M/s. BANDUKWALA SALES PVT LTD, BILASPUR(CG) v. Assistant Commissioner of Income-Tax, Central Circle-1,(1), BILASPUR(CG)

CO 18/BIL/2011 | 2007-2008
Pronouncement Date: 10-02-2012 | Result: Partly Allowed

Appeal Details

RSA Number 1824723 RSA 2011
Assessee PAN AACCB2445H
Bench Raipur
Appeal Number CO 18/BIL/2011
Duration Of Justice 4 month(s) 21 day(s)
Appellant M/s. BANDUKWALA SALES PVT LTD, BILASPUR(CG)
Respondent Assistant Commissioner of Income-Tax, Central Circle-1,(1), BILASPUR(CG)
Appeal Type Cross Objection
Pronouncement Date 10-02-2012
Appeal Filed By Assessee
Order Result Partly Allowed
Bench Allotted Not Allotted
Tribunal Order Date 10-02-2012
Assessment Year 2007-2008
Appeal Filed On 19-09-2011
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL BILASPUR BE NCH BILASPUR BEFORE SHRI SHAILENDRA KUMAR YADAV (J.M) & SHRI R.K.PANDA(A.M) ITA NO. 162/BLPR/2011(A.Y.2007-08) ASSTT. COMMISSIONER OF INCOME TAX CIR. 1(1) MAHIMA COMMERCIAL COMPLEX VYAPAR VIHAR BILASPUR (CG) (APPELLANT) VS. M/S. BANDUKWALA SALES PVT. LTD. SADAR BZAR BILASPUR(CG) PAN:AACCB2445H (RESPONDENT) C.O.NO.18/BLPR/2011 (ARISING OUT OF ITA NO.162/BLPR/2011 A.Y. 2007-08) M/S. BANDUKWALA SALES PVT. LTD. SADAR BZAR BILASPUR(CG) PAN:AABFE0769 (CROSS OBJECTOR) VS. ASSTT. COMMISSIONER OF INCOME TAX CIR. 1(1) MAHIMA COMMERCIAL COMPLEX VYAPAR VIHAR BILASPUR (CG) (APPELLANT IN APPEAL) REVENUE BY : SHRI M.K.SHARMA ASSESSEE BY : NONE DATE OF HEARING : 08/02/2012 DATE OF PRONOUNCEMENT : 10/02/2012 ORDER PER SHAILENDRA KUAMAR YADAV J.M THIS APPEAL HAS BEEN FILED BY THE REVENUE AGAINS T THE ORDER OF CIT(A) BILASPUR DATED 31/3/2011 FOR THE ASSESSMENT YEAR 2007-8. ( ITA NO. 162/BLPR/2011& CO 18/BLPR/11 2 THE ASSESSEE HAS ALSO FILED CROSS OBJECTION 18/BLPR /2011 AGAINST THE SAME ORDER OF THE CIT(A). ITA NO.162/BLPR/2011(A.Y. 2007-08): 2. THE REVENUE HAS RAISED THE FOLLOWING GROUNDS O F APPEAL IN ITS APPEAL: 1(A) THAT ON THE FACTS AND IN THE CIRCUMSTANCES O F THE CASE THE LEARNED CIT(A) ERRED IN LAW AND ON FACTS IN AL LOWING RELIEF OF RS. 73 61 764/- IN SPITE OF THE FACTS ON RECORDS THAT THE AO HAS COMPLETED THE ASSESSMENT U/S. 144 OF THE ACT AS THE ASSESSEE HAD NOT COMPLIED THE QUERIES MADE BY THE A O DURING THE ASSESSMENT PROCEEDINGS AND THE APPEAL HAS BEEN ALLOWED ON THE SUBMISSIONS OF THE ASSESSEE WITHOUT ALLOWING AN OPPORTUNITY TO THE