M/s Girraj Fabrics (P) Ltd., Agra v. ITO,Ward4(4), Agra

ITA 58/AGR/2011 | 2006-2007
Pronouncement Date: 17-11-2011 | Result: Allowed

Appeal Details

RSA Number 5820314 RSA 2011
Assessee PAN AAJCS3426Q
Bench Agra
Appeal Number ITA 58/AGR/2011
Duration Of Justice 8 month(s) 26 day(s)
Appellant M/s Girraj Fabrics (P) Ltd., Agra
Respondent ITO,Ward4(4), Agra
Appeal Type Income Tax Appeal
Pronouncement Date 17-11-2011
Appeal Filed By Assessee
Order Result Allowed
Bench Allotted DB
Tribunal Order Date 17-11-2011
Date Of Final Hearing 17-11-2011
Next Hearing Date 17-11-2011
Assessment Year 2006-2007
Appeal Filed On 21-02-2011
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL AGRA BENCH AGRA BEFORE SHRI H.S. SIDHU JUDICIAL MEMBER AND SHRI B.P. JAIN ACCOUNTANT MEMBER ITA NO.58/AGR/2011 ASSESSMENT YEAR: 2006-07 M/S SHRI GIRRAJ FABRICS (P) LTD. VS. INCOME TAX O FFICER D-8/4 KAMLA NAGAR AGRA. WARD - 4(4) AGRA. (PAN: AAJCS 3426 Q). (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI RAM KUMAR AGARWAL C.A. RESPONDENT BY : SHRI A.K. SHARMA JR. D.R. DATE OF HEARING : 17.11.2011 DATE OF PRONOUNCEMENT : 17.11.2011 ORDER PER BENCH : THIS APPEAL OF THE ASSESSEE ARISES FROM THE ORDER O F LD. CIT(A)-II AGRA DATED 13.12.2010 FOR THE ASSESSMENT YEAR 2006-07. 2. THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL :- 1. THAT THE CIT(A)-II AGRA HAS ERRED IN LAW AND O N FACTS IN CONFIRMING THE REJECTION OF BOOKS OF ACCOUNTS U/S 1 45 & MAKING THE ASSESSMENT U/S 144 WHILE THE BOOKS OF ACCOUNTS WERE MAINTAINED AS PER ACCOUNTING NORMS. ITA NO.58/AGR/2011 A.Y. 2006-07 2 2. THAT THE CIT(A)-II AGRA HAS ERRED IN LAW AND ON FACTS IN CONFIRMING THE ADDITION OF ` 42 24 712/- TAKING TEXTILE COMMISSION INCOME @ 1% ON TOTAL PURCHASE ORDERS OF ` 49 26 29 283/- ON ESTIMATE BASIS IN-SREAD-OF COMMISSION INCOME RANGIN G BETWEEN 0.15% TO 0.20% AS PER BOOKS OF ACCOUNTS OF THE COMPANY. 3. THAT THE APPELLANT CRAVES FOR LEAVE TO ADD ALTE R AND AMEND ANY GROUNDS OF APPEAL AT THE TIME OF APPELLATE HEARING. 3. THE BRIEF FACTS AS PER THE A.O.S ORDER AT PAGE NOS.3 & 4 PARAGRAPH NOS.5 6 & 7 ARE REPRODUCED AS UNDER :- 5. DURING THE COURSE OF ASSESSMENT PROCEEDINGS IT W AS OBSERVED THAT THE ASSESSEE HAS NOT PASSED THE ENTRIES OF CA SH RECEIPTS FROM PURCHASERS AND CASH DEPOSITED TO ITS BANK ACCOUNT THROUGH CASH BOOK. ON ASKING THE ASSESSEE HAS INTER-ALIA VIDE REPLY DATED 04.12.2009 SUBMITTED THAT CASH RECEIVED WAS DEPOSI TED INTO THE BANKS ON SAME DAY HENCE THE COMPANY HAS PASSED THE ENTRY BY DEBITING BANK A/C & CREDITING THE CUSTOMER CONTROL A/C INSTEAD OF FIRST DEBITING CASH BOOK & CREDITING CUSTOMER CONTROL A/C AND THEN DEBI TING BANK A/C & CREDITING CASH BOOK; TO CUT DOWN THE