M/s B.S.Agricultural Inds (India), Agra v. ACIT, Agra

ITA 98/AGR/2005 | 2001-2002
Pronouncement Date: 23-07-2010 | Result: Partly Allowed

Appeal Details

RSA Number 9820314 RSA 2005
Assessee PAN AFPPS9539E
Bench Agra
Appeal Number ITA 98/AGR/2005
Duration Of Justice 5 year(s) 4 month(s) 28 day(s)
Appellant M/s B.S.Agricultural Inds (India), Agra
Respondent ACIT, Agra
Appeal Type Income Tax Appeal
Pronouncement Date 23-07-2010
Appeal Filed By Assessee
Order Result Partly Allowed
Bench Allotted DB
Tribunal Order Date 23-07-2010
Date Of Final Hearing 25-06-2010
Next Hearing Date 25-06-2010
Assessment Year 2001-2002
Appeal Filed On 25-02-2005
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL AGRA BENCH AGRA BEFORE SHRI R.K. GUPTA JUDICIAL MEMBER AND SHRI P.K. BANSAL ACCOUNTANT MEMBER ITA NO.94/AGR/2005 ASST. YEAR: 2001-02 ASSTT. CIT 4(1) AGRA. VS. M/S. B.S. AGRICULTU RE INDUSTRIES (INDIA) 12/15-AA NAWAL GANJ NUNHAI AGRA. (PAN : AFPPS 9539 E). ITA NO.98/AGR/2005 ASST. YEAR: 2001-02 M/S. B.S. AGRICULTURE INDUSTRIES VS. ASSTT. CIT 4(1) AGRA. (INDIA) 12/15-AA NAWAL GANJ NUNHAI AGRA. (PAN : AFPPS 9539 E). (APPELLANTS) (RESPONDENTS) REVENUE BY : SHRI VINOD KUMAR JR. D.R. ASSESSEE BY : SHRI R.S. SINGHVI C.A. ORDER PER P.K. BANSAL A.M.: THESE CROSS APPEALS HAVE BEEN FIELD AGAINST THE ORD ER OF THE CIT(A) DATED 28.12.2004. 2. GROUND NO.1 IN REVENUES APPEAL AND GROUND NO.1 IN ASSESSEES APPEAL ARISE OUT OF THE ADDITION OF RS.13 71 770/- MADE BY THE ASSESSING OF FICER (A.O.) ON ACCOUNT OF EXCESS VALUE OF THE STOCK. 2 3. THE BRIEF FACTS OF THESE GROUNDS ARE THAT THE AS SESSEE IS ENGAGED IN THE BUSINESS OF MANUFACTURING AND SELLING OF DIESEL ENGINES PUMPS ETC. SURVEY UNDER SECTION 133A OF THE INCOME-TAX ACT 1961 (THE ACT HEREINAFTER) WAS CA RRIED OUT AT THE BUSINESS PREMISES OF THE ASSESSEE ON 07.07.2000. AT THE TIME OF SURVEY INV ENTORY OF THE STOCK OF THE FINISHED AND SEMI FINISHED GOODS WAS PREPARED. DETAILS OF SUCH INVEN TORY ARE MENTIONED AT PAGE 2 OF THE ASSESSMENT ORDER. THE ASSESSEE HAD NOTED DOWN THE VALUE OF THE STOCK FOUND AT THE TIME OF SURVEY AT RS.73 72 817/- INCLUDING RS.12 77 812/- W HICH WAS NOT INVENTORIED BY THE SURVEY TEAM. THE A.O. WORKED OUT THE TOTAL VALUE OF THE STOCK AT RS.86 50 629/- AND THUS MADE ADDITION OF RS.13 71 770/- UNDER SECTION 69 OF THE ACT. THE AS SESSEE WENT IN APPEAL BEFORE THE CIT(A) AND CONTENDED THAT THE STOCK INVENTORIED BY THE SURVEY PARTY WAS NOT CORRECT AS THE SAME INCLUDED SOME FIXED ASSETS FINISHED/SEMI FINISHED GOODS WER E VALUED AT SELLING PRICE WHILE THE SAME SHOULD HAVE BEEN VALUED AT COST PRICE AND SOME OF T HE ITEMS OF SPARES WERE UNDER/OVER VALUED AND ACCORDINGLY THE ASSESSEE RECOMPUTED THE VALUE O F INVENTORY. HE ALSO SUBMITTED THAT EVEN THE SURVEY PARTY HAS VALUED ALL THE ITEMS WHETHER FINIS HED OR SEMI FINISHED AT UNIFORM RATE WITHOUT CONSIDERING THE STAGE OF MANUFACTURING. THE ASSESS EE ALSO CONTENDED THAT THE VALUATION OF THE STOCK ESTIMATED BY HIM TALLIED THE VALUE OF STOCK S UBMITTED TO THE BANK AS ON 30.06.2000. IT WAS ALSO POINTED OUT THAT THE STOCK SUBMITTED INCLUDED THE FINISHED GOODS WHICH HAS ALREADY BEEN SOLD BUT THEIR BILTIES WERE SENT THROUGH BANK FOR COLLECTION OF BILLS RAI SED AND IF SUCH FINISHED GOODS ARE EXCLUDED THERE WILL NOT BE ANY DIFFERENCE IN T HE STOCK AS PER BOOKS AND AS PER THE STOCK STATEMENT SUBMITTED TO THE BANK. THE CIT(A) CALLED FOR THE REMAND REPORT AND ULTIMATELY SUSTAINED THE ADDITION TO THE EXTENT OF RS.2 45 686 /-. BOTH THE PARTIES HAVE COME IN APPEAL AGAINST THE SUSTENANCE OF THE ADDITION AS WELL AS A GAINST THE DELETION OF THE ADDITION. 