M/s. Patel Bhagwandas Narayandas,, v. Deputy Commissioner of Income-tax,,

ITA 889/PUN/2014 | 1995-1996
Pronouncement Date: 07-10-2016 | Result: Partly Allowed

Appeal Details

RSA Number 88924514 RSA 2014
Bench Pune
Appeal Number ITA 889/PUN/2014
Duration Of Justice 2 year(s) 5 month(s) 5 day(s)
Appellant M/s. Patel Bhagwandas Narayandas,,
Respondent Deputy Commissioner of Income-tax,,
Appeal Type Income Tax Appeal
Pronouncement Date 07-10-2016
Appeal Filed By Assessee
Order Result Partly Allowed
Bench Allotted B
Tribunal Order Date 07-10-2016
Date Of Final Hearing 26-09-2016
Next Hearing Date 26-09-2016
Assessment Year 1995-1996
Appeal Filed On 02-05-2014
Judgment Text
] ]] ] IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH B PUNE ! ' $ % BEFORE MS. SUSHMA CHOWLA JM AND SHRI ANIL CHATURV EDI AM ITA NO.889/PN/2014 ASSESSMENT YEAR : 1995-96 M/S PATEL BHAGWANDAS NARAYANDAS 153 POLAN PETH JALGAON 425 001. PAN : . APPELLANT VS. THE DY. COMMISSIONER OF INCOME TAX CIRCLE 2 JALGAON. . RESPONDENT / APPELLANT BY : NONE (WRITTEN SUBMISSION) / RESPONDENT BY : SHRI P. L. KUREEL / DATE OF HEARING : 27.09.2016 / DATE OF PRONOUNCEMENT: 07.10.2016 & / ORDER PER ANIL CHATURVEDI AM : THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER OF COMMISSIONER OF INCOME TAX (APPEALS)-2 NASHIK DATED 05.03.2014 FOR THE ASSESSMENT YEAR 1995-96. 2. THE RELEVANT FACTS AS CULLED OUT FROM THE MATERI ALS ON RECORD ARE AS UNDER :- 2.1 ASSESSEE IS A PARTNERSHIP FIRM STATED TO BE ENG AGED IN THE BUSINESS OF TRADING OF FERTILIZERS. THE ASSESSEE FILED ITS RET URN OF INCOME FOR ASSESSMENT YEAR 1995-96 ON 31.10.1995 DECLARING A TOTAL INCOME OF R S.71 470/-. THE CASE WAS SELECTED FOR SCRUTINY AND THEREAFTER THE ASSESSMENT WAS FRAMED UNDER SECTION 2 ITA NO.889/PN/2014 143(3) R.W.S. 145(2) OF THE INCOME TAX ACT 1961 (I N SHORT THE ACT) VIDE ORDER DATED 20.03.1998 AND THE TOTAL INCOME WAS DETERMINE D AT RS.1 18 51 400/-. AGGRIEVED BY THE ORDER OF ASSESSING OFFICER ASSESS EE CARRIED THE MATTER BEFORE THE LD. CIT(A) WHO VIDE ORDER DATED 12.03.2001 GRANTED SUBSTANTIAL RELIEF TO THE ASSESSEE. THEREAFTER THE MATTER WAS CARRIED BEFOR E THE TRIBUNAL. THE CO-ORDINATE BENCH OF THE TRIBUNAL VIDE ORDER DATED 28.06.2007 R EMITTED THE MATTER BACK TO THE FILE OF THE LD. CIT(A) AND DIRECTED HIM TO DE NOVO EXAMINE THE MATTER AND PASS A FRESH ORDER. PURSUANT TO THE DIRECTIONS OF THE CO- ORDINATE BENCH OF THE TRIBUNAL THE LD. CIT(A) VIDE ORDER DATED 05.03.2014 (IN APPEAL N O.NSK/CIT(A)-2/361/09-10) GRANTED PARTIAL RELIEF TO THE ASSESSEE. AGGRIEVED BY THE ORDER OF LD. THE ASSESSEE IS NOW IN APPEAL BEFORE US AND HAS RAISED THE FOLLOWIN G GROUNDS :- 1) ON THE FACTS AND IN LAW THE ID. CIT(A)-II NASH IK HAS ERRED IN ESTIMATING GROSS PROFIT OF THE BUSINESS OF THE ASSESSEE @ 1.75 % AS AGAINST DECLARED BY THE ASSESSEE @ 1.32% AND ASSESSED BY THE PREDECESSOR OF CIT(A) @ 1.40%. 