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Ganesh Roller Flour Mills Versus ITO, Ward 2 (3) , Muzaffarnagar and ITO, Ward 2 (1) , Muzaffarnagar

2016 (4) TMI 79 - ITAT DELHI

Penalty levied u/s 271(1)(c ) - Disallowance of loss - Held that:- A perusal of the documentary evidences take to a conclusion that the assessee has demonstrated the genuineness of the transaction. The enquiry itself was taken up by the revenue authorities many years after the transaction took place. In view thereof, the claim of loss of ₹ 7,42,631.78 incurred by the assessee in purchase and sale of cotton bales through M/s Garg Enterprises has to be allowed.

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of assessee - ITA No. 69/Del/2006, ITA No. 1538/Del/2008 - Dated:- 15-2-2016 - SHRI J. SUDHAKAR REDDY, ACCOUNTANT MEMBER For The Appellant : Shri SVM Chaurasia, Adv. For The Respondent : Sh. T.Vasanthan, Sr.D.R. ORDER ITA 69/Del/2006 for the A.Y. 1997-98 is directed against the order of the Ld.CIT(A), Muzaffarnagar dated 8.10.2015. ITA No.1538/Del/2008 is filed against the order of the Ld.CIT(A), Muzaffarnagar dt. 14.2.2008 wherein the penalty levied u/s 271(1)(c ) of the Income Tax Act 1961 (t .....

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s 263 of the Act. The A.O. was directed to make fresh assessment on the issue of claim of loss of ₹ 13,14,612.91 incurred by the assessee firm, on trading in certain commodities like paddy, cotton etc. through the following concerns. S.No. Name of the firm Loss (in Rs.) 1. M/s Garg Enterprises 7,42,631.78 2. M/s Chandu Lal Mohan Lal 1,50,506.00 3. M/s Sita Ram Sher Singh 1,85,233.08 4. M/s Mahalaxmi Cotton P.Ltd. 1,99,038.74 5. M/s Radha Kishan Brikhbhan 67,203.00 Total: ₹ 13,44,612. .....

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Ld.Sr.D.R. on behalf of the Revenue. On a careful consideration of the facts and circumstances of the case, perusal of material on record, orders of lower authorities, case laws cited, I hold as follows. 4. The Ld.Counsel for the assessee Shri S.V.M.Chaurasia submitted that: (a) detailed submissions were made with documentary evidences in the form of purchase and sale vouchers, confirmatory letters from the respective concerns, their audited balance sheet and affidavits, in support of the genuin .....

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that the assessee firm has been dealing in cotton and other commodities and the income/loss from such trading has been the subject matter of assessment in the earlier years. (c ) the AO had conducted detailed investigation and examined the persons connected with these firms on oath. The statement recorded by the AO when read with the documentary evidences prove the transactions. 5. The Ld.D.R. relied on the orders of the authorities below and rebutted the submissions of the assessee. 6. I first .....

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a fact on the basis of which it could be held that firm was non-existent. 2. 8 traders in and around Sanatan Dharam Wali Gali denied the existence of firm. The Inspector made enquiries in 2000 and firm was closed in 1999. name of the traders be informed and opportunity to cross examination be allowed. 3. Expenses on account of salary, rent, telephone. etc stated by Sh Surender Kumar Joshi to have been incurred are not properly shown in balance sheet and also address not mentioned in audit repor .....

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itten submissions copy filed. 5. Cancellation of Registration by Excise & Taxation Officer on 4-6-1997 During FY 1996-97 registration was in existence is evident from the letter itself. / 6. Name and address of purchaser and sellers not stated in the statement These details can be submitted from the books of accounts which are in the possession of Sh Prahlad Singh. Proprietor of the firm which may please be summoned or time be allowed to us for producing the books. 6.2. The asessee had produ .....

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on 2-3-2003. v. Statement of Sh Surinder Kumar recorded on 17-2-2003. vi. Copy of certificate dated 27-3-2000 of Excise and Taxation Officer, Bhatinda, stating that registration certificate issued to M/s. Garg Enterprises was cancelled on 1.4.1995 and the said concern was dealing in cotton seeds and cotton oil. vii. Statement of Sh Surinder Kumar recorded on 25-2-2003. viii. Statement on audited account as on 31-3-1995 of M/s. Garg Enterprises along with tax audit report in Form 3CD. ix. Copy o .....

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my view, the claim of loss of ₹ 7,42,631.78 incurred by the assessee in purchase and sale of cotton bales through M/s Garg Enterprises has to be allowed. 7. The second issue is regarding allowability of loss of ₹ 1,50,506.00 in respect of transactions with M/s Chandulal Mohan Lal. 7.1. The A.O. disallowed the loss for the following reasons. i. Only one current account was admitted by Sh. Som Prakash which was opened on 10.4.1998 while the sale of paddy took place in February, 1997. i .....

