Income Tax Officer, Nashik v. Smt. Nirmaladevi J. Mittal, Nashik

ITA 864/PUN/2010 | 2007-2008
Pronouncement Date: 26-11-2014 | Result: Dismissed

Appeal Details

RSA Number 86424514 RSA 2010
Assessee PAN ABCPA4333M
Bench Pune
Appeal Number ITA 864/PUN/2010
Duration Of Justice 4 year(s) 5 month(s) 22 day(s)
Appellant Income Tax Officer, Nashik
Respondent Smt. Nirmaladevi J. Mittal, Nashik
Appeal Type Income Tax Appeal
Pronouncement Date 26-11-2014
Appeal Filed By Department
Order Result Dismissed
Bench Allotted B
Tribunal Order Date 26-11-2014
Date Of Final Hearing 04-11-2013
Next Hearing Date 04-11-2013
Assessment Year 2007-2008
Appeal Filed On 04-06-2010
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH B PUNE BEFORE SHRI G.S. PANNU ACCOUNTANT MEMBER AND SHRI R.S. PADVEKAR JUDICIAL MEMBER ITA NO.864/PN/2010 (ASSESSMENT YEAR : 2007-08) INCOME TAX OFFICER (CENTRAL)-2 NASHIK. . APPELLANT VS. SMT. NIRMALADEVI J. MITTAL 380 RAMKRISHNA GANJ KHANDWA. PAN : ABCPA4333M . RESPONDENT ITA NO.865/PN/2010 (ASSESSMENT YEAR : 2007-08) INCOME TAX OFFICER (CENTRAL)-2 NASHIK. . APPELLANT VS. SMT. PUSHPADEVI N. MITTAL 380 RAMKRISHNA GANJ KHANDWA. PAN : ABCPA4360N . RESPONDENT DEPARTMENT BY : SHRI A. K. MODI ASSESSEE BY : SHRI SUNIL PATHAK DATE OF HEARING : 13-11-2014 DATE OF PRONOUNCEMENT : 26-11-2014 ORDER PER G. S. PANNU AM THE CAPTIONED ARE APPEALS BY TWO DIFFERENT ASSESSEE BELONGING TO ONE FAMILY AND SINCE THE ISSUE INVOLVED IS COMMON THE TWO APPEALS HAVE BEEN CLUBBED AND HEARD TOGETHER AND A CONSOLIDATED ORDER IS BEING PASSED FOR THE SAKE OF CONVENIENCE AND BREVITY. 2. SINCE THE ISSUE AS WELL AS THE FACTS AND CIRCUMS TANCES ARE SIMILAR ITA NO.864/PN/2010 IN THE CASE OF SMT. NIRMALADEVI J. M ITTAL HAS BEEN TAKEN AS THE LEAD CASE. THIS IS AN APPEAL BY THE REVENUE DI RECTED AGAINST AN ORDER OF ITA NOS.864 & 865/PN/2010 THE COMMISSIONER OF INCOME TAX (APPEALS)-I NASHIK DATED 24.03.2010 WHICH IN TURN HAS ARISEN FROM AN ORDER DATED 30.12.2009 PASSED BY THE ASSESSING OFFICER U/S 143(3) R.W.S. 153A OF THE INCOME-TAX AC T 1961 (IN SHORT THE ACT) PERTAINING TO THE ASSESSMENT YEAR 2007-08. 