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Assistant Commissioner of Income-tax, Circle-3, Kolkata Versus M/s. AHW Steels Ltd

2016 (3) TMI 585 - ITAT KOLKATA

Addition u/s. 68 as 'unexplained credit' - assessee filed reconciliation statement - Held that:- This is verified from assessee’s Paper Book page 163 being the Debtor A/c of assessee in RSIC, where, on 31st August 2005, the said entry has been reflected as "AHW Steel Limited CRS". The Creditor A/c ledger as referred to herein above also confirm the same. 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 reco .....

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ks of assessee, and assessee’s 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.

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 su .....

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f 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 ver .....

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th April 2005. Next amount of ₹ 8,088/- is with regard to the purchase bill less credited by assessee in their books. Reference was made to Paper Book page 180, where, on 16th March 2006, the entry in the RSIC in the debit ledger account of assessee, amount shown as ₹ 2,08,388/- , whereas assessee in their books have made an entry of ₹ 2,00,300/- that's the difference amount comes to ₹ 8,088/-. The last entry is with regard to the purchase bill wrongly entered by assessee .....

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f RSIC, and hence, the difference of the addition as made by the AO of ₹ 21.88 crores is rightly deleted by CIT(A) and hence we confirm the same. - Decided in favour of assessee - I.T.A No.960/Kol/2012 - Dated:- 3-2-2016 - Shri Mahavir Singh, JM & Shri Waseem Ahmed, AM For The Appellant: Shri Rajat Subhra Biswas, CIT, DR For The Respondent: Shri Arvind Agarwal, Advocate ORDER Per Shri Mahavir Singh, JM: This appeal by revenue is arising out of order of CIT(A)-1, Kolkata in Appeal No.32 .....

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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 wh .....

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ere is substantial difference in the Balance Sheet as shown by the assessee and as seen from ledger account submitted by the creditor M/s. Ram Swarup Industrial Corporation (hereinafter RSIC). In response to notice u/s. 133(6) of the Act, the creditor RSIC showing the credit balance at ₹ 22,96,80,435/- as on 31.03.2006 as against the amount to be shown as payable by the assessee as on 31.03.2006 at ₹ 1,08,97,953/-, thereby difference of ₹ 21,87,82,482/- was added u/s. 68 of the .....

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. As per assessee's books of accounts credit balance as on 31.03.2006 was ₹ 22,96,80,435/- in respect of M/s Ram Swarup Industrial Corporation and as per the accounts submitted by M/s Ram Swarup Industrial Corporation, the amount payable by the assessee to the party as on 31.03.2006 was ₹ 1,08,97,953/-. The assessee was asked to reconcile the above difference and the reconciliation was submitted by the assessee on 24.12.2008. The assessee disputed the accounts submitted by M/s Ra .....

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habad Bank and Karur Vysya Bank which according to the contention of the assessee was wrongly shown by M/s Ram Swarup Industrial Corporation and there is dispute regarding bills wrongly debited by M/s Ram Swarup Industrial 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 .....

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f 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 report and counter comments of the assessee, it is noticed that the transaction o .....

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rporation never produced its bank accounts to substantiate the transaction of ₹ 14 crores on 31.03.2006 before the Assessing Officer. The assessee was maintaining its bank accounts with Bank of India and during the course assessment proceedings and remand proceedings the Assessing Officer did not find any evidence for existence of any other Bank account in the name of Assessee Company. The audited books of accounts maintained by the assessee were not rejected by the Assessing Officer durin .....

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dmitted by Shri Navin Gupta in answer to question No.4 of the statement recorded on 31.12.2008. Keeping in view these facts and circumstances, the additions of ₹ 14 crore cannot be made in the hands of the assessee u/s 68 of the I.T. Act, 1961. Regarding the balance addition of ₹ 7,87,82,482/-, the A/R of the assessee referred to copy of account furnished by M/s Ram Swarup Industrial Corporation and particularly the Page No.180 and Page No.239 of the paper book where amount of ₹ .....

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0,143/- 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 pro .....

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ement along with the relevant documents in support were filed by the assessee-company and an affidavit was also filed claiming that the balance as reflected in the books of account of the assessee vis-à-vis the books of account of RSIC as reflected in their books, were as per entries in the regular books of account and the reconciliation statement was in confirmatory with the books of accounts of assessee. We find from the facts of the case that as per the books of RSIC showed a closing c .....

