Riddhi Siddhi Alluminium Pvt. Ltd., Sangli V. Assistant Commissioner of Income-tax,

ITA 1238/PUN/2014

• Counselvise Citation: [2017] 127 COUNSELVISE.COM (IT) 9518 (ITAT-PUNE)
• Duration Of Justice: 2 year(s) 11 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 12-05-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 11-05-2017
• Assessment Year: 2010-2011
• Appeal Filed On: 05-06-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SAMRAT RAHI
• Keywords: Depreciation; Reassessment proceedings
• Section: 143(3); 142(1); 131; 68

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH, PUNE . , , , BEFORE SHRI D. KARUNAKARA RAO, AM AND SHRI VIKAS AWASTHY, JM . / ITA NO . 1238 /PUN/201 4 / ASSESSMENT YEAR : 20 10 - 11 RIDDHI SIDDHI ALLUMINIUM PVT. LTD., F - 4/A, KUPWAD BLOCK, MIDC KUPWAD, DISTT. - SANGLI - 416436, MAHARASHTRA PAN : AADCR3138G ....... / APPELLANT / V S. THE ASSISTANT COMMISSIONER OF INCOME TAX, CIRCLE 1 , SANGLI / RESPONDENT ASSESSEE BY : S HRI SUNIL GANOO REVENUE BY : S HRI SA M RAT RAHI / DATE OF HEARING : 11 - 05 - 2017 / DATE OF PRONOUNCEMENT : 12 - 0 5 - 2017 / ORDER PER VIKAS AWASTHY, JM : TH IS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER OF COMMISSIONER OF INCOME TAX (APPEALS) , KOLHAPUR DATED 09 - 01 - 2014 FOR THE ASSESSMENT YEAR 2010 - 11. 2 ITA NO . 1238/PUN/2014, A.Y. 2010 - 11 2. THE SOLITARY ISSUE RAISED BY THE ASSESSEE IN APPEAL IS AGAINST CONFIRMING OF ADDITION RS.60,00,000/ - U/S. 68 O F THE INCOME TAX ACT, 1961 (HEREINAFTER REFERRED TO AS THE ACT ) . 3. THE BRIEF FACTS OF THE CASE AS EMANATING FROM RECORDS ARE: THE ASSESSEE C OMPANY IS ENGAGED IN MANUFACTURING OF ALLUMINIUM EXTRUSIONS. THE ASSESSEE FILED ITS RETURN OF INCOME FOR THE IMPUGNED ASSESSMENT YEAR ON 26 - 09 - 2013 DECLARING TOTAL INCOME AS NIL. THE CASE OF THE ASSESSEE WAS SELECTED FOR SCRUTINY. ACCORDINGLY, NOTICE U/ S. 143(2) WAS ISSUED TO THE ASSESSEE ON 20 - 09 - 2011. FROM THE ENQUIRIES MADE BY THE ASSESSING OFFICER DURING THE COURSE OF SCRUTINY IT TRANSPIRED , THAT THE ASSESSEE HAS RECEIVED PAYMENTS TO THE TUNE OF RS.60,00,000/ - THROUGH VARIOUS CHEQUE S FROM SHRI BHARA T JAYPAL NILAKHE, PROPRIETOR MAHALAXMI MARKETING, SANGLI. ON FURTHER ENQUIRY IT WAS FOUND THAT BEFORE THE DATE OF ISSUING CHEQUES, CASH DEPOSITS WERE MADE IN THE BANK ACCOUNT OF SHRI BHARAT JAYPAL NILAKHE WITH RATNAKAR BANK LTD., SANGLI . THEREFORE, EITHE R ON THE SAME DAY OR THE FOLLOWING DAY CHEQUES WERE ISSUED IN THE NAME OF ASSESSEE. STATEMENT OF SHRI BHARAT NILAKHE U/S. 131 OF THE ACT WAS