Hindprakash International Pvt.Ltd., Ahmedabad V. The ACIT.,Circle-4, Ahmedabad

CO 241/AHD/2011

• Counselvise Citation: [2012] 122 COUNSELVISE.COM (IT) 7103 (ITAT-AHMEDABAD)
• Duration Of Justice: 6 month(s) 3 day(s)
• Appeal Type: Cross Objection
• Pronouncement Date: 15-05-2012
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: C
• Next Hearing Date: 17-04-2012
• Assessment Year: 2008-2009
• Appeal Filed On: 11-11-2011
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: P I KUREEL
• Assessee Lawyers: G S PATEL
• Keywords: Rejection of books of accounts; Onus to prove; Condonation of delay

Judgement Text

, , , , C, IN THE INCOME TAX APPELLATE TRIBUNAL AT AHMEDABAD, C BENCH . .. . . .. . , !' !' !' !', , , , #$ #$ #$ #$ %& %& %& %& , , , , &' ( & &' ( & &' ( & &' ( & ' ' ' ' BEFORE S/SHRI G.C. GUPTA, VICE-PRESIDENT AND TEJ RAM MEENA, ACCOUNTANT MEMBER) ITA NO. 2249/AHD/2011 WITH CO NO.241/AHD/2011 [ASSTT.YEAR : 2008-2009] THE ACIT, CIR.4 AHMEDABAD. /VS. HINDPRAKASH INTERNATIONAL PVT. LTD., 201, HINDPRAKASH HOUSE PLOT NO.10/6, PHASE-I, GIDC VATVA, AHMEDABAD 382 445. ( (( (*+ *+ *+ *+ / APPELLANT) ( (( (,-*+ ,-*+ ,-*+ ,-*+ / RESPONDENT) .% / 0 &/ ASSESSEE BY : SHRI G.S.PATEL ( / 0 &/ REVENUE BY : P.I. KUREEL, SR.DR 2 / %3'/ DATE OF HEARING : 17 TH APRIL, 2012 456 / %3'/ DATE OF PRONOUNCEMENT : 15-05-2012 &7 / O R D E R PER G.C. GUPTA, VICE-PRESIDENT: THIS IS REVENUES APPEAL AND THE ASSESSEES CO AND DIRECTED AGAINST T HE ORDER OF THE COMMISSIONER OF INCOME-TAX (APPEALS)-VIII, AHMEDABA D DATED ITA NO. 2249/AHD/2011 WITH CO -2- 12.07.2011 FOR ASSESSMENT YEAR 2008-2009. THESE AR E BEING DISPOSED OF WITH THIS CONSOLIDATED ORDER. ITA NO.2249/AHD/2011 (REVENUES APPEAL) 2. THE ONLY GROUND OF APPEAL OF THE REVENUE IS AS U NDER: 1. THE LD.CIT(A) HAS ERRED IN LAW AND ON FACTS IN DELETING THE ADDITION OF RS.65,66,250/- OUT OF 75,00,000/- O N ACCOUNT OF GROSS PROFIT WITHOUT APPRECIATING THE FACT THAT THE AO HAD MADE THE ADDITION ON THE GROUND THAT SOME OF THE PURCHAS ING PARTIES AND SELLING PARTIES EITHER DID NOT APPEAR OR DENIED HAVING ANY TRANSACTION WITH THE ASSESSEE. 3. THE LEARNED DR SUBMITTED THAT OUT OF 14 PARTIES SUMMONED BY THE AO, TWO PARTIES HAVE DENIED THE TRANSACTION OF PURCHASE AND SALE AND THE OTHER TWO PARTIES DID NOT MAKE ANY APPEARAN CE. HE SUBMITTED THAT ALTHOUGH THE ASSESSEE HAS PRODUCED THE DETAILS OF THE TRANSACTIONS WITH THESE FOUR PARTIES, BUT THE ONUS WAS ON THE AS SESSEE TO PROVE THE GENUINENESS OF THE TRANSACTION OF PURCHASE AND SALE . HE SUBMITTED THAT IN VIEW OF THE DEFECTS POINTED OUT BY THE AO, THE BOOKS OF ACCOUNTS OF THE ASSESSEE WERE RIGHTLY REJECTED AND LUMPSUM ADDITION OF RS.75 LAKHS WAS RIGHTLY