DCIT, Thanjavur v. M/s. Vijayalakshmi Wines, Karaikal

ITA 1247/CHNY/2010 | 2002-2003
Pronouncement Date: 28-07-2011 | Result: Allowed

Appeal Details

RSA Number 124721714 RSA 2010
Assessee PAN MARCH2002O
Bench Chennai
Appeal Number ITA 1247/CHNY/2010
Duration Of Justice 11 month(s) 25 day(s)
Appellant DCIT, Thanjavur
Respondent M/s. Vijayalakshmi Wines, Karaikal
Appeal Type Income Tax Appeal
Pronouncement Date 28-07-2011
Appeal Filed By Department
Order Result Allowed
Bench Allotted A
Tribunal Order Date 23-08-2011
Date Of Final Hearing 28-07-2011
Next Hearing Date 28-07-2011
Assessment Year 2002-2003
Appeal Filed On 03-08-2010
Judgment Text
IN THE INCOME-TAX APPELLATE TRIBUNAL CHENNAI A BENCH CHENNAI. BEFORE SHRI.U.B.S. BEDI J.M. & SHRI. N.S. SAINI A .M. I.T.A. NO. 1247/MDS/2010 ASSESSMENT YEAR: 2002-03 THE DEPUTY COMMISSIONER OF INCOME TAX CIRCLE I THANJAVUR. VS. M/S. VIJAYALAKSHMI WINES NO.2 VEERASAMY NAICKER STREET KARAIKKAL. [PAN:AAEFV3644M] (APPELLANT) (RESPONDENT) C.O.NO.93/MDS/2010 [I.T.A. NO. 1247/MDS/2010] ASSESSMENT YEAR: 2002-03 M/S. VIJAYALAKSHMI WINES NO.2 VEERASAMY NAICKER STREET KARAIKKAL. VS. THE DEPUTY COMMISSIONER OF INCOME TAX CIRCLE I THANJAVUR. (APPELLANT) (RESPONDENT) REVENUE BY : SHRI SHAJI P. JACOB SR. DR ASSESSEE BY : SHRI CKN RAVI SHANKARA PRABHU CA ORDER PER U.B.S. BEDI J.M. THIS APPEAL OF THE REVENUE AND CO OF THE ASSESSEE I S DIRECTED AGAINST THE ORDER PASSED BY THE LD. CIT(A) TIRUCHIRAPALLI DATE D 03.05.2010 RELEVANT TO THE ASSESSMENT YEAR 2002-03. 2. THE CO OF THE ASSESSEE WAS FOUND TO BE FILED LA TE FOR WHICH DEFECT MEMO STANDS ALREADY ISSUED. THE LD. COUNSEL FOR THE ASSE SSEE HAS SOUGHT TO WITHDRAW THE CO AS NOT PRESSED AND TO SUCH MOVE OF THE LD. C OUNSEL FOR THE ASSESSEE THE I II I.T.A. NO. .T.A. NO. .T.A. NO. .T.A. NO.12 1212 1247 4747 47 & & & & C.O.NO. C.O.NO. C.O.NO. C.O.NO. 9 99 93 33 3/MDS/1 /MDS/1 /MDS/1 /MDS/10 00 0 2 LD. DR DID NOT OBJECT. THEREFORE THE CO OF THE ASS ESSEE IS DISMISSED AS WITHDRAWN. 3. AS REGARDS APPEAL OF THE REVENUE IS CONCERNED FOLLOWING 3 EFFECTIVE GROUNDS HAVE BEEN RAISED FROM GROUND NO. 2 TO 4 AND ARE REPRODUCED AS UNDER: 2. THE LD. CIT(A) HAS ERRED IN DELETING THE ADDIT ION OF UNDISCLOSED TURNOVER AND FAILED TO NOTE THAT THE UNDISCLOSED TU RNOVER REPRESENTS THE UNACCOUNTED EXPENDITURE IN STOCK SOLD BY THE ASSESS EE FIRM APART FROM THE PROFITS ARISING FROM SALE OF SUCH UNACCOUNTED STOCK . 3. THE LD. CIT(A) HAS FAILED TO NOTE THAT THE ADDI TION OF ` .21 90 631/- BY THE AO REPRESENTS UNACCOUNTED PURCHASES AND GROSS P ROFIT ON SALE OF SUCH UNACCOUNTED STOCK ONLY. THE CIT(A) ERRED IN RESTRIC TING ADDITION OF ` .57 833/- AND DELETED ENTIRE ADDITION U/S 69C OF TH E ACT IN RESPECT OF UNEXPLAINED EXPENDITURE IN PURCHASE OF STOCK. 