RECORDED WHEREIN HE DEPOSED THAT HE IS ENGAGED IN TRADING OF SOYA , DOC AND TURMERIC ON COMMISSION BASIS. HE HAD P URCHASED GOODS FROM FARMERS ON BEHALF OF THE ASSESSEE AND THEREAFTER, SOLD TO VARIOUS TRADERS ON COMMISSION BASIS. THE ASSESSING OFFICER OBSERVED THAT THE CHEQUES WERE ISSUED BY SHRI BHARAT NILAKHE TO THE ASSESSEE FOR AN AMOUNT MORE OR LESS EQUIVALENT TO THE AMOUNT DEPOSITED IN THE HIS BANK ACCOUNT PRIOR TO ISSUANCE OF CHEQUES. REFERRING TO THE SEQUENCE OF BANK TRANSACTIONS IN THE BANK ACCOUNT OF SHRI BHARAT NILAKHE AND APPLYING THE DOCTRINE OF HUMAN PROBABILITIES, THE 3 ITA NO . 1238/PUN/2014, A.Y. 2010 - 11 ASSESSING OFFICER MADE ADDITION OF R S.60,00,000/ - U/S. 68 OF THE ACT IN THE HANDS OF THE ASSESSEE. AGGRIEVED BY THE ASSESSMENT ORDER DATED 19 - 03 - 2013, THE ASSESSEE PREFERRED AN APPEAL BEFORE THE COMMISSIONER OF INCOME TAX (APPEALS). THE COMMISSIONER OF INCOME TAX (APPEALS) UPHELD THE FINDINGS OF ASSESSING OFFICER AND DISMISSED THE APPEAL OF THE ASSESSEE. NOW, THE ASSESSEE IS IN SECOND APPEAL , ASSAILING THE FINDINGS OF COMMISSIONER OF INCOME TAX (APPEALS). 4. SHRI SUNIL GANOO APPEARING ON BEHALF OF THE ASSESSEE SUBMITTED THAT THE AD DITION OF RS.60,00,000/ - U/S. 68 OF THE ACT HAS BEEN MADE MERELY ON SUSPICION. THE AUTHORITIES BELOW HAVE FAILED TO CONSIDER THE TRADING ACCOUNT OF THE ASSESSEE SHOWING SALE AND PURCHASE OF TAX FREE GOODS MADE THROUGH MAHALAXMI MARKETING. THE ASSESSEE HA S DECLARED INCOME OF RS.32,06,401/ - FROM TRADING OF TURMERIC. THE SAID AMOUNT HAS ALREADY BEEN SHOWN AND REFLECTED IN THE TRADING ACCOUNT AS PROFIT FROM TRADING OF TAX FREE GOODS. THE LD. AR SUBMITTED THAT SUBSEQUENT TO THE ADDITION MADE IN THE ASSESSMEN T YEAR UNDER APPEAL , ASSESSMENTS FOR EARLIER ASSESSMENT YEARS WERE RE OPENED. THE ASSESSING OFFICER DURING THE COURSE OF REASSESSMENT PROCEEDINGS FOR ASSESSMENT YEAR 2009 - 10 MADE THRO UGH INVESTIGATION S . THE ASSESSING OFFICER AFTER EXAMINING THE TRANSACTIO NS BETWEEN THE ASSESSEE AND SHRI BHARAT NILAKHE FOUND THE SAME TO BE GENUINE. THE ASSESSEES CONTENTIONS WERE ACCEPTED AND NO ADDITIONS WERE MADE BY THE ASSESSING OFFICER IN REASSESSMENT PROCEEDINGS. THE LD. AR PLACED ON RECORD A COPY OF THE ASSESSMENT O RDER DATED 24 - 10 - 2016 FOR ASSESSMENT YEAR 2009 - 10 PASSED U/S. 143(3) R.W.S. 147 OF THE ACT. THE LD. 4 ITA NO . 