Tca/424/2014 Of Commissioner Of Income Tax v. Shri.k.thirumoorthy

THE HON'BLE MR.JUSTICE R.SUDHAKARANDTHE HON'BLE MR.JUSTICE R.KARUPPIAH Commissioner of Income TaxCoimbatore... Appellant / Appellant Shri.K.Thirumoorthy,prop. M/s.Aravind Bottle Suppliers,7/25, Bangaru Complex,NSN Palayam, Coimbatore - 641 031... Respondent /Respondent PRAYER: Appeal under Section 260A of the Income Tax Act, 1961 againstthe order of the Income Tax Appellate Tribunal 'D' Bench, Chennai,dated 17.10.2013 in I.T.A.No.965/Mds/2013 for the assessment year2009-10 against the order of the Commissioner of Income Tax (Appeals)I, Coimbatore in Appeal No.329/11-12 dt.19/2/13 against theAssessment order dt.24.12.2011 in PAN order of the IncomeTax Officer, Ward II (3) Coimbatore. This Tax Case (Appeal) is filed by the Revenue challenging theorder of the Income Tax Appellate Tribunal for the assessment year2009-10, raising the following substantial questions of law: https://hcservices.ecourts.gov.in/hcservices/ creditors in the subsequent year and that thecredits are genuine?" 2. The respondent/assessee is an individual trading in oldbottles. In completing the assessment of income for the assessmentyear 2008-09 under Section 143(3) of the Income Tax Act, theAssessing Officer added a sum of Rs.47,58,616/- as unexplainedcredits holding that the credits appearing in the name of variousparties as unconfirmed balances. Aggrieved by the said order of theAssessing Officer, the assessee preferred an appeal before theCommissioner of Income Tax (Appeals), who partly allowed the appealdirecting the Assessing Officer to delete the addition to the extentof Rs.41,38,474/-. While doing so, the Commissioner of Income Tax(Appeals) took note of the payments made by the assessee to thecreditors by NEFT/RTGS through the State Bank of India,Narasimhanaickenpalayam branch, the details of which are set out inparagraph 7 of the order of the Commissioner of Income Tax (Appeals).Aggrieved by the said order of the Commissioner of Income Tax(Appeals), the Revenue preferred an appeal before the Income TaxAppellate Tribunal. 3. The Tribunal extracted the details of the trade creditors,which was extracted by the Commissioner of Income Tax (Appeals). Forbetter clarity, the same is reproduced below: "6. I have gone through the submissions made by theappellant and also the order of the Assessing Officer.During the course of assessment proceedings, the AssessingOfficer verified the balances of sundry creditors. TheAssessing Officer issued letters to the parties as per theaddresses mentioned in the confirmation letter. Theconfirmations were received from Sri.Karpaga Vinayaga BottleCo., Salem, M/s.Vijay Krishnan Enterprises, Chennai andSupreme Bottle Suppliers, Coimbatore. Some of the partiesdid not respond to the letters issued by the AssessingOfficer. The Assessing Officer asked the assessee to provethe genuineness of these credits by furnishing the bankstatements to subsequent year reflecting the payments. Theappellant submitted the bank statement of subsequent year andA.O. on verification stated in the order "Though there arefund transfer from these accounts, there is no clearindication as to whom these funds were transferred. The A.O.also received confirmation letters from M/s.Varsha BottleSuppliers, ARavind Traders, Kubera Trading Service and ShajidTraders. On observing these confirmation letters the A.O.doubted the genuineness of these confirmation letters. TheA.O. after verification of all the details summarized theunconfirmed balance of 14 creditors amounting toRs.47,58,616/- and made the addition. 7. During the course of appellate proceedings, the ARsubmitted the details creditor wise showing the payments made 7. During the course of appellate proceedings, the ARsubmitted the details creditor wise showing the payments made to the trade creditors by NEFT/RTGS through the SBI,Narasinhanaickenpalayam branch.(i) Aravind Traders: In this case, the amount disallowed byAssessing Officer is Rs.7,54,572/-. The appellant furnishedthe details of payments made to the creditor in thesubsequent year 2009-10. Copies of paid cheque with bankstamp and also the bank statements showing the debits werefurnished. From all these details, it is clear that theoutstanding balances were paid by the appellant. Hence, theaddition has to be deleted. (ii) Balaji Enterprise: The amount disallowed by theAssessing Officer as outstanding balance was Rs.6,17,169/-.The appellant on 26.6.2009 has paid Balaji Enterprise throughRTGS transfer, an amount of Rs.7,00,050/-. Since thesepayments are reflected in the banks statements, the additionis to be deleted. (iii) Dharshini Bottles: The addition on account ofoutstanding balance is Rs.1,01,397/-. In this case also, theappellant paid the trade creditor on 26.6.2009 by RTGStransfer. The addition has to be deleted.