THE ITO 13(3)(3), MUMBAI v. SHRI ANIL ENTERPRISES, MUMBAI

ITA 4011/MUM/2008 | 1991-1992
Pronouncement Date: 25-02-2010 | Result: Dismissed

Appeal Details

RSA Number 401119914 RSA 2008
Assessee PAN AAKPA9274G
Bench Mumbai
Appeal Number ITA 4011/MUM/2008
Duration Of Justice 1 year(s) 8 month(s) 19 day(s)
Appellant THE ITO 13(3)(3), MUMBAI
Respondent SHRI ANIL ENTERPRISES, MUMBAI
Appeal Type Income Tax Appeal
Pronouncement Date 25-02-2010
Appeal Filed By Department
Order Result Dismissed
Bench Allotted A
Tribunal Order Date 25-02-2010
Date Of Final Hearing 16-02-2010
Next Hearing Date 16-02-2010
Assessment Year 1991-1992
Appeal Filed On 05-06-2008
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH A MUMBAI. BEFORE SHRI R.K. GUPTA J.M. AND SHRI J. SUDHAKAR REDDY A.M. I.T.A. NO. 40 11/MUM/2008 ASSESSMENT YEAR : 1991-92. THE INCOME-TAX OFFICER ANIL ENTERPRISES RG. 13(3)(3) MUMBAI. VS. 105/10 6 PARSHWA CHAMBERS 17/21 ISSAJI STREET VADGADI MUMBAI 400 003. PAN AAKPA 9274G. APPELLANT RESPONDENT APPELLANT BY : MS. MAHUA SARKAR. RESPONDENT BY : SHRI VIMAL PUNAMIYA O R D E R PER J. SUDHAKAR REDDY A.M. THIS IS AN APPEAL FILED BY THE REVENUE DIRECTED A GAINST THE ORDER OF THE CIT(APPEALS)-XIII MUMBAI DATED 07-03- 2008 FOR ASSESSMENT YEAR 1991-92 ON THE FOLLOWING GROUNDS : 1. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN L AW THE LD. CIT(A) ERRED IN DELETING THE ADDITION OF R.2 20 080 /- AS UNACCOUNTED PURCHASES WITHOUT CONSIDERING THE PROVI SIONS OF SEC. 69C OF INCOME-TAX ACT 1961 WHICH DEEM THE EXPENDIT URE TO BE THE INCOME OF THE ASSESSEE. 2. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN L AW THE LD. CIT(A) ERRED IN DELETING THE ADDITION OF RS.68 03 2 75/- ON ACCOUNT OF UNEXPLAINED CASH CREDITS AND IN ACCEPTING THE RE CONCILIATION FILED BY THE ASSESSEE WITH REFERENCE TO BOOKS OF ACCOUNT ONLY ON THE BASIS THAT NO SUCH RECONCILIATION WAS MADE BY THE AO EVEN THOUGH THE CREDITORS WERE NOT APPEARING WERE UNDERSTATED IN TH E IN THE ASSESSEES BALANCE SHEET AS ON 31.03.1991. 3. WITHOUT PREJUDICE TO GROUND NO.2 THE LD. CIT(A) ER RED IN DELETING THE ADDITION OF RS.17 000/- RELATING TO M/S UNIQUE CHEM 2 ENTERPRISES INCLUDED IN THE AMOUNT OF RS.68 03 275/ - WITHOUT MAKING ANY DISCUSSION IN THIS REGARD AND WITHOUT CO NSIDERING THE OBSERVATIONS MADE BY THE AO IN THE PRESENT ASSESSME NT ORDER THAT THE ADDITION WAS EARLIER MADE ON THE GROUND THAT TH ERE WERE NO PURCHASES IN THE PAST AND THE CREDITORS ARE CARRYIN G FORWARD FROM LAST MORE THAN 2 YEARS. 