Maa Chintpurni Iron & Steel (I) Ltd. v. ITO, Ward 6(3)(3), Mumbai
[Citation -2016-LL-1019-131]

Citation 2016-LL-1019-131
Appellant Name Maa Chintpurni Iron & Steel (I) Ltd.
Respondent Name ITO, Ward 6(3)(3), Mumbai
Court ITAT-Mumbai
Relevant Act Income-tax
Date of Order 19/10/2016
Assessment Year 2007-08
Judgment View Judgment
Keyword Tags returned income
Bot Summary: The AO asked for reconciliation of differences in respect of 32 purchase parties out of all purchase parties as per the two set of details filed. The A.O has made addition of Rs.19,34,047/- to the returned income of the assessee on account of disallowance of purchases made from one purchase party M/s. Amar Amit Jalna Alloys Pvt. Ltd., Jalana. With regard to deleting disallowance of purchases of Rs. 19,34,047/- from M/s Amar Amit Jalna Alloys Pvt Ltd., we find that purchase like bills from the party, supporting evidences like weighment receipts from weigh bridge, ledger account in the books of the appellant, details of payment made through banking channels were produced before the Ld. AO. 7. With regard to the other purchases added by the AO after considering the reconciliation statement we find that the addition of difference between erroneous set of purchase party figures earlier filed on 23.11.2009 and correct figures submitted on 09.12.2009 is not logical. The appellant further stated that the error has occurred because in certain cases like M/s Saraswathi Steel Industries in spite of there being no purchases the opening balance of Rs. 5 lakhs had wrongly been shown as purchases vide letter dated 23/11/2009. From the order of CIT(A), we found that he has examined all the purchases so made by the assessee and after considering the same, upheld addition of Rs.24,82,819/- by observing that in respect of difference between two sets of figures as supplied by the assessee having both positive and negative could not be taken and only net effect is to be taken. We had verified the details of complete purchases for the year as a whole and found that CIT(A) has correctly upheld the addition of Rs.24,82,819/- while deleting the balance addition so made by the AO. We do not find any contravention of Rule 46A in so far as all the details were filed before the AO at the time of scrutiny proceedings after examining the same details, CIT(A) upheld the addition of Rs.24,82,819/- and deleted the balance addition.


1 IN INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES B , MUMBAI BEFORE SHRI R.C. SHARMA(ACCOUNTANT MEMBER) AND SHRI SANDEEP GOSAIN (JUDICIAL MEMBER) ITA No. 2752/MUM/2011 Assessment Year: 2007-08 Maa Chintpurni Iron & Steel (I) Ltd. Vs. ITO, Ward 6(3)(3) Shop No. 5, Sachinam Apartment 5th Floor, Aayakar Bhavan Majiwada Gaon, Thane(W) M.K. Road Mumbai 400610 Mumbai- 400020 PAN No. AABCM9597N & ITA No. 3216/MUM/2011 Assessment Year: 2007-08 ITO, Ward 6(3)(3) Vs. Maa Chintpurni Iron & Steel (I) Ltd. 5th Floor, Aayakar Bhavan Shop No. 5, Sachinam Apartment M.K. Road Majiwada Gaon, Thane(W) Mumbai- 400020 PAN No. AABCM9597N (Appellant) (Respondent) Assessee By : Shri. Subodh Ratnaparki Revenue By : Shri. M. Murli Date of Hearing : 22/07/2016 Date of pronouncement : 19/10/2016 ORDER PER R.C. SHARMA, ACCOUNTANT MEMBER : These are cross appeals filed by Assessee and Revenue against order of Ld. CIT(A) for AY 2007-08. 2. Rival contentions have been heard and record perused. 3. Facts in brief are that assessee is engaged in business of manufacturing mile steel rolled products. During course of scrutiny assessment AO made addition on account of purchase amounting to Rs. 2,42,67,423/-. By 2 impugned order Ld. CIT(A) deleted addition to extent of Rs. 2,07,84,604/-. Thus addition of Rs. 24,82,819/- was upheld by Ld. CIT. Against this order of Ld. CIT(A) both Assessee & Revenue are in further appeal before us. 4. We have heard rival contentions and found from record that in course of assessment proceedings, originally on 23.11.2009, incorrect party wise details of purchases were submitted to Ld. AO by junior accountant of assessee company as main accountant was absent due to accident. On realizing error, correct party wise details of purchases were submitted on 09/12/2009. AO asked for reconciliation of differences in respect of 32 purchase parties out of all purchase parties as per two set of details filed. Assessee submitted reconciliation vide reply dt. 29.12.2009 with explanation for difference and produced relevant evidences. reconciliation was accepted by Ld. AO in respect of 16 parties and addition was made in respect of balance 16 parties wherein differences (either positive or negative) between erroneous details submitted on 23.11.2009 and correct details submitted on 09.12.2009 was determined and both positive and negative figures i.e(+) + (-) wre totaled to work out addition of Rs. 2,42,67,423/-. By impugned order CIT(A) held that both positive and negative differences in purchase could not be totaled but only net difference could be considered for addition. addition was therefore restricted to net difference of Rs. 24,82,819/-. 