The ITO, Ward-9(1),, Surat v. M/s. Balmukund Textiles, Surat

ITA 1765/AHD/2008 | 2005-2006
Pronouncement Date: 18-11-2011 | Result: Allowed

Appeal Details

RSA Number 176520514 RSA 2008
Assessee PAN AAJFS8700N
Bench Ahmedabad
Appeal Number ITA 1765/AHD/2008
Duration Of Justice 3 year(s) 5 month(s) 30 day(s)
Appellant The ITO, Ward-9(1),, Surat
Respondent M/s. Balmukund Textiles, Surat
Appeal Type Income Tax Appeal
Pronouncement Date 18-11-2011
Appeal Filed By Department
Order Result Allowed
Bench Allotted B
Tribunal Order Date 18-11-2011
Assessment Year 2005-2006
Appeal Filed On 19-05-2008
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH AHMEDABAD BEFORE SHRI G. C. GUPTA HONBLE VICE PRESIDENT AND SHRI A. K. GARODIA ACCOUNTANT MEMBER I.T.A. NO. 1765/ AHD/2008 & 1760/AHD/2009 (ASSESSMENT YEAR 2005-06 & 2006-07) ITO WARD 9(1) SURAT VS. M/S. BALMUKUND TEXTILES 39 KRISHNA INDL. ESTATE VARACHHA ROAD SURAT I.T.A.NO. 2103/AHD/2008 & 1348/AHD/2009 (ASSESSMENT YEAR 2005-06 & 2006-07) M/S. BALMUKUND TEXTILES VS. ITO WARD 9(1) 39 KRISHNA INDL. ESTATE SURAT VARACHHA ROAD SURAT PAN/GIR NO. : AAJFS8700N (APPELLANT) .. (RESPONDENT) APPELLANT BY: SHRI SAMIR TEKRIWAL SR. DR RESPONDENT BY: SHRI J P SHAH AR DATE OF HEARING: 16.11.2011 DATE OF PRONOUNCEMENT: 18.11.2011 O R D E R PER SHRI A. K. GARODIA AM:- THESE ARE CROSS APPEALS FILED BY THE ASSESSEE AND THE REVENUE FOR THE ASSESSMENT YEARS 2005-06 & 2006-07 AND THESE AR E DIRECTED AGAINST TWO SEPARATE ORDERS OF LD. CIT(A) V SURAT DATED 14. 02.2008 FOR THE ASSESSMENT YEAR 2005-06 AND DATED 17.02.2009 FOR TH E ASSESSMENT YEAR I.T.A.NO. 1348 1760/AHD/2009 I.T.A.NO.1765 2103 /AHD/2008 2 2006-07. FOR THE SAKE OF CONVENIENCE ALL THESE AP PEALS WERE HEARD TOGETHER AND ARE BEING DISPOSED OFF BY WAY OF THIS COMMON ORDER. 2. IT WAS AGREED BY BOTH THE SIDES THAT THE FACTS I N BOTH THE YEARS ARE IDENTICAL AND HENCE THE ISSUE INVOLVED CAN BE DECI DED ON THE BASIS OF THE FACTS AND THE ORDERS OF AUTHORITIES BELOW IN ANY ON E YEAR. 3. BRIEF FACTS OF THE CASE AS NOTED BY THE A.O. IN THE ASSESSMENT ORDER FOR THE ASSESSMENT YEAR 2005-06 ARE THAT THE ASSESS EE HAS SHOWN TO HAVE MADE PURCHASES FROM A PARTY M/S. MONA TEX. THE A.O . FURTHER NOTED THAT IN ORDER TO VERIFY THE PURCHASES A LETTER U/S 133(6) OF THE INCOME TAX ACT 1961 WAS ISSUED TO THIS PARTY. IN REPLY THIS PARTY HAS FORWARDED THE COPY OF ACCOUNT OF THE ASSESSEE IN THE BOOKS OF THA T PARTY AND THE SAME WAS COMPARED WITH THE LEDGER ACCOUNT OF THAT PARTY SUBMITTED BY THE ASSESSEE. ON SUCH COMPARISON NUMBER OF DISCREPANC IES WERE FOUND BETWEEN BOTH THE ACCOUNTS