Parker Agrochem Exports Ltd.,, Ahmedabad v. The Income tax Officer,Ward-2(1),, Ahmedabad

ITA 4011/AHD/2007 | 2004-2005
Pronouncement Date: 31-05-2010 | Result: Allowed

Appeal Details

RSA Number 401120514 RSA 2007
Assessee PAN HASED6480Q
Bench Ahmedabad
Appeal Number ITA 4011/AHD/2007
Duration Of Justice 2 year(s) 6 month(s) 28 day(s)
Appellant Parker Agrochem Exports Ltd.,, Ahmedabad
Respondent The Income tax Officer,Ward-2(1),, Ahmedabad
Appeal Type Income Tax Appeal
Pronouncement Date 31-05-2010
Appeal Filed By Assessee
Order Result Allowed
Bench Allotted C
Tribunal Order Date 31-05-2010
Date Of Final Hearing 12-05-2010
Next Hearing Date 12-05-2010
Assessment Year 2004-2005
Appeal Filed On 02-11-2007
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD BENCH C BEFORE SHRI MUKUL SHRAWAT JUDICIAL MEMBER AND SHRI D.C. AGRAWAL ACCOUNTANT MEMBER DATE OF HEARING : 12/5/2010 DRAFTED ON:14/05/2 010 ITA NO.4011/AHD/2007 ASSESSMENT YEAR : 2004-05 PARKER AGROCHEM EXPORTS LTD. 2 ND FLOOR LANDMARK BLDG OPP.HDFC HOUSE MITHAKHALI 6 ROADS AHMEDABAD VS. THE INCOME TAX OFFICER CENTRAL WARD-2(1) AHMEDABAD PAN/GIR NO. : (APPELLANT) .. (RESPONDENT) APPELLANT BY : SHRI S.N. SOPARKAR RESPONDENT BY: SHRI M.C.PANDIT SR. D.R. O R D E R PER SHRI MUKUL SHRAWAT JUDICIAL MEMBER : THIS IS AN APPEAL AT THE BEHEST OF THE ASSESSEE W HICH HAS EMANATED FROM THE ORDER OF THE LEARNED CIT(APPEALS) -III AHMEDABAD DATED 29/08/2007. GROUNDS RAISED ARE HEREBY DECIDE D AS UNDER. 1. ADDITION OF RS.2 66 125/- TOWARDS ALLEGED INFL ATED PURCHASES OF ARANDA BE DELETED. 2. FACTS IN BRIEF; AS EMERGED FROM THE CORRESPONDIN G ASSESSMENT ORDER PASSED U/S.143(3) OF THE I.T. ACT 1961 DATE D 27/12/2006 THAT THE ASSESSEE IS IN THE BUSINESS OF TRADING AND INVESTME NT IN SHARES GOLD AND SILVER. HE IS ALSO IN THE BUSINESS OF LETTING OUT THE STORAGE TANK AS WELL AS TRADING IN ALUMINIUM SCRAP. IT WAS NOTED BY THE AS SESSING OFFICER THAT ITA NO.4011/AHD /2007 PARKER AGROCHEM EXPORTS LTD. VS. ITO ASST.YEAR 2004-05 - 2 - THE ASSESSEE HAD PURCHASED 6480 QUINTALS OF CASTER SEED AT THE RATE OF RS.1 780/- PER QUINTAL FROM M/S.JAYANTILAL & CO. ON ENQUIRY IT WAS FOUND BY THE ASSESSING OFFICER THAT THE PREVAILING PRICE AS PER THE AGRICULTURAL PRODUCE MARKET COMMITTEE (HEREINAFTER REFERRED TO AS APMC) WAS RS.1 750/- PER QUINTAL. IT WAS ALSO NO TED BY THE ASSESSING OFFICER THAT THE SAID CONCERN M/S.JAYANTILAL & CO. HAS ITSELF PURCHASED THE CASTER SEED FROM ONE M/S.RAYSON PROJECTS & ENTE RTAINMENTS AND M/S.KRISHNA AUTOMOBILES ON THAT RATE. ON THE BASIS OF SEVERAL OTHER