The ITO Ward-3 Rajahmundry, Rajahmundry v. Sri G Raja Rao, Rajahmundry

ITA 216/VIZ/2011 | 2007-2008
Pronouncement Date: 05-09-2011 | Result: Dismissed

Appeal Details

RSA Number 21625314 RSA 2011
Assessee PAN AIKPR8541H
Bench Visakhapatnam
Appeal Number ITA 216/VIZ/2011
Duration Of Justice 3 month(s) 1 day(s)
Appellant The ITO Ward-3 Rajahmundry, Rajahmundry
Respondent Sri G Raja Rao, Rajahmundry
Appeal Type Income Tax Appeal
Pronouncement Date 05-09-2011
Appeal Filed By Department
Order Result Dismissed
Bench Allotted DB
Tribunal Order Date 05-09-2011
Date Of Final Hearing 09-08-2011
Next Hearing Date 09-08-2011
Assessment Year 2007-2008
Appeal Filed On 03-06-2011
Judgment Text
ITA NO216/VIZ/2011 G RAJA RAO RAJAHMUNDRY. 1 IN THE INCOME TAX APPELLATE TRIBUNAL VISAKHAPATNAM BENCH VISAKHAPATNAM BEFORE: SHRI SUNIL KUMAR YADAV JUDICIAL MEMBER AND SHRI BR BASKARAN ACCOUNTANT MEMBER ITA NO. 216 /VIZAG/ 20 11 ASSESSMENT YEAR : 2007 - 08 ITO WARD - 3 RAJAHMUNDRY VS. G. RAJA RAO RAJAHMUNDRY (APPELLANT) (RESPONDENT) PAN NO.AIKPR 8541H APPELLANT BY: SHRI D. KOMALI KRISHNA SR.DR RESPONDENT BY: N O N E DATE OF HEAR I NG: 09.08.2011 DATE OF PRONOUNCEMENT: 05 .0 9 .2011 ORDER PER SHRI S.K. YADAV JUDICIAL MEMBER:- THIS APPEAL IS PREFERRED BY THE REVENUE AGAINST T HE ORDER OF THE CIT(A) ON VARIOUS GROUNDS WHICH ARE AS UNDER: 1. THE CIT(A) ERRED BOTH IN LAW AND ON FACTS OF THE CA SE. 2. THE CIT(A) FAILED TO RECORD IN WRITING AS REQUIRED UNDER LAW AND ERRED IN NOT FORMING PART OF THE ORDER THE CIRCUMSTANCES UNDER WHICH THE ADDITIONAL EVIDENCES WERE ADMITTED U/S 46A OF THE I .T. RULES. 3. THE POWERS OF CIT(A) ARE COTERMINOUS WITH THAT OF T HE A.O. AND HE OUGHT TO HAVE INDEPENDENTLY EXAMINED THE EVIDENCE I NSTEAD OF SIMPLY RELYING ON THE INCOMPLETE REMAND REPORT OF THE ASSE SSING OFFICER. 4. THE CIT(A) OUGHT TO HAVE UPHELD THE DECISION TAKEN BY THE A.O. IN DISALLOWING THE CREDIT BALANCES OF ` 10 53 419/- IN RESPECT OF BALAJI COAL MOVERS AS THE ASSESSEE WAS UNABLE TO PRODUCE T HE COPY OF LEDGER ACCOUNT IN THE BOOKS OF ACCOUNT OF THE SAID PARTY. 5. THE CIT(A) OUGHT TO HAVE SUSTAINED THE ADDITION MAD E BY THE AO OF ` 4 35 892/- U/S 41(1) OF THE ACT AS THE IDENTITY OF THE CREDITORS WAS NOT ESTABLISHED. 