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ollows. (i) Shri Som Prakash Prop M/s. Chandu lal Mohan Lal in his statement recorded on 29-1-2003 (que no. 20) admitted that draft was received from the assessee firm which was deposited in the bank. The assessee firm has obtained copy of the bank account of M/s. Chandu Lal Mohan Lal from UCO Bank bearing account no. 892 wherein the draft of ₹ 150,506/- was credited on 19-3-1997. It is therefore, clear that the statement of Sh Som Prakash recorded on 29-1-2003 wherein he has stated that h .....

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irm by M/s. Chandu Lal Mohan Lal are recorded and cheque of ₹ 2,20,139.75 and ₹ 3,58,416.46 was paid to M/s. Chandu Lal Mohan La!. These facts clearly prove that M/s. Panmeshwari Das Ghanshyam Das purchased paddy from M/s. Chandu Lal Mohan Lal and accordingly the statement given by Sh Devi Dayal on this point is not correct. (iii) M/s. Ram Kumar Vijendra Kumar is a proprietary concern of Sh Ram Kumar who is father of Sh Som Prakash Prop. M/s. Chandu Lal Mohan l.al. Both the concerns .....

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anshyam Das which has purchased the paddy from M/s. Chandu Lal Mohan Lal has produced the books of accounts before the AO. 7.3. The assessee produced the following documentary evidences before the authorities. 1. Sales & Purchase vouchers 2. Confirmation letter 3. Copy of order passed by Excise & Taxation Officer for FY 1996-97 4. Copy of affidavit dated 29-3-2000 5. Copy of statement recorded on 3-3-2001 6. Copy of Form 49A of Sh Som Prakash 7. Copy of Sales Tax registration certificate .....

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umar from whom M/s. Chandu Lal Mohan Lal purchased the paddy on behalf of assessee 18. Statement of Sh Devi Dayal, Partner of M/s. Panmeshwari Dass Ghanshyam Dass to whom M/s. Chandu Lal Mohan Lal sold the paddy on behalf of the assessee 19. Copy of voucher issued by Sh Ram Kumar Virendra Kumar to M/s. Chandu Lal Mohan Lal 20. Copy of accounts of M/s. Chandu Lal Mohan Lal in the books of MI5. Panmeshwari Dass Ghanshyam Dass and other papers supporting of entries in the copy of accounts 21. Copy .....

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e above loss on the following grounds. i. M/s. Sita Ram Sher Singh purchased cotton bales on 21-3-1997 for ₹ 11,94,363.60 and sold on 24-3-1997 for ₹ 10,09,029.52 to sister concern M/s. Mahalaxmi Cotton Pvt Ltd. ii. On 21-3-1997 only a sum of ₹ 3,439.70 was the credit balance in the bank of M/s. Sita Ram Sher Singh. This small amount in the bank account could not have satisfied the purchase of ₹ 11,94,363.60. iii. The sale consideration of ₹ 5,00,000/- vide cheque n .....

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ount payee cheque no. 820212 dated 31-3-1997. However, in the above account the amount was credited by cheque no. 949687 instead of cheque no. 820212. v. Similarly, in the case of M/s. Mahalaxrni Cotton Pvt l Td the loss of ₹ 1,99,038.94 was stated to have been received through account payee cheque no. 820213 whereas in the bank account the loss was credited through cheque no. 949788. vi. In the case of M/s. Mahalaxmi Cotton Pvt Ud the cotton bales were purchased on 27-2-1997 and 3-3-1997 .....

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on credit and sell on cash basis. ii. That cheque nos 820212 and 820213 are the number of cheques which was issued in favour of our bank, Union Bank of India for obtaining draft of ₹ 1,85,233.83 in favour of M/s. Sita Ram Sher Singh and ₹ 1,99,038.94 in favour of M/s. Mahalaxmi Cotton Pvt Ltd. A certificated of bank in this regard was filed before the AO. iii. That purchase made by M/s. Mahalaxmi Cotton Pvt LT d amounting to ₹ 7,67,871.36 and ₹ 7,45,441.42 on 29-2-1997 a .....

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n Pvt Ltd. He along with books of account appeared before the le! AO and requested that books be examined but the Ld AO denied to examine on the following grounds: a. In the statement recorded by Income Tax Inspector on 4-3-2001 it was stated that account books have been lost. b. That summon sent by Ld AO has not been complied with. c. That books which were to be produced might have been fabricated. In this regard it is submitted that books stated to be lost/misplaced in 2001 were available in 2 .....

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