ENQUIRES THE ASSESSING OFFICER HAS REACHED AT THE CONCLUSION THAT THE ASSESSEE HAD INFLATED THE PURCHASE PRICE OF THE SAI D COMMODITY. HE HAS ALSO MADE AN OBSERVATION THAT M/S.JAYANTILAL & CO. WAS USED AS CONDUIT TO INFLATE THE PURCHASES. THE ASSESSING OFFICER H AS ARRIVED AT A CONCLUSION AND MADE THE ADDITION VIDE FOLLOWING PAR AGRAPH:- FROM THE ABOVE ALSO IT WILL ESTABLISH THAT THE AS SESSEE HAD SOME ADJUSTMENT WITH JAYANTILAL & CO. NO PRUDENT BUSINE SS MAN WILL MAKE EXCESS PAYMENT AS SHOWN ABOVE AND RECEIVE BACK AT A LATER DATE. IT IS ALSO STRENGTHENED THAT THE ASSESSEE H AD BORROWED HUGE AMOUNTS BY PAYING INTEREST TO ITS DIRECTORS GROUP FINANCE COMPANY BANKS ETC. AND WITHOUT VERIFYING THE ACTU AL AMOUNT PAYABLE THAT TOO AFTER THE DATE OF PURCHASE OF GOOD S AND RECEIPT OF BILLS. CONSIDERING THE ABOVE FACTUAL ASPECT OF THE CASE I AM OF THE VIEW THAT THERE IS NO REASON TO PAY MORE AMOUNT THA N THAT QUOTED BY THE APMC ON THE DATE OF PURCHASE AND INCURRED HU GE LOSS IN THE SAID TRANSACTION. THEREFORE THE EXCESS PAYMEN T BETWEEN THE PAYMENT TO JAYANTILAL & CO. AND THE QUOTED PRICE BY THE APMC IS DISALLOWED AS INFLATED PURCHASE PRICE. THIS IS MOR E BECAUSE THE ENTIRE GOODS OF 6480 QUINTALS HAD BEEN PURCHASED FR OM THE GROUP CONCERNS AND JAYANTILAL & CO. WAS PUT AS A CONDUIT SO AS TO JUSTIFY THE TRANSACTIONS. THE EXCESS PAYMENT MADE IS WORKE D OUT AS UNDER: ITA NO.4011/AHD /2007 PARKER AGROCHEM EXPORTS LTD. VS. ITO ASST.YEAR 2004-05 - 3 - TOTAL PURCHASE PRICE OF 6480 QUINTALS OF ARENDA AS PER TRADING A/C. OF THE ASSESSEE RS.1 1 5 34 400/- LESS : VALUE OF 6480 QUINTALS OF ARENDA AS PER MAXIMUM RATE QUOTED BY APMC DEESA AS WORKED OUT ABOVE RS.1 12 68 337/- EXCESS PRICE PAID RS. 2 66 125/- IN VIEW OF THE FOREGOING DISCUSSION THE EXCESS PAY MENT OF RS.2 66 125/- IS ADDED TO THE INCOME DISCLOSED BY T HE ASSESSEE AS INFLATED PURCHASE PRICE PAID FOR THE ARENDA BELONGE D TO THE GROUP CONCERNS BUT ROUTED JAYANTILAL & CO. PENALTY PROCE EDINGS U/S. 271(1)(C) FOR FURNISHING INACCURATE PARTICULARS OF INCOME WILL BE INITIATED SEPARATELY. 3. BEING AGGRIEVED THE ADDITION WAS CHALLENGED BEF ORE THE FIRST APPELLATE AUTHORITY. THE LEARNED CIT(APPEALS) HAS AFFIRMED THE ACTION OF THE ASSESSING OFFICER BY ASSIGNING A REASON THAT THE ASSESSEE HAD FAILED TO EXPLAIN AS TO WHY THE PURCHASES HAVE BEEN MADE IN SUCH A MANNER SPECIALLY WHEN THE PREVAILING RATE OF THE SA ID COMMODITY WERE LOWER AS ALSO AFFIRMED BY THE APMC. IN HIS OPIN ION BY THE SET UP TRANSACTION THE APPELLANT HAD CONTRIVED WITH THOSE PARTIES AND INFLATED THE PURCHASES. THE ACTION OF THE ASSESSING OFFICER WAS CONFIRMED. 