I.T.O-8(2)3, MUMBAI v. M/S. NISSIM TRADERS P.LTD., MUMBAI

ITA 4404/MUM/2008 | 2004-2005
Pronouncement Date: 24-03-2010 | Result: Dismissed

Appeal Details

RSA Number 440419914 RSA 2008
Assessee PAN AABCN3760G
Bench Mumbai
Appeal Number ITA 4404/MUM/2008
Duration Of Justice 1 year(s) 8 month(s) 28 day(s)
Appellant I.T.O-8(2)3, MUMBAI
Respondent M/S. NISSIM TRADERS P.LTD., MUMBAI
Appeal Type Income Tax Appeal
Pronouncement Date 24-03-2010
Appeal Filed By Department
Order Result Dismissed
Bench Allotted I
Tribunal Order Date 23-03-2010
Date Of Final Hearing 15-03-2010
Next Hearing Date 15-03-2010
Assessment Year 2004-2005
Appeal Filed On 26-06-2008
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH I MUMBAI BEFORE SMT. P.MADHAVI DEVI JM & SHRI RAJENDRA SINGH AM I.T.A.NO.4404/MUM/2008 - A.Y 2004-05 INCOME TAX OFFICER 8(2)-3 MUMBAI VS. M/S NISSIM TRADERS P. LTD. E 203 GURUPRASAD PLOT NO.5 S.S.S.NAGAR CROSS RD. NO.2 LOKHANDWALA ANDHERI [W] MUMBAI 400 053. PAN NO.AABCN 3760 G (APPELLANT) (RESPONDENT) REVENUE BY : MR. MOHD. USMAN. ASSESSEE BY : MR. JITENDRA JAIN. O R D E R PER P.MADHAVI DEVI JM: THIS APPEAL OF THE REVENUE IS DIRECTED AGAINST CIT (A)S ORDER DATED 30-4-2008. 2. THE REVENUE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL- 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E THE LEARNED CIT[A] ERRED IN DIRECTING THE AO TO ALLOW TRADING LOSS CL AIMED AT AN AMOUNT OF RS.29 67 439/- UPTO THE EXTENT OF RS.20 00 000/-. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E THE LEARNED CIT[A] ERRED IN RESTRICTING THE ADDITION ON ACCOUNT OF UNEXPLAINED CASH DEPOSITS TO THE EXTENT OF RS.2 96 342/-. 3. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E THE LEARNED CIT[A] ERRED IN RESTRICTING THE DISALLOWANCE OUT OF ADMINISTRATIVE EXPENDITURE OF RS.10 29 124/- TO THE EXTENT OF 10% OF SUCH EXPENDITURE. IN ADDITION THE REVENUE HAS ALSO RAISED THE FOLLOW ING ADDITIONAL GROUNDS OF APPEAL VIDE LETTER DATED 18-1-2010 : 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E THE LEARNED CIT[A] ERRED IN ACCEPTING ADDITIONAL EVIDENCE FROM THE ASSESSEE IN GROSS VIOLATION OF RULE 46A WITHOUT RECORDING A NY REASONS IN HIS ORDER FOR ADMITTING THE ADDITIONAL E VIDENCES. 2 2. THE APPELLANT PRAYS THAT THE ORDER OF THE CIT[A] ON THE ABOVE GROUND TO BE SET ASIDE AND THAT OF THE ITO BE RESTO RED. 3. