SHALIKARANI R. GOEL, MUMBAI v. ITO WD 14(2)(3), THANE

ITA 911/MUM/2009 | 2003-2004
Pronouncement Date: 13-08-2010 | Result: Partly Allowed

Appeal Details

RSA Number 91119914 RSA 2009
Assessee PAN ADZPG6642E
Bench Mumbai
Appeal Number ITA 911/MUM/2009
Duration Of Justice 1 year(s) 6 month(s) 2 day(s)
Appellant SHALIKARANI R. GOEL, MUMBAI
Respondent ITO WD 14(2)(3), THANE
Appeal Type Income Tax Appeal
Pronouncement Date 13-08-2010
Appeal Filed By Assessee
Order Result Partly Allowed
Bench Allotted E
Tribunal Order Date 13-08-2010
Date Of Final Hearing 07-07-2010
Next Hearing Date 07-07-2010
Assessment Year 2003-2004
Appeal Filed On 11-02-2009
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI `E BENCH BEFORE SHRI S.V.MEHROTRA ACCOUNTANT MEMBER & SHRI VIJAY PAL RAO JUDICIAL MEMBER I.T.A.NO.911/MUM/2009 - A.Y 2003-04 MRS. SHALIKARANI R. GOEL 73 SEA LORD B CUFFE OARADEM MUMBAI 400 005. PAN NO.ADZPG 6642 E VS. INCOME TAX OFFICER WARD 14 (2)(3) MUMBAI. (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI RAHUL MAKANI. RESPONDENT BY : SHRI ASHIMA GUPTA. O R D E R PER S.V.MEHROTRA AM: THIS APPEAL OF THE ASSESSEE IS DIRECTED AGAINST TH E ORDER OF THE LEARNED COMMISSIONER OF INCOME TAX [APPEALS]-XIV M UMBAI DATED 29-12-2008. 2. THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL- 1. ON THE FACTS AND CIRCUMSTANCES OF THE CASE THE L EARNED COMMISSIONER OF INCOME TAX [APPEALS] HAS ERRED IN C ONFIRMING THE ADDITIONS OF RS.10 93 245/- IN RESPECT OF THE F OLLOWING THREE PARTIES UNDER SECTION 41[1][A] WITHOUT PROPER VERIF ICATION OF FACTS AND COGENT REASONS. SR.NO . NAME OF THE PARTY AMOUNT 1. M/S DILIP TEXTILES RS. 5 24 273 2. M/S. KOHINOOR TEXTILES RS. 3 23 993 3. M/S NAKODA TEXTILES RS. 2 44 979 TOTAL RS.10 93 245 2. THE LEARNED COMMISSIONER OF INCOME TAX [APPEALS] HAS FURTHER ERRED IN CONFIRMING THE ADDITION OF RS.6 57 126/- BEING PURCHASES MADE FROM M/S PADMAVATI SYNDICATE IN SPIT E OF THE FACT THAT THE APPELLANT HAS MADE THE FULL PAYMENT T O THE ABOVE PARTY ON 09-04-2003 BY ACCOUNT PAYEE CHEQUE. 2 3. THE ASSESSEE AN INDIVIDUAL IN THE RELEVANT ASS ESSMENT YEAR DERIVED INCOME FROM TRADING IN COTTON TEXTILES IN T HE NAME OF M/S R.G.SYNTHETICS CAPITAL GAINS [SHORT TERM LOSS ON S HARES] AND INCOME FROM OTHER SOURCES. THE AO NOTICED FROM THE BALANCE SHEET THAT THERE WERE SUNDRY CREDITORS AT RS.1 04 64 798/- AS ON 31- 3-2003 WHEREAS THE PURCHASES WERE AT RS.84 53 439/-. THEREFORE HE ISSUED NOTICES U/S.133[6] OF THE I.T.ACT IN ORDER TO VERIFY THE G ENUINENESS OF THE SUNDRY CREDITORS. HOWEVER THE POSTAL AUTHORITIES R ETURNED THE NOTICES WITH THE REMARK NOT KNOWN. HE