6. THE CIT(A) OUGHT NOT TO HAVE DELETED THE ADHOC DISA LLOWANCE OF ` 19 200/- IN RESPECT OF RENTAL EXPENDITURE AS THE EX PENDITURE WAS CORRECTLY DISALLOWED BY THE A.O. 7. THE CIT(A) OUGHT NOT TO HAVE REDUCED THE DISALLOWAN CE OF EXPENDITURE IN RESPECT OF RAW MATERIAL PURCHASE FIRE WOOD PURC HASE BRICK PRESSING CHARGES BUTTY FIRING CHARGES BUTTY LOADING AND UN LOADING CHARGES AND ITA NO216/VIZ/2011 G RAJA RAO RAJAHMUNDRY. 2 GRINDING CHARGES FROM 25% TO 20% AS THE EXPENDITURE WAS CORRECTLY DISALLOWED BY THE A.O. 8. THE CIT(A) OUGHT TO HAVE GIVEN REASONS FOR HIS DECI SION INSTEAD OF RELYING ON THE INCOMPLETE REMAND REPORT. 9. ANY OTHER GROUND THAT MAY BE URGED AT THE TIME OF H EARING THE APPEAL. 2. THIS APPEAL WAS TAKEN FOR CONSIDERATION ON 9.8.2 011 BUT NONE APPEARED ON BEHALF OF THE ASSESSEES DESPITE VALID S ERVICE OF NOTICE OF HEARING AND THE COPY OF THE ACKNOWLEDGEMENT IS PLACED ON RE CORD. SINCE NONE APPEARED DESPITE VALID SERVICE OF NOTICE OF HEARING WE HAVE NO OPTION BUT TO HEAR THE APPEAL EX-PARTE. ACCORDINGLY THE REVENUE WAS HEARD. 3. THE FACTS IN BRIEF BORNE OUT FROM THE RECORD ARE THAT THE ASSESSEE HAS FILED THE RETURN OF INCOME WHICH WAS INITIALLY PROC ESSED U/S 143(1) OF THE INCOME-TAX ACT (HEREINAFTER CALLED AS AN ACT) AND LATER ON CASE WAS CONVERTED TO SCRUTINY AND ACCORDINGLY NOTICE U/S 14 3(2) AND 142(1) OF THE ACT WERE ISSUED TO THE ASSESSEE FROM TIME TO TIME. IN ITIALLY THE ASSESSEE SOUGHT ADJOURNMENTS ON ONE REASON OR THE OTHER BUT LATER O N HIS AUTHORIZED REPRESENTATIVE APPEARED BEFORE THE A.O. AND SOUGHT FURTHER TIME. THE ADJOURNMENT WAS GRANTED BUT ON THE FIXED DATE NONE APPEARED ON BEHALF OF THE ASSESSEES. THE A.O. ACCORDINGLY FRAMED THE EX- PARTE ASSESSMENT AND ASSESSED THE INCOME AT ` 69 28 017/- AGAINST THE INCOME RETURNED AT ` 2 13 203/- AFTER MAKING VARIOUS ADDITIONS UNDER D IFFERENT HEADS. 4. THE ASSESSEE PREFERRED AN APPEAL BEFORE THE CIT( A) AND FILED THE PAPER BOOK CONTAINING BILLS AND VOUCHERS AND OTHER EVIDENCE IN SUPPORT OF HIS CONTENTIONS ON DIFFERENT ISSUES WITH A REQUEST FOR ADMISSION OF THE SAID ADDITIONAL EVIDENCE. THE REQUEST OF THE ASSESSEE W AS ACCEDED TO AND THE CIT(A) HAVING ADMITTED ALL THESE EVIDENCES CALLED THE REMAND REPORT FROM THE ASSESSING OFFICER AFTER AFFORDING A REASONABLE OPPORTUNITY TO THE ASSESSEES FOLLOWING WHICH THE ASSESSING OFFICER HA S SUBMITTED A REMAND REPORT TO THE CIT(A). IN REMAND PROCEEDINGS THE A SSESSING OFFICER HAS EXAMINED EACH AND EVERY ISSUE ON WHICH ADDITIONS WE RE MADE BY THE ASSESSING OFFICER. BEING CONVINCED WITH THE EXPLAN ATIONS OF THE ASSESSEES THE ASSESSING OFFICER HAS ACCEPTED THE CLAIM OF THE ASSESSEE AND SUBMITTED ITA NO216/VIZ/2011 G RAJA RAO RAJAHMUNDRY. 