DCIT, Ernakulam v. M/s Kallungal Tarding co.,, Ernakulam

ITA 497/COCH/2011 | 2007-2008
Pronouncement Date: 17-02-2012

Appeal Details

RSA Number 49721914 RSA 2011
Assessee PAN AACFK4358H
Bench Cochin
Appeal Number ITA 497/COCH/2011
Duration Of Justice 8 month(s)
Appellant DCIT, Ernakulam
Respondent M/s Kallungal Tarding co.,, Ernakulam
Appeal Type Income Tax Appeal
Pronouncement Date 17-02-2012
Appeal Filed By Department
Bench Allotted DB
Tribunal Order Date 17-02-2012
Date Of Final Hearing 13-02-2012
Next Hearing Date 13-02-2012
Assessment Year 2007-2008
Appeal Filed On 17-06-2011
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL COCHIN BENCH COCHIN BEFORE S/SHRI N.R.S.GANESAN JM AND B.R.BASKAR AN AM I.T.A NOS. 494 495 496 & 497/COCH/2011 ASSESSMENT YEARS: 2004-05-2007-08 THE DEPUTY COMMISSIONER OF INCOME-TAX CENTRAL CIRCLE-2 ERNAKULAM. VS. M/S. KALLUNGAL TRADING CO. OORAKKADU MALAYIDAMTHURUTHU P.O. EDATHALA ERNAKULAM DISTT. PIN-683 561 [PAN:AACFK 4358H] (REVENUE-APPELLANT) (ASSESSEE - RESPONDENT) ASSESSEE BY SHRI ANIL D.NAIR ADV. REVENUE BY SMT. VIJAYAPRABHA JR. DR DATE OF HEARING 13/02/2012 DATE OF PRONOUNCEMENT 17/02/2012 O R D E R PER B.R.BASKARAN ACCOUNTANT MEMBER: ALL THESE FOUR APPEALS FILED AT THE INSTANCE OF T HE REVENUE ARE DIRECTED AGAINST THE ORDERS PASSED BY LD CIT(A)-III KOCHI AND THEY RELA TE TO THE ASSESSMENT YEARS 2004-05 TO 2007-08. SINCE MOST OF THE ISSUES URGED IN THESE A PPEALS ARE IDENTICAL IN NATURE THEY WERE HEARD TOGETHER AND ARE BEING DISPOSED OF BY TH IS COMMON ORDER FOR THE SAKE OF CONVENIENCE. 2. THE FACTS OF THE CASE ARE STATED IN BRIEF. THE ASSESSEE IS A PARTNERSHIP FIRM AND IS ENGAGED IN THE BUSINESS OF MANUFACTURE OF RICE AND RICE PRODUCTS. THE DEPARTMENT CARRIED A SEARCH OPERATION U/S 132 OF THE ACT IN THE HANDS OF THE ASSESSEE ON 19-10-2006. CONSEQUENT THERETO THE ASSESSMENTS OF THE YEARS UN DER CONSIDERATION WERE COMPLETED U/S 153A OF THE ACT BY MAKING VARIOUS ADDITIONS. THE A SSESSEE CHALLENGED THE VARIOUS I.T.A. NO.494-497/COCH/2011 2 ADDITIONS IN APPEALS FILED BEFORE LD CIT(A) AND THE Y WERE PARTLY ALLOWED. AGGRIEVED BY THE RELIEF GRANTED BY THE LD CIT(A) THE REVENUE IS IN APPEAL BEFORE US IN THE FOUR YEARS UNDER CONSIDERATION. 3. IN ALL THE FOUR YEARS THE ISSUES RELATING T O THE ADDITION MADE U/S 40A(3) OF THE ACT AND DISALLOWANCE OF EXCESS DEPRECIATION ON VEHICLES ARE AGITATED. THE FACTS UNDERLYING THESE TWO ISSUES ARE ALSO IDENTICAL. HENCE WE PREF ER TO DISPOSE OF THESE COMMON GROUNDS FIRST. 