DCIT, Kurukshetra v. M/s Jai Durga Milk Products, Kurukshetra

ITA 446/CHANDI/2012 | 2005-2006
Pronouncement Date: 29-04-2014 | Result: Dismissed

Appeal Details

RSA Number 44621514 RSA 2012
Assessee PAN AAEFJ2498K
Bench Chandigarh
Appeal Number ITA 446/CHANDI/2012
Duration Of Justice 2 year(s) 8 day(s)
Appellant DCIT, Kurukshetra
Respondent M/s Jai Durga Milk Products, Kurukshetra
Appeal Type Income Tax Appeal
Pronouncement Date 29-04-2014
Appeal Filed By Department
Order Result Dismissed
Bench Allotted B
Tribunal Order Date 29-04-2014
Date Of Final Hearing 23-04-2014
Next Hearing Date 23-04-2014
Assessment Year 2005-2006
Appeal Filed On 20-04-2012
Judgment Text
1 IN THE INCOME TAX APPELLATE TRIBUNAL CHANDIGARH BENCHES B CHANDIGARH BEFORE SHRI T.R. SOOD ACCOUNTANT MEMBER AND SHRI SANJAY GARG JUDICIAL MEMBER ITA NO. 446/CHD/2012 ASSESSMENT YEAR: 2005-06 THE DCIT VS. M/S JAI DURGA MILK PRODUCTS CIRCLE PIPLI ROAD KURUKSHETRA KURUKSHETRA PAN NO. AAEFJ2498K (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI ASHWANI KUMAR RESPONDENT BY : SHRI MANJIT SINGH DATE OF HEARING : 22/04/2014 DATE OF PRONOUNCEMENT : 29.04.2014 ORDER PER T.R.SOOD A.M. THE APPEAL FILED BY THE REVENUE IS DIRECTED AGAINST THE ORDER PASSED BY THE CIT(A) KARNAL DATED 07.02.2012. 2. IN THIS APPEAL THE REVENUE HAS RAISED THE FOLLOW ING GROUND:- ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE THE LD. CIT(A) HAS ERRED IN DELETING THE ADDITION OF RS . 80 LACS REPRESENTING DIFFERENCE BETWEEN THE TWO STATEM ENTS OF TRADING & P & L ACCOUNT & BALANCE SHEET DULY AUDITE D ON THE SAME DAY BY THE SAME AUDITOR WHICH WERE FILED SEPARATELY ONE WITH THE INCOME TAX RETURN & OTHER T O THE BANK. 3. AFTER HEARING BOTH THE PARTIES WE FIND THAT A SURVEY WAS CONDUCTED IN THE PREMISES OF THE ASSESSEE ON 24.12.2004 AND CERTAIN BOOKS OF ACCOUNT AND 2 DOCUMENTS WERE FOUND. SOME DISCREPANCIES WERE NOTIC ED IN SUCH BOOKS AND DOCUMENTS. BECAUSE OF THESE DISCREPANCIES ASSESSE E SURRENDERED A SUM OF RS. 1 01 0000/-. THE ASSESSEE FILED RETURN OF INCOME DE CLARING NET INCOME OF RS. 54 50 700/-. ON AN QUERY IT WAS EXPLAINED THAT R ETURN WAS FILED AFTER REDUCING A SUM OF RS. 41 77 314/- ON ACCOUNT OF LOSS DURING THE YEAR AND DEPRECIATION BROUGHT FORWARD FROM EARLIER YEARS. SOME MORE QUER IES WERE RAISED AND ULTIMATELY THE ASSESSEE AGREED FOR ASSESSMENT AT RS . 