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE C OMPANY WHICH IS ENGAGED IN THE BUSINESS OF TRADING IN TEXTILES AND ALSO IN THE BUSINESS OF COMMISSION AND BROKERAGE FILED ITS RETURN OF IN COME DECLARING TOTAL LOSS OF RS.2 95 483/-. DURING THE ASSESSMENT PROCEE DINGS U/S.143[3] OF THE ACT AO CALLED FOR VARIOUS DETAILS. HE OBSERVED THAT THE TAX AUDIT REPORT OF THE ASSESSEE DOES NOT MENTION THE STOCK R EGISTER IN COLUMN NO.9(B) AND 9(C) AND ALSO THAT COLUMN NO.28[A] DOES NOT PROVIDE ANY QUANTITATIVE DETAILS OF PRINCIPAL ITEMS TRADED. HE FURTHER OBSERVED THAT TRANSPORT EXPENSES SHOWN ARE INADEQUATE AND ARE NOT IN PROPORTION TO THE QUANTITY OF GOODS TRADED. HE ALSO OBSERVED THAT THE OTHER PARTY IN THESE SAME TRANSACTIONS DO NOT REFLECT THE TRANSPOR T CHARGES AND BILLS ALSO DO NOT SHOW THE PLACE OF DISPATCH OF THE GOOD S AND THAT THE ASSESSEE HAS NOT SHOWN ANY GODOWN OR STORAGE FACILI TIES AND THE EXPENDITURE INCURRED ON SUCH FACILITIES. HE ALSO NO TED THAT MOST OF THE COLUMNS OF THE SALES BILLS ARE BLANK AND DO NOT SHO W ANY IMPORTANT DETAILS OF DELIVERY NOTE TERMS OF PAYMENT SUPPLIE RS REFERENCE BUYERS ORDER NUMBER AND DATE DISPATCH DOCUMENT AND DESTIN ATION OF SUCH TRANSACTION ETC. HE THEREFORE CALLED FOR ASSESSEE S EXPLANATION ABOUT THE SAME AS TO WHY THE BOOKS OF ACCOUNTS OF THE ASS ESSEE SHOULD NOT BE REJECTED U/S.145 OF THE ACT. AO ALSO INFORMED TH E ASSESSEE THAT NOTICES U/S.133[6] AND 131 WERE ALSO ISSUED TO SOME OF THE PARTIES WHOSE NAMES ARE REPRODUCED AT PAGE-3 OF THE ASSESSM ENT ORDER AND 3 THERE WAS NO COMPLIANCE FROM SEVERAL OF THE PARTIES . THEREFORE ASSESSEES EXPLANATION WAS CALLED FOR AND AS THERE WAS NO RESPONSE FROM THE ASSESSEE OR ITS REPRESENTATIVE TO THE SHOW CAUSE NOTICES ISSUED AO MADE THE EX PARTE ASSESSMENT AND REJECTE D THE ASSESSEES BOOKS OF ACCOUNTS U/S.`145[3] OF THE ACT AND HELD T HAT ALL THE TRADING TRANSACTIONS OF PURCHASES AND SALES ARE ONLY PAPER TRANSACTIONS TO CREATE LOSS TO SET OFF WITH THE OTHER INCOME OF THE ASSESSEE. HE THEREFORE DISALLOWED THE LOSS OF RS.29 67 439/- CL AIMED BY THE ASSESSEE AS LOSS ON TRADING ACTIVITY. THEREAFTER H E HELD THAT ASSESSEE IS ENTERING INTO ACCOMMODATING TRANSACTIONS AND IN THE ABSENCE OF ANY DETAILS HE ESTIMATED THE INCOME THEREFROM TO BE @ 2 % OF THE TOTAL SALES I.E. AT RS.5 73 590/-. THEREAFTER HE ALSO VE RIFIED THE DETAILS AS REGARDS THE CASH DEPOSITS IN ASSESSEES BANK ACCOUN T AND FOUND THAT THERE IS A TOTAL CASH DEPOSIT OF RS.61 94 680/- WHO SE SOURCE AND NATURE IS NOT EXPLAINED BY THE ASSESSEE. THEREFORE HE ADDED THE SAME TO THE TOTAL INCOME OF THE ASSESSEE AS UNDECLARED A ND UNEXPLAINED SOURCE OF INCOME OF THE ASSESSEE. 