DCIT, Circle - 1, Siliguri, Siliguri v. M/s. Amrit Bhog Food Products Pvt. Ltd., Siliguri

ITA 318/KOL/2010 | 2006-2007
Pronouncement Date: 30-09-2010

Appeal Details

RSA Number 31823514 RSA 2010
Assessee PAN AACCA4691E
Bench Kolkata
Appeal Number ITA 318/KOL/2010
Duration Of Justice 7 month(s) 17 day(s)
Appellant DCIT, Circle - 1, Siliguri, Siliguri
Respondent M/s. Amrit Bhog Food Products Pvt. Ltd., Siliguri
Appeal Type Income Tax Appeal
Pronouncement Date 30-09-2010
Appeal Filed By Department
Bench Allotted B
Tribunal Order Date 30-09-2010
Assessment Year 2006-2007
Appeal Filed On 12-02-2010
Judgment Text
1 IN THE INCOME TAX APPELLATE TRIBUNAL BEN CH B KOLKATA () BEFORE . . . . . . . . SHRI D.K.TYAGI JUDICIAL MEMBER. !' !' !' !' /AND . .. . . .. . # SHRI C.D. RAO ACCOUNTANT MEMBER '$ '$ '$ '$ / ITA NO. 318/KOL/2010 %&' () / ASST. YEAR : 2006-07 (+ / APPELLANT ) DCIT CIRCLE-1 SILIGURI -VERSUS- (-+ / RESPONDENT ) M/S. AMRIT BHOG FOOD PRODUCTS PVT. LTD. (PAN:AACCA4691E) C.O. NO. 21/KOL/2010 : %&' () / ASST. YEAR : 2006-07 (ARISING OUT OF ITA NO.318/K/10) (+ / APPELLANT ) M/S. AMRIT BHOG FOOD PRODUCTS PVT. LTD. -VERSUS- (-+ / RESPONDENT ) DCIT CIRCLE-1 SILIGURI FOR TH E DEPARTMENT: / SHRI P.C.NAYAK FOR THE ASSESSEE : / SHRI MIRAJ D. SHAH . / ORDER ( . .. . . .. . ) # PER SHRI C.D.RAO A.M . THE APPEAL PREFERRED BY THE REVENUE AND THE CROSS O BJECTION PREFERRED BY THE ASSESSEE ARE ARISING OUT OF THE ORDER OF THE C.I.T. (A) SILIGURI DATED 29.10.2009 FOR THE ASSESSMENT YEAR 2006-07. 2. THE DEPARTMENT HAS TAKEN THE FOLLOWING GROUNDS I N ITS APPEAL: THE LD. CIT(A) SILIGURI HAS ERRED IN REDUCING THE ADDITION MADE ON ACCOUNT OF INFLATED PURCHASES FROM RS.13 64 000/- T O RS.3 64 000/-. THE A.O. HAS RIGHTLY ESTIMATED THE AMOUNT OF INFLATED P URCHASE OF RS.13 64 000/- GIVING LOGICAL COGENT AND COMPELLIN G REASONS. THE LD. CIT(A) HAS NOT CONSIDERED THE FACT THAT THE ASSESSE E DESPITE BEING GIVEN SUFFICIENT OPPORTUNITIES FAILED TO PRODUCE THE PURC HASE REGISTER OR PURCHASE BILLS. 3. THE ASSESSEE IN ITS CROSS-OBJECTION HAS TAKEN THE FOLLOWING GROUNDS: 2 1. FOR THAT IN THE FACTS AND CIRCUMSTANCES OF THE C ASE THE LEARNED COMMISSIONER OF INCOME TAX APPEALS ERRED IN CONFIRM ING ADDITION OF RS.3 64 000 IN RESPECT OF FALL IN GROSS PROFIT. THE ADDITION OF RS.3 64 000 BE DELETED. 2. FOR THAT IN THE FACTS AND CIRCUMSTANCES OF THE CASE THE LEARNED COMMISSIONER OF INCOME TAX APPEALS ERRED IN CONFIRM ING ADDITION OF RS.1 27 700 IN RESPECT OF TRANSPORT CHARGES. THE AD DITION SHOULD BE DELETED 3. WITHOUT PREJUDICE TO THE ABOVE THE COMMISSIONER OF INCOME TAX APPEAL HAS NOT DISPUTED THE FACT OF WRONG FINDING R ECORDED IN RESPECT OF THE TRANSPORT CHARGES BY THE ASSESSING OFFICER. AND IN VIEW OF THE FACTUAL ERROR THE MATTER BE RESTORED BACK TO THE FILE OF TH E LOWER AUTHORITIES FOR ADJUDICATION. 