4. WE HAVE HEARD BOTH THE SIDES WITH THIS FACTUAL B ACKGROUND. WE HAVE ALSO PERUSED THE COMPILATION FILED BEFORE US. 4.1. THE FIRST AND THE FOREMOST VEHEMENT ARGUMENT O F THE LEARNED AUTHORISED REPRESENTATIVE OF THE ASSESSEE WAS THAT WITHOUT INVOKING THE PROVISIONS OF SECTION 40A(2) OF THE I.T. ACT 1961 THE ASSESSING OFFICER ITA NO.4011/AHD /2007 PARKER AGROCHEM EXPORTS LTD. VS. ITO ASST.YEAR 2004-05 - 4 - HAS WRONGLY MADE THE IMPUGNED DISALLOWANCE. ADMITT EDLY THOSE PURCHASES HAVE NOT BEEN MADE FROM ANY OF THE PERSON S AS DESCRIBED IN SECTION 40(A(2)(B) OF THE I.T. ACT 1961. ONCE THE PURCHASES HAVE NOT BEEN MADE FROM ANY OF THE SISTER-CONCERN OR FROM AN Y INTERESTED PARTY THEREFORE IT WAS WRONG ON THE PART OF THE ASSESSIN G OFFICER TO MAKE THE SAID ADDITION. THE LEARNED AUTHORISED REPRESENTAT IVE OF THE ASSESSEE HAS ALSO DRAWN OUR ATTENTION ON A CHART WHICH WAS R EPRODUCED BY THE LEARNED CIT(APPEALS) AS APPEARING ON PAGE NO.5 OF T HE APPELLATE ORDER TO DEMONSTRATE THAT THE RATES WERE NOT INFLATED AND THOSE VERY RATES WERE THE RATES WHEN THE SAID COMMODITY WAS TRANSACTED BE TWEEN THE OTHER PARTIES. 4.2. ON EXAMINATION OF THE DETAILS FURNISHED BEFORE US ONE THING IS EVIDENT THAT THE IMPUGNED TRANSACTION WAS ADMITTEDL Y NOT COVERED BY THE PROVISIONS OF SECTION 40A(2) OF THE I.T. ACT 1961. AS FAR AS THE REASONABLENESS OF THE PRICE OF THE SAID COMMODITY WAS CONCERNED THOUGH THE APMC HAS QUOTED THE LOWER PRICE BUT TH E EVIDENCE ON RECORD HAVE DEMONSTRATED THAT THE PRICE ON WHICH THE SAID GOOD WERE SUPPLIED WERE ALSO THE PREVAILING PRICE BETWEEN THE OTHER TWO PARTIES. HENCE IT WAS VEHEMENTLY PLEADED THAT THOSE EVIDENCE S MUST NOT BE OVERLOOKED. WE HAVE ALSO FOUND FORCE IN THE OTHER ARGUMENT OF THE LEARNED AUTHORISED REPRESENTATIVE OF THE ASSESSEE T HAT IF THE RATES AS SUGGESTED BY THE ASSESSING OFFICER WOULD BE APPLIED THEN THE SUPPLIER SHOULD RUN IN LOSS THOUGH ON THE CONTRARY HE HA S SHOWN PROFIT ON THE SAID TRANSACTION. IN OUR CONSIDERED OPINION IT C OULD HAVE BEEN A REASON TO DOUBT; BUT DUE TO LACK OF CONCLUSIVE EVIDENCE M UST NOT BE SUSTAINED. ITA NO.4011/AHD /2007 PARKER AGROCHEM EXPORTS LTD. VS. ITO ASST.YEAR 2004-05 - 5 - MERELY ON PREPONDERANCE OF PROBABILITIES IT IS DIF FICULT FOR US TO SUSTAIN SUCH AN ADDITION. THE VIEW TAKEN BY THE AUTHORITI ES BELOW IS HEREBY REVERSED AND ONCE THE TRANSACTION WAS FOUND DULY IN CORPORATED BETWEEN THE PARTIES WHO ARE IDENTIFIABLE AND GENUINENESS W AS NOT DOUBTED THEN DESERVES DUE RELIEF. THIS GROUND IS ALLOWED. 