DCIT, Hyderabad v. M/s Surya Vamshi Textiles Ltd.,, Secunderabad

ITA 167/HYD/2006 | 2000-2001
Pronouncement Date: 31-01-2011 | Result: Dismissed

Appeal Details

RSA Number 16722514 RSA 2006
Assessee PAN AACCS8143B
Bench Hyderabad
Appeal Number ITA 167/HYD/2006
Duration Of Justice 4 year(s) 11 month(s) 13 day(s)
Appellant DCIT, Hyderabad
Respondent M/s Surya Vamshi Textiles Ltd.,, Secunderabad
Appeal Type Income Tax Appeal
Pronouncement Date 31-01-2011
Appeal Filed By Department
Order Result Dismissed
Bench Allotted A
Tribunal Order Date 31-01-2011
Date Of Final Hearing 29-12-2010
Next Hearing Date 29-12-2010
Assessment Year 2000-2001
Appeal Filed On 16-02-2006
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCH A HYDERABAD BEFORE SHRI G.C. GUPTA VICE PRESIDENT AND SHRI CHANDRA POOJARI ACCOUNTANT MEMBER ITA NO.167/H/2006 ASSESSMENT YEAR 2000-2001 THE DCIT CIRCLE 3(2) HYDERABAD VS M/S SURYAVAMSHI TEXTILES LTD. SURYA TOWERS SD ROAD SECUNDERABAD (PAN AACCS 8143 B) (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI T. VENKAT REDDY DR RESPONDENT BY : SHRI G. SARANGAN & SH. C.N. PRAS AD O R D E R PER CHANDRA POOJARI ACCOUNTANT MEMBER: THIS APPEAL PREFERRED BY THE REVENUE IS DIRECTED AGAINST THE ORDER PASSED BY THE CIT(A) IV HYDERABAD DATED 12 .12.2005 AND PERTAINS TO THE ASSESSMENT YEARS 2000-01. 2. THE REVENUE RAISED THE FOLLOWING GROUNDS: 1. THE CIT(A) SHOULD HAVE CONFIRMED THE ADDITION MADE ON ACCOUNT OF DIFFERENCE IN THE SALE PRICE OF THE EXPORT ENTITLEM ENT QUOTA WHICH WAS FOUND TO BE 50% LESS THAN THE PREMIUM CHARGED I N THE MARKET AS PER THE INFORMATION RECEIVED FROM APPAREL EXPORT PROMOTION COUNCIL. 2. THE CIT(A) SHOULD HAVE APPRECIATED THE FACT THAT TH E ADDITION MADE IN THE ASSESSMENT IS ON THE BASIS OF THE ACTUAL INF ORMATION FORWARDED BY THE APPAREL EXPORT PROMOTION COUNCIL SET UP BY T HE GOVT. OF INDIA THROUGH CBDT. 3. THE CIT(A) IGNORED THE FACT THAT THE ASSESSEE HAS N OT FILED ANY EVIDENCE FROM ITS PURCHASERS OR SELLERS TO PROVE TH AT THE PREMIUM MENTIONED IN THE ETS QUOTAS SUPPLIED BY THE APPAREL EXPORT PROMOTION COUNCIL IS NOT CORRECT. 3. BRIEF FACTS OF THE ISSUE ARE THAT THE ASSESSEE HAS SET UP A FACILITY FOR MANUFACTURING PROCESSED DYED YARN KNI TTING OF COTTON FABRICS ITA NO.167 OF 2006 M/S SURYAVAMSHI TEXTILES LTD. SECUNDERABAD 2 2 IN 1996 AND READY MADE GARMENTS IN 1997. DURING TH E MONTH OF FEBRUARY JUNE AND JULY 1999 THE ASSESSEE WAS ALL OTTED QUOTA FOR THE FIRST TIME FOR EXPORT OF GARMENTS UNDER NEW INVESTO R ENTITLEMENT SCHEME(NIE) OF THE GOVT. THE SAID QUOTA WAS TO BE UTILIZED BEFORE 30.9.1999 FOR EXPORTS OF GARMENTS OR COULD BE TRANS FERRED TO ANY OTHER PARTY. AS THE ASSESSEE IS NEW ENTRANT INTO THE MA RKET FOR EXPORT OF GARMENTS IT COULD NOT GET EXPORT OF GARMENTS; IT C OULD NOT GET EXPORT ORDERS AND THEREFORE COULD NOT UTILIZE THE QUOTA AL LOTTED TO IT FOR EXPORT OF GARMENTS. HOWEVER SINCE THE QUOTA ALLOTTED IS TRA NSFERABLE IT SOLD ITS EXPORT ENTITLEMENT QUOTA DURING THE PERIOD APRIL 19 99 TO SEPTEMBER 1999 AT WHATEVER