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M/s. U. P. Dyeing & Printing Works, 154, Subhash Bazar, Meerut Vs. Income Tax Officer Ward- 2 (4) Meerut
October, 09th 2019
    IN THE INCOME TAX APPELLATE TRIBUNAL
              DELHI BENCH `D', NEW DELHI

    BEFORE SH. BHAVNESH SAINI, JUDICIAL MEMBER
                         AND
       SH. R. K. PANDA, ACCOUNTANT MEMBER

                         ITA No.614/Del/2015
                     Assessment Year: 2010-11
  M/s. U. P. Dyeing & Printing   Vs. Income Tax Officer
  Works, 154, Subhash Bazar,         Ward- 2 (4)
  Meerut                             Meerut
  PAN No.AAAFU2202L
  (APPELLANT)                        (RESPONDENT)

                        ITA No.638/Del/2015
                     Assessment Year: 2010-11
  Income Tax Officer            Vs. M/s. U. P. Dyeing & Printing
  Ward- 2 (4)                       Works, 154, Subhash Bazar,
  Meerut                            Meerut
  (APPELLANT)                       (RESPONDENT)


  Appellant by                     Sh. Sanjay Malik, CA
                                   Sh. Sankalp Malik, CA
  Respondent by                    Smt. Naina Soin Kapil, Sr. DR.

  Date of hearing:                 01/08/2019
  Date of Pronouncement:           09/10/2019

                            ORDER
PER R.K PANDA, AM:
     These are cross appeals. The first one is filed by the
assessee and the second one filed by the revenue and are directed
against the order dated 28.11.2014 of the CIT(A), Meerut relating
to A.Y.2010-11. For the sake of convenience these were heard
together and are being disposed of by this common order.
ITA No. 614/Del/2015 ( by assessee)
2.   There is a delay of two days in filing of this appeal by the
assessee for which assessee has filed a condonation petition
alongwith an affidavit explaining the reasons for delay.              After
hearing both the sides and considering the contents of the
condonation application filed alongwith affidavit, the delay is
condoned.
3.   The grounds raised by the assessee are as under :-
     1.     That on facts and in law and in the circumstances of the
     case, the difference between the balances as per the accounts
     of various trade creditors and the balances reflected in the
     books    of   account   of   the   assessee     having   been   fully
     substantiated there was no legal basis to treat such difference
     as income chargeable to tax.
     2.     The Authorities below on facts and in law and the
     grounds taken and basis adopted went wrong to treat
     Rs.44,9317/- as income. The addition deserves to be deleted
     being void, illegal and without jurisdiction.







4.   Facts of the case, in brief, are that the assessee is a
partnership firm engaged in the business of manufacture of
printed handloom / power loom cloth and cloth printing. It filed
its return of income on 15.10.2010 declaring total income of
Rs.56,360/-. During the course of assessment proceedings the
AO noted that assessee has shown sundry creditors to the tune
of Rs.1,22,75,695/-. On the basis of details furnished by the
assessee the AO issued letters u/s. 133 (6) to certain creditors.
From the confirmations received from some of the creditors he
                                                                       Page | 2
noted difference in the case of the following creditors :-
Name                              Difference Amount
Amit Textile                          Rs.1,33,784/-
Kunal tech Fab India                  Rs.10428/-
New India Colour                      Rs.2000/-
Vishal Dyeing Chemical                Rs.7008/-
M/s. Maya International Pvt. Ltd.     Rs.35034/-
S. R. Textile                         Rs.261063/-


