M/s. United Castings, Jalandhar v. The Income tax Officer, Jalandhar

ITA 524/ASR/2011 | 2005-2006
Pronouncement Date: 09-04-2014 | Result: Allowed

Appeal Details

RSA Number 52420914 RSA 2011
Assessee PAN AABFU2732N
Bench Amritsar
Appeal Number ITA 524/ASR/2011
Duration Of Justice 2 year(s) 5 month(s) 22 day(s)
Appellant M/s. United Castings, Jalandhar
Respondent The Income tax Officer, Jalandhar
Appeal Type Income Tax Appeal
Pronouncement Date 09-04-2014
Appeal Filed By Assessee
Order Result Allowed
Bench Allotted SMC
Tribunal Order Date 09-04-2014
Date Of Final Hearing 14-03-2014
Next Hearing Date 14-03-2014
Assessment Year 2005-2006
Appeal Filed On 18-10-2011
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL AMRITSAR BENCH; AMRITSAR. BEFORE SH. H.S. SIDHU JUDICIAL MEMBER I.T.A. NO. 524(ASR)/2011 ASSESSMENT YEAR: 2005-06 PAN: AABFU2732N M/S UNITED CASTINGS NEAR VS. INCOME TAX OFFICER CANAL BRIDGE GADAIPUR II(2) JALANDHAR JALANDHAR. (APPELLANT) (RESPONDENT) APPELLANT BY: SH. ANIL MIGLANI ADVOCATE RESPONDENT BY: SH. AMRIK CHAND DR DATE OF HEARING: 14.03.2014 DATE OF PRONOUNCEMENT: 09.04.2014 ORDER PER BENCH 1) THE ASSESSEE HAS FILED THE PRESENT APPEAL AGAINST THE IMPUGNED ORDER DATED 22.07.2011 PASSED BY LEARNED CIT(A) JA LANDHAR FOR THE ASSESSMENT YEAR 2005-06. 2) THE FACTS RELATING TO THE ISSUE IN DISPUTE ARE T HAT THE ASSESSING OFFICER CONDUCTED INQUIRIES REGARDING THE DEPOSITS OF RS. 1 50 000/- IN THE NAME OF SMT. PREETI DHIR AND RS. 1 45 000/- IN THE NAME OF SMT. DIVYA DHIR BOTH WIVES OF THE PARTNERS OF THE ASSES SEE FIRM. THE DEPOSITS GIVEN BY THE TWO LADIES WERE FOUND TO HAVE BEEN MAD E AFTER 2 I.T.A. NO. 524(ASR)/2011 ASSESSMENT YEAR: 2005-06 CORRESPONDING CASH DEPOSITS IN THEIR BANK ACCOUNTS. THE ASSESSING OFFICER RECORDED THE STATEMENT OF BOTH THE LADIES. THEY STATED THAT THEY WERE RUNNING A BOUTIQUE AT MODEL TOWN JALANDHAR AN D THAT THE CASH WAS DEPOSITED OUT OF THEIR CASH DEPOSIT KEPT IN THE PAS T. THEY STATED THAT THEY BOTH EARNED RS. 8 000/- TO RS. 9 000/- PER MONTH FR OM THE BOUTIQUE. THEIR PURCHASES WERE STATED TO HAVE BEEN MADE FROM DOOR T O DOOR SALESMEN WITHOUT BILLS AND THEIR ADDRESSES WERE ALSO NOT KNO WN. NO BOOKS OF ACCOUNTS WERE MAINTAINED. AS PER THEIR STATEMENT T HE CASH HAD BEEN DEPOSITED IN THEIR RESPECTIVE BANK ACCOUNTS BY SOME EMPLOYEE OF UNITED CASTINGS. THE DENOMINATION OF NOTES DEPOSITED IN TH E BANK WAS NOT KNOWN TO THE LADIES. ONE OF THE LADIES STATED THAT HALF OF HER INCOME WAS BEING SPENT ON PERSONAL NEEDS WHILE OTHER LADY STA TED THAT SHE HARDLY SPENT ANY PORTION OF HER INCOME. THE ASSESSING OFFI CER FOUND UP HARD TO BELIEVE THAT ANY WORKING LADY COULD MANAGE HER AFFA IRS WITHOUT SPENDING ANY PART OF HER INCOME. THE ASSESSING OFFICER NOTED THAT IN THE CASE