P.Narayanan, Tirunelveli v. DCIT, Tirunelveli

CO 68/CHNY/2010 | 2006-2007
Pronouncement Date: 28-07-2011 | Result: Dismissed

Appeal Details

RSA Number 6821723 RSA 2010
Assessee PAN ABBPN1004F
Bench Chennai
Appeal Number CO 68/CHNY/2010
Duration Of Justice 11 month(s) 25 day(s)
Appellant P.Narayanan, Tirunelveli
Respondent DCIT, Tirunelveli
Appeal Type Cross Objection
Pronouncement Date 28-07-2011
Appeal Filed By Assessee
Order Result Dismissed
Bench Allotted D
Tribunal Order Date 28-07-2011
Date Of Final Hearing 20-07-2011
Next Hearing Date 20-07-2011
Assessment Year 2006-2007
Appeal Filed On 02-08-2010
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL BENCH D CHENNAI BEFORE SHRI N.S. SAINI AM SHRI GEORGE MATHAN J.M I.T.A. NO. 1059/MDS/2010 ASSESSMENT YEAR 2006-07 THE DY. COMMISSIONER OF INCOME-TAX CIRCLE - I TIRUNELVELI VS. SHRI P. NARAYANAN NO. 6 SHARON GARDEN NGO B COLONY TIRUNELVELI (PAN NO. AABBPN 1004F) CO NO. 68/MDS/2010 [A/O I.T.A. NO. 1059/MDS/2010 ASSESSMENT YEAR 2006-07 SHRI P. NARAYANAN VS. THE DY. COMMISSIONER OF NO. 6 SHARON GARDEN INCOME-TAX NGO B COLONY C IRCLE - 1 TIRUNELVELI TIRUNELVELI (PAN NO. AABBPN 1004F) (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI G. BASKAR DEPARTMENT BY : SHRI K.E.B. RENGARAJAN JR. STANDING COUNSEL PAGE 2 OF 11 I.T.A. NO 1059/MDS/2010 CO NO. 68/MDS/2010 O R D E R PER N.S. SAINI AM:- THIS APPEAL BY THE REVENUE AND CROSS OBJECTION BY THE ASSESSEE ARE DIRECTED AGAINST THE ORDER OF THE LD. CIT(A)-II MADURAI DATED 30.3.2010 PERTAINING TO ASSESSMENT YEAR 2006- 07. 2. THE SOLE ISSUE TAKEN BY THE REVENUE IN THIS APPE AL IS THAT THE LD. CIT(A) ERRED IN DELETING THE ADDITION OF RS. 34 02 107/- MADE BY THE ASSESSING OFFICER TOWARDS OUTSTANDING EXPENS ES DEBITED IN THE PROFIT AND LOSS ACCOUNT. 3. BRIEF FACTS OF THE CASE ARE THAT AT THE TIME OF ASSESSMENT PROCEEDINGS THE ASSESSING OFFICER FOUND THAT THE C REDITORS FOR EXPENSES WERE SHOWN AT RS. 2 02 23 846/-. HE CALLED FOR BREAK- UP DETAILS FOR THE ABOVE. THE REQUIRED DETAILS WERE FURNISHED. OUT OF THE CREDITORS THE FOLLOWING CREDITORS WERE ALSO ASSESSED BY THE SAME ASSESSING OFFICER. 1 AACFN4870 D NEW SANTHA STORES 13 39 384 2 AAGFR6650 K R.S. &CO. 20 54 948 3 SABHAPATHV GLASS WORKS 7 775 TOTAL 34 02 107 PAGE 3 OF 11 I.T.A. NO 1059/MDS/2010 CO NO. 68/MDS/2010 THE ABOVE CREDITORS WERE INDEPENDENTLY VERIFIED BY THE ASSESSING OFFICER AND FOUND THAT M/S NEW SHANTHA ST ORES WAS HAVING A DEBIT BALANCE OF RS.64 019/- ONLY AGAINST THE CREDIT BALANCE OF RS.13 39 384/- SHOWN BY THE ASSESSEE IN THAT NAME. SIMILARLY M/S R.S. & CO. AND M/S SABHAPATHY GLASS WORKS ALSO HAVE NO BALANCE IN THE NAME OF THE ASSESSEE AGAINST THE CREDIT BALANCES SHOWN BY THE ASSESSEE AS ABOVE IN THEIR NA MES. THESE DISCREPANCIES WERE PUT TO THE ASSESSEE FOR HIS REBU TTAL. THE CASE WAS FIXED FOR HEARING ON 24.12.08. THERE WAS N O RESPONSE FROM THE ASSESSEE. THEREFORE THE ASSESSING OFFICER WAS OF THE VIEW THAT THE ASSESSEE MADE ALL ATTEMPTS TO REDUCE TAXABLE INCOME BY MAKING CLAIMS WHICH ARE NOT SUPPORTED BY DOCUMENTARY EVIDENCES. HENCE HE ADDED RS.34 02 107/ - AS EXPENSES NOT PROVED. 