ACIT, Tirur v. M/s Theyyampattil Jewellery, Kottakkal

ITA 738/COCH/2008 | 2004-2005
Pronouncement Date: 10-05-2010

Appeal Details

RSA Number 73821914 RSA 2008
Assessee PAN AABFT3609D
Bench Cochin
Appeal Number ITA 738/COCH/2008
Duration Of Justice 1 year(s) 10 month(s) 29 day(s)
Appellant ACIT, Tirur
Respondent M/s Theyyampattil Jewellery, Kottakkal
Appeal Type Income Tax Appeal
Pronouncement Date 10-05-2010
Appeal Filed By Department
Bench Allotted DB
Tribunal Order Date 10-05-2010
Date Of Final Hearing 13-04-2010
Next Hearing Date 13-04-2010
Assessment Year 2004-2005
Appeal Filed On 11-06-2008
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL COCHIN BENCH COCHIN BEFORE SHRI N.VIJAYAKUMARAN & SHRI SANJAY ARORA I.T.A.NO.737/COCH/2008 ASSESSMENT YEAR:2004-05 THE ASST. COMMISSIONER OF INCOME-TAX CIRCLE-1 TIRUR. VS. M/S.THEYYAMPATTIL JEWELLERY TIRUR. PA NO.AABFT 3609 D (APPELLANT) ( RESPONDENT ) I.T.A.NO.738/COCH/2008 ASSESSMENT YEAR:2004-05 THE ASST. COMMISSIONER OF INCOME-TAX CIRCLE-1 TIRUR. VS. M/S.THEYYAMPATTIL JEWELLERY KOTTAKKAL. PA NO.AACFT 9164 C (APPELLANT) ( RESPONDENT) & I.T.A.NO.739/COCH/2008 ASSESSMENT YEAR:2004-05 THE ASST. COMMISSIONER OF INCOME-TAX CIRCLE-1 TIRUR. VS. M/S.THEYYAMPATTIL JEWELLERY PUTHANATHANI. PA NO.AABFT 5179Q (APPELLANT) (RESPONDENT) REVENUE BY SHRI T.J. VINCE NT JR.DR ASSESSEE BY SHRI CBM WARRIAR CA O R D E R PER N.VIJAYAKUMARAN J.M: THESE THREE APPEALS ARE BY THE DEPARTMENT IN THE ASSESSMENT OF THREE GROUP CONCERNS VIZ. M/S. THEYY AMPATTIL ITA NOS. 737 TO 739/COCH/2008 2 JEWELLERY TIRUR M/S. THEYYAMPATTIL JEWELLERY KOT TAKKAL AND M/S. THEYYAMPATTIL JEWELLERY PUTHANATHANI. THE AS SESSMENT YEAR INVOLVED IN THESE APPEALS IS 2004-05. 2. AS THE FACTS RELEVANT ARE BEING COMMON IN THESE APPEALS THESE APPEALS WERE HEARD TOGETHER AND ARE BEING DISPOSED OF BY THIS COMMON ORDER FOR THE SAKE OF CONVENIENCE. 3. THE FACTS RELEVANT ARE THAT THERE WAS A SEARCH O N 24-01- 2002. ACCORDINGLY BLOCK ASSESSMENT WAS COMPLETED SEPARATELY. THE REGULAR ASSESSMENT IN THE ABOVE T HREE CASES FOR THE ASSESSMENT YEAR 2004-05 WAS MADE U/S.143(3) . AS THE FACTS ARE COMMON WE SHALL TAKE THE CASE OF M/S . THEYYAMPATTIL JEWELLERY TIRUR FOR DISCUSSION. I N THIS CASE THE ASSESSEE FIRM IS ENGAGED IN THE BUSINESS OF PUR CHASE OF GOLD BARS AND OLD GOLD ORNAMENTS AND SUBSEQUENT SAL E OF GOLD ORNAMENTS. INITIALLY THE RETURN WAS PROCESSED U/S .143(1)(A) AND SUBSEQUENTLY THE CASE WAS SELECTED FOR SCRUTINY . ON VERIFICATION OF THE STATEMENT OF ACCOUNT FILED ALON GWITH THE RETURN OF INCOME REVEALED THAT AN AMOUNT OF RS.7 01 858/- WAS OUTSTANDING AS ON 31-3-2004 WHICH IS THE PREVI OUS YEAR