1 01 00000/- AND ACCORDINGLY INCOME WAS ASSESSED AT RS. 1 01 00 000/ -. LATER ON THE ASSESSMENT WAS REOPENED BY RECORDING THE FOLLOWING REASONS:- 2. IN THE COURSE OF INQUIRIES CONDUCTED ON THE BA SIS OF TAX EVASION PETITION CERTAIN INFORMATION WAS COLLECTED FORM STA TE BANK OF INDIA AMBEDKAR CHOWK KARNAL. FROM THE BANK TRUE COPY OF AUDITED ACCOUNTS FOR THE YEAR ENDING 31.03.05 AND 31.03.2006 ENCLOSE D WITH BALANCE SHEETS TRADING AND PROFIT & LOSS ACCOUNTS AND OTH ER FINANCIAL STATEMENTS WERE PROCURED. COPY OF THE AUDIT REPORTS WERE GOT A TTESTED FROM THE MANAGER OF THE STATE BANK OF INDIA KARNAL FOR AUTH ENTICATION. PERUSAL OF THE BALANCE SHEER PROCURED FROM THE BANK FOR THE PE RIOD ENDING 31.03.2005 AND THE PERUSAL OF BALANCE SHEET PLACED ON THE ASSTT. RECORD FOR THE SAME PERIOD REVEALS SOME DIFFERENCES WHICH ARE AS UNDER:- SR. NO. HEAD AS PER BALANCE SHEET PROCURED FROM BANK FOR ASSTT. YEAR 2005-06 AS PER BALANCE SHEET OF ASSTT. RECORD OF THE OFFICE FOR ASSTT. YEAR 2005-06 DIFFERENCE AS UNEXPLAINED 1. CLOSING STOCK RS. 42 45 310./- RS. 4 45 310/- 38 00 000/- 2. SUNDRY DEBTORS RS. 58 09 805/- RS. 16 09 805/- 42 00 000/- 3. TOTAL 80 00 000/- 3. FROM THE DATA FURNISHED ABOVE IT HAS BECOME ABUN DANTLY CLEAR THAT THE ASSESSEE HAS GIVEN FABRICATED ACCOUNTS IN THE I NCOME TAX DEPARTMENT ON WHICH THE ASSESSMENT HAD BEEN FRAMED. IN THIS RE GARD IT HAS BEEN NOTICED THAT CLOSING STOCK OF RS. 38 00 000/-AND SU NDRY DEBTORS OF RS. 42 00 000/- WHICH HAD BEEN REFLECTED IN THE TRADING ACCOUNTS FURNISHED IN THE DEPARTMENT AS PER INCOME TAX RETURN FILED ON 08 .07.2005 HAS NOT BEEN ASSESSED TO INCOME TAX. THUS I HAVE REASON TO BELIE VE THAT INCOME OF RS. 80 00 000/- HAS ESCAPED ASSESSMENT AS EXCESS STOCK AND EXCESS SUNDRY 3 DEBTORS WAS CLEARLY AN INCOME OF THE ASSESSEE WHICH HAS NOT BEEN BROUGHT TO TAX. 4. DURING THE REASSESSMENT PROCEEDINGS THE ASSESSE ES COUNSEL SHRI VIKAS GARG APPEARED AND REQUESTED IN WRITING TO SUPPLY TH E COPY OF THE BALANCE SHEET WHICH WAS OBTAINED FROM STATE BANK OF INDIA AMBDK AR CHOWK KARNAL. THE ASSESSING OFFICER OBSERVED THAT THIS REQUEST WAS NO T TENABLE BECAUSE ASSESSEE HAD SUPPLIED THE BALANCE SHEET TO THE DEPARTMENT AS WELL AS TO THE BANK AND THEREFORE ONUS WAS ON THE ASSESSEE TO PROVE THE GE NUINENESS AND CREDITWORTHINESS OF BOTH THE BALANCE SHEETS. HE FU RTHER STATED THAT SINCE THE ASSESSEE HAS FAILED TO PROVE THE GENUINENESS AND CR EDIT WORTHINESS OF BOTH THE BALANCE SHEETS. HE FURTHER STATED THAT SINCE THE A SSESSEE HAS FAILED TO PROVED THE GENUINENESS AND DISCREPANCIES POINTED OUT BY THE DE PARTMENT THEREFORE