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2016 (3) TMI 585

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..... assessee in RSIC. Two sale bills on 28th March 2006 of ₹ 28,60,000/- each was wrongly entered by assessee in their Ledger as ₹ 2,86,000/- and ₹ 28,60,000/- which was subsequently rectified by the parties in the next year. With regard to the entries where RSIC has shown as sales by them totaling to ₹ 1,54,78,255/- and the assessee has categorically denied that they have not received any such materials under the bill nos. and the quantity and amount as mentioned in the reconciliation as alleged by the party. We find that no opportunity of cross-examination was provided to the assessee. It was only on the statement of the Chief Finance Controller, the AO relied upon his statement and made addition of ₹ 2l.88 crores. Ld. Counsel for the assessee referred to Short Notes on Grounds of Appeal. According to him, the AO should have asked RSIC to produce the bills and the evidence of delivery of the material i.e. Road Challan and accepted Challan copy by assessee of the materials. No enquiry whatsoever was made by the AO. It was simply on the statement of Sri Navin Gupta, the CFO of RSIC was relied upon by him and addition was made. Next amount of ₹ 2,8 .....

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..... the Act ) for Assessment Year 2006-07 vide his order dated 31.12.2008. 2. The first issue in this appeal of revenue is against the order of CIT(A) deleting the addition made by AO on account of unexplained credit u/s. 68 of the Act. For this, revenue has raised following four grounds: 1. That the Ld. CIT(A) erred in deleting the addition of ₹ 21,87,82,482/- made u/s. 68 as 'unexplained credit' without appreciation the fact that the assessee company failed to reconcile the differences appeared on account of transactions made with M/s. Ram Swarup Industrial Corporation. 2. That the Ld. CIT(A) erred in deleting the addition of ₹ 21,87,82,482/- without controvert the findings of the A.O. that the assessee company failed to reconcile the difference by producing supporting evidences. 3. That the Ld. CIT(A) erred while delivering the judgment without appreciating the cannons of judgment that the onus to prove the transactions was on assessee company. 4. That the Ld. CIT(A) erred in deleting the addition of ₹ 21.87 Crore without allowing the opportunity to the A.O to verify the contents of the paper book filed by the assessee during the a .....

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..... Corporation for which it is contended by the assessee that material was not received by them to the extent of ₹ 7,87,82,482/-. During the appellate proceedings, the reconciliation submitted by assessee appears at page 65 of the Paper Book. The ledger account in the books of the assessee appears at page 66 to 87 of the Paper Book. The statement of Shri Navin Gupta appears at page 119 to 121 of the paper book and in the paper book assessee has also furnished copy of bank account in Bank of India maintained by the assessee. The assessee has also furnished the copy of account in the books of M/s Ram Swarup Industrial Corporation which was obtained by assessee in the inspection of the assessment records before filing of appeal. The assessee also furnished the copy of affidavit filed before the assessing Officer regarding denial of payment of ₹ 14 crore made by the appellant company to M/s Ram Swarup Industrial Corporation and denial of transaction of ₹ 7,87,82,482/-. The assessee has also produced annual balance sheet and Profit Loss a/c along with Audit Report in the paper book. After careful consideration of the written submission, assessment order, remand re .....

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..... ts for an amount of ₹ 2,70,99,341/-. At Page No. 160 being Industrial Corporation books there was an reflection of closing balance as on 31.03.2005 for an amount of ₹ 2,88,60,143/- while in the books of the appellant there was no closing balance in the account of M/s. Ram Swarup Industrial Corporation which forms page 66 of the paper book. The balance amount of ₹ 1,54,78,255/- relating to supply of material (kindly refer to the details in page 4 of the assessment order) by M/s. Ram Swarup Industrial Corporation to the appellant which was not admitted by the appellant even at the assessment stage, no evidence in form of road challans and accepted bills was produced before the Assessing Officer. Keeping in view the above facts and circumstances, the addition of difference amount of ₹ 7,87,82,482/- was made by the Assessing Officer on the basis of conjectures and surmises and without any evidence. Therefore, the ground no. 4 is allowed. Aggrieved, now revenue is in appeal before the Tribunal. 4. We have heard rival submissions and gone through facts and circumstances of the case. During the scrutiny assessment proceedings, the reconciliation statement .....