3. IN THIS APPEAL REVENUE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL :- 1. WHETHER ON THE FACTS AND THE CIRCUMSTANCES OF T HE CASE AND IN THE LAW THE LD. CIT(A) JUSTIFIED IN ALLOWING THE C OMMODITY LOSSES OF RS.77 42 121/- WITH M/S KIRTI COMMODITIES IN ABSEN CE ENOUGH EVIDENCE TO JUSTIFY THE SAME? B. ON THE FACTS AND THE CIRCUMSTANCES OF THE CASE A ND IN LAW THE LD. CIT(A) FAILED TO APPRECIATE THE FACT THAT THE A SSESSEE FAILED TO PROVE THAT SHE IS CLIENT OF M/S KIRTI COMMODITIES INASMUCH AS SHE HAS FAILED TO PRODUCE KYC NORMS APPLICATION FORM CONTRACT NOTES BROKER S NOTES ETC. WHICH ARE NECESSARY TO PROVE GENUINENESS OF THE TRANSACTION. 4. ALTHOUGH REVENUE HAS RAISED TWO GROUNDS OF APPE AL BUT THE SOLITARY DISPUTE IS WITH REGARD TO THE ACTION OF THE CIT(A) IN DELETING AN ADDITION OF RS.77 42 121/- MADE BY THE ASSESSING OFFICER ON ACC OUNT OF UNEXPLAINED LOSSES IN TRADING OF COMMODITIES. 5. BRIEF FACTS ARE THAT ASSESSEE IS A PART OF SAHAY OG GROUP OF CASES WHEREIN A SEARCH AND SEIZURE ACTION U/S 132(1) OF T HE ACT WAS CARRIED OUT ON 22.11.2007. IN THE COURSE OF SURVEY ACTION AT ONE OF THE GROUP CONCERNS NAMELY M/S VIKAS UDYOG A DOCUMENT STYLED AS ANNEX URE- LPF-2 WAS IMPOUNDED. CERTAIN NOTINGS MADE AT PAGE NO.6 IN TH E SAID IMPOUNDED HAS FORMED THE BASIS FOR THE ADDITION MADE BY THE ASSES SING OFFICER WHICH IS IN DISPUTE BEFORE US. THE ASSESSING OFFICER HAS NOTED IN PARA 6 OF THE ASSESSMENT ORDER THAT THE SAID DOCUMENT REVEALED CE RTAIN ENTRIES WHICH HAVE BEEN DETAILED AS UNDER :- CREDIT SMT. NIRMALADEVI RS.77 42 121/- DEBIT HIRA UDYOG RS.64 30 753/- SMT. ARUNA RS.10 43 563/- JAGDISH MITTAL RS. 2 67 805/- TOTAL RS.77 42 121/- ITA NOS.864 & 865/PN/2010 6. SINCE THE ENTRIES PERTAINED TO THE ASSESSEE ASS ESSING OFFICER REQUIRED THE ASSESSEE TO EXPLAIN THE CONTENTS OF THE DOCUMEN T. ASSESSEE EXPLAINED THAT THE AFORESAID ENTRIES RELATED TO LOSSES INCURR ED IN COMMODITY TRANSACTIONS CARRIED OUT THROUGH ONE M/S KIRTI COMMODITIES. ASS ESSEE ALSO CONTENDED BEFORE THE ASSESSING OFFICER THAT THE AFORESAID LOS S OF RS.77 42 121/- WAS DULY SHOWN IN THE RETURN OF INCOME FILED FOR THE ASSESSM ENT YEAR 2007-08 ON 23.10.2007. THE EXPLANATION FURNISHED BY THE ASSES SEE WAS NOT ACCEPTED BY THE ASSESSING OFFICER. FIRSTLY AS PER THE ASSESSI NG OFFICER THE DOCUMENT IN QUESTION DID NOT MENTION THE NAME OF M/S KIRTI COMM ODITIES. SECONDLY AS PER THE ASSESSING OFFICER ASSESSEE HAD EARNED PROFITS OF RS.1 26 26 570/- ON COMMODITIES TRADING CARRIED OUT THROUGH M/S SHANTI COMMODITIES A GROUP CONCERN AND THAT SUCH PROFIT