ITO, WD-40(1), KOLKATA, Kolkata V. Shri Mantu saha, Kolkata

ITA 1224/KOL/2015

• Counselvise Citation: [2017] 127 COUNSELVISE.COM (IT) 1232 (ITAT-KOLKATA)
• Duration Of Justice: 2 year(s) 26 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 18-10-2017
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: C
• Assessment Year: 2011-2012
• Appeal Filed On: 22-09-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ARINDAM BHATTACHARJEE
• Keywords: Assessment record
• Section: 143(3)

Judgement Text

ITA NO.1224/KOL/2015 SHRI MANTU SAHA A.Y.2011-12 1 IN THE INCOME TAX APPELLATE TRIBUNAL, BENCH D KOL KATA [BEFORE HONBLE SHRI J.SUDHAKAR REDDY, AM & SHRI A.T.VARKEY, JM ] ITA NO.1224/KOL/2015 ASSESSMENT YEAR : 2011-12 I.T.O., WARD-40(1) -VERSUS- SRI MANTU SAHA KOLKATA KOLKATA (PAN: ALKPS 0366 C) (APPELLANT) (RESPONDENT) FOR THE APPELLANT: SHRI ARINDAM BHATTACHARJEE, ADDL. CIT FOR THE RESPONDENT: SHRI SOMNATH GHOSH, ADVOCATE DATE OF HEARING : 25.09.2017. DATE OF PRONOUNCEMENT : 18.10.2017. ORDER PER J.SUDHAKAR REDDY, AM: THIS IS AN APPEAL BY THE REVENUE DIRECTED AGAINST T HE ORDER OF THE COMMISSIONER OF INCOME TAX-(A)-12, KOLKATA RELATIN G TO A.Y. 2011-12. 2. THE FACTS IN BRIEF ARE THAT THE ASSESSEE IS A N INDIVIDUAL AND IS IN THE BUSINESS OF RUNNING A FLOUR MILL IN THE NAME AND STYLE OF RADH A KRISHNA FLOUR MILL. HE FILED HIS RETURN OF INCOME ON 24.09.2011 DISCLOSING TOTAL INC OME OF RS.10,96,615/-. THE AO COMPLETED THE ASSESSMENT U/S 143(3) OF THE INCOME T AX ACT, 1961 (ACT) ON 29.03.2014 AND DETERMINED THE TOTAL INCOME AT RS.1, 32,15,070/- AFTER MAKING THE ADDITION OF RS.,1,21,18,459/- TOWARDS INFLATED PURC HASES. HE HELD AS FOLLOWS :- SINCE DURING DISCUSSION ON 19.03.2014 THE ASSESSEE STATED THAT THE PURCHASE PRICE FROM LOCAL FARMERS ARE FLUCTUATED TIME TO TIM E, KEEPING IN MIND, THE SAMPLING ERROR IN DETERMINATION OF AVERAGE PRICE CO MPUTED ON THE BASIS OF THE PURCHASE DOCUMENTS FROM LOCAL FARMERS, PRODUCED; SU CH AVERAGE PRICE IS CONSIDERED AS THE AVERAGE OF SUCH PURCHASE PRICE AN D PURCHASE FROM FCI WHICH IS COMPUTED AS UNDER : RS. (1335.72 + 1035.71) = RS.1185.71 2 CONSIDERING THE LOCAL PURCHASE @ RS.1185.71, THE QU ANTUM OF LOCAL PURCHASE COMES TO [R.108216 X RS.1185.71] RS.12,83,12,793/-. HENCE THE AGGREGATE AMOUNT OF PURCHASE IS ARRIVED AT [RS.12,83,12,793 + RS.1,13,66,390] ITA NO.1224/KOL/2015 SHRI MANTU SAHA A.Y.2011-12 2 RS.13,96,79,183/- WHICH HAS BEEN INFLATED BY THE AS SESSEE IN HIS P & L A/C AS RS.15,17,97,642/-. HENCE, THE DIFFERENCE OF RS.1,21 ,18,459/- IS ADDED BACK TO THE G.P. ACCORDINGLY ENHANCING THE N.P. TO THE SAME EXT ENT. 3. AGGRIEVED THE ASSESSEE CARRIED THE MATTER TO THE FIRST APPELLATE AUTHORITY. THE FIRST APPELLATE AUTHORITY HELD THAT