ITO, Madurai v. Shri M.Sudhakar, Madurai

ITA 1493/CHNY/2010 | 2006-2007
Pronouncement Date: 22-07-2011 | Result: Dismissed

Appeal Details

RSA Number 149321714 RSA 2010
Assessee PAN AZEPS5931C
Bench Chennai
Appeal Number ITA 1493/CHNY/2010
Duration Of Justice 10 month(s) 9 day(s)
Appellant ITO, Madurai
Respondent Shri M.Sudhakar, Madurai
Appeal Type Income Tax Appeal
Pronouncement Date 22-07-2011
Appeal Filed By Department
Order Result Dismissed
Bench Allotted C
Tribunal Order Date 22-07-2011
Date Of Final Hearing 13-07-2011
Next Hearing Date 13-07-2011
Assessment Year 2006-2007
Appeal Filed On 13-09-2010
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL BENCH C CHENNAI (BEFORE SHRI U.B.S. BEDI JUDICIAL MEMBER AND SHRI ABRAHAM P. GEORGE ACCOUNTANT MEMBER) .. I.T.A. NO. 1493/MDS/2010 ASSESSMENT YEAR : 2006-07 THE INCOME TAX OFFICER WARD II(5) MADURAI. (APPELLANT) V. SHRI M. SUDHAKAR PROP: M/S SMP TRADERS TALLAKULAM MADURAI-625 002. PAN : AZEPS5931C (RESPONDENT) APPELLANT BY : SHRI CLEMENT RAMESH KUMAR JCIT RESPONDENT BY : SHRI G. BASKAR O R D E R PER ABRAHAM P. GEORGE ACCOUNTANT MEMBER : IN THIS APPEAL FILED BY THE REVENUE ITS GRIEVANCE IS THAT LD. CIT(APPEALS) DELETED AN ADDITION OF ` 25 01 999/- MADE BY THE A.O. FOR INFLATION OF PURCHASES. 2. SHORT FACTS APROPOS ARE THAT ASSESSEE PROPRIETO R OF A CONCERN TRADING IN RAW BLOCKS AND GRANITES HAD FILED A RET URN FOR THE IMPUGNED I.T.A. NO. 1493/MDS/10 2 ASSESSMENT YEAR ADMITTING A TOTAL INCOME OF ` 1 55 910/-. THE RETURN WAS FILED ALONG WITH AUDIT REPORT UNDER SECTION 44A B OF INCOME-TAX ACT 1961 (IN SHORT THE ACT). DURING SCRUTINY PR OCEEDINGS FROM THE BOOKS OF ACCOUNTS ASSESSING OFFICER NOTED THAT RAW GRANITE BLOCKS WERE PURCHASED BY THE ASSESSEE FROM THREE CONCERNS NAMELY M/S COROMANDEL AGENCIES M/S PALLAVA GRANITE INDUSTRIES AND M/S P.R. TRADERS. ASSESSEE WAS NOT HOLDING ANY OPENING OR C LOSING STOCK. IN OTHER WORDS ALL THE PURCHASES WERE SOLD IN THE SAM E YEAR ITSELF. PURCHASE MADE AS PER THE BOOKS OF THE ASSESSEE OF RAW GRANITES WAS FOR ` 73 72 817/- AND THE SALES WERE FOR ` 87 85 630/-. THE QUANTITY SOLD AS PER THE A.O. WAS ` 530.391 CBM. IN ORDER TO VERIFY CORRECTNESS OF THE PURCHASES ASSESSING OFFICER OBT AINED ACCOUNT COPIES OF THE ASSESSEE IN THE BOOKS OF THREE VENDOR S MENTIONED ABOVE. FROM SUCH DETAILS ASSESSING OFFICER NOTED THAT THE TOTAL SALES EFFECTED BY THE SAID CONCERNS TO THE ASSESSEE DURING THE RELEVANT PREVIOUS YEAR AS PER THE BOOKS WAS OF 397. 