5.   He, therefore, asked the assessee to explain the difference
and asked him to explain as to why it should not be added to
the total income of the assessee. In absence of any reply from
the side of the assessee, the AO made addition of Rs.4,49,317/-.
6.   In appeal the Ld. CIT(A) confirmed the addition on the
ground that AO by his own enquiry had brought in positive
evidence and the assessee failed to offer any explanation before
the AO. Therefore, he rejected the explanation given by the
assessee    before   him    and    sustained    the   addition      of
Rs.4,49,317/- made by the AO.
7.   Aggrieved with such order of the CIT(A), the assessee is in
appeal before the Tribunal.
8.   The Ld. Counsel for the assessee strongly challenged the
order of the CIT(A) in confirming the addition of Rs.4,49,317/-.
He submitted that it is a case where sundry creditors shown by
the assessee is less than the figures given by the respective
parties. Further the assessee has paid back amount to the
sundry creditors in the subsequent years. He submitted that
                                                                 Page | 3
the AO has not disallowed any purchases and has accepted the
trading account, therefore, no addition should have been made.
The Ld. Counsel for the assessee filed the following details to
substantiate the item wise difference in the case of the creditors.
     "The Ld. CIT (A) in para no. 4.2 of his order simply stated that
     reconciliation statement cannot be considered at this stage.
     However the facts is reconciliation statement was filed before
     the AO as well as CIT (A). An index was also filed before the
     Ld. CIT (A) which has been overlooked. Referred to page no.
     110 & 111 of the paper book.
     Page no. 1 of the paper book shows the balance of trade
     creditors in the books of the assessee and balance with the
     suppliers in their books and the difference, it is seen that the
     difference is credit difference. (i.e. the balance payable is less)
     Reconciliation statement was filed at page no.2 and 3 of the
     index paper book. The same was filed before Ld. CIT (A) also
     and not considered by him.
     In case of New Indian Color Company, the confirmation was
     filed at page no.7 and the difference was only because of
     opening balance of Rs.1671.81. thus Ld. CIT (A) was wrong on
     facts on disallowing the same. A chart was also filed which
     shows balance, bills and payment made by the firm, which
     was furnished at page no. 39 of the paper book. (Refer Page
     No. 37)
     In case of SR Textiles, the confirmation was filed at page no. 12
     and the difference was only because of bill was entered later
     as   goods   were inspected     and    purchase    was   done    in
     subsequent date when the goods was approved and bill was
     settled, thus Ld. CIT (A) was wrong on facts on disallowing the
                                                                     Page | 4
same. A chart was also filed which shows balance, bills and
payment made by the firm, which was furnished at page no.
39 of the paper book. (Refer Page No. 39)
In case of Amit Textiles, the confirmation was filed at page no.
19 and the difference was only because of goods received in
the opening date of next year was duly entered in purchases
by the assessee., thus Ld. CIT (A) was wrong on facts on
disallowing the same. A chart was also filed which shows bills
and payment made by the firm, which was furnished at page
no. 39 of the paper book. (Refer Page No. 39).
In case of Kunal Tex Fab, the confirmation was filed at page
no.21 and the difference was only because of cheques debited
in subsequent financial year, thus Ld. CIT(A) was wrong on
facts on disallowing the same. A chart was also filed which
shows balance, bills and payment made by the firm, which
was furnished at para No.39 of the paper book. (Refer Page
No.31).
In case of Vishai Dyes & Chemicals, the confirmation was filed
at page no. 32 and the difference was only because of balance
of petty expenses debited to the tune of Rs. 200 and bill issued
on 31st March, which was received in next financial year. There
was an opening balance of Rs. 9308/- and the same was duly
reconciled, however Ld. CIT (A) was wrong on facts on
disallowing the same. A chart was also filed which shows
balance, bills and payment made by the firm, which furnished
at page no. 40 of the paper book. (Refer Page No. 32)
In case of Maya International, copy of account was filed at
page no. 33 & 34, the difference was only because of two bills
in one there is a difference of Rs.2545/- and in second bill, it

                                                             Page | 5
     was entered later as goods were inspected and purchase was
     done in subsequent date when the goods was approved and
     bill was settled, thus Ld. CIT (A) was wrong on facts on
     disallowing the same. A chart was also filed which shows
     balance, bills and payment made by the firm, which was
     furnished at page no. 41 of the paper book.

9.   Relying on various decisions he submitted that the
addition made by the Assessing Officer and the CIT(A) should be
deleted.
10. The Ld. DR on the other hand heavily relied on the order of
the AO and the CIT(A).
11. We have considered the rival arguments made by both the
sides, perused the orders of the AO and the CIT(A) and the
paper book filed on behalf of the assessee. We have also
considered the various decisions cited before us. We find the
AO in the instant case made addition of Rs.4,49,317/- to the
total income of the assessee on the ground that there is
difference between the balance shown by the assessee and the
confirmation received in the case of six parties the details of
which is given at para 4 of this order. It is the submission of
the Ld. Counsel for the assessee that the figures shown by the
assessee is less as compared to the figures in the confirmation
given by the sundry creditors. Further the assessee has
reconciled the difference in giving reasons and, therefore, there
is no need to make the addition. We find sufficient force in the
above argument of the Ld. Counsel for the assessee. A perusal
of the details filed in the paper book shows that the assessee
                                                            Page | 6
            has filed the following details before the AO as certified in the
            paper book.
                                         Summery of Difference in Balance of Sundrv Creditors

S.No. Name of Suppliers         Balance as     per Balance as per Diff. U.P Dyeing
                                Suppliers