AO. (B) THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF T HE CASE THE LEARNED CIT(A) ERRED IN LAW AND ON FACTS IN ALLOWIN G THE RELIEF OF RS. 1 00 000/- WHICH HAS BEEN ADDED BY THE AO FOR W ANT OF BOOKS OF ACCOUNTS AND OTHER SUPPORTING EVIDENCES WI TH REFERENCE TO THE VARIOUS CLAIMS OF EXPENSES CLAIMED BY THE ASSESSEE AND PAYMENT MADE TO PERSON SPECIFIED UNDER SECTION 40A(2)(B) OF THE ACT. (C) THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF T HE CASE THE LEARNED CIT(A) ERRED IN LAW AND ON FACTS IN ALLOWIN G THE RELIEF OF RS. 61 75 829/- WHICH HAS BEEN HELD BY THE AO AS UNEXPLAINED AND ADDED U/S. 69B OF THE I.T. ACT SINC E THE ASSESSEE HAS FAILED TO SATISFACTORILY EXPLAIN THE DEPOSITS IN THE BANK ACCOUNTS. (D) THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE THE LEARNED CIT(A) ERRED IN LAW AND ON FACTS IN ALLOWIN G THE RELIEF OF RS. 6 00 333/-[EXCESS STOCK DETECTED DURING SURVEY] WHICH HAS BEEN HELD BY THE AO AS UNEXPLAINED INVESTMENT A ND ADDED U/S. 69B OF THE I.T. ACT SINCE THE ASSESSEE H AS FAILED TO SUBSTANTIATE THE OBJECTION THAT THE STOCK OF BOTH T HE ENTITIES WAS MIXED. ( ITA NO. 162/BLPR/2011& CO 18/BLPR/11 3 (E) THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE THE LEARNED CIT(A) ERRED IN LAW AND ON FACTS IN ALLOWIN G THE RELIEF OF RS. 4 85 602/- WHICH HAS BEEN HELD BY THE AO AS FI CTITIOUS CREDITORS LIABILITY SINCE THE ASSESSEE HAS FAILED T O SUBSTANTIATE THE EXISTENCE OF SUCH LIABILITY AND IN SPITE OF TH E FACTS ON RECORDS THAT THE CONFIRMATIONS OF CREDITORS WERE SI GNED BY THE DIRECTOR THE ASSESSEE COMPANY AND COMPLETE ADDRESS AND I.T. ASSESSMENT PARTICULARS OF CREDITORS WERE NOT SUBMIT TED BY THE ASSESSEE BEFORE THE AO. 2. THAT THE LD. CIT(A)S ORDER BEING ERRONEOUS PER VERSE AND CONTRARY TO THE FACTS ON RECORD THE SAME MAY BE SE T ASIDE WHILE THAT OF THE AO BE RESTORED. 3. NONE APPEARED ON BEHALF OF THE ASSESSEE AT THE T IME OF HEARING INSPITE OF SERVICE OF NOTICE. SO THE APPEAL IS DE CIDED ON THE BASIS OF THE ARGUMENTS OF LD. D.R AND MATERIAL ON RECORD. 