4. FOR THAT THE APPELLANT CRAVES LEAVE TO AMEND A LTER OR TO ADD ANY FURTHER GROUNDS AT THE TIME OF HEARING OF THE APPEA L. 4. AT THE TIME OF HEARING BEFORE US THE LD. COUNSE L APPEARING ON BEHALF OF THE ASSESSEE HAS NOT PRESSED GROUND NOS. 2 AND 3 TAKEN IN THE CROSS OBJECTION. THEREFORE GROUND NOS.2 AND 3 ARE DISMISSED AS NOT BEING PRESS ED. GROUND NO.4 TAKEN IN THE CROSS-OBJECTION BEING GENERAL IN NATURE DOES NOT REQUIRE ANY ADJUDICATION. 5. REGARDING GROUND TAKEN BY THE REVENUE AS WELL AS THE FIRST GROUND OF THE CROSS OBJECTION TAKEN BY THE ASSESSEE ARE INTER-RELATED. BRIEF FACTS OF THIS ISSUE ARE THAT WHILE DOING THE SCRUTINY ASSESSMENT THE AO HAS ADD ED AN AMOUNT OF RS.13 64 000/- ON ACCOUNT OF INFLATED PURCHASE BY OBSERVING AS UND ER: ON EXAMINATION OF THE RATE OF PURCHASE FROM LOCAL H AT BAZAR & OTHER PLACES IT IS SEEN THAT THE RATE OF PURCHASE FROM LOCAL HAT BAZAR ARE HIGHER THAN THE RATE OF PURCHASE FROM OTHER PLACES. ASSUMING THAT T HE LOCAL PURCHASES ARE INCLUDING THE TRANSPORT CHARGES STILL THE RATE OF PURCHASE ARE HIGHER BY 5% TO 10%. THE A/R WAS ASKED TO PRODUCE THE PURCHASE BILLS & R EGISTER BUT HE FAILED TO PRODUCE THEM. HE ALSO FAILED TO OFFER ANY EXPLAN ATION FOR SUCH DIFFERENCE IN THE RATE OF PURCHASE. IN ABSENCE OF PROPER EXPLANAT ION AND IN ABSENCE OF PROPER PURCHASE BILLS AND TAKING INTO CONSIDERATION OF THE WHOLE PURCHASES J BY CASH 5% OF PURCHASE FROM LOCAL HAT BAZAR IS ESTIMATED AS IN FLATED PURCHASE. TOTAL QUANTITY PURCHASED FROM LOCAL HAT B AZAR 34935 QTL. OUT OF 57048 QTL. COST OF TOTAL PURCHASE WAS OF RS. 4 45 47 657/ - I.E. AVERAGE COST PER QUINTAL WAS OF RS. 780/ - . THEREFORE THE COST OF 34935 QTLS COMES TO RS. 2 72 80 052/. SINCE THE PURCHASE HAS BEEN INFLATED BY 5% APPROXIMATELY THE COST OF 5% OF 3 PURCHASE FROM LOCAL HAT BAZAR IS CALCULATED AT RS. 13 64 000/ - . THIS AMOUNT IS DISALLOWED ON A/C OF INFLATED PURCHASE. 6. ON APPEAL THE LD. CIT(A) HAS SUSTAINED THE ADDI TION OF RS.3 64 000/- ONLY AND GIVEN RELIEF TO THE EXTENT OF RS.10 LAKHS TO THE AS SESSEE BY OBSERVING AS UNDER: I HAVE CAREFULLY CONSIDERED THE SUBMISSION OF THE LD ARS AND ALSO PERUSED THE ASSESSMENT ORDER. THE LD. AO DID NOT REFERRED TO AN Y SITUATION SHOWING THE VARIATION OF PURCHASE RATES. HE HAS MADE HIS OBSERV ATION IN A HURRIED MANNER WITHOUT PROPER VERIFICATION OF FACTS. HAD THERE BEE N EXCESSIVE INFLATION OF PURCHASE COST THAT WOULD HAVE DIRECTLY AFFECT THE RATE OF TOTAL DIRECT EXPENSES AND ALSO THE PERCENTAGE OF YIELD. AT THE SAME TIME THE LD. AR DID NOT DENY THAT THERE WAS NO RATE DIFFERENCE AT ALLL. THE LD AO HAS ALSO SHOWN THAT EXCESSIVE TRANSPORTATION COST