4. AGGRIEVED BY THE DISALLOWANCES AND THE CONSEQUEN T ADDITIONS BY THE AO ASSESSEE FILED AN APPEAL BEFORE THE CIT[A] ALONG WITH THE ENCLOSURES. THE CIT[A] CALLED FOR THE REMAND REPOR T FROM THE AO WHO SUBMITTED THE SAME U/S.250[4] OF THE ACT VIDE LETTE R DATED 22-4-2008. AFTER CONSIDERING THE SAME THE CIT[A] CAME TO THE CONCLUSION THAT THE ASSESSEE IS MAINTAINING THE BOOKS OF ACCOUNTS A ND STOCK RECORDS AND CONFIRMATION FROM VARIOUS PARTIES TO THE PURCHA SE AND SALE 4 TRANSACTIONS HAVE ALSO BEEN PRODUCED ALONG WITH THE ADDRESSES AND PAN NUMBERS OF THE CONCERNED PARTIES. HE HELD THAT THE DISCREPANCIES POINTED OUT BY THE AO HAVE ALSO BEEN EXPLAINED BY T HE ASSESSEE WITH NECESSARY CONFIRMATIONS FROM THE PARTIES AND ALSO T HE QUANTITY AND VALUE-WISE DETAILED STOCK RECORDS ARE MAINTAINED BY THE ASSESSEE. HE ALSO CONSIDERED THAT HIS PREDECESSOR IN THE ASSESSE ES OWN CASE FOR THE A.Y 2003-04 HAD HELD THAT ASSESSEE WAS NOT INDULGIN G IN HAWALA TRANSACTION AS ALLEGED BY THE AO AND THAT IN THAT Y EAR THE ASSESSEE HAS DECLARED GP OF 0.65% OF THE SALES AND THE CIT[A] H AD ESTIMATED THE PROFIT @ 1% OF THE SALES AFTER CONSIDERING THE FACT S AS AGAINST THE GP OF 0.65% DECLARED BY THE AO. HE HELD THAT DURING TH E RELEVANT ASSESSMENT YEAR UNDER CONSIDERATION THE TURNOVER OF THE ASSESSEE WAS REDUCED BY NEARLY 65% AND ALL THE DETAILS AND EXPLA NATIONS HAVE BEEN FURNISHED BY THE ASSESSEE. HE THEREFORE DIRECTED THE AO TO ALLOW THE TRADING LOSS CLAIMED BY THE ASSESSEE AT AN AMOUNT O F RS.29 67 439/- UPTO THE EXTENT OF RS.20 00 000/- AND TO DELETE THE ADDITION OF RS.5 73 590/-. AGGRIEVED BY THE RELIEF GIVEN BY THE CIT[A] THE REVENUE IS IN APPEAL BEFORE US. 5. THE LD. DR SUBMITTED THAT THOUGH THE ASSESSEE WA S GIVEN AMPLE OPPORTUNITIES OF HEARING BEFORE THE AO HE FAILED T O APPEAR AND PRODUCE THE RELEVANT MATERIAL BEFORE THE AO AND HAS NOT GIVEN ANY REASON FOR PRODUCING THE EVIDENCE AT THE APPELLATE STAGE BEFORE THE CIT[A]. IT WAS FURTHER SUBMITTED THAT THE CIT[A] H AS NOT GIVEN ANY JUSTIFIABLE REASONS FOR ADMITTING THE ADDITIONAL EV IDENCE FILED BEFORE 5 HIM AND THEREFORE ACCORDING TO HIM PROVISIONS OF RULE 46A HAS BEEN VIOLATED. EVEN ON THE RELIEF GIVEN BY THE CIT[A] D ELETING THE PART OF THE ADDITION THE LD. DR SUBMITTED THAT THE ASSESSE E HAS FAILED TO ESTABLISH WITH EVIDENCE IN SUPPORT OF HIS CONTENTIO N THAT IT HAS INCURRED THE LOSS. 6. THE LD. COUNSEL FOR THE ASSESSEE ON THE OTHER H AND SUPPORTED THE ORDER OF THE CIT[A] AND SUBMITTED THAT THE AO HAS NOT GIVEN AMPLE OPPORTUNITY TO THE ASSESSEE AT THE TIME OF HE ARING AND THEREFORE ASSESSEE HAD FILED ALL THE DETAILS BEFOR E THE CIT[A] WHO HAD CALLED FOR THE REMAND REPORT FROM THE AO BEFORE ARR IVING AT HIS CONCLUSION. ACCORDING TO HIM THE PROVISIONS OF RUL E 46A HAVE BEEN FOLLOWED AND IT IS ONLY AFTER CONSIDERING THE REMAN D REPORT OF THE AO THAT THE CIT[A] HAS GIVEN RELIEF TO THE