IN THE INCOME TAX APPELLATE TRIBUNAL
DELHI BENCH `D', NEW DELHI
BEFORE SH. BHAVNESH SAINI, JUDICIAL MEMBER
AND
SH. R. K. PANDA, ACCOUNTANT MEMBER
ITA No.614/Del/2015
Assessment Year: 2010-11
M/s. U. P. Dyeing & Printing Vs. Income Tax Officer
Works, 154, Subhash Bazar, Ward- 2 (4)
Meerut Meerut
PAN No.AAAFU2202L
(APPELLANT) (RESPONDENT)
ITA No.638/Del/2015
Assessment Year: 2010-11
Income Tax Officer Vs. M/s. U. P. Dyeing & Printing
Ward- 2 (4) Works, 154, Subhash Bazar,
Meerut Meerut
(APPELLANT) (RESPONDENT)
Appellant by Sh. Sanjay Malik, CA
Sh. Sankalp Malik, CA
Respondent by Smt. Naina Soin Kapil, Sr. DR.
Date of hearing: 01/08/2019
Date of Pronouncement: 09/10/2019
ORDER
PER R.K PANDA, AM:
These are cross appeals. The first one is filed by the
assessee and the second one filed by the revenue and are directed
against the order dated 28.11.2014 of the CIT(A), Meerut relating
to A.Y.2010-11. For the sake of convenience these were heard
together and are being disposed of by this common order.
ITA No. 614/Del/2015 ( by assessee)
2. There is a delay of two days in filing of this appeal by the
assessee for which assessee has filed a condonation petition
alongwith an affidavit explaining the reasons for delay. After
hearing both the sides and considering the contents of the
condonation application filed alongwith affidavit, the delay is
condoned.
3. The grounds raised by the assessee are as under :-
1. That on facts and in law and in the circumstances of the
case, the difference between the balances as per the accounts
of various trade creditors and the balances reflected in the
books of account of the assessee having been fully
substantiated there was no legal basis to treat such difference
as income chargeable to tax.
2. The Authorities below on facts and in law and the
grounds taken and basis adopted went wrong to treat
Rs.44,9317/- as income. The addition deserves to be deleted
being void, illegal and without jurisdiction.
4. Facts of the case, in brief, are that the assessee is a
partnership firm engaged in the business of manufacture of
printed handloom / power loom cloth and cloth printing. It filed
its return of income on 15.10.2010 declaring total income of
Rs.56,360/-. During the course of assessment proceedings the
AO noted that assessee has shown sundry creditors to the tune
of Rs.1,22,75,695/-. On the basis of details furnished by the
assessee the AO issued letters u/s. 133 (6) to certain creditors.
From the confirmations received from some of the creditors he
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noted difference in the case of the following creditors :-
Name Difference Amount
Amit Textile Rs.1,33,784/-
Kunal tech Fab India Rs.10428/-
New India Colour Rs.2000/-
Vishal Dyeing Chemical Rs.7008/-
M/s. Maya International Pvt. Ltd. Rs.35034/-
S. R. Textile Rs.261063/-
5. He, therefore, asked the assessee to explain the difference
and asked him to explain as to why it should not be added to
the total income of the assessee. In absence of any reply from
the side of the assessee, the AO made addition of Rs.4,49,317/-.
6. In appeal the Ld. CIT(A) confirmed the addition on the
ground that AO by his own enquiry had brought in positive
evidence and the assessee failed to offer any explanation before
the AO. Therefore, he rejected the explanation given by the
assessee before him and sustained the addition of
Rs.4,49,317/- made by the AO.
7. Aggrieved with such order of the CIT(A), the assessee is in
appeal before the Tribunal.
8. The Ld. Counsel for the assessee strongly challenged the
order of the CIT(A) in confirming the addition of Rs.4,49,317/-.
He submitted that it is a case where sundry creditors shown by
the assessee is less than the figures given by the respective
parties. Further the assessee has paid back amount to the
sundry creditors in the subsequent years. He submitted that
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the AO has not disallowed any purchases and has accepted the
trading account, therefore, no addition should have been made.
The Ld. Counsel for the assessee filed the following details to
substantiate the item wise difference in the case of the creditors.
"The Ld. CIT (A) in para no. 4.2 of his order simply stated that
reconciliation statement cannot be considered at this stage.
