A.V.G. Impex Pvt. Ltd., New Delhi v. ITO, New Delhi

ITA 980/DEL/2010 | 2006-2007
Pronouncement Date: 09-07-2010 | Result: Allowed

Appeal Details

RSA Number 98020114 RSA 2010
Bench Delhi
Appeal Number ITA 980/DEL/2010
Duration Of Justice 4 month(s) 1 day(s)
Appellant A.V.G. Impex Pvt. Ltd., New Delhi
Respondent ITO, New Delhi
Appeal Type Income Tax Appeal
Pronouncement Date 09-07-2010
Appeal Filed By Assessee
Order Result Allowed
Bench Allotted A
Tribunal Order Date 09-07-2010
Date Of Final Hearing 06-07-2010
Next Hearing Date 06-07-2010
Assessment Year 2006-2007
Appeal Filed On 08-03-2010
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL (DELHI BENCH A NEW DELHI) BEFORE SHRI RAJPAL YADAV AND SHRI K.G. BANSAL I.T.A. NO. 980/DEL/2010 ASSESSMENT YEAR: 2006-07 A.V.G. IMPEX PVT. LTD. VS. INCOME-TAX OFFICER 301 COMMERCIAL COMPLEX WARD 1(1) PLOT NO.20 SHIVAM TOWER NEW DELHI. PASCHIM VIHAR DELHI-1100 63 (APPELLANTS) (RESPONDENT) APPELLANT BY: S/SH. PS KOHLI & SANJAY JAIN ARS RESPONDENT BY: SHRI AMR ENDERA KUMAR SR.DR ORDER PER RAJPAL YADAV: JUDICIAL MEMBER THE ASSESSEE IS IN APPEAL BEFORE US AGAINST THE OR DER OF LEARNED CIT(APPEALS) DATED 04.01.2010 PASSED FOR ASSESSMENT YEAR 2006-07. THE SOLITARY GRIEVANCE OF THE ASSESSEE IS THAT LEARNED CIT(APPEALS) HAS ERRED IN CONFIRMING THE ADDITION OF RS.1 81 393. 2. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSE E IS A COMPANY ENGAGED IN IMPORT/EXPORT OF FERROUS AND NON-FERROUS METALS READYMADE GARMENTS AND TIMBER ETC. IT HAS FILED ITS RETURN OF INCOME ON 27 .11.2006 DECLARING AN INCOME OF RS.3 11 214. THE ASSESSING OFFICER HAD RE CEIVED AN INFORMATION FROM DIRECTOR OF INCOME-TAX(INV.) NEW DELHI EXHIBI TING THAT A SURVEY IN THE CASE OF M/S. CANNON GROUP OF INDUSTRIES AND OTHERS WAS CARRIED OUT BY THE 2 DEPARTMENT. THE SURVEY TEAM REPORTED THAT SHRI RK G OYAL ALONG WITH HIS WIFE SMT. GEETA GOEL CONTROLS THE CANNON GROUP. THE MAIN BUSINESS OF THE GROUP IS EXPORT OF READYMADE GARMENTS. THE MAIN ALL EGATION AGAINST THE GROUP WAS THAT IT IS SUPPRESSING ITS PROFIT BY TAKI NG ENTRIES OF BOGUS PURCHASES FROM GROUP CONCERNS. THERE ARE NUMBER OF ENTITIES IN THE GROUP BUT MAINLY THREE COMPANIES ARE RELEVANT FOR THE PUR POSE OF THE PRESENT CASE THESE ARE AS UNDER: 1. M/S. BRONZE LOGISTIC (P) LTD. 2. M/S. BRONZE TEXTILES PROCESSORS (P) LTD. 3. M/S. CANNON INDUSTRIES (P) LTD. 3. ACCORDING TO THE ASSESSING OFFICER THE GROUP US ED TO TAKE ENTRIES EXHIBITING PURCHASES. THE ASSESSEE IS ONE OF THE SU