LAXMI AUTO PLAZA P. LTD, MUMBAI v. ITO WD 9(20(2), MUMBAI

CO 211/MUM/2009 | 2005-2006
Pronouncement Date: 30-09-2010 | Result: Dismissed

Appeal Details

RSA Number 21119923 RSA 2009
Assessee PAN AAACL3678A
Bench Mumbai
Appeal Number CO 211/MUM/2009
Duration Of Justice 11 month(s) 3 day(s)
Appellant LAXMI AUTO PLAZA P. LTD, MUMBAI
Respondent ITO WD 9(20(2), MUMBAI
Appeal Type Cross Objection
Pronouncement Date 30-09-2010
Appeal Filed By Assessee
Order Result Dismissed
Bench Allotted Not Allotted
Tribunal Order Date 23-09-2010
Assessment Year 2005-2006
Appeal Filed On 27-10-2009
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH A MUMBAI BEFORE SHRI D. MANMOHAN VP AND SHRI T.R. SOOD A M I.T.A. NO.5882/MUM/2008 (ASST. YEAR: 2005-06) INCOME-TAX OFFICER-9(2)-2 R.NO. 225 2 ND FLOOR M.K. ROAD MUMBAI 400 020. VS. M/S. LAXMI AUTO PLAZA (P) LTD. 102 SURAJ BUILDING GAJDHAR BANDH RD. SANTACRUZ (W) MUMBAI 400 052. PAN: AAACL 3678 A (APPELLANT) (RESPONDENT) C.O. NO. 211/MUM/2009 I.T.A. NO.5882/MUM/2008 (ASST.YEAR: 2005-06) M/S. LAXMI AUTO PLAZA (P) LTD. 102 SURAJ BUILDING GAJDHAR BANDH RD. SANTACRUZ (W) MUMBAI 400 052. PAN: AAACL 3678 A VS. INCOME-TAX OFFICER-9(2)-2 R.NO. 225 2 ND FLOOR M.K. ROAD MUMBAI 400 020. (CROSS OBJECTOR) (APPELLANT IN A PPEAL) REVENUE BY : SHRI SHRAVAN KUMAR ASSESSEE BY : SHRI PRAKASH JHUNJHUNWALA ORDER PER T.R. SOOD (AM) : THE APPEAL BY THE REVENUE AND THE CROSS OBJECTION BY THE ASSESSEE ARE DIRECTED AGAINST THE ORDER OF THE LEARNED COMMISSIO NER OF INCOME-TAX (APPEALS)- IX MUMBAI DATED 21.07.2008 FOR THE ASSESSMENT YEAR 2005-06. ITA NO. 5882/MUM/2008: 2. IN THE APPEAL OF THE REVENUE THE FOLLOWING GROUN DS HAVE BEEN RAISED : 1. THE LEARNED CIT(A) HAS ERRED ON FACTS AND IN LAW I N DELETING THE ADDITION OF RS. 1 14 52 692/- ON ACCOUNT OF UNEXPLA INED CASH CREDIT U/S.668 OF THE I.T.ACT 1961 MADE BY THE ASSESSING OFFICER WITHOUT APPRECIATING THAT DURING THE COURSE OF ASSESSMENT P ROCEEDINGS THE ASSESSEE DID NOT PRODUCE ANY EVIDENCE IN SUPPORT OF THE GENUINENESS OF THE CASH CREDIT WITH REFERENCE TO THE IDENTITY OF T HE CREDITORS THEIR CAPACITY AND GENUINENESS OF THE TRANSACTIONS. THE A SSESSEE EVEN FAILED TO FILE THE BASIC DETAILS OF THEIR ACCOUNTS AND ADD RESSES AND ALSO FAILED TO ESTABLISH THE NATURE OF CREDIT BALANCES. 