3 THE REPORT TO THE CIT(A). RELYING UPON THE REMAND REPORT THE CIT(A) HAS ACCEPTED THE CLAIM OF THE ASSESSEES AND DELETED THE ADDITIONS MADE ON ACCOUNT OF CREDIT BALANCE OF ` 10 52 419/- IN RESPECT OF BALAJI COAL MOVERS ADDITION OF ` 4 35 892/- MADE U/S 41(1) OF THE ACT ADHOC DISALL OWANCE OF ` 19 200/- IN RESPECT OF RENTAL EXPENDITURES AND THE ADDITION ON ACCOUNT OF REDUCTION OF DISALLOWANCE OF EXPENDITURE IN RESPECT OF RAW MATERIAL PURCHASED ETC. FROM 25% TO 20%. 5. AGGRIEVED THE REVENUE HAS PREFERRED AN APPEAL B EFORE US WITH THE SUBMISSION THAT THE CIT(A) HAS NOT APPRECIATED THE FACT THAT DURING THE COURSE OF ASSESSMENT PROCEEDINGS THE ASSESSEE HAS NOT COOPERATED THE ASSESSING OFFICER. ALL THE TIME HE WAS SEEKING ADJ OURNMENTS ON ONE REASON OR THE OTHER. EVEN IN REMAND PROCEEDINGS THE ASSE SSEE HAS NOT FURNISHED THE COMPLETE EVIDENCE WITH RESPECT TO THE ISSUE IN DISPUTE. THE LD. D.R. FURTHER CONTENDED THAT IN THE INTEREST OF JUSTICE THE MATTER MAY BE REMANDED BACK TO THE ASSESSING OFFICER FOR RE-ADJUDICATION O F THE ISSUES. 6. HAVING GIVEN A THOUGHTFUL CONSIDERATION TO THE R EVENUES CONTENTIONS AND FROM PERUSAL OF ORDERS OF LOWER AUTHORITIES WE FIND THAT BEFORE THE ASSESSING OFFICER THE ASSESSEE DID NOT FILE THE RE LEVANT EVIDENCE TO JUSTIFY HIS CLAIM AND THE ASSESSING OFFICER HAS MADE THE ADDITI ONS. BUT BEFORE THE CIT(A) ASSESSEE HAS FILED ALL RELEVANT EVIDENCE WI TH A REQUEST FOR ADMISSION OF SUCH ADDITIONAL EVIDENCE. THE CIT(A) NOT ONLY A DMITTED THE EVIDENCE BUT ALSO CALLED A REMAND REPORT FROM THE ASSESSING OFFI CER AFTER AFFORDING A PROPER OPPORTUNITY OF BEING HEARD TO THE ASSESSEES. DURIN G THE REMAND PROCEEDINGS THE ASSESSEE EXPLAINED HIS CLAIMS ALON G WITH THE EVIDENCE WHICH WERE APPRECIATED BY THE ASSESSING OFFICER AND SUBMI TTED A FAVOURABLE REPORT TO THE CIT(A). THE CIT(A) HAS EXAMINED THE REMAND REPORT AND ADJUDICATED THE ISSUE IN THE LIGHT OF ASSESSEES CONTENTIONS. THEREFORE WE ARE OF THE VIEW THAT THE CIT(A) HAS PROPERLY APPRECIATED THE FACTS BEFORE ACCEPTING THE CLAIM OF THE ASSESSEES. THE RELEVANT OBSERVATION OF THE CIT(A) ARE EXTRACTED HEREWITH FOR THE SAKE OF REFERENCE: ITA NO216/VIZ/2011 G RAJA RAO RAJAHMUNDRY. 