DCIT, Cir.-3, Malegaon V. Shri Rameshwar Lalchand Attal, Nashik

ITA 1099/PUN/2009

• Counselvise Citation: [2011] 140 COUNSELVISE.COM (IT) 49739 (ITAT-PUNE)
• Duration Of Justice: 1 year(s) 7 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 09-05-2011
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 10-03-2011
• Assessment Year: 2003-2004
• Appeal Filed On: 16-09-2009
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: HARESHWAR SHARMA
• Keywords: Search and seizure
• Section: 153A

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH A , PUNE BEFORE SHRI I.C. SU DHIR JUDICIAL MEMBE R AND SHRI G.S. PANNU ACCOUNTANT MEMBER ITA NO. 1099 /PN/200 9 ( ASSTT. YEAR : 2003 - 04 ) DY. COMMISSIONER OF INCOME - TAX, APPELLANT CIRCL E - 3, MALEGAON VS. SHRI. RAMESHWAR LALCHAND ATTAL, RESPONDENT 4077, MAIN ROAD, YEOLA, DIST - NASIK PAN ADAPA9850H APPELLANT BY : SHRI HARESHWAR SHARMA RESPONDENT BY : SHRI SUNIL GANOO ORDER PER I.C. SUDHIR JM THE REVENUE HAS QUESTIONNED FIRST APPELLATE ORDER ON FOLLOWING GROUNDS : 1. THE CIT(A) ERRED IN DELETING THE ADDITION MADE BY THE AO ON ACCOUNT OF UNRECORDED SALES. 2. THE CIT(A) ERRED IN APPRECIATING THAT THE ACCOUNTANT OF THE ASSESSEE HAD ADMITTED U/S.132(4) THAT SALES OF RS.45,95,819/ - FOUND DURING THE SEARCH AS PER ANNEXURE - 10 WERE UNRECORDED AND ASSESSEE HAS CONFIRMED THE ACCOUNTANTS CLAIM U/S. 132(4). 3. THE CIT(A) ERRED IN NOT APPRECIATING THE FACT THAT AFTER THE EXPIRY OF FIVE MONTHS OF THE F Y 2002 - 03 RELEVANT TO AY 2003 - 04, HOW THE SALES [OUT OF TOTAL UNRECORDED SALES OF RS.45,96,819/ - AFTER DEDUCTING THE SALES OF ALLEGED AGRICULTURISTS FRIENDS OF RS.28,73,918/ - ] PERTAINING TO THE ASSESSEE OF RS. 17,22,901/ - ONCE CONFIRMED AS UNRECORDED BY TH E ASSESSEE AND HIS ACCOUNTANT CAN BE FOUND TO BE RECORDED. SHRI RAMESHWAR LALCHAND ATTAL A.Y. 2003 - 04 2 4. THE CIT(A) HAS ERRED IN ACCEPTING SELF SERVING AFFIDAVITS OF ALLEGED AGRICULTURISTS FRIENDS WITHOUT REQUIRING THE ASSESSEE TO ESTABLISH THE NEXUS BETWEEN THE SALES AS MENTIONED IN THE AFFIDAVIT S AND UNRECORDED SALES. 5. THE CIT(A) HAS ERRED IN EXTRAPOLATING THE CLAIM OF ALLEGED AGRICULTURIST FRIENDS TO THE ENTIRE UNRECORDED SALES OF RS.45,96,918/ - . 2. WE HAVE HEARD AND CONSIDERED THE ARGUMENTS ADVANCED BY THE PARTIES IN VIEW OF ORDERS OF THE AUTHORITIES BELOW AND MATERIAL AVAILABLE ON RECORD. 3. THE MAIN CONTENTION OF THE LD. D.R. IN SUPPORT OF THE GROUNDS REMAINED THAT THE LD CIT(A) HAS DELETED THE ADDITION MADE BY THE A.O ON ACCOUNT OF UNRECORDED SALES ACCEPTING THE REMAND REPORT OF THE A .O BUT WITHOUT APPRECIATING THAT NO NEXUS IS ESTABLISHED BETWEEN TRANSACTIONS CONFIRMED BY THE PARTIES AND UNRECORDED SALES. 