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Income Tax Appellate Tribunal, “C”, BENCH KOLKATA
Before: SHRI WASEEM AHMED, AM & SHRI S.S.VISWANETHRA RAVI, JM
BEFORE SHRI WASEEM AHMED, AM & SHRI S.S.VISWANETHRA RAVI, JM आयकर अपील सं./ (�नधा�रण वष� / Assessment Year :2009-2010) Income Tax officer, Ward-3(2), Vs. M/s Chandra Oil Purulia at “Income Tax office, Industries, South Lake Road, P.O.&Dist- N.C.Dasgupta Road, Purulia, Pin-723101 PO&Dist-Purulia, Pin- 723101 �थायी लेखा सं./जीआइआर सं./PAN/GIR No. : AAEFC 1501 A .. (अपीलाथ� /Appellant) (��यथ� / Respondent) राज�व क� ओर से /Revenue by : Shri S. Dasgupta �नधा�रती क� ओर से /Assessee by : Shri Pinaki Mukherjee सुनवाई क� तार�ख / Date of Hearing : 01/06/2016 घोषणा क� तार�ख/Date of Pronouncement 15/07/2016 आदेश / O R D E R PER WASEEM AHMED (A.M): The revenue has preferred this appeal against the order dated 1-5- 2013, passed by ld. CIT(A), Asansol, relating to assessment year 2009- 2010.
The only issue raised by the revenue in grounds of appeal is that the Ld. CIT(A), Asansol has erred in law and on facts by allowing the relief of Rs.35,58,548/- disallowed by the AO u/s. 68 on account of bogus sundry creditors as the assessee could not produce any documentary evidence that the payments were made through broker agents.
The facts in brief are that the assessee in the present case is a partnership firm and engaged in the manufacturing business of mustard oil. The assessee filed its e-return declaring an income of Rs.41,880/-.
Thereafter, notices were issued u/s 143(2), & 142(1) of the Act along with questionnaire for making scrutiny assessment. The assessee has shown sundry creditors of Rs.35,58,548/- as on 31-3-2009 in its balance sheet.
The details of which are as under :-
Sl.No. Name of the parties Amount (in Rs.) 1. M/s Rachna Dall Udyog 6,94,194 2. M/s Aman Trading Co. 4,48,239 3. M/s Gourav Trading Co. 3,29,460 4. Surana Brothers 3,92,523 5. M/s Shanti Udyog 3,64,790 6. M/s Nabneet Brothers 3,12,120 7. M/s Kishanlal Sahu Parties 3,58,591 8. M/s Jitendra Kr & Co. 3,23,324 9. M/s Ghanshyam Das Gupta 3,35,307 The AO during the assessment proceedings issued notice u/s.133(6) of the Act but none replied except only one party i.e. M/s Jitendra Kr & Co. complied to the notice with the submission that the payment for Rs.3,32,324/- was received from assessee through RTGS on 9-3-2009.
Accordingly, the AO opined that the liabilities towards the sundry creditors shown by the assessee along with Jitendra Kr & Co. for Rs.3,23,324/- are bogus. However, the assessee submitted to the AO that all the payments have been made for the aforesaid liability amounting to Rs.35,58,548/- during the subsequent financial year 2009-2010 and furnished the details of the payment made to the aforesaid parties through banking channel of Central Bank of India, Purulia Branch Kolkata. The AO issued notice to the Central Bank of India u/s 133(6) of the Act for confirming the payment as claimed by the assessee. On reply, it was revealed that the payments were made to the following parties :-
As a result, the AO observed that the creditors shown in the books of account and the parties to whom payments were made were not matching at all. Accordingly, the AO sought clarification from the assessee. In compliance to the notice the assessee submitted all the purchases from the aforesaid parties as disclosed in Table-1 are made through the agent.
The list of the agents is furnished aforesaid in Table No.2. The assessee used to make payment to these authorised agencies for the purchase of the goods from the suppliers. However, the AO disregarded the claim of the assessee on the ground that assessee failed to furnish the documentary evidence in support of his claim, and, therefore, genuineness of the transaction for the sundry creditors was not established. Accordingly, the AO disallowed a sum of Rs.35,58,548/- shown as creditors in the balance sheet and added to the total income of the assessee as cash credit in the books of accounts u/s 68 of the Act.