4. THE FIRST ISSUE IS WITH REGARD TO DISALLOWANCE OF RS. 1 00 000/- MADE BY THE AO OUT OF REMUNERATION CLAIM ED TO HAVE BEEN PAID TO DIRECTOR. THIS DISALLOWANCE WAS MA DE BY THE AO AS ACCORDING TO HIM THE REMUNERATION OF RS. 1 25 000/ - CLAIMED TO HAVE BEEN PAID TO DIRECTOR WAS EXCESSIVE AND UNREAS ONABLE PARTICULARLY WHNE THE NP ON TURNOVER OF RS.63.22 L AKHS WAS SHOWN AT RS.22 217/-. HENCE THE AFORESAID DISALLOW ANCE WAS MADE BY AO ON ESTIMATE BASIS BY INVOKING PROVISIONS OF SECTION 40A(2)(B) OF THE ACT. THE MATTER WAS CARRIED BEFORE THE FI RST APPELLATE AUTHORITY WHO GRANTED THE RELIEF TO THE ASSESSEE BY OBSERVING THAT IT IS THE PREROGATIVE OF THE BUSINESSMAN HOW TO RUN T HE BUSINESS AND IT IS NOT OPEN TO THE REVENUE TO PRESCRIBE WHAT EX PENDITURE AN ( ITA NO. 162/BLPR/2011& CO 18/BLPR/11 4 ASSESSEE SHOULD INCUR AND IN WHAT CIRCUMSTANCES HE SHOULD INCUR SUCH EXPENDITURE. IT IS A MATTER OF UNDERSTANDING BETWEEN THE PARTIES IN THE INSTANT CASE BETWEEN THE ASSESSEE- EMPLOYER AND DIRECTOR- EMPLOYEE AND THE SAME IS NOT REALLY GOVE RNED BY ANY LAW AS SUCH. IT DEPENDS UPON SEVERAL FACTS AS TO WHAT QUANTUM OF REMUNERATION SHOULD BE PAID AND THE AO CANNOT SUBST ITUTE HIS OWN RATE FOR CALCULATING RATE OF REMUNERATION. THERE I S NOTHING ON RECORD TO SHOW THAT THE ASSESSEE HAS MADE BOGUS C LAIM. THERE IS NOTHING ON RECORD TO SUGGEST THAT PAYMENT TO THE DI RECTOR WAS AGAINST PREVAILING MARKET CONDITIONS. MOREOVER S IMILAR CLAIM OF REMUNERATION TO THE DIRECTOR WAS UNDISPUTEDLY ALLOW ED IN EARLIER YEARS AND HENCE THERE WAS NO JUSTIFICATION FOR THE DEPARTURE FROM THE ACCEPTED FACTS PARTICULARLY WHEN THERE WAS NO C HANGE IN THE SET OF FACTS JUSTIFYING PAYMENT OF THE SAID REMUNERATI ON. IN VIEW OF THE ABOVE THE CIT(A) WAS JUSTIFIED IN DELETING THE DISALLOWANCE MADE BY THE AO IN QUESTION AND THE SAME IS UPHELD. 5. THE NEXT ISSUE IS WITH REGARD TO ADDITION OF RS. 61 75 829/- MADE BY AO ON ACCOUNT OF UNEXPLAINED DEPOSIT IN BA NK ACCOUNTS. ACCORDING TO AO THE ASSESSEE MAINTAINED TWO BANK AC COUNTS VIZ. (I) ACCOUNT NO.13489 WITH BILSA MAHILA NAGARIK SAHAKARI BANK MARYADIT BILASPUR AND (II) STATE BANK OF INDIA CO MMERCIAL BRANCH BILASPUR AND THE DETAILED COPY OF BANK ACCOUNT NO.1 3489 WITH BILSA MAHILA NAGARIK SAHAKARI BANK MARYADIT BILASP UR REVEALED THAT TOTAL DEPOSITS THERE WERE RS.1 03 35 116/- DUR ING THE PERIOD FROM 07/06/2006 TO 31/03/2007. SIMILARLY A SUM OF RS. ( ITA NO. 162/BLPR/2011& CO 18/BLPR/11 5 21 63 288/- WAS FOUND CREDITED IN THE ACCOUNT WITH SBI COMMERCIAL BRANCH BILASPUR. THUS THE TOTAL DEPOSI TS IN THESE TWO BANK ACCOUNTS WORKED OUT TO RS. 1 24 98 404/-. WH EN CONFRONTED BY AO TO EXPLAINED THE SOURCE OF