INCLUDING UNACCOUNTED PUR CHASES AS WELL AS UNACCOUNTED PAYMENTS MADE BY THE ASSESSEE IN HUGE A MOUNTS. THE A.O. FURTHER NOTED THAT THE DISCREPANCIES WERE COMMUNICA TED TO THE ASSESSEE FOR ITS EXPLANATION BUT THE ASSESSEE HAS FAILED TO EXPLAIN THE SAME DISCREPANCIES IN ITS BOOKS OF ACCOUNTS. THEREAFTER THE A.O. HAS OBSERVED THAT BECAUSE OF THESE DISCREPANCIES BOOKS OF ACCOU NTS OF THE ASSESSEE ARE FOUND NOT TO BE CORRECT AND COMPLETE FROM WHICH TRU E PROFIT OF THE ASSESSEE CAN BE DETERMINED. THE A.O. REJECTED THE BOOKS OF ACCOUNTS OF THE ASSESSEE BY INVOKING THE PROVISIONS OF SECTION 145(3) OF THE ACT. THEREAFTER IN PARA 4 OF THE ASSESSMENT ORDER THE A.O. HAS NOTED THAT THE ASSESSEE HAS SHOWN TO HAVE MADE PURCHASES OF YARN F ROM MONA TEX BOMBAY MARKET UMARWADA SURAT. THE A.O. HAS FURTH ER NOTED THAT ON COMPARISON OF THE COPY OF ACCOUNTS OF THE ASSESSEE IN THE BOOKS OF M/S. MONA TEX WITH THE LEDGER ACCOUNT OF M/S. MONA TEX S UBMITTED BY THE ASSESSEE IT WAS NOTED THAT THE ASSESSEE HAS NOT RE CORDED MANY OF THE I.T.A.NO. 1348 1760/AHD/2009 I.T.A.NO.1765 2103 /AHD/2008 3 PURCHASES IN ITS BOOKS OF ACCOUNT AS WELL AS CORRES PONDING PAYMENTS. WHEN THE ASSESSEE WAS ASKED TO EXPLAIN THE SAID DIF FERENCE THE ASSESSEE ATTENDED ON 31.12.2008 AND SUBMITTED THE WRITTEN RE PLY WHICH WAS DISCUSSED BY THE A.O. IN PARA 4.1 OF THE ASSESSMENT ORDER. THE A.O. HAS PREPARED TWO LISTS ONE OF UNACCOUNTED PURCHASES TOT ALING RS.10 26 167/- AND THE OTHER LISTS OF UNACCOUNTED PAYMENT TOTALING RS.25 97 965/-. IN THE REPLY OF THE ASSESSEE IT WAS SUBMITTED BY THE ASSESSEE BEFORE THE A.O. THAT THE ASSESSEE FIRM HAS NOT MADE ANY SUCH PURCHA SES FROM M/S. MONA TEX AND IN THE ABSENCE OF PROOF OF GOODS BEING DELI VERED TO THE ASSESSEE AND ACCEPTED BY THE ASSESSEE FIRM IN THE FORM OF DE LIVERY CHALLANS ETC NO ADVERSE INFERENCE CAN BE DRAWN REGARDING UNACCOUNTE D PURCHASES BY THE ASSESSEE. REGARDING UNACCOUNTED PAYMENT ALSO IT WA S SUBMITTED BY THE ASSESSEE THAT NO SUCH PAYMENTS WERE MADE BY THE ASS ESSEE AND THE BOOKS OF ACCOUNTS OF M/S. MONA TEX ARE NOT RELIABLE. THE A.O. WAS NOT SATISFIED AND HE HELD THAT ADDITION IS CALLED FOR I N RESPECT OF UNACCOUNTED PAYMENTS MADE BY THE ASSESSEE TO M/S. MONA TEX AS P ER THE PROVISIONS OF SECTION 69C. IT IS ALSO NOTED BY THE A.O. THAT THE ASSESSEE HAD ASKED FOR CROSS EXAMINATION OF M/S. MONA TEX BUT IT IS NOT PO SSIBLE BECAUSE THE ASSESSEE ITSELF HAS MANAGED THE AFFAIRS IN SUCH A M ANNER THAT NO TIME IS LEFT FOR ANY FURTHER ACTION. IT IS FURTHER NOTED BY THE A.O. IN PARA 4.5 OF THE ASSESSMENT ORDER THAT M/S. MONA TEX HAS SUBMITTED