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Income Tax Appellate Tribunal, MUMBAI BENCHES
Before: SHRI R.C. SHARMA & SHRI SANDEEP GOSAIN
ORDER
PER R.C. SHARMA, ACCOUNTANT MEMBER :
These are the cross appeals filed by the Assessee and Revenue against the order of Ld. CIT(A) for the AY 2007-08.
Rival contentions have been heard and record perused.
Facts in brief are that the assessee is engaged in the business of manufacturing mile steel rolled products. During the course of scrutiny assessment AO made addition on account of purchase amounting to Rs. 2,42,67,423/-. By the impugned order Ld. CIT(A) deleted the addition to the extent of Rs. 2,07,84,604/-. Thus the addition of Rs. 24,82,819/- was upheld by the Ld. CIT. Against this order of Ld. CIT(A) both the Assessee & Revenue are in further appeal before us.
We have heard rival contentions and found from record that in the course of assessment proceedings, originally on 23.11.2009, incorrect party wise details of purchases were submitted to the Ld. AO by junior accountant of assessee company as the main accountant was absent due to accident. On realizing the error, the correct party wise details of purchases were submitted on 09/12/2009. The AO asked for reconciliation of differences in respect of 32 purchase parties out of all purchase parties as per the two set of details filed. Assessee submitted reconciliation vide reply dt. 29.12.2009 with explanation for difference and produced relevant evidences. The reconciliation was accepted by the Ld. AO in respect of 16 parties and addition was made in respect of balance 16 parties wherein the differences (either positive or negative) between erroneous details submitted on 23.11.2009 and correct details submitted on 09.12.2009 was determined and both positive and negative figures i.e(+) + (-) wre totaled to work out addition of Rs. 2,42,67,423/-. By the impugned order the CIT(A) held that both positive and negative differences in purchase could not be totaled but only the net difference could be considered for addition. The addition was therefore restricted to net difference of Rs. 24,82,819/-.
The A.O has made addition of Rs.19,34,047/- to the returned income of the assessee on account of disallowance of purchases made from one purchase party M/s. Amar Amit Jalna Alloys Pvt. Ltd., Jalana. The disallowance has been made for the only reason that the said party did not comply with the notice u/s 133(6) of the I.T. Act. The assessee submits that as per his information the said purchase party from jalana had sent the account confirmation to the ld A.O. and ld A.O. never appraised assessee regarding failure of the said party in complying with the notice u/s. 133 (6).
With regard to deleting disallowance of purchases of Rs. 19,34,047/- from M/s Amar Amit Jalna Alloys Pvt Ltd., we find that purchase like bills from the party, supporting evidences like weighment receipts from weigh bridge, ledger account in the books of the appellant, details of payment made through banking channels were produced before the Ld. AO.
By the impugned order CIT(A) deleted the addition after observing as under:-
8.2 Alongwith the said reply vide letter dated 6/1/2011 the assessee filed i. Copy of ledger account of M/s. Amar Amit Jalna Alloys Pvt. Ltd., in their books supported by copies of bills. ii. Original affidavit dated 15/12/2010 of Mr. Bharat Demda, M.D.of M/s. Amar Amit Jalna Alloys Pvt. Ltd., in which the M.D. has confirmed that reply to notice u/s. 133(6) of the I.T. Act sent by the AO received on 30/11/2009 had been sent by them through courier vide letter dated 07/12/2009 confirming the purchases. 8.3. After carefully perusing the above documents and considering the facts of the case, I find that the addition made by the AO is not warranted. The appellant, I find has documentary evidences to verify the purchases. Besides this the concern from where the transaction has resulted has also verified the same. As the appallent has discharged the onus placed on it regarding the verification of transaction with M/s. Amar Amit Jalna Alloys Pvt. Ltd., the addition made is therefore deleted.
We have considered rival contentions. The confirmations so filed was examined by the CIT(A) and after giving a detailed finding at para 8.2 and 8.3 he deleted the addition. Nothing was brought on record by learned DR to controvert the finding so recorded by CIT(A), accordingly, we do not find any reason to interfere in the order of CIT(A) deleting Rs.19,34,047/- made by the AO on account of purchases.
With regard to the other purchases added by the AO after considering the reconciliation statement we find that the addition of difference between erroneous set of purchase party figures earlier filed on 23.11.2009 and correct figures submitted on 09.12.2009 is not logical. The Ld. AO has accepted the explanation in respect of 16 parties thereby accepting the claim of the appellant that the earlier set of details filed on 23.11.20069 were erroneous.
