ITO, BHILWARA v. M/s. Sai Baba Dal Mills, BHILWARA

ITA 485/JODH/2010 | 2005-2006
Pronouncement Date: 31-07-2012 | Result: Dismissed

Appeal Details

RSA Number 48523314 RSA 2010
Assessee PAN AADFS8474M
Bench Jodhpur
Appeal Number ITA 485/JODH/2010
Duration Of Justice 1 year(s) 10 month(s) 27 day(s)
Appellant ITO, BHILWARA
Respondent M/s. Sai Baba Dal Mills, BHILWARA
Appeal Type Income Tax Appeal
Pronouncement Date 31-07-2012
Appeal Filed By Department
Order Result Dismissed
Bench Allotted DB
Tribunal Order Date 31-07-2012
Date Of Final Hearing 12-07-2012
Next Hearing Date 12-07-2012
Assessment Year 2005-2006
Appeal Filed On 03-09-2010
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL JODHPUR BENCH JODHPUR BEFORE SHRI BHAVNESH SAINI JUDICIAL MEMBER AND SHRI A.L. GEHLOT ACCOUNTANT MEMBER ITA NO.485/JU/2010 ASSESSMENT YEAR: 2005-06 INCOME TAX OFFICER VS. M/S SAI BABA DAL MILLS WARD-3 BHILWARA. P-24 INDUSTRIAL ESTATE PRATAP NAGAR BHILWARA. (PAN: AADFS 8474 M). (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI G.R. KOKANI D.R. RESPONDENT BY : SHRI U.C. JAIN & SHAI RAJENDRA JAIN ADVOCATES DATE OF HEARING : 12.07.2012 DATE OF PRONOUNCEMENT OF ORDER : 31.07.2012 ORDER PER A.L. GEHLOT ACCOUNTANT MEMBER: THIS IS AN APPEAL FILED BY THE REVENUE AGAINST THE ORDER DATED 30.06.2010 PASSED BY THE LD. CIT(A) AJMER FOR THE ASSESSMENT YEAR 2005-06 ON THE FOLLOWING GROUNDS :- IN VIEW OF THE FACTS AND CIRCUMSTANCES OF THE CASE THE LD. CIT(A) AJMER HAS ERRED IN :- ITA NO.485/JU/2010 A.Y. 2005-06 . 2 1. DELETING THE ADDITION OF RS.95 807/- MADE ON AC COUNT OF UNDERVALUATION OF STOCK OF CHANA. 2. DELETING THE ADDITION OF RS.13 45 493/- MADE U/S 40A(3) BY OBSERVING THAT THESE PAYMENTS WERE MADE IN EXCEPTIO NAL CIRCUMSTANCES HOWEVER THESE CIRCUMSTANCES ARE NOT E XCEPTIONAL AS ENVISAGED IN RULE 6DD OF THE I.T. RULE. 3. THE APPELLANT CRAVES TO ADD AMEND ALTER DELE TE OR MODIFY THE ABOVE GROUNDS OF APPEAL BEFORE OR AT THE TIME OF HE ARING. 2. THE BRIEF FACTS OF THE CASE ARE THAT DURING THE ASSESSMENT PROCEEDINGS THE A.O. NOTICED THAT THE ASSESSEE DID NOT DISCLOSE COR RECT QUANTITY OF CHANA STOCK. DURING THE YEAR 7693.03 QUINTAL OF CHANA PURCHASED IS SHOWN IN AUDITED ACCOUNTS WHEREAS THE TOTAL PURCHASE DURING THE YEAR AS PER B OOKS OF ACCOUNT WAS 7753.035 QUINTAL. THE A.O. NOTICED THAT THE ASSESSEE HAS SH OWN PURCHASES LESS BY 60.03 QUINTAL AND ACCORDINGLY THE ASSESSEE DECLARED INCOR RECT PURCHASE PRICE. THEREFORE THE A.O. MADE ADDITION OF RS.95 807/-. THE EXPLANA TION OF THE ASSESSEE