C OPY OF EXCISE INVOICE COMMERCIAL INVOICE AND DELIVERY CHALLANS E TC. TO PROVE THE SALES MADE TO THE ASSESSEE FIRM AND REGARDING EVIDENCE FO R PAYMENT M/S. MONA TEX HAS SUBMITTED BANK PAY IN SLIP VOUCHERS. THE A.O. INVOKED THE PROVISIONS OF SECTION 69 C AND MADE ADDITION OF RS.25 97 965/- WITH REGARD TO UNEXPLAINED PAYMENTS. REGARDING UNACCOUN TED PURCHASES NO SEPARATE ADDITION WAS MADE BECAUSE THE AMOUNT OF TH E SAME IS LESS THAN THE AMOUNT OF UNACCOUNTED PAYMENTS. ONE MORE ADDIT ION HAS BEEN MADE I.T.A.NO. 1348 1760/AHD/2009 I.T.A.NO.1765 2103 /AHD/2008 4 BY THE A.O. IN THIS YEAR OF RS.84 248/- BY ALLEGING THAT THE ASSESSEE HAS EARNED PROFITS FROM UNRECORDED SALES IN RESPECT OF UNRECORDED PURCHASES. SIMILAR ADDITION WAS MADE BY THE A.O. IN THE NEXT Y EAR ALTHOUGH THE AMOUNT WAS DIFFERENT. IN ASSESSMENT YEAR 2006-07 ADDITION MADE BY THE A.O. IN RESPECT OF UNACCOUNTED PAYMENTS WAS RS.38 0 0 231/- AND SECOND ADDITION MADE ON ACCOUNT OF ESTIMATED PROFITS ON UN ACCOUNTED SALES WAS RS.3 76 529/-. IN BOTH THE YEARS THE ASSESSEE CAR RIED THE MATTER IN APPEAL BEFORE LD. CIT(A). LD. CIT(A) HAS DELETED THE FIRS T ADDITION MADE BY THE A.O. IN RESPECT OF UNACCOUNTED PAYMENTS OF RS.25 97 965/- IN ASSESSMENT YEAR 2005-06 AND RS.38 00 231/- IN ASSESSMENT YEAR 2006-07. SECOND ADDITION MADE BY THE A.O. IN BOTH THESE YEARS WAS U PHELD BY THE LD. CIT(A). NOW THE ASSESSEE IS IN FURTHER APPEAL BEF ORE US IN BOTH THESE YEARS FOR THE PAT ADDITION UPHELD BY THE LD. CIT(A) AND THE REVENUE IS IN APPEAL BEFORE US FOR BOTH YEARS FOR THE PART ADDITI ON DELETED BY THE LD. CIT(A). 4. LD. D.R. OF THE REVENUE SUPPORTED THE ASSESSMENT ORDER IN BOTH THE YEARS AND SUBMITTED THAT THE A.O. HAS BROUGHT OUT O N RECORD THE COPIES OF ACCOUNT OF THE ASSESSEE IN THE BOOKS OF ACCOUNT OF M/S. MONA TEX AS PER WHICH UNACCOUNTED PAYMENTS WERE MADE BY THE ASSESSE E TO THAT PARTY AND THERE ARE UNACCOUNTED PURCHASES BY THE ASSESSEE FRO M WHICH SALES HAD BEEN BOOKED AND TOWARDS THE EVIDENCE THAT PARTY HA S FURNISHED THE EXCISE INVOICE COMMERCIAL INVOICE AND DELIVERY CHALLANS E TC. ALONG WITH COPIES OF BANK PAY IN SLIPS AND HENCE THE BURDEN WAS ON T HE ASSESSEE TO DISPROVE THESE ALLEGATIONS AND SINCE THE ASSESSEE C OULD NOT DO IT BOTH THE ADDITIONS WERE RIGHTLY MADE BY THE A.O. IN BOTH THE YEARS AND BOTH THE ADDITIONS SHOULD BE CONFIRMED IN BOTH THE YEARS. 