3 4. THE LD. A.R. VEHEMENTLY CONTENDED THAT NO ADDITI ON SHOULD HAVE BEEN SUSTAINED. THERE HAD BEEN SURVEY ON 07.07.2000. THE SURVEY TEAM HAS IMPOUNDED ALL THE BOOKS OF ACCOUNTS AND PREPARED A LIST OF INVENTORY. THE ASSESSEE HAS SUB MITTED THE VALUATION OF THESE ITEMS UNDER LIST NOS.1 2 & 3. IN THE REMAND REPORT IN SOME CASES THE A.O. HAS ACCEPTED THE VALUE BUT NOT IN ALL THE CASES. THE CIT(A) HAS ALSO WORKED OUT THE VALU E AS HAS BEEN CALCULATED BY HIM. FOR THIS OUR ATTENTION WAS DRAWN TOWARDS PAGE 94 TO 97 OF TH E PAPER BOOK. OUR ATTENTION WAS ALSO DRAWN TOWARDS REMAND REPORT WHICH IS AVAILABLE AT PAGE 13 8 TO 148 OF THE PAPER BOOK. THERE WAS NO DISPUTE SO FAR THE QUANTITIES OF THE ITEMS ARE CONC ERNED. THE DISPUTE RELATES ONLY TO THE VALUE OF EACH OF THE ITEM. THERE IS NO DISPUTE SO FAR THE V ALUATION AS ON 31.03.2000 AND AS ON 31.03.2001 ARE CONCERNED. THE ADDITION HAS BEEN MADE BY VALUI NG THE ITEMS FOUND DURING THE COURSE OF SURVEY I.E. AS ON 07.07.2000. HOW THE ADDITION CAN BE MADE BY VALUING THE STOCK AT A DIFFERENT RATE IN THE MID OF THE YEAR WHEN THERE IS NO DIFFER ENCE IN THE QUANTITY OF THE STOCK FOUND DURING THE COURSE OF SURVEY. IT WAS ALSO POINTED OUT THAT DURING THE A.Y. 1990-91 THE TRIBUNAL HAS DELETED THE ADDITION. THE LD. D.R. RELIED ON THE O RDER OF A.O. 5. WE HAVE CAREFULLY CONSIDERED THE RIVAL SUBMISSIO NS AND PERUSED THE MATERIAL ON RECORD. WE NOTED THAT THERE HAD BEEN SURVEY IN THE CASE OF THE ASSESSEE AS ON 07.07.2000. THREE LISTS OF INVENTORY WERE PREPARED AND THE STOCK HAS BEEN VALU ED. THERE IS NO DIFFERENCE IN THE QUANTITY OF THE STOCK SO FAR THE STOCK FOUND DURING THE COURSE OF SURVEY IS CONCERNED. THE DIFFERENCE WAS ONLY IN THE VALUATION OF THE INVENTORY. THE ASSESS EE WAS MAINTAINING STOCK RECORD ON DAY TODAY BASIS. THE ADDITION HAS BEEN MADE MERELY BY VALUIN G THE STOCK FOUND DURING THE COURSE OF SURVEY IN WHICH THERE IS NO DIFFERENCE SO FAR THE Q UANTITY IS CONCERNED AS COMPARED TO THE BOOKS OF ACCOUNTS. IN OUR OPINION THE STOCK HAS TO BE V ALUED AT THE END OF THE YEAR FOR WHICH THE FINAL 4 RESULTS ARE DETERMINED. IN THE CASE OF THE ASSESSE E THE ASSESSEE IS CONSISTENTLY FOLLOWING THE 31 ST MARCH ENDING TO BE THE ACCOUNTING YEAR. THE STOCK HAS TO BE VALUED AT THE END OF THE ACCOUNTING YEAR IN ACCORDANCE WITH THE METHOD OF VALUATION CON SISTENTLY FOLLOWED BY THE ASSESSEE. IN THE CASE OF THE ASSESSEE THERE IS NO DISPUTE THAT THER E WAS NO DIFFERENCE IN THE QUANTITY OF THE STOCK FOUND DURING THE COURSE OF SURVEY AS COMPARED TO TH E BOOKS OF ACCOUNTS. ONCE THERE IS NO QUANTITATIVE DIFFERENCE IN THE STOCK OF THE ASSESSE E DURING THE YEAR AS COMPARED TO THE BOOKS OF ACCOUNTS IN OUR OPINION NO QUESTION OF INVESTMENT OUTSIDE THE BOOKS OF ACCOUNTS ARISES. IF THE METHOD OF VALUATION OF THE STOCK FOLLOWED BY THE AS SESSEE HAS DULY BEEN ACCEPTED BY THE A.O. IN THE PREVIOUS YEAR THE SAME IS TO BE ACCEPTED IN TH E YEAR UNDER CONSIDERATION ALSO. WE ACCORDINGLY DELETE THE ADDITION. THUS GROUND NO.1 OF ASSESSEES APPEAL IS ALLOWED WHILE GROUND NO.1 OF REVENUES APPEAL STANDS DISMISSED. 6. GROUND NO.2 IN ASSESSEES APPEAL SINCE NOT PRES SED STANDS DISMISSED AS NOT PRESSED. 7. GROUND NO.3 IN ASSESSEES APPEAL AND GROUND NOS. 2 & 3 IN REVENUES APPEAL RELATE TO THE TRADING ADDITION OF RAS.9 05 132/-. THE BRIEF FACT S OF THESE GROUNDS ARE THAT THE A.O. NOTED THAT THE ASSESSEE HAS RETURNED G.P. @ 14.5% DURING THE Y EAR. HE DID NOT ACCEPT THE BOOK RESULTS AND REJECTED THE BOOKS OF ACCOUNTS UNDER SECTION 145(3) ON THE GROUND THAT THE COMPLETE EVIDENCE IN SUPPORT OF VARIOUS EXPENSES WERE NOT PRODUCED AND U NACCOUNTED STOCK OF MORE THAN RS.13 LACS WAS FOUND AT THE TIME OF SURVEY. HE ALSO NOTED CER TAIN MORE DEFICIENCIES NAMELY THAT THE ASSESSEE HAS SOLD THE GOODS TO SISTER CONCERN M/S B SA SALES CORPORATION AT A PRICE WHICH WAS LOWER BY 30% TO 40% AT WHICH THE SAME WERE SOLD TO THE THIRD PARTIES. THE A.O. INCREASED THE SALES MADE TO M/S BSA SALES CORPORATION BY 25% AND