I?TO, Firozabad V. M/s Emkay Glass Works P.Ltd., Firozabad

ITA 110/AGR/2009

• Counselvise Citation: [2011] 140 COUNSELVISE.COM (IT) 50342 (ITAT-AGRA)
• Duration Of Justice: 2 year(s) 4 month(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 05-08-2011
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: DB
• Next Hearing Date: 25-07-2011
• Assessment Year: 1999-2000
• Appeal Filed On: 24-03-2009
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: A K SHARMA
• Assessee Lawyers: PRAKASH NARAIN
• Keywords: Rejection of books of accounts; Unexplained investment
• Section: 142(1); 143(1); 147; 145; 148

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AGRA BENCH, AGRA BEFORE SHRI P.K. BANSAL, ACCOUNTANT MEMBER AND SHRI H.S. SIDHU, JUDICIAL MEMBER ITA NO.110/AGR/2009 ASSESSMENT YEAR: 1999-2000 INCOME TAX OFFICER 5(1), VS. M/S EMKAY GLASS WORK S (P) LTD., FIROZABAD. 1, LABOUR COLONY, FIROZABAD (U.P.). (PAN : AABCE 0636 Q). (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI A.K. SHARMA, JR. D.R. RESPONDENT BY : SHRI PRAKASH NARAIN, ADVOCATE ORDER PER H.S. SIDHU, J.M. : THE REVENUE HAS FILED THE PRESENT APPEAL AGAINST TH E ORDER PASSED BY THE LD. CIT(A)-I, AGRA ON THE FOLLOWING GROUNDS OF APPEAL : - (1) THAT THE COMMISSIONER OF INCOME-TAX (APPEALS)- I, AGRA HAS ERRED IN LAW AS WELL AS ON FACTS IN DELETING THE AD DITION OF ` 19,12,534/- MADE BY THE ASSESSING OFFICER ON ACCOUN T OF ENHANCED SALE DUE TO UNDISCLOSED PURCHASE AND CONSUMPTION OF OIL BY INVOKING PROVISIONS OF SECTION 145(3) OF THE I.T. ACT, 1961 IN VERY SUMMARILY MANNER AND WITHOUT CONSIDERING THE COGENT REASONS M ENTIONED IN THE ASSESSMENT ORDER AND MATERIAL FACTS BROUGHT ON RECO RD BY THE ASSESSING OFFICER. (2) THAT THE COMMISSIONER OF INCOME-TAX (APPEALS)-I I, AGRA HAS ERRED IN LAW AND ON FACTS IN DELETING THE ADDITION OF ` 7,22,394/- MADE 2 BY THE ASSESSING OFFICER ON ACCOUNT OF UNEXPLAINED INVESTMENT IN DIRECT EXPENSES WITHOUT PROPERLY CONSIDERING THE FA CTS OF THE CASE. (3) THAT THE ORDER OF THE COMMISSIONER OF INCOME-TA X (APPEALS)-II, AGRA DESERVES TO BE VACATED AND THAT OF THE ASSESSI NG OFFICERS BE RESTORED. (4) THAT THE APPELLANT CRAVES LEAVE TO ADD OR ALTER ANY OR MORE GROUND OR GROUNDS OF APPEAL AS MAY BE DEEMED FIT AT THE TIME OF HEARING OR APPEAL. 2. THE BRIEF FACTS RELATING TO THE ISSUE IN DISPUTE ARE THAT THE ASSESSEE FILED ITS ORIGINAL RETURN OF INCOME ON 30.09.1999 DECLARING I NCOME OF ` 2,83,370/- WHICH WAS PROCESSED UNDER SECTION 143(1) OF THE INCOME TA X ACT, 1961 (THE ACT HEREINAFTER) ON 18.02.2000. SUBSEQUENTLY, IT HAS C OME TO THE NOTICE OF THE ASSESSING OFFICER THAT A DRAFT AMOUNTING TO ` 14,08,025/- HAD BEEN PURCHASED FROM STATE BANK OF BIKANER & JAIPUR, BRANCH-MUZAFFA NAGA R IN FAVOUR OF INDIAN OIL CORPORATION LIMITED, MATHURA ON BEHALF OF M/S. EMKA Y GLASS WORKS WHICH WERE NOT ACCOUNTED FOR IN THE BOOKS OF ACCOUNTS OF THE ASSESSEE M/S. EMKAY GLASS WORKS, FIROZABAD. THE ASSESSING OFFICER TAKEN ACTI ON UNDER SECTION 147 OF THE ACT WITH REGARD TO SUCH INCOME WHICH HAD ESCAPED AS SESSMENT. IN THE COURSE OF ASSESSMENT PROCEEDINGS, THE ASSESSEE