ACCOUNTING PRE SSURE OF TWO ENTRIES. EXPLANATION OF THE ASSESSEE IS NOT ACCEPTA BLE BECAUSE THE AMOUNT OF COMMISSION AND AMOUNT OF PURCHASE ORDE R WERE RECEIVED AT THE SAME TIME FROM THE SAME PERSON AND ASSESSEE HAS MADE TWO ENTRIES FOR THESE TRANSACTIONS FIRST DEBI TING THE CASH BOOK BY AMOUNT OF COMMISSION & CREDITING THE COMMISSION ACCOUNT AND THEN DEBITING THE BANK A/C BY AMOUNT OF PURCHASE OR DER & CREDITING THE CUSTOMER CONTROL A/C HENCE NEITHER TIME HAS BE EN SAVED NOR ANY ACCOUNTING PRESSURE HAS BEEN CUT DOWN. FURTHER COMM ISSION RECEIVED IS DIRECTLY CONNECTED TO THE AMOUNT RECEIVED BY THE ASSESSEE FROM PURCHASERS BEING A FIX PERCENTAGE OF THE SAME BUT FROM THE CASH BOOK NEXUS BETWEEN DIFFERENT 'AMOUNTS OF COMMISSION ' AND DIFFERENT 'AMOUNTS OF PURCHASE ORDERS' COULD NOT BE ESTABLISH ED. FURTHER ACCOUNTS OF SUPPLIERS OF WHOM IT IS AN AGENT WERE NOT FOUND IN THE LEDGER MAINTAINED BY ASSESSEE HENCE HE WAS ASKED T O FURNISH COPIES OF ACCOUNT OF SUPPLIERS IN ITS BOOKS OF ACCOUNT; BU T VIDE REPLY DATED 11.12.2009 ASSESSEE SUBMITTED THAT THE SAME ARE NOT AVAILABLE WITH IT. ITA NO.58/AGR/2011 A.Y. 2006-07 3 IN SUCH CIRCUMSTANCES TRADING RESULTS AS SHOWN IN T HE INCOME AND EXPENDITURE ACCOUNT ON THE BASIS OF SUCH BOOKS OF ACCOUNT CANNOT BE RELIED UPON AND HENCE THE SAME ARE REJECTED AND INC OME OF THE ASSESSEE FROM BUSINESS OF TEXTILE COMMISSION IS BEI NG DETERMINED UNDER SECTION 144 READ WITH SECTION 145 OF THE I.T. ACT 1961. 6. DURING THE COURSE OF ASSESSMENT PROCEEDINGS SH. GIRRAJ KISHORE AGARWAL DIRECTOR IN HIS STATEMENT DATED 2 4.12.2009 HAS STATED THAT THE ASSESSEE COMPANY HAS ITS INCOME FRO M COMMISSION @ 0.15% TO0.20%. RECEIVED FROM THE PERSONS/PARTIES W HO PLACED THE ORDERS FOR PURCHASE OF CLOTH FROM SUPPLIERS AS THE ASSESSEE COMPANY WAS AN AGENT OF TEXTILE SUPPLIERS. FURTHER SH. GIRR AJ KISHORE AGARWAL STATED THAT HIS PROPRIETORSHIP CONCERN M/S. GIRRAJ CORPORATION WAS ALSO DOING THE SAME BUSINESS BUT THE RATE OF COMMIS SION WAS @ 0.75% TO 1.25% WHICH IS GREATER THAN THE COMMISSION RECE IVED BY THE COMPANY. FURTHER HE STATED THAT FOR THE PURPOSE OF BUSINESS OF HIS PROPRIETORSHIP CONCERN HE USED TO TAKE PURCHASERS T O THE MARKET FOR SELECTION OF CLOTH THEREFORE HE USED TO SPEND A LOT OF LABOUR AND TIME; WHEREAS IN THE CASE OF COMPANY PURCHASERS USED TO COME TO THE OFFICE OF THE COMPANY AND AFTER SELECTING THE MATERIAL AT THE OFFICE ITSELF USED TO PLACE THE PURCHASE ORDERS; THEREFORE TIME A ND LABOUR OF THE COMPANY WAS SAVED. IN TOTALITY THE DIFFERENT RATE OF COMMISSION WAS DUE TO DIFFERENCE OF LABOUR AND TIME SPENT BY THE A SSESSEE AND THE PROPRIETORSHIP CONCERN OF SH. GIRRAJ KISHORE AGARWA L. THE EXPLANATION OF DIRECTOR OF COMPANY IS NOT ACCEPTABL E AS THE BUSINESS OF ASSESSEE AND BUSINESS OF M/S. GIRRAJ CORPORATION IS SAME HENCE THE RATE OF COMMISSION CANNOT BE DIFFERENT. FURTHER ITI WAS DEPUTED TO MAKE FIELD ENQUIRIES WHO VIDE HIS REPORT DATED 29. 