ESTIMATED THE TOTAL SALES OF THE ASSESSEE AT 5 RS.7 CRORES AS AGAINST THE DISCLOSED SALES OF RS.6 61 52 686/- AND APPLIED A G.P. RATE @ 15% AND MADE THE ADDITION OF RS.9 05 132/-. THE ASSESSEE W ENT IN APPEAL BEFORE THE CIT(A). BEFORE THE CIT(A) THE ASSESSEE POINTED OUT THAT THE RATE OF S ALES MADE TO M/S BSA SALES CORPORATION WAS NOT LOWER. HE SUBMITTED A COMPARATIVE CHART OF THE SELLING RATE MADE TO M/S BSA SALES CORPORATION AND TWO OTHER THIRD PARTIES AND WORKED OUT THAT THE SALES WERE MADE TO M/S BSA SALES CORPORATION @ RS.14 004/- WHILE THE SALES WER E MADE TO OTHER TWO PARTIES @ RS.12 416/- AND RS.12 037/-. IN RESPECT OF THE G.P. RATE IT W AS POINTED OUT THAT THERE HAS BEEN SLIGHT FALL IN THE RATE ON ACCOUNT OF ENHANCED SALES INCREASE IN T HE FREIGHT INVOLVED AND MANUFACTURING EXPENSES. THE CIT(A) ALTHOUGH CONFIRMED THE REJECT ION OF THE BOOKS OF ACCOUNTS BUT POINTED OUT THAT IN THE PRECEDING YEARS THE G.P. RATE HAS VARIE D FROM 13.51% TO 15.27%. THEREFORE NO ADVERSE INFERENCE CAN BE DRAWN AND ACCORDINGLY SUST AINED THE ADDITION OF RS.5 000/- OUT OF RS.9 05 132/-. 8. THE LD. A.R. REITERATED THE SUBMISSIONS MADE BEF ORE THE CIT(A) AND DRAWN OUR ATTENTION TOWARDS THE REMAND REPORT ESPECIALLY AT PAGE 144. THE G.P. RATE IN THE CASE OF THE ASSESSEE VARIED FROM 13.51% TO 15.4%. FOR THIS ATTENTION W AS DRAWN TOWARDS PAGE NO. 184 OF THE PAPER BOOK AND IT WAS POINTED OUT THAT THE IN THE IMMEDIA TELY SUCCEEDING A.Y. 2002-03 IN AN ASSESSMENT FRAMED UNDER SECTION 143(3) THE G.P. RAT E @ 14.73% HAS BEEN ACCEPTED BY THE A.O. IT WAS ALSO POINTED OUT THAT THE G.P. RATE AS RETUR NED BY THE ASSESSEE DURING THE A.Y. 1997-98 TO 1999-2000 WERE ACCEPTED BY THE TRIBUNAL AS WELL AS BY THE ALLAHABAD HIGH COURT. THUS IT WAS CONTENDED THAT NO INTERFERENCE IS TO BE MADE IN THE G.P. RATE AS RETURNED BY THE ASSESSEE. RELIANCE WAS PLACED ON THE DECISION OF HONBLE ALLA HABAD HIGH COURT IN THE CASE OF CIT VS. RAM NARAIN HIRA LAL 227 ITR 401 FOR THE PROPOSITIO N OF LAW THAT WHEN THE SALES AND PURCHASE 6 WERE DULY VERIFIABLE NO QUESTION OF DISTURBING THE G.P. ARISES. THE LD. D.R. ON THE OTHER HAND RELIED ON THE ORDERS OF THE AUTHORITIES BELOW. 9. WE HAVE CAREFULLY CONSIDERED THE RIVAL SUBMISSIO NS AND PERUSED THE MATERIAL ON RECORD. ALONG WITH THE ORDERS OF THE TAX AUTHORITIES BELOW. WE NOTED THAT THE ASSESSEE HAS NOT COME IN APPEAL AGAINST THE ACTION OF THE CIT(A) CONFIRMING THE REJECTION OF THE BOOKS MADE BY THE A.O. BY INVOKING SECTION 145(3). SIMILARLY WE NOTED TH AT THE REVENUE HAS NOT COME IN APPEAL AGAINST THE REDUCTION OF THE SALES AS ESTIMATED BY THE CIT( A). WE NOTED THAT EVEN THE BOOKS OF ACCOUNTS OF THE ASSESSEE WERE REJECTED BUT INCOME HAS BEEN C OMPUTED ON THE BASIS OF THE BOOKS OF ACCOUNTS MAINTAINED BY THE ASSESSEE AND THERE WAS A DDITION MADE BY ESTIMATING THE SALES AND APPLYING G.P. RATE. THE A.O. HAS NOT DISPUTED THE PURCHASES AND THE SALES MADE BY THE ASSESSEE EXCEPT THE SALES MADE TO THE SISTER CONCERN FOR WHI CH THE ASSESSEE HAS SUBMITTED THE NECESSARY EVIDENCES BEFORE THE CIT(A) AND THE CIT(A) WAS SATI SFIED WITH THE RATE AT WHICH THE SALES WERE MADE TO THE SISTER CONCERN. EVEN OTHERWISE ALSO T HE RATE AT WHICH THE SALES WERE MADE TO THE SISTER CONCERN WAS NOT DISTURBED BY THE A.O. EXCEPT ESTIMATING THE SALES ON ADHOC BASIS. THUS IN FACT AFTER THE ORDER OF THE CIT(A) THE ENTIRE SALE S AND PURCHASE MADE BY THE ASSESSEE REMAINS ACCEPTED BY THE REVENUE. NOW THE QUESTION ARISES W HAT G.P. RATE SHOULD BE APPLIED TO THE SALES DISCLOSED BY THE ASSESSEE. THE ASSESSEE HAS SUBMIT TED THE CHART WHICH IS AVAILABLE AT PAGE 184 OF THE PAPER BOOK WHICH WE PERUSED AND NOTED THAT IN T HE SUCCEEDING A.Y. 2002-03 THE ASSESSEE HAS SHOWN G.P. OF 14.73%. THIS G.P. RATE HAS DULY BEEN ACCEPTED BY THE A.O. IN THE ASSESSMENT FRAMED