ENDING RELEVANT TO THE ASSESSMENT YEAR UNDER APPEAL WITH ONE M/S. SANCHETTY JEWELLERS MUMBAI. THIS WAS STA TED TO BE ITA NOS. 737 TO 739/COCH/2008 3 TOWARDS THE PURCHASES MADE FROM THEM. THE ASSESSE E WAS ASKED TO FILE CONFIRMATION OF THE BALANCES FROM CRE DITOR AND A COPY OF THE ASSESSEES ACCOUNT AS APPEARING IN THE BOOKS OF ACCOUNTS OF M/S. SANCHETTY JEWELLERS MUMBAI. AGA IN CASE WAS REPOSTED AND REPOSTED. ACCORDING TO THE ASSES SING OFFICER THE ASSESSEE DID NOT PRODUCE THE SAME. HE THEREFORE ADDED THIS AMOUNT AS INCOME FROM OTHER SOURCES IN THE ABSENCE OF ANY EVIDENCE FOR THE CORRECTNESS OF THE CREDIT BALANCE APPEARING IN THE BOOKS OF ACCOUNTS. THE ASSESSING OFFICER TREATED THIS CREDIT BALANCE AS NO N-EXISTING AS ON THE PREVIOUS YEAR I.E. ON 31-3-2004. 4. ON APPEAL TO THE CIT(APPEALS) THE CONTENTION OF THE ASSESSEE WOULD BE THAT THIS AMOUNT WAS PAYABLE FOR THE PURCHASE OF JEWELLERY TO M/S. SANCHETTY JEWELLERS MUMBAI. THE PURCHASE OF JEWELLERY AS PER BILL IS INCLUDED I N THE STOCK OF JEWELLERY WHICH IS REPRESENTED BY SALES OR CLOSI NG STOCK. THE AMOUNT OF RS.7 01 858/- PAYABLE TO M/S. SANCHET TY JEWELLERS MUMBAI WAS PAID BY DEMAND DRAFT NO.27146 5 DRAWN ON CATHOLIC CYRIAN BANK KALPAKANCHERY DATED 5-7- 2004. A COPY OF THE DD WAS FURNISHED TO THE ASSES SING OFFICER DURING THE COURSE OF ASSESSMENT PROCEEDINGS . HENCE THE INCOME ASSESSED UNDER THE HEAD OTHER SOURCES IS TOTALLY WRONG AND AGAINST THE LAW. FURTHER IT WAS SUBMIT TED BEFORE ITA NOS. 737 TO 739/COCH/2008 4 THE LD. CIT(APPEALS) THAT THE ASSESSEE FIRM WAS PUR CHASING JEWELLERY FROM M/S. SANCHETTY JEWELLERS MUMBAI DUR ING THIS YEAR AS WELL AS DURING THE EARLIER ASSESSMENT YEARS . IN THE PRECEDING ASSESSMENT YEAR 2003-04 THE ASSESSEE FIR M PURCHASED 1498.650 GMS OF JEWELLERY FOR A VALUE OF RS.7 26 846/- ON 10-4-2002. THE ENTIRE PURCHASE CONSIDERATION WAS PAID BY ACCOUNT PAYEE CROSSED DD ISSUED BY CATHOLIC CYRIAN BANK KALPAKANCHERY BRANCH MALA PPURAM DISTRICT. FOR THE YEAR UNDER CONSIDERATION 1210. 100 GMS OF JEWELLERY FOR A VALUE OF RS.7 01 858/- WAS PURCHASE D FROM M/S. SANCHETTY JEWELLERS MUMBAI VIDE PURCHASE BILL DATED 19-01-2004 AND THE STOCK BOOK EVIDENCING THE RECEIP T OF JEWELLERY WERE PRODUCED BEFORE THE ASSESSING OFFICE R. IT WAS FURTHER EXPLAINED THAT THE QUANTITY OF JEWELLERY PU RCHASED FROM THIS SUPPLIER IS PARTLY TRADED DURING THE YEAR AND THE BALANCE IS DISCLOSED AS CLOSING STOCK OF THAT YEAR. THE FIRST APPELLATE AUTHORITY WAS OF THE VIEW THAT THE ASSESS EE HAS DISCHARGED THE ONUS. THE PURCHASE OF JEWELLERY WA S EVIDENCED BY INVOICE. THE RECEIPT OF JEWELLERY AN D WEIGHT IS ENTERED IN THE STOCK REGISTER. THE