M/s. Dynamic Herbikem India Pvt. Ltd., Kolkata V. ITO, Ward - 12(2), Kolkata, Kolkata

ITA 1054/KOL/2010

• Counselvise Citation: [2011] 140 COUNSELVISE.COM (IT) 54608 (ITAT-KOLKATA)
• Duration Of Justice: 1 year(s) 5 month(s) 6 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-10-2011
• Appeal Filed By: Assessee
• Bench Allotted: A
• Next Hearing Date: 23-06-2010
• Assessment Year: 2005-2006
• Appeal Filed On: 21-05-2010
• Court: TRIBUNAL
• Department Lawyers: NIHAR DUTTA GUPTA LD
• Assessee Lawyers: S L KOCHAR LD
• Keywords: Business income; Opportunity of being heard
• Section: 133(6)

Judgement Text

, A , , IN THE INCOME TAX APPELLATE TRIBUNAL, BENCH- A , CALCUTTA () BEFORE , SHRI MAHAVIR SINGH, JUDICIAL MEMBER. /AND . !., '# , SHRI C.D. RAO, ACCOUNTANT MEMBER. $ / ITA NO. 1054/KOL/2010 %& '(/ ASSESSMENT YEAR: 2005-06 M/S. DYNAMIC HERBIKEM INDIA PVT. LTD. PAN:AABCD 0798G INCOME-TAX OFFICER WARD 12(2), KOLKATA (*+ / APPELLANT ) - % - - VERSUS - . (-.*+/ RESPONDENT ) *+ / 0 '/ FOR THE APPELLANT: / SHRI S. L. KOCHAR, LD. AR -.*+ / 0 '/ FOR THE RESPONDENT: / SHRI NIHAR DUTTA GUPTA, LD.DR 1%2 / !# /DATE OF HEARING : 27-10-2011 3' / !# /DATE OF PRONOUNCEMENT :27-10-2011 '4 / ORDER . !., '# , ,, , SHRI C.D.RAO, ACCOUNTANT MEMBER.: ASSESSEE HAS FILED THIS APPEAL AGAINST ORDER DATED 29-12-2009 OF THE LEARNED COMMISSIONER OF INCOME-TAX (APPEALS) FOR THE ASSES SMENT YEAR 2005-06. 2. IN THIS APPEAL THE ASSESSEE HAS TAKEN FOLLOWING GROUNDS OF APPEAL:- 1. THE LD. CIT APPEAL XXXII MADE ERRONEOUS JUDGEME NT IN NOT ALLOWING THE APPELLANTS GROUND OF STRIKING OFF THE ADDITION OF RS.3.53.660 IN RESPECT OF SALES TO M/S. AGRITECH TRADERS & SERVICES LTD. COCH IN. DURING THE PREVIOUS YEAR RELEVANT TO THE ASSESSMENT YEAR 2005-06,. THE APPELLANT MADE A TOTAL SALES OF RS. 21,.72,555. THE APPELLANT IN SUPPORT OF THAT PRODUCED RETURNS / ASSESSMENT ORDERS MADE BY THE COMMERCIAL TAX AUTHOR ITY AND CENTRAL EXCISE DEPARTMENT. M/S. AGRITECH TRADERS & SERVICE S LTD., COCHIN STATED RS. 24,.47,.144 AS THEIR PURCHASE FROM THE APPELLANT, I N RESPONSE TO A NOTICE U/S.133(6). THE LD.CIT APPEAL XXXII DID NOT TAKE AN Y INITIATIVE TO CHECK THE VERACITY OF THE ASSESSMENT PROCEDURE FOLLOWED BY TH E LD.ITO 12(2) AND RELIED ITA NO.1054/KOL/2010-A-CDR 2 SOLELY ON THE FACE VALUE OF WHATSOEVER DOCUMENTS P RODUCED BY M/S. AGRITECH TRADERS & SERVICES LTD., COCHIN WITHOUT BOTHERING T O CALL FOR FURTHER INFORMATION AND CLARIFICATIONS FROM THEM. 2. THE LD. CIT APPEAL XXXII MADE FRIVOLOUS JUDGMEN TS IN CONFIRMING THE ADDING BACK RS. 140498 ON THE GROUND THAT THERE IS A DIFFERENCE IN SALES IN THE APPELLANTS BOOK VIS--VIS THE ENTRIES MADE BY M/S. CROP CARE SUPPLIES, MANGALORE. IN SPITE OF PRODUCING