267 CBM FOR A VALUE OF ` 36 48 281/-. ASSESSEE WAS PUT ON NOTICE REGARDING THIS VARIATION. REPLY OF THE ASSESSEE WAS THAT WHAT WAS STATED IN THE BOOKS OF ACCOUNTS WERE CORRECT AND HE HAD NOTHING T O COMMENT ON I.T.A. NO. 1493/MDS/10 3 THE STATEMENT GIVEN BY THE SUPPLIERS. ASSESSING OF FICER CONSIDERED THE EXPLANATION IN THIS REGARD TO BE NOT SATISFACTO RY. HE THEREFORE REASONED THAT INFLATED PURCHASES WERE CLAIMED BY TH E ASSESSEE FOR THE DIFFERENCE OF 397.267 CBM SALES ACKNOWLEDGED BY THE VENDORS AS TO HAVE BEEN MADE TO THE ASSESSEE AND 530.391 CB M SALES EFFECTED BY THE ASSESSEE DURING THE RELEVANT PREVIO US YEAR. BASED ON THE QUANTITY AND VALUE OF SALES ACKNOWLEDGED BY THE VENDORS AS MENTIONED ABOVE WHICH AS AFORESAID CAME TO 397.2 67 CBM FOR ` 36 48 281/- THE A.O. CAME TO A CONCLUSION THAT A T OTAL COST OF 530.391 CBM SOLD BY THE ASSESSEE DURING THE RELEVAN T PREVIOUS YEAR WOULD BE ONLY ` 48 70 818/-. HENCE THE DIFFERENCE BETWEEN ` 73 72 817/- THE PURCHASE ACCOUNTED BY THE ASSESSEE AND ` 48 70 818/- ESTIMATED BY THE A.O. BASED ON THE AVER AGE RATES OF THE VENDORS THE A.O. ARRIVED AT ` 25 01 999/- AS UNACCOUNTED PURCHASES. AN ADDITION OF LIKE AMOUNT WAS MADE TO THE TOTAL IN COME RETURNED BY THE ASSESSEE. 3. IN ITS APPEAL BEFORE LD. CIT(APPEALS) SUBMISSIO N OF THE ASSESSEE WAS THAT THE PURCHASES REFLECTED IN THE BO OKS WERE AS PER I.T.A. NO. 1493/MDS/10 4 THE ORIGINAL BILLS PRESENTED TO THE ASSESSING OFFIC ER FOR VERIFICATION. AS PER THE ASSESSEE ITS BOOKS COULD NOT HAVE BEEN IGNORED BASED ON THE COPIES OF ACCOUNTS GIVEN BY THE THREE VENDORS. ASSESSEE IT SEEMS ALSO FILED CERTAIN RECORDS FOR JUSTIFYING TH E RATE PER CBM AT WHICH IT HAD EFFECTED THE PURCHASES. ASSESSING OFF ICER WAS REQUIRED TO GIVE A REMAND REPORT BY LD. CIT(APPEALS). THE R EMAND REPORT GIVEN BY THE A.O. IS REPRODUCED AS UNDER:- THE CIT(A) HAS REQUESTED THE ASSESSING OFFICER TO FURNISH THE REMAND REPORT IN THE ABOVE CASE WITHIN 15 DAYS FROM DATE OF RECEIPT OF HIS LETTER CITED ABOVE. IN THIS REGARD I SUBMIT THAT I ASSUMED CHARGE IN T HIS WARD ONLY ON MARCH 30 2010. DUE TO THE PAUCITY OF T IME AND URGENCY INVOLVED IN FURNISHING THE REPORT I SUBMIT THAT I COULD NEITHER GIVE ANY FRESH OPPORTUNITY TO THE ASSESSEE NO R ALLOW THE ASSESSEE FOR PRODUCING THE ALLEGED SELLERS FOR CROS S EXAMINATION. RATHER I COULD ONLY GO THROUGH THE RECORDS AND FILE MY REPLY AS UNDER:- THE MAIN ISSUE INVOLVED IN THIS CASE IS ADDITION MA DE ON INFLATION IN PURCHASE. AS PER ENTRY IN THE ACCOU NTS THE ASSESSEE HAD PURCHASED GRANITES FOR RS.36 48 281/- IN QUANTITY TERMS 397.267 CBM WHILE SALES WERE EFFECTE D FOR RS.87 85 630/- IN QUANTITY TERMS IT COMES TO 53 0.391 CBM. IN THE ABSENCE OF CLOSING STOCK OR OPENING ST OCK THE QUANTITY OF GRANITES SOLD IS MORE THAN THE QUANTITY O F GRANITES PURCHASED. SINCE THERE WAS DIFFERENCE BET WEEN THE QUANTITY OF PURCHASE SHOWN BY THE ASSESSEE AND QUANTITY SUPPLIED BY SELLERS THE ASSESSING OFFICER HAS I.T.A. NO. 1493/MDS/10 5 GIVEN OPPORTUNITY TO THE ASSESSEE TO EXPLAIN THE DISCREPANCY PARTICULARLY WHEN ALL THE PURCHASES BEIN G CASH PURCHASES. FROM THE LETTER DATED 18.12.2008 FURNIS HED BY THE ASSESSEE IT IS EVIDENT THAT THE ASSESSEE WAS GI VEN ADEQUATE OPPORTUNITY TO RECONCILE THE DISCREPANCIES. SINCE THE