CLOSING STOCK OF THE JEWELLERY WAS ALSO VERIFIED. THE SALE OF THE JEWE LLERY FOR THE PERIOD FROM 20-01-2004 TO 31-3-2004 IS 1863.511 GMS AND THE STOCK OF JEWELLERY IN THE SHOP AS ON 31-3-2004 IS ITA NOS. 737 TO 739/COCH/2008 5 31 6211.189 GMS. THE PURCHASE OF JEWELLERY FROM TH E MUMBAI SUPPLIER VIZ. M/S. SANCHETTY JEWELLERS MUM BAI IS REFLECTED IN THE SALE OR IN THE CLOSING STOCK OF TH E RELEVANT PREVIOUS YEAR ENDED 31-3-2004. UNDER THE CIRCUMSTA NCES THE DEBIT ENTRY OF VALUE OF JEWELLERY IN THE PROFIT AND LOSS ACCOUNT IS REFLECTED EITHER IN THE SALES OR IN THE CLOSING STOCK. HENCE THERE IS NO EFFECT OF REDUCING THE INCOME OF THE FIRM AS PER THE PROFIT AND LOSS ACCOUNT. THEREFORE TH E LD. CIT(APPEALS) WAS OF THE VIEW THAT THE ADDITION IS N OT ATTRACTED AS PER THE PROVISIONS OF SECTION 68 69 69A OR 69B AS THEY ARE NOT APPLICABLE TO THIS CASE WHICH RESU LTED IN THE ALLOWANCE OF THE APPEAL AGAINST WHICH THE REVENUE I S IN APPEAL BEFORE US. 5. WE HAVE HEARD SHRI T.J. VINCENT THE LD. JR.D.R. APPEARING FOR THE REVENUE AND SHRI CBM WARRIAR CA APPEARING FOR THE ASSESSES AND CONSIDERED THEIR SUB MISSIONS CAREFULLY. THE LD. JR. DR WOULD SUBMIT THAT AS PE R SURVEY U/S.133A IT IS ESTABLISHED THAT M/S. SANCHETTY JEW ELLERS MUMBAI MADE ACCOMMODATION ENTRY ON THE PURCHASE OF JEWELLERY BY THE ASSESSEE AND ADMITTED AS SUCH. B EFORE THE ASSESSING OFFICER NO DETAILS WERE FILED. THE CREDI TS APPEARING WERE RIGHTLY ADDED BY THE ASSESSING OFFICER. THER EFORE THE ORDER OF THE LD. CIT(APPEALS) MAY BE SET ASIDE WHI CH IS ITA NOS. 737 TO 739/COCH/2008 6 TOTALLY WRONG AND THAT OF THE ASSESSING OFFICER MAY BE RESTORED IS THE PRAYER OF THE LD. JR.DR. 6. SHRI WARRIAR THE LD. COUNSEL FOR THE ASSESSEE ON THE OTHER HAND PRELIMINARILY OBJECTED THE DEPARTMENTAL APPEAL ON THE GROUND THAT THE APPEAL ITSELF IS MIS-CONCEIV ED. THE ADDITION IS MADE ONLY ON THE POINT THAT THE SOURCE WAS NOT EXPLAINED TO THE SATISFACTION. BUT IN THE GROUND IT IS TOTALLY A DIFFERENT CASE PUT FORTH. THEREFORE THE DEPART MENTAL APPEALS ARE LIABLE TO BE DISMISSED ON THE BASIS OF MIS- CONCEIVED GROUND WHICH IS NOT AT-ALL ARISING OUT O F THE ORDERS OF THE INCOME-TAX AUTHORITIES. SIMILAR PURCHASES M ADE FROM M/S. SANCHETTY JEWELLERS MUMBAI IN EARLIER YEARS WERE ACCEPTED BY THE DEPARTMENT AND FOR THAT THE LD. COU NSEL FOR THE ASSESSEE INVITED OUR ATTENTION TO PAGES 26 TO 2 8 OF THE ASSESSEES PAPER BOOK. REFERRING TO PAGE NO.25 OF THE PAPER BOOK WHICH IS A LETTER DATED 03-08-2005 ISSUED BY THE ASSIST. COMMISSIONER OF INCOME-TAX CENTRAL CIRCLE CALICUT TO THE MANAGING PARTNER OF THE ASSESSEE FIRM THE ASSESSING OFFICER ASKED FOR THE PURCHASE BILLS CASH