DOCUMENTS BY THE A PPELLANT IN RESPECT OF THE RETURN / ASSESSMENT ORDERS MADE BY THE COMMERCIAL T AX AUTHORITY AND CENTRAL EXCISE DEPARTMENT. A LETTER PRODUCED BY THE APPELLANT WRITTEN BY M/ S. CROP CARE SUPPLIES ADMITTING ERRONEOUS ENTRIES IN T HEIR BOOKS OF ACCOUNTS. SUBMITTED TO THE LD. CIT APPEAL XXXII DURING THE C OURSE OF HEARING BUT THE SAME WAS WRONGFULLY NOT GIVEN ANY COGNIZANCE BY THE 1D. CIT APPEAL XXXII. LD. CIT (APPEAL) XXXII VIDE ORDER DATED 2912.2009. CLEARLY STATES AT PAGE NO. 5 OF THE ORDER THUS THE ADDITION OF RS. 1,40,498 [ RS.1,14,.803 BEING THE AMOUNT OF UNDISCLOSED PURCHASES + RS. 20,695 BEING THE AMOUNT OF GROSS PROFIT ON SUCH GOODS SOLD J STANDS DELETED. AGAIN IN PAGE NO 6 OF THE ORDER STATES THE ASSESSEE HAS NOT BEEN ABLE TO OFFER ANY CO GENT EXPLANATION FOR SUCH DIFFERENCE, THE ADDITION OF RS. 4,15,.087 DESE RVES TO HE CONFIRMED. [ADDITION OF RS. 2,74,589 MADE BY THE A.O. ON ACCOU NT OF M/S. AGRITECH TRADERS & SERVICES LTD. AND ADDITION OF RS. 1,.40, 498 MADE ON ACCOUNT OF M/S. CROP CARE SUPPLIERS WHICH IS NOW CONSIDERED TO BE ON ACCOUNT OF M/SS. AGRITECH TRADERS & SERVICES LTD.] 3. THE LD. CIT (APPEAL) XXXII ERRED IN CONFIRMING THE ADDITION OF RS. 1 7.68.773 AND RS. 37,35,302 ON ACCOUNT OF MS. KRISH I RASAYAN PVT. LTD. AND KRISHI RASAYAN (FIRM), AS THESE TWO PARTIES SUBMITT ED FIGURES IN RESPONSE TO NOTICE U/S. 133(6) ARC TO THAT EXTENT INVARIANCE WI TH THE BOOKS OF ACCOUNTS OF THE APPELLANT. APPELLANT IS REGULAR IN SUBMITTING THE R ETURN WITH WEST BENGAL SALES TAX AUTHORITY AND EXCISE DEPARTMENT,. AND THE SAME BEING PRODUCED FOR VERIFICATION DURING THE COURSE OF HEARING. THE LD. CIT (APPEAL) XXXII RELIED SOLELY ON THE INFORMATION FURNISHED BY THE PARTIES, WITHOUT CARING TO CROSS VERIFY THE CORRECTNESS/GENUINITY OF THOSE ENTRIES. THIS IS BOTH HAD IN LAW AND HAS PRODUCED THE INTEREST OF THE APPELLANT. 4. THE LD. CIT (APPEAL) XXXII ERRED IN ALLOWING TH E ADDITION OF RS. 2,46,000 FOR PAYMENT MADE TO M/S. TECHONOCRAFT ON T HE GROUND OF NOT DEDUCTING TDS DURING THE COURSE OF HEARING IT WAS SUBMITTED T HAT THIS PAYMENT WAS ON ACCOUNT OF PURCHASE OF PLANT & MACHINERY AND INCLUS IVE EL INSTALLATION CHARGES OF RS.17,800 AND RS. 19,000. THESE PAYMENT WAS NOT LIABLE FOR TDS IN TERMS OF SECTION 40A(IA) OF THE ACT. 5. PAYMENT MADE TO M/S ASSAM ROADWAYS AND TO M/S. HARI OM FREIGHT CARRIERS PVT. LTD. FOR RS. 82.650 AND RS .57.030 RE SPECTIVELY. IN THE SUBSEQUENT YEAR TDS WERE DEDUCTED ON BOTH THESE PAYMENTS AND D EPOSITED. LD CIT ITA NO.1054/KOL/2010-A-CDR 3 (APPEAL) XXXII FAILED TO GIVE ANY CREDENCE OF SUCH STATEMENT OF FACTS AND WRONGLY CONFIRM THE ADDITIONS. 