MADE BY THE AO. HE REFE RRED TO RELEVANT PARAS OF THE ASSESSMENT ORDER IN SUPPORT OF THE CAS E OF THE REVENUE. HE SUBMITTED THAT MERE EXPLANATION OF THE ASSESSEE THAT THE TRANSACTIONS WITH THESE FOUR PARTIES WERE DULY ENTE RED IN THE BOOKS OF ACCOUNTS AND PAYMENTS HAVE BEEN MADE THROUGH BANKIN G CHANNEL, DOES NOT ABSOLVE THE ASSESSEE FROM ITS PRIMARY ONUS TO PROVE THE GENUINENESS OF THE TRANSACTION OF PURCHASE AND SALE . THE LEARNED ITA NO. 2249/AHD/2011 WITH CO -3- COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE ASSESSE E HAS MAINTAINED COMPLETE BOOKS OF ACCOUNTS AND HAVE PRODUCED COMPLE TE DETAILS WITH REGARD TO THESE FOUR PARTIES FROM WHOM GOODS WERE P URCHASED/SOLD BY THE ASSESSEE DURING THE RELEVANT PERIOD. HE SUBMI TTED THAT THE SUMMONS WERE SERVED ON TWO PARTIES VIZ. M/S.AUM ENT ERPRISE AND M/S.A.M. SHAH & CO., AND THEREFORE MERELY BECAUSE THEY DID NOT APPEAR BEFORE THE AO WAS NOT A GROUND TO MAKE ANY A DDITION. WITH REGARD TO OTHER TWO PARTIES VIZ. M/S.NAVDURGA CHEMI CALS AND M/S.CHINAR ENTERPRISE, COMPLETE DETAILS HAVE BEEN F ILED BEFORE THE AO AND THE PAYMENTS WERE THROUGH BANKING CHANNEL ONLY AND WERE REFLECTED IN THE BANK STATEMENTS OF THE ASSESSEE. COMPLETE QUANTITATIVE TALLY WAS FILED BEFORE THE AO IN WHICH NO DEFECTS WERE POINTED OUT BY THE AO. HE SUBMITTED THAT THERE WAS NO BASIS FOR MAKING LUMPSUM ADDITION OF RS.75 LAKHS BY THE AO AN D SUSTAINING RS.9.33 LAKHS ADDITION BY THE CIT(A). 3. WE HAVE CONSIDERED RIVAL SUBMISSIONS AND PERUSED THE ORDERS OF THE AO AND THE CIT(A). WE FIND THAT THE ASSESSEE HAS DECLARED BETTER TRADING RESULTS DURING THE RELEVANT PERIOD AS COMPA RED TO THE PROCEEDING YEARS. THE ASSESSEE IS IN THE TRADING B USINESS OF DYES AND CHEMICALS. OUT OF THE 14 PARTIES SUMMONED BY THE A O, 10 PARTIES HAVE CONFIRMED THE TRANSACTIONS OF PURCHASE AND SAL E TO THE ASSESSEE. WITH REGARD TO TWO PARTIES VIZ. M/S.AUM ENTERPRISE AND M/S.A.M. SHAH & CO. THE SUMMONS WERE DULY SERVED ON THEM, AN D THEREFORE, THE IDENTITY OF THE PARTIES IS PROVED BEYOND DOUBT. THE PAYMENTS TO THESE PARTIES WERE THROUGH ACCOUNT PAYEE CHEQUES, A ND WERE REFLECTED IN THE BANK ACCOUNTS OF THE ASSESSEE. IN THESE FAC TS, WE HOLD THAT NO ADVERSE VIEW IS TO BE TAKEN WITH REGARD TO THE TRAN SACTIONS WITH THESE ITA NO. 2249/AHD/2011 WITH CO -4- TWO PARTIES MADE BY THE ASSESSEE AND THE CIT(A) WAS JUSTIFIED IN ACCEPTING THE CONTENTION OF THE ASSESSEE THAT PURCH ASE FROM M/S.AUM ENTERPRISE AND M/S.A.M. SHAH & CO. COULD NOT DOUBTE D ONLY BECAUSE THESE PARTIES FAILED TO MAKE APPEARANCE BEFORE THE AO. 4. WITH REGARD TO REMAINING TRANSACTIONS WITH TWO P ARTIES VIZ. M/S.NAVDURGA CHEMICALS AND M/S.CHINAR ENTERPRISE, W E FIND THAT