4. THE CIT(A) HAS ERRONEOUSLY WORKED OUT NET PROFI T AGAINST THE PRINCIPLES OF ACCOUNTANCY. CIT(A) FAILED TO NOTICE THAT ALL EXPENSES HAVE BEEN ACCOUNTED FOR WHILE WORKING OUT NET PROFIT ALR EADY OFFERED FOR TAX. CONSEQUENTLY THE GROSS PROFIT EARNED ON UNACCOUNTE D SALE WILL ALSO BE NET PROFIT. THE CIT(A) HAS ERRED IN SUSTAINING ADDITION OF NET PROFIT WORKED OUT @ 2.64%. THE CIT(A) OUGHT TO HAVE CONFIRMED ADDITION OF ` .1 53 344/- BEING GROSS PROFIT @ 7% ON UNACCOUNTED SALE OF ` .21 90 631/- AND ALSO ADDITION OF ` .20 37 287/- TOWARDS UNEXPLAINED EXPENDITURE FOR PU RCHASE OF STOCK SOLD OUTSIDE THE BOOKS. 4. FACTS INDICATE THAT RETURN OF INCOME OF THE ASS ESSEE FIRM FOR THE A.Y. 2002- 03 WAS FILED WITH A TOTAL INCOME OF ` .83 906/-. THE ASSESSMENT WAS COMPLETED ON 29.10.2004 WITH FOLLOWING ADDITIONS WITH THE CONSEN T OF THE ASSESSEE: I) LOW GP ` .1 60 000/- II) SALES PROMOTION EXPENSES ` .1 00 000/- III) SALARY EXPENSES ` . 50 000/- IV) INTEREST ON DEBIT BALANCE ` . 75 042/- TOTAL ` .1 85 042/- 4.1 AS PER SALES TAX DEPARTMENT ASSESSMENT ORDER D ATED 17.02.2003 RELEVANT FOR THE F.Y. 2001-02 THE TOTAL TURNOVER OF THE ASS ESSEE FIRM HAS BEEN REPORTED AND I II I.T.A. NO. .T.A. NO. .T.A. NO. .T.A. NO.12 1212 1247 4747 47 & & & & C.O.NO. C.O.NO. C.O.NO. C.O.NO. 9 99 93 33 3/MDS/1 /MDS/1 /MDS/1 /MDS/10 00 0 3 ASSESSED AT ` .L 99 23 411/-. FURTHER IT WAS NOTICED THAT TURNOV ER OF ` .L 77 32 780/- ADMITTED BY THE ASSESSEE FIRM FOR THE RETURN FILED WAS PERTAINING TO THE PERIOD JULY 2001 TO MARCH 2002 ONLY. THEREFORE THE DIFFERENCE IN TURNOVER ` .21 90 631/- WAS PERTAINING TO THE SALES FOR THE PERIOD FROM APRIL 2 001 TO JUNE 2001. IN ORDER TO ASSESS THE DIFFERENCE AMOUNT OF ` .21 90 631/- BEING THE INCOME TREATED AS SALES SUPPRESSION WHICH HAS ESCAPED ASSESSMENT A NOTICE U/S 148 WAS ISSUED ON 25.3.2008. IN RESPONSE TO THE ABOVE THE ASSESSEE S UBMITTED ON 03.04.2008 THAT RETURN FILED EARLIER MAY BE ADMITTED TO HAVE BEEN F ILED IN RESPONSE TO NOTICE U/S 148. 4.2. DURING THE COURSE OF ASSESSMENT THE ASSESSEE FIRM SUBMITTED THAT ENTIRE DIFFERENCE IN SALE PROCEEDS MUST NOT BE ADDED AS IN COME OF THE FIRM BUT THE ADDITION COULD BE ONLY OF THE PROFITS EMBEDDED IN S ALES. THE SALES ONLY REPRESENTED THE PRICE RECEIVED BY THE SELLER OF THE GOODS ONLY THE REALIZATION OF EXCESS OVER THE COST INCURRED COULD FORM PART OF THE PROFIT INCLUDE D IN THE CONSIDERATION FOR THE SALES AND THE FOLLOWING JUDICIAL PRONOUNCEMENTS WERE CITE D BY THE ASSESSEE'S AUTHORIZED REPRESENTATIVE TO SUPPORT THE STAND: I) CIT VS