INVESTMENT IN THES E DEPOSITS IT WAS EXPLAINED BEFORE THE AO THAT ALL THE DEPOSITS WERE MADE OUT OF SALE PROCEEDS AND WERE VERIFIABLE FROM THE BOOKS OF ACCOUNT. IT WAS ALSO EXPLAINED THAT SOME AMOUNTS MIGHT BE REPRESENT ING REDEPOSITS OF THE SUMS WITHDRAWN ON EARLIER OCCASIONS. ACC ORDING TO AO THE ASSESSEE HAD NOT PRODUCED BOOKS OF ACCOUNT AND EVE N AFTER DEDUCTING THE TOTAL SALE FOR THIS YEAR SHOWN AT RS. 63 22 575/- AS CORRECT THE UNRECONCILED DEPOSITS IN THE BANK ACCO UNTS WORKED OUT TO RS. 61 75 829/-. IN PROCEEDINGS BEFORE THE AO IT WAS ALTERNATIVELY CONTENDED ON BEHALF OF THE ASSESSEE T HAT THE AMOUNT DEPOSITED COULD NOT BE THE INCOME OF THE ASSESSEE B ECAUSE IT WAS RECEIVED FROM SALES AND THE COST OF GOODS SOLD COU LD NOT BE SUBJECTED TO TAX. IT WAS ALSO SUBMITTED THAT AT TH E MOST ONLY PROFIT ELEMENT ON SUCH UNRECONCILED DEPOSITS REPRESENTING SALES WAS ASSESSABLE IF ANY SUPPRESSED SALES WERE DETECTED D UE TO DIFFERENCE BETWEEN THE TOTAL DEPOSITS IN THE BANK ACCOUNT AND THE TOTAL SALES. WITHOUT CONDUCTING THE NECESSARY INVESTIGATION THE GROSS AMOUNT OF THE SALES APPEARING IN THE FORM OF DEPOSITS IN THE AFOREMENTIONED BANK ACCOUNTS WAS ADDED BY INVOKING PROVISIONS OF S ECTION 69B OF THE ACT. MATTER WAS CARRIED BEFORE THE FIRST APPEL LATE AUTHORITY WHO GRANTED RELIEF AND THE SAME HAS BEEN OPPOSED BEFORE US. ACCORDING TO CIT(A) COPY OF BANK ACCOUNT FURNISHED BEFORE TH E AO ITSELF EXPLAINED EACH AND EVERY TRANSACTION. FOR EXAMPLE ON ( ITA NO. 162/BLPR/2011& CO 18/BLPR/11 6 30/12/2006 A SUM OF RS. 4.00 LACS WAS SHOWN AS DEP OSIT VIDE CHEQUE NO.691629 RECEIVED FROM M/S. HUSSAIN IMPEX. ACCORDING TO CIT(A) THE DETAILED DESCRIPTION WAS CLEARLY WRIT TEN IN THE COPY OF BANK ACCOUNT FURNISHED BEFORE THE AO. SIMILARLY R S. 5.00 LACS DEPOSITED WITH STATE BANK OF INDIA ON 12/01/207 WAS SHOWN AS RECEIVED FROM HUSSAIN IMPEX VIDE CHEQUE NO. 691634. ALL THE TRANSACTIONS WERE EXPLAINABLE FROM THE COPY OF ACC OUNT ITSELF WHICH WAS SUBMITTED BEFORE THE AO FORMING PART OF THE ASS ESSMENT ORDER. SIMILAR IS THE CASE WITH BILASA MAHILA NAGARIK SAHA KARI BANK MARYADIT. THUS CIT(A) AGREED WITH THE EXPLANATIO N FURNISHED ON BEHALF OF THE ASSESSEE BEFORE AO AS WELL AS HIM AND GRANTED RELIEF TO THE ASSESSEE. THIS OBSERVATION OF THE CIT(A) IS N OT HAVING GENESIS IN THE ORDER OF AO. THE ASSESSEE HAS BEEN EVASIVE IN THE PROCEEDINGS