WAS OFFSET BY THE LOSS OF RS.77 42 121/- WHICH WAS CLAIMED TO HAVE BEEN INCURRED WHILE DOING COMMO DITIES TRADING THROUGH M/S KIRTI COMMODITIES. ACCORDING TO THE ASSESSING OFFICER THE PRESENCE NAME OF THE THREE ENTITIES M/S HIRA UDYOG SMT. ARU NA AND JAGDISH MITTAL SHOWED THAT SUCH LOSSES WERE PROCURED THROUGH THESE THREE ENTITIES. FURTHER AS PER THE ASSESSING OFFICER THE CLAIM OF THE ASSE SSEE REGARDING TRADING ACTIVITY THROUGH M/S KIRTI COMMODITIES WAS NOT SUBS TANTIATED AS THE CONTRACT NOTES/BROKER NOTES WERE NOT FURNISHED. LASTLY THE ASSESSING OFFICER ALSO NOTED FROM THE ACCOUNTS EXTRACT OF THE ASSESSEE WI TH M/S KIRTI COMMODITIES THAT ASSESSEE HAS BEEN GENERATING LOSSES CONTINUOUS LY FROM 28.05.2006 TO 13.10.2006. EVEN AFTER THE TRANSACTION OF LOSS M/ S KIRTI COMMODITIES WAS GIVEN THE PAYMENT OF RS.77 42 121/- ONLY IN THE MON TH OF MARCH I.E. AFTER A SUBSTANTIAL TIME GAP. THEREFORE ACCORDING TO THE ASSESSING OFFICER THE LOSS OF RS.77 42 121/- WAS AN ARTIFICIAL LOSS GENERATED BY THE ASSESSEE AND HE DISALLOWED THE SAME. 7. BEFORE THE CIT(A) ASSESSEE MADE VARIOUS SUBMISS IONS ASSAILING THE ADDITION MADE BY THE ASSESSING OFFICER. THE SUBMIS SIONS MADE BY THE ASSESSEE HAVE BEEN TABULATED BY THE CIT(A) IN PARA 5.1 OF HIS ORDER. BASED ITA NOS.864 & 865/PN/2010 ON THE SUBMISSIONS MADE THE CIT(A) CONCLUDED THAT ASSESSEES CLAIM OF LOSS OF RS.77 42 121/- INCURRED ON COMMODITY TRANSACTION S CARRIED OUT THROUGH M/S KIRTI COMMODITIES IS SUPPORTED BY BOOKS OF ACCOUNT AND RECORDS MAINTAINED BY KIRTI COMMODITIES. FURTHER THE CIT(A) CONCLUDED T HAT PAYMENT TO M/S KIRTI COMMODITIES ON ACCOUNT OF SUCH LOSS WAS MADE BY THE ASSESSEE IN MARCH 2007 I.E. PRIOR TO THE DATE OF SEARCH; AND THE RET URN OF INCOME FILED BY THE ASSESSEE FOR ASSESSMENT YEAR 2007-08 CLAIMING SUCH LOSS WAS FILED ON 23.10.2007 I.E. PRIOR TO THE DATE OF SEARCH. MOREO VER THE CIT(A) NOTED THAT THERE WAS NO SUBSTANCE IN THE STAND OF THE ASSESSIN G OFFICER THAT THE LOSSES IN QUESTION WERE PROCURED BY THE ASSESSEE FROM THE THR EE OTHER ENTITIES WHOSE NAMES WERE FOUND IN THE DOCUMENT IMPOUNDED. THE CI T(A) NOTED THAT THERE WAS NO CORROBORATIVE EVIDENCE BROUGHT OUT BY THE AS SESSING OFFICER IN SUPPORT OF HIS CONTENTION THAT THE IMPUGNED LOSS WAS BOGUS OR WAS DIVERTED BY THE AFORESAID THREE ENTITIES WHOSE NAMES APPEARED IN TH E IMPOUNDED