2. THE LD.CIT(A) HAS ERRED ON FACTS AND IN LAW IN ADMITTING THE CONTENTION OF THE ASSESSEE THAT THE ENTIRE BOOKS OF ACCOUNT C OMPUTER SYSTEM BILLS ITA NO. 5882/M/08 & CO NO. 211/M/2009 M/S.LAXMI AUTO PLAZA(P) LTD. 2 VOUCHERS WERE DESTROYED IN FLOOD ON 26/7/2005 WITHO UT APPRECIATING THAT AT NO STAGE OF ASSESSMENT PROCEEDINGS STARTING FROM 22/2/2007 THE ASSESSEE MADE PLEA OF DESTRUCTION OF RECORDS DUE TO NATURAL CALAMITY AND THAT THE AUDITORS REPORT DATED 2/9/2005 DOES NOT M ENTION THAT THE BOOKS OF ACCOUNT ETC. WERE NOT AVAILABLE FOR AUDIT AS THEY WERE DESTROYED IN FLOOD. FURTHER THE TAX AUDIT REPORT D ATED 29.10.2005 (IN FORM NO.3CD) IS STATED TO BE BASED ON THE ASSESSEE S BOOKS OF ACCOUNT WHICH CONTRADICTS THE ASSESSEES CLAIM THAT THE BOO KS OF ACCOUNT WERE DESTROYED IN FLOOD IN JULY 2005. 3. THE LD. CIT(A) HAS ERRED ON FACTS AND IN LAW IN DELETING THE ADDITION OF RS. 10 20 250/- TOWARDS THE INFLATION OF PURCHASES OF SPARE PARTS AND ACCESSORIES FROM M/S. LAXMI AUTO CENTRE BHIWANDI WITHOUT APPRECIATING THAT NO EVIDENCE WHATSOEVER WAS FILED BY THE ASSESS EE IN SUPPORT OF THE GENUINENESS OF THE SAID PURCHASE. 4. THE LD.CIT(A) HAS ERRED ON THE FACTS AND IN LAW IN DELETING THE ADDITION OF RS.4 07 015/- (BEING 20% OF DISCLOSED SALES OF RS. 20 35 575/-) ON ACCOUNT OF SUPPRESSED SALE OF ACCESSORIES WITHOUT A PPRECIATING THAT NO SALE OF ACCESSORIES WAS SHOWN ALONGWITH SALE OF TWO /THREE WHEELERS SOLD AND THAT NO DETAILS OF SALES MADE TO VARIOUS PARTIE S WERE FILED INSPITE OF REPEATED REQUESTS OF THE ASSESSING OFFICER. 5. THE LD. CIT(A) HAS ERRED ON FACTS A ND IN LAW IN DELETING THE DISALLOWANCE OF EXPENSES OF RS.5 33 559/- (BEING 20% OF TOTAL CL AIM OF RS.38 43 777/- ) WITHOUT APPRECIATING THAT THE ASSESSEE FAILED TO PRODUCE ANY EVIDENCE IN THE FORM OF BILLS/VOUCHERS IN SUPPORT OF THE CLA IM OF THE EXPENSES BEFORE THE ASSESSING OFFICER. 6. THE LD. CIT(A) HAS ERRED ON FACTS AN D IN LAW IN HOLDING THAT THE NET PROFIT ESTIMATED BY HER @ 10% OF THE DISCLOSED TURN OVER WOULD MEET THE END OF JUSTICE AND THERE WOULD NOT BE ANY FURTHER N ECESSITY TO MAKE ADDITIONS OR DISALLOWANCES WITHOUT APPRECIATING TH AT THE TURNOVER SHOWN BY THE ASSESSEE WAS NOT SUPPORTED BY BOOKS OF ACCO UNT OR OTHER EVIDENCES AND THAT THE ADDITION MADE ON ACCOUNT OF UNEXPLAINED CASH CREDIT U/S.68 OF THE I.T. ACT 1961 CANNOT BE TREAT ED AS COVERED BY ESTIMATED ADDITION TO THE NET PROFIT. 7. THE LD. CIT(A) HAS ERRED ON FACTS AND IN LAW IN HOLDING THAT THE ASSESSING OFFICER HAS ASSESSED THE INCOME WHICH WAS NOT IN TANDEM WITH A REASONABLE ESTIMATE THAT COULD BE MADE IN ASSESSE ES CASE. WITHOUT APPRECIATING THAT THE ASSESSING OFFICER HAS MADE TH E ASSESSMENT ON THE BASIS OF MATERIAL AVAILABLE ON RECORD AND ALSO AFTE R AFFORDING THE ASSESSEE AMPLE OPPORTUNITY OF BEING HEARD. FROM THE FACTS OF THE CASE IT IS AMPLY CLEAR THAT THE ASSESSING OFFICER HAD MADE HONEST ATTEMPT TO ASSESS INCOME ON THE FACTS AND CIRCUMSTANCES OF THE CASE. 3. AFTER HEARING BOTH THE PARTIES WE FIND THAT DUR ING THE ASSESSMENT