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ciliation statement and the first entry as payment shown by RSIC is of ₹ 14,00,00,000/-. In the affidavit filed by the assessee (Paper Book page 113 & 114), it was clearly mentioned that no such payment has been made by the assessee to RSIC. From ledger account of RSIC for subsequent year, the said amount of ₹ 14,00,00,000/- have been reversed by them on 01.07.2006 and 01.10.2006 (Paper Book page 158). The next amount in the reconciliation statement is ₹ 9,37,42,597/- for w .....

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99,341/-, the same treatment has been done by RSIC in their books i.e. they have transferred from the Debtor A/c to Creditor A/c of assessee in their books. Page 163 of assessee s Paper Book, wherin the Debtor A/c of assessee in RSIC, where, as on 31st August 2005, the said entry has been reflected as "AHW Steel Limited CRS". The Creditor A/c ledger as referred to herein above, which also confirm the same. ( Page 224 of assessee s paper book). The next amount of ₹ 2,88,574/- and .....

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6 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 .....

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bills and the evidence of delivery of the material i.e. Road Challan and accepted Challan copy by assessee of the materials as alleged to have been sold by them. No enquiry whatsoever was made by the AO and it was simply on the statement of Sri Navin Gupta, the CFO of RSIC was relied on by him and addition made. Similarly, another amount of ₹ 6,50,000/- transferred from the credit account of assessee and the books of RSIC to Debtor A/c of assessee in the books of RSIC. Paper Book page 166 .....

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or Road Challan and/or Delivery Evidence was verified by the AO. From the Ledger A/c which is at page 160 of assessee s paper book, RSIC is showing the sum as 31st March 2005. This amount in any case is of the earlier year and not of the year under consideration. From the Ledger A/c in the books of assessee of RSIC which is at page 66, there is no opening balance and the first entry of purchase was made on 27th April 2005. The last entry is with regard to the purchase bill wrongly entered by ass .....

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under:- The additions 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 .....

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see-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. The crux of the mater under consideration is that the Ld. AO has the opportunity to cross verify the reconciliation as submitted by the assessee-co. and for that the CFO of M/s. Ramswarup Industrial Corporation, Sri Naveen Gupta, was produced by the assessee-co. himself before the A.O. Th .....

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s were never issued to the party. Sri Gupta has stated in reply to question no.14 that he does not agree with the reconciliation of M/s. AHW Steels Ltd. He further stated that the statement of a/c M/s. Ramswarup Industrial Corporation was pm the basis of actual transaction that were carried out. In such circumstances, where assessee reconciliation is not based on concrete evidences and further it was submitted by the party that the transaction were actually made i.e. M/s Ramswarup Industrial Cor .....

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he facts of the case that the AO relying on the submissions taken u/s 133(1) of one Sri Navin Gupta of RSIC, had added the difference of ₹ 21.88 crores to the income of the assessee by invoking the provision of section 68 of the Act. We fuether find that though full details and documents and ledger copy of RSIC for the year ended 31st March 2006 and also of 31st March 2007 was put on record. The statement was recorded by the AO on the last date of passing of the assessment order on 31st De .....

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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 ent .....

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nt in the reconciliation statement is ₹ 9,37,42,597.69 for which it has been stated that RSIC has transferred this sum to the credit account from their Debtor A/c of assessee to the Creditor A/c of assessee in their books. This is verified from assessee s paper book page 180 being Debtor A/c of assessee in RSIC books (where on 31st March 2006 they have internally transferred from the Debtor A/c to the Creditor A/c the said sum). The credit Ledger A/c of assessee in the books of RSIC have b .....

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eflected as "AHW Steel Limited CRS". The Creditor A/c ledger as referred to herein above also confirm the same. 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 at assessee s Paper Book page 90 & 91. The assessee had shown it as their purchase and had recorded it in their books of account accordin .....

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377; 28,60,000/- which was subsequently rectified by the parties in the next year. 10. 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 Ch .....

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ddition 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 which is at assessee s Paper Book at page 160, RSIC is showing the sum as on 31st March 2005. This amo .....

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