PRESIDENT INDUSTRIES 258 ITR 654(GUJ) II) CIT VS BALCHAND AJIT KUMAR 263 ITR 610 (MP) III) MAN MOHAN SADANI VS CIT (2008) 304 ITR 52(MP) 4.3 THE CONTENTION OF THE ASSESSEE FIRM WAS NOT ACC EPTABLE TO THE ASSESSING OFFICER WHO WAS OF THE OPINION THAT SINCE THE TURN OVER DETERMINED BY THE SALES-TAX AUTHORITIES HAS BEEN TAKEN INTO ACCOUNT. DURING THE COURSE OF HEARING THE ASSESSEE DID NOT PRODUCE ANY DETAILS OF PURCHASE AN D ANY EXPENDITURE ACCOUNT SO THE ASSESSING OFFICER TREATED THE DIFFERENCE IN SAL ES ` .21 19 631/- AS INCOME TO BE I II I.T.A. NO. .T.A. NO. .T.A. NO. .T.A. NO.12 1212 1247 4747 47 & & & & C.O.NO. C.O.NO. C.O.NO. C.O.NO. 9 99 93 33 3/MDS/1 /MDS/1 /MDS/1 /MDS/10 00 0 4 ADDED. THE OTHER ADDITIONS MADE BY THE ASSESSING OF FICER AS MENTIONED APART FROM THE ABOVE WERE ALSO ADOPTED ONCE AGAIN IN THE ORDER OF RE-ASSESSMENT. 5. THE ASSESSEE TOOK UP THE MATTER IN APPEAL AND I T WAS SUBMITTED THAT THE ASSESSEE BEING A LICENSE HOLDER IN IMFL PRODUCTS FO R THE UNION TERRITORY OF PONDICHERRY COULD NOT MAKE ANY PURCHASE FROM OUTSID E WITHOUT GETTING NECESSARY PERMIT FROM THE EXCISE DEPARTMENT. THE BUSINESS OF THE ASSESSEE FIRM WAS CARRIED OUT BY THE OLD PARTNERS DURING THE PERIOD FROM APRI L 2001 TO JUNE 2001. THE ASSESSING OFFICER COULD NOT HAVE CONSIDERED THE STO CK ON HAND AS ON 01.04.2001 PERMITTED PURCHASE AND OTHER EXPENDITURE INCURRED D URING THIS PERIOD. THE ASSESSING OFFICER HAS TREATED THE DIFFERENCE IN SAL ES AMOUNT AS INCOME SUPPRESSED. THE ASSESSEE FIRM HAS ALSO SUBMITTED TH AT THE ERSTWHILE PARTNERS OF THE FIRM HAD FILED THE RETURN OF INCOME FOR THE A.Y . 2002-03 FOR THE PERIOD FROM APRIL 2001 TO JUNE 2001 BEFORE THE INCOME-TAX OFFICER WA RD 1 (2) PONDICHERRY(GINO.4447V). ` .23 09 972/- WAS SHOWN AS THE TURNOVER FROM APRIL 2001 TO JUNE 2001 IN THE FINANCIAL STATEMENT FILED ALONG WITH THE RETURN OF INCOME. THE TURNOVER FOR REMAINING PERIOD FROM JULY 2001 TO MARCH 2002 ` .L 77 32 780/- WAS ALSO SHOWN IN THE FINANCIAL STATEMENT FILED BY THE ASSESSEE FIRM ALONG WITH THE RETURN OF INCOME BEFORE THE ASSESSING OFFICER WARD 1 (2) NAGAPATTINAM AND THE TURNOVER REPORTED UPON IS MORE THAN WHAT IS SHOWN AS PER SALES-TAX ASSESSMENT ORDER. THE ASSESSING OFFICER HAD ERRED IN MAKING TH E ADDITION OF TURNOVER OF ` .21 90 6311- AS INCOME OF THE FIRM. EVEN THOUGH TH E SAME AMOUNT WAS INCLUDED IN THE RETURN OF INCOME FILED BY THE OLD PARTNERS F OR THE PERIOD FROM APRIL 2001 TO JUNE 2001 THE ASSESSEE CONTENDED THAT THE SAME TUR NOVER WAS TAXED ONCE AGAIN I II I.T.A. NO. .T.A. NO. .T.A. NO. .T.A. NO.12 1212 1247 4747 47 & & & & C.O.NO. C.O.NO. C.O.NO. C.O.NO. 9 99 93 33 3/MDS/1 /MDS/1 /MDS/1 /MDS/10 00 0 5 BY THE ASSESSING OFFICER WHICH IS NOT JUSTIFIED. T HE ASSESSEE ALSO FILED COPIES OF FORM 20 RETURN OF INCOME FINANCIAL STATEMENT AND COMPUTATION STATEMENT FOR THE A.Y. 2002-03 AS FILED BY THE OLD PARTNERS BEFORE TH E ASSESSING OFFICER [INCOME-TAX OFFICER WARD 1(1) NAGAPATTINAM] DATED 30.10.2002 IN SUPPORT OF THE ABOVE CONTENTION. 