PROCEEDINGS THE ASSESSING OFFICER NOTICED CERTAIN DISCREPANCIES IN THE DETAILS FILED BY THE ASSESSEE. HE ALSO NOTICED THAT CONFIRMATIONS WERE NOT FILED IN RESPECT OF SUNDRY CREDITORS. HE ALSO NOTICED THAT IT WAS STAT ED IN THE BALANCE SHEET THAT CREDITORS WERE LESS THAN SIX MONTHS BUT THEN HOW TH E OUTSTANDING BALANCE COULD BE MORE THAN THE PURCHASES EFFECTED DURING THE YEAR F OR WHICH THE FOLLOWING DETAILS HAVE BEEN GIVEN: ITA NO. 5882/M/08 & CO NO. 211/M/2009 M/S.LAXMI AUTO PLAZA(P) LTD. 3 S.NO. NAME OF THE PURCHASE PURCHASES EFFECTED DURING F.Y.2004-05 CREDITORS SHOWN OUTSTANDING. 1. RAJAPAUR SAHAKAR AUTO RS. 8 51 500/- RS.9 6 4 500/- 2. S.C. MOTORS RS.1 36 765/- RS.4 88 946/- 3. OM SAI AUTOMOBILES RS.2 20 498/- RS.7 63 94 6/- IT WAS FURTHER NOTICED THAT THE ASSESSEE HAD SHOWN THE SALES ONLY TO THREE PARTIES AND THE ASSESSING OFFICER ENQUIRED THAT WHY THE ACC ESSORIES WERE NOT SOLD TO OTHER PARTIES AS NORMALLY ACCESSORIES WOULD BE SOLD WIT H TWO WHEELERS AND THEREFORE HE MADE ADDITION AMOUNTING TO RS. 4 07 015/- ON ACC OUNT OF SUPPRESSED SALES OF ACCESSORIES. 4. IT WAS ALSO NOTICED THAT BILLS FOR PURCHASE OF A CCESSORIES WERE NOT PRODUCED AND STRANGELY EVEN THE ACCESSORIES PROCURE D ON 31.3.2005 WERE SOLD ON THE SAME DAY. ACCORDINGLY HE WAS OF THE VIEW THAT THE ASSESSEE HAD INFLATED THE PURCHASE OF ACCESSORIES AND ACCORDINGLY AN ADDITIO N OF RS. 10 02 250/- WAS MADE ON ACCOUNT OF INFLATION OF PURCHASES. FURTHER AN ADDITION OF RS. 5 43 559/- WAS MADE ON ACCOUNT OF 20% OF VARIOUS EXPENSES BECAUSE THE SAME WERE NOT SUPPORTED BY ANY VOUCHERS. 5. BEFORE THE LEARNED CIT(A) IT WAS MAINLY SUBMITT ED THAT THE BOOKS HAVE BEEN LOST FROM THE FLOODS IN MUMBAI THEREFORE THE SAME WERE NOT FILED. 6. LEARNED CIT(A) CONSIDERED ALL THE ASPECTS OF THE CASE AND OBSERVED THAT IT WAS KNOWN TO EVERYBODY THAT THERE WERE FLOODS IN MU MBAI AND THE ASSESSEE MIGHT HAVE SUFFERED LOSS OF BOOKS. HE ULTIMATELY CALCULA TED THE PROFIT AT 10% AT THE TOTAL TURNOVER. 7. BEFORE US THE LEARNED DEPARTMENTAL REPRESENTATIV E REFERRED TO PAGE 22 OF THE PAPER BOOK AND POINTED OUT THAT THE P&L ACCOUNT HAS BEEN SIGNED BY THE AUDITORS ON 2 ND SEPTEMBER 2005 WHEREAS THE FLOODS HAD OCCURRED IN MUMBAI ON 26 TH JULY 2005. THE AUDITORS MUST HAVE SIGNED THE BOO KS OF ACCOUNT ON THE BASIS OF BOOKS OF ACCOUNT AND THEREFORE THE ASSESSEE NOW CANNOT SAY THAT THE BOOKS HAVE BEEN LOST IN THE FLOODS WHEN THE SAME WERE PRO DUCED BEFORE THE AUDITORS ON 2 ND SEPTEMBER 2005. ITA NO. 5882/M/08 & CO NO. 211/M/2009 M/S.LAXMI AUTO PLAZA(P) LTD. 4 8. ON THE OTHER HAND THE LEARNED COUNSEL FOR THE A SSESSEE SUBMITTED THAT THE ACCOUNTS WERE SINGED ON 2.9.2005 BUT THE SAME