ITO, CHENNAI V. Smt. S.Chandra, CHENNAI

ITA 1135/CHNY/2012

• Counselvise Citation: [2012] 140 COUNSELVISE.COM (IT) 64630 (ITAT-CHENNAI)
• Duration Of Justice: 6 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 06-12-2012
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 06-12-2012
• Assessment Year: 2007-2008
• Appeal Filed On: 22-05-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: K BALASUBRAMA NIAM ITA NO MDS
• Section: 133A

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH CHENNAI BEFORE DR. O. K. NARAYANAN, VICE PRESIDENT AND SHRI V. DURGA RAO, JUDICIAL MEMBER ------- ITA NO.1135/MDS/2012 ASSESSMENT YEAR : 2007-08 THE INCOME TAX OFFICER, BUSINESS WARD-III(2), CHENNAI. V. SMT. S. CHANDRA, P/O M/S. BOTTLE POINT, 12, 2 ND STREET, DHANALAKSHMI NAGAR, SHAIK MANIAM, PORUR, CHENNAI-600 116. (PAN : ARDPC1425L) (APPELLANT) (RESPONDENT) A N D C.O. NO. 107/MDS/2012 (IN ITA NO. 1135/MDS/2012) ASSESSMENT YEAR/ 2007-08 SMT. S. CHANDRA, V. THE I NCOME TAX OFFICER, P/O M/S. BOTTLE POINT, BUSIN ESS WARD-III(2), 12, 2 ND STREET, CHENNAI. DHANALAKSHMI NAGAR, SHAIK MANIAM, PORUR, CHENNAI-600 116. (CROSS OBJECTOR) (RESPONDENT) DEPARTMENT BY : SHRI SHAJI P. JACOB, ADDL.CIT ASSESSEE BY : SHRI K. BALASUBRAMA NIAM,ADVOCATE ITA NO.1135 /MDS /2012 & CO 107/MDS/2012 : 2 : DATE OF HEARING : 06.1 2.2012 DATE OF PRONOUNCEMENT : 06.12.201 2 O R D E R PER V. DURGA RAO, JUDICIAL MEMBER : THIS APPEAL BY THE REVENUE AND THE CROSS OBJECTIO N BY THE ASSESSEE ARE DIRECTED AGAINST THE ORDER OF THE CIT(APPEALS)-VIII, CHENNAI DATED 22-02-2012 FOR THE ASSESSMENT YEAR 2007-08. THERE IS A DELAY OF TWO DAYS IN FILING THE APPEAL. THE ASSESSING OFFICER HAS FILED A PETITION DATED 04-07-2012 EXPLAINING THAT THE DELAY HAD OCCU RRED DUE TO INADVERTENT MISTAKE. AFTER CONSIDERING THE PETI TION, WE FIND THAT THE DELAY IS NOT INTENTIONAL OR WANTON. ACCO RDINGLY, WE CONDONE THE DELAY OF TWO DAYS IN FILING THE APPEAL AND ADMIT THE SAME FOR PROSECUTION. 2. BRIEF FACTS ARE THAT THE ASSESSEE IS ENGAGED IN T HE BUSINESS OF PURCHASE AND SUPPLY OF BOTTLES WHICH AR E SUPPLIED TO LEADING IMFL MANUFACTURERS. FOR THE ASSESSMENT YEAR UNDER CONSIDERATION, THE ASSESSEE FILED RETURN OF I NCOME ADMITTING TOTAL INCOME OF ` 4,15,385/-. A SURVEY ACTION WAS UNDERTAKEN U/S 133A OF THE INCOME TAX ACT, 1961 IN THE BUSINESS PREMISES AND WASHING PLANTS LOCATED AT POR UR, ITA NO.1135 /MDS /2012 & CO 107/MDS/2012 : 3 : IYYAPPANTHANGAL AND MOONDRAM KATTALAI ON 26-102006. DURING THE SURVEY OPERATION IT WAS OBSERVED THAT TH E PURCHASE OF BOTTLES IS THROUGH SELF-MADE BOUGHT NOTES FOR TH E PURCHASE FROM STREET HAWKERS. ACCORDINGLY, THE ASSESSMENT W AS RE- OPENED AND THE ASSESSING OFFICER ON ESTIMATION MADE AN ADDITION WITH REGARD TO THE BOTTLE PURCHASED FROM T HE ESTABLISHED SUPPLIERS AND PURCHASED THROUGH SELF BO UGHT NOTES FROM THE STREET HAWKERS. 