M/s. A.D.Jayaveerapandia & Bros, CHENNAI v. ITO, CHENNAI

ITA 326/CHNY/2011 | 2006-2007
Pronouncement Date: 25-03-2011 | Result: Partly Allowed

Appeal Details

RSA Number 32621714 RSA 2011
Assessee PAN AAAFJ3044K
Bench Chennai
Appeal Number ITA 326/CHNY/2011
Duration Of Justice 1 month(s) 1 day(s)
Appellant M/s. A.D.Jayaveerapandia & Bros, CHENNAI
Respondent ITO, CHENNAI
Appeal Type Income Tax Appeal
Pronouncement Date 25-03-2011
Appeal Filed By Assessee
Order Result Partly Allowed
Bench Allotted B
Tribunal Order Date 25-03-2011
Assessment Year 2006-2007
Appeal Filed On 23-02-2011
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL BENCH B CHENNAI BEFORE SHRI ABRAHAM P. GEORGE ACCOUNTANT MEMBER AN D SHRI GEORGE MATHAN JUDICIAL MEMBER .. I.T.A. NO. 326 & 327/MDS/2011 ASSESSMENT YEARS : 2006-07 & 2007-08 M/S. A.D. JAYAVEERAPANDIA & BROS. NO.31 THIRD MAION ROAD KOTTURPURAM CHENNAI-600 085. V. THE INCOME-TAX OFFICER WARD-I(1) CHENNAI. (PAN: AAAFJ3044K) (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI D. ANAND RESPONDENT BY : SHRI P.B. SEKARAN O R D E R PER GEORGE MATHAN JUDICIAL MEMBER : ITA NO. 326/MDS/2011 IS AN APPEAL BY THE ASSESSEE AGAINST THE ORDER OF THE LEARNED CIT(APPEALS)-VI CHENNAI IN ITA NO. 86/ 08-09 DATED 10-12-2010 OR THE ASSESSMENT YEAR 2006-07. ITA NO. 327/MDS/2011 IS AN APPEAL FILED BY THE ASSESSEE AGAINST THE ORDER OF THE LEARNED CIT(APPEA LS)-VI CHENNAI IN ITA NO. 89/09-10 DATED 10-12-2010 FOR THE ASSESSMENT YEAR 2 007-08. 2. SHRI D. ANAND ADVOCATE REPRESENTED ON BEHALF OF THE ASSESSEE AND SHRI P.B. SEKARAN LEARNED CIT-DR REPRESENTED ON BEHALF OF THE REVENUE. AS THE I.T.A. NOS. 326 & 327/MDS/2011 2 ISSUES IN BOTH THE APPEALS ARE IDENTICAL AND RELATE TO THE SAME ASSESSEE THE SAME ARE DISPOSED OF BY THIS COMMON ORDER. 3. IT WAS THE SUBMITTED BY THE LEARNED AUTHORISED R EPRESENTATIVE THAT THE ASSESSEE IS IN THE BUSINESS OF IMPORT AND EXPORT OF AGRICULTURAL PRODUCTS SUCH AS ONIONS CHILLIES ETC. IN THE COURSE OF ASSESSMENT IT WAS NOTICED THAT THE ASSESSEE HAD CLAIMED WASTAGE IN REGARD TO ONIONS EXPORTED AT 7.5%. IT WAS THE SUBMISSION THAT THE ASSESSING OFFICER HAD RESTRICTE D THE WASTAGE TO 5% AFTER OBTAINING A REPORT FROM THE INSPECTOR ATTACHED TO H IM. IT WAS THE SUBMISSION THAT THE INSPECTOR HAD OBTAINED INFORMATION FROM ON E OF THE SUPERVISORS OF THE ASSESSEE AND HAD GIVEN A REPORT INTIMATING THAT THE SHELF LIFE OF ONIONS ARE USUALLY HIGH COMPARED TO OTHER VEGETABLES AND AFTER VERIFICATION OF THE RECORDS KEPT IN THE PREMISES AS ALSO THE VERSION OF THE SUP ERVISOR THE SHORTAGE WAS ARRIVED AT AROUND 4 TO 5% OF THE TOTAL PURCHASES. IT WAS THE SUBMISSION THAT THE ASSESSING OFFICER HAD CONSEQUENTLY ALLOWED THE ASSE SSEE WASTAGE OF ONLY 5% AS AGAINST 7.8% CLAIMED BY THE ASSESSEE. IT WAS THE F URTHER SUBMISSION THAT THE ASSESSING OFFICER HAD ALSO DISALLOWED THE PAYMENTS MADE TO THE PORT TRUST OF PONDICHERRY AS ALSO THE PORT TRUST OF NAGAPATTINAM ON THE GROUND THAT NO TDS HAD BEEN MADE UNDER SEC. 194C OF THE ACT. IT WAS T HE SUBMISSION THAT