THE ASSESSEE HA D PRODUCED ALL THE BILLS, VOUCHERS, BOOKS OF ACCOUNT ETC. BEFORE THE AO AND THAT NO DEF ECTS WERE POINTED OUT IN THE BOOKS OF ACCOUNT. HE HELD THAT THERE WAS NO BASIS FOR TAK ING PURCHASE PRICE THAT RELATES TO ONLY A PART OF THE YEAR, THEREAFTER ARRIVED AT THE AVERAGE PURCHASE PRICE AND OFFERED THE SAME FOR DETERMINING THE QUANTUM OF PURCHASE. HE OB SERVED THAT THE PURCHASE PRICE OF WHEAT CANNOT REMAIN CONSTANT THROUGHOUT THE YEAR AN D THERE WOULD BE VARIATIONS. HE DELETED THE ADDITION. AGGRIEVED THE REVENUE IS IN A PPEAL BEFORE US ON THE FOLLOWING GROUNDS :- 1. THAT IN FACT AND CIRCUMSTANCES OF THE CASE, LD. C IT(A) ERRED IN ALLOWING FULL RELIEF BY DELETING THE ADDITION OF RS. 1,21,18,459/ - AGAINST INFLATED PURCHASES SPECIALLY WHEN THE ASSESSEE IN THE COURSE OF ASSESS MENT PROCEEDINGS, FAILS TO PRODUCE CORROBORATIVE PURCHASE BILLS FOR MAJOR PORT ION OF LOCAL PURCHASE FROM THE HAT CHASI. 2. THAT IN FACT AND CIRCUMSTANCES OF THE CASE LD.CIT( A) ERRED IN ALLOWING FULL RELIEF WHEN THE ASSESSEE, IN SPITE OF BEING PROVIDE D SEVERAL OPPORTUNITIES OF BEING HEARD AND SUBMIT PROPER EVIDENCE IN SUPPORT O F HIS CLAIM, FAILED TO FURNISH THE SAME. 3. THAT THE APPELLANT CRAVES THE LEAVE TO ADD, ALTER, MODIFY, INCLUDE OR DELETE ANY GROUNDS OF APPEAL. 4. AFTER HEARING THE RIVAL CONTENTIONS AND PER USING THE PAPERS ON RECORD INCLUDING 145 PAGES OF PAPER BOOK FILED BY THE ASSESSEE, WE F IND NO INFIRMITY IN THE ORDER OF THE FIRST APPELLATE AUTHORITY FOR THE FOLLOWING REASONS :- I)THE BOOKS OF ACCOUNT WAS AUDITED U/S 44AB OF THE ACT. II)THE AO HAD VERIFIED THE BOOKS OF ACCOUNTS AND TH E RELEVANT DOCUMENTS AS WELL AS PURCHASES DURING THE COURSE OF ASSESSMENT PROCEEDIN GS AND HAS NOT POINTED OUT ANY ERROR OR OMISSION IN THE SAME. THE ASSESSEE HAD PRO DUCED EVIDENCE BEFORE THE AO IN ITA NO.1224/KOL/2015 SHRI MANTU SAHA A.Y.2011-12 3 SUPPORT OF ITS PURCHASE AND NO ADDITION WAS MADE. T HE AO WAS OF THE VIEW THAT THE PURCHASE OF WHEAT FROM LOCAL FARMERS FROM 7 TH APRIL TO 12 TH JUNE, 2010 WAS AT A COST WHICH IS MUCH LESSER THAN WHAT IS CHARGED BY FOOD C ORPORATION OF INDIA WHEREAS IT WAS THE COST WHICH WAS MORE THAN WHAT IS CHARGED BY FOOD CORPORATION OF INDIA AFTER THIS DATE. SUCH OBSERVATION BY THE AO, IN OUR VIEW, DOES NOT WARRANT AVERAGING AND APPLYING THE PURCHASE PRICE. III) BASED ON THE COST PRICE OF PURCHASES FROM 07.0 4.2010 TO 12.06.2010, THE AO CANNOT HOLD THAT THIS IS THE COST OF WHEAT FOR THE ENTIRE YEAR AND THEREAFTER, AVERAGING THE SAME AND TREATING THE DIFFERENCE INCOME, AS UNE XPLAINED PURCHASE. IV) THE LD. COUNSEL FOR THE ASSESEES CONTENTION TH AT IT IS TO MAKE PURCHASE OF WHEAT AT THE MARKET DETERMINED PRICE AND THAT THE AO HAS NOT BROUGHT OUT ANY EVIDENCE