5. AS AGAINST THIS IT WAS SUBMITTED BY THE LD. A.R . THAT NO EVIDENCE HAS BEEN BROUGHT ON RECORD REGARDING ANY OF THE ALL EGATION I.E. I.T.A.NO. 1348 1760/AHD/2009 I.T.A.NO.1765 2103 /AHD/2008 5 UNACCOUNTED PURCHASES AND UNACCOUNTED PAYMENTS AND ADDITION IS MADE SIMPLY ON THE BASIS OF BOOKS OF A THIRD PARTY WHILE IN THE EARLIER YEARS IT WAS HELD BY THE A.O. THAT THE BOOKS OF THAT PARTY A RE NOT RELIABLE. IT WAS SUBMITTED THAT THERE IS NO EVIDENCE REGARDING ANY U NACCOUNTED PURCHASE BY THE ASSESSEE AND ANY UNACCOUNTED PAYMENT BY THE ASSESSEE AND HENCE THERE IS NO BASIS FOR MAKING ANY ADDITION IN THE HA NDS OF THE ASSESSEE IN ANY OF THE YEARS. RELIANCE WAS PLACED ON THE JUDGM ENT OF HONBLE JURISDICTIONAL HIGH COURT RENDERED IN THE CASE OF K RISHNA TEXTILES VS CIT AS REPORTED IN 301 ITR 227 AND IT WAS SUBMITTED THA T IN THAT CASE ALSO ON SIMILAR FACTS IT WAS HELD BY THE HONBLE JURISDICT IONAL HIGH COURT THAT NO SUCH ADDITION CAN BE MADE ON THE BASIS OF THE ENTRI ES FOUND IN THE BOOKS OF ANOTHER PARTY. IN REJOINDER IT WAS SUBMITTED BY THE LD. D.R. THAT IN THAT CASE THE ASSESSMENT YEAR INVOLVED WAS 1987-88 WHICH IS PRIOR TO AMENDMENT IN THE PROVISIONS OF SECTION 69C BY WAY O F INSERTION OF THE PROVISO AND HENCE THIS JUDGMENT OF HONBLE GUJARAT HIGH COURT IS NOT APPLICABLE IN THE PRESENT CASE. IN REPLY IT WAS S UBMITTED BY THE LD. A.R. OF THE ASSESSEE THAT THIS WAS ALTERNATIVE ARGUMENT IN THAT CASE AND THIS IS NOT THE ONLY BASIS OF THE DECISION OF HONBLE GUJAR AT HIGH COURT IN THAT CASE AND HENCE THIS JUDGEMENT OF HONBLE GUJARAT H IGH COURT IS VERY MUCH APPLICABLE IN THE PRESENT CASE. 6. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS PERUSE D THE MATERIAL ON RECORD AND HAVE GONE THROUGH THE ORDERS OF AUTHORIT IES BELOW AND THE JUDGMENT CITED BY THE LD. A.R. OF THE ASSESSEE. WE FIND THAT IT IS OBSERVED BY THE HONBLE GUJARAT HIGH COURT ON PAGE 234 OF 310 ITR THAT THE BURDEN WAS ON THE REVENUE TO SHOW THAT THE AMOU NT OF DEMAND DRAFT FOUND TO BE CREDITED IN THE ASSESSEES ACCOUNT FROM THE BOOKS OF ACCOUNT OF THE GMDC BELONGS TO THE ASSESSEE BY BRINGING PR OPER EVIDENCE ON RECORD AND THE ASSESSEE COULD NOT BE EXPECTED TO EX PLAIN THE SOURCE OF I.T.A.NO. 1348 1760/AHD/2009 I.T.A.NO.1765 2103 /AHD/2008 6 INCOME OR TO CALL RESPONSIBLE OFFICERS OF GMDC AND BANK TO DISCHARGE THE BURDEN WHICH LAYS UPON THE DEPARTMENT. IT IS ALSO OBSERVED BY THE HONBLE GUJARAT HIGH COURT THAT THEY WOULD HAVE REM ITTED THE MATTER BACK TO THE ITO TO MAKE FURTHER INQUIRY IN THE MATT ER BUT SINCE THE MATTER WAS VERY OLD BEING MORE THAN 20 YEARS AND BECAUSE O F FORCE IN THE ALTERNATIVE CONTENTION RAISED BY THE ASSESSEE IT W AS NOT CONSIDERED JUST AND PROPER TO MAKE ANY FURTHER INQUIRY IN THE MATTE R. IN THE PRESENT CASE BOTH THESE REASONS ARE ABSENT I.E. THE MATTER IS NO T SO OLD IN THE PRESENT