4. THE LD. A.R., ON THE OTHER HAND, SUBMITTED THAT THE LD CIT(A) HAS DELETED THE ADDITION ON THE BASIS OF VERIFICATION MADE BY THE A.O IN ITS REMAND REPORT FURNISHED DURING THE COURSE OF FIRST APPELLATE PROCEEDINGS. IN ITS REMAND REPORT, THE A.O HAS ALREADY DISCUSSED ABOUT THE NEXUS BETWEEN THE CONFIRMATIONS OF THE PARTIES AND ALLEGED UNRECORDED SALES TOTALLING TO RS. 42,32,449 / - . ON THE SAID TRANSACTIONS, THE ASSESSEE IN RESPONSE TO NOTICE U/S. 153A HAD DECLARED THE COMMISSION EARNED ON THE SALE PROCEEDS PERTAINING TO HIS FRIENDS. THE LD. A.R. TRIED TO JUSTIFY THE FIRST APPELLATE ORDER ON THE ISSUE. SHRI RAMESHWAR LALCHAND ATTAL A.Y. 2003 - 04 3 5. CONSIDERING THE ABOVE SUBMISSIONS, WE FIND THAT IT IS AN UNDISPUTED FACT BEFORE US THAT THE LD CIT(A) HAS DELETED THE ADDITION OF RS. 39,70,819/ - MADE BY THE A.O TOWARDS UNDISCLOSED SALES ON THE BASIS OF REMAND REPORT FILED BY THE A.O DURING THE COURSE OF APPELLATE PROCEEDINGS AS THE ASSESSEE WAS ABLE TO SUBMIT DETAILS OF UNRECORDED SALE BILLS DURING THE COURSE OF FIRST APPELLATE PROCEEDINGS. FOR A READY REFERENCE, RELEVANT EXTRACT OF THE REMAND REPORT REFERRED BY THE LD CIT(A) IN PARA NO. 5 OF THE FIRST APPELLATE ORDER IS B EING REPRODUCED HEREUNDER : AFTER VERIFICATION OF THE CASE AS WELL AS CONSIDERING THE EXPLANATION/SUBMISSION OF THE ASSESSEE FILED DURING APPELLATE PROCEEDINGS AND DURING THE COURSE OF VERIFICATION BY THIS OFFICE MY COMMENTS ARE AS UNDER: ON THE BASIS OF MATERIALS AVAILABLE BEFORE THE A.O., HE HAD RIGHTLY CONCLUDED THAT AGRICULTURISTS HAD DIRECT TRADE RELATION WITH THE DEALERS, AS THE ASSESSEE COULD NOT EXPLAIN THE REASON FOR ISSUANCE OF DEMAND DRAFT DIRECTLY IN THE NAME OF AGRICULTURISTS. EVEN THOUGH SALES WERE EFFECTED ON COMMISSION BASIS, THE SALES CONSIDERATION SHOULD HAVE BEEN ROUTED THROUGH ASSESSEE TO THE AGRICULTGURISTS. IN THIS REGARD, ASSESSEE HAS EXPLAINED THAT MODUS OPERANDI OF HIS BUSINESS IS TO PURCHASE THE ONIONS AND SELL IT BY DISPATC HING ON CONSIGNMENT TO UPCOUNTRY DEALERS. THE DEALERS TAKE THE DELIVERY OF GOODS AND SELL THEM ON BEHALF OF THE ASSESSEE. AFTER GOODS ARE SOLD THEY DEDUCT THE EXPENSES INCURRED ON BEHALF OF ASSESSEE AND THEIR COMMISSION ON SALE PROCEEDS AND SETTLE THE AC COUNTS ON WAGON BASIS AND REMIT THE BALANCE SALE PROCEEDS BY DEMAND DRAFT. SINCE THE ACCOUNTS ARE SETTLED ON WAGON BASIS, THEY PREPARE THE INVOICE ON WAGON BASIS ONLY. HOWEVER, DEMAND DRAFTS ARE ISSUED IN THE NAME OF ACTUAL OWNERS OF GOODS SENT ON CONSIGN MENT. THE ASSESSEE HAS FURTHER STATED THAT AS HE IS A REGULAR TRADER OF ONION, HE HAS CONTACT WITH VARIOUS DEALERS. FURTHER FOR THE PURPOSE OF CONSIGNMENT OF ONION, HE HAS TO HIRE FULL WAGON FROM RAILWAY. THEREFORE AS PER AVAILABILITY OF SPACE IN WAGON HE ACCOMMODATES HIS FRIENDS ONIONS ON SHARING BASIS AND SELL THEM DIRECTLY TO THE DEALERS AND FOR SUCH SERVICE HE CHARGES COMMISSION FROM THEM. HE ALSO CLAIMS THAT HIS ORIGINAL BUSINESS IS TO PURCHASE ONION DIRECTLY FROM THE AGRICULTURISTS AND SEND THEM TO THE DEALER FOR SALE ON CONSIGNMENT BASIS. HOWEVER, HE DISPATCHED AND SOLD HIS FRIENDS ONION ONLY WITH THE INTENTION TO HELP THEM TO EARN EXTRA PROFIT. SHRI RAMESHWAR LALCHAND ATTAL A.Y. 2003 - 04 4 THEREFORE, HE DID NOT RECORD THE TRANSACTIONS TOTALING TO RS.42,32,449/ - IN HIS BOOKS OF ACCOUNTS, A S IT DID NOT BELONG TO HIM. HOWEVER, IN THE RETURN FILED IN RESPONSE TO NOTICE U/S. 153A, HE DECLARED THE COMMISSION/G.P. ON SALE PROCEEDS PERTAINING TO HIS FRIENDS. HE HAS ALSO CLARIFIED THAT AS THE CONSIGNMENT