OF SMT. PREET DHIR RS. 2 36 000/- HAD BEEN DEPOSITED IN CASH IN HER BANK ACCOUNT DURING THE RELEVANT PREVIOUS YEAR WHICH IN CLUDED THREE MAJOR DEPOSITS OF RS. 50 000/- EACH AGAINST WHICH CHEQUES WERE ISSUED IN FAVOUR OF THE ASSESSEE. IN THE CASE OF SHRI DIVYA D HIR HER BANK ACCOUNT WAS FOUND TO HAVE BEEN OPENED ONLY IN JANUARY 2005 AND HAD CASH 3 I.T.A. NO. 524(ASR)/2011 ASSESSMENT YEAR: 2005-06 DEPOSITS TOTALING RS. 1 60 000/-. THE ASSESSING OF FICER WAS OF THE VIEW THAT THE REGULAR AND SMALL DEPOSITS IN THE BANK ACC OUNT OF SMT. PREET DHIR INDICATED THAT THEY WERE OUT OF HER CURRENT SAVINGS BUT HE DOUBTED THE SOURCE OF CASH DEPOSITS IN THE CASE OF SMT. DIVYA D HIR AS SHE DID NOT HAVE BANK ACCOUNT EARLIER. SHE ALSO DID NOT BELIEVE THAT THE TWO LADIES HAD DEPOSITED CASH OUT OF THEIR PAST SAVINGS. HE THERE FORE PROPOSED TO TREAT THESE DEPOSITS RECEIVED FROM THE TWO LADIES AS ASSE SSEES INCOME AND GAVE A SHOW CAUSE NOTICE TO THE ASSESSEE IN THIS RE GARD. THE ASSESSEE OBJECTED TO THE PROPOSAL. HE STATED THAT BOTH THE L ADIES WERE INCOME TAX ASSESSEE WHO HAD CONFIRMED THE DEPOSITS IN THEIR ST ATEMENT. IT WAS CONTENDED THEREFORE THAT THE ASSESSEE HAD DISCHAR GED ITS ONUS IN RESPECT OF THESE TRANSACTIONS. CASH FLOW STATEMENT OF BOTH THE LADIES FROM 01.04.2001 WAS SUBMITTED WHICH ALSO SHOWED SOME OP ENING CASH IN HAND. THE ASSESSING OFFICER NOTED THAT NO WITHDRAWA L FOR PERSONAL PURPOSES HAD BEEN SHOWN IN THE CASH FLOW STATEMENT AND THAT EVEN SMALL WITHDRAWALS FROM THEIR BANK ACCOUNT HAD BEEN SHOWN AS CASH IN HAND. HE HELD THAT THE CASH FLOW STATEMENTS WERE SELF SERVIN G DOCUMENTS WITHOUT SUPPORT OF ANY DOCUMENTARY EVIDENCE WERE DEVOID OF ANY LOGIC AND COULD NOT BE RELIED UPON. THE ASSESSING OFFICER WAS ALSO OF THE VIEW THAT IF SO MUCH CASH HAD BEEN AVAILABLE WITH THE LADIES IN EARLIER THE MONEY 4 I.T.A. NO. 524(ASR)/2011 ASSESSMENT YEAR: 2005-06 WOULD HAVE BEEN UTILIZED BY THE ASSESSEE FIRM SAVIN G ITS INTEREST COST. THE ASSESSING OFFICER CAME TO THE CONCLUSION THAT T HE CASH INTRODUCED BY THE TWO LADIES BELONGED TO THE ASSESSEE-FIRM AND TH AT THIS CASH HAD BEEN GENERATED AFTER THE INSTALLATION OF TWO NEW MACHINE S BY THE ASSESSEE. THE ASSESSING OFFICER ALSO NOTED THAT IN THE EARLIER YE AR THE INCOME TAX RETURNS FILED BY THE LADIES WERE JUST ABOVE THE EXE MPTION LIMIT. THE ASSESSING OFFICER RELYING ON CERTAIN JUDGMENTS HE LD THAT THE DEPOSITS RECEIVED IN THE NAME OF TWO LADIES AS ASSESSEES OW N INCOME. HE ALSO HELD THAT THE BOOKS OF THE ASSESSEE WERE LIABLE TO BE REJECTED AND FINALLY THE UNDISCLOSED INCOME OF THE ASSESSEE FIRM AMOUNT ING TO RS. 2 95 000/- WHICH WAS THE CASE INTRODUCED THROUGH THE TWO LADIE S. THE ASSESSING OFFICER COMPLETED THE ASSESSMENT ON 11.12.2007 UNDE R SECTION 143(3) OF THE ACT. 3) AGGRIEVED WITH THE ASSESSMENT ORDER DATED 11.12. 