W ERE PREPARED ON THE BASIS OF WHATEVER INFORMATION AND BOOKS WERE AVAILABLE WITH THE ASSESSEE. HE SUBMITTED THAT SOME DETAILS WERE DEFINITELY LOST IN THE FLOOD S AND EVEN A FIR WAS LODGED FOR WHICH A CERTIFICATE HAS BEEN ISSUED BY THE SANTACRU Z POLICE STATION COPY OF WHICH IS PLACED AT PAGES 8 TO 10 OF THE PAPER BOOK. AN A FFIDAVIT HAS ALSO BEEN FILED COPY OF WHICH IS AT PAGE 11 OF THE PAPER BOOK. HE ALSO T RIED TO JUSTIFY THAT THE ADDITION WAS UNCALLED FOR. 9. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS CAREFUL LY. WE FIND THAT NOW A COPY OF THE CERTIFICATE FROM THE POLICE AUTHORITIES HAS BEEN PLACED ON RECORD AND WHICH IS AVAILABLE AT PAGE 8 OF THE PAPER BOOK SHO WING THAT THE BOOKS OF ACCOUNT WERE DAMAGED. FURTHER WE FAIL TO UNDERSTAND THAT IF ALL THE BOOKS OF ACCOUNT WERE DAMAGED THEN HOW THE ACCOUNTS COULD BE AUDITED BY THE AUDITORS WHICH HAVE ALSO BEEN SIGNED BY THE DIRECTOR. THE SAME DIRECTOR I.E. SHRI SHARAD SHYAMLAL GUPTA WHO HAS SIGNED THE AFFIDAVIT SEEMS TO HAVE S IGNED THE AUDITED PROFIT & LOSS ACCOUNT AND STATEMENTS ALSO. HOWEVER AT THE SAME TIME IT IS POSSIBLE THAT SOME OF THE VOUCHERS AND SUBSIDIARY LEDGERS MIGHT HAVE B EEN LOST IN THE FLOODS. THEREFORE IN THE INTEREST OF JUSTICE WE SET ASIDE THE ORDER OF THE LEARNED CIT(A) AND REMIT THE MATTER BACK TO THE FILE OF THE A.O. W ITH DIRECTION TO RE-EXAMINE THE ISSUES. THE ASSESSEE IS ALSO DIRECTED TO FILE WHAT EVER DETAILS ARE AVAILABLE WITH IT. 10. IN THE RESULT THE APPEAL FILED BY THE REVENUE IS ALLOWED FOR STATISTICAL PURPOSES. C.O. NO.211/MUM/2009 : 11. IN THIS GROSS OBJECTION THE ASSESSEE HAS RAISE D THE FOLLOWING GROUNDS: 1. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN L AW LD. CIT(A) ERRED IN SUSTAINING THE ADDITION AT RS. 13 5 7 230/- BEING 10% OF GROSS TURNOVER ON IGNORING THE FACT THAT SUC H HIGH NET PROFIT MARGIN COULD NOT BE EARNED IN A TRADING BUSI NESS. 2. WITHOUT PREJUDICE TO THE ABOVE LD . CIT(A) OUGHT TO HAVE RESTRICTED THE ADDITION TO THE EXTENT OF PEAK OF CA SH CREDITS AT RS.7 07 776/-. ITA NO. 5882/M/08 & CO NO. 211/M/2009 M/S.LAXMI AUTO PLAZA(P) LTD. 5 12. SINCE THE APPEAL OF THE REVENUE HAS ALREADY BEE N REMITTED BACK TO THE A.O. BY US IN THE ABOVE NOTED ORDER THE CROSS OBJE CTIONS HAVE BECOME INFRUCTUOUS. THEREFORE THE SAME IS DISMISSED AS IN FRUCTUOUS. THE ORDER PRONOUNCED IN THE OPEN COURT ON THIS 30 TH DAY OF SEPTEMBER 2010. SD. SD. (D. MANMOHAN) (T. R. SOOD) VICE-PRESIDENT ACCOUNTANT MEMBER MUMBAI DATED THE 30 TH SEPTEMBER 2010. KN COPY TO: 1. THE ASSESSEE 2. THE REVENUE 3. THE CIT-IX MUMBAI 4. THE CIT(A)-IX MUMBAI 5. THE DR A BENCH MUMBAI BY ORDER /TRUE COPY/ ASST. REGISTRAR ITAT MUMBAI