DOCUMENT. THE CIT(A) HAS ALSO NOTED THAT SOME OF THE PARTIES NOTED IN THE IMPOUNDED DOCUMENT WERE BEING ASSESSED BY THE VERY SAME ASSES SING OFFICER AND IN THOSE CASES NO ADDITION WAS MADE ON THIS SCORE. FO R THE OTHER PARTY WHOSE NAME WAS APPEARING IN THE IMPOUNDED DOCUMENT THE C IT(A) RECORDS THAT ON ENQUIRIES IT WAS FOUND THAT THE SAID PARTY HAS ALSO FILED RETURN OF INCOME WHEREIN SUBSTANTIAL PROFITS FROM COMMODITY TRADING WAS DECLARED AND THEREFORE THERE WAS NO LIKELIHOOD THAT SUCH A PARTY WOULD TRA NSFER ITS COMMODITY TRANSACTION LOSSES TO THE ASSESSEE. FOR THE AFORES AID REASONS AND NOTICING THE ABSENCE OF ANY CORROBORATIVE AND SUPPORTING EVI DENCE WITH THE ASSESSING OFFICER THE CIT(A) HAS DELETED THE ADDITION. 8. AGAINST THE AFORESAID THE ONLY POINT RAISED BY THE LD. DEPARTMENTAL REPRESENTATIVE IS THAT THE ASSESSEE HAS FAILED TO P ROVE THAT SHE HAS UNDERTAKEN TRANSACTIONS IN COMMODITY TRADING WITH M /S KIRTI COMMODITIES BECAUSE SHE FAILED TO SUBSTANTIATE THAT SHE WAS A C LIENT OF M/S KIRTI COMMODITIES. IT IS POINTED OUT THAT ASSESSEE FAILE D TO PRODUCE THE KYC NORMS ITA NOS.864 & 865/PN/2010 APPLICATION FORM CONTRACT NOTES BROKERS NOTE ET C. WHICH ARE NORMALLY MAINTAINED BY THE BROKERS FOR THEIR CLIENTS. 9. ON THE OTHER HAND THE LD. REPRESENTATIVE FOR TH E ASSESSEE RELIED UPON THE FINDINGS OF THE CIT(A) PARTICULARLY RELATING TO THE ALLEGATIONS OF THE ASSESSING OFFICER THAT THE PAYMENT MADE BY THE ASSE SSEE TO M/S KIRTI COMMODITIES ON ACCOUNT OF IMPUGNED LOSS WAS AFTER A LONG TIME GAP. IN THIS CONTEXT REFERENCE HAS BEEN MADE TO THE FOLLOWING S UBMISSIONS MADE BEFORE THE CIT(A) WHICH HAVE BEEN FOUND TO BE ACCEPTABLE :- (IV) THE APPELLANT HAS PAID THE LOSSES OF RS.77 42 121/- INCURRED BY THE APPELLANT UP TO 13/10/2006 TO M/S KIRTI COMMODI TIES IN MARCH 2007 BY ACCOUNT PAYEES CHEQUES MUCH PRIOR TO THE DATE OF SE ARCH ACTION. THE PAYMENTS WERE AS UNDER : SR.NO. DATE BANK NAME A/C NO. CHEQUE NO. AMOUNT (RS .) 01 8/3/2007 STATE BANK OF INDIA 550067 50 00 000 02 12/3/2007 .DO. 550069 27 42 121 TOTAL 77 42 121 THE DELAY IN PAYMENT DOES NOT MAKE THE LOSS ACTUALL Y INCURRED AS NON- GENUINE. THE APPELLANT HAS NOT CONTINUOUSLY INCURR ED LOSS IN RESPECT OF TRANSACTIONS THROUGH M/S KIRTI COMMODITIES AS CLAIM ED BY THE A.O. IT CAN BE NOTED FROM THE ACCOUNT EXTRACT OF THE APPELLANT IN THE BOOKS OF M/S KIRTI COMMODITIES THAT IN RESPECT OF 55 TRANSACTIONS THE APPELLANT HAS EARNED PROFIT AND IN RESPECT OF 82 TRANSACTIONS THE APPELLANT HAS INCURRED LOSS. UPTO 12/05/2006 THERE WAS CREDIT BALANCE OF RS.17 20 360 /- OF THE APPELLANT IN THE BOOKS OF M/S KIRTI COMMODITIES KHANDWA WHICH WAS TREATED AS MARGIN MONEY FOR SUBSEQUENT TRANSACTIONS. 