4. THE FIRST COMMON ISSUE RELATES TO THE ADDITI ON MADE U/S 40A(3) OF THE ACT. THE ASSESSEE HAS PURCHASED PADDY FOR THE PURPOSE OF ITS BUSINESS BY PAYING CASH. ACCORDING TO THE ASSESSEE THE SAID PURCHASES HAVE BEEN MADE DIRECTLY FROM THE FARMERS AND HENCE THE PROVISIONS OF SEC. 40A(3) ARE NOT ATTRACTED AS THE PAYMENTS MADE TO THE FARMERS ARE COVERED BY THE RELAXATION PROVIDED IN RULE 6DD OF T HE INCOME TAX RULES. HOWEVER THE AO TOOK THE VIEW THAT THESE PURCHASES HAVE BEEN MAD E FROM THE DEALERS AND NOT THE FARMERS AND HENCE THE PROVISIONS OF SEC.40A(3) ARE ATTRACTED. ACCORDINGLY HE DISALLOWED THE PAYMENTS MADE IN CASH IN ALL THE FOUR YEARS. BE FORE LD CIT(A) THE ASSESSEE FURNISHED THE DETAILS OF NAME AND ADDRESSES OF FARMERS FROM W HOM THE PADDY WAS PURCHASED THE QUANTITY PURCHASED THE PRICE PAID ETC. THE LD CIT (A) CALLED FOR A REMAND REPORT FROM THE AO BUT THE ASSESSING OFFICER STOOD BY HIS ASSE SSMENT ORDER. AFTER CONSIDERING THE REMAND REPORT REPLIES FURNISHED BY THE ASSESSEE T HE LD CIT(A) DELETED THE ADDITION MADE U/S 40A(3) OF THE ACT IN ALL THE FOUR YEARS. 4.1 WE HAVE HEARD THE RIVAL CONTENTIONS ON THIS ISSUE. IT IS PERTINENT TO NOTE THAT THE AO ISSUED SUMMONS TO FOUR PARTIES BUT THEY WERE RE TURNED UN-SERVED. BESIDES THE ABOVE HE DID NOT CAUSE ANY ENQUIRIES FROM THE SUPP LIERS OF PADDY EVEN THOUGH THE ASSESSEE CLAIMED THAT THEY ARE FARMERS. IT IS STA TED THAT THE ASSESSEE HAS PURCHASED THE PADDY FROM THE FARMERS BY PREPARING A BOUGHT NOTE WHICH FACT WAS NOT REBUTTED BY THE A.O. WE ALSO NOTICE THAT THE ASSESSEE HAS FURNISHE D THE DETAILS OF NAME AND ADDRESSES OF FARMERS. WHEN THE SUMMONS DESPATCHED BY POST WERE RETURNED UN-SERVED THE AO COULD I.T.A. NO.494-497/COCH/2011 3 HAVE CONDUCTED PHYSICAL ENQUIRIES TO ASCERTAIN THE VERACITY OF THE CLAIM OF THE ASSESSEE. INSTEAD THE AO CHOSE TO DRAW ADVERSE INFERENCES ON LY FOR THE REASON THAT THE SUMMONS WAS RETURNED UN-SERVED. APART FROM DRAWING ADVERSE INFERENCE THE AO HAS FAILED TO BRING ON RECORD ANY OTHER MATERIAL TO SUGGEST THAT THE SUPPLIERS OF PADDY WERE IN FACT DEALERS ONLY. SINCE THE AO HAS DRAWN INFERENCES ON SURMISES WE DO NOT FIND ANY INFIRMITY IN THE DECISION OF LD CIT(A) IN DELETING THE IMPUGNED ADDITION. ACCORDINGLY WE UPHOLD HIS DECISION ON THIS ISSUE. 