CASE BECAUSE THE ASSESSMENT YEAR INVOLVED IS 2005-0 6 AND WE ARE IN THE MONTH OF NOV. 2011 AND THERE IS NO ALTERNATIVE CONT ENTION OF THE ASSESSEE IN THE PRESENT CASE IN VIEW OF THE AMENDMENT IN SEC TION 69C AND THEREFORE IN OUR CONSIDERED OPINION IN THE PRESEN T CASE THE MATTER SHOULD GO BACK TO THE FILE OF THE A.O. FOR FURTHER INQUIRY AND FRESH DECISION AS HAS BEEN OBSERVED BY THE HONBLE GUJARAT HIGH COURT IN THE CASE OF KRISHNA TEXTILES (SUPRA). WE WOULD ALSO LIKE TO OB SERVE THAT IN THE PRESENT CASE IT WAS ARGUED BY THE ASSESSEE BEFORE THE A.O. IN THE COURSE OF ASSESSMENT PROCEEDINGS TO ALLOW CROSS EXAMINATIO N OF THE PARTY BUT THE SAME COULD NOT BE ALLOWED BY THE A.O. BECAUSE OF LA CK OF TIME AND HENCE FOR THIS REASON ALSO RESTORATION OF THE MATTER BAC K TO THE FILE OF THE A.O. IS CONSIDERED FIT AND PROPER AND THE A.O. SHOULD ALLOW THE OPPORTUNITY TO THE ASSESSEE TO CROSS EXAMINE THE PARTY M/S. MONA TEX. WE THEREFORE SET ASIDE THE ORDER OF LD CIT(A) IN BOTH THE YEARS AND RESTORE THE ENTIRE MATTER BACK TO THE FILE OF THE A.O. FOR AFRESH DECI SION IN BOTH THE YEARS IN THE LIGHT OF THE DECISION OF HONBLE GUJARAT HIGH C OURT IN THE CASE OF KRISHNA TEXTILES (SUPRA). THE A.O. SHOULD ALSO PRO VIDE OPPORTUNITY OF CROSS EXAMINATION TO THE ASSESSEE IF THE ASSESSEE M AKES THAT REQUEST. THE A.O. SHOULD PASS NECESSARY ORDER AS PER LAW AS PER ABOVE DISCUSSION AFTER PROVIDING ADEQUATE OPPORTUNITY OF BEING HEARD TO TH E ASSESSEE. I.T.A.NO. 1348 1760/AHD/2009 I.T.A.NO.1765 2103 /AHD/2008 7 7. IN THE RESULT BOTH THE APPEALS OF THE REVENUE A ND BOTH THE APPEALS OF THE ASSESSEE ARE ALLOWED FOR STATISTICAL PURPOSE S. 8. ORDER PRONOUNCED IN THE OPEN COURT ON THE DATE M ENTIONED HEREINABOVE. SD./- SD./- (G. C. GUPTA) (A. K. GARODIA) VICE PRESIDENT ACCOUNTANT MEMBER AHMEDABAD; SP COPY OF THE ORDER FORWARDED TO: 1. THE APPLICANT 2. THE RESPONDENT 3. THE CIT CONCERNED 4. THE LD. CIT (APPEALS) 5. THE DR AHMEDABAD BY ORDER 6. THE GUARD FILE AR ITAT AHMEDABAD 1. DATE OF DICTATION 16/11 2. DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE DICTATING MEMBER 17/11 .OTHER MEMBER 3. DATE ON WHICH THE APPROVED DRAFT COMES TO THE SR. P .S./P.S. 17/11 4. DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE THE D ICTATING MEMBER FOR PRONOUNCEMENT 18/11 5. DATE ON WHICH THE FAIR ORDER COMES BACK TO THE SR. P.S./P.S.18/11 6. DATE ON WHICH THE FILE GOES TO THE BENCH CLERK 18/11/2011 7. DATE ON WHICH THE FILE GOES TO THE HEAD CLERK .. 8. THE DATE ON WHICH THE FILE GOES TO THE ASSISTANT RE GISTRAR FOR SIGNATURE ON THE ORDER . 9. DATE OF DESPATCH OF THE ORDER. ..