10. WE HAVE CAREFULLY CONSIDERED THE RIVAL SUBMISSI ONS. IN SUM AND SUBSTANCE THE DISPUTE REVOLVES AROUND THE LOSS OF RS.77 42 121/- CLAIMED TO HAVE BEEN INCURRED BY THE ASSESSEE ON COMMODITY TRA NSACTIONS CARRIED OUT THROUGH M/S KIRTI COMMODITIES A COMMODITY BROKER. THE ASSESSEE HAD CLAIMED SUCH LOSS IN THE RETURN OF INCOME FILED FOR ASSESSMENT YEAR 2007-08 ON 23.10.2007 MUCH BEFORE THE DATE OF SEARCH. IT I S ALSO UNDISPUTED THAT THE PAYMENT HAS BEEN MADE BY THE ASSESSEE TO M/S KIRTI COMMODITIES BY ACCOUNT PAYEE CHEQUES IN MARCH 2007 I.E. MUCH PRIOR TO THE DATE OF SEARCH ACTION. UNDER THESE CIRCUMSTANCES AT THE FIRST INSTANCE THE RE IS NO REASONS TO DOUBT THE CLAIM MADE BY THE ASSESSEE IN THE ORIGINAL RETU RN OF INCOME FILED ON ITA NOS.864 & 865/PN/2010 23.10.2007. HOWEVER IN THE IMPUGNED ASSESSMENT FI NALIZED CONSEQUENT TO THE SEARCH ACTION IN TERMS OF SECTION 153A R.W.S. 1 43(3) OF THE ACT THE ASSESSING OFFICER HAS REFERRED TO A DOCUMENT IMPOUN DED FROM THE PREMISES OF M/S VIKAS UDYOG A GROUP CONCERN TO SAY THAT THE I MPUGNED LOSS WAS NOT GENUINE. THE CONTENTS OF THE SAID DOCUMENT HAVE AL READY BEEN EXTRACTED BY US IN THE EARLIER PART OF THIS ORDER. THE DISCUSSI ON IN THE ASSESSMENT ORDER DOES NOT REVEAL THAT THE ASSESSING OFFICER HAD ANY INDEPENDENT THIRD PARTY EVIDENCE OR ANY OTHER CORROBORATIVE EVIDENCE TO SAY THAT THE IMPUGNED LOSS WAS IN-GENUINE. THE OBJECTIONS RAISED BY THE ASSES SING OFFICER WITH RESPECT TO THE EXISTENCE OF NAME OF THREE ENTITIES NAMELY M/S HIRA UDYOG SMT. ARUNA AND JAGDISH MITTAL IN THE IMPOUNDED DOCUMENT BY ITS ELF DO NOT CONSTITUTE ANY INCRIMINATING EVIDENCE TO SUGGEST THAT THE IMPUGNED LOSS IS IN-GENUINE. MOREOVER ASSESSEE EXPLAINED THAT THE LOSS IN QUEST ION IS SUPPORTED BY THE RECORDS MAINTAINED BY M/S KIRTI COMMODITIES. IN TH IS CONTEXT EXTRACT OF THE ACCOUNT OF THE ASSESSEE IN THE ACCOUNT BOOKS OF M/S KIRTI COMMODITIES WAS FURNISHED BEFORE THE ASSESSING OFFICER ALSO. BEFOR E THE CIT(A) ASSESSEE ALSO POINTED OUT THAT