2. THE ASSESSEE IS A PARTNERSHIP FIRM HAVING BUSIN ESS OF TRADING IN CHEMICALS. IT FILED ITS RETURN OF INCOME ON 30-0 1-1992 DECLARING A TOTAL INCOME OF RS. 1 73 165/-. ASSESSMENT WAS COMPLETED U/S 144 OF THE ACT. THIS ORDER WAS SET ASIDE BY THE C.I.T. MUMBAI CITY U/S 264 VIDE ORDER DATED 19-9-996. THEREAFTER AN ORDER IS PASSED U/S 1 43(3) ON 28-12-2006 BY THE AO WHEREIN CERTAIN ADDITIONS HAVE BEEN MADE. AGGRIEVED THE ASSESSEE CARRIED THE MATTER IN APPEAL. THE FIRST AP PELLATE AUTHORITY PARTLY ALLOWED THE APPEAL. AGGRIEVED WITH THE RELIEF GRANT ED THE REVENUE FILED THIS APPEAL. 3. WE HAVE HEARD MS. MAHUA SARKAR LEARNED DR AND MR. VIMAL PUNAMIYA LEARNED COUNSEL FOR THE ASSESSEE. 5. ON A CAREFUL CONSIDERATION OF THE FACTS AND CIR CUMSTANCES OF THE CASE AND A PERUSAL OF THE PAPERS ON RECORD AND THE ORDERS OF THE AUTHORITIES BELOW AS WELL AS THE CASE LAWS CITED W E HOLD AS FOLLOWS. 6. GROUND NO. 1 IS AGAINST THE DELETION OF ADDITIO N OF RS.2 20 080/- BY THE LEARNED CIT(APPEALS). THE AO M ADE THE ADDITION U/S 69C. AT PARA 4.2 THE FIRST APPELLATE AUTHORITY OBSERVED AS FOLLOWS : 4.2 I HAVE CONSIDERED THE CONTENTION OF THE APPELL ANT. THE EARLIER AO ANALYZING THE SALES AND PURCHASES OF MARCH 1991 OBSERVED THAT THE APPELLANT SHOWS SALE OF 20 980 MT OF SODA FLAKE S FOR WHICH THERE WAS NO CORRESPONDING PURCHASE. THIS IS THE RE ASON OF ADDITION. THE AO OBSERVED THAT SINCE THERE WAS NO C ORRESPONDING PURCHASE THE SAME MUST HAVE BEEN UNACCOUNTED. EVEN IF THAT IS 3 TRUE THE ADDITION SHOULD SHOW THE PURCHASE AND PRO FIT THEREOF. THE AO HIMSELF OBSERVES THAT SALES OF THE AMOUNT WAS AC COUNTED FOR. THE SALES FIGURE IS PURCHASE PLUS PROFIT. HENCE EV EN ON THAT GROUND THE ADDITION IS MADE IT WILL AMOUNT TO DOU BLE ADDITION. THE APPELLANTS CONTENTION IS ACCEPTABLE. THE ADDIT ION IS UNTENABLE AS THE APPELLANT IS ALREADY SHOWING SALES. THE AO I S THEREFORE DIRECTED TO DELETE THE ADDITION OF RS.2 20 080. THE GROUND SUCCEEDS. WE FULLY AGREE WITH THESE FINDINGS AND UPHOLD THE S AME. THUS WE DISMISS GROUND NO. 1 OF THE REVENUE. 7. COMING TO GROUND NO. 2 THE FACTS OF THIS ADDIT ION ARE BROUGHT OUT AT PARA 5.1 AND 5.2 OF THE CIT(APPEALS) ORDER WHICH ARE EXTRACTED BELOW FOR READY REFERENCE : 5.1 THE SECOND GROUND OF APPEAL IS THAT THE AO ERR ED IN ASSESSING RS.68 03 275/- AS UNEXPLAINED CASH CREDIT S. THE FACTS ARE LIKE THIS : THE AO PASSED THE ORDER ON 29/03/1999 VERIFIED THE BOOKS OF ACCOUNT IMPOUNDED BY HIM. HE EXAMINED THEM WITH REFERENCE TO BALANCE SHEET ITEMS OF EARLIER YEARS I.E. YEAR ENDI NG ON 31/03/1990. HE OBSERVED THAT THE NAME OF CERTAIN CREDITOR APPEA RING IN THE BALANCE SHEET ENDING ON 31/03/1990 SHOULD HAVE APPE ARED AS CREDITOR AS ON 1/04/1990. HE OBSERVED THAT THE NAME S ARE NOT APPEARING THOUGH THE LEDGER SHOWS THAT THEY ARE NO T SQUARED-UP. THE DETAILS ALSO MENTIONED