2) ON THE FACTS AND IN LAW THE ID. CIT(A)-II NASHI K HAS ERRED IN NOT TELESCOPING ADDITION ON ACCOUNT OR UNPROVED LIABILITY OF RS. 1 14 520/- AGAINST THE G.P. ADDITION CONFIRMED BY HIM AT RS. 7 25339/-. 3) ON THE FACTS AND IN LAW THE ID. CIT(A)-II NASHI K HAS ERRED IN HOLDING THAT THE ADDITION IS TO BE CONFIRMED I) ON ACCOUNT OF ALLEGED UNPROVED CREDITS IN THE FO RM OF G.P. ADDITION AT RS. 92 000/-. II) ON ACCOUNT OF ALLEGED UNPROVED AND FICTITIOUS L IABILITY AT RS.1 14 520/-. III) ON ACCOUNT OF ALLEGED FICTITIOUS CREDIT NOTES AT RS.2 67 387/-; IV) ON ACCOUNT OF ALLEGED SUPPRESSED PRODUCTION SO LD IN THE FORM OF G.P. ADDITION AT RS. 61 084/-. YOUR APPELLANT CRAVES LEAVE TO ADD ALTER DELETE A BOVE OR ANY OTHER GROUND/S OF APPEAL. 3. ON THE DATE OF HEARING ASSESSEE DID NOT APPEAR BUT HOWEVER IT HAS FILED WRITTEN SUBMISSIONS VIDE LETTER DATED 18 TH MARCH 2016 AND SUBMITTED THAT THE APPEAL BE DECIDED ON THE BASIS OF WRITTEN SUBMISSIO NS. IN VIEW OF THE WRITTEN 3 ITA NO.889/PN/2014 SUBMISSIONS OF THE ASSESSEE WE PROCEED TO DISPOSE OF THE APPEAL EX-PARTE QUA THE ASSESSEE ON THE BASIS OF MATERIAL ON RECORD AND THE WRITTEN SUBMISSIONS. 4. GROUND NO.1 IS WITH RESPECT TO ESTIMATION OF GP. 4.1 A SURVEY UNDER SECTION 133A WAS CONDUCTED ON TH E BUSINESS PREMISES OF THE ASSESSEE ON 10.03.1995. THEREAFTER ASSESSEE F ILED RETURN OF INCOME ON 31.10.1995 DECLARING TOTAL INCOME AT RS.71 470/-. THE ASSESSING OFFICER PASSED ORDER UNDER SECTION 143(3) OF THE ACT WHEREIN HE AS SESSED THE TOTAL INCOME AT RS.1 18 51 398/- BY MAKING VARIOUS ADDITIONS. THER EAFTER THE MATTER WAS CARRIED BEFORE THE LD. CIT(A) WHO VIDE ORDER DATED 12.03.2 001 REJECTED THE BOOK RESULTS AND ESTIMATED THE GROSS PROFIT (GP). THE CIT(A) ES TIMATED THE TURNOVER AT RS.16 CRORES AS AGAINST THE TURNOVER OF RS.15.64 CRORES D ECLARED BY THE ASSESSEE AND ON THE TURNOVER OF RS.16 CRORES HE ESTIMATED THE GP AT 1.40% AS AGAINST GP AT 1.32% DECLARED BY THE ASSESSEE. THEREAFTER THE MATTER W AS CARRIED BEFORE THE TRIBUNAL. THE HONBLE TRIBUNAL REMITTED THE ISSUE BACK TO THE FILE OF THE LD. CIT(A) WITH DIRECTIONS CONTAINED THEREIN. PURSUANT TO THE DIRE CTIONS OF HONBLE TRIBUNAL THE LD. CIT(A) AGAIN REJECTED THE BOOK RESULTS AND ESTIMATE D GP RATE AT 1.75% ON THE ESTIMATED