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TMI Blog2016 (4) TMI 79X X X X Extracts X X X X X X X X Extracts X X X X ..... 5-2-2016 - 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 (the Act) for the A.Y. 1997-98 was confirmed. First I take up ITA no.69/Del/06. 2. Facts in brief:- The assessee firm filed its return of income for the AY 1997-98 on 8.10.97 declaring taxable income of ₹ 87,008/-. The original assessment was made on 31.3.2000 u/s 143(3) of the Income Tax Act 1961 (the Act) determining the taxable income of ₹ 1,20,786/-. This order was made on the basis of directions given by the JCIT u/s 144A of the Act. The assessment order was, however, set aside u/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. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 take up the issue of disallowance of loss party-wise. 6.1. Disallowance of loss of ₹ 7,42,631.78 of M/s Garg Enterprises:- The reasons given by the A.O. for disallowing the loss and the assessee s reply are as follows. Reasons given by AO Reply of the Assessee 1. 3 registered letter sent in 2000 and 2003 not served returned back with remark that no such firm exists Firm is closed in 1999. hence registered letters returned back in 2000 2003 with remarks no such firm exists is not such 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tement on audited account as on 31-3-1995 of M/s. Garg Enterprises along with tax audit report in Form 3CD. ix. Copy of certificate dated 10-2-2003 issued by Excise and Taxation Officer, Bhatinda. x. Report of Income Tax Inspector regarding address of the firm. xi. Letter dated 25-2-2003 written to the ITO by Sh Surinder Kumar,Manager, M/s. Garg Enterprises. 6.3. A perusal of the above documentary evidences take me 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. 6.4. In 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. ii. Sh.Devi Dayal, Partner of M/s Panmeshwari Das Ghansh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... respect of purchase and sale of paddy and M/s. Panmeshwari Das Ghanshyam 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 8. Copy of statement recorded on 29-1-2003 9. Copy of telephone directory of Vyapar Mandal, Fatehabad. 10. Copy of FIR reg. loss of account books 11. Copy of newspaper reg loss of account books 12. Copy of certificate of Market Committee, Fatehabad. 13. Copy of receipt of license renewal fee 14. Copy of donation receipt 15. Copy of bill of purchase of account book 16. Copy of ID of Sh Som Prakash issued by Election Commission of India 17. Statement of Sh Ram Kumar Prop M/s. Ram Kumar Vijendra Kumar from whom M/s. Chandu Lal Mohan Lal purchased the paddy on behalf of assessee 18. Stat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... les were purchased on 27-2-1997 and 3-3-1997 for ₹ 7,67,871.36 and ₹ 7,45,441.42 respectively. On both these dated only a sum of ₹ 3,826.15 was lying credited in the bank account of the company. vii. Both parties did not produce books of accounts on the ground that these have been lost. 8.2. The assessee submitted as follows. i. That payment for the purchases made by M/s. Sita Ram Sher Singh for us was made by them in subsequent year it is not sufficient to hold the transaction as not genuine as one can purchase the goods 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 and 3-3-1997 with no balance in bank does not affect the genuineness of the transaction. iv. That M/s. Sita Ram Sher Singh and M/s. Mahalaxmi ..... X X X X Extracts X X X X X X X X Extracts X X X X
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