By the impugned order Ld. CIT(A) upheld the addition of Rs. 24,82,819/- after observing as under:
“ 6.2. I have carefully considered the order of the assessing officer and the submission of the appellant. I find that during the course of assessment proceedings the assessing officer had in order to verify the purchases made by the appellant asked the appellant to file purchase details along with supporting evidence. In response, the appellant had vide letter dated 23/11/2009 filed details. However by another letter dated 09/12/2009 the appellant submitted fresh details stating that the earlier details had been wrongly constructed and filed and now what has been filed is the right details. It was stated that this was because the main accountant of the appellant had suffered serious accident and the details submitted were prepared by the junior accountant and had inherent mistakes. The assessing officer vide his letter dated 16/12/2009 sought a reconciliation regarding the difference in figures of party wise purchases submitted. The appellant submitted a reply. The AO verified the details submitted vis-à-vis books of account and came to the conclusion that in respect of 16 concerns there was a difference to the tune of Rs. 2,42,67,423/- in respect of expenditure claimed on account of purchases. The AO then proceeded to make an addition of the said amount to the total income of the appellant. 6.3 The appellant has in his defense stated that the AO has not sought any confirmation from the concerned parties and if this had been done no difference as pointed out would have resulted. The appellant further stated that the error has occurred because in certain cases like M/s Saraswathi Steel Industries in spite of there being no purchases the opening balance of Rs. 5 lakhs had wrongly been shown as purchases vide letter dated 23/11/2009. * M/s. Ramdas Ispat and Metals Pvt. Ltd. purchase returns of Rs. 1,03,650/- had remained to be considered. It has further been stated that if each and every account is seen it would stand that there is no differences. However without prejudice to the above the appellant has stated that even if the differences are to be considered the figure of unreconciled purchases would amount to only Rs. 34,82,819/- as the difference between the two sets of figures is both positive and negative and subsequent adjustments will have to be made. It cannot be that only the positive figures from both the sides be picked up. After carefully considering the fact I find that the action of the AO in treating a certain amount as unreconciled purchases cannot be faulted with. I find that the AO had to verify the purchases of the appellant requested the appellant to submit details. The onus was totally on the appellant to submit correct details in support of the claim made by it in its return of income regarding the purchases said to be made in the year. The appellant has held the junior accountant responsible for giving details which the appellant at the time of assessment proceedings was represented by an ITP who was fully qualified to check into the case of the appellant and submit details that was correct and which could verify the appellant’s claim made in the computation of the income. It is also to be considered that the junior accountant was and cannot be considered competent enough to make submission without consulting his seniors i.e. the directors of the company etc. and that any details that was prepared by him would have been subject to scrutiny by the seniors of the company. Therefore this contention of the appellant I find does not hold. The Hon'ble Ahmedabad Tribunal has clearly stated that even if a Return of Income is filed by agent or POA holder or guardian, the appellant has to bear consequences of an untrue Return of Income unless there are satisfying reasons (2011-9 taxamann.com 92(Ahd-I.T.A.T.). The principle behind the said observation of the Hon’ble Tribunal is squarely applicable in the case of the appellant. This especially so as complete reconciliation has not been done by the appellant to verify purchases. However, I find that the contention of the appellant that the figure of the purchases disallowed should be computed by keeping in view both the positive and negative differences that emerge regarding the letters dated 23/11/2009 and 09/12/2009 is acceptable. Therefore the addition to be sustained is upto Rs. 34,82,819/-. The balance amount is to be deleted. This ground of appeal is therefore partly allowed.
11. We have considered rival contentions and carefully gone through the orders of the authorities below. From the order of CIT(A), we found that he has examined all the purchases so made by the assessee and after considering the same, upheld addition of Rs.24,82,819/- by observing that in respect of difference between two sets of figures as supplied by the assessee having both positive and negative could not be taken and only net effect is to be taken. However, the AO has taken both positive and negative difference in purchases in respect of the various suppliers. We had verified the details of complete purchases for the year as a whole and found that CIT(A) has correctly upheld the addition of Rs.24,82,819/- while deleting the balance addition so made by the AO. We do not find any contravention of Rule 46A in so far as all the details were filed before the AO at the time of scrutiny proceedings after examining the same details, CIT(A) upheld the addition of Rs.24,82,819/- and deleted the balance addition.
12. Noting was brought on record by the Ld. AR or DR to persuade us to deviate from the findings recorded by Ld. CIT(A). Accordingly we do not find any reason to interfere in the findings so recorded by the Ld. CIT(A) upholding the addition of Rs. 24,82,819/- and deleting the balance addition.
In the result, both the appeal filed by the Assessee and Revenue are dismissed.
Order pronounced in the open court on 19/10/2016.