M/s Standard Tyres & Motors, Vijayawada v. The ITO, Ward-4, Vijayawada

ITA 3/HYD/1996 | misc
Pronouncement Date: 21-10-2010 | Result: Dismissed

Appeal Details

RSA Number 325314 RSA 1996
Bench Visakhapatnam
Appeal Number ITA 3/HYD/1996
Duration Of Justice 14 year(s) 9 month(s) 20 day(s)
Appellant M/s Standard Tyres & Motors, Vijayawada
Respondent The ITO, Ward-4, Vijayawada
Appeal Type Income Tax Appeal
Pronouncement Date 21-10-2010
Appeal Filed By Assessee
Order Result Dismissed
Bench Allotted DB
Tribunal Order Date 21-10-2010
Assessment Year misc
Appeal Filed On 01-01-1996
Judgment Text
ITA NOS. 3 & 262 HYD 1996 STANDARD TYRES VIJAYAWADA PAGE 1 OF 6 IN THE INCOME TAX APPELLATE TRIBUNAL VISAKHAPATNAM BENCH VISAKHAPATNAM BEFORE: SHRI SUNIL KUMAR YADAV JUDICIAL MEMBER AND SHRI BR BASKARAN ACCOUNTANT MEMBER ITA NO.3/HYD/1996 ASSESSMENT YEAR: 1987 - 88 STANDARD TYRES VIJAYAWADA VS. ITO WARD-IV VIJAYAWADA (APPELLANT) PAN NO: (RESPONDENT) ITA NO.262/HYD/1996 ASSESSMENT YEAR: 1987-88 ASSISTANT COMMISSIONER OF INCOME TAX CIRCLE-2 VIJAYAWADA VS. STANDARD TYRES VIJAYAWADA (APPELLANT) PAN NO: (RESPONDENT) ASSESSEE BY: NONE DEPARTMENT BY: SHRI D.S. SUNDER SINGH DR ORDER PER SHRI B. R. BASKARAN ACCOUNTANT MEMBER: THESE CROSS APPEALS ARE DIRECTED AGAINST THE ORDER DATED 1-11-1995 PASSED BY LEARNED CIT(A) VIJAYAWADA AND THEY RELAT E TO THE ASSESSMENT YEAR 1987-88. 2. THESE APPEALS WERE ADJOURNED SINE DIE ON 13-12-2 007 ON THE PETITION OF THE ASSESSEE WHEREIN IT WAS STATED THA T THE ASSESSEE HAD FILED AN APPLICATION UNDER KVSS BEFORE THE DESIGNATED AUT HORITY VIJAYAWADA AND THE ORDER IS AWAITED. SUBSEQUENTLY WHEN THE CASE WA S POSTED FOR HEARING ON 1-6-2010 THE ASSESSEE FILED A LETTER WHERE IN IT WAS STATED THAT THE ASSESSEE HAD FILED A WRIT PETITION AGAINST THE DESI GNATED AUTHORITY FOR NON- SETTLING OF APPLICATION FILED UNDER KVSS AND THE SA ME WAS LISTED FOR FINAL HEARING ON 31-5-2010. IT WAS ALSO STATED IN THE SAID LETTER THAT THE BENCH ITA NOS. 3 & 262 HYD 1996 STANDARD TYRES VIJAYAWADA PAGE 2 OF 6 MAY DECIDE THE CASE ON MERITS. IN VIEW OF THE SAID LETTER THE CASES WERE ADJOURNED TO 5-8-2010 AND FURTHER ADJOURNED TO 18-1 0-2010. HOWEVER THE ASSESSEE HAS FAILED TO INFORM ABOUT THE FATE OF ITS WRIT PETITION FILED BEFORE THE HON'BLE ANDHRA PRADESH HIGH COURT AND ALSO FAIL ED TO APPEAR BEFORE THE BENCH ON THE DATE OF HEARING ON 18-10-2010. IN THES E CIRCUMSTANCES WE PROCEED TO DECIDE THE CASES EX-PARTE QUA THE ASSES SEE. 3. THE ASSESSEE IS IN APPEAL IN RESPECT OF THE FOLL OWING TWO ISSUES: A) ADDITION