Sri Varalakshmi Company, Salem V. ACIT, Salem

ITA 1143/CHNY/2015

• Counselvise Citation: 114321714 RSA 2015
• Duration Of Justice: 3 month(s) 28 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 11-09-2015
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: D
• Assessment Year: 2010-2011
• Appeal Filed On: 14-05-2015
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: A B KOLI
• Assessee Lawyers: G BASKAR

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL D BENCH, CHENNAI . . . , . !'# ! , % !& BEFORE SHRI N.R.S. GANESAN, JUDICIAL MEMBER AND SHRI A. MOHAN ALANKAMONY, ACCOUNTANT MEMBER ./ ITA NO.1143/MDS/2015 ( )( / ASSESSMENT YEAR : 2010-11 M/S SRI VARALAKSHMI COMPANY, NO.3, KOMARAPALAYM, MALLUR VIA, SALEM 636 203. PAN : AANFS 2534 E V. THE ASSISTANT COMMISSIONER OF INCOME TAX, NO.3, GANDHI ROAD, SALEM 636 007. (+,/ APPELLANT) (-.+,/ RESPONDENT) +, / 0 / APPELLANT BY : SHRI G. BASKAR, ADVOCATE -.+, / 0 / RESPONDENT BY : SHRI A.B. KOLI, JCIT 1 / 2% / DATE OF HEARING : 10.08.2015 3') / 2% / DATE OF PRONOUNCEMENT : 11 .09.2015 / O R D E R PER N.R.S. GANESAN, JUDICIAL MEMBER: THIS APPEAL OF THE ASSESSEE IS DIRECTED AGAINST THE ORDER OF COMMISSIONER OF INCOME TAX (APPEALS), SALEM, DATED 27.03.2015 AND PERTAINS TO ASSESSMENT YEAR 2010-11. 2 I.T.A. NO.1143/MDS/15 2. SHRI G. BASKAR, THE LD.COUNSEL FOR THE ASSESSEE, SUBMITTED THAT THE ASSESSEE IS A MANUFACTURER AND EXPORTER OF TAPIOCA AND SAGO PRODUCTS. THE ASSESSEE HAS PURCHASED TAPIOCA FROM THE FARMERS AND PAID CASH. ACCORDING TO THE LD. COUNSE L, THE ASSESSEE RETURNED AN INCOME OF ` 1,80,75,780/- ON THE SALES TURNOVER OF ` 63.14 CRORES. THE ASSESSEE PURCHASED SAGO FROM M/S SAGO SERVE TO THE EXTENT OF ` 14,45,57,440/- AND FROM OTHERS TO THE EXTENT OF ` 4,10,41,225/-. ACCORDING TO THE LD. COUNSEL, THE A GRICULTURISTS, WHO CULTIVATED TAPIOCA, DID NOT HAVE ANY PRINTED VO UCHER. IN RESPECT OF THE PAYMENT OF ` 14,45,57,440/- MADE TO M/S SAGO SERVE, THE ASSESSING OFFICER ALLOWED THE CLAIM OF THE ASSE SSEE COMPLETELY. THE ASSESSING OFFICER DOUBTED ONLY ON THE PAYMENT M ADE BY THE ASSESSEE DIRECTLY TO THE FARMERS, IN THE ABSENCE OF ANY PRINTED VOUCHERS MAINTAINED BY THE AGRICULTURISTS. THE ASS ESSEE HAS NO OTHER ALTERNATIVE EXCEPT TO HAVE NOTE FOR PURCHASE AND PAYMENT MADE TO THEM. THE ASSESSING OFFICER FOUND THAT THE DETAILS AVAILABLE ON THE NOTES ARE NOT CROSS VERIFIABLE, TH EREFORE, HE ESTIMATED THE DISALLOWANCE AT ` 15 LAKHS. HOWEVER, THE CIT(APPEALS) RESTRICTED THE SAME TO ` 10 LAKHS. ON A QUERY FROM THE BENCH WHETHER THE DISALLOWANCE COULD BE REASONABLY ESTIMATED, THE LD.COUNSEL SUBMITTED THAT SINCE THE ASSESSEE WAS PU RCHASING 3 I.T.A. NO.1143/MDS/15 TAPIOCA DIRECTLY FROM THE FARMERS, MAINTAINING PROP ER VOUCHERS WAS NOT PRACTICALLY POSSIBLE AND ANY ESTIMATE MADE BY T HIS TRIBUNAL WILL BE FOLLOWED BY THE ASSESSING OFFICER FOR THE REST O F THE YEARS. THEREFORE, ACCORDING TO THE LD. COUNSEL, THAT WOULD AFFECT THE ASSESSEE ADVERSELY. THEREFORE, THE LD.COUNSEL SUBM ITTED THAT THE ENTIRE ADDITION OF ` 15 LAKHS MAY BE DELETED. 