5. BEFORE THE LD. CIT(A) THE AUTHORIZED REPRESENTA TIVE OF THE APPELLANT REITERATED THE ISSUE RAISED IN THE GROUND S OF APPEAL AND PLEADED FOR DELETION OF THE ADDITIONS MADE. HE ALSO FILED WRITTEN SUBMISSIONS BY FILING THE ACCOUNT COPIES OF THE THREE CREDITORS IN DISPUTE. THE AUTHORIZED REPRESENTATIVE CONTENDED PAGE 4 OF 11 I.T.A. NO 1059/MDS/2010 CO NO. 68/MDS/2010 THAT SUFFICIENT OPPORTUNITY WAS NOT GIVEN FOR EXPLA INING THE TRANSACTIONS WITH THE THREE CREDITORS. THEREFORE T HE LD. CIT(A) PASSED A REMAND ORDER IN ITA NO.357/08-09 DATED 11. 11.2009. THE ASSESSING OFFICER DID NOT FILE THE REMAND REPOR T. THEREFORE A LETTER DATED 25.02.2010 WAS ADDRESSED TO THE ASSESS ING OFFICER REMINDING HIM ABOUT THE REMAND REPORT FOR WHICH ALS O THERE WAS NO RESPONSE. THEN THE ASSESSING OFFICER WAS INF ORMED TELEPHONICALLY TO FINALIZE THE REMAND REPORT. THE A SSESSING OFFICER IN HIS LETTER DATED 09.03.2010 STATED AS UN DER: 'AS DIRECTED BY THE COMMISSIONER OF INCOME TAX (APPEALS) HAVE EXAMINED THE MATERIAL PRODUCED BY THE ASSESSEE WITH REFERENCE TO THE BOOKS OF ACCOUNTS MAINTAINED AND PRODUCED BY THE ALLEGED CREDITORS ON VERIFICATION IT IS FOUND THAT THERE ARE NO OUTSTANDING AMOUNTS DUE FROM THE ASSESSEE TO THE CREDITORS AS ALLEGED THOUGH IT IS A FACT THAT THE ASSESSEE HAD BEEN PURCHASING MATERIALS FROM THE CREDITORS. I HAVE TO THEREFORE SUBMIT THAT THE ASSESSEE'S CLAIM AS TO THE OUTSTANDING CREDIT BALANCES IS NOT GENUINE AND THE SAME HAS TO BE REJECTED PAGE 5 OF 11 I.T.A. NO 1059/MDS/2010 CO NO. 68/MDS/2010 6. THE LD. CIT(A) OBSERVED THAT A PERUSAL OF THE AS SESSING OFFICERS LETTER DATED 9.3.2010 REVEALS THAT THE EN QUIRY WAS NOT PROPERLY DONE. THEREFORE THE ASSESSEE WAS ASKED TO PRODUCE THE BOOKS OF ACCOUNTS FOR VERIFICATION AT THE TIME OF H EARING ON 15.03.2010. THE AUTHORIZED REPRESENTATIVE OF THE AS SESSEE DID NOT PRODUCE THE BOOKS OF ACCOUNTS STATING THAT THE BOOKS OF ACCOUNTS WERE IMPOUNDED BY THE ASSESSING OFFICER AN D FURNISHED XEROX COPY OF THE IMPOUNDING ORDER DT.01.12.2009. T HESE FACTS WERE INFORMED TO THE JOINT COMMISSIONER OF INCOME T AX TIRUNELVELI RANGE FOR FURNISHING THE BOOKS OF ACCOU NTS. IN RESPONSE THE ASSESSING OFFICER APPEARED ON 16.03.2 010 AND PRODUCED THE BOOKS OF ACCOUNTS FOR PERUSAL. ON THE SAME DAY I.E. 16.03.2010 THE BOOKS OF ACCOUNTS IMPOUNDED ON 01.12.2009 WERE RETURNED TO THE ASSESSEE BY THE ASSESSING OFFI CER. IN HIS LETTER DATED 19.03.2010 THE LD. CIT(A) ASKED THE A SSESSING OFFICER TO EXPLAIN THE JUSTIFICATION FOR THE ADDITI ON OF RS. 34 02 107/- IN THE ABSENCE OF CROSS VERIFICATION OF ASSESSEE'S ACCOUNTS VIA-A-VIS THE THREE CREDITORS ACCOUNTS. IN RESPONSE THE ASSESSING OFFICER IN HIS LETTER DATED 25.03.2010 ST ATED THAT HE SUBMITTED