Padma Iron & Hardware Stores, Berhampur v. ITO, Berhampur

ITA 411/CTK/2010 | 2007-2008
Pronouncement Date: 27-12-2010

Appeal Details

RSA Number 41122114 RSA 2010
Assessee PAN AAFFP2258N
Bench Cuttack
Appeal Number ITA 411/CTK/2010
Duration Of Justice 1 month(s) 15 day(s)
Appellant Padma Iron & Hardware Stores, Berhampur
Respondent ITO, Berhampur
Appeal Type Income Tax Appeal
Pronouncement Date 27-12-2010
Appeal Filed By Assessee
Bench Allotted SMC
Tribunal Order Date 27-12-2010
Assessment Year 2007-2008
Appeal Filed On 12-11-2010
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL (SMC) CUTTACK BENCH CUTTACK ( ) BEFORE . . HONBLE SHRI K.K.GUPTA ACCOUNTANT MEMBER. / I.T.A.NO. 411/CTK/2010 / ASSESSMENT YEAR 2007 - 08 M/S.PADMA IRONS & HARDWARE STORES SANO BAZAR BERHAMPUR AAFFP2258N - - - VERSUS - INCOME - TAX OFFICER WARD 2 BERHAMPUR. ( /APPELLANT ) ( / RESPONDENT ) / FOR THE APPELLANT : / SHRI D.K. SETH/M.SETH ARS / FOR THE RESPONDENT: / SHRI S.C.MOHANTY DR / ORDER (SMC) . . SHRI K.K.GUPTA ACCOUNTANT MEMBER . THIS APPEAL BY THE ASSESSEE AGITATES THE ADDITIONS MADE U/ S.68 OF THE INCOME - TAX ACT 1 961 BY THE ASSESSING OFFICER PARTLY CONFIRMED BY THE LEARNED CIT(A). 2. THE ASSESSEE IS A DEALER IN IRON AND HARDWARE AND WAS SUBJECTED TO SCRUTINY U/S.143(3) WHEN DURING THE COURSE OF ASSESSMENT THE ASSESSING OFFICER OBSERVED THAT CREDITS IN THE NAME OF M/S. SOUTH INDIA CORPORATION P LTD AND IN THE NAMES OF M/S.KISHAN EXTRUSIONS LTD. INDORE REMAINED UNEXPLAINED . ON THE BASIS OF HIS ENQUIRY FROM THE TRADE CREDITORS A DIFFERENCE IN THE BALANCES SHOWN BY THE ASSESSEE VIS - - VIS BY TRADE CREDITO RS WAS NOTICED . HE MADE ADDITION U/S.68 IN THE CASE OF SOUTH INDIA CORPORATION PVT. LTD AT RS.1 98 021 AND IN THE NAME OF M/S.KISHAN EXTRUSIONS LTD. AT RS.1 38 478 AND KISHAN IRRIGATION LTD. A SISTER CONCERN AN ADDITION OF RS.2 06 003 WAS MADE . AGGRIEVED THE AS SESSEE APPEALED BEFORE THE FIRST APPELLATE AUTHORITY WHO CONSIDERED THE DEBIT BALANCE OF KISHAN EXTRUSION LTD. TO BE A DJUSTED AGAINST THE UNEXPLAINED CREDIT BALANCE OF M/S.KISHAN IRRIGATION LTD. A SISTER CONCERN AND CONFIRMED RS.67 525 WHICH HAS BEEN / I.T.A.NO. 411/CTK/2010 2 APP EA L ED AGAINST BEFORE M E . THE LEARNED COUNSEL FOR THE ASSESSEE ALSO POINTED OUT THAT ERRONEOUSLY THE ADDITION OF RS.1 91 210 IN THE NAME OF SOUTH EASTERN CORPORATION P LTD. WAS NOT A RGUED UPON BEFORE THE LEARNED CIT(A) IN VIEW OF THE GROUND NOT HAVING B EEN RAISED INDIVIDUALLY IN THE GROUNDS BEFORE HIM AS PER THE COPY OF FORM NO.35 WHICH MAY BE PERUSED IN THE APPEAL MEMO. HE PRAYED THAT THE ADDITIONS SO CONFIRMED BY THE ASSESSING OFFICER REMAINING TO BE ADJUDICATED BY THE LEARNED CIT(A) ARE TO BE CONSIDERED I N ITS ENTIRETY IN SO FA R AS THE TRADE CREDITORS REMAINED EXPLAINED TO THE EXTENT THAT THE PURCHASES THERE FROM HAVE BEEN ACCEPTED BY THE ASSESSING OFFICER TO THE EXTENT THAT THE RECONCILIATION BETWEEN THE BALANCES AS SHOWN BY THE TRADE CREDITORS AND THE ASSESSEE HAS TO BE BROUGHT ON RECORD TO SPECIFICALLY COMPUTE THE UNEXPLAINED AMOUNT TO BE TAXED U/S.68.HE POINTED OUT THAT THE LEARNED CIT(A) BY CONFIRMING RESIDU AL RS.67 525 BY ADJUSTING THE BALANCES OF THE SISTER CONCERN HAS ONLY CONSIDERED ON SIDE OF THE RECONCILIATION WHEN THE MATTER REQUIRED EXP LANATION BY THE ASSESSEE TO BE PUT BEFORE HIM SO AS TO BE CONSIDERED IN THE ORDER OF ASSESSMENT WHEN ALL TH E BALANCES SOUGHT TO BE TAXED A RE E XPLAINED AND NOT ESTABLISHED A S BOGUS AS WAS CONSIDERED