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..... ge 224 of assessee s paper book). The next amount of ₹ 2,88,574/- and ₹ 2,93,150/- is with regard to two sale bills as issued by RSIC as per detail mentioned in the reconciliation statement, but were not entered by them in their ledger of assessee. The bills are in Paper Book at pages 90 91. The assessee had shown it as their purchase and booked it in their books of account. The next amount is with regard to the amount excess debited by assessee in their books in the Ledger A/c of RSIC for a sum of ₹ 27,91,751/-. In this regard, Paper Book page 86 being the credit Ledger A/c of RSIC in the books of assessee, and Paper Book page 180 being the Debit A/c of assessee in RSIC. Two sale bills on 28th March 2006 of ₹ 28,60,000/- each was wrongly entered by assessee in their Ledger as ₹ 2,86,000/- and ₹ 28,60,000/- which was subsequently rectified by the parties in the next year. As regard to the entries where RSIC has shown as sales by them totaling to ₹ 1,54,78,255/- and the assessee has categorically denied that they have not received any such materials under the bill nos. and the quantity and amount as mentioned in the reconciliation as alleg .....

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..... s u/s 68 of the Act was made as the difference in the figures of creditors as per A/cs. of the assessee-co. were grossly deferred from what received in the reply vide notice u/s 133(6) of the Act Wherein it was found that the Sundry Creditor viz. Ramswarup Industrial Corporation showing Rs.l,08,97,953/- as on 31.03.2006 against the assessee's figure of credit balance of ₹ 22,96,80,435/-. The assessee was asked to explain/reconcile the substantial difference in the balance shown by the assessee in its books and as shown by the party in the replies received vide notice u/s 133(6) of the Act. The assessee, however produce its reconciliation with M/s Ramswarup Industrial Corporation for the year under consideration i.e. F.Y. 05-06. Further, the assessee-co, submitted as affidavit on 30.12.08 contending that the alleged payment of ₹ 14 crores on 31.03.2006 has credited by the M/s Ramswarup Industrial Corporation in their books was never made by the assessee-co. Further, the assessee-co. also contended that the transactions amounting to ₹ 1,59,14,691/- on various dates, amounting to ₹ 2,88,60,143/- has wrongly debited to the assessee's accounts. .....

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..... nity whatsoever was provided to the assessee for cross-examination by the AO. The assessee has explained before us in entirety the reconsilation and also explained the discrepancies. The assessee referring to page 65 explained the entries as reflected in the reconciliation statement. As per the books of RSIC, the balance as on 31st March, 2006 in their books showed a closing credit balance of ₹ 1,08,97,953/-. RSIC in their ledger for the subsequent year i.e. for 31st March, 2007 ending have shown the same amount as opening balance under the party ledger as Debtors. This can be seen from page 158 of assessee s Paper Book. The closing credit balance as reflected by assessee in their books is ₹ 22,96,80,435/-. (It is this difference between the closing balance as reflected by RSIC and as per the books of assessee has been added back by the AO). In the reconciliation statement, the first entry as payment shown by RSIC is of ₹ 14,00,00,000/-. In the affidavit filed by assessee which is at assessee s Paper Book pages 113 114, it was clearly mentioned that, no such payment has been made by assessee to RSIC which they have alleged. From the ledger account of RSIC for th .....

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..... ee has categorically denied that they have not received any such materials under the bill nos. and the quantity and amount as mentioned in the reconciliation as alleged by the party. We find that no opportunity of cross-examination was provided to the assessee. It was only on the statement of the Chief Finance Controller, the AO relied upon his statement and made addition of ₹ 2l.88 crores. Ld. Counsel for the assessee referred to Short Notes on Grounds of Appeal. According to him, the AO should have asked RSIC to produce the bills and the evidence of delivery of the material i.e. Road Challan and accepted Challan copy by assessee of the materials. No enquiry whatsoever was made by the AO. It was simply on the statement of Sri Navin Gupta, the CFO of RSIC was relied upon by him and addition was made. Next amount of ₹ 2,88,60,143/- is with regard to the sale bill, as reflected as on 31st March 2005, in the Debtor A/c of assessee, in the books of RSIC as sale bill. But, once again, no such purchases have been made by assessee and no verification with regard to the sale bill of RSIC and/or Road Challan and/or Delivery Evidence was verified by the AO. From the Ledger A/c wh .....

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