IS SETTLED ON WAGAON BASIS, DEALERS HAV E TO ISSUE INVOICES ON WAGON BASIS ONLY, HOWEVER, THEY SEND THE DEMAND DRAFT IN THE NAME OF ACTUAL OWNER OF THE GOODS. ACCORDINGLY, IN RESPECT OF GOODS PERTAINING TO HIS FRIENDS, DEALERS ISSUED THE DEMAND DRAFTS IN THEIR NAMES. TO JUSTIFYTHE AFORESAID MO DUS OPERANDI OF HIS BUSINESS PRACTICE, ASSESSEE HAS FILED FRESH CONFIRMATION LETTERS FROM THE FOLLOWING PARTIES, SHOWING NATURE OF TRANSACTION AND DETAILS OF CHEQUES ISSUED IN THE NAME OF THE AGRICULTURISTS. (1) VIKASH AALOO BHANDAR, HAJIPUR (VAISHALI) BIHAR (2) DARBARI PRASAD POTATO, ONION COMMISSION AGENT, HAJIPUR (VAISHALI)BIHAR (3) KHUSHAL & BIMAL COMMISSION AGENTS & ADHATI POTATO, ONION, MUJIHAAPHARPUR. (4) JAY MATA DI TRADING COMPANY, DARBHANGA (BIHAR) (5) MAA KALEE BHANDAR, SAMASTIPUR, BIHAR. A COPY OF AFORESAID C ONFIRMATIONS FILED BY THE ASSESSEE ARE ENCLOSED FOR YOUR CONSIDERATION. DURING THE COURSE OF ASSESSMENT PROCEEDINGS A.O HAD VERIFIED THE TRANSACTION FROM THE AGRICULTURISTS BUT THE SAME COULD NOT BE VERIFIED FROM THE DEALERS. NOW THE ASSESSEE HAS FILED T HE CONFIRMATION LETTERS FROM THE DEALERS. FURTHER THE INVOICES ARE SEIZED DURING THE COURSE OF SEARCH AND SEIZURE ACTION, WHEREIN DETAILS OF DEMAND DRAFTS ARE MENTIONED. THE ASSESSEE HAS POINTED OUT THAT FOLLOWING ENTRIES CAN BE NOTICED FROM SEIZED MATER IALS WHICH SUPPORT THE CONTENTION OF ASSESSEE THAT UNRECORDED TRANSACTIONS BELONGED TO AGRICULTURISTS. (I) IN THE BACKSIDE OF PAGE NO.27 OF ANNEXURE 10 AGAINST THE DD NO., AMOUNT AND NAME OF AGRICULTURISTS ARE MENTIONED. (II) ON PAGE NO. 8 AND 12 OF AN NEXURE 11 AGAINST THE DD NO., NAME OF THE AGRICULTURISTS ARE MENTIONED. (III) AT PAGE NO. 31 OF ANNEXURE 10, THERE IS INVOICES IN THE NAME OF LAA WHEREIN THE WORD KALE GROUP KA MAAL HAI ARE RECORDED, WHICH SHRI RAMESHWAR LALCHAND ATTAL A.Y. 2003 - 04 5 INDICATES THAT GOODS MENTIONED IS SUCH INVOICE S IN THE NAME OF LAA ACTUALLY BELONGS TO KALE GROUP. (IV) PAGE NO. 19 OF ANNEXURE 13, IN KACHHA BILL THERE ARE VARIOUS BILLS AMOUNTS RECORDED IN THE NAME OF MAHENDRA KALE. IT IS A FACT THAT AFORESAID MATERIALS ARE SEIZED FROM THE PROCESSION OF THE ASSES SEE, AND THEY BEAR THE EVIDENCE. IF THE ENTRIES IN SEIZED MATERIALS ARE CONSIDERED IN ITS ENTIRETY, THE CLAIM OF THE ASSESSEE REGARDING BALANCE SALE PROCEEDS PERTAINING TO AGRICULTURISTS IS VERIFIABLE. ON THE BASIS OF ABOVE REMAND REPORT, WE ARE O F THE VIEW THAT THE LD CIT(A) WAS JUSTIFIED IN DELETING THE ADDITION OF RS. 39,70,819/ - MADE BY THE A.O ON ACCOUNT OF UNDISCLOSED SALES. THE SAME IS UPHELD. THE GROUNDS ARE ACCORDINGLY REJECTED. 6. IN RESULT, APPEAL IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 9 TH MAY , 2011 SD/ - SD/ - ( G.S.PANNU ) ACCOUNTANT MEMBER (I.C. SUDHIR) JUDICIAL MEMBER PUNE: DATED: 9 TH MAY , 2011 US COPY OF THE ORDER IS FORWARDED TO : 1. THE APP ELLA NT 2. THE RESPONDENT 3. THE CIT (A) - I , NASHIK 4. THE CIT - ( CENTRAL ), NAGPUR 5. THE D.R. ITAT, A BENCH, PUNE 6. GUARD FILE BY ORDER SHRI RAMESHWAR LALCHAND ATTAL A.Y. 2003 - 04 6 ASSISTANT REGISTRAR INCOME TAX APPELLATE TRIBUNAL PUNE