ASSESSEE COULD NEITHER RECONCILE THE DISCREPANC IES NOR GIVEN ANY PROPER EXPLANATION THE ASSESSING OFFICER HAS CONCLUDED THAT THERE WAS PURCHASE INFLATION AND HE QUANTIFIED THE SAME AS RS.25 01 999 AND TREATED IT AS UNACCOUNTED PURCHASE. IN VIEW OF THE ABOVE I SUBMIT THAT THE INFERENCE DRAWN BY THE ASSESSING OFFICER ABOUT INFLATION IN PU RCHASE IS BASED ON CORRECT APPRECIATION OF FACTS AND EVIDE NCE ON RECORD. LD. CIT(APPEALS) AFTER GOING THROUGH THE SUBMISSIO NS OF THE ASSESSEE AND REMAND REPORT OF THE A.O. WAS OF THE OPINION THAT ASSESSING OFFICER HAD NOT MADE ANY EXAMINATION OF T HE RECONCILIATION OF THE PURCHASES MADE BY THE ASSESSEE. AS PER LD. CIT(APPEALS) ASSESSING OFFICER DID NOT VERIFY THE BILLS OR THE A CCOUNT COPIES APPEARING IN ASSESSEES BOOKS WITH THAT OF THE SUPP LIERS. ASSESSEE BEING IN POSSESSION OF THE BILLS FOR PUCHASES LD. CIT(APPEALS) HELD THAT UNLESS THE BILLS WERE PROVED TO BE FAKE ADDIT ION MADE BY THE A.O. COULD NOT BE SUSTAINED. HE THEREFORE DELETE D THE DISALLOWANCE. I.T.A. NO. 1493/MDS/10 6 4. NOW BEFORE US LEARNED D.R. SUBMITTED THAT A.O. HAD NOT BEEN GIVEN SUFFICIENT TIME FOR VERIFYING THE SUBMISSIONS OF THE ASSESSEE AND RECORD SUBMITTED BY THE ASSESSEE. AS PER LEARN ED D.R. ORIGINAL BILLS WERE NOT PRODUCED BY THE ASSESSEE BEFORE THE ASSESSING OFFICER. ASSESSEE COULD NOT GIVE ANY EXPLANATION F OR THE DIFFERENCE BETWEEN QUANTITY SHOWN AS PURCHASED FROM THE THREE VENDORS AND THE QUANTITIES WHICH WERE ACKNOWLEDGED BY THE THREE VENDORS TO HAVE BEEN SOLD TO THE ASSESSEE. THIS BEING SO AS PER L EARNED D.R. THE INFLATION OF THE PURCHASES WAS CLEAR AND THE A.O. W AS JUSTIFIED IN MAKING THE ADDITION. LEARNED D.R. ALSO SUBMITTED T HAT THE ASSESSING OFFICER SHOULD BE GIVEN A PROPER CHANCE TO VERIFY T HE RECORDS SUBMITTED BY THE ASSESSEE AND IF THIS WAS NOT DONE ENDS OF JUSTICE WOULD NOT BE MET. 5. PER CONTRA LEARNED A.R. SUBMITTED THAT REVENUE S SUBMISSION REGARDING BOOKS AND DOCUMENTS IN SUPPORT HAVING NO T BEEN FURNISHED TO THE A.O. DURING THE COURSE OF ASSESSME NT PROCEEDINGS WAS ENTIRELY WRONG. ACCORDING TO HIM THE BOOKS AN D DOCUMENTS WERE IMPOUNDED DURING THE COURSE OF ASSESSMENT PROC EEDINGS AND THIS WAS CLEAR FROM THE LETTER DATED 31 ST MARCH 2011 OF ITO WARD I.T.A. NO. 1493/MDS/10 7 II(5) RANGE-II MADURAI (COPY PLACED BEFORE US). AS PER LEARNED A.R. ASSESSEE HAD PRODUCED ORIGINAL BILLS FOR PURC HASE OF GRANITES FROM EACH OF THREE VENDORS AND ALL THE VENDORS AS W ELL AS THE ASSESSEE WERE REGISTERED DEALERS. POINTING OUT TO THE REMAND REPORT OF THE A.O. LEARNED A.R. SUBMITTED THAT NO DEFECT WAS FOUND BY THE ASSESSING OFFICER ON THE BILLS PRODUCED BY THE ASSE SSEE. BY RELYING ON THIRD PARTY STATEMENT AN ADDITION WAS MADE WITH OUT PUTTING IT TO THE ASSESSEE. REGARDING THE QUANTITY MENTIONED BY THE ASSESSING OFFICER LEARNED A.R. SUBMITTED THAT THESE QUANTITI ES WERE CLEARLY ARRIVED FROM THE INVOICES FURNISHED BY THE ASSESSEE ONLY. THEREFORE AS PER LEARNED A.R. IF THE MATTER WAS AGAIN REMITT ED BACK TO THE A.O. IT WOULD ONLY RESULT IN ELONGATING THE MISERY OF TH E ASSESSEE AND PROLONGING A RESOLUTION OF THE ISSUE. 