BOOK LED GER ETC. PAGES 26 TO 28 OF THE PAPER BOOK ARE THE CASH BILLS AND PAGE NO.29 IS THE STATEMENT OF ACCOUNT FROM 01-04-2002 T O 31-03- 2003 PAGE NO.30 IS THE STATEMENT OF ACCOUNT FROM 0 1-04- 2002 TO 31--3-2003 IN RESPECT OF THE OTHER ASSESSEE VIZ. ITA NOS. 737 TO 739/COCH/2008 7 M/S. THEYYAMPATTIL JEWELLERY PUTHANATHANI AND PART ICULARLY WITH REFERENCE TO THIS ASSESSEE PAGE NO.35 IS THE C OPY OF ASSESSMENT ORDER FOR THE IMMEDIATELY PRECEDING ASSE SSMENT YEAR 2003-04 WHEREIN SUCH AN ADDITION IS NOT FOUND PLACE. IN OTHER WORDS FOR THE IMMEDIATELY PRECEDING ASSES SMENT YEAR 2003-04 ASSESSMENT WAS MADE U/S.143(3) AND THE DEPARTMENT HAS ACCEPTED THE PURCHASES FROM M/S. SA NCHETTY JEWELLERS MUMBAI AS THERE IS NO ADDITION UNDER TH AT HEAD. FOR THAT YEAR ALSO ASSESSEE FIRM IS ENGAGED IN THE SAME BUSINESS. SO ALSO IN THE CASE OF M/S. THEYYAMPATT IL JEWELLERY PUTHANATHANI THE ASSESSEE HEREIN AND IN THAT CASE ALSO AS PER ASSESSEES PAPER BOOK AT PAGE NO.37 THE RE WAS NO ADDITION. PAGE NO.40 OF THE PAPER BOOK IS THE COPY OF ASSESSMENT ORDER IN THE CASE OF M/S. THEYAMPATIL JE WELLERY KOTAKKAL WHEREIN ALSO SIMILAR POSITION EXISTS. T HE LD. COUNSEL FOR THE ASSESSEE HEAVILY RELIED ON PAGE NO. 8 OF ASSESSEES PAPER BOOK WHICH IS A COPY OF CONFIRMATI ON LETTER OF CATHOLIC CRIYAN BANK WHEREIN THE BANK CONFIRMS T HE PAYMENT TO SANCHETTY JEWELLERY WHO WAS A PAYEE THE RE AND THE DD COLLECTION BANK AND BRANCH DATE OF PAYMENT ETC. WERE ALSO MENTIONED. BY RELYING ON THIS THE LD. C OUNSEL FOR THE ASSESSEE WOULD SUBMIT THAT PAYMENT HAS BEEN CLE ARLY ESTABLISHED PURCHASE OF JEWELLERY HAS BEEN ACCEPTE D SOURCE ITA NOS. 737 TO 739/COCH/2008 8 ALONE DOUBTED BUT THE ASSESSEE PROVING THE SOURCE BLOCK ASSESSMENT WERE ALSO COMPLETED AND THERE WAS NO DIF FERENCE IN THE CLOSING STOCK. THEREFORE THE LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE ORDER OF THE LD. CIT(AP PEALS) IS QUITE JUSTIFIED. UNDER THE ABOVE FACTS AND CIRCUM STANCES THE DEPARTMENT ON A MIS-CONCEIVED GROUND WENT TO BUILD A EDIFICE WITHOUT ANY PROPER FOUNDATION. THEREFORE THE APP EALS ARE NOT AT ALL MAINTAINABLE AND LIABLE TO BE DISMISSED IS THE BORNE CONTENTION OF THE LD. COUNSEL FOR THE ASSESSE E. 7. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND PER USED THE MATERIALS AVAILABLE ON RECORD INCLUDING THE PRE CEDENTS. IN THE EARLIER ASSESSMENT YEAR 2003-04 ALL THE ASS ESSES NOW UNDER APPEAL PURCHASED GOLD JEWELLERY FROM M/S. SA NCHETTY JEWELLERS MUMBAI AND IN THE REGULAR ASSESSMENT FO R THAT ASSESSMENT YEAR THE DEPARTMENT HAD ACCEPTED THE PU RCHASES OF JEJWELLERY AND NO ADDITION WAS MADE. BUT FOR T HIS YEAR ASSESSING OFFICER DOUBTED