 | Addition cannot be made by ignoring the accounting procedure |
| Posted on 24 June 2013 by Diganta Paul | |
CourtINCOME TAX APPELLATE TRIBUNAL BriefThe return of income was filed on 31.03.2008 declaring income at Rs.1,01,784/-. The assessment was finalized u/s 143(3) on 29.12.2009 by making an addition of Rs.12,84,516/- on account of bogus sundry creditors and Rs.48,540/- on account of concealed sundry debtors. CitationITO, Ward 2 (3), Meerut. (APPELLANT) Vs. Shri Shiv Kumar Agarwal, Prop. M/s. Pem Synthetics, Vishwa Shanti Complex,Near Rani Mill, Delhi Road,Meerut.(PAN: ADOPA4774G)(RESPONDENT) Judgement IN THE INCOME TAX APPELLATE TRIBUNAL (DELHI BENCH 'G': NEW DELHI) SHRI I.C. SUDHIR, JUDICIAL MEMBER and BEFORE SHRI B.C. MEENA, ACCOUNTANT MEMBER ITA No.3150/Del./2012 (ASSESSMENT YEAR: 2007-08) ITO, Ward 2 (3), Meerut. (APPELLANT) Vs. Shri Shiv Kumar Agarwal, Prop. M/s. Pem Synthetics, Vishwa Shanti Complex, Near Rani Mill, Delhi Road, Meerut. (PAN: ADOPA4774G) (RESPONDENT) CO No.320/Del/2012 (in ITA No.3150/Del./2012) (ASSESSMENT YEAR: 2007-08) Shri Shiv Kumar Agarwal, Prop. M/s. Pem Synthetics, Meerut. Vishwa Shanti Complex, Near Rani Mill, Delhi Road, (APPELLANT) (PAN: ADOPA4774G) Vs. ITO, Ward 2 (3), Meerut. (RESPONDENT) ASSESSEE BY: Shri Ashok Kumar, Advocate REVENUE by: Smt. Jyoti Legha, Senior DR ORDER PER B.C. MEENA, ACCOUNTANT MEMBER: The appeal filed by the revenue and cross objection filed by the assessee emanates from the order of CIT (Appeals), Meerut dated 22.03.2012. 2. The return of income was filed on 31.03.2008 declaring income at Rs.1,01,784/-. The assessment was finalized u/s 143(3) on 29.12.2009 by making an addition of Rs.12,84,516/- on account of bogus sundry creditors and Rs.48,540/- on account of concealed sundry debtors. The CIT (A) deleted these additions by holding as under: "6. Decision and reasons therefore: I have considered the facts of the case, findings of the A.O. and submissions of the appellant, I have also considered the accounting procedure being followed by the appellant and have perused the copies of accounts of the appellant in the books of his customer namely Olympic Fasteners and vice versa and the account of the supplier M/s Synfab Sales & Ind. Ltd in the books of the appellant as well as the copy of account of the customer namely M/s Olympic Fasteners in the books of the supplier. I have noted that the appellant has credited the account of the supplier by the amount of their bill by making corresponding debit entry in the account of the customer added with appellant's commission thereon. These entries were recorded by the appellant in the capacity of an agent only and this fact is explained during assessment proceedings as well as appeal proceedings. In case credit of the supplier M/s Synfab Sales & Ind. Ltd is treated as bogus, debit balance of customer M/s Olympic Fasteners shall have to be reduced correspondingly by that amount in order to nullify the effect of the accounting entry as a whole, as only one side (i.e. credit side) cannot be assumed as bogus while accepting the debit side thereof as correct. This is also substantiated by the fact that the supplier is showing the similar amount of balance in his books as due from M/s Olympic Fasteners as is shown by M/s Olympic Fasteners in their books of account to the credit of the appellant. Non declaration of sale & purchase of material supplied by M/s Synfab Sales & Ind. Ltd to M/s Olympic Fasteners by the appellant in his books of account or to the Trade Tax department as his sale & purchase, was attributable to the fact that property in the said goods had never passed to the appellant during the whole transaction. This fact cannot be a base to hold the credit of M/s Synfab Sales & Ind. Ltd as bogus, ignoring the accounting procedure being followed by the appellant. From the copy of account of the supplier in appellant's books of account on record, it is apparent that the appellant has debited the amount of commission