THE ASSESSEE HAS FILED COMPLETE DETAILS THEREOF BEFORE THE AO AND THE AO COULD NOT POINT OUT ANY DEFECT THEREIN. THE ASSESS EE HAS ALSO FILED ITS QUANTITATIVE TALLY AND NO DEFECTS COULD BE POINTED OUT BY THE AO. THE PAYMENTS WERE BY WAY OF ACCOUNT PAYEE CHEQUE. THE ASSESSEE HAS FILED ITS BANK STATEMENT COPY WHEREIN THE PAYMENTS WERE REFLECTED. IN THESE FACTS OF THE CASE, WE ARE OF THE CONSIDERED O PINION THAT THE CIT(A) WAS JUSTIFIED IN NOT CONFIRMING THE AD HOC ADDITION OF RS.75 LAKHS MADE BY THE AO ON ACCOUNT OF TRANSACTIONS OF PURCHASE AND SALES MADE BY THE ASSESSEE. THE FACT THAT THE ASSE SSEE HAS MADE PURCHASE FROM M/S.NAVDURGA CHEMICALS AND HAVE MADE SALES TO M/S.CHINAR ENTERPRISE, COULD NOT BE DOUBTED IN VIEW OF THE QUANTITATIVE TALLY FILED BY THE ASSESSEE AND PAYMEN TS REFLECTED IN ITS BANK STATEMENTS FILED BY THE ASSESSEE BEFORE THE AO . THE ONLY EVIDENCE FOR THE ADVERSE INFERENCE IN POSSESSION OF THE DEPARTMENT WITH REGARD TO TRADING ENTRIES IN RESPECT OF M/S.NA VDURGA CHEMICALS AND M/S.CHINAR ENTERPRISE IS THE DENIAL OF THESE TWO PARTIES OF HAVING ENTERED INTO ANY TRANSACTION WITH THE ASSESS EE. WE FIND THAT THE CIT(A) HAS ESTIMATED CERTAIN AMOUNT AS PROFIT O N THE BASIS OF GP DECLARED BY THE ASSESSEE WITH REGARD TO THE TRANSAC TION ENTERED INTO BY THE ASSESSEE WITH THESE TWO PARTIES AND DELETED THE AD HOC ADDITION MADE BY THE AO. THE REASONABLENESS OR OTHERWISE OF THE ESTIMATION ITA NO. 2249/AHD/2011 WITH CO -5- OF THE INCOME WITH REGARD TO THE TRANSACTIONS WITH THESE TWO PARTIES COULD BE SEPARATELY ADJUDICATED WHILE DISPOSING OF THE CROSS OBJECTION FILED BY THE ASSESSEE, BUT SO FAR AS THE ORDER OF T HE CIT(A) IN DELETING THE LUMPSUM ADDITION MADE BY THE AO IS CONCERNED, T HE SAME BEING JUSTIFIED AND ORDER OF THE CIT(A) ON THIS ISSUE IS ACCORDINGLY CONFIRMED AND THE GROUND NO.1 OF THE REVENUES APPE AL BEING WITHOUT ANY MERIT IS DISMISSED. CO NO.241/AHD/2011 (ASSESSEES CO) 5. THERE IS A DELAY OF 21 DAYS IN FILING THE PRESEN T CO BY THE ASSESSEE. THE ASSESSEE HAS FILED CONDONATION APPLI CATION FOR THE CONDONATION OF DELAY. 6. WE HAVE HEARD PARTIES ON THIS ISSUE. IN THE FAC TS OF THE CASE AND IN VIEW OF THE CIRCUMSTANCES EXPLAINED IN THE CONDO NATION APPLICATION BY THE ASSESSEE, WE ARE OF THE VIEW THAT IT IS A FI T CASE FOR CONDONATION OF DELAY IN FILING THE CO BY THE ASSESSEE, WHICH IS ACCORDINGLY CONDONED. 