Aggrieved assessee preferred appeal to ld. CIT(A), who has deleted the addition made by the AO by observing as under :-
I had considered all materials brought to record. The foremost point to be considered is that the creditors are trade creditors and not loan creditors. The figure is not the entire transaction that has been made with these persons. The main fact to be checked is how sums are paid to traders. The transaction with them is not to be confirmed with discharge of these credits but with discharge of all purchase transactions. I had made verification randomly of transactions from the purchase ledger and bank statement (already with Assessing Officer in the assessment records). It emerges that :- a. On 20.11.2008 and 03.12.2008 two cheques for Rs.2,50,000/- and Rs.2,24,198/- was claimed as payment in account of M/s Rachana Dall Udyog. It can be seen from bank statement that these are cleared in name of Shree Mahabir Enterprises respectively. b. To M/s Aman Trading Co. Rs.2,00,000/-, RS.2,66,395/-, Rs.2,00,000/- and Rs.2,00,000- was respectively paid as per purchase ledger on 27.01.2009, 09.02.2009, 18.03.2009 and 26.03.2009. The last two are reflected in bank statement on respective days as cleared to Shree Mahabir Enterprises. The first two are transfer entries, details not entered by bank, and debit made by cheque. From the above it emerges clearly that payments are indeed made to brokers. This is the method of conduct of business. Any suspicion on the sundry credit should naturally should have lead to suspicion on other trade transaction. When other transaction one taken correct by the Assessing Officer and since pattern of accounting d transaction of business is transparent, there is no ground to sustain the addition. I accordingly direct the Assessing Officer to delete the addition since I hold that the sum paid to Mahabir Traders and Ram Enterprises represents discharge of payment to trading partners. The ground is allowed.
Being aggrieved by this order of ld. CIT(A) Revenue is in appeal before us.
Ld. DR before us vehemently supported the order of AO and submitted that the ld. AR has filed fresh evidence for claiming the benefit and, therefore, it should be restored back to the AO for fresh adjudication.
On the other hand, ld. AR supported the order of ld. CIT(A) and filed a paper book comprising the pages from 1 to 67. Ld. AR drew our attention on page 10 & 11 of the paper book where the details of suppliers/sellers/sundry creditors along with their respective agents were placed. The assessee also submitted the details of payment along with the date and amount which was paid to the agents on behalf of the sundry creditors. In support of his claim ld. AR has also submitted the confirmation from the sundry creditors which are placed on pages 32 of the paper book. Ld. AR also drew our attention on page 32 to 67 where the simple copies of the bills, consignment, sales bills/ road permit were placed.
6. We have considered rival contentions of both the parties and perused the material available on record. From the foregoing discussion, we find that the AO has made the addition on sundry creditors as bogus liability u/s 68 of the IT Act on the ground that notice issued u/s.133(6) of the Act were not responded and the confirmation obtained from the bank of the assessee u/s.133(6) of the IT Act were not matching. However, ld. CIT(A) deleted the addition on the ground that payments were made through banking channel and through the agents of the supplier/sundry creditors. Now, the question before us arises so as to whether the deletion made by ld. CIT(A) in the aforesaid facts and circumstances is justified. We find that the assessee has produced all the supporting documents in support of the purchases made from the suppliers, confirmation about the brokers appointed by the suppliers and the payment based on banking channel. We find no infirmity in the order of ld. CIT(A) and we uphold. Hence, this ground of appeal
of the revenue is dismissed. 7. In the result, appeal of the revenue stands dismissed. Order pronounced in the open court on this 15/07/2016.
Sd/- Sd/- (S.S.VISWANETHRA RAVI) (WASEEM AHMED) �या�यक सद�य / JUDICIAL MEMBER लेखा सद�य / ACCOUNTANT MEMBER कोलकाता Kolkata; �दनांक Dated 15/07/2016 �.कु.�म/pkm/*Dkp, �न.स/ PS आदेश क� ��त�ल�प अ�े�षत/Copy of the Order forwarded to : 1. अपीलाथ� / The Appellant 2. ��यथ� / The Respondent. 3. आयकर आयु�त(अपील) / The CIT(A), Kolkata 4. आयकर आयु�त / CIT �वभागीय ��त�न�ध, आयकर अपील�य अ�धकरण, कोलकाता / DR, ITAT, Kolkata 5. 6. गाड� फाईल / Guard file. स�या�पत ��त //True Copy// आदेशानुसार/ BY ORDER,