5. A.O has made addition of Rs.19,34,047/- to returned income of assessee on account of disallowance of purchases made from one purchase party M/s. Amar Amit Jalna Alloys Pvt. Ltd., Jalana. disallowance has been made for only reason that said party did not comply with notice u/s 133(6) of I.T. Act. assessee submits that as per his information said purchase party from jalana had sent account confirmation to ld A.O. and ld A.O. never 3 appraised assessee regarding failure of said party in complying with notice u/s. 133 (6). 6. With regard to deleting disallowance of purchases of Rs. 19,34,047/- from M/s Amar Amit Jalna Alloys Pvt Ltd., we find that purchase like bills from party, supporting evidences like weighment receipts from weigh bridge, ledger account in books of appellant, details of payment made through banking channels were produced before Ld. AO. 7. By impugned order CIT(A) deleted addition after observing as under:- 8.2 Alongwith said reply vide letter dated 6/1/2011 assessee filed i. Copy of ledger account of M/s. Amar Amit Jalna Alloys Pvt. Ltd., in their books supported by copies of bills. ii. Original affidavit dated 15/12/2010 of Mr. Bharat Demda, M.D.of M/s. Amar Amit Jalna Alloys Pvt. Ltd., in which M.D. has confirmed that reply to notice u/s. 133(6) of I.T. Act sent by AO received on 30/11/2009 had been sent by them through courier vide letter dated 07/12/2009 confirming purchases. 8.3. After carefully perusing above documents and considering facts of case, I find that addition made by AO is not warranted. appellant, I find has documentary evidences to verify purchases. Besides this concern from where transaction has resulted has also verified same. As appallent has discharged onus placed on it regarding verification of transaction with M/s. Amar Amit Jalna Alloys Pvt. Ltd., addition made is therefore deleted. 8. We have considered rival contentions. confirmations so filed was examined by CIT(A) and after giving detailed finding at para 8.2 and 8.3 he deleted addition. Nothing was brought on record by learned DR to controvert finding so recorded by CIT(A), accordingly, we do not find any reason to interfere in order of CIT(A) deleting Rs.19,34,047/- made by AO on account of purchases. 4 9. With regard to other purchases added by AO after considering reconciliation statement we find that addition of difference between erroneous set of purchase party figures earlier filed on 23.11.2009 and correct figures submitted on 09.12.2009 is not logical. Ld. AO has accepted explanation in respect of 16 parties thereby accepting claim of appellant that earlier set of details filed on 23.11.20069 were erroneous. 10. By impugned order Ld. CIT(A) upheld addition of Rs. 24,82,819/- after observing as under: 6.2. I have carefully considered order of assessing officer and submission of appellant. I find that during course of assessment proceedings assessing officer had in order to verify purchases made by appellant asked appellant to file purchase details along with supporting evidence. In response, appellant had vide letter dated 23/11/2009 filed details. However by another letter dated 09/12/2009 appellant submitted fresh details stating that earlier details had been wrongly constructed and filed and now what has been filed is right details. It was stated that this was because main accountant of appellant had suffered serious accident and details submitted were prepared by junior accountant and had inherent mistakes. assessing officer vide his letter dated 16/12/2009 sought reconciliation regarding difference in figures of party wise purchases submitted. appellant submitted reply. AO verified details submitted vis- -vis books of account and came to conclusion that in respect of 16 concerns there was difference to tune of Rs. 2,42,67,423/- in respect of expenditure claimed on account of purchases. AO then proceeded to make addition of said amount to total income of appellant. 