6. THE LD. CIT(A) WHILE CONSIDERING AND ACCEPTING THE PLEA OF THE ASSESSEE HAS CONCLUDED TO SUSTAIN THE ADDITION TO THE EXTENT OF ` .57 833/- INSTEAD OF DIFFERENCE IN TURNOVER AS PER THE ASSESSING OFFICER AT ` .21 90 631/- BY APPLYING NP RATE OF 2.64% AND DELETED THE BALANCE ADDITION. 7. AGGRIEVED BY THE SAID ORDER THE DEPARTMENT HAS COME UP IN APPEAL AND WHILE RELYING UPON THE ORDER OF THE ASSESSING OFFIC ER THE LD. DR SUBMITTED THAT A CLEAR CUT DIFFERENCE IN THE SALES TURNOVER DECLARED BEFORE SALES TAX AUTHORITIES AND IN THE ACCOUNT FILED BEFORE THE INCOME TAX DEPARTME NT BEING ` .21 90 631/- AND ALL THE EXPENSES IN RELATION TO SUCH UNDISCLOSED TRANSA CTION MIGHT HAVE BEEN AS PER ACCOUNTS SUBMITTED. SO THE ENTIRE DIFFERENCE IN AM OUNTS IN THE SALES MADE AND THE SALES DISCLOSED IS REQUIRED TO BE ADDED WHICH HAS CORRECTLY BEEN ADDED BY THE ASSESSING OFFICER AND THE LD. CIT(A) IS NOT JUSTIFI ED IN JUST RESTRICTING THE ADDITION TO ` .57 833/-. THE ASSESSEE DURING THE ASSESSMENT PROC EEDINGS WAS ISSUED SPECIFIC NOTICE IN THIS REGARD BY THE ASSESSING OFFICER ON 0 4.05.2006 AND THERE IS A SALES TAX ORDER PASSED IN THIS CASE ON 17.02.2003 IN WHIC H SECOND SALE OF IMFL DECLARED WAS TO THE EXTENT OF ` .1 99 23 411/- (COPY OF THE SAID NOTICE AND SALES T AX ORDER HAS BEEN PLACED ON RECORD). WHEREAS THE ASSESSEE H AS DISCLOSED TOTAL SALES AT ` .1 77 32 780/- AS ADMITTED BY THE ASSESSEE IN THE I NCOME TAX RETURN FILED FOR THE I II I.T.A. NO. .T.A. NO. .T.A. NO. .T.A. NO.12 1212 1247 4747 47 & & & & C.O.NO. C.O.NO. C.O.NO. C.O.NO. 9 99 93 33 3/MDS/1 /MDS/1 /MDS/1 /MDS/10 00 0 6 PERIOD UNDER CONSIDERATION. THEREFORE THERE IS A C LEAR DIFFERENCE OF ` .21 90 631/- AND IN THE ABSENCE OF ANY EXPENDITURE HAVING BEEN I NCURRED ON SUCH SUPPRESSED SALES THE ENTIRE AMOUNT IS LIABLE TO BE ADDED. THE REFORE IT WAS PRAYED FOR SETTING ASIDE THE ORDER OF THE LD. CIT(A) AND RESTORING THA T OF THE ASSESSING OFFICER. 