UNDER SECTION 143(3) IN THE A.Y. 1999-2000 THE G.P. RATE OF 14.92% HAS BEEN ACCEPTED BY THE ITAT AGRA BENCH AND CONFIRMED BY THE HONBLE ALLAHABAD HIGH COURT. THE ASSESSMENT FOR THE A.Y. 2000-01 WAS COMPLETED UNDER SECTION 14 3(1) AS THE CASE WAS NOT SELECTED FOR 7 SCRUTINY. THE G.P. RATE IN THAT YEAR WAS 15.08%. THUS WE NOTED THAT THERE HAD BEEN VARIATION IN THE G.P. RATE. IN OUR OPINION NO THUMP RULE CAN B E LAID DOWN IN A PARTICULAR INDUSTRY THAT G.P. HAS TO BE ARRIVED AT A PARTICULAR RATE. THERE MUST BE EVIDENCES FOR A PARTICULAR G.P. RATE BEING DERIVED BY THE ASSESSEE. IF THERE HAD BEEN ABNORMA L FALL OR INCREASE IN THE G.P. THE ASSESSEE SHOULD BE IN A POSITION TO EXPLAIN WHY THERE HAD BE EN VARIATION IN THE G.P. THE ADDITION OF RS.5 000/- ON ADHOC BASIS SUSTAINED BY THE CIT(A) IN OUR OPINION IS ALSO NOT JUSTIFIED ON THE FACTS OF THE CASE ESPECIALLY WHEN THERE HAD BEEN VA RIATION IN EACH OF THE YEAR. WE ACCORDINGLY DELETE THE ADDITION OF RS.5 000/-. THUS GROUND NO .3 OF ASSESSEES APPEAL IS ALLOWED WHILE GROUND NOS.2 & 3 OF REVENUES APPEAL STAND DISMISSE D. 10. GROUND NO.4 IN REVENUES APPEAL RELATES TO THE DELETION OF BAD DEBTS OF RS.18 169/-. THE ASSESSEE HAS CLAIMED ADVANCES MADE TO THE LABOURER AMOUNTING TO RS.36 919/- AS BAD DEBTS BY WRITING OFF THE SAME DURING THE YEAR. WHEN THE MAT TER WENT BEFORE THE CIT(A) BEFORE THE CIT(A) THE ASSESSEE POINTED OUT THAT RS.18 169/- WA S ADJUSTED AGAINST THE WAGES WHILE NO ADJUSTMENT WAS MADE IN RESPECT OF THE BALANCE SUM O F RS.18 750/- AND THEREFORE THE SAME SHOULD BE CONSIDERED AS DISALLOWABLE. THE CIT(A) D ELETED THE SUM OF RS.18 169/-. 11. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL ON RECORD ALONG WITH THE ORDERS OF THE TAX AUTHORITIES BELOW. IN OUR OPINIO N NO INTERFERENCE IS CALLED FOR IN THE ORDER OF THE CIT(A) AS THE ADVANCE OF RS.18 169/- WAS GIVEN BY THE ASSESSEE WAS ADJUSTABLE AGAINST THE WAGES PAID TO THE LABOURERS. THE ASSESSEE HAS WRI TTEN OFF THE SAME AS NOT RECOVERABLE. THE AMOUNTS SHOWN ON RECORD IN OUR OPINION IS ALLOWAB LE TO THE ASSESSEE UNDER SECTION 28 OF THE ACT AS LOSS INCIDENTAL TO THE BUSINESS. THUS THIS GRO UND OF APPEAL STANDS DISMISSED. 8 12. GROUND NO.5 IN REVENUES APPEAL RELATES TO THE DELETION OF DISALLOWANCE OF RS.92 976/- MADE OUT OF THE TRAVELLING/CONVEYANCE LABOUR WELFA RE REPAIR & MAINTENANCE AND DEMONSTRATION VAN EXPENSES . 13. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL ON RECORD. WE NOTED THAT THE A.O. DISALLOWED 1/10 TH OF THE EXPENSES UNDER THE HEAD TRAVELLING/CONVEYAN CE LABOUR WELFARE REPAIR & MAINTENANCE AND DEMONSTRATION VAN EXPENSES AS THE EXPENSES ARE NOT PROPERLY SUPPORTED AND SOME OF THE EXPENSES HAD BEEN INCURRE D BY SHRI BALDEO SINGH AND SHRI LAXMAN SINGH FOR THEIR PERSONAL EXPENSES. THE A.O. ALSO N OTED THAT OUT OF TEA EXPENSES THE SUBSTANTIAL AMOUNT TOWARDS THE TOUR EXPENSE WAS INCURRED ON TOU R OF SARDAR BALDEO SINGH TO LUDHIANA WHO IS THE PROPRIETOR OF M/S BALDEO SONS HAVING A BRANC H AT LUDHIANA. THE TOUR WAS FREQUENTLY TAKEN TO LUDHIANA FOR A PERIOD RANGING FROM 5 DAYS TO 20 DAYS. WE ALSO NOTED THAT THE CIT(A) HAS DELETED THE ADDITION BY OBSERVING THAT THE A.O. HAS WRONGLY PRESUMED THAT THE ASSESSEE WAS THE PROPRIETOR OF M/S. BALDEO SONS WHILE IN FACT THE AS SESSEE FIRM HAD A UNIT AT LUDHIANA AND THE PARTNER SHRI BALDEO SINGH HAS TO GO THERE TO LOOK A FTER THE BUSINESS OF THE UNIT AT LUDHIANA. BEFORE US EVEN THOUGH THE LD. D.R. HAS VEHEMENTLY O PPOSED THE DELETION OF THE DISALLOWANCE BUT COULD NOT ADDUCE THE EVIDENCE THAT THE EXPENSES INC URRED BY THE ASSESSEE WERE THE PERSONAL EXPENSES OF THE PARTNER. UNDER THESE FACTS AND CIR CUMSTANCES IN OUR OPINION NO INTERFERENCE IS CALLED FOR IN THE ORDER OF THE CIT(A). WE THEREFO RE CONFIRM THE ORDER OF CIT(A). THUS GROUND NO.5 OF THE APPEAL ALSO STANDS DISMISSED. 