5. THE NEXT COMMON ISSUE RELATES TO THE DISALLO WANCE OF EXCESS DEPRECIATION. THE ASSESSEE CLAIMED HIGHER DEPRECIATION OF THE LORRIES USED BY IT FOR TRANSPORTATION OF GOODS TO ITS CUSTOMER PLACES. THE AO TOOK THE VIEW THAT THE HIGHER DEPRECIATION IS AVAILABLE ONLY TO THOSE ASSESSEES WHO ARE USING THE LORRIES F OR RUNNING THEM ON HIRE. ACCORDINGLY HE ALLOWED DEPRECIATION ON LORRIES AT NORMAL RATES AND DISALLOWED THE EXCESS CLAIM. THE LD CIT(A) NOTICED THAT THE ASSESSEE IS COLLECTING H IRE CHARGES FROM ITS CUSTOMERS FOR THE TRANSPORTATION OF GOODS AND HAS ALSO OFFERED THE S AME IN ITS PROFIT AND LOSS ACCOUNT. ACCORDINGLY HE HAS HELD THAT THE ASSESSEE IS ELIGI BLE FOR DEPRECIATION ON THOSE VEHICLES AT HIGHER RATE AS THE IMPUGNED VEHICLES ARE RUN ON HI RE. 5.1 THE FACT THAT THE ASSESSEE HAS COLLECTED HI RE CHARGES FROM ITS CUSTOMERS FOR TRANSPORTATION OF GOODS IS NOT DISPUTED. IN SUCH A SITUATION IN OUR VIEW THE USER OF THOSE VEHICLES SHOULD BE CONSIDERED AS PLYING OF LORRIES FOR HIRE. ACCORDINGLY WE DO NOT FIND ANY INFIRMITY IN THE DECISION OF LD CIT(A) IN ALLOW ING HIGHER RATE OF DEPRECIATION. 6. THE ONLY ISSUE THAT IS REMAINING TO BE ADJUD ICATED IN ASSESSMENT YEAR 2004-05 RELATES TO THE ADDITION MADE U/S 41(1) OF THE ACT I N RESPECT OF THE BALANCE OUTSTANDING IN THE NAME OF M/S STAR AGENCIES. THE AO NOTICED THAT THE BALANCE OF RS.22 74 971/- WAS OUTSTANDING IN THE NAME OF SAID CONCERN SINCE 31.3. 2003. THE AO ASKED THE ASSESSEE TO PRODUCE CONFIRMATION LETTER BUT THE ASSESSEE STATE D THAT IT DID NOT CARRY ON ANY TRANSACTION WITH THE SAID PARTY FOR THE PAST 3 YEARS AND FURT HER THE AMOUNT WAS PAID DURING THE PREVIOUS YEAR 200304. SINCE THE ASSESSEE FAILED TO FURNISH ANY EVIDENCE WITH REGARD TO I.T.A. NO.494-497/COCH/2011 4 THE PAYMENTS MADE TO THEM THE AO ADDED THE ABOVE S AID SUM OF RS.22 74 971/- TO THE TOTAL INCOME OF THE ASSESSEE. THE LD CIT(A) DELETED THE IMPUGNED ADDITION WITH THE FOLLOWING OBSERVATIONS: 11.5 AS MENTIONED ABOVE IN PARA 11.1 THERE WAS A LIABILITY OF RS. 22 74 971/- OUTSTANDING AGAINST M/S. STAR AGENCIES KALADY AS ON 31/3/2003 AND THE SAME WAS SETTLED SUBSEQUENTLY BY MAKING PAYMENTS. ALL THE S AID PAYMENTS ARE SEEN TO HAVE BEEN ACCOUNTED IN THE REGULAR BOOKS OF THE APPELLA NT PRODUCED BEFORE THE AO. THE APPELLANT CLAIMS THAT THEY HAVE NO TRANSACTIONS WI TH THE ABOVE PARTY FOR MORE THAN 31/2 YEARS. IN THE REMAND REPORT AO HAS CONFIRMED THAT M/S. STAR AGENCIES WAS A REGULAR SUPPLIER OF PADDY TO THE APPELLANT. IN AD DITION