BEFORE THE CIT(A) WAS AS UNDER :- 8.2 THE APPELLANT IN ITS WRITTEN SUBMISSION ARGUED THAT : THE ASSESSING OFFICER FOUND THAT INSTEAD OF 7693.0 30 QTL OF CHANA FOR RS.1 12 39 164/- SHOWN IN BOOKS OF ACCOUNTS ACTUAL PURCHASES OF CHANA WAS 7753.035 QTL THUS THERE WAS LESS PURCHASE S SHOWN BY 60.005 QTL AND ACCORDINGLY THE STOCK WAS ALSO TAKEN SHORT BY THIS QUANTITY. IN VALUE ALSO THERE WAS MISTAKE IN PURCH ASE AMOUNT BY RS.5 762/- (1 12 44 926/- - 1 12 39 164/-). THUS H E ADDED THIS DIFFERENCE AMOUNT OF RS.5 762/- AND ALSO ADDED RS.9 0 045/- ON ACCOUNT OF DECREASED GROSS PROFIT ON ACCOUNT OF NOT VALUING OF 60.03 ITA NO.485/JU/2010 A.Y. 2005-06 . 3 QTL. IN THIS RESPECT SIR YOUR HONOUR WILL APPRECI ATE THAT AS PER DETAIL GIVEN BY THE AO ON PAGE NO.18 OF THE ASSESSMENT ORD ER THE DIFFERENCE IN QUANTITY WAS IN THE MONTH OF NOV 04 I.E. WHEN SU RVEY TOOK PLACE AND AFTER RECONCILIATION AS PER LETTER DATED 13.12. 04 THERE WAS EXCESS STOCK OF 66.62 QTL FOUND WHICH IS JUST EQUAL AS 60. 03 QTL CALCULATED IN THE ASSESSMENT ORDER. THE ASSESSEE SUO MOTO SURREN DERED RS.94 934/- IN THIS ACCOUNT AS EXCESS STOCK FOUND IN CHANA ACCO UNT THEREFORE TO TAX AGAIN THE SAME DOES NOT ARISE. HENCE ADDITIONS DES ERVE TO BE DELETED. 3. THE CIT(A) AFTER CONSIDERING THE ASSESSEES EXP LANATION DELETED THE SAID ADDITION AS UNDER :- 8.3 THE NET EFFECT OF RECORDING LESS PURCHASE IN T HE BOOKS OF ACCOUNTS RESULTED IN EXCESS STOCK FOUND DURING SURV EY. AS MENTIONED BY THE AO PURCHASES WERE SHOWN LESS BY 60.005 QUIN TALS AND DURING SURVEY EXCESS STOCK OF 66.62 QUINTALS OF CHANA WAS FOUND. THE ADDITION ON ACCOUNT OF EXCESS STOCK OF CHANA HAS BE EN SEPARATELY MADE BY THE AO WHICH HAS BEEN ALSO CONFIRMED BY TH E UNDERSIGNED. THEREFORE FURTHER ADDITION OF RS.95 807/- IS NOT J USTIFIED AND THE SAME IS DELETED. 4. WE HAVE HEARD THE LD. REPRESENTATIVES OF THE PAR TIES AND RECORDS PERUSED. WE NOTICE THAT IT IS A CASE OF RECONCILIATION AND C ONSIDERING SHORT/EXCESS STOCK OF CHENA. DURING THE COURSE OF SURVEY EXCESS STOCK OF 66.62 QUINTALS OF CHANA WAS FOUND WHICH WAS DUE TO LESS ACCOUNTING OF PURCHASES IN THE BOOKS OF ACCOUNT. THUS IT IS A COMPENSATORY ERROR IN PASSING THE ACC OUNTING ENTRY. SINCE THE ADDITION ON ACCOUNT OF EXCESS STOCK HAS BEEN SEPARATELY MADE BY THE A.O. AND SAME WAS CONFIRMED BY THE CIT(A) WE THEREFORE FIND THAT T HE CIT(A) HAS RIGHTLY DELETED ITA NO.485/JU/2010 A.Y. 2005-06 . 4 THE ADDITION OTHERWISE THAT WILL BE DOUBLE AMOUNT O F ADDITION. IN THE LIGHT OF THE FACT ORDER OF THE CIT(A) IS CONFIRMED. 