14. THE 6 TH GROUND TAKEN BY THE REVENUE RELATES TO THE DELETIO N OF THE ADDITION OF RS.67 467/- MADE ON ACCOUNT OF UNRECORDED PURCHASE FOR THE MONT H OF JUNE 2000 FOUND AT THE TIME OF 9 SURVEY. THE A.O. ON THE BASIS OF THE PAPER NO.76 TO 78 OF ANNEXURE-A-36 SEIZED AT THE TIME OF SURVEY OBSERVED THAT THE ASSESSEE GOT DONE JOB WOR K FROM SANDEEP INDUSTRIES AND THE AMOUNT SHOWN IN THE INVOICE NO.15 DATED 05.07.2000 IS RS.9 011/- AND IN THE CHALLAN NO.3 & 4 IT WAS RS.31 787/- AND RS.35 680/-. THE ITEMS IN THE CHAL LAN TALLY WITH THE ITEMS IN THE INVOICE. THE A.O. THEREFORE AFTER GIVING OPPORTUNITY TO THE ASS ESSEE TOOK THE VIEW THAT THE ASSESSEE MADE THE PURCHASES OF ITEMS CONTAINED IN PAPER NO.76 & 77 AN D ADDED JOB WORK GOT DONE IN RESPECT OF THOSE ITEMS. THE ASSESSEE ACCOUNTED FOR ONLY THE J OB CHARGES. THEREFORE HE ADDED A SUM OF RS.67 467/- AS UNEXPLAINED EXPENDITURE. BEFORE TH E CIT(A) THE ASSESSEE CONTENDED THAT THERE WAS NO UNACCOUNTED PURCHASES. CI CASTING WAS PURCH ASED FOR RS.50 199/- FROM M/S AMAR ENTERPRISES VIDE BILL DATED 19.06.2000 AND THE ITEM WAS SENT TO M/S. SANDEEP INDUSTRIES THROUGH CHALLAN FOR JOB WORK. M/S. SANDEEP INDUSTRIES SENT THE ITEMS VIDE ITS BILL DATED 05.07.2000 FOR RS.9 011/-. THUS IT WAS CONTENDED THAT THERE WAS NO UNDISCLOSED PURCHASES. THE CIT(A) AFTER VERIFYING THE BILL AND THE BOOKS OF THE ASSESSEE D ELETED THE ADDITION. 15. THE LD. D.R. BEFORE US STRONGLY RELIED ON THE O RDER OF THE A.O. BUT COULD NOT PRESENT ANY COGENT MATERIAL OR EVIDENCE WHICH MAY PROVE THAT TH E ITEMS WHICH WERE SENT FOR JOB WORK TO M/S SANDEEP INDUSTRIES WERE DIFFERENT FROM WHICH WERE I N THE BILL OF M/S. AMAR ENTERPRISES DATED 19.06.2000. SINCE THE ITEMS IN THE BILL DATED 19.0 6.2000 PURCHASED FOR RS.50 199/- FROM M/S AMAR ENTERPRISES WERE SENT FOR JOB WORK TO M/S . SA NDEEP INDUSTRIES IN OUR OPINION IT IS NOT A CASE WHERE ANY ADDITION CAN BE SUSTAINED FOR UNACCO UNTED EXPENDITURE. THE CIT(A) IN OUR OPINION HAS RIGHTLY DELETED THE ADDITION. 10 16. GROUND NO.7 IN REVENUES APPEAL RELATES TO THE DELETION OF ADDITION OF RS.1 57 043/- MADE ON ACCOUNT OF UNRECORDED PURCHASE OF BEARINGS. THE A.O. NOTED FROM THE IMPOUNDED MATERIAL DURING THE COURSE OF SURVEY VIDE ANNEXURE- 22 PAPER NO.1 30 42 43 & 50 THAT THE ASSESSEE HAS DONE THE TRANSACTION FOR RS.1 57 043/- . THE ASSESSEE CONTENDED THAT THE FIGURES WRITTEN ARE NOT THE AMOUNT BUT REPRESENTED THE BEAR ING NUMBER. WHEN THE MATTER WENT BEFORE THE CIT(A) BEFORE THE CIT(A) ALSO THE ASSESSEE EXPLAIN ED THAT THE PAPER NO.1 30 42 43 & 50 CONTAINED THE DATE-WISE ENGINE NUMBER AND THIS PAPE RS DO NOT CONTAIN THE DETAIL OF ANY AMOUNT. THE ASSESSEE ALSO PRODUCED THE BEARINGS OF THESE NU MBERS AND FILED EMPTY BOXES OF THE BEARINGS. THE CIT(A) AFTER HEARING THE ASSESSEE AND VERIFYIN G THE BEARINGS CONVINCED WITH THE ASSESSEE AND DELETED THE ADDITION. IN RESPECT OF PAPER NO.4 3 HE GAVE THE FINDING THAT THIS PAPER DOES NOT RELATE TO THE YEAR UNDER APPEAL BUT TO THE PRECEDIN G YEAR. 17. BEFORE US THE LD. D.R. VEHEMENTLY RELIED ON THE ORDER OF THE A.O. WHILE THE LD. A.R. RELIED ON THE ORDER OF THE CIT(A) BUT NO MATERIAL WAS FURN ISHED BEFORE US WHICH MAY COMPEL US TO REVERSE THE FINDING OF FACTS GIVEN BY THE CIT(A). AFTER PERUSING THE RELEVANT PAPERS IMPOUNDED DURING THE CURSE OF SURVEY THE CIT(A) HAS GIVEN A FINDING OF FACT WHICH REMAINED UNCONTROVERTED BY THE LD. D.R. UNDER THESE FACTS A ND CIRCUMSTANCES WE CONFIRM THE ORDER OF THE CIT(A) DELETING THE ADDITION OF RS.1 57 043/-. 