However the facts is reconciliation statement was filed before
the AO as well as CIT (A). An index was also filed before the
Ld. CIT (A) which has been overlooked. Referred to page no.
110 & 111 of the paper book.
Page no. 1 of the paper book shows the balance of trade
creditors in the books of the assessee and balance with the
suppliers in their books and the difference, it is seen that the
difference is credit difference. (i.e. the balance payable is less)
Reconciliation statement was filed at page no.2 and 3 of the
index paper book. The same was filed before Ld. CIT (A) also
and not considered by him.
In case of New Indian Color Company, the confirmation was
filed at page no.7 and the difference was only because of
opening balance of Rs.1671.81. thus Ld. CIT (A) was wrong on
facts on disallowing the same. A chart was also filed which
shows balance, bills and payment made by the firm, which
was furnished at page no. 39 of the paper book. (Refer Page
No. 37)
In case of SR Textiles, the confirmation was filed at page no. 12
and the difference was only because of bill was entered later
as goods were inspected and purchase was done in
subsequent date when the goods was approved and bill was
settled, thus Ld. CIT (A) was wrong on facts on disallowing the
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same. A chart was also filed which shows balance, bills and
payment made by the firm, which was furnished at page no.
39 of the paper book. (Refer Page No. 39)
In case of Amit Textiles, the confirmation was filed at page no.
19 and the difference was only because of goods received in
the opening date of next year was duly entered in purchases
by the assessee., thus Ld. CIT (A) was wrong on facts on
disallowing the same. A chart was also filed which shows bills
and payment made by the firm, which was furnished at page
no. 39 of the paper book. (Refer Page No. 39).
In case of Kunal Tex Fab, the confirmation was filed at page
no.21 and the difference was only because of cheques debited
in subsequent financial year, thus Ld. CIT(A) was wrong on
facts on disallowing the same. A chart was also filed which
shows balance, bills and payment made by the firm, which
was furnished at para No.39 of the paper book. (Refer Page
No.31).
In case of Vishai Dyes & Chemicals, the confirmation was filed
at page no. 32 and the difference was only because of balance
of petty expenses debited to the tune of Rs. 200 and bill issued
on 31st March, which was received in next financial year. There
was an opening balance of Rs. 9308/- and the same was duly
reconciled, however Ld. CIT (A) was wrong on facts on
disallowing the same. A chart was also filed which shows
balance, bills and payment made by the firm, which furnished
at page no. 40 of the paper book. (Refer Page No. 32)
In case of Maya International, copy of account was filed at
page no. 33 & 34, the difference was only because of two bills
in one there is a difference of Rs.2545/- and in second bill, it
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was entered later as goods were inspected and purchase was
done in subsequent date when the goods was approved and
bill was settled, thus Ld. CIT (A) was wrong on facts on
disallowing the same. A chart was also filed which shows
balance, bills and payment made by the firm, which was
furnished at page no. 41 of the paper book.
9. Relying on various decisions he submitted that the
addition made by the Assessing Officer and the CIT(A) should be
deleted.
10. The Ld. DR on the other hand heavily relied on the order of
the AO and the CIT(A).
11. We have considered the rival arguments made by both the
sides, perused the orders of the AO and the CIT(A) and the
paper book filed on behalf of the assessee. We have also
considered the various decisions cited before us. We find the
AO in the instant case made addition of Rs.4,49,317/- to the
total income of the assessee on the ground that there is
difference between the balance shown by the assessee and the
confirmation received in the case of six parties the details of
which is given at para 4 of this order. It is the submission of
the Ld. Counsel for the assessee that the figures shown by the
assessee is less as compared to the figures in the confirmation
given by the sundry creditors. Further the assessee has
reconciled the difference in giving reasons and, therefore, there
is no need to make the addition. We find sufficient force in the
above argument of the Ld. Counsel for the assessee. A perusal
of the details filed in the paper book shows that the assessee
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has filed the following details before the AO as certified in the
paper book.
Summery of Difference in Balance of Sundrv Creditors
S.No. Name of Suppliers Balance as per Balance as per Diff. U.P Dyeing
Suppliers
1 New India Colour Company 476,282.81 474,611.00 1,671.81 Diff. in Opening Balance Cr.
S.R Textiles 428,130.00 167,067.00 261,063.00 Cr.