STATED THAT M/ S EMKAY GLASS WORKS, FIROZABAD WAS A PARTNERSHIP FIRM TILL 31.03.1998 AN D AFTER THAT A PRIVATE LIMITED COMPANY HAD COME TO EXISTENCE W.E.F. 01.04.1998 AND THE DRAFT IN DISPUTE PERTAINED TO THE PERIOD OF 29.04.1998 TO 20.07.1998 IN THE NAME OF M/S EMKAY GLASS WORKS. IT IS NOT BELONGING TO THE ASSESSEE A S THE BUSINESS HAD BEEN TAKEN 3 OVER BY M/S. EMKAY GLASS WORKS PRIVATE LIMITED W.E. F. 01.04.1998. AFTER RECORDING THE STATEMENT OF SHRI BRIJ MOHAN MAHESHWA RI WHO WAS AN EMPLOYEE OF M/S. EMKAY GLASS WORKS, FIROZABAD, THE ASSESSING OF FICER REFERRED THE MATER TO THE HANDWRITING EXPERT AND THE REPORT OF THE SAME H AS ALSO BEEN CONFRONTED TO THE ASSESSEE. AFTER CONSIDERING THE EVIDENCES PRODUCED BY THE ASSESSEE, THE ASSESSING OFFICER HELD THAT THE ASSESSEE HAS OBTAINED A BANK DAFT THOROUGH HIS EMPLOYEE AND DEPOSITED THE SAME WITH INDIAN OIL CORPORATION LIMI TED, MATHURA. SUCH UNDISCLOSED PURCHASE BY THE ASSESSEE WAS DEEMED TO HAVE BEEN CONSUMED IN PRODUCTION OF GLASS WHICH HAD NOT BEEN RECORDED IN THE BOOKS OF ACCOUNTS AND THE ASSESSING OFFICER REJECTED THE BOOKS OF ACCOUNTS OF THE ASSESSEE BY APPLYING THE PROVISIONS OF SECTION 145(3) OF THE ACT AND COMPUTE D THE INCOME OF THE ASSESSEE ON ACCOUNT OF OIL VALUING ` 22,36,254/- AND UNEXPLAINED INVESTMENT IN DIRECT EXPENSES BEING CONSUMED BY THE ASSESSEE WHICH HE HA S REPRODUCED IN THE ASSESSMENT ORDER AT PAGE NOS.42 TO 44, PARAGRAPH NO . 28 AND AT THE END HE MADE THE ADDITION OF ` 19,12,534/- ON ACCOUNT OF ENHANCED SALE DUE TO UNDI SCLOSED PURCHASE AND CONSUMPTION OF OIL. THE TOTAL UNEXPLA INED INVESTMENT MADE IN THE BUSINESS IS AMOUNTED TO ` 72,23,942/-. CONSIDERING THE FACTS THAT THE CONSUM PTION OF OIL AND OTHER RAW MATERIAL IS A RUNNING PROCESS, THE ASSESSING OFFICER CONSIDERED 10% OF THIS AMOUNT AS ACTUALLY UNEXPLAINED WHICH WO RKS OUT TO ` 7,22,394/- AND CONSIDERED THE SAME AS UNEXPLAINED INVESTMENT IN AD DITION TO THE INCOME OF THE 4 ASSESSEE AND COMPLETED THE ASSESSMENT ON 27.02.2006 UNDER SECTION 147/143(3) OF THE ACT. 3. AGGRIEVED BY THE SAME, THE ASSESSEE FILED APPEAL BEFORE THE LD. CIT(A) WHO, VIDE IMPUGNED ORDER, PARTLY ALLOWED THE APPEAL OF T HE ASSESSEE AND DELETED THE ADDITION OF ` 19,12,534/- AND ` 7,22,394/-. NOW THE REVENUE, BEING AGGRIEVED BY THE IMPUGNED ORDER PASSED BY THE LD. FIRST APPELLAT E AUTHORITY, HAS FILED THE PRESENT APPEAL. 4. AT THE TIME OF HEARING, THE LD. LD. DEPARTMENTAL REPRESENTATIVE RELIED UPON THE ORDER PASSED BY THE ASSESSING OFFICER AND, ON T HE CONTRARY, THE LD. COUNSEL FOR THE ASSESSEE RELIED UPON THE ORDER PASSED BY THE LD . FIRST APPELLATE AUTHORITY. 5. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE R ELEVANT RECORDS AVAILABLE WITH US. IT IS A MATTER OF RECORD THAT THE ASSESSE E HAS FILED ITS RETURN OF INCOME ON 30.09.1999 DECLARING INCOME OF ` 2,83,370/- WHICH WAS PROCESSED UNDER SECTION 143(1) ON 18.02.2000. THEREAFTER, IT CAME TO THE N OTICE THAT DRAFTS AMOUNTING TO ` 14,08,025/- WAS PURCHASED FROM STATE BANK OF BIKANE R & JAIPUR, BRANCH- MUZAFFAR NAGAR IN FAVOUR OF INDIAN OIL CORPORATION LIMITED, MATHURA ON BEHALF OF