HIS REPORT ON THE BASIS OF REPLIES FURNIS HED BY THE PAGE 6 OF 11 I.T.A. NO 1059/MDS/2010 CO NO. 68/MDS/2010 ALLEGED CREDITORS AND ALSO AFTER VERIFYING THE STAT EMENT OF ACCOUNTS FILED BY THEM IN THEIR RESPECTIVE CASES FO R THE ASSESSMENT YEAR 2006-07. HE ALSO STATED THAT HE WIL L SUBMIT HIS REPORT AFTER MAKING ONE MORE ATTEMPT AT CROSS VERIF YING THE FACTS. IN THE SAME LETTER THE ASSESSING OFFICER ST ATED THAT THE BOOKS OF ACCOUNTS PRODUCED BY THE ASSESSEE ON 01.12 .2009 WERE RETAINED BY HIM FOR VERIFICATION FOR A PERIOD OF TW O WEEKS AND AFTER TWO WEEKS THE ASSESSEE CAN COME AND COLLECT T HE BOOKS. HE ALSO STATED THAT THE BOOKS HAD NOT BEEN IMPOUNDE D THE NEED FOR OBTAINING COMMISSIONER'S APPROVAL FOR FURTHER R ETENTION DOES NOT ARISE. IT IS PERTINENT TO OBSERVE HERE THAT THE BOOKS OF ACCOUNTS WERE IMPOUNDED U/S 131(3) OF THE ACT AS PE R ASSESSING OFFICER'S ORDER DT.OL.12.2009. UPTO 16.03.2010 THE BOOKS OF ACCOUNTS WERE NOT RETURNED TO THE APPELLANT. THEY W ERE RETURNED TO THE APPELLANT ONLY ON 16.03.2010 AS PER THE LETTER OF THE ASSESSING OFFICER. PAGE 7 OF 11 I.T.A. NO 1059/MDS/2010 CO NO. 68/MDS/2010 7. THE LD. CIT(A) AFTER CONSIDERING THE SUBMISSION S OF THE ASSESSEE AND THE REMAND REPORT OF THE ASSESSING OFF ICER HELD AS UNDER: I HAVE CAREFULLY CONSIDERED THE STATEMENT OF FACTS GROUNDS OF APPEAL AND WRITTEN SUBMISSION OF THE APPELLANT. I HAVE ALSO GONE THROUGH THE LETTER RECE IVED FROM THE ASSESSING OFFICER IN THIS REGARD IN RESPON SE TO THE REMAND ORDER. PERUSAL OF THE ASSESSING OFFICER S LETTER DATED 9.3.2010 REVEALS THAT HE HAS NOT EXAMI NED ANY OF THE ISSUES MENTIONED IN THE REMAND ORDER. IN VIEW OF THE ABOVE ISSUES ARE TO BE DECIDED ON THE MERITS OF THE CASE. THE AUTHORISED REPRESENTATIVE OF THE APPELLANT PRODUCED THE ACCOUNT COPY OF THE M/S R.S. & CO. NEW SANTHA STORES AND SABHAPATHY GLASS WORKS. THE ACCOUN T COPIES REVEALED THE CREDIT BALANCE AS ON 31.03.2006 AS PER THE BOOKS OF ACCOUNT OF THE APPELLANT. THE AUTHORISED REPRESENTATIVE OF THE APPELLANT ALSO PRODUCED THE XE ROX COPIES OF THE BILLS IN RESPECT OF SABHAPATHY GLASS WORKS THE STATEMENT OF ACCOUNT ISSUED BY RS. & CO. ALONG W ITH PAGE 8 OF 11 I.T.A. NO 1059/MDS/2010 CO NO. 68/MDS/2010 THE COPIES OF BILLS FOR THE SUPPLY OF DIESEL. HE AL SO PRODUCED THE XEROX COPIES OF BILLS ISSUED BY SANTHA S TORES TO PROVE THE TRANSACTION. THE LETTERS FURNISHED BY M /S RS. & CO AND M/S SABAPATHY GLASS WORKS IN RESPONSE TO T HE SUMMONS ISSUED BY THE ASSESSING OFFICE ARE VAGUE AND DO NOT CONTAIN THE TRANSACTIONS THEY HAD WITH THE APPE LLANT. THERE WAS NO RESPONSE FROM SANTHA STORES AS PER THE ASSESSMENT RECORDS THOUGH SUMMONS WERE ISSUED TO THEM . IN THE ABSENCE OF PROPER VERIFICATION AND WITHOUT PR OPER SUPPORTING DOCUMENTS THE ADDITION MADE CAN NOT BE SUSTAINED. IT IS PERTINENT TO NOTE THAT THOSE THREE PARTIES ARE HAVING TRANSACTIONS WITH THE APPELLANT NOT ONLY DURING THE YEAR AND IN EARLIER YEARS