OF RS.55 044/- TOWARDS INFLATION OF PU RCHASES OF TYRES B) ADDITION OF RS.25 000/- SUSTAINED TOWARDS SALE O F DAMAGED TYRES 4. THE REVENUE IS IN APPEAL IN RESPECT OF THE FOLLO WING TWO ISSUES: A) RELIEF GRANTED IN RESPECT OF TEST TYRES SALES V ALUE RS.3 75 000/ B) RELIEF GRANTED IN RESPECT OF SALE OF DAMAGED TY RES 5. THE FACTS RELATING TO THE CASE ARE STATED IN BRI EF. THE ASSESSEE IS A PARTNERSHIP FIRM DEALING IN TYRES AND TUBES. THE OR IGINAL ASSESSMENT ORDER WAS PASSED IN THE HANDS OF THE ASSESSEE ON 30-3-199 0 BY DETERMINING THE TOTAL INCOME AT RS.6 72 500/- AS AGAINST THE RETUR NED INCOME OF RS.94 250/-. THE ASSESSEE CONTESTED THE VARIOUS AD DITIONS IN THE APPEAL FILED BEFORE THE LEARNED CIT (A) AND THE FIRST APPE LLATE AUTHORITY REMANDED THE MATTERS BACK TO THE FILE OF THE ASSESSING OFFIC ER. ACCORDINGLY THE ASSESSING OFFICER COMPLETED THE ASSESSMENT AGAIN ON 31-3-1993 BY SUSTAINING ALL THE ADDITIONS THAT WERE MADE IN THE ORIGINAL ASSESSMENT ORDER. THE ASSESSEE AGAIN PREFERRED APPEAL BEFORE T HE LEARNED CIT (A) AND THE SAME WAS ALLOWED PARTLY. AGGRIEVED BY THE ORDER OF LEARNED CIT(A) BOTH THE PARTIES ARE IN APPEAL BEFORE US. 6. THE FIRST ISSUE IN THE APPEAL OF THE ASSESSEE RE LATES TO THE ADDITION OF RS.55 044/- MADE UNDER SECTION 69 OF THE ACT TOWARD S THE INFLATION OF PURCHASES OF TYRES. DURING THE COURSE OF THE ORIGIN AL ASSESSMENT PROCEEDING IT WAS NOTICED BY THE ASSESSING OFFICER THAT THE ASSESSEE HAD ALTERED THE NUMBER OF TYRES IN CERTAIN PURCHASE BIL LS. IT WAS NOTICED THAT THE ITA NOS. 3 & 262 HYD 1996 STANDARD TYRES VIJAYAWADA PAGE 3 OF 6 ASSESSEE HAD INFLATED THE QUANTITY BY 18 TYRES WHOS E VALUE WAS ESTIMATED AT RS.55 044/-. IN THE REASSESSMENT PROCEEDINGS IT WAS CLAIMED THAT THE SALE VALUE OF 18 TYRES WAS DULY ACCOUNTED FOR AND H ENCE NO ADDITION WAS WARRANTED FOR JUST ALTERING THE QUANTITY OF TYRES P URCHASED. HOWEVER THE ASSESSING OFFICER NOTICED THAT THE ASSESSEE HAD UND ER INVOICED CERTAIN SALES AND ACCORDINGLY CAME TO THE CONCLUSION THAT THE ASS ESSEE HAD INFLATED THE PURCHASES AND SALES BY 18 TYRES IN ORDER TO COMPENS ATE THE UNDER INVOICING. ACCORDINGLY THE ASSESSING OFFICER HELD THAT THE AMOUNT WITHDRAWN BY WAY OF UNDER INVOICING HAS TO BE ASSES SED AND HENCE ADDED A SUM OF RS.60 000/- IN THE HANDS OF THE ASSESSEE. BE FORE THE LEARNED CIT (A) IT WAS REPRESENTED THAT THE ASSESSEE HAD FILED AN A PPEAL BEFORE THE TRIBUNAL AGAINST THE FIRST ORDER OF THE LEARNED CIT (A) ON T HIS ISSUE AND THE SAME IS PENDING BEFORE THE TRIBUNAL. ACCORDINGLY THE LEARNE D CIT (A) OPINED THAT HE DID NOT HAVE JURISDICTION TO DEAL WITH THIS ISSUE A ND LEFT THE MATTER AS IT IS. 6.1 THE ASSESSEE IS CONTESTING THIS ISSUE BEFORE US IN THE PRESENT APPEAL. WE NOTICE FROM THE ORDER OF THE LEARNED CIT (A) THA T THE ASSESSEE HAD PREFERRED AN APPEAL BEFORE THE TRIBUNAL EARLIER ON THE VERY SAME ISSUE. SINCE THE ISSUE WAS PENDING BEFORE THE TRIBUNAL TH E LEARNED CIT (A) HAD REFRAINED TO DEAL WITH THE SAME. HOWEVER THE DETAI LS OF THE SAID APPEAL AND THE ORDER PASSED BY THE TRIBUNAL ON THIS ISSUE WERE NOT SHOWN TO US. IN THESE CIRCUMSTANCES WE DO NOT FIND ANY INFIRMITY I N THE DECISION OF THE LEARNED CIT (A) IN DECLINING TO DISPOSE OF THE SAID ISSUE. 7. THE NEXT ISSUE RELATES TO THE ADDITION PERTAININ G TO UNDER BILLING OF DAMAGED TYRES. THIS ISSUE IS COMMON IN BOTH THE AP PEALS. IN THE ORIGINAL ASSESSMENT PROCEEDINGS A SUM OF RS.1 05 428/- WAS A DDED TOWARDS UNDER INVOICING OF DAMAGED TYRES. IN THE REASSESSMENT PRO CEEDINGS THE ASSESSING OFFICER NOTICED THAT HIS PREDECESSOR HAD ARRIVED AT THE FIGURES BY MAKING DETAILED WORKINGS. ACCORDINGLY HE SUSTAINED THE AD DITION OF RS.1 04 978/-. THE LEARNED CIT (A) ACCEPTED THAT THE DAMAGED TYRES HAD TO BE SOLD AT LESSER RATES AND OPINED THAT THE AMOUNT OF UNDER I NVOICING HAD ONLY TO BE ESTIMATED. ACCORDINGLY HE SUSTAINED THE ADDITION T O THE EXTENT OF ITA NOS. 3 & 262 HYD 1996 STANDARD TYRES VIJAYAWADA PAGE 4 OF 6 RS.25 000/- AND GRANTED A RELIEF OF RS.79 978/-. AG GRIEVED BOTH THE PARTIES ARE IN APPEAL BEFORE US ON THIS ISSUE. 7.1 WE HAVE HEARD THE LEARNED DEPARTMENTAL REPRESEN TATIVE ON THIS ISSUE AND ALSO PERUSED THE RECORD. IN THE ORIGINAL A SSESSMENT ORDER THE THEN ASSESSING OFFICER HAS STATED THAT THE ASSESSEE DID NOT FURNISH EXPLANATION AS TO HOW THE STOCK GOT DAMAGED. ACCORD INGLY THE THEN ASSESSING OFFICER ARRIVED AT THE UNDER INVOICING AT RS.1 05 428/-. IN THE REASSESSMENT PROCEEDINGS THE ASSESSING OFFICER NOTI CED THAT THE THEN ASSESSING OFFICER HAD ARRIVED AT THE FIGURE ON BILL TO BILL BASIS AND FURTHER NOTICED THAT THERE WAS AN ARITHMETICAL ERROR. ACCOR DINGLY HE SUSTAINED THE ADDITION TO RS.1 04 978/- AFTER CORRECTING THE ERRO R. HOWEVER THE LEARNED CIT (A) HAS ASSUMED THAT THE DAMAGED TYRES ARE NORM ALLY OLD STOCK BROUGHT FORWARD FROM YEAR TO YEAR AND ACCORDINGLY S USTAINED THE ADDITION TO THE EXTENT OF RS.25 000/-. 