WAS CLAIMED IN CERTAIN CASES. T HERE ARE ALSO FALL OF GP RATE EVEN IF THE EXCESS ELECTRICITY EXPENSES IS CONSIDE RED. IN VIEW OF THE ABOVE FACT I AM OF THE OPINION THAT THE LD. ARS FAILED TO SATISF ACTORILY EXPLAIN THE ISSUE RAISED BY THE LD. AO. HOWEVER IF THE TOTAL AMOUNT OF RS. 13 64 000/ - ( AS DISALLOWED BY THE LD. AO) IS REDUCED FROM THE COST OF RAW MATERIAL CONSUM ED THE G P RATE WOULD BE DRASTICALLY INCREASED WHICH IS IMPOSSIBLE AND UNREA SONABLE. AS THE TURNOVER DURING THE YEAR WAS INCREASED SUBSTANTIALLY THERE MAY BE A REASON FOR SLIGHT FALL IN THE G P RATE. THEREFORE TO MEET THE END OF JUSTICE THE DISALLOWANCE MADE BY TIE LD AO IS RESTRICTED TO RS. 3 64 000/ - WHICH WILL ALMOST COVER UP FALL OF G P RATE (WITHOUT CONSIDERING THE PAYMENT OF ADDITI ONAL ELECTRICITY BILL). THIS GROUND IS THUS PARTIALLY ALLOWED. 7. AGGRIEVED BY THIS NOW BOTH THE REVENUE AS WELL AS THE ASSESSEE IS IN APPEAL BEFORE US. 8. AT THE TIME OF HEARING THE LD. D.R. APPEARING ON BEHALF OF THE REVENUE HAS REITERATED THE FINDINGS GIVEN BY THE AO AND FURTHER CONTENDED THAT THE LD. CIT(A) HAS NOT GIVEN ANY REASONING AS TO WHY HE HAS RESTRICTED THE DISALLOWANCE TO RS.3 64 000/-. HE FURTHER CONTENDED THAT THE AO IS JUSTIFIED IN MA KING THE ADDITION OF RS.13 64 000/- IN THE ABSENCE OF PURCHASE BILLS AND REGISTER. 9. ON THE OTHER HAND THE LD. COUNSEL APPEARING ON BEHALF OF THE ASSESSEE HAS SUBMITTED THAT THE REVENUE HAS NOT POINTED OUT ANY DEFECTS IN THE BOOKS OF ACCOUNTS AND WITHOUT REJECTING THE BOOKS OF ACCOUNTS THE ES TIMATION MADE BY THE AO AS WELL AS THE SUSTENANCE BY THE LD. CIT(A) HAS NO BASIS AND S UCH SORT OF AD HOC ADDITION IS BASED ON THE SURMISES AND CONJECTURES. THE LD. COUN SEL HAS SUBMITTED THAT (I) THE 4 REVENUE HAS NOT POINTED OUT ANY DEFECT IN THE BOOKS OF ACCOUNTS AND WHATEVER MATERIAL WAS REQUIRED BY THE REVENUE WAS PRODUCED (II) G.P. RATE OF THE YEAR UNDER CONSIDERATION IS HIGHER THAN THE AVERAGE OF LAST TH REE YEARS AND (III) THERE IS NO BASIS FOR AOS FINDING IN THE ASSESSMENT ORDER. THEREFORE HE REQUESTED TO DELETE THE ADDITION MADE BY THE AO AND FURTHER SUSTAINED BY TH E LD. CIT(A). IN SUPPORT OF THE CONTENTION THE LD. COUNSEL RELIED ON THE ORDERS OF THE HONBLE JURISDICTIONAL HIGH COURT IN ITA NO.219 OF 2001 IN THE CASE OF M/S. SWA DESHI COMMERCIAL CO. LTD. VS- CIT COPY OF THE SAME HAS BEEN FURNISHED. 