SHRI KRUPA UDHYOG,AKOLA V. DCIT AKOLA CIRCLE, AKOLA

ITA 139/NAG/2024

AI Insights

The case involves Shree Krupa Udyog, a firm engaged in manufacturing, which appealed against the order of the Commissioner of Income Tax (Appeals) at the National Faceless Appeal Centre, Delhi. The appeal challenged the additions made to the assessee's income for the Assessment Year 2015-16, primarily concerning discrepancies in the accounts of sundry creditors. The Assessing Officer had made additions based on differences between the amounts recorded in the assessee's books and the confirmations received from creditors. The Tribunal's decision was based on the reconciliation provided by the assessee for most discrepancies, except for a portion where the assessee could not provide satisfactory explanations.

• Counselvise Citation: [2024] 140 COUNSELVISE.COM (IT) 474378 (ITAT-NAGPUR)
• Duration Of Justice: 8 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 18-11-2024
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: DB
• Next Hearing Date: 04-11-2024
• Assessment Year: 2015-2016
• Appeal Filed On: 11-03-2024
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: ABHAY Y. MARATHE
• Assessee Lawyers: S.G. GANDHI
• Keywords: Valuation report
• Section: 68; 133(6); 44AB

Judgement Text

" IN THE INCOME TAX APPELLATE TRIBUNAL NAGPUR BENCH, NAGPUR BEFORE SHRI V. DURGA RAO, JUDICIAL MEMBER AND SHRI K.M. ROY, ACCOUNTANT, MEMBER ITA no.139/Nag./2024 (Assessment Year : 2015–16) Shree Krupa Udyog Kala Maroti Road, Old City Akola 444 002 PAN – ACKFS7033B ……………. Appellant v/s Dy. Commissioner of Income Tax Akola Circle, Akola ……………. Respondent Assessee by : Shri S.G. Gandhi (As per adjournment application dated 04/11/2024 filed) Revenue by : Shri Abhay Y. Marathe Date of Hearing – 07/11/2024 Date of Order – 18/11/2024 O R D E R PER K.M. ROY, A.M. This appeal has been filed by the assessee challenging the impugned order dated 16/01/2024, passed by the learned Commissioner of Income Tax (Appeals), National Faceless Appeal Centre, Delhi, [“learned CIT(A)”], for the assessment year 2015–16. 2. The assessee has raised following grounds:– “1. Under the facts and in the circumstances of the case the learned Commissioner of Income Tax (Appeals) NFAC erred in stating that during the assessment proceeding the appellant failed to attach document such as ledger accounts, quantitative stock etc., particularly in the circumstances where the Assessing Officer in assessment order writes that \"The books of accounts have been audited u/s 44AB of the Income 2 Shree Krupa Udyog Tax Act, 1961. The books of accounts produced have been examined on the test check. The bank statement, computation of total income, partnership deed, valuation report, ledger, confirmation of sundry creditors etc. have been verified and placed on record.\" (Quantitative details are the part of Tax Audit Report). 2. Under the facts and in the circumstances of the case the learned Commissioner of Income Tax (Appeals) NFAC erred in not dealing the grounds of appeal (additional) individually and expressed a common generalized view on all the grounds except ground no. 1 and ignoring a general principle that purchases cannot be disallowed where quantitative details are on record and the books of accounts are not rejected explicitly or any defect is brought on record in maintenance of books. 3. Under the facts and in the circumstances of the case the learned Commissioner of Income Tax (Appeals) - NFAC erred in not dealing the ground related to the credit balance of Prachi Engineering Rs.52,29,025/- in right spirit though it was an amount payable on account of capital expenditure incurred in AY 2014-15 and it has nothing to do with the year under consideration and ignoring the balance sheet as at 31-03- 2014 filed during appellate proceeding wherein the amount is shown under head sundry creditors. 4. Under the facts and in the circumstances of the case the learned Commissioner of Income Tax (Appeals)-NFAC erred in drawing a conclusion that assessee cannot take a shelter of law for his own advantage. 