PPLIERS. HE FURTHER NOTICED THAT ASSESSEE HAS MADE SALES OF RS.90 68 681 TO THE SE THREE COMPANIES. THE SALES CLAIMED BY THE ASSESSEE TO THESE COMPANIES AR E AS UNDER: TAX FREE LOCAL SALES 1. M/S. BRONZE LOGISTICS (P) LTD. 1429703/- 2. M/S. BRONZE TEXTILES PROCESSORS PVT. LTD. 56225 60/- 3. M/S. CANNON INDUSTRIES PVT.LTD. 2017418/- 9069681/- 3 4. THE CASE OF THE ASSESSEE IS THAT IT HAS SOLD THE GOODS TO THESE THREE COMPANIES. IN ORDER TO VERIFY THE CLAIM OF ASSESSEE ASSESSING OFFICER ISSUED NOTICES UNDER SEC. 133(6) OF THE ACT TO THESE PARTI ES AND CALLED FOR INFORMATION OF TRANSACTION ENTERED BY THEM. THE TWO CONCERNS HAVE REPLIED I.E. M/S. BRONZE TEXTILES AND M/S. CANNON INDUSTRIE S THEY STATED THAT GOODS WERE PURCHASED IN JANUARY 06 BUT WERE BOOKED BY THE M IN FINANCIAL YEAR 2006-07 FOR THE REASONS THAT THE GOODS PURCHASED RE MAINED LYING WITH THE TRANSPORTERS DUE TO DISPUTE WITH THE PARTIES. ASSES SING OFFICER AFTER A DETAILED INQUIRY HAS HELD THAT THE SALES SHOWN BY THE ASSESS EE ARE BOGUS BECAUSE IT COULD NOT PROVE THE MODE OF TRANSPORTATION VIDE WHI CH GOODS WERE SENT AND THE FREIGHT WAS PAID BY THE BUYERS. ASSESSING OFFIC ER ALSO POINTED OUT NUMBER OF DISCREPANCIES IN THE CLAIM OF THE ASSESSE E. HE ESTIMATED 5% PROFIT ON SALES AND MADE AN ADDITION OF RS.4 53 485.THE AS SESSING OFFICER FURTHER HELD THAT ASSESSEE MUST HAVE EARNED 2% OF RS.90 69 681 AS COMMISSION FOR PROVIDING ACCOMMODATION ENTRY AND IN THIS WAY AN AD DITION OF RS.1 81 393 HAS BEEN MADE. 5. ON APPEAL LEARNED CIT(APPEALS) DELETED THE ADDI TION OF RS.4 53 485 ON THE GROUND ON THE ONE HAND ASSESSING OFFICER IS HOLDING THE TRANSACTION AS PROVIDING OF AN ACCOMMODATION ENTRY. ON THE OTH ER HAND HE HAS 4 ACCEPTED IT AS A SALES AND ESTIMATING THE PROFIT ON SUCH SALES. ACCORDING TO LEARNED CIT(APPEALS) BOTH THINGS CANNOT HAPPEN TOG ETHER. HE DELETED ESTIMATION OF PROFIT BUT CONFIRMED THE STAND OF THE ASSESSING OFFICER THAT THE ASSESSEE HAS PROVIDED ACCOMMODATION ENTRY AND EARNE D COMMISSION @ 2% ON THE ALLEGED TOTAL SALES FIGURE OF RS.90 69 681. IN THIS WAY AN ADDITION OF RS.1 81 393 HAS BEEN CONFIRMED. 6. BEFORE US LEARNED COUNSEL FOR THE ASSESSEE SUBM ITTED THAT IT HAS BEEN MAINTAINING BOOKS OF ACCOUNT AND ALL OTHER DETAILS. IT HAS SHOWN PROFIT ON THESE SALES AT 3.8% AND DECLARED AN INCOME OF RS.3 11 214 WHICH IN ANY CASE MORE THAN THE ONE ESTIMATED BY THE ASSESSING OFFICE R AT 2% FOR PROVIDING ALLEGED ACCOMMODATION ENTRY. ACCORDING TO THE LEARN ED COUNSEL IF THE STAND OF THE ASSESSING OFFICER IS TO BE ACCEPTED THEN DEC LARED INCOME HAS ALSO TO BE REDUCED BY TAKING INTO CONSIDERATION THE LOGIC A SSIGNED BY THE LEARNED CIT(APPEALS) WHILE DELETING THE ADDITION OF RS.4 53 485. LEARNED DR ON THE OTHER HAND RELIED UPON THE ORDER OF THE ASSESSING O FFICER. 