6. THE APPELLANT PURCHASED COAL FOR RS. 26,353 AND RS. 27.330 FROM M/S. SHAKTI TRADERS AND AJOY SHARMA RESPECTIVELY,. AGAIN ST CASH APPELLANTS FACTORY LOCATED IN THE DISTRICT OF JHARGRAM WHERE BASIC BAN KING FACILITIES WERE SEVERELY LACKING SPECIALLY DURING THE PERIOD 2004-05. THESE WERE EMERGENCY PURCHASES. AGAINST PROPER BILLS. CHALLANS ETC. UNLIKE IN OTHER CASES WERE PAYMENTS WERE MADE BY ACCOUNT PAYEE CHEQUE ONLY. THE LD. CIT (APP EAL ) XXXII CONFIRMED THE ADDITIONS OF THESE TWO AMOUNTS WITHOUT JUDGING THE FACT THAT THE PAYMENTS WERE MADE UNDER EXTREME EXIGENCY AND THE IDENTITY OF THE PAYEE IS WELL ESTABLISHED. 3. BRIEF FACTS OF THE CASE ARE THAT THE. ASSESSMENT WAS FRAMED BY THE A.O. ON 17.12.2007 U/S 143 (3) OF THE INCOME TAX ACT. INCOME DECLARED WAS RS.2150,512/- TO WHICH THE A.O. HAS MADE ADDITIONS AS UNDER: - ( A) RS.52,091/- AND RS.3,01,566/- TOTALING TO RS.3, 53,657/- RELATING TO DIFFERENCE IN TRANSACTION WITH AGRIITECH TRADERS & SERVICES LTD. (B) RS.20,695/- TAKEN AS PROFIT FROM UNDISCLOSED S ALES TO CROPCARE SUPPLIERS AND RS.1,90,803/- TAKEN AS UNDISCLOSED PURCHASE. (C) RS.17,68,773/- ON ACCOUNT OF OVERSTATED LIABIL ITY AGAINST KRISHI RASAYAN PVT. LTD. D) RS.5,50,210/- TAKEN AS UNDISCLOSED PROFIT ON SA LES MADE TO KRISH RASAYAN FIRM. E) RS.31,85,092/- RELATING TO UNDISCLOSED PURCHASE ON ACCOUNT OF SALES MADE TO KRISHI RASAYAN FIRM. (F) RS.4,51,12 2/- - DISALLOWANCE U/S 40(A)(IA). 3.1. BARRING DISALLOWANCE MADE U/S 40(A)(IA), ALL THE OTHER ADDITIONS/DISALLOWANCES MADE BY THE A.O. PERTAIN TO THE TRANSACTIONS OF TRADINGS WH ICH THE APPELLANT HAD WITH THOSE PARTIES. THE APPELLANT IS A MANUFACTURER OF PESTICIDES AND SELLS ITS PRODUCTS TO THEM. THE A.O. COLLECTED INFORMATION U/S 133 (6) OF THE INCOME TAX ACT FROM THOSE PARTIES AND FOUND DIFFERENCES IN THE ACCOUNTS E.G., IN OPENING BALANCE, AMOUNTS OF PURCH ASES/SALES AND CLOSING BALANCE AND, ACCORDINGLY, MADE THE ADDITIONS BY PROCEEDING ON TH E BASIS THAT THE RELEVANT FIGURES COLLECTED U/S 133 (6) FROM THE PARTIES WERE CORRECT. 3.2. THERE ARE MAJOR ADDITIONS OF RS.17,68,773/-, RS.5,50,210/- & RS.31,85,092/- WHICH PERTAIN TO THE TRANSACTIONS OF THE APPELLANT WITH K RISHI RASAYAN PVT. LTD. AND KRISHI RASAYAN ITA NO.1054/KOL/2010-A-CDR 4 (FIRM). THIS MATTER IS DISCUSSED BY THE A.O. AT PAG E 3 OF HIS ORDER OF ASSESSMENT. THE CASE OF THE APPELLANT HAD BEEN THAT WHATEVER TRANSACTIONS A RE RECORDED IN ITS BOOKS OF ACCOUNTS WITH THOSE TWO PARTIES IN RESPECT OF WHOM LEDGER ACCOUNT WAS BEING MAINTAINED BY THE APPELLANT IN ITS BOOKS, THERE WAS NO OTHER TRANSACTION AND THAT WHATEVER TRANSACTIONS WHICH KRISHI RASAYAN HAVE INFORMED TO THE A.Q. DID NOT REFLECT CORRECT T RANSACTIONS, AND THAT THE SAID PARTIES HAD NOT CORRECTLY SUPPLIED DATA WITH REGARD TO THE BILL NOS ., DATES ETC. TO THE A.O. IN RESPONSE TO PROCEEDINGS U/S 133 (6). 