BY THE LEARNED ASSESSING OFFICER RELYING ON THE DECISION OF HONBLE MADHYA PRADESH HIGH COURT IN THE CASE OF V.I.S.P. (P) LTD. V. COMMISSIONER OF INCOME - TAX [2004] 265 ITR 202 (MP) . HE POINTED OUT THAT THE ASSESSING OFFICER HAD NOT ESTABLISHED THESE CREDITS AS BOGUS FOR THE SIMPLE REASON THAT HE HAD ACCEPTED ALL THE PURCHASES AGAINST THESE CREDITS WHI CH ADDITION OR DISALLOWANCE HAS NOT BEEN MADE AS CAN BE SEEN IN THE ASSESSMENT ORDER. THEREFORE HE PRAYED THAT BOTH THESE ADDITIONS SO CONFIRMED BY THE LEARNED CIT(A) MAY KINDLY BE RESTORED TO HIS FILE FOR ADJUDICATION TO ESTABLISH THEIR BOGUS NATURE TO BE TAXED U/S.68. HE SUBMITTED THAT IT IS NOT POSSIBLE TO RECONCILE THE SUM OF RS.67 525 AS PART OF ONE OF THE PURCHASES AND THE / I.T.A.NO. 411/CTK/2010 3 ASSESSEE HAS ALL THE PURCHASE BILLS FOR THE SUM OF RS.1 91 021 IN THE CASE OF M/S.SOUTH INDIA CORPORATION P. LTD. AN OPPORTUNITY MAY BE GRANTED TO THE ASSESSEE TO BRING OUT THE GENUINENESS OF THESE TRADE CREDITORS TO ESTABLISH BEYOND DOUBT THAT THEY ARE NOT BOGUS SO AS DERIVED BY THE LEARNED ASSESSING OFFICER. 3. THE LEARNED DR SUBMITTED THAT THE ASSESSEE WAS NOT ABLE TO OFFER SATISFACTORY EXPLANATION FOR THE DIFFERENCE IN THE AMOUNTS AS SHOWN BY THE ASSESSEE IN ITS BOOKS OF ACCOUNT VIS - - VIS THE BALANCES SHOWN OWED BY THE ASSESSEE WITH RESPECT TO THE TRADE CREDITORS. HOWEVER HE HAD NO OBJECTION IF THE MATTER IS RESTORED TO THE FILE OF THE LEAR NED CIT(A) FOR CONSIDERATION OF SPECIFICALLY RECONCILING THE BALANCES AGAINST THE PURCHASES WHICH HAVE BEEN ACCEPTED AS GENUINE BY THE ASSESSING OFFICER IN THE IMPUGNED ASSESSMENT YEAR. 4. I HAVE HEARD THE RIVAL CONTENTION AND PERUSED THE MATERIAL AVAILABLE ON RECORD. IN MY CONSIDERED VIEW I FIND FORCE IN THE SUBMISSIONS OF THE LEARNED COUNSEL FOR THE ASSESSEE THAT ONCE AN ADDITION HAS BEEN MADE U/S.68 IT HAS TO BE ESTABLISHED BEYOND DOUBT THAT THE CREDIT BALANCE OF THESE CREDITORS WAS NOT ON THE BASIS OF ANY PUR CHASES MADE FROM THEM WHICH OTHERWISE STAND S ACCEPTED BY THE ASSESSING OFFICER AS PART AS EXPENSES TO BE REDUCED FROM THE TURNOVER THE ASSESSEE BEING A DEALER IN IRON AND HARDWARE. THE LEARNED COUNSEL FOR THE ASSESSEE HAS ALSO POINTED OUT THAT THE ISSUE REGARDING ADDITION OF RS.1 91 210 WAS NOT ADJUDICATED BY THE LEARNED CIT(A) ALTHOUGH MENTIONED IN PARA 2 OF HIS ORDER THEREFORE REQUIRES CONSIDERATION IN THE LIGHT OF ESTABLISHING THAT THESE CREDITS ARE NOT BOGUS AS RELIED UPON BY THE LEARNED ASSESSING OFFIC ER IN THE CASE LAW CITED ABOVE. BOTH THESE ADDITIONS ARE THEREFORE RESTORED TO THE FILE OF THE LEARNED CIT(A) FOR CONSIDERATION AFRESH TO BE FACTUALLY BROUGHT OUT WHETHER COULD BE CONSIDERED AS CASH CREDITS U/S.68 / I.T.A.NO. 411/CTK/2010 4 VIS - - VIS THE ASSESSEE INSISTING THAT T HEY ARE TRADE CREDITORS AGAINST BILLS RAISED WHICH OTHERWISE APPEAR S TO HAVE BEEN ACCEPTED BY THE ASSESSING OFFICER ALLOWING THE PURCHASES IN THE IMPUGNED ASSESSMENT YEAR. 5. IN THE RESULT THE APPEAL IS ALLOWED FOR STATISTICAL PURPOSES. THIS ORDER IS PRONOUNCED IN OPEN COURT ON DT. 27.12.2010 SD/ - ( . . ) (K.K.GUPTA) ACCOUNTANT MEMBER. ( ) DATE: 27 TH DECEMBER 2010 - COPY OF THE ORDER FORWARDED TO: 1 . / THE APPELLANT : M/S.PADMA IRONS & HARDWARE STORES SANO BAZAR BERHAMPUR 2 / THE RESPONDENT: INCOME - T AX OFFICER WARD 2 BERHAMPUR. 3 . / THE CIT 4 . ( )/ THE CIT(A) 5 . / DR CUTTACK BENCH 6 . GUARD FILE . / TRUE COPY / BY ORDER [ ] SENIOR PRIVATE SECRETARY ( ) ( H.K. PADHEE ) SENIOR.PRIVATE SECRETARY.