       1    New India Colour Company         476,282.81       474,611.00       1,671.81 Diff. in Opening Balance                    Cr.
            S.R Textiles                     428,130.00       167,067.00    261,063.00                                              Cr.
                                                                                          Some bills taken in next F.Y on
       2
                                                                                          17.05.2010
       3    Amit Textiles                 1,009,654.00        875,870.00    133,784.00                                              Cr.
                                                                                          Bill No. 217 dt. 27.03.2010 taken in
                                                                                          next F.Y on 01.04.2010
       4    Kunal Tex Fab                     75,651.00        65,222.00      10,429.00                                             Cr.
                                                                                          Cheque payment not taken
                                                                                          by Kunal Tex Fab
                                                                                          UP Dyeing shown on 29.04.2009
       5    Vishal Dyes & Chemicals          741,919.00       748,927.00 (-) 7,008.00                                               Dr.
                                                                                          Diff. in Opening Balance Rs. 93087-
                                                                                          balance excess entered by Vishal Dyes
                                                                                          & Rs. 2300/- entered by Vishal Dyes on
                                                                                          01.04.2010
       6                                                     1.026.991.00     35,020.00 Rs. 2545/- Bill Diff. & Rs. 32475/- bill    Cr.
                                          1,062,011.00
                                                                                        taken in next F.Y on 15.05.2010

                                                             3.358.688.00 448,975.81 The A.O added all the six Items
            Maya International Total      3,793,647.81
            Actual Difference
                                             434,959.81
     Note: It is a case where liability payable is less than the creditors claiming with, Hence No addition shall be made on this
           score









            12. We find the various details furnished by the assessee before
            the CIT(A) were summarily rejected by him on the ground that the
            assessee has not furnished any explanation before the AO. In our
            opinion the assessee in the instant case has fully discharged the
            onus cast on him by giving sufficient reasons before the AO and
            CIT(A) regarding the discrepancies in the accounts. Further it is

                                                                                                                     Page | 7
a case where the liability payable is less than the balance shown
by the creditors in 5 out of the 6 cases. Further the AO has not
disputed the purchases from the said parties and has accepted
the trading results. Considering the totality of the facts of the
present case and considering the submission made by the Ld.
Counsel for the assessee before the AO and the CIT(A), we are of
the considered opinion that the CIT(A) was not justified in
sustaining the addition of Rs.4,49,317/- on account of difference
in the accounts of the creditors. We, therefore, set aside the order
of the CIT(A) and direct the AO to delete the addition.
13. The appeal filed by the assessee is accordingly allowed.


ITA No.638/Del/2015 ( by revenue)
14. The grounds of the revenue is as under :-
     1.    Whether in the facts and circumstances of the case, the Ld.
     CIT(A) was correct in law and facts in not remanding the matter for
     proper and complete verification of sundry creditors worth Rs.
     72,71,723/- which were unconfirmed balances.
     2.     Whether in the facts and circumstances of the case, the Ld.
     CIT(A) was correct in law and facts in accepting the version of the
     assessee regarding unconfirmed balances of sundry creditors worth
     Rs. 72,71,723/- without proper verification.
     3.     That the appellant craves leave to add, modify and / or
     delete any ground(s) of appeal.
     4.     In the facts and circumstances of the case, the order of the
     CIT(A), Meerut may be set aside and that of the A.O. restored.



15. After hearing both the sides, we find the tax effect involved
in the grounds raised by the Revenue is admittedly below Rs.50
lakhs. Therefore, in view of the CBDT Circular No.17/2019 dated
8th August, 2019 raising the monetary limits for filing of the
                                                                     Page | 8
appeals by the Revenue before the Tribunal to Rs.50 lakhs and
the subsequent clarification dated 20th August, 2019 to the effect
that the said Circular is applicable even to pending appeals, the
appeal filed by the Revenue is not maintainable. Accordingly, the
same is dismissed.
16.      In the result, the appeal filed by the Revenue is dismissed
and the appeal filed by the assessee is allowed.
         Order pronounced in the open court on 09.10.2019.


     Sd/-                                                         Sd/-
  (BHAVNESH SAINI)                                            (R.K PANDA)
 JUDICIAL MEMBER                                          ACCOUNTANT MEMBER
*Neha*
Date:- 09.10.2019
Copy forwarded to:
1.      Appellant
2.      Respondent
3.      CIT
4.      CIT(Appeals)
5.      DR: ITAT
                                                                ASSISTANT REGISTRAR
                                                                      ITAT NEW DELHI
           Date of dictation
           Date on which the typed draft is placed before the dictating
           Member
           Date on which the approved draft comes to the Sr.PS/PS
           Date on which the fair order is placed before the Dictating
           Member for Pronouncement
           Date on which the fair order comes back to the Sr. PS/ PS
           Date on which the final order is uploaded on the website of    09.10.2019
           ITAT
           Date on which the file goes to the Bench Clerk                 09.10.2019
           Date on which file goes to the Head Clerk.
           The date on which file goes to the Assistant Registrar for
           signature on the order
           Date of dispatch of the Order




                                                                                       Page | 9

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