5. GROUND NO.2 READS AS UNDER: 2. ADDITION OF RS.54 715/- DISALLOWING CLAIM FOR LOSS ON SALE OF ALLUMINIUM SCRAP BE DELETED. 6. FACTS IN BRIEF WERE THAT THE ASSESSING OFFICER H AS NOTICED THAT THE ASSESSEE HAS IMPORTED ALUMINIUM FROM NEW ZEALAND FO R A SUM OF RS.14 97 187/-. THERE WAS ANOTHER PURCHASE OF RS.1 1 95 720/-. OUT OF THOSE PURCHASES THE APPELLANT HAD SOLD 4 M.T. TO A PARTY VIZ. MAHALAXMI & CO. IN THAT TRANSACTION A LOSS OF RS. 54 745/- WAS INCURRED. THE INCURRING OF THE SAID LOSS WAS QUESTIONED BY TH E ASSESSING OFFICER. THE EXPLANATION OF THE ASSESSEE WAS THAT THE SALE W AS MADE AGAINST DEMAND DRAFT AND AFFECTED THROUGH AN ADVERTISEMENT ON DIFFERENT NEWSPAPERS. IT WAS ALSO EXPLAINED THAT SEEING THOS E ADVERTISEMENTS THE SAID PARTY HAS APPROACHED THE ASSESSEE WHO WAS NOT KNOWN TO THE ASSESSEE AND ON RECEIVING THE PAYMENT THROUGH DRAFT THE SALE WAS EXECUTED. IN THE ABSENCE OF PROPER COMPLIANCE AND THE REQUISITE DETAILS THE ASSESSING OFFICER WAS NOT CONVINCED AND MADE T HE ADDITION OF THE IMPUGNED LOSS CLAIMED WHICH WAS CHALLENGED IN FIRST APPEAL. 7. THE LEARNED CIT(APPEALS) WAS ALSO NOT CONVINCED AND HELD THAT THE ASSESSEE HAS NOT FURNISHED THE DEMAND DRAFT NUM BER AND THE ADDRESS ITA NO.4011/AHD /2007 PARKER AGROCHEM EXPORTS LTD. VS. ITO ASST.YEAR 2004-05 - 6 - OF THE SAID PARTY HENCE IN THE ABSENCE OF THOSE EV IDENCES HELD THAT THE ASSESSING OFFICER HAD RIGHTLY DISALLOWED THE CLAIM. 8. HAVING HEARD BOTH THE SIDES AND PERUSING THE EVI DENCES PLACED BEFORE US THROUGH A COMPILATION WE ARE OF THE VIEW THAT ONCE THE APPELLANT HAS ADVERTISED ABOUT THE SALE OF ALUMINIU M SCRAP AND THE PAYMENT WAS COLLECTED THROUGH A DRAFT HOWEVER THE MATTER BEING OLD THE REQUISITE DETAILS COULD NOT BE PRODUCED BUT THERE WERE OTHER SURROUNDING CIRCUMSTANCES AND COGENT EVIDENCE TO DEMONSTRATE TH AT THE SCRAP WAS SOLD THROUGH ADVERTISEMENT THEREFORE WE DEEM IT J USTIFIABLE TO REVERSE THOSE FINDINGS OF THE REVENUE AUTHORITIES WE THER EFORE CONSIDERING THE TOTALITY OF THE CIRCUMSTANCES DIRECT TO ALLOW THE CLAIM. WITH THE RESULT THIS GROUND IS ALLOWED. 9. IN THE RESULT THE APPEAL OF ASSESSEE IS ALLOWED . ORDER SIGNED DATED AND PRONOUNCED IN THE COURT ON 31 ST MAY 2010. SD/- SD/- ( D.C. AGRAWAL) ( MUKUL SHRAWAT ) ACCOUNTANT MEMBER JUDICIAL MEMBER AHMEDABAD; DATED 31 / 05 /2010 T.C. NAIR SR. PS COPY OF THE ORDER FORWARDED TO : 1. THE APPELLANT. 2. THE RESPO NDENT 3. THE CIT CONCERNED. 4. THE LD. CIT(AP PEALS)-III AHMEDABAD 5. THE DR AHMEDABAD BENCH.6. THE GUARD FILE. BY ORDER //TRUE COPY// (DY./ASSTT.REGISTRAR) ITAT AHMEDABAD