18. THE NEXT GROUND IN REVENUES APPEAL RELATES TO THE DELETION OF THE ADDITION OF RS.75 000/- MADE ON THE BASIS OF PAPER NO.40 OF ANNEXURE-22. T HE A.O. WAS OF THE VIEW THAT AS PER PAPER NO.40 OF ANNEXURE 22 THE ASSESSEE HAD GIVEN A SUM O F RS.75 000/- TO FEW PARTIES OUT OF WHICH RS.25 000/- WAS RECEIVED BACK ON 28.04.2000 AND BAL ANCE REMAINED AT RS.50 000/-. HE 11 ACCORDINGLY MADE THE ADDITION OF RS.75 000/- IGNORI NG THE CONTENTION OF THE ASSESSEE THAT THIS PAPER DOES NOT SPEAK OF ANYTHING AND THE PAPER DOES NOT BELONGED TO THE ASSESSEE. WHEN THE MATTER WENT BEFORE THE CIT(A) THE ASSESSEE CONTEND THAT THE PAPER DO NOT REFLECT ANY NAME DATE AND A NATURE OF TRANSACTION AND SIGNATURE OF ANY P ARTY. THE NOTING ON THIS PAPER ARE ROUGH ONE AND THIS IS MERELY A DUMP PAPER. THE PAPER ALSO DO ES NOT REFLECT WHETHER ANY MONEY WAS RECEIVED OR PAYMENT GIVEN. IT WAS ALSO POINTED OUT THAT DURING THE COURSE OF SURVEY NO EXCESS CASH WAS FOUND. THE CIT(A) AFTER EXAMINING THE PA PER IMPOUNDED DURING THE COURSE OF SURVEY TOOK A VIEW THAT THE PAPER WAS A DUMP PAPER AND DEL ETED THE ADDITION. 19. THE LD. D.R. EVEN THOUGH VEHEMENTLY RELIED ON T HE ORDER OF THE A.O. BUT COPY OF THE PAPER IMPOUNDED WAS NOT FURNISHED BEFORE US. THE C IT(A) HAS ALREADY EXAMINED THE PAPER IMPOUNDED AND TOOK THE VIEW THAT THE PAPER WAS A DU MP PAPER. IN THE ABSENCE OF ANY COGENT MATERIAL OR EVIDENCE IN OUR OPINION FINDINGS OF T HE CIT(A) CANNOT BE DISTURBED AND WE ACCORDINGLY DISMISS THE GROUND. 20. COMING TO THE GROUND NO.4 IN ASSESSEES APPEAL THE SAME RELATES TO THE SUSTENANCE OF ADDITION OF RS.70 552/- AS PER ANNEXURE A-31 THE P APER FOUND DURING THE SURVEY AND OWNED BY SHRI LAXMAN SINGH. THE A.O. ON THE BASIS OF ANNEX URE A-31 NOTED THAT THE ASSESSEE HAS MADE PAYMENTS TO SHRI INDERJEET AND MOHAN SINGH AND ALSO INCURRED CERTAIN EXPENSES TOWARDS PETROL AND DIESEL. HE ALSO NOTED THAT SHRI INDERJEET SING H IS THE EMPLOYEE OF THE ASSESSEE AND SHRI MOHAN SINGH IS THE PARTNER OF THE FIRM AND ACCORDIN GLY HE MADE THE ADDITION OF RS.70 552/-. WHEN THE MATTER WENT BEFORE THE CIT(A) BEFORE THE CIT(A) THE ASSESSEE CONTENDED THAT ANNEXURE A-31 DOES NOT PERTAIN TO IT. IT CONTAINS THE FIGURE RANGING FROM RS.406/- TO RS.30 000/- 12 BEARING VARIOUS NAMES AND FEW FIGURES SHOW EXPENDIT URES. IT WAS ALSO SUBMITTED BEFORE THE CIT(A) THAT THE ANNEXURE BELONGED TO SARDAR LAXMAN SINGH PROPRIETOR OF M/S. BSA SALES CORPORATION AGRA WHO MADE THE PAYMENT TO APPELLANT FIRM THROUGH INDERJEET SINGH. CASH PAYMENT WAS MADE TO INDERJEET SINGH OF THE ASSESSEE FIRM BY M/S. BSA SALES CORPORATION ON THE RELEVANT POINT OF TIME AND AS AND WHEN INDERJEET SI NGH DEPOSITED THE MONEY THE RECEIPTS WERE ISSUED. IN RESPECT OF SOME OF THE FIGURES IT WAS CONTEND THAT THE FIGURES OF RS.20 000/- RS.20 000/- RS.10 000/- RS.5 000/- AND RS.10 000/ - WERE DULY REFLECTED AND MATCHED WITH THE RECEIPTS ISSUED BY THE ASSESSEE. AFTER ASKING THE REMAND REPORT FROM THE A.O. THE CIT(A) CONFIRMED THE ADDITION. THE CIT(A) HAS ALSO NOTED THAT ONE OF THE PAYMENT OF RS.30 000/- HAS NOT BEEN RECORDED IN THE ASSESSEES BOOK ON ANY OF THE DATES NOR ANY RECEIPT HAS BEEN ISSUED FOR THIS. HE ALSO NOTED THAT THE ANNEXURE TO THE PAPER WAS ALSO FOUND FROM THE ASSESSEES PREMISES. THE NOTE BOOK REALLY BELONG TO SHRI LAXMAN SINGH P ARTNER OF THE ASSESSEE FIRM. HE ALSO NOTED WHY LAXMAN SINGH SHOULD MENTION HIS OTHER PETTY EXP ENSES ON THIS PAPER. EVEN THE CIT(A) NOTED THAT THE ASSESSEE HAS CONFIRMED THAT SOME OF THE ENTRIES OF RS.5 000/- AND RS.10 000/- PERTAINED TO THE YEAR UNDER REFERENCE AND THIS IS T HE SETTLED LAW THAT IF NO DATE IS MENTIONED THEN THE PRESUMPTION IS THAT EACH PERTAINS TO THE YEAR I N WHICH THE DOCUMENT IS FOUND. THE LD. A.R. EVEN THOUGH CONTENDED BEFORE US THAT THE ASSESSEE H AS SUBMITTED RECONCILIATION OF ALL THE ENTRIES AND FOR THIS HE HAS DRAWN OUR ATTENTION TO PAGE NO. 230 AS WELL AS PAGE NO.231 WHICH CONTAIN LETTER DATED 29.06.2004 WRITTEN BY LAXMAN SINGH TO THE CIT(A) THAT THE ANNEXURE BELONGED TO M/S. B S AGRICULTURE INDUSTRIES (INDIA) AGRA