3. ON BEING AGGRIEVED, THE ASSESSEE CARRIED THE MAT TER BEFORE THE CIT(APPEALS). IT WAS SUBMITTED BEFORE T HE LEARNED CIT(APPEALS) THAT THE AVERAGE GROSS PROFIT RATE MAY BE ADOPTED AT 9.44% TO COVER UP THE DISCREPANCIES IF A NY. THE LEARNED CIT(APPEALS) AFTER CONSIDERING THE SUBMISSI ONS OF THE ASSESSEE ENHANCED THE GROSS PROFIT FURTHER BY 0.5% ON THE SALES TURNOVER FOR THE TWO ASSESSMENT YEARS 2006-07 AND 2007-08. 4. ON BEING AGGRIEVED, THE REVENUE HAS FILED THE AP PEAL BEFORE THE TRIBUNAL AND THE ASSESSEE HAS FILED THE CROSS OBJECTION. AT THE TIME OF HEARING THE LEARNED COUN SEL FOR THE ASSESSEE SUBMITTED THAT THE TRIBUNAL HAS ALREADY CO NSIDERED THE ISSUE FOR THE ASSESSMENT YEAR 2006-07 IN I.T.A. NO. ITA NO.1135 /MDS /2012 & CO 107/MDS/2012 : 4 : 1097/MDS/2012 & C.O. NO. 106/MDS/2012 AND VIDE ORDE R DATED 30-10-2012 THE TRIBUNAL DISMISSED THE REVENUE S APPEAL AND ALLOWED THE CROSS OBJECTION FILED BY THE ASSESS EE. IT WAS THEREFORE SUBMITTED THAT THE ISSUES ARE COVERED FOR THE ASSESSMENT YEAR UNDER CONSIDERATION. 5. ON THE OTHER HAND, THE LEARNED DR DID NOT CONTRO VERT THE SUBMISSIONS MADE BY THE LEARNED COUNSEL FOR THE ASS ESSEE. 6. WE HAVE HEARD BOTH THE SIDES, PERUSED THE RECORD S AND GONE THROUGH THE ORDERS OF THE AUTHORITIES BELOW. WE FIND THAT THE VERY SAME ISSUE WAS DECIDED BY THE TRIBUNA L VIDE ORDER DATED 30-10-2012 FOR THE EARLIER ASSESSMENT Y EAR 2006- 07 IN ITA NO. 1097/MDS/2012 & CO NO. 106/MDS/2012 A ND THE ISSUE IS SQUARELY COVERED BY THE DECISION OF THE TR IBUNAL. THE RELEVANT PORTION IN THE ORDER OF THE TRIBUNAL IS EX TRACTED AS UNDER : 8. WE HAVE GIVEN OUR THOUGHTFUL CONSIDERATION TO T HE ISSUE INVOLVED AND HAVE ALSO PERUSED RELEVANT FINDINGS AS WELL AS CASE LAW CITED (SUPRA). AS STATED HEREINABOVE, THE ONLY GROUND OF ADDITION MADE BY THE ASSESSING OFFICER IS THAT T HE ASSESSEE HAD QUOTED DIFFERENT RATES PAID TO NON-DESCRIPTIVE TRADERS AND ESTABLISHED SUPPLIERS QUA BOTTLES PURCHASED FROM TH EM. THE ASSESSING OFFICER COMPUTED THE ADDITION ON THE BASI S OF DIFFERENCE OF RATES IN QUESTION AND THE MATERIAL DI SCLOSED DURING ASSESSMENT PROCEEDINGS. IN APPEAL, THE CIT(A ) HAS NOT FOUND THE ASSESSING OFFICERS ADDITION APPROPRIATE. THEREFORE, HE TOOK INTO CONSIDERATION THE GROSS PROFIT RATIO I N THE IMPUGNED ASSESSMENT YEAR AS WELL AS ASSESSMENT