6. WE HAVE PERUSED THE ORDERS AND HEARD THE RIVAL C ONTENTIONS. PAPER-BOOK PAGES 22 TO 40 ARE COPIES OF THE INVOICE S RELATING TO PURCHASES MADE BY THE ASSESSEE FROM THREE CONCERNS NAMELY M/S COROMANDEL AGENCIES M/S PALLAVA GRANITE INDUSTRIES AND M/S P.R. TRADERS. THERE IS NO DISPUTE THAT THESE INVOICES W ERE PRODUCED BY THE ASSESSEE ATLEAST BEFORE LD. CIT(APPEALS). LD. CIT(APPEALS) HAD I.T.A. NO. 1493/MDS/10 8 PUT IT BEFORE THE A.O. WHO REFRAINED FROM GOING IN TO SUCH RECORDS BUT TRIED TO JUSTIFY HIS EARLIER STAND. ONCE ASSESSEE HAS PRODUCED THE BILLS FOR PURCHASES UNLESS THE BILLS ARE PROVED TO BE FABRICATED PURCHASES CANNOT BE BRUSHED ASIDE SIMPLY BASED ON S TATEMENTS TAKEN FROM THE VENDORS. BOOKS WERE PRODUCED BY THE ASSESSEE AND THE PURCHASES WERE RECORDED IN IT. EACH OF THE PUR CHASE SHOWS THE QUANTITY OF PURCHASE THE RATE OF PURCHASE AND VALU E OF PURCHASE. ASSESSING OFFICER DOES ACKNOWLEDGE THE PURCHASES TO THE EXTENT OF ` 73 72 817/- AS ACCOUNTED BY THE ASSESSEE IN ITS BOO KS. NEVERTHELESS THE ASSESSING OFFICER FOUND THE RATE AT WHICH ASSESSEE RECORDED THE PURCHASES TO BE EXCESSIVE SINCE FOR T HE QUANTITY OF SALES EFFECTED BY THE ASSESSEE AS PER THE ASSESSING OFFICER THE PURCHASE OUGHT TO HAVE BEEN ONLY ` 48 70 818/-. THIS CONCLUSION OF THE ASSESSING OFFICER IS NOT AT ALL CORRECT. IN OU R OPINION ASSESSING OFFICER TOOK A PRESUMPTION THAT SALE VALUE SHOWN BY THE VENDORS IN THEIR ACCOUNTS TO BE SACROSANCT AND THE RATES THEY GAVE COULD BE UNIVERSALLY APPLIED. IN OUR OPINION ASSESSEE HAD PRODUCED BOOKS AND ALSO PURCHASE BILLS. ASSESSING OFFICER EVEN DU RING THE REMAND PROCEEDINGS DID NOT CARE TO VERIFY THE CORRECTNESS THEREOF AND STUCK I.T.A. NO. 1493/MDS/10 9 TO HIS EARLIER STAND. THE BOOKS AND SUPPORTING DOC UMENTS WERE ALREADY WITH REVENUE HAVING BEEN IMPOUNDED AND THE ASSESSEE CANNOT BE PUT PERENNIAL TROUBLES FOR THE FAILURE OF THE REVENUE AND REVENUE CANNOT BE GIVEN UMPTEEN NUMBER OF OPPORTUNI TIES KEEPING THE ASSESSEE ON TENDER HOOKS. WE ARE OF THE OPINIO N THAT LD. CIT(APPEALS) HAD RIGHTLY CONSIDERED THE REMAND REPO RT AND CAME TO A CONCLUSION THAT ASSESSEE HAVING PRODUCED SUFFICIENT RECORDS TO PROVE THE PURCHASES AN ADDITION FOR INFLATED PURCHASES W AS NOT WARRANTED. THE DELETION OF THE ADDITION WAS APPROPRIATE. NO I NTERFERENCE IS CALLED FOR. 7. IN THE RESULT THE APPEAL FILED BY THE REVENUE I S DISMISSED. THE ORDER WAS PRONOUNCED IN THE COURT ON 22 ND JULY 2011. SD/- SD/- (U.B.S. BEDI) (ABRAHAM P. GEORGE) JUDICIAL MEMBER ACCOUNTANT MEMBER CHENNAI DATED THE 22 ND JULY 2011. KRI. COPY TO: APPELLANT/RESPONDENT/CIT(A)-I MADURAI/ CIT-I MADURAI/D.R./GUARD FILE