4 THE ISSUE WISE FACTS BRIEFLY STATED ARE THAT ON R EQUIRING THE APPELLANT TO FURNISH THE EVIDENCES IN THE FORM OF PURCHASE BI LLS/INVOICES IN SUPPORT OF THE ALLEGED PURCHASE OF MATERIAL FROM THE PARTIES N AMELY M/S. BALAJI COAL MOVERS ( ` 10 52 419/-) M/S. JAYARAM CERAMICS RAW MATERIAL S ERVICING CENTRE ( ` 4 46 428/-) M/S. KATARI REFRACTORIES ( ` 2 65 200/-) AND M/S. SAROJA CERAMICS ( ` 2 65 200/-) AND ON NOT FINDING ANY COMPLIANCE FRO M THE APPELLANT THE ASSESSING OFFICER EFFECTED AN AGGREG ATE ADDITION OF ` 20 29 247/- U/S 69C OF THE ACT AS UNEXPLAINED EXPEN DITURE. SIMILARLY AS REGARDS THE CREDIT BALANCES OF THE BROUGHT FORWARD CREDITORS NAMELY (I) G.V. RAO ( ` 81 600) (II) K. APPARAO ( ` 1 02 000) (III) K. RAMARAO ( ` 36 000) (IV) SRI BHAWANI ENGG. WORKS ( ` 1 51 700) (V) SVS ENTERPRISES ( ` 27 846) AND (VI) WORLD MINERALS ( ` 36 146) AGGREGATING TO ` 4 35 892/- THE ASSESSING OFFICER REQUISITIONED THE SUPPORTING PROOF AND IN THE ABSENCE OF COMPLIANCE TREATED AND ADDED THE AMOUNT AS INCOME REPRESENTING CESSATION OF LIABILITY U/S 41(1). AGAIN ON ACCOUNT OF NON-PRODUCTION OF S UPPORTING PROOF WITH REGARD TO RENT EXPENDITURE OF ` 96 000/- TRUCK LOADING AND UNLOADING CHARGES ` 83 000/- THE ASSESSING OFFICER EFFECTED AN ADHOC DISALLOWANCE @ 20% OF THE ABOVE EXPENDITURE AMOUNTING TO ` 35 800/-. FURTHERMORE AS REGARDS OTHER EXPENDITURES AND PURCHASES AGGREGATING TO ` 74 94 030/- THE ASSESSING OFFICER EFFECTED AN ADHOC DISALLOWANCE OF 25% THEREOF AMOUNTING TO ` 18 73 508/- FOR NON-PRODUCTION OF SUPPORTING EVIDE NCE. AGAIN FOR WANT OF PRODUCTION OF EVIDENCE THE ASSESSING OFFICER DI SALLOWED THE ENTIRE CLAIM OF THE LOSS ON ACCOUNT OF REJECTED MATERIAL OF ` 44 567/-. FINALLY THE ASSESSING OFFICER DISALLOWED A SUM OF ` 22 95 800/- AS UNEXPLAINED CASH CREDIT U/S 68 OF THE ACT IN RESPECT OF CASH DEPOSITS MADE INTO THE B ANK ACCOUNT OF THE APPELLANT ON FIVE OCCASIONS THE NATURE AND THE SOU RCES OF WHICH COULD NOT BE EXPLAINED. DURING THE APPELLATE PROCEEDINGS THE APPELLANT FI LED PAPER BOOK CONTAINING THE BILLS VOUCHERS AND OTHER SUPPORTING EVIDENCES PLEADING FOR ADMISSION OF SUCH ADDITIONAL EVIDENCES ON THE PLEA THAT THE ASSESSING OFFICER HAD NOT AFFORDED SUFFICIENT OPPORTUNITY TO ESTABLIS H THE GENUINENESS OF THE TRANSACTIONS AND EXPENDITURES AND FURTHER REQUESTE D TO ACCEPT THE CLAIM OF GENUINENESS OF THE TRANSACTIONS MADE AND THE EXPEND ITURES INCURRED. THE THEN CIT(A) RAJAHMUNDRY AFTER