PREMIUM IT COULD GET FOR VARIOUS QUOTAS AT THAT TIME SINCE THE TIME LIMIT FOR UTILIZING THE SAID QUOTAS WAS EXPIRI NG BY 30.9.1999. ACCORDING TO THE ASSESSING OFFICER THE SALE TRANSA CTIONS ARE 210 IN NUMBERS AND PURCHASE TRANSACTIONS ARE 16 IN NOS. W HEN THE SALE PRICE OF EXPORT ENTITLEMENT QUOTAS OF THE ASSESSEE WAS COMP ARED TO THE PREMIUM RATE IN ETS FIGURES THE SALE PRICE OF THE ASSESSEE WAS FOUND TO BE LOW TO THE TUNE OF RS.3 63 63 703/-. THE SAME WAS TREATED AS UNDISCLOSED INCOME OF THE ASSESSEE BY THE ASSESSING OFFICER. A GAINST THIS THE ASSESSEE WENT IN APPEAL BEFORE THE CIT(A). THE CIT(A) OBSER VED THAT THERE IS NO REASON FOR COMPARING THE RATES BETWEEN THE ETS FIGU RES AND PREMIUM EARNED BY THE ASSESSEE ON MUTUAL TRANSFER BASIS S O AS TO TREAT THE ALLEGED DIFFERENCE IN PREMIUM AS UNDISCLOSED INCOME OF THE ASSESSEE. THE ASSESSING OFFICER MIGHT HAVE A SUSPICION IN MIND AB OUT THE VERACITY OF THE RATE AT WHICH THE ASSESSEE SOLD ITS QUOTAS TO OTHER S. BUT THE SUSPICION SHOULD HAVE LED TO FURTHER INVESTIGATION BY THE ASS ESSING OFFICER BEFORE ARRIVING A PROPER CONCLUSION IN THE MATTER. BUT HE RE THE SUSPICIOUS ITSELF HAS BECOME AN OUTRIGHT CONCLUSION ON THE PART OF TH E ASSESSING OFFICER WITHOUT COLLECTING ANY EVIDENCE IN THE CASE OF THE ASSESSEE. THE ASSESSEE HAS DISCHARGED ITS ONUS BY GIVING FULL DETAILS OF T HE PARTIES TO WHOM THEY HAVE SOLD THE EXPORT ENTITLEMENTS. THE ASSESSING O FFICERS REMARK IN THE ITA NO.167 OF 2006 M/S SURYAVAMSHI TEXTILES LTD. SECUNDERABAD 3 3 ASSESSMENT ORDER EXCEPT FURNISHING ABOVE DETAILS T HE ASSESSEE COULD NOT ADDUCE COGENT EVIDENCE TO SUBSTANTIATE CLAIM THERE FORE DOES NOT HOLD GOOD. THE INFORMATION ABOUT MARKET PRACTICE CANNO T BE USED AS CONCLUSIVE EVIDENCE OF CONCEALMENT IN THE ASSESSEE S CASE WITHOUT COLLECTING CONCRETE EVIDENCES ON SPECIFIC INSTANCES OF SALE OF THE EXPORT ENTITLEMENTS. THE ASSESSING OFFICERS FINDINGS ARE BASED ON INFERENCE DRAWN FROM THE PREVALENT MARKET PRACTICE. BUT THIS INFERENCE BECOMES ONLY A SUBJECTIVE FINDING IN THE ABSENCE OF ANY EVI DENCE TO ESTABLISH THAT EXCESS MONEY WAS EITHER PAID BY SUCH PARTIES OR REC EIVED BY THE ASSESSEE. EVEN THE INFERENCE DRAWN ON THE BASIS OF THE MARKET INFORMATION GETS WEAKENED IN THE FACE OF PREPONDERANCE OF THE JUSTIF IABILITY OF THE ASSESSEES OBJECTIONS. THUS HE DELETED THE ADDITION. AGAINST THIS THE RE VENUE IS IN APPEAL BEFORE US. 4. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE MATERIALS AVAILABLE ON RECORDS. AT THE OUTSET THE AUTHORISE D REPRESENTATIVE DREW OUR ATTENTION TO THE JUDGEMENT OF MADRAS HIGH COURT DAT ED 11.2.2000 IN THE CASE OF SOUTH INDIA HOSIERY MANUFACTURERS ASSOCIAT ION WHEREIN OBSERVED THAT THE ETS SYSTEM WAS NOT IN OPERATION TILL 1997 1999. ACCORDING TO LEARNED AR WHEN THE ETS SYSTEM WAS NOT IN OPERATIO N DURING THE PERIOD WHEN SALE OF QUOTA WAS MADE COMPARISON OF SALE PRI CES OF EXPORT QUOTAS WITH THOSE OF ALLEGED TRANSACTIONS REPORTED TO HAVE BEEN TAKEN PLACE THROUGH ETS IS NOT PROPER. HENCE THERE IS NO JUS TIFICATION AT ALL COMPARING THE RATES BETWEEN THE ETS AND PREMIUM EAR NED ON MUTUAL TRANSFERABLE BASIS. 