7.2 IN A GOING CONCERN THE POSSIBILITY OF STOCK GETTING DAMAGED CANNOT BE RULED OUT. THE ASSESSING OFFICER IN THE ORIGINAL A SSESSMENT PROCEEDINGS ARRIVED AT THE VALUE OF UNDER BILLING WITHOUT BRING ING ON RECORD ANY MATERIAL TO SUGGEST UNDER INVOICING. THE ASSESSEE HAS FAILE D TO FURNISH ANY MATERIAL TO SUPPORT ITS CLAIM OF SALE OF DAMAGED STOCK. IN S UCH A KIND OF SITUATION AN APPELLATE AUTHORITY IS CONSTRAINED TO MAKE AN ES TIMATED ADDITION IN ORDER TO BRING THE DISPUTE TO AN END. WE FIND THAT THE LE ARNED CIT (A) HAS FOLLOWED THE SAID PROCEDURE FOR DECIDING THE ISSUE BY ESTIMATING THE POSSIBLE UNDER BILLING AT RS.25 000/-. THOUGH BOTH THE PARTIES ARE CONTESTING THE SAID DECISION OF LEARNED CIT(A) YET NO MATERIAL WAS BROUGHT BEFORE US BY BOTH THE PARTIES IN ORDER TO COMPEL US TO INTERFERE WITH THE DECISION OF LEARNED CIT(A). IN THESE CIRCUMSTANCES IN OUR VIEW ALSO THE ADDITION OF RS.25 000/- ESTIMATED BY THE LEARNED CI T(A) WOULD MEET THE ENDS OF JUSTICE AND ACCORDINGLY WE UPHOLD THE ORDER OF THE LEARNED CIT (A) ON THIS ISSUE. 8. THE REMAINING ISSUE IN THE APPEAL OF THE REVENUE RELATES TO THE ADDITION MADE ON ACCOUNT OF SALE OF TEST TYRES. THE ASSESSEE HAD RECEIVED ITA NOS. 3 & 262 HYD 1996 STANDARD TYRES VIJAYAWADA PAGE 5 OF 6 75 TYRES FREE OF COST FROM M/S. MRF LIMITED. ACCORD ING TO THE ASSESSEE THE COMPANY M/S MRF TYRES HAD SUPPLIED THESE TYRES TO T HE ASSESSEE AT FREE OF COST WHO IN TURN IS REQUIRED TO SUPPLY THE SAME AT FREE OF COST TO ITS CUSTOMERS. THE PURPOSE OF SUCH DISTRIBUTION WAS SAI D TO BE TO EVALUATE THE PERFORMANCE OF TYRES. IN THE ORIGINAL ASSESSMENT PR OCEEDINGS THE THEN ASSESSING OFFICER CAUSED INQUIRES WITH THREE PERSON S AND THEY DENIED OF HAVING RECEIVED ANY TYRES AT FREE OF COST. ACCORDIN GLY THE THEN ASSESSING OFFICER ADDED THE VALUE OF 75 TEST TYRES AMOUNTING TO RS.3 75 000/-. IN THE REASSESSMENT PROCEEDINGS THE ASSESSEE FILED COPIES OF LETTERS SENT TO M/S MRF LTD. WHEREIN THE DETAILS OF PERSONS TO WHOM TH E TYRES WERE GIVEN WERE MENTIONED. ACCORDING TO THE SAID LETTERS THE TEST TYRES WERE GIVEN TO 50 PERSONS. THE ASSESSEE ALSO FILED AFFIDAVITS FROM 12 PERSONS. THE ASSESSING OFFICER ALSO EXAMINED 9 PERSONS. AFTER S UCH EXAMINATION THE ASSESSING OFFICER CAME TO THE CONCLUSION THAT THESE PERSONS WERE TUTORED TO GIVE ANSWERS IN A STEREO TYPE MANNER. THE ASSESSEE ALSO FILED A LETTER DATED 12-3-1993 FROM M/S MRF LTD. CONFIRMING THE SUPPLY OF 75 TYRES TO THE ASSESSEE FOR ONWARD DISTRIBUTION TO HIS CUSTOMERS. THE ASSESSING OFFICER DID NOT ACCEPT THE SAID LETTER AS THE SAME DID NOT CER TIFY THAT THE TEST TYRES WERE SUPPLIED AT FREE OF COST BY THE ASSESSEE. ACCO RDINGLY THE ASSESSING OFFICER SUSTAINED THE ADDITION OF RS.3 75 000/- IN THE REASSESSMENT PROCEEDINGS. THE