M/S. BAJRANG CONVEYORS,BILASPUR(CG) vs. THE ITO, WARD- 2(1), BILASPUR(CG)

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ITA 1/BIL/2014Status: DisposedITAT Raipur15 January 2018AY 2009-105 pages
AI SummaryRemanded

What did the Tribunal hold?

The Tribunal held that the assessee should be given an opportunity to explain the details and the Assessing Officer should verify the invoices and pass an order on merits. The issue of suppressed sales was also restored to the Assessing Officer.

What were the facts?

The assessee booked an advance of Rs. 27,49,190 received from M/s. Aditya Renewable Resources as a liability. The Assessing Officer treated this as a bogus liability and added it to the assessee's income, a view confirmed by the CIT(A). The assessee argued that invoices were raised in the subsequent financial year.

What were the issues?

Whether the advance received for supply of goods was a bogus liability or a genuine transaction where invoices were raised in a subsequent year. Whether suppressed sales addition was justified.

Which sections of the Income-tax Act were involved?

Section 68

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, RAIPUR BENCH, RAIPUR

Before: S/SHRI N.S SAINI & PAVAN KUMAR GADALE

For Appellant: Shri G.S.Agrawal, AR
For Respondent: Shri O.P.Chaudhary, DR
Hearing: 11/01

IN THE INCOME TAX APPELLATE TRIBUNAL, RAIPUR BENCH, RAIPUR

BEFORE S/SHRI N.S SAINI, ACCOUNTANT MEMBER AND PAVAN KUMAR GADALE, JUDICIAL MEMBER

ITA No. 01/Rpr/2014 Assessment Year : 2009-2010

M/s. Bajrang Conveyors, 28, Vs. The Income Tax Officer, - Sector-C, Industrial Estae, 2(1), Mahima Complex, Sirgitti, Bilaspur Vyapar Vihar, Bilasopur PAN/GIR No.AAFFB 2255 F (Appellant) .. ( Respondent)

Assessee by : Shri G.S.Agrawal, AR Revenue by : Shri O.P.Chaudhary, DR

Date of Hearing : 11/01/ 2018 Date of Pronouncement : 15 /01/ 2018

O R D E R Per Pavan Kumar Gadale, JM

This is an appeal filed by the assessee against the order of the CIT(A)-

Bilaspur, dated20.8.2013 for the assessment year 2009-2010.

2.

The first issue relates to disallowance of Rs.27,49,190/- by the lower

authorities treating the same as advance received for supply of goods as

bogus trading liability.

3.

The relevant facts are like this. The assessee derives income from job

works and manufacturing of conveyor rollers, Idlers and system. The

2 ITA No. 01/Rpr/2014 Assessment Year : 2009-2010

Assessing Officer found that the assessee has shown gross profit @ 8.94%

and net profit @ 1.33% on a total turnover of Rs.1,42,69,228/- after giving

interest & remuneration to partners. The assessee has maintained its books

of account on mercantile system. The Assessing Officer noticed that an

advance of Rs.27,49,796/- was shown as liability received by the assessee

from M/s. Aditya Renewable Resources. On perusal of account of the party in

the books of the assessee, it was found that Rs.27,49,796/- has been

accumulated by receiving four cheques on different dates. On enquiry, the

Assessing Officer gathered that there are mismatch in the account. He

further found that M/s. Aditya Renewable Resources used to purchase

finished goods from it and the party booked the supplied goods as purchase

whereas the assessee firm has booked the same as advance. The assessee

explained that the party purchased the goods for a particular project and the

whole project material was not sent at a time but sent by four consignments

and, accordingly, whenever the whole segment of project items were sent to

the named party, then whole realization value of Rs.38,38,543/- dated

31.10.2009 had been accounted for in the next assessment year. The above

explanation of the assessee was not convinced to the Assessing Officer, who

observed that the assessee had converted revenue receipt of

Rs.27,49,,190/- as an advance and showed it as liability in the balance

sheet, whereas the liability does not exist. Therefore, he treated the amount

3 ITA No. 01/Rpr/2014 Assessment Year : 2009-2010

as bogus liability and added the same to the income of the assessee u/s.68

of the Act.

4.

On appeal, the CIT(A) confirmed the action of the Assessing Officer.

5.

At the time of hearing, ld A.R. submitted that the addition made by the

Assessing Officer with respect to transaction of Rs.27,49,190/- has been

considered and the invoice was raised in the financial year 2009-2010

relevant to assessment year 2010-2011. Ld A.R. submitted the paper book

disclosing copy of invoice and the calculation of the stock.

6.

Ld D.R. relied on the orders of lower authorities.

7.

We have heard the rival submissions, perused the orders of lower

authorities and materials available on record. The undisputed facts of the

case are that an advance of Rs.27,49,796/- was shown as liability received

by the assessee from M/s. Aditya Renewable Resources. On perusal of

account of the party in the books of the assessee, it was found that

Rs.27,49,796/- has been accumulated by receiving four cheques on different

dates. Before us, ld A.R. submitted that the addition made by the Assessing

Officer with respect to transaction of Rs.27,49,190/- has been considered

and the invoice was raised in the financial year 2009-2010 relevant to

assessment year 2010-2011. To substantiate, ld A.R. submitted the paper

book disclosing copy of invoice and the calculation of the stock with

4 ITA No. 01/Rpr/2014 Assessment Year : 2009-2010

documents. We are of the considered view that the assessee should be

provided an opportunity to explain the details alongwith statements filed

before us and the Assessing Officer has to verify whether the assessee has

raised sales bills in the assessment year 2010-2011 and pass the order on

merits. The Assessing Officer is directed to afford proper opportunity of

hearing to the assessee before adjudicating the issue afresh.

8.

The next issue relates to addition of Rs.8,60,783/- as suppressed

sales.

9.

Ld A.R. of the assessee submitted that the above addition is included

in Rs.8,60,783/- as suppressed sales.

10.

As we have restored the addition of Rs.27,49,190/- to the file of the

Assessing Officer, the addition of Rs.8,60,783/- being suppressed sales is

also restored to the file of the Assessing officer with the same direction as

give above. This issue is also allowed for statistical purposes.

11.

In the result, appeal filed by the assessee is allowed for statistical

purposes.

Order pronounced on 15 /01/2018. Sd/- sd/- (N.S Saini) (Pavan Kumar Gadale) ACCOUNTANT MEMBER JUDICIALMEMBER

5 ITA No. 01/Rpr/2014 Assessment Year : 2009-2010

Raipur; Dated 15 /01/2018 B.K.Parida, SPS Copy of the Order forwarded to : 1. The Appellant : M/s. Basjrang Conveyors, 28, Sector-C, Industrial Estae, Sirgitti, Bilaspur 2. The Income Tax Officer, -2(1), Mahima Complex, Vyapar Vihar, Bilasopur 3. The CIT(A)- Bilaspur 4. Pr.CIT-Bilaspur 5. DR, ITAT, Raipur 6. Guard file. //True Copy//

BY ORDER,

SR.PRIVATE SECRETARY ITAT, Raipur

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