3. ON THE CONTRARY, SHRI A.B. KOHLI, THE LD. DEPART MENTAL REPRESENTATIVE SUBMITTED THAT THE ASSESSEE HAS NOT MAINTAINED ANY VOUCHER FOR PAYMENT. THEREFORE, THE ASSESSING OFFI CER COULD NOT VERIFY THE PAYMENTS SAID TO BE MADE BY THE ASSESSEE . IN THE ABSENCE OF ANY MATERIAL, THE ASSESSING OFFICER REAS ONABLY ESTIMATED THE DISALLOWANCE AT ` 15 LAKHS. THE CIT(APPEALS), HAS HOWEVER, RESTRICTED THE SAME AT ` 10 LAKHS. HENCE NO INTERFERENCE IS CALLED FOR. 4. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS ON EITH ER SIDE AND PERUSED THE RELEVANT MATERIAL ON RECORD. ADMITTEDL Y, THE ASSESSEE PURCHASED SAGO FROM M/S SAGO SERVE TO THE EXTENT OF ` 14,45,57,440/-. THE ASSESSING OFFICER ACCEPTED THI S PURCHASE AND NO DISALLOWANCE WAS MADE. IN RESPECT OF ` 4,10,41,225/-, THE ASSESSEES CLAIM WAS THAT THIS PAYMENT WAS MADE TO FARMERS WHO 4 I.T.A. NO.1143/MDS/15 CULTIVATED TAPIOCA IN THEIR FIELD. THE CONTENTION OF THE ASSESSEE BEFORE THE CIT(APPEALS) APPEARS TO BE THAT IN THE A BSENCE OF ANY SPECIFIC DEFECT, DISCREPANCY OR INACCURACY FOUND IN THE BOOKS OF ACCOUNT, NO DISALLOWANCE IS CALLED FOR. BUT, THE F ACT REMAINS THAT THE ASSESSEE PAID CASH TO THE FARMERS AND THE NOTES SAI D TO BE PREPARED BY THEM CONTAIN ONLY NAMES AND SIGNATURE. IT DID NOT CONTAIN ANY OTHER PARTICULARS TO VERIFY THE IDENTIT Y OF THE RECIPIENTS. IF THE ASSESSEE HAD MENTIONED NAME OF THE RECIPIENTS A LONG WITH THEIR VILLAGE NAME IN THE NOTES THAT WOULD HAVE BEEN AN E VIDENCE BY WHICH THE ASSESSING OFFICER MIGHT HAVE MADE CROSS V ERIFICATION FOR THE PAYMENTS. IN THE ABSENCE OF ANY OTHER PARTICUL ARS OTHER THAN THE NAMES OF THE FARMERS, THIS TRIBUNAL IS OF THE C ONSIDERED OPINION THAT THE ASSESSEE HAS NOT MAINTAINED THE VOUCHERS P ROPERLY. EVEN THOUGH FULL ADDRESS OF THE FARMERS LIVING AT VILLAG ES MAY NOT BE POSSIBLE, THERE SHOULD NOT BE ANY DIFFICULTY FOR TH E ASSESSEE IN MENTIONING NAMES OF THE FARMERS AND THE VILLAGES FR OM WHERE THE SAID FARMERS ARE HAILING. BY THE MENTION OF NAMES OF THE FARMERS AND THE VILLAGES FROM WHERE THEY ARE HAILING, ONE C OULD EASILY IDENTIFY THE PERSONS WHO SUPPLIED TAPIOCA TO THE AS SESSEE. UNFORTUNATELY, THE ASSESSEE HAS NOT MENTIONED EVEN THE MINIMUM REQUIRED PARTICULARS OF NAMES OF THE VILLAGES. THE REFORE, THIS TRIBUNAL IS OF THE CONSIDERED OPINION THAT THE POSS IBILITY OF INFLATING 5 I.T.A. NO.1143/MDS/15 THE EXPENDITURE CANNOT BE RULED OUT AS OBSERVED BY BOTH THE AUTHORITIES BELOW. THOUGH THE ASSESSING OFFICER DI SALLOWED ` 15 LAKHS, THE CIT(APPEALS) RESTRICTED THE SAME TO ` 10 LAKHS. THIS TRIBUNAL IS OF THE CONSIDERED OPINION THAT DISALLOW ANCE OF ` 10 LAKHS IS ON THE HIGHER SIDE, THEREFORE, A DISALLOWANCE OF ` 5 LAKHS WOULD MEET THE ENDS OF JUSTICE. ACCORDINGLY, THE ORDERS OF THE LOWER AUTHORITIES ARE SET ASIDE AND THE ASSESSING OFFICER IS DIRECTED TO DISALLOW ONLY ` 5 LAKHS IN RESPECT OF CASH PAYMENTS MADE TO THE FARMERS FOR PURCHASING TAPIOCA. 5. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS PAR TLY ALLOWED. ORDER PRONOUNCED ON 11 TH SEPTEMBER, 2015 AT CHENNAI. SD/- SD/- (. !'# ! ) ( . . . ) (A. MOHAN ALANKAMONY) (N.R.S. GANESAN) % / ACCOUNTANT MEMBER /JUDICIAL MEMBER /CHENNAI, 5 /DATED, THE 11 TH SEPTEMBER, 2015. KRI. / -267 87)2 /COPY TO: 1. +, /APPELLANT 2. -.+, /RESPONDENT 3. 1 92 () /CIT(A), SALEM 4. 1 92 /CIT, SALEM 5. 7: -2 /DR 6. ( ; /GF.