A SUM OF RS. 80 LAKHS WAS ADDED TO THE INCOME OF THE ASSE SSEE. 5. ON APPEAL VARIOUS SUBMISSIONS WERE MADE BEFORE LD. CIT(A) AND IT WAS MAINLY SUBMITTED THAT ASSESSING OFFICER HAS NOT GIV EN THE COPY OF BALANCE SHEET THEREFORE IT WAS NOT POSSIBLE TO GIVE COMMENTS. H OWEVER THE ASSESSEE POINTED OUT THAT ORIGINALLY AFTER THE ADDITIONAL INCOME WAS ASSESSED THE SAME WAS NOT INCORPORATED IN THE BALANCE SHEET BUT LATER ON FIGU RES WERE INCORPORATED IN THE BALANCE SHEET. FURTHER THE DETAILED RECONCILIATIO NS WERE FILED. THE LD. CIT(A) WAS SATISFIED WITH THESE RECONCILIATIONS AND DELETE D THE ADDITION. 4. BEFORE US LD. DR STRONGLY SUPPORTED THE ORDER OF THE ASSESSING OFFICER.. 5. ON THE LD. COUNSEL FOR THE ASSESSEE STRONGLY SUP PORTED THE IMPUGNED ORDER. 6. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS CAREFUL LY AND FIND THAT IT WAS SUBMITTED BEFORE CIT(A) THAT IT WAS NOT POSSIBLE TO GIVE FURTHER COMMENTS IN VIEW OF THE FAILURE TO SUPPLY THE BALANCE SHEET T HE SAME WAS SEND TO ASSESSING 4 OFFICER FOR HIS COMMENTS AND THE RELEVANT EXTRACT R EPRODUCED BY THE LD. CIT(A) AT PAGE 5 IS AS UNDER:- DURING THE APPEAL PROCEEDINGS THE COUNSEL OF TH E APPELLANT FILED WRITTEN SUBMISSIONS. A COPY OF THE SAME IS ENCLOSED. IN THE WRITTEN SUBMISSIONS THE ADDITION HAS BEEN CHALLENGED ON THE GROUND THAT THE DOCUMENTS ON THE BASIS OF WHICH ADDITION HAS BEEN MADE WAS NOT PROVIDED TO T HE APPELLANT. SINCE THE DOCUMENTS ON THE BASIS OF WHIC H ADDITION HAS BEEN MADE WAS NOT PROVIDED TO THE APPELLANT Y OU ARE REQUESTED TO PROVIDE THE SAME TO THE APPELLANT AND TO CONSIDER THEIR REPLY THEREON. THE REPLY OF THE APPE LLANT ALONGWITH YOUR COMMENTS MAY BE SENT TO THIS OFFICE AND FOR THIS PURPOSE THE MATTER IS REMANDED TO YOU U/S 25 0(4) OF THE I.T. ACT 1961. YOU MAY ALSO CARRY OUT ANY OTHER IN VESTIGATION / ENQUIRIES IN THIS REGARD TO VERIFY THE FACTS TO R EACH TO A LOGICAL CONCLUSION. IT IS A HIGH DEMAND APPEAL AND HENCE YOU ARE REQUESTED TO SUBMIT THE REMAND REPORT ALONGWITH ASSESSMENT RECORDS TO THIS OFFICE 26 TH SEPTEMBER 2011. 7. THE LD. CIT(A) NOTED THAT THE ASSESSING OFFICER SUBMITTED THE REMAND REPORT IN WHICH IT WAS STATED THAT SAID BALANCE SHE ET WAS SUPPLIED. HOWEVER THE ASSESSING OFFICER DID NOT MAKE ANY SPECIFIC COMMENT TO JUSTIFY THE ADDITION OF RS. 80 00 000/- LAKHS AND THEREFORE ASSESSING OFF ICER WAS AGAIN REQUESTED TO MAKE SPECIFIC COMMENTS VIDE LETTER DATED 21.12.2011 AND THE RELEVANT EXTRACT IS REPRODUCED AT PAGE 6 WHICH IS