THE ASSESSING OFFICER HAD INVOKED THE PROVISIONS OF SEC TION 40(A)(IA) OF THE ACT. IT WAS THE SUBMISSION THAT THE LEARNED CIT(A) HAD DELE TED THE DISALLOWANCE MADE IN REGARD TO THE PAYMENTS MADE TO THE PORT TRUST P ONDICHERRY ON THE GROUND I.T.A. NOS. 326 & 327/MDS/2011 3 THAT THE PAYMENTS HAD BEEN MADE TO THE GOVERNMENT O F PONDICHERRY. IT WAS THE SUBMISSION THAT THE LEARNED CIT(A) HAD CONFIRMED TH E DISALLOWANCE MADE BY INVOKING THE PROVISIONS OF SECTION 40(A)(IA) IN RES PECT OF THE PAYMENT MADE TO THE PORT TRUST NAGAPATTINAM ON THE GROUND THAT NO TDS HAD BEEN MADE. IT WAS THE SUBMISSION THAT THE PORT TRUST AT NAGAPATTINAM WAS NOT PERMITTING THE DEDUCTION OF TDS. IT WAS THE SUBMISSION THAT CONS EQUENTLY THE ASSESSEE HAD TO PAY THE FULL AMOUNT. IT WAS THE SUBMISSION THAT HE HAD NO OBJECTION IF THIS ISSUE IS RESTORED TO THE FILE OF THE ASSESSING OFFICER FO R RE-ADJUDICATION AND THE ASSESSEE WOULD BE IN A POSITION TO PRODUCE EVIDENCE TO SHOW THAT THE PORT TRUST NAGAPATTINAM WAS NOT AGREEING TO THE DEDUCTION OF T DS. IT WAS THE FURTHER SUBMISSION BY THE LEARNED AUTHORISED REPRESENTATIVE THAT IN REGARD TO THE ISSUE OF WASTAGE THE ASSESSEES BOOKS OF ACCOUNTS HAD NOT BE3EN REJECTED AND CONSEQUENTLY NO ESTIMATING IN REGARD TO THE WASTAGE COULD BE MADE. 4. IN REPLY THE LEARNED DR SUBMITTED THAT THERE WA S NO REASON FOR THE WASTAGE TO BE AS HIGH AS 7.8%. IN REGARD TO THE DI SALLOWANCE CONFIRMED BY THE LEARNED CIT(A) IN REGARD TO THE PROVISIONS OF SECT ION 40(A)(IA) ON ACCOUNT OF THE NON-DEDUCTION OF TDS U/S. 194C IN RESPECT OF THE PA YMENT MADE TO THE PORT TRUST NAGAPATTINAM IT WAS THE SUBMISSION THAT WHE THER TDS WAS PERMITTED TO BE MADE OR NOT AS PER THE PROVISIONS OF SEC. 40(A) (IA) IF THE TDS HAS NOT BEEN MADE THE EXPENDITURE WAS NOT ALLOWABLE. HE VEHEME NTLY SUPPORTED THE ORDER OF THE ASSESSING OFFICER AND THE LEARNED CIT(A). I.T.A. NOS. 326 & 327/MDS/2011 4 5. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS. A PER USAL OF THE ASSESSMENT ORDER SHOWS THAT AS PER SECTION 44AB REPORT ENCLOSE D ALONG WITH THE RETURN OF INCOME THE ASSESSEE HAS CLAIMED THE SHORTAGE OF ONI ONS. THE ASSESSEE WAS ALSO ASKED TO SUPPORT THE CLAIM OF THE DAMAGES. WHAT IS THE DEFECT IN THE SUPPORTING DOCUMENTS WHICH HAVE BEEN GIVEN BY THE ASSESSEE IS NOT COMING OUT OF THE ASSESSMENT ORDER. ALL THAT THE ASSESSING OFFICER S AYS IS THAT THE ENTRIES MADE FOR THE SHORTAGE ARE NOT CONVINCING. FURTHER IT IS NOT ICED THAT THE SUPERVISOR OF THE ASSESSEE HAS STATED THAT THE PERISHABILITY OF THE O NIONS COULD BE AROUND 4 TO 5%. WHAT IS THE STATEMENT OF THE SUPERVISOR AND WHETHER THE SUPERVISORS STATEMENT HAS BEEN PUT TO THE ASSESSEE FOR EXAMINATION IS ALS O NOT COMING OUT OF THE ASSESSMENT ORDER. HOW THE SHORTAGES HAVE BEEN ARRI VED AT 4 TO 5% OUT OF THE TOTAL PURCHASES IS ALSO NOT COMING OUT OF THE INSPE CTORS REPORT. THUS WHAT IS NOTICED IS THAT THE AUDIT REPORT IN THE CASE OF THE ASSESSEE AS ALSO THE PURCHASE REGISTER STOCK REGISTER ETC. SUPPORT THE CLAIM OF THE ASSESSEE IN REGARD TO THE WASTAGE