7. WE HAVE DULY CONSIDERED THE RIVAL CONTENTIONS AN D GONE THROUGH THE RECORD CAREFULLY. THE ASSESSEE HAS FILED A PAPER BO OK WHEREIN IT PLACED ON RECORD COPY OF THE ASSESSMENT ORDER COPY OF THE LE ARNED CIT(APPEALS)S ORDER AND COPY OF THE WRITTEN SUBMISSIONS FILED BEF ORE THE LEARNED 5 CIT(APPEALS). IN THESE WRITTEN SUBMISSIONS ASSESSE E HAS FILED THE COPIES OF INVOICES EXHIBITING SALES OF FABRICS. APART FROM TH ESE TWO INVOICES THERE IS NO OTHER DOCUMENT. ON THE BASIS OF THESE TWO DOCUME NTS IT IS DIFFICULT FOR US TO CONCLUSIVELY HOLD THAT ASSESSEE WAS NOT INVOLVED IN THE BUSINESS OF PROVIDING ACCOMMODATION ENTRY. THE ASSESSING OFFICE R HAS DISCUSSED CERTAIN LACUNAS IN THE TRANSACTIONS CLAIMED BY THE ASSESSEE BY REFERRING MODE OF TRANSACTION AND THE INFORMATION RECEIVED FROM TH E DIRECTOR OF INCOME-TAX (INV.) WHO CARRIED OUT SURVEY IN THE CASE OF CANNON GROUP. LEAVING APART ALL THESE THINGS WE ARE OF THE VIEW THAT ONCE ASSESSEE IS SHOWING INCOME AT 3.8% OF THE ALLEGED SALES TRANSACTIONS OF RS.90 69 681 THEN THERE IS NO REASON TO ESTIMATE THE INCOME AT 2% ALSO. IN OTHER WORDS EITHER ASSESSEE HAS SOLD THE GOODS AND EARNED PROFIT WHICH IT CLAIMED A T 3.8% OR IT HAS PROVIDED ACCOMMODATION ENTRY WHICH ENABLE THE ASSESSEE TO EA RN COMMISSION INCOME AT 2%. THE ASSESSEE HAS DISCLOSED HIGHER INCOME WHI CH CAN TAKE CARE OF ALLEGED COMMISSION INCOME IF ANY EARNED BY PROVIDIN G ACCOMMODATION ENTRY. BOTH THESE ADDITIONS CANNOT REMAIN SIMULTANE OUSLY. SINCE THE ASSESSEE HAS DISCLOSED HIGHER AMOUNT OF INCOME THEREFORE T HERE IS NO JUSTIFICATION TO ADD A SUM OF RS.1 81 393 ON THE GROUND THAT ASSESSE E HAS EARNED COMMISSION INCOME BY PROVIDING ACCOMMODATION ENTRY. THIS ASPECT CAN BE 6 TAKEN CARE IN THE OVERALL INCOME DISCLOSED BY THE A SSESSEE. CONSIDERING THIS ASPECT WE ALLOW THE APPEAL OF THE ASSESSEE AND DEL ETE THE ADDITION OF RS.1 81 81 393. 8. IN THE RESULT THE APPEAL FILED BY THE ASSESSEE IS ALLOWED. DECISION PRONOUNCED IN THE OPEN COURT ON 09.07.201 0 ( K.G. BANSAL ) ( RAJPAL YADAV ) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 09/07/2010 MOHAN LAL COPY FORWARDED TO: 1) APPELLANT 2) RESPONDENT 3) CIT 4) CIT(APPEALS) 5) DR:ITAT ASSISTANT REGISTRAR