CONSIDERING THE PLE A OF THE APPELLANT FORWARDED SUCH ADDITIONAL EVIDENCES TO THE ASSESSIN G OFFICER TO EXAMINE THEM AND FURNISH A FACTUAL REPORT AFTER AFFORDING REASON ABLE OPPORTUNITY TO THE APPELLANT FOLLOWING WHICH THE ASSESSING OFFICER HA S FURNISHED A REPORT DATED 4.2.2011. AS REGARDS THE ISSUE OF THE AGGREGATE DISALLOWANCE OF ` 20 29 247/- IN RESPECT OF THE FOUR FRESH CREDITORS THE ASSESSING OFFICER HAS OBSERVED THAT ON EXAMINATION OF THE PURCHASE INVOICES HE WAS SATISF IED ABOUT THE GENUINENESS OF PURCHASES AND THAT EXCEPT FOR THE FACT THAT THE APPELLANT HAS NOT BEEN ABLE TO FURNISH A COPY OF HIS LEDGER ACCOUNT IN THE BOOK S OF M/S. BALAJI COAL MOVERS ALL SUCH TRANSACTIONS APPEAR TO BE IN ORDER. AS RE GARDS THE TREATMENT OF THE AGGREGATE OF THE CREDIT BALANCES OF ` 4 35 892/- IN RESPECT OF SIX PARTIES AS AFORESTATED THE ASSESSING OFFICER HAS OPINED THAT ALL SUCH CREDITORS HAVE ITA NO216/VIZ/2011 G RAJA RAO RAJAHMUNDRY. 5 CONFIRMED THAT BALANCES SHOWN BY THE APPELLANT AGAI NST THEIR NAMES ARE CORRECT BUT THE IDENTITY OF SUCH CREDITORS HAD NOT BEEN ESTABLISHED. THE ASSESSING OFFICER HOWEVER HELD THAT CONSIDERING T HAT ALL SUCH CREDITS WERE BROUGHT FORWARD FROM THE F.Y. 2004-05 AND NO FRESH TRANSACTIONS WERE ENTERED INTO DURING THE RELEVANT ACCOUNTING YEAR AN D ALL CREDITS HAVING BEEN SQUARED UP IN THE SUBSEQUENT YEAR THE GENUINENESS OF SUCH CREDITORS MAY BE ACCEPTED. REGARDING THE ADHOC DISALLOWANCE OF ` 83 000/- TOWARDS RENT PAID AND LOADING AND UNLOADING CHARGES THE ASSESSING OF FICER HELD THAT THE GENUINENESS OF RENTAL CHARGES PAID IS ACCEPTABLE BU T HOWEVER SINCE LOADING AND UNLOADING CHARGES ARE SUPPORTED BY ONLY SELF MA DE VOUCHERS DISALLOWANCE THEREOF IS EXIGIBLE BUT SUCH DISALLOWA NCE BE RESTRICTED TO 15% INSTEAD OF 20% AS ADOPTED IN THE ASSESSMENT ORDER. CONCERNING THE ADHOC DISALLOWANCE @ 25% IN RESPECT OF BALANCE EXPENDITUR ES AND PURCHASES AGGREGATING TO ` 74 94 030/- THE ASSESSING OFFICER HAS OBSERVED TH AT THE EXPENDITURES TOWARDS PURCHASES OF CLAY GROG COAL AND BRICK MOULDING CHARGES SHOULD BE ACCEPTED IN FULL AS THE APPELLANT HAS FURNISHED THE SUPPORTING EVIDENCES THAT THE DISALLOWANCE IN RESP ECT OF RAW-MATERIAL PURCHASES FIRE WOOD PURCHASES BRICK PRESSING CHAR GES BUTTY FIRING CHARGES BUTTY LOADING AND UNLOADING CHARGES AND GRINDING C HARGES BE REDUCED TO 20% FROM 25% SINCE SUCH EXPENDITURES ARE LARGELY SU