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Income Tax Appellate Tribunal, KOLKATA BENCH “B” KOLKATA
Before: Shri S.S.Godara & Dr. A.L. Saini
Linkwise Tie-up Pvt. Ltd. V/s. Income Tax Officer, Ward- (successors of Mega 12(1), R.No.11A, Aayakar Tenchless Engineering Bhawan, P-7, Pvt. Ltd.) 64/1, Khudiram Chowringhee Square, Bose Sarani, Belachia Kolkata-69 Kolkata-37 [PAN No.AADCM 4163 G] .. अपीलाथ� /Appellant ��यथ�/Respondent Shri Ramessh Kumar Patodia, FCA आवेदक क� ओर से/By Assessee Shri S. Dasgupta, Addl. CIT-SR-DR राज�व क� ओर से/By Revenue 09-05-2018 सुनवाई क� तार�ख/Date of Hearing 17-05-2018 घोषणा क� तार�ख/Date of Pronouncement आदेश /O R D E R PER S.S.Godara, Judicial Member:- The Revenue and assessee have filed their instant cross-appeal against Commissioner of Income Tax (Appeals)-4 Kolkata’s order dated 17.10.2016, passed in case No.346/CIT(A)-4/Ward-12(1)/Kol/15-16, partly upholding the Assessing Officer’s action disallowing sundry creditors / purchases of ₹85,79,220/- (out of the total amount of ₹3.74 crores) to the IT No.2416/Kol/2016 &115/Kol/2017 A.Y. 2012-13 ITO Wd-12(1),Kol. Vs. Mega Trenchless Eng. P. Ltd. Page 2 extent of ₹17,15,844/- only, in proceedings u/s. 143(3) of the Income Tax Act, 1961; in short ‘the Act. Heard both the parties. Case file perused.
The Revenue’s case before us as per its pleadings is that the Assessing Officer had rightly disallowed assessee’s impugned purchases to the tune of ₹85,79,220/-. It asserts that the CIT(A) has erred in law as well as on facts in granting part relief to the assessee to the extent of ₹68,63,376/- under challenge. Learned Departmental Representative takes us to the case record indicating the Assessing Officer to have doubted genuineness of assessee’s sundry creditors (purchases) in case of four companies namely, M/s Swarasathi Estate Advisors Traders Ltd., Trimutri Plant & Machinery Traders Pvt. Ltd., Woodburs Auto Agencies Pvt. Ltd., & Bhagyalaxmi Software Traders Pvt. Ltd., involving sums of ₹ 26 lakh in former three cases and ₹7,79,220/- in last one; respectively totaling to ₹85,79,220/-. The Revenue buttresses the Assessing Officer’s case that one Shri Anand Sharma controlled all these four entities. He had got recorded his statement to have been providing accommodation entries in the nature of share capital expenses and creditors etc. Learned Departmental Representative reiterates that it was only on the basis of Shri Sharma’s statement dated 02.07.2013 that the department to be cognizance thereof followed by the necessary disallowance is assessee’s case. He therefore urges to restore the impugned addition in enterity to the tune of ₹85,79,220/- since the purchases claim involves a serious genuineness issue.
Learned counsel representing assessee informs us that both the lower authorities had not afforded it either an opportunity to cross-examine Shri Sharma or supplied a copy of his alleged statement. He places before us a copy of assessment order in succeeding assessment year 2013-14. The Assessing Officer himself accepts similar purchases of ₹13.14 lakhs and ₹16.61 lakhs in case of former two entites (supra) without any dispute. Learned counsel highlights the facts that CIT(A) has categorically held that IT No.2416/Kol/2016 &115/Kol/2017 A.Y. 2012-13 ITO Wd-12(1),Kol. Vs. Mega Trenchless Eng. P. Ltd. Page 3 there is no dispute so far as genuineness of assessee’s sales in principle as concerned. He submits that once sales are not in dispute, the corresponding purchases have to be accepted. The assessee also takes the through assessment order dated 29.03.2015 (page para 5.9 onwards) recording Assessing Officer’s findings doubting genuineness of assessee’s purchases to be mere accommodation entries without any material at all but based on mere assumptions and presumption. Learned counsel invites our attention to Assessing Officer’s observations using crucial expression “might” everywhere in his findings indicating that the same suffered from conjectures and surmise only than any conclusive material. He therefore seeks us to delete the entire disallowance in toto.
We have given our thoughtful consideration to Revenue’s arguments praying to restore the entire purchases / sundry creditors disallowance as against assessee’s case that CIT(A) ought to have deleted the remaining disallowance component a well. This assessee admittedly trades in bed sheets (main item), blankets and cotton durry being supplied to various cooperative who in turn are railways vendors. There is no dispute that the instant issue of genuineness of the purchases / sundry creditors in question has arisen because of the fact that once Shri Sharma controlled the above four entities. He had admitted to have been engaged in providing accommodation entries in respect of share capital, credits and expenses. The Revenue treats the said statement as the basic material for doubting assessee’s purchases against whom the corresponding sales have been already taken as correct (supra). Neither the Assessing Officer nor the CIT(A) have supplied the assessee copy of Mr Sharma’s statement recorded on 02.07.2013 much less his cross-examination. Hon'ble apex court’s judgment in Andaman Timber vs. CIT (2015) 281 CTR 241 (SC) holds that such violation of principle of natural justice in absence of any exceptional circumstances renders an addition to be not sustainable. Case on record suggests that the Assessing Officer has himself treated Mr. Sharma two IT No.2416/Kol/2016 &115/Kol/2017 A.Y. 2012-13 ITO Wd-12(1),Kol. Vs. Mega Trenchless Eng. P. Ltd. Page 4 suppliers companies (supra) to be genuine in succeeding assessment year. All these clinching developments have gone unrebutted from the Revenue’s side. We therefore see no reason to concur with the impugned sundry creditors disallowance either in wholesale or in part. The same stands deleted. The assessee’s substantive grievance is accepted. The Revenue’s sole substantive ground declined accordingly.