5. THE BRIEF FACTS OF SECOND GROUND ARE THAT DURING THE ASSESSMENT PROCEEDINGS THE A.O. NOTICED THAT THE ASSESSEE MADE PAYMENT OF RS.66 52 468/- IN CASH FOR PAYMENT OF VARIOUS PURCHASES. THE A.O. COLLECTED D ETAILS OF SUCH CASH PAYMENTS AND FOUND 162 DIFFERENT ENTRIES OF CASH PAYMENTS AM OUNTING TO RS.67 27 468/-. THE A.O. HAS ATTACHED ANNEXURE-B TO THE ASSESSMENT ORDER IN RESPECT OF THESE ENTRIES. SINCE THE ASSESSEE MADE THE CASH PAYMENT IN CONTRAVENTION TO PROVISIONS OF SECTION 40A(3) THEREFORE THE A.O. MADE DISALLO WANCE OF 20% OF SUCH CASH PAYMENT OF WHICH CALCULATION COMES TO RS.13 45 493/ -. THE CIT(A) AFTER CONSIDERING THE ASSESSEES SUBMISSION DELETED THE ADDITION AS UNDER :- (PARAGRAPH NO.11.7) 11.7 FROM THE PERUSAL OF RECORDS IT IS FOUND THAT THERE IS NO DISPUTE ABOUT GENUINENESS OF THESE TRANSACTIONS. NAMES AND COMPLETE ADDRESSES OF THESE PARTIES ALONG WITH THEIR TELEPHO NE NO. AND RST/CST NO. WERE FURNISHED BEFORE AO. EACH ONE OF THEM ALS O CONFIRMED THE RESPECTIVE TRANSACTION WITH APPELLANT. THE AO HIMS ELF HAS MENTIONED IN THE ASSESSMENT ORDER THAT AS PER CLAIM OF APPELL ANT SPECIFIC REQUEST WAS MADE BY THE SELLER FOR CASH PAYMENT OR PAYMENT THROUGH BEARER CHEQUES. HOWEVER THIS CLAIM WAS REJECTED BY AO ON THE GROUND THAT APPELLANT WAS HAVING CREDIT FACILITY IN HIS ACCOUNT FOR PAYMENT OF ONE BILL AT A TIME. THUS AO REFUSED TO ACCEPT THAT THI S IS ONLY A TECHNICAL OR VENIAL BREACH OF LAW. HOWEVER IN VIEW OF EXCEPT IONAL CIRCUMSTANCES NARRATED BY APPELLANT AND DECISION OF HONBLE CALCUTTA HIGH COURT AS MENTIONED ABOVE I HOLD THAT DISALLOW ANCE U/S 40A(3) ITA NO.485/JU/2010 A.Y. 2005-06 . 5 IS NOT JUSTIFIED IN THIS CASE. THE ADDITION OF RS. 13 45 493/- IS THEREFORE DIRECTED TO BE DELETED. GROUND NO.5 IS THUS ALLOWE D. 6. THE LD. DEPARTMENTAL REPRESENTATIVE RELIED UPON THE ORDER OF A.O. AND ALSO RELIED UPON THE JUDGEMENT HONBLE PATNA HIGH COURT IN THE CASE OF NARAYAN BIJOY KUMAR VS. CIT 163 ITR 695 (PATNA). 7. THE LD. AUTHORISED REPRESENTATIVE ON THE OTHER HAND RELIED UPON THE ORDER OF CIT(A) AND SUBMITTED THAT COMPLETE DETAILS WERE FURNISHED BEFORE THE A.O. LD. AUTHORISED REPRESENTATIVE DREW OUR ATTENTION ON A.O .S ORDER AND SUBMITTED THAT AFTER VARIOUS DISCREPANCIES NOTICED IN THE BOOKS OF ACCOUNT THE A.O. REJECTED THE ASSESSEES BOOKS OF ACCOUNT. LD. AUTHORISED REPRES ENTATIVE ALSO DREW OUR ATTENTION TO PAGE NO.19 OF THE A.O.S ORDER. 