receivable of Rs.48540/- (net of TDS) to the account of the supplier and their credit balance towards supplies to customer was Rs.13,33,057/ as against Rs.12,84,516/- as considered by the AO. The AO has separately added this amount of Rs.48540/- holding the same as concealed debts of the appellant, apparently based on incomplete appreciation of facts on record. In view of above observation, I hold that the A.O. has misdirected himself, based of wrong appreciation of facts on record, in reaching a finding that the credit of the supplier in the books of the appellant declared at Rs.12,84,5l6/- (Net of commission receivable of Rs.48,540/-) was bogus. I, therefore, delete the additions of Rs.12,84,516/- and Rs.48540/- totalling to Rs.13,33,056/-. In the result, Ground Nos. 1 & 2 are decided in favour of the appellant." Against which the revenue is in appeal by taking the following grounds:- "1. Whether in the facts and circumstances of the case, the Ld. Commissioner of Income Tax (Appeals) was right in law and in fact in deleting the addition of Rs.13,33,056/- ignoring the fact that the assessee failed to explain how in absence of purchases, creditor could exist and further totally failed to explain the credit entry appearing in its balance sheet. 2. Whether in the facts and circumstances of the case, the Ld. Commissioner of Income Tax (Appeals) has erred in law and in fact in deleting the addition of Rs.13,33,056/- ignoring the legal position that onus to prove such creditor was entirely upon the assessee which totally remained undischarged. Reliance is placed on the following judgments- I. CIT Vs. Korlay Trading Co. Ltd. (Cal.) 232 ITR 820. II. Krishan Kumar Jhanb Vs ITO and Anr (Punjab & Haryana) 17 DTR 249 III M/s. Sejai International Ltd. Vs. CIT,Meerut (All.)Appeal No.306 of 2010 3. In the facts and circumstances of the case, the order of the Commissioner of Income tax (Appeals) may be set aside and that of the A.O. restored." The assessee has filed the cross objection by taking the following grounds:- "1. That the order of Ld. Commissioner IT.(Appeal) Meerut has based very rightly on the substantial facts & law, because of right prospective consideration of correct appreciation of facts on record(deletion of impugned demand Rs.13,33,056/- made in this case by him accordingly. 2. That the entries of sundry creditors and debtors in the balance sheet of the objector/Respondent had been recorded in the capacity of an agent only based upon the actual appreciation of facts and circumstances of the normal course of business trend of the respondent business. 3. That the Ld. Commissioner (I.T.) Appeal has passed the order impugned in accordance of Laws and facts considering the accounting entry as a whole, as only one side (i.e.) credit side cannot be assumed as bogus while accepting the debit side there of as correct. 4. That the reliance placed at the following judgments a. CIT Vs. Korlay Trading Co. Ltd. (Cal) 232 ITR 820. b. Krishan Kumar Jhanb Vs. ITO and Am (Punjab & Haryana ) 17 DTR 249 c. M/s Sejai International Ltd. Vs. CIT, Merrut (AIL) Appeal No.306 of 2010. by the Appellant have not relied similarities with the facts and circumstances of the cross objector in pursuance of natural law and justice." 3. We have heard both the sides on these issues. The assessee was carrying out the business of trading of yarn and fabric on his own account as well as on commission basis. Assessee had shown sundry creditors of Rs.13,15,269/-. On cross verification, Assessing Officer did not find the matching amount of Rs.12,84,516/- in the copy of books of Synfab Sales & Industries Ltd.. CIT (A) had considered the method of accounting of assessee and also accounts of these concerns. The assessee is a commission agent of M/s. Synfab Sales & Ind. Ltd., Silvasa, Panchsheeel Polyster Pvt. Ltd., Daman and Him Chemical Ltd., Nalagarh. Total billing during the year was Rs.1,54,39,920/- and the main customer was M/s. Olympic Fasteners, Meerut. Out of