AS UNDER:- PLEASE REFER TO THIS OFFICE ORDER DATED 29/30 TH AUGUST 2011 U/S 250(4) OF THE INCOME TAX ACT 1961 PER WHICH Y OU WERE DIRECTED TO PROVIDE A COPY OF THE TRADING PROFIT & LOSS ACCOUNT AND BALANCE SHEET OF THE APPELLANT COLLECT ED FROM THE STATE BANK OF INDIA KARNAL TO THE APPELLANT A ND TO SUBMIT YOUR REPORT ALONG WITH YOUR COMMENTS ON THE REPLY OF THE APPELLANT BY 26 TH SEPTEMBER 2011. THE REMAND REPORT HAS BEEN RECEIVED IN THIS OFFICE ON 9 NOV. 2011 AND ON EXAMINATION THEREOF IT IS NOTED THAT YOUR COMMENTS ON THE REPLY OF THE APPELLANT HAS NOT BEEN SUBMITTED ON TH E PRETEXT THAT NO REPLY WAS FILED BY THE ASSESSEE. A COPY OF THE REMAND 5 REPORT WAS PROVIDED TO THE APPELLANT. SH. ASHISH GU PTA PARTNER OF THE APPELLANT FIRM ATTENDED THE PROCEEDI NGS ALONG WITH HIS COUNSEL SH. VIKAS GARG CA AND SUBMITTED THAT THE AO DID NOT CALL FOR THEIR COMMENTS AND HENCE THERE WAS NO OCCASION TO FILE THE REPLY WITH THE A.O. FURTHER I N THE WRITTEN SUBMISSIONS THE APPELLANT MADE AN ATTEMPT TO RECON CILE THE DIFFERENCE BETWEEN THE TRADING PROFIT AND LOSS ACC OUNT AND BALANCE SHEET FILED WITH THE DEPARTMENT AND FILED W ITH THE BANK. A COPY OF THE SAME IS ENCLOSED. YOU ARE REQUE STED TO EXAMINE THE SAME AND TO FURNISH YOUR PARA WISE COMM ENTS THROUGH ADDL. CIT KURUKSHETRA RANGE KURUKSHETRA B Y 10 TH JAN 2011. THE RELEVANT ASSESSMENT RECORDS MAY ALSO BE PROVIDED. 8. THE EARLIER REMAND REPORT WAS PROVIDED TO THE AS SESSEE ALSO FOR HIS COMMENTS. THE ASSESSEE IN HIS COMMENTS MAINLY STAT ED THAT EARLIER THE ADDITIONAL AMOUNT OF INCOME WAS NOT CREDITED TO THE PROFIT AND LOSS ACCOUNT WHICH HAS BEEN LATER CONSIDERED IN THE BALANCE SHEE T FOR THE PURPOSE OF RENEWAL OF LIMIT FACILITY. THE ASSESSEE FURTHER FURNISHED DETAILED RECONCILIATION HOW VARIOUS AMOUNTS WERE ADDED TO THE SUNDRY DEBTORS S TOCK WHICH HAS BEEN REPRODUCED BY LD. CIT(A) IN HIS ORDER AT PAGES 9 TO 10. IN THE MEANTIME THE ASSESSING OFFICER ALSO FURNISHED COMMENTS TO THE Q UERIES RAISED BY LD. CIT(A) IN HIS LETTER DATED 21.12.2001. THE COMMENTS HAVE B EEN SUMMARIZED BY THE LD. CIT(A) AT PAGE 12 IN CIT(A) ORDER WHICH ARE AS UNDE R:- (A) THAT THE COPY OF THE AUDIT REPORT ON THE BASIS OF W HICH REASONS WERE RECORDED SHOULD HAVE BEEN KEPT BY THE ASSESSEE SINCE THE SAME WAS FILED WITH THE BANK BY THE ASSES SEE ITSELF. (B) THAT THE PLEA OF THE ASSESSEE THAT THE BALANCE SHEE T WAS FILED IN THE BANK FOR THE PURPOSE OF RENEWAL OF THE CREDI T LIMIT FACILITY WHICH APPEARS TO BE AN