5. SINCE THE TRANSACTION WAS MADE BETWEEN APRIL T O SEPT. 1999 THE DATA COLLECTED FROM ETS CANNOT BE USED FOR THE PURPOSE OF MAKING ADDITIONS. ACCORDING TO AUTHORISED REPRESENTATIVE THE INFORMATION COLLECTED FROM ETS AND FORWARDED BY THE APPAREL EXP ORT PROMOTIONAL ITA NO.167 OF 2006 M/S SURYAVAMSHI TEXTILES LTD. SECUNDERABAD 4 4 COUNCIL FOR THE PERIOD FROM 21.12.1998 TO 20.9.1999 CANNOT BE USED AGAINST THE ASSESSEE. DURING THE PERIOD FROM 21.12 .1998 TO 20.9.1999 BOTH ETS AND MTB ARE PERMITTED. MORE SO THERE IS NO POSITIVE MATERIAL IN THE HANDS OF AUTHORITY TO COME TO THE CONCLUSION TH AT THE ASSESSEE HAS RECEIVED THE DIFFERENCE AMOUNT OF RS.3 63 63 703/- OVER AND ABOVE THE AMOUNT SHOWN BY THE ASSESSEE. THE INFORMATION COLL ECTED BY THE DEPARTMENT ON QUOTA TRANSFER BASIS FOR THE PERIOD F ROM 21.12.1998 TO 20.9.1999 CANNOT BE USED SINCE OPERATION ETS IS STA YED BY THE MADRAS HC IN ITS WRIT PETITION (SUPRA). WE ARE FULLY AGREEME NT WITH THE CONTENTION OF THE ASSESSEES COUNSEL. FURTHER IN THE CASE OF C IT VS. CALCUTTA DISCOUNT CO. LTD. (91 ITR 8) ( S.C.) WHEREIN IT WAS HELD THA T WHERE A TRADER TRANSFERS HIS GOODS TO ANOTHER TRADER AT A PRICE LESS THAN TH E MARKET PRICE AND THE TRANSACTION IS A BONA FIDE ONE THE TAXING AUTHORIT Y CANNOT TAKE INTO ACCOUNT THE MARKET PRICE OF THOSE GOODS IGNORING T HE REAL PRICE FETCHED TO ASCERTAIN THE PROFIT FROM THE TRANSACTION. 6. FURTHER IN THIS CASE THE ASSESSEE HAS GIVEN DETAILS FROM WHOM THE ASSESSEE HAS SOLD THE EXPORT QUOTA ENTITLE MENT. ONCE THE ASSESSEE HAS GIVEN THE DETAILS IT IS THE DUTY OF T HE ASSESSING OFFICER TO EXAMINE THE FACTS FROM THE RESPECTIVE PARTIES WHETH ER THOSE PARTIES WERE PAID IN EXCESS THAN DECLARED BY THE ASSESSEE. THE ASSESSING OFFICER NOT CARRIED ON THAT EXERCISE. THE FAILURE OF THE ASSES SING OFFICER CANNOT BE THE REASON TO DRAW INFERENCE THAT THE ASSESSEE HAS RECE IVED EXCESS PRICE THAN IT WAS STATED BY IT. FURTHER THE ADDITION MADE BY THE ASSESSING OFFICER ONLY ON THE BASIS OF SURMISE AND THERE IS NO MATERI AL EVIDENCE TO SUGGEST THAT THE ASSESSEE HAS ACTUALLY RECEIVED EXCESS CONS IDERATION THAN DISCLOSED. THE SUSPICION CANNOT BE THE REASON FOR MAKING ADDITION. IT IS INCUMBENT ON THE ASSESSING OFFICER TO BRING ON RECO RD CERTAIN POSITIVE MATERIALS TO SHOW THAT THE ASSESSEE HAS RECEIVED AD DITIONAL CONSIDERATION. IN OUR OPINION WE DO NOT FIND ANY REASON TO CONFIR M THE ADDITION MADE BY ITA NO.167 OF 2006 M/S SURYAVAMSHI TEXTILES LTD. SECUNDERABAD 5 5 THE ASSESSING OFFICER AND AS SUCH THE DELETION OF T HE ADDITION BY THE CIT(A) IS JUSTIFIED. 7. IN THE RESULT THE REVENUE APPEAL IS DISMISSED . ORDER PRONOUNCED IN THE OPEN COURT 31.1.2011 SD/- SD/- G.C. GUPTA CHANDRA POOJARI VICE PRESIDENT ACCOUNTANT MEMBER DATED THE 31 ST JANUARY 2011 COPY FORWARDED TO: 1. THE DCIT CIRCLE 3(2) HYDERABAD 2. M/S SURYAVAMSHI TEXTILES SURYA TOWERS SD ROAD SE CUDERABAD 3. CIT(A) IV HYDERABAD 4. CIT HYDERABAD 5. THE DR HYDERABAD