YEAR 2007-08 AND PARTLY UPHELD THE ADDITION. IT IS NOT IN DISPUT E THAT IN THE ITA NO.1135 /MDS /2012 & CO 107/MDS/2012 : 5 : CASE OF ASSESSEES HUSBAND STATED ABOVE (SUPRA), TH E SAME VERY ISSUE WAS INVOLVED AND THE COORDINATE BENCH WHILST DISMISSING THE APPEALS OF THE REVENUE AND ALLOWING ASSESSEES COS HAS HELD AS FOLLOWS: 9. WE HAVE PERUSED THE ORDERS AND HEARD THE CONTENTIONS. MAIN GROUND OF THE ASSESSEE AS WELL AS REVENUE IS ON THE ADDITION MADE FOR ALLEGED INFLATI ON IN COST OF PURCHASE OF OLD BOTTLES. ASSESSING OFFICER HAD APPLIED THE AVERAGE COST OF PURCHASE FROM ESTABLISH ED SUPPLIERS, ON THE PURCHASES EFFECTED FROM STREET HAWKERS, DISCARDING THE COST SHOWN BY THE ASSESSEE FOR SUCH PURCHASES MADE. AS AGAINST THIS, THE CIT(APPEA LS) WORKED OUT THE GP FOR BOTH THE YEARS UNDER APPEAL, AVERAGED SUCH GP AND APPLIED SUCH GP FOR JUDGING WHETHER THE DISALLOWANCES WERE WARRANTED AND IF WARRANTED TO WHAT EXTENT. THIS APPROACH OF LD. CIT(APPEALS), OF-COURSE, RESULTED IN THE ADDITION F OR THE YEAR IN WHICH GP WAS HIGHER BEING DELETED VIZ., ASST. YEAR 2006-07 AND SCALING DOWN OF THE ADDITIO N FOR A.Y. 2007-08. WHAT WE FIND IS THAT BOOKS OF ACCOUNTS OF THE ASSESSEE WERE NEVER REJECTED. ADMITTEDLY, ASSESSEE WAS MAINTAINING ATLEAST SELF-M ADE VOUCHERS FOR PURCHASES EFFECTED FROM STREET HAWKERS . IN THE TRADE OF OLD BOTTLES, TO EXPECT THAT STREET HAWKERS WILL PROVIDE PRINTED BILLS FOR PURCHASES WILL BE UNREASONABLE. COMPARING THE COST OF PURCHASE FROM STREET HAWKERS WITH COST OF PURCHASE FROM ESTABLISH ED SUPPLIERS, IN OUR OPINION, WAS NOT BASED ON ANY RATIONALE AT ALL. ASSESSEE WAS SHOWING GP RATES WHI CH WERE COMPARABLE WITH OTHER ASSESSEES SIMILARLY PLAC ED. WITHOUT FINDING ANY DEFECT IN THE BOOKS OF ACCOUNTS , IN OUR OPINION, ADDITION FOR INFLATION ON PURCHASE OUG HT NOT HAVE BEEN MADE, JUST FOR A REASON THAT SELF MAD E VOUCHERS ALONE WERE AVAILABLE FOR PURCHASES FROM STREET HAWKERS. IN THE NATURE OF THE TRADE OF THE ASSESSEE IF SELF-VOUCHERS WERE ONLY MAINTAINED FOR PURCHASE OF BOTTLES FROM STREET HAWKERS, IN OUR OPI NION, ASSESSEE COULD NOT BE FAULTED. NO ASSESSEE CAN BE EXPECTED TO DO AN IMPOSSIBLE THING. AS FOR THE ADD ITION MADE IN A.Y. 2006-07 FOR ALLEGED STOCK DISCREPANCY IT MAY BE TRUE THAT THE ASSESSEE HAD NOT MAINTAINED AN Y STOCK REGISTER. NEVERTHELESS THE QUANTITY OF PURCH ASES MADE BY THE ASSESSEE WAS AVAILABLE SINCE ASSESSING OFFICER HAD HIMSELF ARRIVED AT THE COST OF PURCHASE BASED ON SUCH QUANTITIES. HOWEVER, RECONCILIATION OF STOCK OF BOTTLES BETWEEN THE OPENING STOCK AS ON ITA NO.1135 /MDS /2012 & CO 