12.2009 HAS STATED THAT TEXTILE COMMISSION AGENT CHARGE COMMISSION @ 0 .75 TO 1.25% FROM THE PURCHASER. 7. IN VIEW OF THE FOREGOING FACTS THE RATE OF COM MISSION EARNED BY THE COMPANY IS BEING TAKEN @1% I.E. MEAN OF THE RA TE OF COMMISSION OF DIRECTOR'S PROPRIETORSHIP CONCERN AND AS REPORTE D BY THE ITI. ACCORDINGLY COMMISSION RECEIVED BY THE COMPANY COME S TO RS.49 26 292/- AGAINST AMOUNT OF PURCHASE ORDERS OF RS.49 26 29 283/- @ 1% OF THE SAME. INCOME OF ASSE SSEE FROM BUSINESS OF TEXTILE COMMISSION IS BEING TAKEN AT RS .41 10 726/- AFTER ITA NO.58/AGR/2011 A.Y. 2006-07 4 ALLOWING THE EXPENDITURES RS.8 15 566/- FROM TOTAL RECEIPT OF RS.49 26 292/-. (INCOME FROM BUSINESS OF TEXTILE COMMISSION RS.41 1 0 726/-). 4. THE LD. CIT(A) CONFIRMED THE ACTION OF THE A.O. 5. WE HAVE HEARD THE RIVAL CONTENTION AND PERUSED T HE FACTS OF THE CASE. THE MAIN REASONS FOR REJECTING THE BOOKS OF ACCOUNT I.E . FOR INVOKING THE PROVISIONS OF SECTION 145(3) OF THE ACT BY THE A.O. ARE THAT THE ASSESSEE WAS ACCOUNTING FOR THE MONEY COLLECTED FROM THE PURCHASERS AND THE SUPPLIE RS BY DEBITING BANK AND CREDITING WITH CUSTOMER CONTROL ACCOUNT. AS REGARD S THE COMMISSION FOR SUCH SERVICES THE ASSESSEE DEBITED THE CASH AND CREDITED THE COMMISSION IN HIS ACCOUNT AFTER REMITTING THE MONEY TO THE SUPPLIERS CUSTOME R CONTROL ACCOUNT USED TO DEBIT BY CREDITING THE BANK. A QUERY WAS RAISED FROM THE LD. DEPARTMENTAL REPRESENTATIVE TO POINT OUT ANY DEFECT IN THE ENTRI ES MADE IN THE BOOKS OF ACCOUNT MADE BY THE ASSESSEE. NOTHING COULD BE POINTED OUT AND NO DEFECT HAS BEEN BROUGHT ON RECORD BY THE A.O. OR THE LD. CIT(A). N O COGENT REASONS HAVE BEEN GIVEN BY EITHER OF THE AUTHORITIES BELOW WITH RESPE CT TO ANY DEFECT IN THE SYSTEM OF ACCOUNTING MAINTAINED BY THE ASSESSEE. THEREFORE THE A.O. IS NOT JUSTIFIED IN REJECTING THE BOOKS OF ACCOUNT AND HE IS NOT AUTHOR IZED TO MAKE ANY ADDITION ON THIS ACCOUNT. THEREFORE THE ADDITIONS MADE ARE LI ABLE TO BE DELETED. THUS ALL THE GROUNDS OF THE ASSESSEE ARE ALLOWED. ITA NO.58/AGR/2011 A.Y. 2006-07 5 6. IN THE RESULT APPEAL OF THE ASSESSEE IN ITA NO. 58/AGR/2011 IS ALLOWED. (ORDER PRONOUNCED IN THE OPEN COURT ON 17.11.2011). SD/- SD/- (H.S. SIDHU) (B.P. JAIN) JUDICIAL MEMBER ACCOUNTANT MEMBER DATE: 17 TH NOVEMBER 2011 PBN/* COPY OF THE ORDER FORWARDED TO: APPELLANT/RESPONDENT/CIT CONCERNED/CIT(APPEALS) CO NCERNED/D.R. ITAT AGRA BENCH AGRA/GUARD FILE. BY ORDER ASSISTANT REGISTRAR INCOME-TAX APPELLATE TRIBUNAL AGRA TRUE COPY