PPORTED BY SELF MADE VOUCHERS. THE ASSESSING OFFICER HAS SUGGESTED FOR DISALLOWANCE OF ELECTRICAL CHARGES TO THE TUNE OF ` 1 54 100/- AGAINST THE CLAIM OF ` 4 63 202/- FOR FAILURE OF THE APPELLANT TO FURNISH THE NECESSARY S UPPORTING BILLS TO THAT EXTENT. IN ALL THE ASSESSING OFFICER HAS SUGGESTE D FOR SUSTENANCE OF DISALLOWANCE ON THE ISSUE TO THE EXTENT OF ` 4 47 902/- INCLUDING THE DISALLOWANCE OF ELECTRICAL CHARGES OF ` 1 54 100/-. IN RESPECT OF THE CLAIM OF LOSS OF ` 44 567/- UNDER THE HEAD REJECT MATERIAL THE ASS ESSING OFFICER HAS SUGGESTED FOR SUSTENANCE OF THE ENTIRE DISALLOWANCE FOR FAILURE OF THE APPELLANT TO FURNISH THE SUPPORTING EVIDENCES NOT O NLY EARLIER BUT EVEN DURING THE PROCEEDINGS FOR EXAMINATION OF THE ADDITIONAL E VIDENCES. AS REGARDS THE AGGREGATE DISALLOWANCE OF ` 22 95 800/- AS UNEXPLAINED CASH DEPOSITS U/S 68 OF THE ACT THE ASSESSING OFFICER AFTER CAREFULLY EXAMINING THE ISSUE WITH REFERENCE TO THE BOOKS OF ACCOUNTS HAS OBSERVED TH AT ALL THE AMOUNTS DEPOSITED ON FIVE OCCASIONS REFLECT THE WITHDRAWALS FROM THE BOOKS OF ACCOUNTS AND THAT THE APPELLANT WAS HAVING SUFFICIE NT CASH BALANCES ON THE DATES OF EACH OF SUCH WITHDRAWAL. AFTER HEARING THE LD. AUTHORIZED REPRESENTATIVE O N PERUSAL OF THE RECORD AND THE REPORT OF THE ASSESSING OFFICER DATE D 4.2.2011 AND ON A CAREFUL CONSIDERATION OF THE FACTS RELATING TO THE ISSUE T HE FOLLOWING OBSERVATIONS ARE MADE AND DECISIONS TAKEN: ON THE BASIS OF THE FACTS EMERGING FROM THE EXAMIN ATION OF THE ISSUES BY THE ASSESSING OFFICER DURING THE PROCEEDINGS FOR SCRUTINIZING THE ADDITIONAL EVIDENCES THE AGGREGATE DISALLOWANCE OF ` 20 29 247/- AND ANOTHER DISALLOWANCE OF ` 4 35 892/- IS LIABLE TO BE DELETED WHICH IS HEREB Y DELETED. ITA NO216/VIZ/2011 G RAJA RAO RAJAHMUNDRY. 6 7. SINCE WE DO NOT FIND ANY INFIRMITY IN THE ORDER OF THE CIT(A) WE CONFIRM THE SAME. 8. IN THE RESULT THE APPEAL OF THE REVENUE IS DISMISSED. PRONOUNCED IN THE OPEN COURT ON 05.09.2011 SD/- SD/- (BR BASKARAN) (SUNIL KUMAR YADAV) ACCOUNTANT MEMBER JUDICIAL MEMBER VG/SPS VISAKHAPATNAM DATED 05 TH SEPTEMBER 2011 COPY TO 1 ITO WARD - 3 RAJAHMUNDRY 2 SRI G. RAJA RAO PROP: SAI REFRACTORIES D.NO.11 - 58/1 HUKUMPET VENKATAGIRI RAJAHMUNDRY RURAL. 3 THE CI T RAJAHMUNDRY 4 TH E CIT (A) RAJAHMUNDRY 5 THE DR ITAT VISAKHAPATNAM. 6 GUARD FILE. BY ORDER SENIOR PRIVATE SECRETARY INCOME TAX APPELLATE TRIBUNAL VISAKHAPATNAM