AFTER THOUGHT STORY SINCE IN THE BANK THE ASSESSEE FILED A COMPLETE AND DULY SIGNED AUDIT REP ORT IN FORM NO. 3CD ALONGWITH BALANCE SHEET PROFIT & LOSS ACCO UNT AND SCHEDULE-III; 6 (C) THAT THE ASSESSEE HAD SHOWN PROFIT OF RS. 41 22 685 /- IN THE PROFIT & LOSS ACCOUNT FILED WITH THE BANK WHEREAS L OSS OF RS. 41 77 314/- HAD SHOWN IN THE AUDIT REPORT FILED WIT H THE DEPARTMENT AND HENCE THERE WAS NO CONFORMITY AS CLA IMED BY THE ASSESSEE; (D) THAT NEITHER THE DEPARTMENT NOR THE INSTITUTE OF CH ARTERED ACCOUNTANTS ALLOW TO PREPARE TWO AUDIT REPORTS ALON GWITH DIFFERENT BALANCE SHEET AND PROFIT & LOSS ACCOUNT B Y A CHARTERED ACCOUNTANT ON THE SAME DATE; (E) THAT RELIANCE ON THE ORDER OF HONBLE DELHI HIGH CO URT IN THE CASE OF SANTOSH BOX(P) LTD. IS MISPLACED BEING THE FACTS OF THAT CASE ARE DIFFERENT WITH THE FACTS OF THE CASE OF TH E APPELLANT . 9. THE COMMENTS OF THE RANGE OFFICER HAD ALSO BEEN REPRODUCED AT PAGE 13. THE ASSESSEE IN RESPONSE TO THIS REMAND REPORT SUBM ITTED THAT THE ASSESSING OFFICER COULD NOT HAVE REFUSED TO PROVIDE THE BALAN CE SHEET. FURTHER AGAIN THE SUBMISSIONS WITH REGARD TO RECONCILIATION ETC. WERE REITERATED. THE LD. CIT(A) ALSO OBTAINED COMMENTS FORM M/S VINAY GOEL & ASSOCI ATE WHO WERE AUDITORS OF THE CONCERN AND AUDITORS COMMENTS HAVE BEEN REPRODU CED AT PAGES 15 TO 17 WHICH ARE AS UNDER:- MOST RESPECTFULLY WITH REFERENCE TO YOUR LETTER D ATED 04.012012 ON THE SUBJECT ABOVE IN THE MATTER WE WO ULD LIKE TO SUBMIT BEFORE YOUR HONOR AS UNDER:- 1. THAT WE HAVE BEEN APPOINTED AS TAX AUDITED BY THE S UBJECT FIRM VIDE THEIR LETTER DATED 31/05/2005 AND HAS BEE N DULY ACCEPTED BY US IN TERMS OF LETTER OF ENGAGEMENT DAT ED 31/05/2005 TO PERFORM THE AUDIT AS REQUIRED UNDER S ECTION 44AB OF THE INCOME TAX RULES 1962. (COPY OF APPOINT MENT LETTER AND AUDIT ENGAGEMENT LETTER IS ENCLOSED). 2. THAT IN TERMS OF ABOVE MENTIONED APPOINTMENT WE HAV E CARRIED OUT THE AUDIT OF ABOVE REFERRED FIRM AND HA S ISSUED A AUDIT REPORT ALONGWITH BALANCE SHEET AND PROFIT AND LOSS ACCOUNT DATED 06/07/2005 (COPY ENCLOSED) WHICH WE B ELIEVE 7 HAS BEEN SUBMITTED BY THE ASSESSEE ALONG WITH INCOM E TAX RETURN AND DULY ASSESSED UNDER SECTION 143(3) BY TH E DEPARTMENT. 