the total billing amount, Rs.1,50,61,287/- was for the material of M/s. Synfab Sales & Ind. Ltd.. The total purchases from this supplier was Rs.1,49,86,357/-. The commission amount was Rs.74,930/- @ half per cent of the total amount. The debit note of Rs.1,50,61,287/- was debited to M/s. Olympic Fasteners, Meerut. The amount was credited in the account of M/s. Synfab Sales. The account of M/s. Olympic Fasteners was debited by the same amount after adding half per cent commission. Thus, these entries were recorded by the assessee in the capacity of an agent only. Thus, the difference noted by Assessing Officer was on account of accounting procedure followed by assessee. It has been clarified by assessee and accepted by CIT (A). Considering these facts, we find that CIT (A) was justified in deleting the addition and we sustain the same. 4. Since the cross objection filed by the assessee is in support of the order of CIT (A) which we have sustained, the cross objection of the assessee has become infructuous and accordingly, dismissed. 5. In the result, the appeal of the revenue and cross objection of the assessee stand dismissed. Order pronounced in open court on this 3rd day of May, 2013. Sd/- Sd/- (I.C. SUDHIR) (B.C. MEENA) JUDICIAL MEMBER ACCOUNTANT MEMBER Dated the 3rd day of May, 2013/TS Copy forwarded to: 1. Appellant 2. Respondent 3. CIT 4. CIT (A), Meerut. 5. CIT (ITAT), New Delhi. AR, ITAT NEW DELHI |
| | If the loan taken by the company is already offered as income as trading receipt cannot be taxed again as undisclosed |
| Posted on 24 June 2013 by Diganta Paul | |
CourtINCOME TAX APPELLATE TRIBUNAL BriefGround Nos.1 to 4 of the assessee's appeal are against the reopening of assessment under Section 147 of the Income-tax Act, 1961. In the assessment order, the Assessing Officer has recorded that in this case, the original return furnished by the assessee was processed under Section 143(1) and no regular assessment had taken place. The Assessing Officer had received the information from DIT(Investigation) that during the course of investigation, it was found that Mukesh Gupta along with his relatives and associate concerns were in the business of providing entries by way of loans, share application money, gifts etc. As per information, the assessee was also beneficiary of the entry of `5 lakhs taken from Suma Finance Investment Ltd. In view of the above specific information, the Assessing Officer recorded the satisfaction for reopening of assessment under Section 148 and after issuing notice under Section 148, reopened the assessment. CitationM/s Ramji Dass Darshan Kumar Ltd., 100/28, Shiva Tower, Sector-9, Rajapur, Rohini, Delhi – 110 085. PAN : AAACR0805J. (Appellant) Vs. Income Tax Officer,Ward-15(2),New Delhi. (Respondent) Judgement IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH 'F' : NEW DELHI BEFORE SHRI G.D.AGRAWAL, VICE PRESIDENT AND SHRI A.D.JAIN, JUDICIAL MEMBER ITA No.5070/Del/2012 Assessment Year: 2002-03 M/s Ramji Dass Darshan Kumar Ltd., 100/28, Shiva Tower, Sector-9, Rajapur, Rohini, Delhi – 110 085. PAN : AAACR0805J. (Appellant) Vs. Income Tax Officer, Ward-15(2), New Delhi. (Respondent) Appellant by: Shri Ved Jain, CA. Respondent by: Shri Satpal Singh, Sr.DR. ORDER PER G.D.AGRAWAL, VP: This appeal by the assessee is directed against the order of learned CIT(A)-XVIII, New Delhi dated 19th July, 2012 for the AY 2002- 03. 2. Ground Nos.1 to 4 of the assessee's appeal are against the reopening of assessment under Section 147 of the Income-tax Act, 1961. In the assessment order, the Assessing Officer has recorded that in this case, the original return furnished by the assessee was processed under Section 143(1) and no regular assessment had taken place. The Assessing Officer had received the information from DIT(Investigation) that during the course of investigation, it was found that Mukesh Gupta along with his relatives and associate concerns were in the business of providing entries by way of loans, share application money, gifts etc. As per information, the assessee was also beneficiary of the entry of `5 lakhs taken from Suma Finance Investment Ltd. In view of the above specific information, the Assessing Officer recorded the satisfaction for reopening of assessment under Section 148 and after issuing notice under Section 148, reopened the assessment. 