5. Under the facts and in the circumstances of the case the learned Commissioner of Income Tax (Appeals)/NFAC erred in drawing a conclusion that assessee introduced his own unaccounted cash in books in the shape of creditors and addition made by AO can be treated u/s 68 of the Act, whereas the pre-condition of Sec. 68 is totally absent in the present case. 6. Under the facts and in the circumstances of the case the learned Commissioner of Income Tax (Appeals)/NFAC erred in not giving any consideration to the cases relied upon and the submissions made by the assessee on the facts of the case, time to time, though the dates of submissions made are quoted in the order. 7. All the grounds are without prejudice to each other.” 3. Facts in Brief:– The assessee is a firm which is engaged in manufacturing of Dall, filed its return of income for the year under consideration on 11/08/2015, disclosing total income at ` nil, with current year loss to be carried forward at ` 24,29,613. The Assessing Officer noticed that the assessee has, in its audited accounts, shown sundry creditors of ` 3 Shree Krupa Udyog 2,00,49,652. The assessee furnished name and address of the major sundry creditors and filed confirmation with copy of relevant ledgers. Further for verification of the creditors, letters to the sundry creditors were issued calling information under section 133(6) of the Income Tax Act, 1961 (\"the Act\"). On being pointed out of the difference in amount confirmed vis–a–vis balance per books. The assessee furnished following submissions in support of its claim:– “1. Anis Traders Daryapur wer have purchase bill of amounting to ₹ 23,06,938/- in the last fifteen days of March 2015 and ₹12,19,791/- paid by cheque and last two bill amounting to ₹500569/- and ₹502069/- dated 14/03/2015 payable. All purchase bill are attached as cogent proof. 2. The difference amount in M/s. Avtarsingh Gulati Washim is 23,382/- about the rate difference. 3. Shri Ganpati Pulses show amounting to ₹ 40412/- instead of ₹322632/- there is opening balance Dr. amount ₹672771/- is not consider by party in his books of account the copy of last year balance sheet is attached as cogent proof. It is the only party with we deal in last financial year. 4. M/s. Jagdamba Industries and M/s. Jagdamba Enterprises are same parties. We have purchase bill amounting 3235179/- but one of bill₹ 388298/- is taken in next financial year by party and same was taken in current financial year by us amounting ₹388298/- and amount ₹603485/- bill dated 30/03/2015 is not consider by the party. 5. M/s. Kamal Trading difference ₹3040/- is rate difference. 6. M/s. Laxmi Traders the amount ₹544544/- is actually not paid taken by party which was paid after the year. 7. M/s. Naresh Ramvilas Siwal having payable amount ₹793754/- was paid actually but due to wrong entry made by our accountant he transfer amount in other accounts. 8. M/s. Sachin Traders having payable amount ₹311748/- was paid actually paid but due to wrong entry made by our accountant he transfer amount in other accounts. 9. M/s. Maa Vaishnavi Udyog we have confirmation of account shows ₹355713/- payable by us to the party. There is difference of rate ₹13425/-only. 10. M/s. Prachi Engineering Goods we have confirmation of account shows 5229025/- payable by us to the party. 4 Shree Krupa Udyog 11. M/s. Shivshankar Traders we have a purchase bill dated 11/03/2015 bill No.53 amounting ₹202340/- payable 193731/- + Freight 3000/- paid on 7 April 2015. Bill copy attached. 12. M/s. Shri Wardhaman Industries we have a purchase bill dated 15/03/2015 Bill No.23683 amounting 571889/- after deduction of discount & freight ₹554000/- paid on 08/05/2015 by ch. No.98351. 13. M/s. Subhash Madhav Saoji Amount ₹7060/- difference of rate. 14. M/s. Suraj Traders Having payable ₹651548/- we have the confirmation of party ₹600000/- paid by RTGS on 26/03/2015 wrongly credited in Vitthal Dal Mill by the mistake of Accountant so the accountant there is excess payment show in his accounts. 15. M/s. Vijay Trading Co. Mehkar sent his confirmation on mail shows ₹802610/- payable to us there is difference of ₹7751/- there is due to batav and rate difference. The copy of account is attached. 