3. THAT WE CATEGORICALLY DENY THAT WE HAVE ISSUED ANY OTHER BALANCE SHEET OF THE SAME DATE TO THE ABOVE REFERRE D ASSESSEE CLAIMED TO BE FILED WITH THERE BANKERS. IT IS ALSO PERTINENT TO MENTION HERE THAT AFTER KNOWING THIS FACT WE HAVE I SSUED A LETTER TO THE CAPTIONED ASSESSEE FIRM ON 02.06.2009 TO EXPLAIN THERE POSITION IN THIS MATTER AND THE FIRM VIDE ITS LETTER DATED 23.06.2009 DENIED OUR ISSUANCE OF ANY OTHER BALANCE SHEET THAN REFERRED IN PARA 2 ABOVE. (COPY OF THE LETTER DATED 02.06.2009 AND 23.06.2009 ARE ENCLOSED FOR REFERENC E). 4. THAT THE MATTER HAD ALSO BEEN EXAMINED BY THE POLIC E IN THE MATTER AND ON FIR HAS BEEN LODGED IN WHICH WE AS AU DITORS OF THE FIRM HAS BEEN TAKEN AS CO ACCUSED. THE POLICE A FTER VERIFICATION OF ALL THE FACTS HAD FILED CANCELLATIO N REPORT TO THE CONCERNED JUDICIAL COURT. THE ISSUE WAS FURTHER RAISED BY WAY OF COMPLAINT TO THE ICAI WHERE ALSO THE UNDERS IGNED HAS EXPLAINED ITS POSITION AND DENIED ISSUANCE OF ANY O THER BALANCE SHEET. IT IS ALSO PERTINENT TO MENTION HERE THAT THE UNDERSIGNED HAS ALSO OBTAINED AN EXPERT OPINION FRO M SH. DEEPAK JAIN HANDWRITING EXPERT AT DELHI WHO CATEGO RICALLY HELD THAT THE SIGNATURES ON THE BALANCE SHEETS ARE DIFFERENT. AND THE COPY OF OTHER BALANCE SHEETS WERE PROCURED BY FRAUDULENT MEANS BY VESTED PARTIES DUE TO INTERNAL DISPUTES OF PARTNERS INTER-SE AMONG THEMSELVES FOR WHICH THE UN DERSIGNED HAS NO DIRECT OR INDIRECT INTEREST. 5. AS SUCH THE UNDIVIDED MAKES A CATEGORICAL DENIAL FR OM ALLEGATION OF ISSUING OR SIGNING MORE THAN ONE AUDI TED BALANCE SHEET OF M/S JAI DURGA MILK PRODUCTS FOR F. Y. 2004- 05 OR 2005-06. 10. IN VIEW OF THIS DETAILED CORRESPONDENCE THE LD. CIT(A) EXAMINED THE SAME AND OBSERVED THAT AFTER THE SURVEY ONCE ASS ESSMENT WAS FINALIZED AT RS. 1 01 00 000/ THERE WAS NO NEED TO FURTHER ADDITION PARTICULARLY WHEN THE 8 ASSESSEE HAS RECONCILED THE FIGURES AND ASSESSING O FFICER HAS NOT GIVEN ANY SPECIFIC COMMENTS AGAINST SUCH RECONCILIATION. 11. WE FIND NO REASON TO DEVIATE FROM THE FINDS OF LD. CIT(A) BECAUSE RECONCILIATION HAVE BEEN DULY FILED BEFORE HIM AGAI NST WHICH THE ASSESSING OFFICER HAD NO COMMENTS TO OFFER. BASICALLY WHEN A DDITIONAL INCOME WAS OFFERED BY WAY OF SURRENDER THE SAME HAS BEEN ADDED TO STOCK & SUNDRY DEBTORS AND PROPER RECONCILIATION HAVE BEEN FILED WHICH HAS BEEN EXAMINED BY LD. CIT(A). THEREFORE WE FIND NOTHING WRONG WITH THE ORDER OF LD. CIT(A) AND CONFIRM THE SAME. 12. IN THE RESULT REVENUES APPEAL IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 29.04.20 14 SD/- SD/- (SANJAY GARG) (T.R. SOOD) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED : 24 TH APRIL 2014 RKK COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT 4. THE CIT(A) 5. THE DR