TO THE CONFIRMATION LETTER PRODUCED THEY HAVE ALSO CONFIRMED BY SWORN STATEM ENT BEFORE THE AO THAT THE MONEY WAS DUE TO THEM AS CLAIMED BY THE APPELLANT AND THE SAME WAS SETTLED DURING THE SUBSEQUENT PERIOD. THE STATEMENT RECOR DED BY THE AO CANNOT BE IGNORED CONSIDERING AS AN ORAL EVIDENCE AS STATED BY THE AO IN THE REMAND REPORT IN AS MUCH AS IT IS A STATEMENT ON OATH RECORDED I N WRITING AND SIGNED BY THE PARTIES. IT IS A VALID EVIDENCE SUSTAINABLE AS PE R LAW. 11.6 IT IS SEEN FROM THE ASSESSMENT ORDER THAT TH E ENTIRE LIABILITY WAS BROUGHT FORWARD FROM PRECEDING YEAR AND WAS PAID OFF THROU GH REGULAR BOOKS OF ACCOUNTS. HENCE THIS IS NOT A SUM CREDITED IN THE BOOKS OF THE PREVIOUS YEAR. THERE IS ALSO NO FINDING IN THE ASSESSMENT ORDER THAT THE APPELL ANT HAS CLAIMED ANY UNEXPLAINED EXPENSES ON ACCOUNT OF THE PAYMENT MADE TO THE ABO VE CREDITOR. SIMILARLY THERE IS NO FINDING THAT THE PAYMENT HAS BEEN MADE FROM UNEXPLAINED SOURCES. MOREOVER AS PER THE ASSESSMENT ORDER NO INCRIMIN ATING OR ADDITIONAL DOCUMENTS HAVING BEEN FOUND DURING SEARCH TO SHOW THAT APPEL LANT HAS RAISED BOGUS CREDITS OR HAS MADE BOGUS PAYMENTS. HENCE AO IS NOT JUSTIFIE D IN MAKING THIS ADDITION ON ACCOUNT OF PAYMENT TO M/S. STAR AGENCIES KALADY. ACCORDINGLY I DELETE THE SAME. I.T.A. NO.494-497/COCH/2011 5 IT IS ALSO PERTINENT TO NOTE THAT THE PAYMENT MAD E TO THE ABOVE SAID PARTY WAS DULY INCORPORATED IN THE BOOKS OF ACCOUNTS OF T HE ASSESSEE AND FURTHER THE SAID PARTY HAS ALSO SENT CONFIRMATION LETTER. THUS WE NOTICE THAT THE LD CIT(A) HAS DULY CONSIDERED VARIOUS FACTS SURROUNDING THE ISSUE AND ACCORDINGLY REACHED TO THE CONCLUSION THAT THE IMPUGNED ADDITION IS NOT WARRANTED. IN THESE CIRCUM STANCES WE DO NOT FIND ANY INFIRMITY IN THE DECISION OF LD CIT(A) IN DELETING THE IMPUGN ED ADDITION. 7. IN THE RESULT ALL THE APPEALS OF THE REVENU E ARE DISMISSED. PRONOUNCED ACCORDINGLY ON 17-02-2012 SD/- SD/- (N.R.S.GANESAN) (B.R.BASKARAN) JUDICIAL MEMBER ACCOUNTANT MEMBER PLACE: ERNAKULAM DATED: 17TH FEBRUARY 2011 GJ COPY TO: 1. M/S. KALLUNGAL TRADING CO. OORAKKADU MALAYIDAM THURUTHU P.O. EDATHALA ERNAKULAM DISTT. PIN-683 561 2. THE DEPUTY COMMISSIONER OF INCOME-TAX CENTRAL C IRCLE-2 ERNAKULAM. 3. THE COMMISSIONER OF INCOME-TAX (APPEALS)-III KO CHI. 4. THE COMMISSIONER OF INCOME-TAX CENTRAL KOCHI. 5. D.R. I.T.A.T. COCHIN BENCH COCHIN. 6. GUARD FILE . BY ORDER (ASSISTANT REGISTRAR) ITAT COCHIN BENCH