TRANSACTIONS WERE CARRIED OUT WITH M/S KIRTI COMMODITIES WHICH HAVE RESULTED IN PROFIT ALSO. THE ASSESSEE H AS EXPLAINED BEFORE THE CIT(A) THAT IN RESPECT OF 55 TRANSACTIONS WITH M/S KIRTI COMMODITIES ASSESSEE HAD PROFITS AND IN RESPECT OF OTHER 82 TRANSACTIONS THE IMPUGNED LOSSES WERE INCURRED. IT HAS ALSO BEEN ASSERTED THAT THE AMOUN T RECEIVABLE BY THE ASSESSEE ON ACCOUNT OF PROFITS WERE KEPT WITH M/S K IRTI COMMODITIES AS MARGIN MONEY AND THE PAYMENT FOR THE LOSS IN QUESTI ON WAS MADE TO M/S KIRTI COMMODITIES SUBSEQUENTLY BY ACCOUNT PAYEE CHEQUES. IN OUR CONSIDERED OPINION ASSESSEE HAS RIGHTLY ASSERTED BEFORE THE C IT(A) THAT THE LOSSES IN QUESTION WERE FULLY SUBSTANTIATED AND THAT THE CIT( A) MADE NO MISTAKE IN ACCEPTING THE SAME. THEREFORE HAVING REGARD TO TH E DISCUSSION MADE BY THE CIT(A) IN THE IMPUGNED ORDER THE OBJECTIONS RAISED BY THE REVENUE IN THE PRESENT APPEAL ARE UNJUSTIFIED AND ARE NOT MAINTAIN ABLE. ACCORDINGLY THE ORDER OF THE CIT(A) IS HEREBY AFFIRMED AND THE REVE NUE FAILS IN ITS APPEAL. ITA NOS.864 & 865/PN/2010 11. THE FACT AND CIRCUMSTANCES AND THE ISSUE INVOLV ED IN THE OTHER CAPTIONED APPEAL RELATING TO SMT. PUSHPADEVI N. MIT TAL IS PARI-MATERIA TO THOSE CONSIDERED BY US IN THE APPEAL OF SMT. NIRMALADEVI J. MITTAL IN THE EARLIER PARAGRAPHS. THE ADDITION MADE IN THE CASE OF SMT. PUSHPADEVI N. MITTAL IS ALSO BASED ON THE SAME DOCUMENT IMPOUNDED IN THE CO URSE OF SURVEY IN THE CASE OF GROUP CONCERN M/S VIKAS UDYOG AS WAS THE POSITION IN THE CASE OF SMT. NIRMALADEVI J. MITTAL DEALT WITH IN THE EARLIE R PARAGRAPHS. 12. IN VIEW OF THE AFORESAID OUR DECISION IN THE C ASE OF SMT. NIRMALADEVI J. MITTAL (SUPRA) IN THE EARLIER PARAGRAPHS WOULD APPL Y MUTATIS MUTANDIS IN APPEAL OF SMT. PUSHPADEVI N. MITTAL ALSO. THEREFORE APPE AL OF THE REVENUE IN THE CASE OF SMT. PUSHPADEVI N. MITTAL IS ALSO DISMISSED . 13. RESULTANTLY BOTH THE CAPTIONED APPEALS OF THE REVENUE ARE DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 26 TH NOVEMBER 2014. SD/- SD/- (R.S. PADVEKAR) (G.S. PANNU) JUDICIAL MEMBER ACCOUNTANT MEMBER PUNE DATED: 26 TH NOVEMBER 2014. SUJEET COPY OF THE ORDER IS FORWARDED TO : - 1) THE ASSESSEE; 2) THE DEPARTMENT; 3) THE CIT(A)-I NASHIK; 4) THE CIT-I NASHIK; 5) THE DR B BENCH I.T.A.T. PUNE; 6) GUARD FILE. BY ORDER //TRUE COPY// ASSISTANT REGISTRAR I.T.A.T. PUNE