LEARNED CIT (A) DELETED THE SAID A DDITION AND THE RELEVANT OBSERVATIONS MADE BY HIM ARE EXTRACTED BELOW: I HAVE GONE THROUGH THE FACTS OF THE CASE. IT IS R EALLY SURPRISING AS TO THE BASIS AS TO HOW THE PRESENT AC CIR-2 VJA CAME TO THE CONCLUSION THAT THE STATEMENT RECORDED FROM THE TRANSPORTERS BY HIS TWO PREDECESSOR ASSTT. COMMISSI ONERS ARE NOT ACCEPTABLE AND APPEAR TO BE TUTORED VERSION ONL Y. IT MAY BE MENTIONED THAT THE PRESENT ASST. COMMISSIONER WH O HAS SENT THE REMAND REPORT DT. 20-10-1995 DID NOT AT AL L RECORD ANY SINGLE STATEMENT FROM ANY TRANSPORTER TO WHOM T HE TYRES WERE SUPPLIED FREE OF COST. APART FROM THE ABOVE I ALSO GONE THROUGH THE RELEVA NT ASSESSMENT RECORD AND FIND THAT THE APPELLANT FIRM WAS REGULARLY SUBMITTING REPORTS TO M/S MRF LTD. HYDER ABAD ABOUT THE DETAILS OF FREE SUPPLY OF TYRES TO THE VARIOUS TRANSPORTERS. ON THE BASIS OF THE ABOVE DISCUSSION AND FACTS I F IND THAT ALL THE 75 TYRES WERE DISTRIBUTED BY THE APPELLANT FIRM TO THE TRANSPORTERS FREE OF COST AS PER THE DIRECTIONS OF M/S MRF LTD. ITA NOS. 3 & 262 HYD 1996 STANDARD TYRES VIJAYAWADA PAGE 6 OF 6 THERE IS NO SALE OF TYRES OUTSIDE THE BOOKS OF ACCO UNT. THE ADDITION MADE AMOUNTING TO RS.3 75 000/- IS BASED M AINLY ON SUSPICION AND PRESUMPTION. THE ADDITION OF RS.3 75 000/- THEREFORE HEREBY DELETED. 9. FROM THE ORDER OF THE LEARNED CIT (A) WE NOTICE THAT THE FIRST APPELLATE AUTHORITY HAS EXPRESSED OPINION THAT THE ASSESSING OFFICER HAS ARRIVED AT THE CONCLUSION ABOUT THE TUTORED VERSION ON THE BASIS OF SURMISES ONLY AND NOT BASED UPON ANY MATERIAL. FURTHER THE ASSESSING OFFICER HAS TAKEN STATEMENTS FROM 9 PERSONS ONLY FROM OUT OF 50 PERSONS TO WHOM THE TYRES HAVE BEEN SUPPLIED. ON GOING THROUGH THE REC ORD WE ARE OF THE VIEW THAT THE LEARNED CIT (A) HAS TAKEN A CONSCIOUS DECI SION BY CONSIDERING ALL MATERIALS ON HAND. ACCORDINGLY WE DO NOT FIND ANY INFIRMITY IN THE DECISION OF LEARNED CIT (A) ON THIS ISSUE. 10. IN THE RESULT THE APPEAL OF THE ASSESSEE AS WEL L AS THAT OF REVENUE IS DISMISSED. PRONOUNCED IN THE OPEN COURT ON 21 ST OCTOBER 2010. SD/- SD/- (SUNIL KUMAR YADAV) (B R BASKARAN) JUDICIAL MEMBER ACCOUNTANT MEMBER PVV/SPS VISAKHAPATNAM DATE: 21-10- 2010 COPY TO 1 THE ITO WARD-IV VIJAYAWADA 2 THE ASSISTANT COMMISSIONER OF INCOME TAX CIRCLE-2 VIJAYAWADA 3 4. 5. 6. M/S STANDARD TYRES & MOTORS PRAKASAM ROAD GOVERNO RPET VIJAYAWADA THE CIT VIJAYAWADA THE CIT(A) VIJAYAWADA 7 THE DR ITAT VISAKHAPATNAM. 8 GUARD FILE. BY ORDER SENIOR PRIVATE SECRETARY INCOME TAX APPELLATE TRIBUNAL VISAKHAPATNAM