ASSESSEE. THUS ACCORDING TO HIM THE ADDITIONAL GROUNDS OF APPEAL FAIL. AS REGARDS THE MERITS OF THE ADDITION THE LD. COU NSEL FOR THE ASSESSEE SUBMITTED THAT THE ASSESSEE WAS MAINTAININ G BOOKS OF ACCOUNTS AND ALL THE PARTIES HAVE FILED CONFIRMATIO NS CONFIRMING THE TRANSACTIONS. HE FURTHER SUBMITTED THAT FOR THE A.Y 2003-04 THE AO HAD HELD THE ASSESSEE TO BE DOING SIMILAR BUSINESS AS HAWALA TRANSACTIONS AND THE CIT[A] HAS GIVEN A FINDING T HAT THE ASSESSEE WAS NOT INDULGING IN SUCH BUSINESS AND AFTER CONSIDERIN G THE FACTS OF THE CASE THE CIT[A] HAS GIVEN RELIEF TO THE ASSESSEE. HE SUBMITTED THAT TO HIS KNOWLEDGE THE REVENUE HAS NOT FILED ANY APPEAL BEFORE THE TRIBUNAL AGAINST THE SAID ORDER OF THE CIT[A] AND THEREFOR E IT HAS BECOME 6 FINAL. HE SUBMITTED THAT EVEN FOR THE RELEVANT ASSE SSMENT YEAR THE REVENUE HAS NOT CHALLENGED THE FINDING OF THE CIT[A ] THAT THE ASSESSEE WAS NOT INDULGING IN HAWALA TRANSACTIONS. HE SUBMITTED THAT THE GRIEVANCE OF THE REVENUE IS ONLY AGAINST THE RE STRICTION OF DISALLOWANCE AND DELETING THE ADDITION OF RS.5 73 590/- AND HENCE THIS FINDING OF THE CIT[A] HAS NOT BEEN CHALLENGED. 7. HAVING HEARD BOTH THE PARTIES AND HAVING CONSID ERED THEIR RIVAL CONTENTIONS WE FIND THAT THE ASSESSEE WAS DOING SI MILAR BUSINESS FOR A.Y 2003-04 AND THE FINDING OF THE CIT[A] WAS THAT THE ASSESSEE WAS NOT ENGAGED IN HAWALA TRANSACTIONS AND THIS FINDING OF THE CIT[A] HAS NOT BEEN CHALLENGED BY THE REVENUE. NEITHER THE DR NOR THE LD. COUNSEL FOR THE ASSESSEE COULD THROW LIGHT ON THIS ISSUE. F URTHER AS RIGHTLY POINTED OUT BY THE LD. COUNSEL THE REVENUE HAS NOT CHALLENGED THIS FINDING IN THIS APPEAL ALSO. THEREFORE SUBJECT TO THE OUTCOME OF THE APPEAL IF ANY FILED BEFORE THE TRIBUNAL BY THE RE VENUE FOR A.Y 03-04 WE HOLD THAT THE FINDING OF THE CIT[A] THAT THE AS SESSEE IS NOT CARRYING ON THE HAWALA TRANSACTIONS IS FINAL. 8. AS REGARDS THE MERITS OF THE ADDITION CONFIRMED BY THE CIT[A] AND THE RELIEF GIVEN BY HIM WE FIND THAT THE CIT[A ] HAS CALLED FOR A REMAND REPORT FROM THE AO AND HAS ALSO CONSIDERED T HE EVIDENCES FILED BY THE ASSESSEE BEFORE HIM BEFORE COMING TO THE CON CLUSION THAT THE BOOKS OF ACCOUNTS OF THE ASSESSEE ARE PROPERLY MAIN TAINED AND THEREFORE THE SAME CANNOT BE REJECTED U/S.145[3] OF THE ACT. THE AO WAS NO PRECLUDED FROM MAKING NECESSARY VERIFICATION S FROM THE PARTIES 7 WHO HAD FILED THE CONFIRMATION LETTERS AND WHOSE PA N NUMBERS AND ADDRESSES WERE ALSO GIVEN BY THE ASSESSEE EVEN DURI NG THE REMAND PROCEEDINGS. FROM THE REMAND REPORT DATED 22-4-2008 IT IS SEEN THAT THE AO HAS NOT ENTERED INTO ANY SUCH VERIFICATION A CTIVITY. THEREFORE WE DO NOT SEE ANY REASON TO INTERFERE WITH THE ORDE R OF THE CIT[A] ON THIS ISSUE AND REVENUES ADDITIONAL GROUND OF APPEA L AND ALSO GROUND OF APPEAL NO.1 ARE REJECTED. 