TURNOVER OF RS.16 CRORES AS AGAINST TURNO VER OF RS.15.64 CRORES DECLARED BY THE ASSESSEE. AGGRIEVED BY THE ORDER OF LD. CIT (A) THE ASSESSEE IS NOW IN APPEAL BEFORE US. 5. BEFORE US THE ASSESSEE IN THE WRITTEN SUBMISSIO NS SUBMITS THAT THE ESTIMATION OF GP AT 1.75% AS AGAINST THE GP AT 1.32 % DECLARED BY THE ASSESSEE IS ON A HIGHER SIDE AND EVEN IN THE COMPARABLE CASES O F WHOLESALE AND RETAIL SALE THE GP IS AT 1.14% TO 2%. HE FURTHER SUBMITTED THAT TH E GP IN ASSESSMENT YEAR 1994-95 WAS 1.46% ON THE TURNOVER OF RS.8.01 CRORES AS AGAINST GP DECLARED FOR 4 ITA NO.889/PN/2014 THE YEAR AT 1.32% ON THE TURNOVER OF RS.15.64 CRORE S. HE THEREFORE SUBMITTED THAT THE ESTIMATION OF GP ON A HIGHER SIDE AND THAT THE SAME BE ESTIMATED AT 1.57% OF THE TOTAL TURNOVER. LD. DR ON THE OTHER HAND SUP PORTED THE ORDER OF LOWER AUTHORITIES. 6. WE HAVE HEARD THE LD. DR AND PERUSED THE MATERIA L ON RECORD. WE FIND THAT LD. CIT(A) NOTED THAT THERE WERE VARIOUS DISCREPANC IES IN THE MAINTENANCE OF ACCOUNTS AND THEREFORE BOOKS OF ACCOUNTS MAINTAINED BY ASSESSEE COULD NOT BE RELIED UPON. HE THEREFORE UPHELD THE REJECTION OF BOOKS OF ACCOUNTS AND THEREAFTER TAKING INTO CONSIDERATION THE VARIOUS OBSERVATIONS OF ASSESSING OFFICER ESTIMATED THE TURNOVER OF ASSESSEE AT RS.16 CRORES AS AGAINST THE TURNOVER OF RS.15.64 CRORES SHOWN BY ASSESSEE. CONSIDERING THE TOTALITY OF FAC TS WE DO NOT FIND ANY ERROR IN THE FINDING OF LD. CIT(A) IN ESTIMATING THE GP ON THE B ASIS OF TURNOVER ESTIMATED BY HIM. WE THUS DISMISS THIS GROUND OF ASSESSEE. 7. WITH RESPECT TO SECOND GROUND IT IS SUBMITTED T HAT DURING THE YEAR THE ASSESSEE HAD MADE PURCHASES FROM M/S MANOJ KRISHI S EVA KENDRA AND THE OUTSTANDING AMOUNT PAYABLE AS ON 31.03.1995 WAS RS. 1 64 700/- AS AGAINST WHICH THE OUTSTANDING BALANCE RECEIVABLE AS PER THE CREDI TOR WAS RS.55 130/-. IT IS SUBMITTED THAT ASSESSING OFFICER PRESUMED THAT THE ASSESSEE MUST HAVE MADE UNACCOUNTED PAYMENTS TO THE EXTENT OF RS.1 14 570/- TO THE SAID PARTY AND ACCORDINGLY THE LIABILITY SHOWN BY THE ASSESSEE TO THE EXTENT OF RS.1 14 570/- WAS A FICTITIOUS LIABILITY. HE ACCORDINGLY MADE THE ADDI TION. THE ADDITION MADE BY THE ASSESSING OFFICER WAS CONFIRMED BY LD. CIT(A). BEF ORE US IT IS ASSESSEES CONTENTION THAT IT IS A PRESUMPTION THAT THE UNACCO UNTED PAYMENT OF RS.1 14 570/- HAS BEEN MADE OUT OF THE UNDISCLOSED INCOME. HE SU BMITTED THAT WHEN LD. CIT(A) HAS REJECTED THE BOOKS OF ASSESSEE AND HAS ESTIMATE D THE UNDISCLOSED INCOME BY 5 ITA NO.889/PN/2014 ESTIMATING THE GP THEN SUCH UNDISCLOSED INCOME OWNE D BY THE ASSESSEE