AND T HE ASSESSEE HAS NOTHING TO DO WITH THE SAME BUT HE COULD NOT IN OUR OPINION PROVE THAT THE DE TAILS CONTAINED IN ANNEXURE DO NOT BELONG TO THE ASSESSEE . THIS IS AN UNDISPUTED FACT THAT SHRI IN DERJEET SINGH IS THE EMPLOYEE OF THE ASSESSEE AND A SUM OF RS.65 600/- HAS BEEN SHOWN IN THE NAME OF SHRI INDERJEET SINGH. BESIDES THIS A 13 SUM OF RS.1 200/- AND RS.1 500/- HAS BEEN SHOWN AGA INST THE NAME OF SHRI MOHAN SINGH WHO IS ALSO THE PARTNER IN THE ASSESSEE FIRM. REST ARE TH E PETTY EXPENSE. THIS IS THE SETTLED LAW THAT THE ONUS IS ON THE PERSON WHO ALLEGES THAT THE PAPER DO ES NOT BELONG TO HIM. NO COGENT MATERIAL OR EVIDENCE WAS BROUGHT ON RECORD WHICH MAY PROVE THAT THE TRANSACTION MENTIONED IN ANNEXURE A- 31 DOES NOT RELATE TO THE ASSESSEE. UNDER THESE FA CTS AND CIRCUMSTANCES IN OUR OPINION NO INTERFERENCE IS CALLED FOR IN THE ORDER OF THE CIT( A) AND ACCORDINGLY WE ALLOW THIS GROUND TAKEN BY THE ASSESSEE. 21. THE NEXT GROUND OF ASSESSEES APPEAL RELATES TO THE SUSTENANCE OF THE ADDITION OF RS.35 517/- OUT OF THE ADDITION OF RS.39 406/- MADE BY THE A.O. UNDER SECTION 2(24)(X) READ WITH SECTION 36(1)(V) OF THE ACT. THE A.O. NOTED T HAT THE ASSESSEE HAS MADE THE PAYMENT OF ESI AND EPF BEYOND THE SPECIFIED DATE. HE IGNORED THE CONTENTION OF THE ASSESSEE THAT THE SALARY FOR THE MONTH OF JUNE 2000 COULD NOT BE ASCERTAINED BY 07.07.2000 AS ON THIS DATE A SURVEY WAS CONDUCTED AND THE RECORDS WITH REGARD TO PAYMENT OF SALARY/WAGES WERE IMPOUNDED AND COPY THEREOF WERE MADE AVAILABLE IN THE FIRST WEEK OF AU GUST 2000. AS SOON AS THE RELEVANT REGISTERS WERE PROVIDED WAGES/SALARY WAS WORKED OUT AND ESI/ EPF WAS DEDUCTED AND PAID ON 19.08.2000 I.E. WITH THE GRACE PERIOD WHEN THE ESI/EPF WAS DED UCTED. WHEN THE MATTER WENT BEFORE THE CIT(A) THE CIT(A) CONFIRMED THE DISALLOWANCE. BEF ORE US THE LD A.R. VEHEMENTLY RELIED ON THE ORDER OF THE DELHI HIGH COURT IN THE CASE OF CIT VS . AIMIL LIMITED 321 ITR 508 FOR THE PROPOSITION OF LAW THAT THE ASSESSEE CAN GET BENEFI T OF THE DEDUCTION OF PAYMENT IF THE ACTUAL PAYMENT IS MADE BEFORE THE RETURN IS FILED. IN THE CASE OF THE ASSESSEE THE PAYMENT RELATES TO THE MONTH OF JUNE 2000 AND THE PAYMENT HAS BEEN MADE B Y THE ASSESSEE ON 19.08.2000 I.E. NOT ONLY 14 WITHIN THE F.Y. BUT ALSO BEFORE FILING OF THE INCOM E TAX RETURN. LD. D.R. ON THE OTHER HAND RELIED ON THE ORDER OF THE CIT(A). 22. WE HAVE CAREFULLY CONSIDERED THE RIVAL SUBMISSI ONS AND PERUSED THE MATERIAL ON RECORD. WE NOTED THAT IN THIS CASE THE ASSESSEE HAS MADE TH E PAYMENT FOR THE ESI/EPF FOR THE MONTH OF JUNE 2000 IN THE MONTH OF AUGUST 2000 I.E. IN ANY CASE BEFORE FILING OF THE RETURN BY THE ASSESSEE. THE SUPREME COURT IN THE CASE OF CIT VS. VINAY CEMENT LIMITED 313 ITR (ST.) 1 DISMISSED THE SPECIAL LEAVE PETITION OF THE DEPARTM ENT AGAINST THE DECISION OF THE GAUHATI HIGH COURT IN ITA NO.2 OF 2005 AND 56 AND 80 OF 2003 AND 284 ITR 619 IN WHICH THE HONBLE HIGH COURT HAS HELD THAT THE CONTRIBUTIONS MADE TOWARDS PROVIDENT FUND ETC. AFTER THE CLOSE OF THE ACCOUNTING PERIOD BUT BEFORE THE DUE DATE FOR FILI NG OF THE RETURN OF INCOME FOR THE A.Y. 1992-93 WERE ENTITLED TO RELIEF UNDER SECTION 43B(B) OF THE I.T. ACT. THE HONBLE SUPREME COURT WHILE DISMISSING THE SPECIAL LEAVE PETITION OBSERVED THAT THESE WERE CASES CONCERNING THE LAW AS IT STOOD PRIOR TO THE AMENDMENT OF SECTION 43B FOR THA T PERIOD PARTICULARLY IN VIEW OF THE FACT THAT IT HAD CONTRIBUTED TO PROVIDENT FUND BEFORE FILING THE RETURN. WE ARE OF THE VIEW THAT IN VIEW OF THE DECISION OF HONBLE SUPREME COURT IN THE CASE OF CI T VS. VINAY CEMENT LIMITED THE ASSESSEE IS BOUND TO SUCCEED. WE ACCORDINGLY SET ASIDE THE ORD ER OF CIT(A) AND DIRECT THE A.O. TO DELETE THE ADDITION OF RS.35 517/-. THUS THIS GROUND IS ALLO WED. 23. THE NEXT GROUND OF