107/MDS/2012 : 6 : 1.4.2006 AND AS ON THE DATE OF SURVEY ON 26.1.2006 , WAS DONE IN A REVERSE MANNER BY APPLYING AN ESTIMAT ED GP RATE ON THE SALES DURING THE INTERVENING PERIOD TO ARRIVE AT THE COST OF SALES. THIS DEFINITELY WILL NOT GIVE ANY SCIENTIFIC RESULT. VARIATION WORKED OUT BASED ON SUCH METHOD WAS ONLY OF A SUM OF ` 1,27,796/-, FOR WHICH ADDITION HAS BEEN DONE. THIS VARIATION WILL GO INTO THIN AIR EVEN WITH A SLIGHT CHANGE IN THE GP R ATE. GP RATE FOR BOTH THE YEARS SHOWN BY THE ASSESSEE WA S MUCH LOWER THAN 14.53% ADOPTED BY THE A.O FOR THE WORK OUT. CONSIDERING NATURE OF BUSINESS OF THE ASSESSEE, WE ARE OF THE OPINION THAT THERE IS NOTHI NG ON RECORD WHICH CALLED FOR AN ADDITION FOR ANY INFLATI ON IN PURCHASES NOR FOR ANY SUPPRESSION OF STOCK OF BOTTL ES. 9. IN THE RESULT APPEALS OF THE REVENUE FOR BOTH YEARS ARE DISMISSED WHEREAS THE CROSS OBJECTIONS OF THE ASSESSEE ARE ALLOWED. AFTER PERUSING THE OBSERVATIONS OF THE COORDINATE B ENCH, THERE IS HARDLY ANY IOTA OF DOUBT THAT THE ISSUE IN HAND STANDS SQUARELY COVERED. THEREFORE, WE ARE ALSO OF THE OPI NION THAT THE ASSESSEES BOOKS OF ACCOUNTS WERE NEVER REJECTE D EITHER BY THE ASSESSING OFFICER OR THE CIT(A). ONCE THAT IS S O, THERE WAS NO OCCASION TO DISBELIEVE THE RATES STATED BY THE A SSESSEE WHILE MAKING THE PAYMENTS TO THE SO-CALLED NON-DESCRIPTIV E TRADERS. THEREFORE, WE ARE OF THE VIEW THAT THE ADDITION IN QUESTION, WHICH HAS BEEN PARTLY UPHELD BY THE CIT(A) IS LIABL E TO BE DELETED IN TOTO. ACCORDINGLY, WE ALLOW ASSESSEES C ROSS OBJECTION AND DISMISS REVENUES APPEAL. 9. TO SUM UP, THE APPEAL OF THE REVENUE IS DISMISS ED AND ASSESSEES CROSS OBJECTION IS ALLOWED. 7. RESPECTFULLY FOLLOWING THE ABOVE DECISION OF THE TRIBUNAL, WE DISMISS THE APPEAL FILED BY THE REVENUE. 8. IN THE CROSS OBJECTION THE ASSESSEE HAS OBJECTED TO THE ENHANCEMENT OF GROSS PROFIT RATE BY 0.5% BY THE LEA RNED CIT(APPEALS). THE TRIBUNAL IN THE ORDER REFERRED T O ABOVE HAS ITA NO.1135 /MDS /2012 & CO 107/MDS/2012 : 7 : DELETED THE SAID ENHANCEMENT OF GROSS PROFIT. IN V IEW OF THE DECISION OF THE CO-ORDINATE BENCH OF THIS TRIBUNAL FOR THE EARLIER ASSESSMENT YEAR 2006-07, THE ASSESSEES CRO SS OBJECTION IS ALLOWED. 8. IN THE RESULT, THE REVENUES APPEAL IS DISMISSED AND THE CROSS OBJECTION FILED BY THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT AT THE T IME OF HEARING ON THURSDAY, THE 06 TH OF DECEMBER, 2012, AT CHENNAI. SD/- SD/- (DR. O. K. NARAYANAN) (V.DURGA RAO) VICE PRESIDENT JUDICIAL MEMBER CHENNAI, DATED THE 06 TH DECEMBER, 2012. H. COPY TO: ASSESSEE/AO/CIT(A)/CIT/D.R./GUARD FILE