7. THE EFFECTIVE GROUND OF THE CO OF THE ASSESSEE I S AS UNDER: 1. THE LD.CIT(A) HAS ERRED IN LAW AND ON FACTS OF THE CASE IN UPHOLDING THE REJECTION OF BOOKS OF ACCOUNTS. THE LD.CIT(A) OUGHT TO HAVE ACCEPTED THE RESPONDENT CROSS OBJEC TORS SUBMISSION THAT PROPER BOOKS OF ACCOUNTS ARE MAINTA INED BY IT FOR DETERMINING TRUE AND CORRECT INCOME. ACCORDING LY, YOUR RESPONDENT CROSS OBJECTOR PRAYS THAT THE ACTION O F THE LD.AO BE DECLARED ILLEGAL AND CANCELLED AND HIS CONSEQUEN T ACTION ITA NO. 2249/AHD/2011 WITH CO -6- MAY ALSO PLEASE BE DECLARED ILLEGAL AND THE BALANCE ADDITION OF RS.9,33,750/- MAY PLEASE ALSO BE DELETED. 8. WE HAVE HEARD PARTIES. THE FACTS OF THE ISSUE H AVE BEEN DETAILED IN THE FOREGOING PARAGRAPHS OF THE ORDER W HILE DECIDING THE REVENUES APPEAL FOR THE RELEVANT ASSESSMENT YEAR. THE CIT(A) ESTIMATED THE ADDITION WITH REGARD TO PURCHASE AND SALE WITH M/S.NAVDURGA CHEMICALS AND M/S.CHINAR ENTERPRISE AT 5% OF THE TRANSACTION AMOUNT WITH THESE PARTIES. KEEPING IN VIEW THE DECLARED GP RATE OF 3.57% BY THE ASSESSEE, WE FIND THAT SOME ADDITION ON ACCOUNT OF PURCHASE AND SALE WITH THESE TWO PARTIES IS CALLED FOR IN VIEW OF THE FACT THAT THESE TWO PARTIES HAVE DENIED HAVING MADE ANY TRANSACTIONS WITH ASSESSEE-COMPANY. THE AO HAS REC ORDED IN THE ASSESSMENT ORDER AT PAGE NO.10 THAT THE ASSESSEE-CO MPANY HAS NOT REQUESTED FOR CROSS-EXAMINATION OF THESE PARTIES TO REBUT THE DENIAL OF THE PARTIES. WE FIND THAT THE TRANSACTIONS WITH TH ESE PARTIES WERE DULY ENTERED IN THE ACCOUNTS BOOKS OF THE ASSESSEE AND T HE PAYMENTS WERE MADE/RECEIVED THROUGH BANKING CHANNELS, AND THEREFO RE, THE ASSESSEE- COMPANY COULD HAVE ASKED FOR OPPORTUNITY TO CROSS-E XAMINE THESE PARTIES TO PROVE THAT DENIAL BY THESE PARTIES OF HA VING ANY TRANSACTION WITH THE ASSESSEE-COMPANY WAS CONTRARY TO THE FACTS OF THE CASE AND UNTRUE. NO SUCH EFFORTS WERE MADE BY THE ASSESSEE- COMPANY. IN THESE FACTS OF THE CASE, WE HOLD THAT THE CIT(A) WAS JUST IFIED IN ESTIMATING THE ADDITION WITH REGARD TO THE TRANSACTION WITH TH ESE TWO PARTIES. HOWEVER, WE FIND THAT THE ADDITION ESTIMATED AT 5% OF THE TOTAL AMOUNT OF TRANSACTION WITH THESE PARTIES IS ON THE HIGHER SIDE AND IT SHOULD BE RESTRICTED TO 3.57% OF THE TOTAL TRANSACT ION AMOUNT, AS THE GP RATE FOR THE RELEVANT PERIOD OF THE ASSESSEE IS 3.57% ONLY, AND ITA NO. 2249/AHD/2011 WITH CO -7- ACCORDINGLY, THE ADDITION COMES TO RS.6,66,700/- AS AGAINST RS.9,33,750/- SUSTAINED BY THE CIT(A). WE DIRECT A CCORDINGLY AND THE GROUND NO.1 OF THE CO OF THE ASSESSEE IS PARTLY ALL OWED. 9. IN THE RESULT, THE APPEAL OF THE REVENUE IS DISM ISSED AND THE CO OF THE ASSESSEE IS PARTLY ALLOWED. ORDER PRONOUNCED IN OPEN COURT ON THE DATE MENTIONE D HEREINABOVE. SD/- SD/- ( %& %& %& %& / TEJ RAM MEENA) &' ( &' ( &' ( &' ( /ACCOUNTANT MEMBER ( . .. . . .. . /G.C. GUPTA) !' !' !' !' /VICE-PRESIDENT C OPY OF THE ORDER FORWARDED TO: 1) : APPELLANT 2) : RESPONDENT 3) : CIT(A) 4) : CIT CONCERNED 5) : DR, ITAT. BY ORDER DR/AR, ITAT, AHMEDABAD