BEFORE AO. THE AO REJECTED THE STAND OF THE ASSESSEE IN THE ABSENCE OF MATERIAL SUBSTANTIATING THE SAME . HOWEVER SAME HAS BEEN ACCEPTED BY CIT(A) AS SUCH. ACCORDIN G TO US CIT(A) HAS AGREED WITH THE CONTENTIONS OF ASSESSEE WITHOUT PROPER APPRECIATION OF THE FACTS MOREOVER NOTHING IS ON RECORD TO SUGGEST THAT ASSESSE HAS GIVEN SATISFACTORY EXPLANATION BEF ORE HIM WITH REGARD TO THE ADDITION IN QUESTION AND THE SAME M ATERIAL HAS BEEN ACCEPTED BY CIT(A) AS SACROSANCT TRUTH WHILE GRANTI NG RELIEF TO THE ASSESSEE ON THIS ACCOUNT. ACCORDING TO US THIS ISSUE NEED DEEP PROBE INTO THE MATTER. SO IN THE INTEREST OF JUSTI CE WE RESTORE THE ISSUE TO AO TO DECIDE THE ISSUE AS PER LAW AND ON FACTS AFTER PROVIDING DUE OPPORTUNITY OF HEARING TO THE ASSESSE E. SINCE WE ARE ( ITA NO. 162/BLPR/2011& CO 18/BLPR/11 7 RESTORING THIS ISSUE ON THE PRELIMINARY GROUND AS MENTIONED ABOVE WE ARE REFRAINING TO COMMENT ON THE MERIT OF THE IS SUE ON HAND. 6. THE NEXT IS WITH REGARD TO ADDITION OF RS.6 00 3 33/- MADE BY AO ON ACCOUNT OF UNEXPLAINED INVESTMENT IN EXCESS S TOCK FOUND DURING THE SURVEY. ACCORDINGLY THE ADDITION WAS M ADE BY AO WHICH WAS DELETED BY CIT(A). THE SAME HAS BEEN OP POSED BEFORE US ON BEHALF OF THE REVENUE WHO SUPPORTED THE ORDE R OF AO ON THIS COUNT. ACCORDING TO CIT(A) IN SURVEY PROCEEDINGS AS ALSO IN PROCEEDINGS BEFORE THE AO THE ASSESSEE EXPLAINED THAT THE STOCK OF INVENTORY WAS NOT PREPARED BY THE SURVEY TEAM PR OPERLY THAT THE ASSESSEE AND ALSO ITS SISTER CONCERN WERE ENGAGED IN THE RETAIL TRADING OF PAINTS IN SAME PREMISES AND THAT THE STO CK OF THE SISTER CONCERN WAS TAKEN IN THE STOCK INVENTORY OF THE ASS ESSEE COMPANY. THIS FACT COUPLED WITH THE VARIOUS FACTUAL INFIRMIT Y IN THE INVENTORY PREPARED BY THE SURVEY TEAM ACCORDING TO THE ASSES SEE WERE EXPLAINED TO THE SURVEY TEAM IN THE FINAL STATEMENT RECORDED BY THE SURVEY TEAM. ACCORDING TO CIT(A) NEITHER THE SURVE Y TEAM NOR THE AO PROVED THIS EXPLANATION AS FALSE. IN THE GIVE N FACTS AND CIRCUMSTANCES OF THE CASE THE AO WAS NOT JUSTIFIED IN MAKING THE ADDITION AND THE SAME HAS BEEN RIGHTLY DELETED BY CIT(A) WHO HAS GIVEN RELIEF TO THE ASSESSEE BY A REASONED FACTUAL FINDING WHICH NEED NO INTERFERENCE BY US. WE UPHOLD THE SAME. 7. THE NEXT ISSUE IS WITH REGARD TO ADDITION OF RS . 