8. THE LD. AUTHORISED REPRESENTATIVE SUBMITTED THAT ONCE THE BOOKS OF ACCOUNT IS REJECTED SECTION 40A(3) OF THE ACT IS NOT APPLI CABLE. HE RELIED UPON THE FOLLOWING JUDGEMENTS :- I) HONBLE RAJASTHAN HIGH COURT IN THE CASE OF SMT. HARSHILA CHORDIA VS. ITO 298 ITR 349 (RAJ) ITA NO.485/JU/2010 A.Y. 2005-06 . 6 II) HONBLE CALCUTTA HIGH COURT IN THE CASE OF CIT VS. CPL TANNERY 318 ITR 179 (CAL) III) HONBLE ALLAHABAD HIGH COURT IN THE CASE OF CI T VS. BANWARI LAL BANSHIDHAR 229 ITR 229 (ALL.) 9. IT WAS ALSO SUBMISSION OF THE LD. AUTHORISED REP RESENTATIVE THAT THE CASH PAYMENT WAS MADE ON THE INSISTENCE OF THE PARTIES. LD. AUTHORISED REPRESENTATIVE DEMONSTRATED THIS FACT BY REFERRING TO RELEVANT CON FIRMATIONS AND COPY OF ACCOUNTS OF THE PARTIES WHICH HAVE BEEN PLACED AT PAGE NOS.5 TO 20 OF THE ASSESSEES PAPER BOOK. 10. WE HAVE HEARD THE LD. REPRESENTATIVES OF THE PA RTIES AND RECORDS PERUSED. THE ADMITTED FACTS OF THE CASE UNDER CONSIDERATION ARE THAT THE BOOKS OF ACCOUNT OF THE ASSESSEE HAS BEEN REJECTED BY INVOKING SECTION 145(3) OF THE ACT. THE RELEVANT FINDING OF THE A.O. IN THIS REGARD IS REPRODUCED AS UNDER FROM PAGE NO.19 OF A.O.S ORDER :- IN VIEW OF ABOVE DISCUSSIONS AND FACTS AND ERROR I N ACCOUNTS AS DISCUSSED SUPRA THE REPLAY OF LEARNED AR OF THE ASSESSEE IS NOT FULLY ACCEPTABLE. THE ASSESSEE FAILED TO MAINTAIN THE BOOKS OF ACCOUNTS IN REGULAR COURSE AS INCOMPLETE BOOKS WERE FOUND DURING SURVEY. THE ASSESSEE HAS FAILED TO MAINTAIN DAY TO DAY PRODUCTION RECORDS/STOCK REGISTER. THE LOOSE PAPERS WERE ALSO FOUND DURING SURVEY AND THE TRANSACTION APPEARING THE LOOSE PAPE R WERE NOT FOUND RECORDED AS SUCH TRUE INCOME OF THE ASSESSEE FROM T HE BOOKS OF ITA NO.485/JU/2010 A.Y. 2005-06 . 7 ACCOUNTS COULD NOT BE ASCERTAINED. THE DEFECTS IN THE ACCOUNTING SYSTEM HAS ALSO BEEN NOTICED AS INCORRECT STOCK OF CHANA IN NOV-04 & MAR-05 HAS BEEN NOTICED. THE TOTAL PURCHASE AMOUNT AND QUANTITY OF CHANA ALSO DIFFERS FROM BOOKS OF ACCOUNTS. THE ASS ESSEE HAS NOT DISCLOSED THE CORRECT QUANTITY AND AMOUNT IN THE AU DITED ACCOUNTS. THE PROVISIONS OF SEC.145(3) HAVE BEEN APPLIED SUBJ ECT TO DISCREPANCIES IN THE ACCOUNTS AND ERROR IN AUDIT RE PORT WITH REFERENCE TO BOOKS OF ACCOUNTS FOR PURCHASE OF CHANA. 11. THE CIT(A) ALSO CONFIRMED THE REJECTION OF BOO KS OF ACCOUNT AND CONFIRMED VARIOUS TRADING ADDITIONS RS.34 899/- ON ACCOUNT O F CHANA RS.45 900/- ON ACCOUNT OF CHANA DAL RS.26 649/- ON ACCOUNT OF MUT TER DAL RS.5 062/- ON ACCOUNT OF MUTTER POWER. THE RELEVANT OBSERVATION OF THE CIT(A) IN THIS REGARD IS REPRODUCED FROM PARAGRAPH NO. 8.4 OF THE CIT(A)S O RDER AS UNDER :- (PARAGRAPH NO.8.4) THUS THE ADDITIONS OF RS.34 899/- RS.45 900/- R S.26 649/- RS.5 062/- RS.61/- AND RS.93 076/- ARE THEREFORE CONFIRMED AND ADDITION OF RS.4 19 875/- AND RS.95 807/- ARE DELET ED. GROUND NO.2 IS THUS PARTLY ALLOWED. 