3.3. THE A.O., HOWEVER, DID NOT ACCEPT THE SUBMISS IONS AS GIVEN BY THE ASSESSEE AND PROCEEDED TO HOLD THAT THE TRANSACTIONS AS RECORDED IN THE BOOKS OF ACCOUNTS OF THOSE PARTIES WERE TO BE ACCEPTED AND, HENCE, THE A.O. BROUGHT OU T THE DIFFERENCE IN THE ACCOUNTS AND 7 ASSESSED THE SAME AS INCOME OF THE ASSESSEE.. 4. BEFORE THE COMMISSIONER OF INCOME TAX (APPEAL), THE ASSESSEE HAD EXPLAINED THE MATTER RELATING TO THOSE TWO PARTIES AND HAD POINTE D OUT THAT THE DIFFERENCES IN THE AMOUNT OF TRANSACTIONS WAS NOT RELATED TO ANY INCORRECT RECOR DING BY THE APPELLANT AND THAT IT WAS TOTALLY WRONG TO JUST PROCEED TO MAKE THE ADDITION OF THE D IFFERENCES IN THE HANDS OF THE APPELLANT SIMPLY PROCEEDING ON THE BASIS THAT THE FIGURES SUP PLIED BY THESE PARTIES TO THE ASSESSING OFFICER WERE CORRECT. DETAILS WERE SUBMITTED BEFORE THE LD. CIT(A). 5. ON APPEAL, THE LEARNED COMMISSIONER OF INCOME-TA X (APPEALS) AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE HAS CONFIRMED THE ACTIO N OF THE ASSESSING OFFICER. 6. AGGRIEVED BY THIS, NOW THE ASSESSEE IS IN APPEAL BEFORE US. 7. AT THE TIME OF HEARING BEFORE US THE LD. COUNSEL APPEARING ON BEHALF OF THE ASSESSEE SUBMITTED A PAPER BOOK THAT BEFORE THE HONBLE BEN CH, THE ASSESSEE, AT PAGE 46, HAS GIVEN FULL AND COMPLETE SYNOPSIS OF THE TRANSACTIONS THAT THE APPELLANT HAD WITH KRISHI RASAYAN (FIRM) AND KRISH RASAYAN FIRM PVT. LTD. THE APPELLANT HAS ALSO EXPLAINED THE MATTER BY WAY OF RECONCILIATION. UNFORTUNATELY, THE RELEVANT MATTER HAS NOT BEEN PROPERLY TAKEN NOTE OF BY THE A.O./CIT (A) OR EXPLAINED BY THE APPELLANT THOUGH A S THE DETAILS SUBMITTED WOULD SHOW DIFFERENCES IN TRANSACTIONS ARE EXPLAINABLE AND PRO CEED ACCORDINGLY. IT IS ALSO SUBMITTED THAT THOUGH THE A.O. ON 14.12.2007, WHICH WAS THE LAST D ATE OF HEARING, HAS OBSERVED THAT SRI. D. ITA NO.1054/KOL/2010-A-CDR 5 BANDOPADHYAY, FCA, A/R OF THE ASSESSEE CONFESSED TH AT THE ASSESSEE HAD NO EXPLANATION TO OFFER BUT IT IS IN THE CONTEXT OF THE FACT THAT THE A.O. CONCLUDED THE HEARING ON 14.12.2007 ITSELF AND NO FURTHER TIME WAS ALLOWED. AT THE APPELLATE S TAGE, THE APPELLANT HAD EXPLAINED THE MATTER AND THE LD. CIT (A) TOOK NOTE OF THE MATTER, THOUGH SUMMARILY AND REJECTED THE SAME AND CONFIRMED THE ADDITIONS MADE BY THE A.O. DURING THE YEAR UNDER APPEAL, THE APPELLANT HAD NO TRANSACTION WITH KRISHI RASAYAN PVT. LTD. AS WILL B E APPARENT FROM CONFIRMATION OF THE SAID PARTY SHOWING SAME OPENING CLOSING BALANCE AT RS.8, 48,009/-. SINCE THE BALANCE PAYABLE TO KRISHI ASAYAN WAS SHOWN AT RS.26,16,782/- BY THE AP PELLANT, THE A.O. WORKED OUT DIFFERENCE OF RS.17,68,773/- AND HAS ADDED THE SAME AS INCOME OF THE