THEREFORE REQUEST ED THE ASSESSEE TO PROVIDE THE PRESENT CORRESPONDING ADDRESS OR TO PRO DUCE THESE PARTIES WITH THE CONFIRMATIONS. HOWEVER SINCE THE ASSESSEE FAILED TO DO SO AO TREATED THE TOTAL SUM OF RS.10 93 245/- AS INCOME/N ON-EXISTING LIABILITY U/S.41[1][A] IN RESPECT OF THE FOLLOWING THREE PART IES: SR.NO. NAME OF THE PARTY NATURE OF TRANSACTION BALANCE AS ON 31-03-2003 1 M/S DALIP TEXTILES SUNDRY CREDITOR RS.5 24 273 2 M/S KOHINOOR TEXTILES SUNDRY CREDITOR RS.3 23 993 3 M/S NAKODA TEXTILES SUNDRY CREDITOR RS.2 44 979 TOTAL RS.10 93 245/- 4. THE AO HAD ALSO REQUESTED THE ASSESSEE TO FURNIS H THE CONFIRMATION OF ACCOUNTS IN THE CASE OF M/S. PADMAV ATI SYNDICATE FROM WHOM PURCHASES HAD BEEN SHOWN AT RS.6 57 126/-. SIN CE ASSESSEE FAILED TO FURNISH THE SAME AO MADE ADDITION OF THE SAME. 5. AS REGARDS THE ADDITION OF RS.10 93 245/- U/S.41 [1][A] IT WAS SUBMITTED BEFORE THE LD. CIT[A] THAT THE ASSESSEES CLAIM OF DEFECTIVE GOODS SENT BY THE PARTIES HAD NOT BEEN SETTLED BY T HEM TILL DATE AND 3 THE MATTER WAS IN THE FINAL DISCUSSION PHASE TO BE SETTLED SOON. THUS IT WAS SUBMITTED THAT THE ADDITION U/S.41[1][A] WAS PR EMATURE AS THE SAME WAS DONE IN THE VERY FIRST YEAR OF THE PURCHAS ES MADE BY THE ASSESSEE. THE LD. CIT[A] REJECTED THE ASSESSEES CL AIM INTER ALIA OBSERVING THAT NEITHER BEFORE THE AO NOR DURING TH E APPELLATE PROCEEDINGS ASSESSEE COULD ESTABLISH WITH ANY CORR OBORATIVE EVIDENCE THE EXISTENCE OF THE LIABILITY WHICH ADMITTEDLY W AS ON ACCOUNT OF PURCHASES OF EARLIER YEARS AND THEREFORE ACCORDIN G TO THE LD. CIT[A] THE TRADING LIABILITY DEEMED TO HAVE BEEN CEASED. 6. AS REGARDS THE ADDITION OF RS.6 57 126/- BEING P URCHASES MADE FROM M/S PADMAVATI SYNDICATE THE ASSESSEE HAD FILE D A COPY OF THE ACCOUNTS OF THE PARTY DULY SIGNED CONCERNING THE PU RCHASES OF RS.6 57 126/- AND OUTSTANDING BALANCE OF RS.3 94 38 3/- BEFORE THE LD. CIT[A]. A COPY OF THE EVIDENCE RECEIVED FROM THE PA RTY WAS ALSO ENCLOSED WITH A REQUEST TO ADMIT THE SAME AS ADDITI ONAL EVIDENCE. THE LD. CIT[A] NOTED THAT HIS PREDECESSOR HAD FORWARDE D THE ADDITIONAL EVIDENCE AND HAD DIRECTED THE AO TO EXAMINE THE SAM E AND FURNISH COMMENTS ON THE SAME ALONG WITH THE ADDITIONAL EVID ENCE IF ANY ON ADMISSIBILITY OF THE ADDITIONAL EVIDENCE U/S.46A. 7. THE AO IN HIS REMAND REPORT SUBMITTED THAT THERE WAS NO SUCH PARTY AT THE GIVEN ADDRESS AS THE SUMMONS ISSUED HA S BEEN RETURNED BY THE POSTAL AUTHORITIES. FURTHER THE WARD INSPEC TOR DEPUTED TO SERVE THE SUMMONS PERSONALLY ALSO REPORTED THAT NO SUCH P ARTY EXISTED AT THIS ADDRESS. THUS THE ONUS OF PROVING THE GENUINE NESS BEYOND DOUBT 