16. M/s. Vitthal Dal Mill showing difference of excess payble due to wrong entry ₹600000/- of M/s. Suraj Traders and some of other party also transfer in his accounts. I hope your honour would find the above in order. Should your honour require any further details, my client shall be pleased to furnish the same.\" 4. The Assessing Officer ultimately made the addition as to the returned income by observing as below after being satisfied in some of the cases:– “7.11 The summary of disallowances on account of sundry creditors as discussed above is as under:– Sr. no. Name of Creditor Amount of addition as discussed above 1. Avtarsingh Premsingh Gulati, Washim 23382 2. Ganpati Pulses, Akola 282220 3. Jagdamba Industries, Akola 1036298 4. Kamal Trading Co., Washim 3040 5. M/s. Nareshkumar Ramvilashji Siwal, Akola 793754 6. M/s. Sachin Traders, Aurangabad 311748 7. Maa Vaishnavi Udyog, Akola 369138 8. Prachi Eng. Goods 5229025 9. Subhash Madhav Saoji, Dongaon 7060 Total 8055671 5 Shree Krupa Udyog 5. Being aggrieved, appeal was filed before the learned CIT(A), which was dismissed. There was an adjournment application before us filed by the C.A. Shri S.G. Gandhi. But the same was rejected and the matter was taken up for adjudication in view of smallness of the matter and the paper book is already in our record. In Paper Book Page–49, the ledger of Prachi Eng. Goods is perused which is reproduced below:– 01–04–14 Balance brought forward 6,179,264 6,179,264 04–04–14 Pully & Shaft Purchase voucher no.P020 93,196 6,272,460 10–05–14 77247 AUB Current A/c 50,000 6,222,460 16–05–14 To Agaraemery Stone Pvt. Ltd., Agaraemery Stone P. Ltd. 15,000 6,207,460 17–05–14 Cash in Hand 17,570 6,189,890 14–06–14 Cash in Hand 17,000 6,172,890 15–06–14 Cash in Hand 18,000 6,154,890 16–06–14 Cash in Hand 19,500 6,135,390 17–06–14 Cash in Hand 13,500 6,121,890 18–06–14 Cash in Hand 18,955 6,102,935 17–07–14 82876 AUB Current A/c To RTGS 800,000 5,252,925 28–07–14 82890 AUB Current A/c To TRANSFER, NEFT 50,010 5,240,925 12–08–14 86307 AUB Current A/c To TRANSFER, TRF 12,000 5,239,525 31–08–14 Cash in Hand To Shreenath 1,400 5,233,525 26–11–14 Cash in Hand To Shrinath, Labour 6,000 5,229,025 15–03–15 Cash in Hand To Shreenath Kopula 4,500 5,229,025 Total 1,043,435 6,272,460 5,229,025 6. The difference of ` 52,29,025, is arising out of opening balance of ` 61,79,264, which cannot be added because the current year’s income 6 Shree Krupa Udyog inflation, if any, can only be ascribed to past years. The assessee has further explained that the bills worth ` 9,91,783, was considered by Jagdamba Enterprises subsequently, it is a mere timing difference since the accounting of such bills has spilled over to a different period by the supplier. The assessee has been successful in reconciling the difference. Thus, there is successful reconciliation of ` 62,20,808 (i.e., ` 52,29,025 + ` 3,88,298 + ` 6,03,485) which is meticulously explained and the addition hence is not tenable. As regards balance creditors, the assessee has not been in a position to throw light on the difference. So the same is confirmed to the extent of ` 18,34,863 i.e., (` 80,55,671 – ` 62,20,808). Thus, the assessee gets part relief of ` 62,20,808. It is a rare case of addition when none of the charging provisions have been specified. Further the lower authorities did not investigate the reasons for difference in detail. We are, however, constrained to sustain the partial disallowance since nothing is emanating from the paper book submitted. Further it is doubtful whether books, albeit audited, can be full of mistakes. 7. In the result, appeal filed by the assessee is partly allowed. Order pronounced in the open Court on 18/11/2024 Sd/- V. DURGA RAO JUDICIAL MEMBER Sd/- K.M. ROY ACCOUNTANT MEMBER NAGPUR, DATED: 18/11/2024 7 Shree Krupa Udyog Copy of the order forwarded to: (1) The Assessee; (2) The Revenue; (3) The PCIT / CIT (Judicial); (4) The DR, ITAT, Nagpur; and (5) Guard file. True Copy By Order Pradeep J. Chowdhury Sr. Private Secretary Sr. Private Secretary ITAT, Nagpur "