(iv) Jayarahava Traders: The addition made in this case wasRs.56,272. The appellant submitted that on 30.12.2009, anamount of Rs.31,200/- was paid through banking channels.Similarly, the appellant submitted that an amount ofRs.18,000/- was paid by cash on 5.1.2010 and 16.1.2010.However, in the ledger extracts, these cash deleted and thebalance amount added is confirmed.v) Kubera Trading Service: The addition made wasRs.11,42,776/-. The appellant submitted the details of bankaccount reflecting the RTGS transfer during the financialyear 2009-10. On verification of these details, the additionmade by the Assessing Officer needs to be deleted.vi) Pandian Bottle Stores: In this case, the addition madewas Rs.64,816/-. The appellant furnished cheque details forpayment of these amount on 13.4.2009. Hence, the addition isto be deleted. vii) R.B.I. Bottles: The addition made by the AssessingOfficer was Rs.57,200/-. The appellant submitted that theamounts were paid by cash on 6.4.2009, 17.4.2009 and4.5.2009. However, the ledger copy furnished did not showthe payments on these dues. Hence, genuineness could not beproved by the AR. The addition is confirmed.viii) Shajith Traders: The addition made was forRs.7,19,166/-. The appellant filed the details of paymentsmade by RTGS transfer along with the bank statement. Theappellant paid on various dates through banking channels inthe financial year 2009-10. Hence, the addition made by theAssessing Officer is to be deleted.ix) In the case of Southern Bottle Suppliers and SapthagiriBottle Suppliers, the appellant could not prove withsufficient proof regarding the cash payments made by him to the traders. The addition of Rs.60,320/- and 72,301/- isconfirmed.x) Bottle Suppliers: The addition made on account of sundrycreditors was Rs.4,05,248/-. The appellant submitted thatduring the financial year 2010 and 2011, the payments weremade by cash. However, the appellant could not producefurther evidences to prove the genuineness of thesetransactions. Hence, the addition of Rs.4,05,248/- isconfirmed. xi) Supreme Bottles: In the case of Supreme Bottles, theaddition made was Rs.97,520/-. The appellant filedreconciliation statement along with account copies.xii) Varsha Bottle Suppliers: The AR submitted that theappellant is buying one type of bottle from Varsha BottleSuppliers and selling them another type of bottles. Thesetransactions were mutually netted off in the subsequent year.Copies of purchase and sales invoices were produced forverification. The addition of Rs.6,09,856/- is to bedeleted." xi) Supreme Bottles: In the case of Supreme Bottles, theaddition made was Rs.97,520/-. The appellant filedreconciliation statement along with account copies.xii) Varsha Bottle Suppliers: The AR submitted that theappellant is buying one type of bottle from Varsha BottleSuppliers and selling them another type of bottles. Thesetransactions were mutually netted off in the subsequent year.Copies of purchase and sales invoices were produced forverification. The addition of Rs.6,09,856/- is to bedeleted." 4. After considering the details of the trade creditors, theTribunal confirmed the order of the Commissioner of Income Tax(Appeals). Aggrieved by the said order, the Revenue is before thisCourt raising the above-mentioned substantial questions of law. 5. Heard Mr.T.R.Senthil Kumar, learned Standing Counselappearing for the Revenue and perused the materials placed beforethis Court. 6. A faint plea was made that the Commissioner of Income Tax(Appeals) has failed to follow the procedure under Rule 46A of theIncome Tax Rules. We find that the Department has raised six groundsin the appeal before the Tribunal, but this issue does not appear tofigure therein. They were primarily on merits of the claim of theassessee on unexplained credit balance. 7. We find that the Commissioner of Income Tax (Appeals) hasgone into the individual transaction on merits holding that paymentswere made through banking transactions and deleted the addition. TheTribunal has also once again verified the same and held in favour ofthe assessee. 8. Being pure question of fact, which was verified by theCommissioner of Income Tax (Appeals) and again verified by theTribunal and confirmed the same, we find no question of law much lessany substantial question of law arises for consideration in thisappeal. 9. In the result, this Tax Case (Appeal) stands dismissed. Nocosts. Sd/-Assistant RegistrarDated:20.1.15 True CopySub Assistant RegistrarTo1. The Assistant Registrar,Income Tax Appellate TribunalChennai Bench "D", Chennai.2. The Commissioner of Income Tax (Appeals) -I, Coimbatore.3. The Income Tax Officer, Ward II (3), Coimbatore4. The Commissioner of Income Tax, Coimbatore.+1 cc to Mr.T.R.Senthil Kumar, Advocate,SR.63068.tej(co)krd 28/1T.C.(A).No.424 of 2014