TO DEMONSTRATE INFLATION IN PURCHASE PRICE BY THE ASSE SSEE, IN COMPARISON TO SUCH MARKET DETERMINED RATES. V) THE ADDITION MADE BY THE AO WAS MERELY ON SURMIS ES AND CONJECTURES AND WITHOUT ANY BASIS. UNDER THE CIRCUMSTANCES WE UPHOLD THE FOLLOWING FAC TUAL FINDING OF THE LD. CIT(A).: 4.2. I APPELLANT'S SUBMISSION AND FACTS AVAILABLE O N; RECORD IS CAREFULLY CONSIDERED ASSESSMENT RECORD WAS CALLED FOR AND PER USED. ON PERUSAL OF ASSESSMENT RECORD, IT IS SEEN THAT ALL THE PURCHAS E AND SALE DETAILS, BILLS ETC. THAT WERE CALLED FOR BY A.O., WERE PRODUCED. AS IS SEEN FROM ORDER SHEET ENTRY DETAILS, A.O. HAD CALLED FOR ONE SAMPLE PURCHASE AND SALES B ILL FOR EACH MONTH WHICH HAS BEEN PRODUCED. NO DEFECTS IN BOOK ON ANY BILLS WERE POINTED OUT. THEREFORE, THERE WAS NO BASIS FOR TAKING PURCHASE PRICE FOR ON LY A PART OF THE YEAR; TO ARRIVE AT AVERAGE PURCHASE PRICE, WHEN ALL THE PURCHASE BI LLS CALLED FOR, WERE PRODUCED AND. WITHOUT CROSS-CHECKING THE AUTHENTICITY OF PUR CHASE OR EVEN POINTING OUT COMPARABLE CASE TO SUPPORT PURCHASE PRICE ASSUMED. PURCHASE PRICE OF ANY COMMODITY, INCLUDING AGRICULTURAL COMMODITY IS UNLI KELY TO BE CONSTANT OVER THE YEAR. THEREF6RE THERE WAS NO BASIS FOR ADOPTING THE PURCHASE PRICE ONLY FROM A PART OF THE YEAR, WHEN THE PURCHASE PRICE WAS LOWES T TO ARRIVE AT AN AVERAGE PURCHASE PRICE FOR THE ENTIRE 'YEAR, TO WORK OUT ES TIMATED PURCHASE INFLATION WITHOUT POINTING OUT ANY DEFECT IN BOOKS OF ACCOUNT AND WITHOUT CITING ANY COMPARABLE CASE. NOTWITHSTANDING, THE METHOD ADOPTE D BY THE AO IN COMPUTING THE AVERAGE PRICE FOR PURCHASES BY AVERAGING THE PU RCHASE PRICE OF 8000 QUINTALS OF FCI PURCHASES WITH 97737 QUINTALS OF LOCAL PURCH ASES IS PECULIAR AND LACKS ITA NO.1224/KOL/2015 SHRI MANTU SAHA A.Y.2011-12 4 LOGIC. IN VIEW OF THE ABOVE FACTS, A.O.S ADDITION MADE ON ACCOUNT OF PURCHASE INFLATION IS WITHOUT ANY BASIS AND CANNOT BE SUSTAI NED. THEREFORE, THE ADDITION MADE IS DELETED AND THE APPEAL IS ALLOWED. THE LD. DR COULD NOT CONTROVERT THESE FINDINGS. 4. IN VIEW OF THE ABOVE DISCUSSION WE UPHOLD THE ORDER OF THE FIRST APPELLATE AUTHORITY AND DISMISS THE APPEAL OF THE REVENUE. 5. IN THE RESULT THE APPEAL BY THE REVENUE IS D ISMISSED. O RDER PRONOUNCED IN THE COURT ON 18 .10.2017. SD/- SD/- [A.T.VARKEY] [ J.SUDHAKAR REDDY ] JUDICIAL MEMBER ACCOUNTANT MEMBER DATED : 18.10.2017. [RG SR.PS] COPY OF THE ORDER FORWARDED TO: 1.SRI MANTU SAHA, KONAR BAGAN, BONGAON, 24-PARGANAS (NORTH), PIN:743235. 2. I.T.O., WARD-40(1), KOLKATA. 3. C.I.T.(A)- 12, KOLKATA 4. C.I.T-14, KOLKAT A 5. CIT(DR), KOLKATA BENCHES, KOLKATA. TRUE COPY BY ORDER, SENIOR PRIVATE SECRETARY HEAD OF OFFICE/D.D.O, ITAT KOLKATA BENCHES ITA NO.1224/KOL/2015 SHRI MANTU SAHA A.Y.2011-12 5