4 85 602/- MADE BY THE AO ON ACCOUNT OF FICTITIOUS CREDITORS L IABILITY. THE AO ( ITA NO. 162/BLPR/2011& CO 18/BLPR/11 8 DOUBTED THAT CONFIRMATIONS OBTAINED BY THE APPELLAN T FROM THE SUNDRY CREDITORS FILED IN ASSESSMENT PROCEEDINGS BE FORE HIM. ACCORDINGLY THE LIABILITY SHOWN BY THE ASSESSEE UN DER THE HEAD SUNDRY CREDITORS WAS PRESUMED TO BE BOGUS LIABILIT Y AND AO MADE THE ADDITION. IN APPEAL CIT(A) GRANTED THE RELIEF TO THE ASSESSEE THE SAME HAS BEEN OPPOSED BEFORE US. LD. D.R SUPPO RTED THE ORDER OF THE AO. AFTER HEARING THE ARGUMENTS OF LD. D .R AND MATERIAL ON RECORD WE FIND THAT THE WRITTEN CONFIRMATION WAS FI LED BEFORE THE AO. THE CONTENTS WITH REGARD CONFIRMATION OF THE CREDI T IN QUESTION SHOULD HAVE BEEN DEMOLISHED BY AO WHICH IS MISSIN G IN THIS CASE. THE AO HAS BROUGHT ANY INCRIMINATING EVIDENCE TO P ROVE THIS FACT AGAINST THE ASSESSEE. THIS IS NOT JUSTIFIED SO TAK ING ALL THE FACTS AND CIRCUMSTANCES THE DELETION OF ADDITION MADE BY THE CIT(A) NEED NO INTERFERENCE AND ACCORDINGLY THE SAME IS UPHELD. 8. IN THE RESULT THE APPEAL OF THE REVENUE IS PART LY ALLOWED. CO NO.18/BLPR/2011 : 9. THE CROSS OBJECTION FIELD BY THE ASSESSEE IS SIM PLY IN SUPPORT OF THE ORDER OF CIT(A) ON ALL COUNTS WHICH IS DEALT BY US IN REVENUES APPEAL WHICH WILL TAKE CARE OF THE OBJECTIONS RA ISED ON ACCOUNT OF VARIOUS ADDITIONS. THE CROSS OBJECTION IS DISPOSED OF ACCORDINGLY. 10. IN THE RESULT THE APPEAL OF THE REVENUE IS PA RTLY ALLOWED AND THAT OF CROSS OBJECTION IS DISPOSED OFF AS INDICATE D ABOVE. ( ITA NO. 162/BLPR/2011& CO 18/BLPR/11 9 ORDER PRONOUNCED IN THE OPEN COURT ON THE 10 TH DAY OF FEB. 2012. SD/- SD/- (R.K.PANDA) (SHAI LENDRA KUMAR YADAV)) ACCOUNTANT MEMBER JUDICIA L MEMBER BILASPUR DATED 10 TH FEB. 2012 COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT CITY CONCERNED 4.THE CIT(A)- CONCERNED 5. THE D.R BIL ASPUR BENCH. (TRUE COPY) BY ORDER SR. PRIVATE SECRETARY ITAT BILASPUR BENC H BILASPUR VM. ( ITA NO. 162/BLPR/2011& CO 18/BLPR/11 10 DETAILS DATE INITIALS DESIGNATION 1 DRAFT DICTATED ON 8/2/2012 SR.PS/PS 2 DRAFT PLACED BEFORE AUTHOR 9/2/2012 SR.PS/PS 3 DRAFT PROPOSED & PLACED BEFORE THE SECOND MEMBER JM/AM 4 DRAFT DISCUSSED/APPROVED BY SECOND MEMBER JM/AM 5. APPROVED DRAFT COMES TO THE SR.PS/PS SR.PS/PS 6. KEPT FOR PRONOUNCEMENT ON SR.PS/PS 7. FILE SENT TO THE BENCH CLERK SR.PS/PS 8 DATE ON WHICH THE FILE GOES TO THE HEAD CLERK 9 DATE OF DISPATCH OF ORDER