2007 PASSED UNDER SECTION 143(3) OF THE ACT THE ASSESSEE FILED AN APPEAL BEFORE LEARNED FIRST APPELLATE AUTHORITY WHO VIDE IMPUGNE D ORDER DATED 22.07.2011 SUSTAINED THE ADDITION IN DISPUTE MADE B Y THE ASSESSING OFFICER AND PARTLY ALLOWED THE APPEAL OF THE ASSESS EE. NOW BEING AGGRIEVED WITH IMPUGNED ORDER THE ASSESSEE FILED T HE PRESENT APPEAL. 5 I.T.A. NO. 524(ASR)/2011 ASSESSMENT YEAR: 2005-06 4) AT THE TIME OF HEARING LEARNED COUNSEL FOR THE ASSESSEE FILED HIS WRITTEN SUBMISSION AND STATED THAT ON THE BASIS OF HIS WRITTEN SUBMISSION THE ISSUED IN DISPUTE MAY BE DECIDED. 5) ON THE CONTRARY LEARNED DR RELIED UPON THE IMPU GNED ORDER PASSED BY LEARNED FIRST APPELLATE AUTHORITY. 6) I HAVE HEARD BOTH THE PARTIES AND PERUSED THE RE LEVANT DOCUMENTS AVAILABLE ON RECORD AND I AM OF THE VIEW THAT THE ASSESSEE IS A PARTNERSHIP FIRM CARRYING ON THE BUSINESS OF MANUFA CTURING OF AUTO PARTS AND DOING LABOUR JOB. THE SALES OF G.P. RATE OF THE ASSESSEE ARE PROGRESSIVE AS COMPARED TO THE EARLIER YEAR AND ACC EPTED BY THE DEPARTMENT. DURING THE ASSESSMENT PROCEEDINGS THE ASSESSING OFFICER ALLEGED THAT THE CONSUMPTION REGISTERED IN RESPECT OF FUEL CONSUMED IN THE FURNACE IS NOT MAINTAINED AND THE FIRE BRICKS REPLA CED IN THE THEN FURNACE WERE HIGHER THAN THE EARLIER YEAR AND THEREFORE TH E BOOKS OF ACCOUNT SHOULD BE REJECTED. THE ASSESSING OFFICER FOUND THA T THERE WERE FRESH CREDITS OF RS. 295000/- RECEIVED BY CHEQUES FROM TH E BANK ACCOUNTS OF THE DEPOSITORS THE WIVES OF THE PARTNERS ARE THERE FORE HE MADE AN ADDITION OF RS. 295000/- AS UNDISCLOSED INCOME OF T HE ASSESSEE-FIRM. I HAVE GONE THROUGH THE ASSESSMENT ORDER AS WELL AS T HE IMPUGNED ORDER PASSED BY LEARNED CIT(A) JALANDHAR AND I AM OF TH E VIEW THAT THE 6 I.T.A. NO. 524(ASR)/2011 ASSESSMENT YEAR: 2005-06 ASSESSING OFFICER HAS NOT POINTED OUT ANY DEFECTS I N MAINTENANCE OF BOOKS OF ACCOUNT WHICH WAS DULY AUDITED BY THE CHA RTERED ACCOUNTANTS. AS REGARDS TO THE FIRE BRICKS PURCHASED BY THE ASSE SSEE ARE UTILIZED IN THE FOUR FURNACES IN THE FACTORY OF THE ASSESSEE WHEREA S IN THE EARLIER YEAR THERE WERE ONLY TWO FURNACES THE CONSUMPTION OF FI RE BRICKS WAS JUSTIFIED TO BE HIGHER. THE ASSESSING OFFICER HAS NOT DOUBTED THE PURCHASE VOUCHER OF FIRE BRICKS PRODUCED BEFORE HIM DURING ASSESSMEN T PROCEEDINGS. AS REGARDS TO THE FUEL CONSUMPTION THE FURNACE OIL IS PURCHASED AND STORED IN THE UNDERGROUND FUEL TANK AND UTILIZED IN PRODUC TION AS PER REQUIREMENT. IT IS NOT POSSIBLE TO HAVE UNIFORM PUR CHASES EVERY MONTH AS THE FURNACE OIL IS SOMETIMES IN SHORT SUPPLY. THE B OOKS OF ACCOUNT CANNOT BE REJECTED MERELY ON THE GROUND THAT THE DAY-TO-DA Y CONSUMPTION REGISTER IS NOT MAINTAINED IN THE PRESENT OF QUANTI