WAS AVAILABLE FOR MAKING UNACCOUNTED PAYMENT AND THEREF ORE ASSESSEE SHOULD HAVE BEEN GRANTED THE TELESCOPING BENEFIT IN RESPECT OF THE ADDITION OF RS.1 14 570/-. IT IS FURTHER SUBMITTED THAT THE SEPARATE ADDITION ON ACCOUNT OF UNACCOUNTED PURCHASES AMOUNTS TO DOUBLE ADDITIONS MORESO WHEN T HE INCOME IS ALSO ESTIMATED. HE THEREFORE SUBMITTED THAT THE ASSESSEE BE GRANTED TELESCOPING BENEFIT. THE LD. DR ON THE OTHER HAND SUPPORTED THE ORDER OF ASSES SING OFFICER. 8. WE HAVE HEARD THE LD. DR AND PERUSED THE MATERIA L ON RECORD. WE FIND THAT THE ADDITION ON ACCOUNT OF UNACCOUNTED PAYMENT TO C REDITORS HAS BEEN CONFIRMED BY LD. CIT(A) FOR THE REASON THAT THE ASSESSEE COUL D NOT RECONCILE THE BALANCE THAT WAS SHOWN BY THE ASSESSEE AND THE CREDITORS. IT IS ALSO A FACT THAT THE ADDITION ON ACCOUNT OF GP HAS BEEN MADE BY ESTIMATING THE TURNO VER AND THE GP HAS BEEN ESTIMATED AT 1.75% AS AGAINST GP OF 1.32% DECLARED BY THE ASSESSEE. IT IS SUBMITTED BY ASSESSEE THAT THE ASSESSING OFFICER HA S NOT ALLEGED THAT ASSESSEE HAS DEBITED ANY BOGUS PURCHASE IN THE NAME OF ABOVE PARTY AND THEN THE ADDITION HAS BEEN MADE ON THE BASIS OF PRESUMPTION. WE FIND FORCE IN THE CONTENTION OF THE ASSESSEE THAT THE ADDITION HAS BEEN MADE ON THE BAS IS OF ESTIMATION. FURTHER IT IS ALSO A FACT THAT NO MATERIAL HAS BEEN PLACED BY THE REVENUE ON RECORD TO DEMONSTRATE ANY BOGUS PURCHASES MADE BY THE ASSESSE E FROM THE AFORESAID PARTY. CONSIDERING THE TOTALITY OF THE FACTS AND SUBMISSIO NS OF LD. AR WE ARE OF THE VIEW THAT NO SEPARATE ADDITION ON ACCOUNT OF BOGUS PURCH ASE OF RS.1 14 570/- IS CALLED FOR IN THE PRESENT CASE AND THAT THE ADDITION CONFI RMED BY LD. CIT(A) BY ESTIMATING THE GP WOULD TAKE CARE OF THE PRESENT ADDITION ALSO . IN VIEW OF THE AFORESAID FACTS WE DIRECT DELETION OF ADDITION OF RS.1 14 570/-. T HUS THIS GROUND OF ASSESSEE IS ALLOWED. 6 ITA NO.889/PN/2014 9. IN THE WRITTEN SUBMISSION ASSESSEE HAS STATED T HAT HE DID NOT WISH TO PRESS GROUND NO.3(I) TO (IV). IN VIEW OF THE AFORESAID S UBMISSIONS OF ASSESSEE THESE GROUNDS ARE DISMISSED. 10. IN THE RESULT THE APPEAL OF THE ASSESSEE IS PA RTLY ALLOWED. ORDER PRONOUNCED ON THIS 7 TH DAY OF OCTOBER 2016. SD/- SD/- ( SUSHMA CHOWLA ) ( ANIL CHATURVEDI ) / JUDICIAL MEMBER $ / ACCOUNTANT MEMBER PUNE ; DATED : 7 TH OCTOBER 2016. & ' (!)* +*! / COPY OF THE ORDER IS FORWARDED TO : 1) THE ASSESSEE; 2) THE DEPARTMENT; 3) THE CIT(A)-2 NASHIK; 4) THE CIT-2 NASHIK; 5) THE DR B BENCH I.T.A.T. PUNE; 6) GUARD FILE. & / BY ORDER ' # //TRUE COPY// $ %& # '( / SR. PRIVATE SECRETARY ) '* / ITAT PUNE