10. AFTER HEARING THE RIVAL SUBMISSIONS AND ON CARE FUL PERUSAL OF THE MATERIALS AVAILABLE ON RECORD IT IS OBSERVED THAT THE HONBL E JURISDICTIONAL HIGH COURT IN THE CASE CITED SUPRA HAS OBSERVED AS UNDER: THE ASSESSEE HAS SHOWN GROSS PROFIT RATE AT 5.58% W HICH IS LOW IN COMPARISON TO PREVIOUS ASSESSMENT YEAR. THE ONLY GR OUND WHICH WAS URGED BEFORE THE LEARNED TRIBUNAL WAS THAT THE PROF IT RATE WAS SHOWN AT 7 .41 % AND PRIOR TO THAT IT WAS SHOWN AT 6 .44 %. THEREFORE THE GROSS PROFIT FOR THE SAID ASSESSMENT YEAR WHICH WAS CONSIDERED B Y THE LEARNED TRIBUNAL AT 5 .58 % IS THE GROUND FOR ARRIVING AT SUCH A CONCLUSION BY THE LEARNED TRIBUNAL. IT ALSO TO BE NOTED AS POINTED O UT BY MR.KHAITAN THAT THE BOOKS OF ACCOUNTS WHICH WERE PRODUCED WERE NOT REJECTED NOR EVEN A SINGLE VOUCHER WAS FOUND UNVERIFIABLE. 10.1 UNDER THE ABOVE FACTS AND CIRCUMSTANCES THE H ONBLE JURISDICTIONAL HIGH COURT ALLOWED THE APPEAL OF THE ASSESSEE BY OBSERVI NG AS UNDER: SUCH BEING THE POSITION IN OUR CONSIDERED OPINION THE LEARNED TRIBUNAL HAD WRONGLY DECIDED THE SAID QUESTION IN H OLDING THAT THE GROSS PROFIT WAS REQUIRED TO BE ESTIMATED AT THE RA TE WHICH HE ARRIVED AT AND THEREFORE WE FOUND THAT THERE IS NO SUBSTANCE I N THE SUBMISSION MADE BY MR. KHAITAN IN THE MATTER. FURTHERMORE SINC E THE RELEVANT FACT THAT THE BOOKS OF ACCOUNTS WERE NOT REJECTED AND HA D BEEN TAKEN INTO ACCOUNT FOR THE PURPOSE OF DECIDING THIS QUESTION W HICH HAS BEEN RAISED IN THIS APPEAL WE ALLOW THE APPEAL AND ANSWERED TH E QUESTION IN THE AFFIRMATIVE IN FAVOUR OF THE ASSESSEE. THE APPEAL I S THEREFORE DISPOSED OF . 10.2 BEING THE FACTS OF THE PRESENT CASE ARE NOT SI MILAR TO THE ONE DECIDED BY THE HONBLE HIGH COURT WE ARE UNABLE TO ACCEPT THE CON TENTION OF THE ASSESSEE. IN THE PRESENT CASE THE AO HAS CATEGORICALLY GIVEN A FIND ING THAT THE A.R. WAS ASKED TO 5 PRODUCE THE PURCHASE BILL AND REGISTER BUT HE FAILE D TO PRODUCE THE SAME. THEREFORE THE AO HAS MADE THE ADDITION BASED ON THE FACTS AVAILA BLE WITH HIM. HOWEVER THE LD. CIT(A) HAS DELETED THE ADDITION OF RS.10 LAKHS AND SUSTAINED RS.3 64 000/- WITHOUT GIVING ANY VALID REASON. THEREFORE WE SET ASIDE TH E ORDERS OF THE LD. CIT(A) AND IN THE INTEREST OF JUSTICE WE REMIT BACK THIS ISSUE T O THE FILE OF THE AO TO RE-CONSIDER THE SAME AFTER GIVING REASONABLE OPPORTUNITY OF BEING HEARD TO THE ASSESSEE. WE ALSO DIRECT THE ASSESSEE TO PRODUCE THE PURCHASE BILLS A ND THE REGISTER IN ORDER TO SUBSTANTIATE ITS CLAIM. 11. IN THE RESULT THE APPEAL OF THE REVENUE IS ALL OWED FOR STATISTICAL PURPOSES WHEREAS THE CROSS OBJECTION OF THE ASSESSEE IS ALLO WED IN PART FOR STATISTICAL PURPOSES. / . 0 1& /2 THIS ORDER IS PRONOUNCED IN COURT ON 30-09-2010 SD/- SD/- . . . . . . . . D.K.TYAGI JUDICIAL MEMBER . .. . . .. . # C.D. RAO ACCOUNTANT MEMBER ( (( (# # # #) )) ) DATE: 30.09.2010 MST(SR.PS.) . 3 -%%4 54(6- COPY OF THE ORDER FORWARDED TO: 1. M/S. AMRIT BHOG FOOD PRODUCTS PVT. LTD. AGRASEN RO AD SILIGURI 2 DCIT CIRCLE-1 SILIGURI. 3. C.I.T.(A) 4. CIT 5 . DR KOLKATA BENCHES KOLKATA 4 -%/ TRUE COPY .&1/ BY ORDER DEPUTY /ASST. REGISTRAR ITAT KOLKATA BENCHES