APPELLANT. FURTHER, WITH REFERENCE TO TRANSACTIONS THAT THE APPELLANT HAD WITH KRISHI RAS AYAN, THE A.O. FOUND THAT AS AGAINST SALES OF RS.71,91,333/- SHOWN BY THE APPELLANT TO THE SAID P ARTY, THE SAID PARTY SHOWED PURCHASE OF RS.1,09,26,615/- FROM THE APPELLANT. THE A.O. ACCOR DINGLY WORKED OUT DIFFERENCE OF RS.37,35,302/- AND ADDED THE SAME AS INCOME. THE A. O. ALSO ADDED RS.5,50,210/- WORKED OUT BY HIM AS ESTIMATED INCOME ON SALE OF RS.37,35,302/ -..THUS, THE ADDITION OF S.17,68,773/-, RS.37,35,302/- & RS.5,50,210/- TOTALING TO RS.60,54 ,285/- RELATE TO APPELLANTS CUSTOMER KRISHI RASAYAN AND ITS SISTER CONCERN KRISHI RASAYAN PVT.L TD.. THE LD. ARS SUBMISSIONS ARE THAT RECONCILIATION OF SALES NOTED AT RS.71,91,334/- BY THE ASSESSEE AT RS.1,09,26,635/- BY THE PARTIES IS MADE OUT AND IS AVAILABLE PAGE 48 OF PAPER BOOK. DETAILS OF RS.71,91,333/- ARE AT PAGE 49 OF PAPER BOOK. PURCHASES STATED BY KRISHI RASAYAN ARE DETAILED AVAILABLE AT PAGE 50 & 51.THEY ARE OBVIOUSLY RECONCILED AT PAGE 48 OF PB. THUS, H E REQUESTED THE BENCH THAT THE MATTER MAY BE SET ASIDE TO THE FILE OF THE AO AND FURTHER BE GIVEN AN UNDERTAKING TO ATTEND BEFORE THE AO AS AND WHEN REQUIRED TO COMPLY WITH THE NECESSARY R EQUISITIONS THAT MAY BE MADE FOR NECESSARY VERIFICATIONS. 8. ON THE OTHER HAND, THE LD.DR APPEARING ON BEHALF OF THE DEPARTMENT HAS NOT OBJECTED TO THIS SUBMISSION OF THE LD. COUNSEL FOR THE ASSESSEE FOR SETTING ASIDE THE MATTER TO THE FILE OF THE AO. 9. AFTER HEARING THE RIVAL SUBMISSIONS, ON CAREFU L PERUSAL OF THE MATERIAL AVAILABLE ON RECORD AND KEEPING IN VIEW OF THE FACT THAT NOW THE ASSESSEE IS IN POSITION TO RECONCILE THE ITA NO.1054/KOL/2010-A-CDR 6 DISCREPANCIES POINTED OUT BY THE REVENUE AND IN SUP PORT OF THIS THE LD. COUNSEL FOR THE ASSESSEE HAS FILED SUFFICIENT MATERIAL IN THE PAPER BOOK. THUS, IN THE INTEREST OF JUSTICE, WE RESTORE THE MATTER TO THE FILE OF THE AO TO REDECID E THE ISSUE AFRESH DENEVO AS PER LAW AFTER GIVING ADEQUATE OPPORTUNITY OF BEING HEARD TO THE A SSESSEE. 10. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS AL LOWED FOR STATISTICAL PURPOSE. 5 6 , %75 8$/ -9% ' : ; 9 ' < 1 '4 #1' 6 1% > ? THIS ORDER IS PRONOUNCED IN OPEN COURT ON DT. 27 -10-2011 SD/- SD/- ( , ) (SHRI MAHAVIR SINGH) JUDICIAL MEMBER) ( . !. , '# ) ( C.D. RAO ), ACCOUNTANT MEMBER ) ( (( (!# !# !# !#) )) ) DATE: 27-10-2011 '4 / -@ A'@'B / COPY OF THE ORDER FORWARDED TO: 1. . *+ / THE APPELLANT : DYNAMIC HERBIKEM (I) PVT. LTD, 1 5 JAGAT ROY CHOWDHURY ROAD, KOL-8. 2 -.*+ / THE RESPONDENT- I.T.O W 12(3), KOLKATA 3. 4% / THE CIT, 4. 4% ( )/ THE CIT(A), 5 . C> -% / DR, KOLKATA BENCH 6 . GUARD FILE . .@ -/ TRUE COPY, '4%1/ BY ORDER, 9 /ASSTT REGISTRAR . *PRADIP* 5D %89 E