IN THE SAME ASSESSMENT O RDER IS AS BELOW: NAME OF CREDITOR AMOUNT L/F. NO. (1) KAY KAY TRADING RS.16 50 177/- L.F. 14 (2) GLOBE INTERNATIONAL RS.113 98 094/- L.F. 23 (3) NIKHIL SALES CORPN. RS.16 30 467/- L.F. 2 4 (4) EAST INDIA CORPN. RS. 2 52 400/- L.F. 29 (5) PARUL DYECHEM INDS. RS. 3 86 633/- L.F. 30 (6) ANIL PRINTERS (P) LTD. RS. 3 12 842/- L. F. 31 (7) EMKAY CHEMICALS RS. 3 00 000/- L.F. 111 RS.59 30 013/- 4 5.2 THE AO ALSO FOUND DIFFERENCE IN CREDITORS IN BA LANCE SHEET AND BOOKS OF ACCOUNT. THEY ARE AS BELOW : (1) SIDDHI SALES CORPN. RS.3 00 000/- L.F. 28 (2) SHREEJI COLOUR CHEM RS.5 55 662/- L.F. 13 INDS. RS.8 55 662/- THE AO MADE THE ADDITION U/S 41(1) OF THE ACT ON A DIRECTION GIVEN BY THE ADDITIONAL COMMISSIONER OF INCOME-TAX. THE FIRS T APPELLATE AUTHORITY ON APPEAL DELETED THE ADDITION. AGGRIEVED THE REV ENUE IS IN APPEAL. 8. AT PARA 5.5 THE FIRST APPELLATE AUTHORITY OBSE RVED THAT THE ADDL. CIT HAD GIVEN A DIRECTION TO MAKE THE ADDITIO N U/S 41(1) OF THE ACT FOR THE REASON THAT THE ASSESSEE HAD NOT EXPLAINED THE ISSUE. HE HELD THAT THE AO HAD IMPOUNDED THE BOOKS AND THERE IS NO FIND ING THAT THE BOOKS ARE NOT RELIABLE. HE FOUND THAT THE NAMES OF THE CR EDITORS WERE APPEARING IN THE BOOKS OF ACCOUNT AND THERE IS NO CESSATION. HE WENT ON TO OBSERVE THAT THE AO HAS AGREED THAT THE ASSESSEE DID NOT GE T THE BENEFIT OF CESSATION OF LIABILITY. IN FACT SUMMONS WERE ISSUED TO THE CREDITORS STATEMENTS WERE RECORDED FROM THEM AND THEREAFTER T HE AO CAME TO THE CONCLUSION THAT THERE IS NO CESSATION OF LIABILITY. HE FOUND THAT THE BOOKS OF ACCOUNT WERE DULY AUDITED AND THE AO DID NOT ATT EMPT TO RECONCILE THE AUDITED BALANCE SHEET WITH THE BOOKS OF ACCOUNT. TH E ASSESSEE RECONCILED THESE DISCREPANCIES AND THE FIRST APPELLATE AUTHORI TY WAS SATISFIED WITH THE RECONCILIATION. ON THESE FACTS AND CIRCUMSTANCES T HE FIRST APPELLATE AUTHORITY OBSERVED THAT THE ADDITION WAS NOT MADE U /S 68 AND THAT IT WAS MADE U/S 41(1) AND AS THERE IS NO CESSATION OF LIAB ILITY AND AS THE BOOKS OF ACCOUNT WERE RECONCILED THE ADDITION HAS TO BE DEL ETED. THE LEARNED DR COULD NOT CONTRADICT THESE FINDINGS. THUS WE UPHOLD THE SAME AND DISMISS GROUND NO. 2 OF THE REVENUE. 5 9. FOR THE SAME REASONS WE ALSO DISMISS GROUND NO . 3 OF THE REVENUE. 10. IN THE RESULT THE APPEAL OF THE REVENUE IS DI SMISSED. ORDER PRONOUNCED ON THIS 25 TH DAY OF FEBRUARY 2010. SD/- SD/- (R.K. GUPTA) (J. SUDHAKAR REDDY) JUDICIAL MEMBER. ACCOUNTANT MEMBER. MUMBAI DATED : 25 TH FEBRUARY 2010. WAKODE COPY FORWARDED TO : 1. APPELLANT. 2. RESPONDENT 3. C.I.T. 4. CIT(A) 5. DR A-BENCH. (TRUE COPY) BY ORDER ASSTT.REGISTRAR ITAT MUMBAI BENCHES MUMBAI.