OF 7.8% AND AS AGAINST THESE EVIDENCES THE ASSESSING OFFICER IS SUPPORTED ONLY BY AN ENQUIRY REPORT BY THE INSPECTO R WHEREIN A PRESUMPTION IS DRAWN THAT THE WASTAGE WOULD BE ABOUT 4 TO 5%. PRE SUMPTIONS IT IS WELL KNOWN CANNOT FORM THE BASIS OF AN ASSESSMENT. THE AUDIT REPORT IN THE CASE OF THE ASSESSEE HAS ALSO NOT BEEN FOUND TO BE WRONG OR DEFECTIVE NOR HAS THE BOOKS OF ACCOUNTS OF THE ASSESSEE BEEN FOUND TO BE UNRELI ABLE OR REJECTED. FURTHER A WASTAGE OF 4 TO 5% AS ESTIMATED BY THE ASSESSING OF FICER ON THE BASIS OF THE I.T.A. NOS. 326 & 327/MDS/2011 5 INSPECTORS REPORT OR 7.8% AS COMPUTED BY THE ASSES SEE CANNOT BE A BENCHMARK FOR CALCULATING WASTAGES. THE WASTAGES SHOULD BE T HE ACTUAL WASTAGES AS ARE RECORDED IN THE BOOKS OF ACCOUNTS. IN THE CIRCUMST ANCES WE ARE OF THE VIEW THAT IN THE ABSENCE OF ANY EVIDENCE TO THE CONTRARY THE CLAIM OF WASTAGE OF 107.511 METRIC TONNES FOR THE ASSESSMENT YEAR 2006-07 AND 2 30.339 METRIC TONNES FOR THE ASSESSMENT YEAR 2007-08 IS LIABLE TO BE ALLOWED AND WE DO SO. 6. IN REGARD TO THE ISSUE OF THE DISALLOWANCE BY IN VOKING THE PROVISIONS OF SECTION 40(A)(IA) OF THE ACT IN RESPECT OF THE PAYM ENTS MADE TO THE PORT TRUST NAGAPATTINAM THE ASSESSEE HAS CLAIMED THAT THE PAY MENTS WERE MADE TO THE PORT TRUST WITHOUT DEDUCTING TDS ON THE GROUND THAT THE SAID PORT TRUST HAD DEMANDED THE PAYMENTS TO BE MADE WITHOUT DEDUCTING TDS. THE ASSESSEE HAS PLACED BEFORE US ONLY THE DEMAND NOTE ISSUED BY THE GOVERNMENT OF PONDICHERRY PORT DEPARTMENT. HOWEVER THE DEMAND NOTE RAISED B Y THE PORT TRUST AT NAGAPATTINAM IS NOT BEFORE US. A PERUSAL OF THE AS SESSMENT ORDER ALSO SHOWS THAT THE LEARNED AUTHORISED REPRESENTATIVE HAS RAIS ED THE ARGUMENT THAT THE AGENCIES ARE GOVERNMENT AGENCIES AND NO TAX IS LIAB LE TO BE DEDUCTED. IT IS ALSO NOTICED THAT THE LEARNED CIT(A) HAS ACCEPTED THE CL AIM OF THE ASSESSEE THAT THE PAYMENT TO THE PORT TRUST OF PONDICHERRY WAS A PAYM ENT TO THE GOVERNMENT AND THE REVENUE HAS ALSO NOT FILED ANY APPEAL AGAINST T HE SAME. AS THERE IS NO EVIDENCE IN REGARD TO THE PAYMENTS MADE TO THE PORT TRUST NAGAPATTINAM WE ARE OF THE VIEW THAT THIS ISSUE IS LIABLE TO BE RES TORED TO THE FILE OF THE ASSESSING I.T.A. NOS. 326 & 327/MDS/2011 6 OFFICER FOR RE-ADJUDICATION TO FIRST EXAMINE AS TO WHETHER TDS IS LIABLE TO BE MADE ON THE PAYMENT TO THE PORT TRUST DURING THE RE LEVANT ASSESSMENT YEARS AND IF YES UNDER WHICH PROVISION THE SAME IS LIABL E TO BE MADE. THE ASSESSEE SHALL CO-OPERATE IN THE SET ASIDE PROCEEDINGS. THE ASSESSING OFFICER SHALL AFTER EXAMINING AND ASSIMILATING ALL FACTS SHALL RE-DECID E THE ISSUE IN ACCORDANCE WITH LAW AFTER GRANTING THE ASSESSEE ADEQUATE OPPORTUNIT Y TO SUBSTANTIATE ITS CASE. IN THE CIRCUMSTANCES THE APPEALS OF THE ASSESSEE ARE PARTLY ALLOWED FOR STATISTICAL PURPOSES. 7. THE ORDER WAS PRONOUNCED IN THE COURT ON 25 TH MARCH 2011. SD/- SD/- (ABRAHAM P. GEORGE) (GEORGE MATHAN) ACCOUNTANT MEMBER JUDICIAL MEMBER CHENNAI DATED THE 25 TH MARCH 2011. H. COPY TO: ASSESSEE/AO/CIT (A)/CIT/D.R./GUARD FILE