THE SOURCE FOR PURCHASE A ND HE WANTED TO PROVE THE SOURCE BY THE ASSESSEE. THE A SSESSEE PROVED THE SOURCE BY WAY OF CONFIRMATION LETTER FRO M CATHOLIC CRIYAN BANK WHICH IS AVAILABLE AT PAGE NO.8 OF THE ASSESSEES PAPER BOOK. THE SOURCE ALONE WAS DOUBT ED. THE EXISTENCE OF THE PARTY IS NOT IN DISPUTE. THE PUR CHASE OF JEWELLERY WAS ACCEPTED BY THE DEPARTMENT FOR EARLIE R YEARS. ITA NOS. 737 TO 739/COCH/2008 9 THE ONLY DISPUTE FOR THIS ASSESSMENT YEAR IS ABOUT THE SOURCE FOR THE PURCHASE OF JEWELLERY. THAT HAS BEEN SUFF ICIENTLY EXPLAINED BY WAY OF CONFIRMATION BY CATHOLIC CRIYAN BANK WHO IS THE ULTIMATE PAYEE BANK BRANCH THROUGH WHIC H THE PAYMENTS WERE COLLECTED. IT IS CRYSTAL CLEAR FROM THESE FACTS THAT THE ASSESSEE HAS DIS-CHARGED ITS ONUS PROVING THE SOURCE. PAGE NO.4 OF THE ASSESSEES PAPER BOOK I S A COPY OF LETTER ADDRESSED TO M/S. SANCHETTY JEWELLERS MUMBA I WHEREIN THE ASSESSEE ASKED THE SAID JEWELERS TO SEN D A COPY OF THE ACCOUNT OF THE ASSESSEE WITH M/S. SANCHETTY JEWELLERS MUMBAI FOR THE PERIOD FROM 01-04-2003 TO 31-3-2004 TO PRODUCE THE SAME BEFORE THE ASSESSING OFFICER. PAG ES 5 & 6 ARE COPY OF STOCK REGISTER IN WHICH THE PURCHASE OF GOLD ORNAMENTS ENTERED. PAGE NO.7 OF THE PAPER BOOK I S A COPY OF CONFIRMATION LETTER ISSUED BY THE CATHOLIC CRIYA N BANK TO THE EFFECT THAT A DD NO.271470 OF RS.6 37 362/- DAT ED 14-7- 2004 WAS DRAWN IN FAVOUR OF M/S. SANCHETTY JEWELLER S MUMBAI AND THIS AMOUNT IS DEBITED AND PAID OUT OF T HE CURRENT ACCOUNT OF THE ASSESSEE. WE COULD NOT DOU BT THIS CERTIFICATE UNLESS THERE IS SOME OTHER INCRIMINATIN G MATERIALS TO SUGGEST THAT IT IS A FALSE ONE. MERE DOUBT ON A SUSPICION IS NOT AT ALL WARRANTED WHICH THE LD. CIT(APPEALS) CORRECTLY APPRECIATED AND ULTIMATELY DECIDED THE ISSUE IN FAV OUR OF THE ITA NOS. 737 TO 739/COCH/2008 10 ASSESSEE. THEREFORE WE ARE OF THE FIRM BELIEF TH AT THE ORDER OF THE CIT(APPEALS) REQUIRES NO INTERFERENCE. ACC ORDINGLY THESE APPEALS DESERVES TO BE DISMISSED ON TWO COUNT S (I) GROUNDS ARE MIS-CONCEIVED AND (II) SOURCE FOR THE P URCHASE OF JEWELLERY HAS BEEN SUFFICIENTLY PROVED. 8. IN THE RESULT ALL THE THREE APPEALS ARE DISMISS ED. SD/- SD/- (SANJAY ARORA) (N.VIJAYKUMA RAN) ACCOUNTANT MEMBER JUDICIAL M EMBER ERNAKULAM DATED THE 10 TH MAY 2010. PM. COPY FORWARDED TO: 1. THE ASST. COMMISSIONER OF INCOME-TAX CIRCLE-1 TIRU R. 2. M/S.THEYYAMPATTIL JEWELLERY KAINIKKARA COMPLEX TOWN HALL ROAD TIRUR. 3. M/S.THEYYAMPATTIL JEWELLERY 1/851 UNEEN COMPLEX MAIN ROAD KOTTAKKAL. 4. M/S.THEYYAMPATTIL JEWELLERY MK COMPLEX TIRUR R OAD PUTHANATHANI. 5. CIT(A)-I KOCHI. 6. CIT CENTRAL KOCHI. 7. D.R. BY ORDER SD/- ASSISTANT R EGISTRAR