M/s Gateway Enterprises v. The Income-tax Officer, Ward 4(4), Chennai
[Citation -2016-LL-1007-68]

Citation 2016-LL-1007-68
Appellant Name M/s Gateway Enterprises
Respondent Name The Income-tax Officer, Ward 4(4), Chennai
Court ITAT-Chennai
Relevant Act Income-tax
Date of Order 07/10/2016
Assessment Year 2007-08
Judgment View Judgment
Keyword Tags confirmation letter
Bot Summary: The assessee could not produce any confirmation letter from M/s Mehta Elastic Industries to the extent of 1,37,750/-. According to the Ld. representative, the assessee purchased goods from M/s Mehta Elastic Industries. According to the Ld. D.R., the assessee has also filed copies of the invoices which contain no details of M/s Mehta Elastic Industries in Surat the payment has to be made only through banking channel. Referring to the confirmation letter said to be filed by M/s Mehta Elastic Industries, the Ld. D.R. submitted that the confirmation letter was in fact prepared by the assessee, and at the bottom of the confirmation letter, a rubber stamp of Mehta Elastic Industries was affixed and somebody else has signed as proprietor. The assessee has also 4 I.T.A. No.1516/Mds/16 produced confirmation letter from M/s Mehta Elastic Industries. The CIT(Appeals) simply rejected the confirmation letter filed by the assessee from M/s Mehta Elastic Industries. The details of bank account and other entries, which were required for establishing the payment of 19,500/-, need to be examined either by calling from the assessee or from M/s Mehta Elastic Industries.


IN INCOME TAX APPELLATE TRIBUNAL B BENCH, CHENNAI BEFORE SHRI N.R.S. GANESAN, JUDICIAL MEMBER AND SHRI A. MOHAN ALANKAMONY, ACCOUNTANT MEMBER ITA No.1516/Mds/2016 Assessment Year : 2007-08 M/s Gateway Enterprises, Income Tax Officer, No.11, Krishna Iyer Street, v. Ward 4(4), Sowcarpet, Chennai - 600 079. Chennai - 600 006. PAN : AAAFG 2093 D (Appellant) ( Respondent) Appellant by : Shri M. Gopichand, ITP Respondent by : Shri Supriyo Pal, JCIT Date of Hearing : 10.08.2016 Date of Pronouncement : 07.10.2016 O R D E R PER N.R.S. GANESAN, JUDICIAL MEMBER: This appeal of assessee is directed against order of Commissioner of Income Tax (Appeals) 5, Chennai, dated 24.02.2016 and pertains to assessment year 2007-08. 2. Shri M. Gopichand, Ld. representative for assessee, submitted that assessee-firm is engaged in business of 2 I.T.A. No.1516/Mds/16 trading in accessories for leather goods and garments. In liability side of balance sheet, amount of `38,83,905/- was shown against trade creditors. According to Ld. representative, Assessing Officer called for confirmation letters from sundry creditors. assessee could not produce any confirmation letter from M/s Mehta Elastic Industries to extent of `1,37,750/-. In absence of any material, Assessing Officer found that transaction was not genuine. Accordingly, he added sum of `1,37,750/- to total income of assessee. According to Ld. representative, assessee purchased goods from M/s Mehta Elastic Industries. In fact, assessee was purchasing goods from said Mehta Elastic Industries from assessment year 1998-99. opening balance as on 01.04.2006 was `1,56,250/-. assessee has paid sum of `19,500/- by cheque and closing balance was `1,37,750/-. According to Ld. representative, assessee has produced copy of bills and ledger. Inspite of that, CIT(Appeals) has confirmed order of Assessing Officer. M/s Mehta Elastic Industries has filed conformation letter, therefore, according to Ld. representative, CIT(Appeals) is not correct in confirming addition made by Assessing Officer. 3 I.T.A. No.1516/Mds/16 3. On contrary, Shri Supriyo Pal, Ld. Departmental Representative, submitted that so-called ledger copy shows that sum of `19,500/- was paid by cheque. ledger copy does not indicate cheque number and other bank details. According to Ld. D.R., assessee has also filed copies of invoices which contain no details of M/s Mehta Elastic Industries in Surat, therefore, payment has to be made only through banking channel. In absence of any details, according to Ld. D.R., CIT(Appeals) has rightly confirmed addition made by Assessing Officer. Referring to confirmation letter said to be filed by M/s Mehta Elastic Industries, Ld. D.R. submitted that confirmation letter was in fact prepared by assessee, and at bottom of confirmation letter, rubber stamp of Mehta Elastic Industries was affixed and somebody else has signed as proprietor. Therefore, according to Ld. D.R., CIT(Appeals) doubted genuineness of confirmation letter and confirmed addition. 4. We have considered rival submissions on either side and perused relevant material available on record. assessee has filed copies of ledger account, bills/invoices before Assessing Officer and CIT(Appeals). assessee has also 4 I.T.A. No.1516/Mds/16 produced confirmation letter from M/s Mehta Elastic Industries. confirmation letter was rejected by CIT(Appeals) on ground that rubber stamp of M/s Mehta Elastic Industries was affixed in bottom of letter and somebody else has signed as proprietor. Assessing Officer and CIT(Appeals) have not examined genuineness of confirmation letter after calling details from M/s Mehta Elastic Industries. This Tribunal is of considered opinion that when CIT(Appeals) doubted genuineness of confirmation letter filed by assessee from M/s Mehta Elastic Industries, he ought to have directed Assessing Officer to examine responsible person from M/s Mehta Elastic Industries and find out whether M/s Mehta Elastic Industries has in fact confirmed outstanding amount. Without such examination, CIT(Appeals) simply rejected confirmation letter filed by assessee from M/s Mehta Elastic Industries. Likewise, details of bank account and other entries, which were required for establishing payment of `19,500/-, need to be examined either by calling from assessee or from M/s Mehta Elastic Industries. In absence of any such details, this Tribunal is of considered opinion that CIT(Appeals) is not justified in confirming addition made by Assessing Officer 5 I.T.A. No.1516/Mds/16 5. In normal circumstances, this Tribunal would have remitted back matter to file of Assessing Officer for re- examination. In case before us, addition is only `1,37,750/-. Remanding back to file of Assessing Officer would not serve any purpose. By considering smallness of addition made by Assessing Officer as confirmed by CIT(Appeals), this Tribunal is of considered opinion that in absence of enquiry by authorities below, addition made by Assessing Officer is not justified. Accordingly, orders of authorities below are set aside and addition of `1,37,750/- is deleted. 6. In result, appeal filed by assessee is allowed. Order pronounced on 7th October, 2016 at Chennai. sd/- sd/- (A.Mohan Alankamony) (N.R.S. Ganesan) Accountant Member Judicial Member Chennai, th Dated, 7 October, 2016. Kri. 6 I.T.A. No.1516/Mds/16 Copy to: 1. Appellant 2. Respondent 3. CIT(A)-5, Chennai 4. Principal CIT-9, Chennai 5. DR 6. GF. M/s Gateway Enterprises v. Income-tax Officer, Ward 4(4), Chennai
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