9. AS REGARDS GROUND NO.2 RELATING TO ADDITION ON A CCOUNT OF UNEXPLAINED CASH DEPOSITS BRIEF FACTS ARE THAT THE CIT[A] AFTER CONSIDERING THE REMAND REPORT OF THE AO THAT THE CA SH BALANCES AVAILABLE FOR DEPOSIT IN THE BANK ACCOUNT AMOUNTED TO RS.35 68 338/- AND THE ASSESSEE HAS NOT BEEN ABLE TO EXPLAIN THE S OURCE OF BALANCE AMOUNT OF RS.36 26 342/- HAS HELD THAT THE CASH DE POSITS OF RS.23 30 000/- RECEIVED FROM M/S ABHIJAY INVESTMENT S WAS AVAILABLE AS IT IS CLEAR FROM THE RECORDS OF THE ASSESSEE AND AL SO FROM THE CONFIRMATION RECEIPT FROM M/S ABHIJAY INVESTMENTS. HE HELD THAT THE CLAIM OF THE ASSESSEE REGARDING THE SOURCE OF THIS CASH DEPOSIT APPEARS TO BE CORRECT. HE THEREFORE CONFIRMED THE ADDITIO N OF RS.2 96 342/- ONLY. AGAINST THE RELIEF GIVEN BY THE CIT[A] THE REVENUE IS IN APPEAL BEFORE US. 10. AFTER HEARING BOTH THE PARTIES WE FIND THAT TH E CIT[A]HAS CONSIDERED THE FACTUAL MATRIX OF THE CASE BEFORE GI VING ANY RELIEF TO THE ASSESSEE AND THE LD. DR HAS NOT BEEN ABLE TO POINT OUT ANY DISCREPANCY OR ANY EVIDENCE CONTRARY TO THE FINDIN G OF THE CIT[A] . IN 8 VIEW OF THE SAME WE DO NOT SEE ANY REASON TO INTER FERE WITH THE ORDER OF THE CIT[A] AND THIS GROUND OF APPEAL IS ACCORDI NGLY REJECTED. 11. AS REGARDS GROUND NO.3 AO DISALLOWED THE ENTIR E ADMINISTRATIVE EXPENDITURE OF RS.10 28 134/- AND DEPRECIATION OF R S.1 19 437/- AS PER THE PROFIT & LOSS ACCOUNT WITHOUT GIVING ANY REASON S OR JUSTIFICATION FOR THE DISALLOWANCE. THE ASSESSEE RAISED THE ISSUE BEF ORE THE CIT[A] AND EVEN IN THE REMAND REPORT THE AO FAILED TO GIVE ANY REASONS FOR THE SAID DISALLOWANCE. THE CIT[A] AFTER CONSIDERING TH E SAME HELD THAT THE DISALLOWANCE OF 10% OF THE EXPENDITURE WILL MEET T HE ENDS OF JUSTICE AND HE RESTRICTED THE DISALLOWANCE AT 10% OF THE A DMINISTRATIVE EXPENSES AND ALLOWED THE DEPRECIATION IN FULL. AGGR IEVED BY THE RELIEF GIVEN BY THE CIT[A] REVENUE IS IN APPEAL BEFORE US . 12. WE HAVE HEARD THE PARTIES. EVEN AT THIS STAGE B EFORE US THE REVENUE HAS NOT BEEN ABLE TO POINT OUT THE GROUND O N WHICH THE AO HAS MADE THE DISALLOWANCE AND THE JUSTIFICATION OF THE SAME. IN VIEW OF THE SAME WE DO NOT SEE ANY REASON TO INTERFERE WIT H THE ORDER OF THE CIT[A] AND THIS GROUND OF APPEAL IS ALSO REJECTED. 13. IN THE RESULT REVENUES APPEAL IS DISMISSED. ORDER PRONOUNCED ON THIS 24 TH DAY OF MARCH 2010. SD/- SD/- (RAJENDRA SINGH) (P.MADHAVI DEVI) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI:24 TH MARCH 2010. 9 P/-*