TY-WISE DETAIL OF FUEL IN THE OPENING STOCK PURCHASE TOTAL CONSUMPTION DURI NG THE YEAR AND CLOSING STOCK. THE ENTIRE PURCHASES ARE VOUCHED AND NO DEFECT IS POINTED OUT IN PURCHASES SALES AND THE BOOKS OF ACCOUNT MA INTAINED IN THE NORMAL COURSE OF BUSINESS. AS REGARDS TO THE DEPOSIT MADE BY THE WIVES OF THE PARTNERS IT IS ADMITTED FACT THAT THEY ARE WORKING LADIES AND REGULARLY ASSESSED TO INCOME TAX AND THEY HAD ACCEPTED THE A DVANCING OF AMOUNTS BY CHEQUES TO THE ASSESSEE-FIRM IN THEIR STATEMENTS RECORDED BY THE 7 I.T.A. NO. 524(ASR)/2011 ASSESSMENT YEAR: 2005-06 ASSESSING OFFICER AND ALSO EXPLAINED THE SOURCE OF DEPOSITS IN THEIR BANK ACCOUNTS. ACCORDING TO THE IMPUGNED ORDER LEARNED CIT(A) ACCEPTED THE DEPOSITS OF RS. 295000/- IN RESPECT OF THE DEPOSITO RS AS GENUINE BUT SUSTAINED THE ADDITION IN THE TRADING RESULTS OF TH E SAME AMOUNT BY OBSERVING THAT THE PURCHASES OF ALUMINUM IN MARCH 2005 WERE MORE THAN THE CLOSING STOCK AS PER PARA NO. 7.1 AT PAGE 9 OF THE CIT(A)S ORDER AND HIGHER PURCHASE OF FUEL COMPARED TO OTHER MONTH S IN THE MONTH OF DECEMBER 2004 AS PER PARA 7.2.1 AT PAGE 10 OF THE CIT(A)S ORDER AND LASTLY THE FIRE BRICKS CONSUMED IN FURNACE WERE HIG HER BY ABOUT 600 BRICKS AS PER PARA 7.3 AT PAGE 10 OF THE CIT(A)S O RDER. AFTER GOING THROUGH THE IMPUGNED ORDER I AM OF THE VIEW THAT T HE LEARNED FIRST APPELLATE AUTHORITY HAS NOT CONSIDERED THE WORK-IN- PROGRESS SHOWN IN THE CLOSING STOCK AND MAKING ITS OWN ASSUMPTIONS WITHOU T CONFRONTING THE SAME TO THE ASSESSEE AND NO DEFECT HAS BEEN POINTED OUT IN THE CLOSING STOCK. THEREFORE THE ADDITION IN DISPUTE IS NOT SU STAINABLE IN THE EYE OF LAW BECAUSE IT IS MERELY ON THE BASIS OF PRESUMPTIO N AND ASSUMPTION. 7) KEEPING IN VIEW THE FACTS AND CIRCUMSTANCES OF T HE PRESENT CASE I AM OF THE VIEW THAT THE REVENUE AUTHORITY D ID NOT POINT OUT ANY UNVOUCHED EXPENDITURE OR ANY UNRECORDED/INFLATED PU RCHASES NOR ANY UNDISCLOSED SALES IN THE AUDITED ACCOUNTS. THEREFOR E THE ADDITION IN 8 I.T.A. NO. 524(ASR)/2011 ASSESSMENT YEAR: 2005-06 DISPUTE HAS WRONGLY BEEN MADE WITHOUT ANY BASIS WHI CH DESERVES TO BE CANCELLED. ACCORDINGLY I CANCEL THE ADDITION OF RS . 2 95 000/- SUSTAINED BY LEARNED FIRST APPELLATE AUTHORITY IN THE IMPUGNE D ORDER BY ACCEPTING THE APPEAL FILED BY THE ASSESSEE. 8) IN THE RESULT THE APPEAL FILED BY ASSESSEE IS A LLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 9 TH APRIL 2014 SD/./- (H.S. SIDHU) JUDICIAL MEMBER DATED: 9 TH APRIL 2014 /RK/ COPY OF THE ORDER FORWARDED TO: 1. THE ASSESSEE: M/S UNITED CASTINGS NEAR CANAL BRIDG E GADAIPUR JALANDHAR 2. INCOME TAX OFFICER II(2) JALANDHAR 3. THE CIT(A) 4. THE CIT 5. THE SR DR I.T.A.T. TRUE COPY BY ORDER (ASSISTANT REGISTRAR) INCOME TAX APPELLATE TRIBUNAL AMRITSAR BENCH: AMRITSAR.