ASSESSEES APPEAL RELATES TO THE SUSTENANCE OF THE DISALLOWANCE OF RS.11 920/- UNDER SECTION 40A(3) OF THE ACT. THE A .O. DISALLOWED 20% OF RS.37 185/- AND RS.22 416/- PAID BY THE ASSESSEE IN VIOLATION OF SE CTION 40A(3). WHEN THE ASSESSEE WENT BEFORE THE CIT(A) THE ASSESSEE POINTED OUT THAT THE SUM O F RS.37 185/- WAS PAID TO M/S B.K. JAIN & 15 CO. IN TWO PARTS I.E. RS.20 000/- AND RS.17 185/-. SIMILARLY PAYMENT OF RS.22 416/- TO MONIKA PAREEKH WAS ALSO MADE IN TWO PARTS I.E. RS.10 000/- AND RS.12 416/-. THE PAYMENTS WERE MADE TO BOTH THE PARTIES EVEN THOUGH IN A SINGLE DAY BUT AT TWO DIFFERENT OCCASIONS. THE CIT(A) CONFIRMED THE ACTION OF HE A.O. FOLLOWING THE DECIS ION OF M.P. HIGH COURT IN THE CASE OF SHRI RADHIKA PRAKASHAN (RAIPUR) PVT. LTD. VS. CIT 257 I TR 675. 24. BEFORE US THE LD. A.R. CONTENDED THAT UNDER SEC TION 40A(3) AS WAS IN EXISTENCE DURING THE YEAR UNDER CONSIDERATION FOR COMPUTING THE LIMIT O F RS.20 000/- EACH PAYMENT HAS TO BE TAKEN INTO ACCOUNT. THE ASSESSEE HAS NOT MADE THE PAYMEN T IN EXCESS OF RS.20 000/- ON A PARTICULAR OCCASION EVEN THOUGH THE PAYMENT ON A PARTICULAR DA Y EXCEEDS RS.20 000/-. RELIANCE WAS PLACED ON THE DECISION OF THE M.P. HIGH COURT IN THE CASE OF CIT VS. TRIVENIPRASAD PANNALAL 228 ITR 680. 25. LD. D.R. ON THE OTHER HAND CONTEND THAT THE A SSESSEE EVEN THOUGH CONTENDED BEFORE THE A.O. THAT THE PAYMENTS WERE MADE TO BOTH THE PARTIE S AT TWO DIFFERENT OCCASIONS IN A DAY AND EACH PAYMENT IS LESS THAN RS.20 000/- BUT HE NEITHE R PRODUCED THE VOUCHER NOR THE CASH BOOK BEFORE THE A.O. EVEN THOUGH THE SAME WAS SPECIFICAL LY ASKED FOR BY THE A.O. THUS IT WAS CONTENDED THAT THE ONUS IS ON THE ASSESSEE TO PROVE THAT THE PAYMENT HAS BEEN MADE ON EACH OCCASION LESS THAN RS.20 000/-. 26. WE HAVE CAREFULLY CONSIDERED THE RIVAL SUBMISSI ONS AND PERUSED THE MATERIAL ON RECORD ALONG WITH THE ORDERS OF THE TAX AUTHORITIES BELOW. WE NOTED THAT SECTION 40A(3) WAS AMENDED BY THE FINANCE ACT IN 2008 W.E.F. 01.04.2009 BY WHI CH THE WORD PAYMENT OR AGGREGATE OF 16 PAYMENTS MADE TO A PERSON IN A DAY HAS BEEN CONSIDE RED FOR THE PURPOSE OF THE LIMIT OF RS.20 000/- PRIOR TO 01.4.2009 IN OUR OPINION THE AGGREGATE OF THE PAYMENTS MADE BY THE ASSESSEE IN A DAY TO A PARTY HAS NOT TO BE CONSIDER ED FOR EXCEEDING THE LIMIT OF RS.20 000/- UNDER SECTION 40A(3). BUT WE AGREE THAT THE CONTENTION O F THE LD. D.R. THAT THE ONUS IS ON THE ASSESSEE TO PROVE THAT HE HAS MADE EACH PAYMENT LESS THAN RS .20 000/-. WE HAVE GONE THROUGH THE RECORD AND WE NOTED THAT EVEN THOUGH THE ASSESSEE HAS TAKE N THE CONTENTION THAT THE PAYMENTS TO EACH OF THE PARTY HAS BEEN MADE TWO TIMES IN A DAY AND EACH PAYMENT IS LESS THAN RS.20 000/- BUT HE DID NOT PRODUCE ANY VOUCHER OR COPY OF THE CASH BOOK TO THE A.O. EVEN NO SUCH EVIDENCE HAS BEEN PRODUCED BY THE ASSESSEE BEFORE US ALTHOUGH THE CON TENTION WAS RAISED IN THIS REGARD. WE THEREFORE IN THE INTEREST OF JUSTICE AND FAIR PLAY TO BOTH THE PARTIES SET ASIDE THE ORDER OF THE CIT(A) AND DIRECT THE A.O. TO DELETE THE DISALLOWAN CE OF RS.11 920/- IN CASE THE ASSESSEE PRODUCES THE PROOF OF MAKING PAYMENTS TO EACH OF TH E PARTY ON THE SAME DAY IN TWO OCCASIONS AND THE PAYMENT SO MADE ON EACH OCCASION DOES NOT E XCEED RS.20 000/-. THUS THIS GROUND IS ALLOWED FOR STATISTICAL PURPOSE. 27. IN THE RESULT APPEAL OF THE REVENUE STANDS DIS MISSED WHILE THE APPEAL OF THE ASSESSEE IS PARTLY ALLOWED. (ORDER PRONOUNCED IN THE OPEN COURT ON 23.07.2010). SD/- SD/- (R.K. GUPTA) (P.K. BANSAL) JUDICIAL MEMBER ACCOUNTANT MEMBER PLACE: AGRA DATE: 23 RD JULY 2010. 17 PBN/* COPY OF THE ORDER FORWARDED TO: 1. APPELLANT 2. RESPONDENT BY ORDER 3. CIT CONCERNED 4. CIT (APPEALS) CONCERNED 5. DR ITAT AGRA BENCH AGRA 6. GUARD FILE ASSIST ANT REGISTRAR INCOME-TAX APPELLATE TRIBUNAL AGRA TRUE COPY