3. At the time of hearing before us, the learned counsel for the assessee could not justify how the reopening of assessment was invalid. 4. In view of the above, we do not find any merit in ground Nos.1 to 4 of the assessee's appeal. The same are rejected. 5. Ground Nos.5 & 6 of the assessee's appeal are against the addition of `16 lakhs made by the Assessing Officer as undisclosed income. 6. At the time of hearing before us, it was stated by the learned counsel that though the assessment was reopened on the ground of escapement of income of `5 lakhs being alleged entry taken from Suma Finance Investment Ltd., the Assessing Officer made the addition of `16 lakhs on the ground that the assessee has taken the total loan of `16 lakhs from following persons:- Rashipal Chand `30,000/- Harjinder Singh `3,00,000/- D.K.K.Promoters `20,000/- Freezair India Pvt.Ltd. `2,50,000/- Garuda Securities `5,00,000/- Suma Finance & Investment Ltd. `5,00,000/- 7. It is stated by the learned counsel that the assessee is in the business of real estate and the above amounts were received as advance against the booking of flats. That ultimately, those persons did not purchase the flats and, therefore, the sum of `16 lakhs received as advance from them is offered as income. Once the above amount has already been offered as income by the assessee, the same cannot be taxed as undisclosed income, otherwise, it would amount to double taxation. He, therefore, submitted that the addition of `16 lakhs sustained by the learned CIT(A) should be deleted. 8. Learned DR, on the other hand, stated that before the Assessing Officer, the assessee never stated that the sum of `16 lakhs has already been offered by the assessee as its income. He, therefore, submitted that either the addition should be sustained or the matter may be set aside to the file of the Assessing Officer for verification of the fact whether the sum of `16 lakhs has been offered by the assessee as its income. 9. We have carefully considered the arguments of both the sides and perused the material placed before us. It is contended by the learned counsel that the sum of `16 lakhs added by the Assessing Officer as undisclosed income has already been offered as income by the assessee by way of forfeiture of booking advance. In principle, we agree with the assessee's contention that if the above sum is already offered as income by the assessee by way of trading receipt, the same cannot be taxed again as undisclosed income. However, whether the above sum is actually offered as income, needs verification. We, therefore, set aside the orders of authorities below on this point and restore the matter to the file of the Assessing Officer. We direct him to examine the assessee's contention whether the sum of `16 lakhs has already been offered to tax as forfeiture of booking advance. If the amount has already been offered as income, no separate addition of the receipt of the above money shall be made as undisclosed income. Needless to mention that he will allow adequate opportunity of being heard to the assessee. 10. In the result, the appeal of the assessee is deemed to be partly allowed for statistical purposes. Decision pronounced in the open Court on 17th May, 2013. Sd/- Sd/- (A.D.JAIN) (G.D.AGRAWAL) JUDICIAL MEMBER VICE PRESIDENT Dated: 17.05.2013 VK. Copy forwarded to: - 1. Appellant: M/s Ramji Dass Darshan Kumar Ltd., 100/28, Shiva Tower, Sector-9, Rajapur, Rohini, Delhi – 110 085. 2. Respondent: Income Tax Officer, Ward-15(2), New Delhi. 3. CIT 4. CIT(A) 5. DR, ITAT Assistant Registrar |
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