Some bills taken in next F.Y on
2
17.05.2010
3 Amit Textiles 1,009,654.00 875,870.00 133,784.00 Cr.
Bill No. 217 dt. 27.03.2010 taken in
next F.Y on 01.04.2010
4 Kunal Tex Fab 75,651.00 65,222.00 10,429.00 Cr.
Cheque payment not taken
by Kunal Tex Fab
UP Dyeing shown on 29.04.2009
5 Vishal Dyes & Chemicals 741,919.00 748,927.00 (-) 7,008.00 Dr.
Diff. in Opening Balance Rs. 93087-
balance excess entered by Vishal Dyes
& Rs. 2300/- entered by Vishal Dyes on
01.04.2010
6 1.026.991.00 35,020.00 Rs. 2545/- Bill Diff. & Rs. 32475/- bill Cr.
1,062,011.00
taken in next F.Y on 15.05.2010
3.358.688.00 448,975.81 The A.O added all the six Items
Maya International Total 3,793,647.81
Actual Difference
434,959.81
Note: It is a case where liability payable is less than the creditors claiming with, Hence No addition shall be made on this
score
12. We find the various details furnished by the assessee before
the CIT(A) were summarily rejected by him on the ground that the
assessee has not furnished any explanation before the AO. In our
opinion the assessee in the instant case has fully discharged the
onus cast on him by giving sufficient reasons before the AO and
CIT(A) regarding the discrepancies in the accounts. Further it is
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a case where the liability payable is less than the balance shown
by the creditors in 5 out of the 6 cases. Further the AO has not
disputed the purchases from the said parties and has accepted
the trading results. Considering the totality of the facts of the
present case and considering the submission made by the Ld.
Counsel for the assessee before the AO and the CIT(A), we are of
the considered opinion that the CIT(A) was not justified in
sustaining the addition of Rs.4,49,317/- on account of difference
in the accounts of the creditors. We, therefore, set aside the order
of the CIT(A) and direct the AO to delete the addition.
13. The appeal filed by the assessee is accordingly allowed.
ITA No.638/Del/2015 ( by revenue)
14. The grounds of the revenue is as under :-
1. Whether in the facts and circumstances of the case, the Ld.
CIT(A) was correct in law and facts in not remanding the matter for
proper and complete verification of sundry creditors worth Rs.
72,71,723/- which were unconfirmed balances.
2. Whether in the facts and circumstances of the case, the Ld.
CIT(A) was correct in law and facts in accepting the version of the
assessee regarding unconfirmed balances of sundry creditors worth
Rs. 72,71,723/- without proper verification.
3. That the appellant craves leave to add, modify and / or
delete any ground(s) of appeal.
4. In the facts and circumstances of the case, the order of the
CIT(A), Meerut may be set aside and that of the A.O. restored.
15. After hearing both the sides, we find the tax effect involved
in the grounds raised by the Revenue is admittedly below Rs.50
lakhs. Therefore, in view of the CBDT Circular No.17/2019 dated
8th August, 2019 raising the monetary limits for filing of the
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appeals by the Revenue before the Tribunal to Rs.50 lakhs and
the subsequent clarification dated 20th August, 2019 to the effect
that the said Circular is applicable even to pending appeals, the
appeal filed by the Revenue is not maintainable. Accordingly, the
same is dismissed.
16. In the result, the appeal filed by the Revenue is dismissed
and the appeal filed by the assessee is allowed.
Order pronounced in the open court on 09.10.2019.
Sd/- Sd/-
(BHAVNESH SAINI) (R.K PANDA)
JUDICIAL MEMBER ACCOUNTANT MEMBER
*Neha*
Date:- 09.10.2019
Copy forwarded to:
1. Appellant
2. Respondent
3. CIT
4. CIT(Appeals)
5. DR: ITAT
ASSISTANT REGISTRAR
ITAT NEW DELHI
Date of dictation
Date on which the typed draft is placed before the dictating
Member
Date on which the approved draft comes to the Sr.PS/PS
Date on which the fair order is placed before the Dictating
Member for Pronouncement
Date on which the fair order comes back to the Sr. PS/ PS
Date on which the final order is uploaded on the website of 09.10.2019
ITAT
Date on which the file goes to the Bench Clerk 09.10.2019
Date on which file goes to the Head Clerk.
The date on which file goes to the Assistant Registrar for
signature on the order
Date of dispatch of the Order
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