4 WAS NOT FULLY DISCHARGED. A COPY OF THE REPORT WAS SUPPLIED TO THE ASSESSEE. IN REPLY THE ASSESSEE POINTED OUT THAT H E HAD GIVEN THE LAST KNOWN ADDRESS OF THE PARTY. FURTHER THE ASSESSEES LAST TRANSACTION WITH THE PARTY WAS COMPLETED ON 9 TH APRIL 2003 AND THE LAST PAYMENT TOWARDS THE PURCHASES WAS MADE ON 19 TH MARCH 2003. THE ASSESSEE HAD FILED COPIES OF VARIOUS ACCOUNTS IN SUPPORT OF HIS CONTENTIONS. THE LD. CIT[A] CONFIRMED THE FINDINGS OF THE AO INTER ALIA OBSERVING THAT THE ASSESSEE FAILED TO ESTABLISH THE GENUINENESS OF THE EXPENDITURE. 8. APROPOS ADDITION OF RS.10 83 245/- LD. COUNSEL OF THE ASSESSEE SUBMITTED THAT ADDITION IF AT ALL COULD BE MADE U /S.68 AND NOT U/S.41. HE SUBMITTED THAT INGREDIENTS OF SEC.41 SHOULD HAVE BEEN SATISFIED BEFORE INVOKING THE SAID PROVISION. FURTHER SINCE IT IS NOT DISPUTED THAT THE LIABILITY PERTAINED TO EARLIER YEAR HENCE ADD ITION COULD BE MADE IN EARLIER YEAR ONLY AND NOT IN THIS YEAR. THE LD. COU NSEL OF THE ASSESSEE FURTHER SUBMITTED THAT OPENING BALANCE HAS NOT BEEN DISPUTED AND THEREFORE THE ADDITION COULD NOT BE MADE IN THIS Y EAR. HE SUBMITTED THAT WHAT AO COULD NOT DO DIRECTLY ALSO COULD NOT D O INDIRECTLY. HE REFERRED TO PAGE-37 OF THE PAPER BOOK WHEREIN COPY OF THE LEDGER ACCOUNT OF M/S DALIP TEXTILE IS PLACED TO DEMONSTR ATE THAT OUT OF THE OPENING BALANCE AS ON 1-4-2002 OF RS.7 05 835/- GO ODS WORTH RS.1 81 562/- HAVE BEEN RETURNED ON 18-3-2003. THUS HE SUBMITTED THAT THE TRANSACTION WAS GOING ON AS THE GOODS RETU RNED HAD BEEN ACCEPTED AND THEREFORE SEC.41 COULD NOT BE INVOKE D. SIMILARLY HE REFERRED TO PAGES 38 TO 39 OF THE PAPER BOOK WHEREI N COPY OF THE 5 LEDGER ACCOUNTS OF M/S KOHINOOR TEXTILES AND NAKODA TEXTILES ARE PLACED IN WHICH SIMILAR TRANSACTIONS OF GOODS RETU RNED HAVE BEEN RECORDED AND HAVE NOT BEEN DISPUTED. THE LD. COUNSE L OF THE ASSESSEE IN SUM AND SUBSTANCE SUBMITTED THAT SINCE TRANSACT IONS HAVE BEEN GOING ON WITH THE PARTIES AND ASSESSEE IS ACKNOWLED GING THE LIABILITY IN HIS BOOKS THEREFORE IT COULD NOT BE INFERRED THAT THE LIABILITY HAS CEASED TO EXIST. 9. APROPOS THE ADDITION OF RS.6 57 126/- THE LD. C OUNSEL OF THE ASSESSEE SUBMITTED THAT IN ANY VIEW OF THE MATTER THE ENTIRE PURCHASES COULD NOT BE ADDED AND THAT JUST ONLY THE GP PERCENTAGE COULD BE ADDED. 10. ON THE OTHER HAND THE LD. DR RELIED ON THE O RDERS OF THE LOWER AUTHORITIES. 11. