POONAMCHAND NARAYANDAS SOONI,KHIRKIYA vs. ITO-2, HARDA
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Income Tax Appellate Tribunal, INDORE SMC BENCH, INDORE
आयकर अपील�य अ�धकरण, इंदौर �यायपीठ, इंदौर IN THE INCOME TAX APPELLATE TRIBUNAL INDORE SMC BENCH, INDORE BEFORE SHRI MANISH BORAD, ACCOUNTANT MEMBER ITA No.239/Ind/2024 (Assessment Year: 2013-14) Poonamchand Narayandas Income Tax Officer -2, Sooni, Harda Main Road, H. No.26, Vs. Khirkiya, Madhya Pradesh (Appellant / Assessee) (Respondent/ Revenue) PAN: AABFP3619H Assessee by S/Shri Ashish Goyal and N.D. Patwa, ARs Revenue by Shri Ashish Porwal, Sr.DR Date of Hearing 06.08.2024 Date of Pronouncement 09.08.2024 O R D E R
This appeal by the assesse is directed against the order dated
26.12.2023 of the Commissioner of Income Tax (Appeals), Kolkata
for A.Y.2013-14 which is arising from the assessment order u/s
143(3) of the Act dated 23.03.2016 framed by ITO-2, Harda.
Assessee has raised following grounds of appeal:
ITA No.239/Ind/2024 Poonamchand Narayandas Sooni “1.The Id AO was not justified in passing the order. which is bad-in-law, void ab initio, barred by limitation, illegal, contrary to the facts and circumstances of the case, liable to be annulled 2. The Id CIT(A) was not justified in confirming the order, which is bad-in- law, void ab initio, barred by limitation, illegal, contrary to the facts and circumstances of the case, liable to be annulled. 3. The Id CIT(A) was not justified in confirming the addition of Rs. 17,42,976/- as unexplained cash credit 4. The appellant carves leave to add, amend or modify any of the grounds of appeal”
Brief facts of the case are that the assessee is a partnership
firm engaged in the business of wholesale dealer of food grains.
Income of Rs.1,94,140/- declared in the e-return for Assessment
Year 2013-14 filed on 27.9.2013. Case selected for scrutiny
through CASS followed by validly serving of notice u/s 143(2) of the
Act. Books of accounts were produced. Ld. A.O examined the
financial statements and books of accounts and also provided
return of preceding years. Thereafter Ld.A.O on going through the
balance sheet observed that the sundry creditors were shown at
Rs.1,63,22,802/-. Further examining the details filed by the
assessee Ld.A.O noted that the total sum on sundry creditors
includes Rs.1,12,96,543/- payable to the farmers and remaining
amount to other parties. Ld. A.O further wanted to examine the
ITA No.239/Ind/2024 Poonamchand Narayandas Sooni genuineness of the outstanding balance of the farmers/sundry
creditors. The assessee provided details of name and address of the
farmers. Ld. A.O issued notices u/s 133(6) and u/s 131 of the Act
to various parties out of which 7 parties gave reply and also gave
statement that they own agriculture land and they have sold their
agriculture produce to the assessee firm and have only taken part
of the total sale and remaining amount is outstanding which they
will take from the assessee in the subsequent period as and when
they are in need to purchase pesticides, medicines etc. Various
other details of the farmers were filed, however Ld. A.O concluded
the assessment by not accepting the explanations about the sundry
creditors of Rs.17,42,976/- and along with other minor addition of
Rs.50,000/- assessed income at Rs.19,87,116/-.
3.1 Aggrieved assessee preferred appeal before Ld. CIT(A) and so
far as the issue of unexplained sundry creditors of Rs.17,92,976/-
he confirmed the action of the Ld. A.O.
3.2 Aggrieved assessee is now in appeal before this Tribunal.
ITA No.239/Ind/2024 Poonamchand Narayandas Sooni 4. Ld. Counsel for the assessee apart from referring to the paper
book containing 81 pages providing a copy of certificate from
Inspector, Krishi Mandi, Ledger accounts of the farmers,
confirmation of the farmers along with copies of khasra, aadhar
and bank statement of Bank of India. He also placed reliance on the
decision of this Tribunal in the case of M/s Kamlesh Dal Mill V/s
ITO ITA No.256/Ind/2023 order dated 25.10.2023 wherein also
similar issue has been examined and based on the evidence filed,
appeal of the assessee is allowed. Ld. Counsel of the assessee also
referred to the synopsis providing list of 22 farmers from which
Rs.17,42,976/- is outstanding. The relevant extract from the
synopsis filed by the Ld. Counsel of the assessee is reproduced
below:
“The assessee, in the audited accounts has following creditors against purchase from farmers.
