Court No. - 35
Case :- INCOME TAX APPEAL No. - 562 of 2009 Appellant :- Commissioner Of Income Tax Respondent :- M/S National Chemical Products Counsel for Appellant :- S.S.C. I.T.,Praveen Kumar Counsel for Respondent :- Rajesh Gupta,R.S.Agrawal,Rahul Agarwal
Hon'ble Bharati Sapru,J. Hon'ble Neeraj Tiwari,J.
Heard Shri Praveen Kumar, learned counsel for the appellant and Shri Rahul Agrawal, learned counsel for the respondent.
This appeal under Section 260-A of the Income Tax, 1961(hereinafter referred to as the 'Act') has been filed by the department against the order of the Income Tax Appellate Tribunal dated 14.08.2009 for the assessment year 2000-01. The questions of law sought to be answered are as under:
"(1) Whether the Hon'ble ITAT, Agra Bench, Agra was legally correct in the findings of learned CIT (A) and ignoring the evidence of introduction of un-accounted money amounting to Rs.1,17,79,084/- by the assessee in its bank by way of encashment of bank drafts purchased by one of the employees of its sister concern in cash in the name of alleged three purchasers?
(II) Whether the Hon'ble ITAT was justified in deleting the addition of Rs.1,17,79,08/-under provisions of Section 69 on account of encashment of drafts when factum of sale to alleged purchasers is not proved?"
The assessee firm being a dealer of Tata Chemicals Ltd. engaged in trading of Soda Ash has filed return of income at Rs.34,27,312/- and assessment was completed by the AO on total income of Rs.1,52,06,400/- by making an addition of Rs. 1,17,79,084/- under section 69 of the IT Act, 1961.
During the course of assessment proceedings, it is noticed by the AO that pay orders worth Rs.1,17,79,084/- were deposited in the bank account of the assessee firm in OBC, Firozabad on various dates. On enquiry, it was found that these pay orders were purchased itself by the employee of the assessee firm in cash in the name of three firms namely M/s Three Stars Paper Mills Ltd., Dadri, M/s B.J. Duplex Board Ltd., Kundali and M/s Shree Ram Chandra Straw Products Ltd., Moradabad from the OBC, Firozabad and were deposited in the Current Account No.650 of the assessee firm with OBC, Firozabad. The handwriting expert has reported that the handwriting and signatures of the pay in slips through which these pay orders were deposited in the bank account of the assessee are made by one Sh. B.P. Singh, the employee of the assessee's sister concern M/s Ashoka Chemicals.
The Version of the assessee that the amount of pay orders, as credited in assessee's firm account, was the payment made by the above three firms against the sales of goods of Soda Ash made to them and the assessee also filed copy of 3B and Form No.2C under the Trade Tax Act issued by the above three firms and held that the assessee failed to prove the delivery of the goods and remittance of the money from these firms and accordingly added an amount of Rs.1,17,79,084/- to the income of the assessee under section 69 of the IT Act as unexplained investment after rejecting the books of account.
Aggrieved with the order of the AO, the assessee preferred an appeal before the learned CIT (Appeals)-II, Agra. In appeal the learned CIT (A)-II Agra has deleted the entire addition made by the AO holding that the AO was not justified and correct to conclude that the sales to alleged three parties to the extent of Rs.1,17,79,084/- was bogus and these parties had given only book entry to the assessee and also that the receipt of this amount in the account of said three parties through pay orders purchased in cash was actually undisclosed money of the assessee firm.
Against the order of the CIT (A)-II, Agra the Revenue preferred an appeal before the Hon'ble ITAT, Agra Bench, Agra. The Hon'ble ITAT following the findings of Tribunal order dated 27.04.2007 in assessee's own case for the AY 2001-2002 that the authorities below were not justified in treating the sales made by assessee to the three parties were bogus and assessee deposited his own money in the bank account by way of pay orders has confirmed the order of the CIT (A) vide its impugned order dated 14.08.2009.
Ultimately, the admitted fact in this case is that the books of account of the assessee had not been rejected, nor it was ever recorded that the sales made by the assessee to the three parties were bogus. Other than this, a coordinate Bench of the Tribunal in the assessee's own case for the assessment year 2001-02 had also upheld the deletion of the amount which was sought to be added by the Assessing Officer for a sum of Rs.1,17,79,084/-.
There are concurrent orders of the CIT (Appeals) as well as the Tribunal which have discussed the order of the Assessing Officer and while doing so the Tribunal as well as the CIT(Appeals) have noted particularly that the transactions were made by the assessee at normal selling rates and were properly backed by sales tax forms issued by the parties and had been found recorded in the accounts as well as the stock records.
Such being the case, it could not be said to be presumed to a colourable device or arrangement to avoid tax liability. Mere suspicion cannot be the basis of making an addition. It is trite to say the suspicion however, so strong cannot replace evidence.
Therefore, in view of the fact that the books of account were never rejected by any authority, the deletion was rightly granted. The question nos.1 and 2 both are answered in favour of the assessee and against the department.
The appeal is accordingly dismissed.
Order Date :- 22.2.2018 pks