M/S. EMKAY GLASS WORKS. ACCORDING TO THE ASSESS ING OFFICER, THE AMOUNT OF THE SAID DRAFT THE ASSESSEE HAS NOT SHOWN IN ITS BO OKS OF ACCOUNTS AND ON THE BASIS 5 OF THIS EVIDENCE AND INFORMATION THE ASSESSING OFFI CER HAS TAKEN ACTION UNDER SECTION 147 OF THE ACT AND ISSUED NOTICE UNDER SECT ION 148 OF THE ACT TO THE ASSESSEE ON 16.07.2004 WHICH WAS SERVED UPON THE AS SESSEE ON 20.07.2004. IN COMPLIANCE OF THE SAME, THE ASSESSEE FILED RETURN O F INCOME DECLARING INCOME OF ` 2,83,370/- ON 16.03.2004 AS RETURNED ORIGINALLY. T HE ASSESSING OFFICER ISSUED NOTICES UNDER SECTION 143(2) OF THE ACT ON 20.08.20 04 AND ALSO ISSUED NOTICE UNDER SECTION 142(1) ON 31.08.2004. IN RESPONSE TO THE S AME, THE LD. AUTHORISED REPRESENTATIVE OF THE ASSESSEE APPEARED FROM TIME T O TIME AND DISCUSSED THE MATER WITH THE ASSESSING OFFICER. NO DOUBT THE ASSESSING OFFICER HAS SUPPLIED COPY OF REASONS RECORDED FOR ISSUANCE OF NOTICE UNDER SECTI ON 148 OF THE ACT TO THE ASSESSEE ON ITS REQUEST. THE ACTION OF THE ASSESSING OFFICE R INITITATING THE PROCEEDINGS UNDER SECTION 147 OF THE ACT IN THE CASE OF THE ASS ESSEE HAS BEEN APPROVED BY THE LD. FIRST APPELLATE AUTHORITY IN THE IMPUGNED ORDER . THE ASSESSEE HAS NOT FILED ANY APPEAL OR CROSS OBJECTION AGAINST THE SAME. AFTER THOROUGHLY GOING THROUGH THE ASSESSMENT ORDER AS WELL AS THE IMPUGNED ORDER PASS ED BY THE LD. FIRST APPELLATE AUTHORITY, WE FIND THAT THE ASSESSING OFFICER HAS P ASSED A VERY DETAILED ORDER ON THE ISSUE IN DISPUTE AND JUSTIFIED THE ACTION IN AP PLYING THE PROVISIONS OF SECTION 145(3) OF THE ACT. BUT WE FIND THAT THE LD. FIRST APPELLATE AUTHORITY HAS NOT PASSED A SPEAKING ORDER ON THE ISSUE WHETHER THE PROVISION S OF SECTION 145(3) IS APPLICABLE IN THE CASE OF THE ASSESSEE OR NOT. THE LD. FIRST APPELLATE AUTHORITY SIMPLY DELETED THE ADDITION OF ` 19,12,534/- AND ` 7,22,394/- BY HOLDING THAT THERE IS NO CONCLUSIVE 6 AND IRREFUTABLE EVIDENCE THAT THE RFO/FO PURCHASED THROUGH THE IMPUGNED DRAFTS WERE RECEIVED, SOLD AND UTILISED BY THE ASSESSEE WH ICH RESULTED IN THE INCOME AS ESTIMATED BY THE ASSESSING OFFICER. THE LD. FIRST APPELLATE AUTHORITY DELETED THE ADDITION IN DISPUTE. WE ARE UNABLE TO APPROVE THIS FINDING GIVEN BY THE LD. FIRST APPELLATE AUTHORITY. ACCORDING TO OUR OPINION, THE IMPUGNED ORDER PASSED BY THE LD. FIRST APPELLATE AUTHORITY IS A NON-SPEAKING ONE AND DESERVES TO BE CANCELLED. WE CANCEL THE SAME BY ACCEPTING THE APPEAL FILED BY THE REVENUE FOR STATISTICAL PURPOSES WITH THE DIRECTION TO THE LD. CIT(A)-I, AG RA TO DECIDE THE ISSUE IN DISPUTE AFRESH UNDER LAW AFTER GIVING OPPORTUNITY TO THE AS SESSEE, ESPECIALLY ON THE ISSUE WHETHER THE PROVISIONS OF SECTION 145 OF THE ACT IS APPLICABLE IN THE CASE OF THE ASSESSEE OR NOT. 6. IN THE RESULT, APPEAL FILED BY THE REVENUE IS AL LOWED FOR STATISTICAL PURPOSES. (ORDER PRONOUNCED IN THE OPEN COURT ON 05.08.2 011). SD/- SD/- (P.K. BANSAL) (H.S. SIDHU) ACCOUNTANT MEMBER JUDICIAL MEMBER PLACE: AGRA DATE: 5 TH AUGUST, 2011 PBN/* 7 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 ASSISTANT REGISTRAR INCOME-TAX APPELLATE TRIBUNAL, AGRA TRUE COPY