8. THE LD. COUNSEL FOR THE ASSESSEE WHILE RELYING UPON THE ORDER OF THE LD. CIT(A) AND ARGUMENTS ADVANCED BEFORE THE FIRST APPE LLATE AUTHORITY HAS PLEADED THAT THERE CANNOT BE SUPPRESSION OF ANY AMOUNT OF S ALE BECAUSE EVERY CONSIGNMENT IS REQUIRED PRIOR PERMIT OF EXCISE DEPA RTMENT AND EXCISE DEPARTMENT RECORD IS VERY WELL THERE. IN THIS CASE CERTAIN TR ANSACTIONS WERE DONE BY THE ERSTWHILE PARTNERS WHICH HAD A DIFFERENT CONSTITUT ION AND ERSTWHILE FIRM HAS FILED SEPARATE RETURN FROM 01.04.2001 TO 30.06.2001 WHIC H FACT WAS DULY DEMONSTRATED BEFORE THE LD. CIT(A) AND INSPITE OF THAT ADDITION HAS BEEN MADE BY RESTRICTING NP RATE AT 2.64% WHICH IS ALSO NOT JUSTIFIED BUT SIN CE THE ASSESSEE HAS NOT CAME UP IN APPEAL THEREFORE IN CASE THE ORDER OF THE LD. CIT(A) IS UPHELD IT HAS NO OBJECTION BUT THE FACT OF THE MATTER IS THAT THE P ART OF THE TURNOVER IS DISCLOSED IN THE SEPARATE RETURN FILED IF CONSIDERED THERE WIL L BE NO DIFFERENCE IN THE TURNOVER DECLARED BEFORE THE INCOME TAX AUTHORITIES AND BEFO RE SALES TAX AUTHORITIES. SINCE THIS VITAL ASPECT HAS NOT BEEN LOOKED INTO THEREFO RE IN THE INTEREST OF JUSTICE THE MATTER CAN GO BACK TO THE FILE OF THE ASSESSING OFF ICER FOR RECONSIDERATION OF THE ISSUE AFRESH WHERE THE ASSESSEE SHOULD BE GIVEN DU E OPPORTUNITY TO LEAD NECESSARY EVIDENCES TO BRING THE ACTUAL FACTS OF TH E CASE BY PRODUCING COPY OF THE RETURN FILED UPTO JUNE 2001 WITH DIFFERENT ASSESSI NG AUTHORITY AND OTHER RELEVANT MATERIAL FOR THEIR VERIFICATION AT ASSESSMENT STAGE . I II I.T.A. NO. .T.A. NO. .T.A. NO. .T.A. NO.12 1212 1247 4747 47 & & & & C.O.NO. C.O.NO. C.O.NO. C.O.NO. 9 99 93 33 3/MDS/1 /MDS/1 /MDS/1 /MDS/10 00 0 7 9. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND PE RUSED THE RECORD AND FIND THAT THE ASSESSEE HAS CAME OUT WITH A FRESH MATERIA L BEFORE THE LD. CIT(A) WHO HAS ALSO RECORDED THIS FACT OF FILING OF THE 3 MONT HS RETURN AS STATED BY THE ASSESSEE IN ITS ARGUMENTS. SINCE THIS ISSUE HAS NOT BEEN LOOKED INTO PROPERLY AND APPROPRIATELY BY THE ASSESSING OFFICER AND THE LD. CIT(A) HAS SIMPLY APPLIED NP RATE ON THE DIFFERENCES IN TURNOVER DISCLOSED BEFOR E THE SALES TAX AUTHORITIES AND IN THE INCOME TAX RETURN. THEREFORE KEEPING IN VIEW T HE ENTIRETY OF FACTS CIRCUMSTANCES AND MATERIAL ON RECORD WE ARE OF THE CONSIDERED VIEW THAT THIS WOULD MEET THE ENDS OF JUSTICE IN CASE THE ORDERS O F THE AUTHORITIES BELOW IN RELATION TO THE ISSUE RAISED IN THE APPEAL OF THE R EVENUE IS SET ASIDE AND MATTER IS RESTORED BACK ON THE FILE OF THE ASSESSING OFFICER WITH THE DIRECTION TO REDECIDE THE ISSUE AFRESH AFTER OBTAINING NECESSARY DETAILS FROM THE ASSESSEE AND GIVING DUE OPPORTUNITY TO THE ASSESSEE. WE HOLD AND DIRECT ACC ORDINGLY. 10. AS A RESULT THE APPEAL OF THE DEPARTMENT IS A CCEPTED FOR STATISTICAL PURPOSE WHEREAS THE CO OF THE ASSESSEE GETS DISMISSED. ORDER PRONOUNCED ON 12.08.2011 SD/- SD/- (N.S. SAINI) ACCOUNTANT MEMBER (U.B.S. BEDI) JUDICIAL MEMBER CHENNAI DATED THE 12.08.2011 VM/- TO: THE ASSESSEE//A.O./CIT(A)/CIT/D.R.