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND HA VE PERUSED THE RECORDS OF THE ASSESSEE. APROPOS ADDITION OF RS.10 93 245/- IN RESPECT OF THE THREE PARTIES [MENTIONED ABOVE] WE FIND CON SIDERABLE FORCE IN THE ARGUMENTS OF THE LD. COUNSEL OF THE ASSESSEE TH AT BEFORE INVOKING THE PROVISIONS OF SEC.41 THE INGREDIENTS OF THE SA ID SECTION HAVE TO BE SATISFIED. ADMITTEDLY THE LIABILITY IN RESPECT OF ALL THE THREE PARTIES WAS FOR APPEARING IN THE BOOKS OF ACCOUNT OF THE ASSESS EE AND THERE WERE NO TRANSACTIONS OF PURCHASES DURING THE YEAR. ALL T HE BALANCES WERE OUT OF OPENING BALANCES ONLY. THEREFORE SEC.68 COULD N OT BE INVOKED AS THE GENUINENESS OF THE LIABILITIES HAD TO BE EXAMIN ED IN THE YEAR TO WHICH IT PERTAINED. AS FAR AS THE APPLICABILITY OF SEC.41[1][A] IS 6 CONCERNED SINCE ASSESSEE HAS NOT WRITTEN BACK THES E AMOUNTS THEREFORE DEPARTMENT COULD NOT TREAT THE LIABILITY AS NON EXISTENT MERELY ON THE GROUND OF NON SERVICE OF SUMMONS ON T HE PARTIES PARTICULARLY BECAUSE IN THE CURRENT YEAR GOODS HAVE BEEN RETURNED WHICH FACT HAS NOT BEEN DISPUTED BY THE DEPARTMENT. ONCE THE TRANSACTION IS GOING ON WITH THE PARTIES IT CANNOT BE SAID THAT LIABILITY HAS CEASED TO EXIST. FURTHER ASSESSEE HAS FILED AN APPLICATION FOR ADMISSION OF ADDITIONAL EVIDENCE DATED 7 TH MAY 10 SEEKING PERMISSION TO FILE YEARWISE ACCOUNTING STATEMENT OF ALL THE PA RTIES TO SHOW THAT THE PARTIES WERE PAID BY THE ASSESSEE THROUGH BANKING C HANNELS TOWARDS THE OUTSTANDING LIABILITY IN SUBSEQUENT YEARS. IN O UR OPINION SINCE THIS EVIDENCE WAS NOT AVAILABLE AT THE TIME OF ASSESSMEN T PROCEEDINGS AS WELL AS THE FIRST APPELLATE PROCEEDINGS AS THE PAYM ENTS HAVE BEEN MADE SUBSEQUENT TO THE PASSING OF THE ORDER IT WOU LD BE IN THE INTERESTS OF JUSTICE THAT THIS EVIDENCE BE ADMITTED FOR PROPER ADJUDICATION OF THE ISSUE. WE ACCORDINGLY ADMIT T HIS EVIDENCE AND RESTORE THE MATTER TO THE FILE OF THE AO FOR THE LI MITED PURPOSES OF EXAMINING THE SAME. IN CASE THE PAYMENTS ARE ESTABL ISHED THEN NO ADDITION IS CALLED FOR U/S.41[1] ON THE GROUND OF C ESSATION OF LIABILITY. THIS GROUND IS ALLOWED FOR STATISTICAL PURPOSES. 12. APROPOS ADDITION OF RS.6 57 126/- WE DONT FIN D ANY SUBSTANCE IN THE ARGUMENTS OF THE LD. COUNSEL THAT ONLY GP PE RCENTAGE IS TO BE ADDED. THE EXISTENCE OF THE PARTY AS SUCH WAS NOT E STABLISHED. THEREFORE THE PURCHASES FROM ANY OTHER SOURCE COUL D NOT BE 7 CONSIDERED. WE FIND THAT THIS ISSUE IS SQUARELY COV ERED BY THE DECISION OF HON'BLE DELHI HIGH COURT IN THE CASE OF CIT VS. LD. COUNSEL OF THE ASSESSEE MEDICA 250 ITR 575. THIS GROUND IS THEREF ORE REJECTED. 13. IN THE RESULT ASSESSEES APPEAL IS PARTLY ALLO WED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 13 TH DAY OF AUGUST 2010. SD/- SD/- (VIJAY PAL RAO) (S.V.MEHROTRA) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI:13 TH AUGUST 2010. P/-*