12. THE HONBLE ALLAHABAD HIGH COURT IN THE CASE OF CIT VS. BANWARI LAL BANSHIDHAR 229 ITR 229 (ALL.) WHEREIN IT HAS BEEN HELD THAT AFTER REJECTING THE BOOKS OF ACCOUNT NO DISALLOWANCE CAN BE MADE SEPAR ATELY UNDER SECTION 40A(3) OF THE ACT. THE HONBLE ANDHRA PRADESH HIGH COURT IN THE CASE OF INDWELL CONSTRUCTIONS VS. CIT 232 ITR 776 (A.P.) ALSO HELD THAT SEPARATE ADDITION CANNOT BE MADE IN RESPECT OF ITEMS FOLLOWING SECTION 40(B) WHERE BOOKS OF ACCOUNT ARE ITA NO.485/JU/2010 A.Y. 2005-06 . 8 REJECTED. THE REVENUE CANNOT RELY UPON THE SAME BO OKS OF ACCOUNT WHICH HAS BEEN REJECTED. SINCE IN THE CASE UNDER CONSIDERATI ON IT IS ADMITTED FACT THAT THE BOOKS OF ACCOUNT HAS BEEN REJECTED BY THE A.O. WE ARE THEREFORE OF THE VIEW THAT THE SEPARATE DISALLOWANCE MADE UNDER SECTION 40A(3) IS NOT WARRANTED. 13. THE CIT(A) DELETED THE ADDITION ON DIFFERENT GR OUNDS AND REASONS. ON THOSE REASONS AND GROUNDS WE ARE NOT EXPRESSING ANY OPIN ION. HOWEVER THE ADDITION IS DELETED AS DISCUSSED ABOVE. 14. THE LD. DEPARTMENTAL REPRESENTATIVE RELIED UPON THE JUDGEMENT OF HONBLE PATNA HIGH COURT IN THE CASE OF NARAYAN BIJOY KUMAR VS. CIT 163 ITR 695 (PATNA). THE SAID JUDGEMENT DOES NOT HELP THE REVE NUE AS IN THAT CASE THE ASSESSEE COULD NOT PRODUCE ANY SATISFACTORY EVIDENCE TO SHOW THAT THE ASSESSEE WAS PREVENTED BY SUFFICIENT CAUSE FROM NON-PAYMENT OF P URCHASE PRICE THROUGH A BANK WHEREAS IN THE CASE UNDER CONSIDERATION THE FACTS ARE THAT THE BOOKS OF ACCOUNT HAS BEEN REJECTED AND SEPARATE ADDITION UNDER SECTION 4 0A(3) OF THE ACT HAS BEEN MADE. THUS THE JUDGEMENT CITED BY THE LD. DEPARTM ENTAL REPRESENTATIVE IS DISTINGUISHABLE ON FACTS. ITA NO.485/JU/2010 A.Y. 2005-06 . 9 15. IN THE LIGHT OF ABOVE DISCUSSIONS WE FIND THAT THE CIT(A) HAS RIGHTLY DELETED THE ADDITION OF RS.13 45 493/- MADE BY THE A.O. UND ER SECTION 40A(3) OF THE ACT THOUGH ON DIFFERENT REASONS AS DISCUSSED ABOVE. 16. IN THE RESULT APPEAL FILED BY THE REVENUE IS D ISMISSED. (ORDER PRONOUNCED IN THE OPEN COURT) SD/- SD/- (BHAVNESH SAINI) (A.L. GEHLOT) JUDICIAL MEMBER ACCOUNTANT MEMBER PBN/* COPY OF THE ORDER FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT (APPEALS) CONCERNED 4. CIT CONCERNED 5. D.R. ITAT JODHPUR BENCH JODHPUR 6. GUARD FILE. BY ORDER ASSISTANT REGISTRAR INCOME-TAX APPELLAT E TRIBUNAL JODHPUR TRUE COPY