S.No Name of farmer Village Amount Crop Certifi Confirmatio Ledge . purchased cate n & Khasra r from & aadhar Mandi 1 Omprakash Chhanera 78,354 Chana PB-5 PB- 37-39 PB-16 S/o Bhawarlal 2 Ramdin S/o Khirkiya 1,09,490 Chana PB-5 PB- 33-36 PB-16 Shri Radhakishan 3 Vishnuprasad Khirkiya 95,670 Chana PB-5 PB- 30-32 PB-16 S/o Shri Govardhan 4 Raghunath S/o Khirkiya 27,506 Chana PB-5 PB- 21-23 PB-14
ITA No.239/Ind/2024 Poonamchand Narayandas Sooni Shri Ramlal 5 Ashok S/o Shri Khirkiya 1,09,490 Moong PB-5 PB- 52-54 PB-16 Damodar 6 Abhishek S/o Khirkiya 1,10,150 Moong PB-5 PB- 55-57 PB-10 Shri Rameshchandr a 7 Veeru S/o Shri Khirkiya 34,850 Wheat PB-5 PB- 40-42 PB-17 Mahendra Kumar 8 Dinesh S/o Khirkiya 72,600 Soyabean PB-5 PB- 64-66 PB-12 Shri Prahlad 9 Mohan S/o Sirali 40,480 Moong PB-5 PB- 58-60 PB-10 Shri Kishore 10 Mukesh S/o Khirkiya 75,750 Soyabean PB-5 PB- 67-70 PB-13 Shri Lakshinarayan 11 Manohar S/o Khirkiya 21,646 Chana PB-5 PB- 43-46 PB-17 Shri Phholchand 12 Ashok S/o Shri Khirkiya 1,01,150 Chana PB-5 PB- 24-26 PB-14 Ramnath 13 Omprakash Khirkiya 17,173 Chana PB-5 PB- 18-20 PB-13 S/o Shri Chhetar 14 Mahesh S/o Khirkiya 98,850 Chana PB-5 PB- 27-29 PB-15 Shri Rameshwar 15 Ramchandra Khirkiya 31,800 Wheat PB-5 PB- 61-63 PB-12 S/o Shri Narmadaprasa d 16 Manohar S/o Harsud 1,20,326 Moong PB-5 PB- 47-51 PB-8 Shri Atmaram 17 Dasharatha 50,596 Moong PB-5 PB-6 18 Ranjit Sarangpu 90,149 Moong PB-5 PB-7 r 19 Bhur Kudawa 79,674 Moong PB-5 PB-8 20 Narayan 1,04,200 Moong PB-5 PB-11 21 Sadasukh 2,00,000 Moong PB-5 PB-6 22 Bhim Singh 79,572 Moong PB-5 PB-9 17,42,976
Assessee purchased soyabean from the above farmers. The purchases were made through Mandi Samiti. The purchases were made at the year- end.
The purchase transaction is duly certified by Mandi Samiti. It is a trade credit and not an unsecured loan.
The Khasra of the parties were submitted.
ITA No.239/Ind/2024 Poonamchand Narayandas Sooni
All the farmers who sell the crops through Mandi are duly registered and pay Mandi Tax. 6. It is further submitted that the parties are trade creditors. Once the purchases are accepted, there cannot be addition for trade credits. Reliance is placed on the judgment of ITO vs Zozsons Exports Ltd. (2015) 55 taxmann.com 522 (Trib. Lucknow) where it was held that where Assessing Officer had drawn an adverse conclusion only on account of non-verifiability of sundry creditors but there being no dispute as regards purchases, and trading results having been accepted, addition made under section 68 was not sustainable. 7. In identical circumstances, in the case of M/s. Kamlesh Dal Mills, Khirkiya, the addition for such purchases of grains from farmers through mandi was deleted by the Hon'ble ITAT in ITA No. 256/IND/ 2023 vide order dated 25.10.2023. The copy of the said order is placed at PB 77-81.”
4.1 He further submitted that all the purchase transactions
carried with the alleged cash creditors namely 22 farmers at the
year end are genuine and they are duly certified by the Inspector of
the Mandi. He also submitted that Ld. A.O has accepted the
purchases but surprisingly doubted the genuineness of some
creditors, therefore the impugned addition deserves to be deleted.
On the other hand Ld. Departmental Representative
vehemently argued and supported the orders of lower authorities.
