2008) 216 CTR 195, WHERE IF THE S HARE APPLICANTS DID NOT RESPOND TO THE NOTICE ISSUED U/S 133(6), ADDITION W AS RIGHTLY DELETED BY THE LD. CIT(A) AND NO SUBSTANTIAL QUESTION OF LAW AROSE IN THAT CASE. HE FURTHER RELIED UPON THE DECISION OF THE HONBLE DELHI HIGH COURT IN THE CASE OF CIT VS. SHRI VARDHMAN OVERSEAS LTD. (2012) 68 DTR (DEL) 379, WHERE IT HAS BEEN HELD THAT THE AMOUNTS STANDING IN THE NAMES OF SUNDRY CREDITORS FOR MORE THAN FOUR YEARS SHOWN AS OUTSTANDING AND NOT U NILATERALLY WRITTEN BACK TO PROFIT & LOSS ACCOUNT CANNOT BE BROUGHT TO TAX UNDER SECTION 41(1) OF THE ACT. 6. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE FACTS OF THE CASE. IT IS NOT UNDER DISPUTE THAT INFORMATION UNDER SECT ION 133(6) OF THE ACT WAS CALLED FOR FROM THE SAID CREDITOR, BUT NO CONFIRMAT ION WAS RECEIVED. THE ASSESSEE FILED THE CONFIRMATION FROM M/S. NARENDRA FORWARDERS (P) LTD.; GANDHIDHAM, AS ADDITIONAL EVIDENCE AND ACCORDINGLY AFTER TAKING REMAND REPORT AND AFTER CONDUCTING ENQUIRY WITH REGARD TO THE FILING OF THE SAID ITA NO.526(ASR)/2013 7 CONFIRMATION, THE ADDITION WAS DELETED BY THE LD. C IT(A) FOR WHICH THE REVENUE IS NOT IN APPEAL. AS REGARDS OTHER TWO CRE DITORS NAMELY M/S. ASHWANI VANASPATI LTD; AND M/S. SANDIP & CO; IT IS ALSO NOT IN DISPUTE AS IS BORNE OUT FROM THE RECORDS AND AS CONCEDED BY THE L D. DR THAT THEY ARE OLD CREDITORS. AT THE OUTSET, RELYING UPON THE DECISION REFERRED TO BY THE LD. COUNSEL FOR THE ASSESSEE, MR. J.S. BHASIN, ADVOCATE IN THE CASE OF CIT VS. GP INTERNATIONAL LTD (SUPRA), ANY AMOUNT PAYABLE A ND SHOWN IN THE BOOKS OF ACCOUNT AS PAYABLE AND NOT WRITTEN BACK CANNOT B E SAID TO HAVE CEASED TO EXIST AND CANNOT BE TREATED AS INCOME BY INVOKING THE PROVISIONS OF SECTION 41(1) OF THE ACT. THEREFORE, FOR NO REASON, THIS CA N BE AN INCOME U/S 41(1) OF THE ACT. AS REGARDS THE CREDITS FOUND IN THE BOOKS OF ACCOUNT, AS ALREADY HELD BY US HEREINABOVE, THE SAID CREDITORS ARE OLD CREDI TORS AND NO SUM HAS BEEN RECEIVED AND CREDITED DURING THE IMPUGNED PREVIOUS YEAR RELEVANT TO ASSESSMENT YEAR 2005-06. THEREFORE, NO ADDITION CAN BE MADE UNDER SECTION 68 OF THE ACT. THE LD. CIT(A) PROBABLY DID NOT CON DUCT ANY ENQUIRY FOR THE REASONS THAT THERE WAS NO CONFIRMATION OR ANY ADDIT IONAL EVIDENCE WITH REGARD TO THE SAID TWO CREDITORS BEFORE HIM. AS REG ARDS THE ARGUMENTS MADE BY THE LD. DR THAT THE ASSESSEE HAS WRITTEN BACK TH E SAID TWO CREDITORS DURING THE ASSESSMENT YEAR 2008-09 AFTER COMPLETION OF THE ASSESSMENT, WHICH PROVES THAT THESE ARE BOGUS CREDITORS, HAS NO BASIS, SINCE NO MATERIAL ITA NO.526(ASR)/2013 8 IN THIS REGARD HAS BEEN BROUGHT ON RECORD BY THE AO AND THE LD. DR ON RECORD WITH REGARD TO THE SAID CREDITORS TO PROVE T HE SAME AS BOGUS. THOUGH THE ASSESSEE HAS WRITTEN BACK THE SAID LIABILITY OF THE SAID TWO CREDITORS DURING THE ASSESSMENT YEAR 2008-09 DOES NOT GO TO P ROVE THAT THE CREDITORS ARE BOGUS SINCE THERE CAN BE MANY OTHER REASONS FOR WHICH THE ASSESSEE WRITES BACK THE LIABILITY WHICH HAS BEEN DONE IN TH E PRESENT CASE. RELIANCE HAS ALSO BEEN MADE BY THE LD. COUNSEL FOR THE ASSES SEE IN THIS REGARD IN THE CASE OF CIT VS. SHRI VARDHMAN OVERSEAS LTD; WHERE THE HONBLE DELHI HIGH COURT HAS RELIED UPON THE DECISION IN THE CASE OF CIT VS. SUGAULI SUGAR WORKS (P) LTD. (1999) 236 ITR 518 (SC) , DISTINGUIS HING THE DECISION OF THE HONBLE SUPREME COURT IN THE CASE OF CIT VS. T.V. SUNDARAM IYENGAR & SONS LTD. (1996) 222 ITR 344 (SC) AND JAY ENGINEERI NG WORKS LTD. VS. CIT (2009) 311 ITR 299 (DEL.) HOLDING THAT THE AMOUNTS OUTSTANDING IN THE NAMES OF SUNDRY CREDITORS FOR MORE THAN FOUR YEAR S SHOWN AS OUTSTANDING AND NOT UNILATERALLY WRITTEN BACK TO PROFIT & LOSS A/C CANNOT BE BROUGHT TO TAX UNDER SECTION 41(1) OF THE ACT. IN THE FACTS A ND CIRCUMSTANCES, THERE CANNOT BE MADE ANY ADDITION FOR THE SAID SUNDRY CRE DITORS U/S 41(1) OR U/S 68 OF THE ACT. ACCORDINGLY, WE FIND NO INFIRMITY IN T HE ORDER OF THE LD. CIT(A), WHO HAS RIGHTLY DELETED THE ADDITION SO MADE BY THE A.O. THUS, THE GROUNDS RAISED BY THE REVENUE ARE DISMISSED. ITA NO.526(ASR)/2013 9 7. IN THE RESULT, THE APPEAL OF THE REVENUE IN ITA NO.526(ASR)/2013 IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 11TH JUNE, 2014. SD/- SD/- (A.D.JAIN) (B.P. JAIN) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 11TH JUNE, 2014 /SKR/ COPY OF THE ORDER FORWARDED TO: 1. THE ASSESSEE:M/S. SHADI RAM & SONS, VPO LAMBRA, DIS TT. JALANDHAR. 2. THE ACIT, CIRCLE-IV, JALANDHAR. 3. THE CIT(A), JALANDHAR. 4. THE CIT, JALANDHAR. 5. THE SR DR, ITAT, AMRITSAR. TRUE COPY BY ORDER (ASSISTANT REGISTRAR) INCOME TAX APPELLATE TRIBUNAL, AMRITSAR BENCH: AMRITSAR