6.3 appellant has in his defense stated that AO has not sought any confirmation from concerned parties and if this had been done no difference as pointed out would have resulted. appellant further stated that error has occurred because in certain cases like M/s Saraswathi Steel Industries in spite of there being no purchases opening balance of Rs. 5 lakhs had wrongly been shown as purchases vide letter dated 23/11/2009. * M/s. Ramdas Ispat and Metals Pvt. Ltd. purchase returns of Rs. 1,03,650/- had remained to be considered. It has further been stated that if each and every account is seen it would stand that there is no differences. However without prejudice to above appellant has stated that even if differences are to be considered figure of unreconciled purchases would amount to only Rs. 34,82,819/- as difference between two sets of figures is both positive and negative and subsequent adjustments will have to be made. It cannot be that only positive figures from both sides be picked up. After carefully considering fact I find that action of AO in treating certain amount as unreconciled purchases cannot be faulted with. I find that AO had to verify purchases of appellant requested appellant to submit details. onus was totally on appellant 5 to submit correct details in support of claim made by it in its return of income regarding purchases said to be made in year. appellant has held junior accountant responsible for giving details which appellant at time of assessment proceedings was represented by ITP who was fully qualified to check into case of appellant and submit details that was correct and which could verify appellant s claim made in computation of income. It is also to be considered that junior accountant was and cannot be considered competent enough to make submission without consulting his seniors i.e. directors of company etc. and that any details that was prepared by him would have been subject to scrutiny by seniors of company. Therefore this contention of appellant I find does not hold. Hon'ble Ahmedabad Tribunal has clearly stated that even if Return of Income is filed by agent or POA holder or guardian, appellant has to bear consequences of untrue Return of Income unless there are satisfying reasons (2011-9 taxamann.com 92(Ahd-I.T.A.T.). principle behind said observation of Hon ble Tribunal is squarely applicable in case of appellant. This especially so as complete reconciliation has not been done by appellant to verify purchases. However, I find that contention of appellant that figure of purchases disallowed should be computed by keeping in view both positive and negative differences that emerge regarding letters dated 23/11/2009 and 09/12/2009 is acceptable. Therefore addition to be sustained is upto Rs. 34,82,819/-. balance amount is to be deleted. This ground of appeal is therefore partly allowed. 11. We have considered rival contentions and carefully gone through orders of authorities below. From order of CIT(A), we found that he has examined all purchases so made by assessee and after considering same, upheld addition of Rs.24,82,819/- by observing that in respect of difference between two sets of figures as supplied by assessee having both positive and negative could not be taken and only net effect is to be taken. However, AO has taken both positive and negative difference in purchases in respect of various suppliers. We had verified details of complete purchases for year as whole and found that CIT(A) has correctly upheld addition of Rs.24,82,819/- while deleting balance addition so made by AO. We do not find any contravention of Rule 46A in so far as all details were filed before AO at time of scrutiny proceedings after examining same details, CIT(A) upheld addition of Rs.24,82,819/- and deleted balance addition. 6 12. Noting was brought on record by Ld. AR or DR to persuade us to deviate from findings recorded by Ld. CIT(A). Accordingly we do not find any reason to interfere in findings so recorded by Ld. CIT(A) upholding addition of Rs. 24,82,819/- and deleting balance addition. 13. In result, both appeal filed by Assessee and Revenue are dismissed. Order pronounced in open court on 19/10/2016. Sd/- sd/- (SANDEEP GOSAIN) (R.C. SHARMA) JUDICIAL MEMBER ACCOUNTANT MEMBER Mumbai; Dated: 19/10/2016 AG (On Tour) Copy of Order forwarded to : 1. Appellant 2. Respondent. 3. CIT(A)- 4. CIT 5. DR, ITAT, Mumbai 6. Guard file. BY ORDER,//True Copy// (Dy./Asstt. Registrar) ITAT, Mumbai Maa Chintpurni Iron & Steel (I) Ltd. v. ITO, Ward 6(3)(3), Mumbai
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