ITA No.239/Ind/2024 Poonamchand Narayandas Sooni 6. I have heard rival submissions and perused the records placed
before me. The finding of Ld. CIT(A) confirming the addition for
alleged sundry creditors at Rs.17,92,976/- is in challenge before
me. I observe that the assessee a partnership firm is a wholesale
trader of food grains. It purchases the agriculture produce from
various farmers and carrying out its trading activity. During the
year under consideration out of the total sundry creditors of
Rs.1,63,22,802/- a sum of Rs. 1,12,96,549/- was attributable to
sundry creditors which are farmers. The focus of examination of
the Ld. A.O was only with regard to the sundry creditors balance in
the name of farmers. Ld. A.O’s extensive exercise included taking
various information from the assessee as well as issuing notice u/s
133(6) of the Act and summons u/s 131 of the Act. In most of the
cases proper reply was received and some of the farmers gave the
statement that they have sold goods to the assessee and they have
not taken the total balance due from the firm because they will take
the sum at the time of the new crop season for purchasing seeds
and pesticides. Ld. A.O remain doubtful for only for 22 farmers
having the outstanding balance of Rs.17,42,976/- and for the
remaining amount of sundry creditors Ld. A.O was satisfied. This
ITA No.239/Ind/2024 Poonamchand Narayandas Sooni satisfaction of the Ld. A.O itself asserts the modus operandi of
business carried by the assessee that the genuine transaction have
taken place between assessee and farmers by way of purchasing
food grains from the farmers and further carry out the trading
activity.
6.1 This is also an admitted fact that Ld. A.O has not doubted the
genuineness of purchases and books of accounts have not been
rejected and there is no observation of the Ld.A.O doubting the
purchases. In my considered view even on this ground when the
purchases have been accepted there is no justification in doubting
the genuineness of sundry creditors.
6.2 Even otherwise assessee has furnished details of alleged 22
farmers having outstanding credit balance of Rs.17,42,976/-.
Complete details of farmers with their address, bill of the crop
purchased, certificate from mandi Inspector appearing at page 5
and also confirmation of khasra and aadhar number of the farmers
along with ledger account clearly prove that the purchases made by
the assessee from all these farmers are genuine and the sundry
ITA No.239/Ind/2024 Poonamchand Narayandas Sooni creditors are not bogus. I also notice that the farmers sale crops at
Mandi and are duly registered and pay the mandi tax and
therefore under the given facts and circumstances where the
purchases have been accepted and genuineness of alleged sundry
creditors balance is proved, then there itself remains no room for
making addition for bogus sundry creditors and for this I place
reliance on the decision of Co-ordinate Bench, Lucknow in the case
of ITO v/s Zazsons Exports Ltd (2015) tt taxmann.com 522.
6.3 Further since the documentary evidence for proving that the
alleged sundry creditors/farmers are not bogus creditors and
genuine transactions of purchase of food grains have taken place,
and that Ld. CIT(A) has erred in confirming the action of Ld. A.O
making the addition for bogus purchase, I place reliance on the
decision of this Tribunal in the case of M/s Kamlesh Dal Mills
(supra) where also similar issue was dealt under the similar facts
and circumstances, and this Tribunal in para 8 of the order
observed as under:
“8. We have considered rival submissions of both sides and perused the orders of lower-authorities as well as documents filed in the Paper-Book. The present case involves a small controversy regarding addition of Rs. 3,23,279/- made by AO. The assessee is engaged in whole-sale business of grains and in the course of business made purchases from farmers during the period 08.03.2014 to 24.03.2014 as per Certificate issued by 9
ITA No.239/Ind/2024 Poonamchand Narayandas Sooni Inspector of Mandi Samiti, placed at Page No. 26 of Paper-Book. There is no doubt expressed by revenue qua the genuineness of purchases. In so far as payments to farmers are concerned, the copies of Ledger A/cs filed by assessee demonstrate that the payments were made in the immediate next year. The copies of Ledger A/cs are also not disputed or doubted from the side of revenue. Therefore, based on documentary evidences filed in Paper- Book by Ld. AR under a certificate in terms of ITAT Rules that all these documents were before lower-authorities, we are inclined to delete the addition made by AO. Ordered accordingly. The assessee succeeds in this appeal.”
6.4 Thus respectfully following the above decision of this Tribunal
and considering the facts and circumstances of the case discussed
herein above I am inclined to hold that both the lower authorities
erred in confirming the addition for bogus sundry creditors. Thus
finding of Ld. CIT(A) is set aside and addition of bogus sundry
creditors at Rs.17,46,976/- is hereby deleted. Effective Ground
No.3 on merits raised by the assessee is allowed. Other grounds
are general in nature which needs no adjudication.
In the result appeal of the assessee is allowed.
Order pronounced in the open court on 09.08.2024.
Sd/-
(MANISH BORAD) Accountant Member
Indore, 09.08.2024 Dev/Sr. PS
ITA No.239/Ind/2024 Poonamchand Narayandas Sooni
Copies to: (1) The appellant (2) The respondent (3) CIT (4) CIT(A) (5) Departmental Representative (6) Guard File By order UE COPY Sr. Private Secretary Income Tax Appellate Tribunal Indore Bench, Indore