ALSO. THIS IS EVIDENC ED BY THE OPENING BALANCE SHOWN IN THEIR NAMES IN THE BOOKS O F ACCOUNT OF THE APPELLANT. EARLIER YEARS ASSESSMENTS WERE COMPLETED ACCEPTING THE BALANCES WITH THESE PARTIES AS GENUINE. THE OPENING CREDIT BALANCES OF THE THREE PA RTIES AS ON 01.042005 ARE AS UNDER: 1 RS. & CO. 8 21 89 2 NEW SANTHA STORES 8 24 51 3 3 SABAPATHI GLASS WORKS 24 840 PAGE 9 OF 11 I.T.A. NO 1059/MDS/2010 CO NO. 68/MDS/2010 IN THE ABSENCE OF PROOF TO THE EFFECT THAT THE BILL S AND VOUCHERS PRODUCED BY THE APPELLANT ARE FABRICATED OR BOGUS THE ADDITION MADE IS NOT SUSTAINABLE. THESE BILLS/VOUCHERS THOUGH MADE AVAILABLE BEFORE THE ASSESSING OFFICER AFTER REMAND ORDER VERIFICATION WAS NOT CARRIED OUT BY HIM TO DISPROVE THEIR GENUINENESS. HE FAILED TO CARRY OUT INVESTIGATION THOUGH SUFFICIENT OPPORTUNITY WAS PROVIDED TO HIM. THE APPELLANT DISCHARGED HIS LIABILITY OF PROVING THE TRANSACTION S WHEREAS THE ASSESSING OFFICER DID NOT PROVE IT TO B E BOGUS TRANSACTIONS. THEREFORE I AM OF THE CONSIDERED VIEW THAT THE ADDITION OF RS. 34 02 107/- IS NOT WARRANTED. I ORDER DELETION OF THE SAME. 8. THE LD. D.R. SUPPORTED THE ORDER OF THE AO WHERE AS THE LD. A.R. SUPPORTED THE ORDER OF THE LD. CIT(A). 9. AFTER CONSIDERING THE RIVAL SUBMISSIONS AND PERU SING THE MATERIAL AVAILABLE ON RECORD WE FIND THAT IN THE I NSTANT CASE THE ASSESSING OFFICER AFTER RECEIVING THE ALLEGED INFO RMATION FROM THE PAGE 10 OF 11 I.T.A. NO 1059/MDS/2010 CO NO. 68/MDS/2010 PARTIES TO THE EFFECT THAT THERE WERE NO TRANSACTIO NS WITH THE ASSESSEE TREATED THE ALLEGED STATEMENT AS SACROSANC T WITHOUT MAKING ANY VERIFICATION. IT IS NOT IN DISPUTE THAT THE ASSESSEES TRANSACTIONS ARE DULY SUPPORTED BY BILLS AND VOUCHE RS. NO DEFECTS IN THE BILLS AND VOUCHERS COULD BE POINTED OUT BY THE REVENUE. NO MATERIAL HAS BEEN BROUGHT ON RECORD TO SHOW THAT NO PAYMENT WAS IN FACT MADE BY THE ASSESSEE AGAINST THE SAID PURC HASES. IN THE ABOVE CIRCUMSTANCES IN OUR CONSIDERED OPINION THE DELETION OF ADDITION MADE BY THE LD. CIT(A) WAS AFTER PROPER AP PRECIATION OF FULL FACTS AS AVAILABLE BEFORE HIM. NO MATERIAL HA S BEEN BROUGHT BEFORE US BY THE REVENUE TO POINT OUT ANY ERROR IN THE ORDER OF THE LD. CIT(A). WE THEREFORE DO NOT FIND ANY REASON TO INTERFERE WITH THE ORDER OF THE LD. CIT(A). IT IS CONFIRMED AND T HE APPEAL OF THE REVENUE IS DISMISSED. 10. THE CROSS OBJECTION FILED BY THE ASSESSEE IS IN SUPPORT OF THE ORDER OF THE LD. CIT(A). IN VIEW OF OUR FINDING GI VEN ABOVE THE CROSS OBJECTION HAS BECOME INFRUCTUOUS HENCE STAND S DISMISSED. PAGE 11 OF 11 I.T.A. NO 1059/MDS/2010 CO NO. 68/MDS/2010 11. IN THE RESULT THE APPEAL FILED BY THE REVENUE AND THE CROSS OBJECTION FILED BY THE ASSESSEE STAND DISMISSED. ORDER PRONOUNCED IN THE COURT ON 28 TH JULY 2011. SD/- SD/- (GEORGE MATHAN ) (N.S. SAINI) JUDICIAL MEMBER ACCOUNTANT MEMBER CHENNAI DATED THE 28 TH JULY 2011. VL COPY TO: ASSESSEE/AO/CIT (A)/CIT/D.R./GUARD FILE