1238/PUN/2014, A.Y. 2010 - 11 AR CONTENDED THAT THE FACTS AND THE TRANSACTIONS CARRIED OUT IN THE ASSESSMENT YEAR UNDER APPEAL ARE IDENTICAL TO THE TRANSACTIONS CARRIED OUT BY THE ASSES SEE FOR PURCHASE AND SALE OF TURMERIC WITH SHRI BHARAT NILAKHE IN ASSESSMENT YEAR 2009 - 10. THE BANK ACCOUNT THROUGH WHICH THE TRANSACTIONS WERE CARRIED OUT IS ALSO THE SAME. SINCE, THE TRANSACTIONS IN BOTH THE ASSESSMENT YEARS ARE IDENTICAL IN NATURE, NO ADDITION U/S. 68 IS WARRANTED UNDER THE ASSESSMENT YEAR UNDER APPEAL. 5. ON THE OTHER HAND SHRI SAMRAT RAHI REPRESENTING THE DEPARTMENT VEHEMENTLY SUPPORTED THE FINDINGS OF COMMISSIONER OF INCOME TAX (APPEALS) IN CONFIRMING THE ADDITION. THE LD. DR SU BMITTED THAT THE ASSESSEE IS ENGAGED IN THE BUSINESS OF MANUFACTURING OF ALLUMINIUM EXTRUSIONS. THE ASSESSEE HAS RECEIVED CHEQUES AGGREGATING TO RS.60,00,000/ - FROM SHRI BHARAT NILAKHE. JUST BEFORE THE ISSUANCE OF CHEQUES , CASH DEPOSITS EQUIVALENT TO THE AMOUNT OF CHEQUES WERE MADE IN THE BANK ACCOUNT OF SHRI BHARAT NILAKHE . THE MANNER IN WHICH ENTIRE TRANSACTIONS ARE CARRIED OUT RAISES AN EYE OF SUSPICION ON THE ENTIRE SERIES OF TRANSACTIONS. MERE FACT THAT THE PAYMENTS HAVE BEEN RECEIVED BY THE ASSESS EE THROUGH CHEQUES WOULD NOT MEAN THAT THE TRANSACTIONS ARE GENUINE. EXCEPT FOR THE FACT THAT THE PAYMENTS HAVE BEEN RECEIVED BY THE ASSESSEE THROUGH CHEQUES , THERE IS NO DOCUMENTARY EVIDENCE TO SHOW THAT THERE WERE TRANSACTIONS WITH RESPECT TO SALE AND P URCHASE OF TURMERIC. THEREFORE, THE ADDITION UPHELD BY THE COMMISSIONER OF INCOME TAX (APPEALS) SHOULD BE SUSTAINED AND THE APPEAL OF THE ASSESSEE SHOULD BE DISMISSED. 5 ITA NO . 1238/PUN/2014, A.Y. 2010 - 11 THE LD. DR FURTHER ASSERTED THAT FACTS IN EACH ASSESSMENT YEAR ARE SEPARATE THEREFORE PRINCIPLES OF RES JUDICAT A WOULD NOT APPLY. 6. W E HAVE HEARD THE SUBMISSIONS MADE BY THE REPRESENTATIVES OF RIVAL SIDES AND HAVE PERUSED THE ORDERS OF THE AUTHORITIES BELOW . THE ASSESSEE IN APPEAL HAS ASSAILED THE ADDITION OF RS.60,00,000/ - MADE U/S. 68 OF THE ACT. THE ADDITION HAS BEEN MADE BY THE ASSESSING OFFICER BY DISBELIEVING THE TRANSACTIONS BETWEEN THE ASSESSEE AND SHRI BHARAT NILAKHE, PROPRIETOR MAHALAXMI MARKETING . THE STAND OF THE ASSESSEE IS THAT THE ASSESSEE HAS RECEIVED AMOUNT AGGREGATING TO RS.60,00,000/ - DURING THE PERIOD RELEVANT TO THE ASSESSMENT YEAR IN APPEAL ON ACCOUNT OF SALE OF TURMERIC. THE ASSESSING OFFICER MADE ADDITION ON THE PREMISES THAT APART FROM CHEQUE PAYMENTS THERE IS NO OTHER DOCUMENT ON RECORD TO SHOW SALE AND PURCHASE OF TURMERIC. 7. THE LD. AR HAS PLACED ON RECORD A COPY OF THE ASSESSMENT ORDER DATED 24 - 10 - 2016 FOR ASSESSMENT YEAR 2009 - 10 PASSED U/S. 143(3) R.W.S. 147 OF THE ACT . A PERUSAL OF THE ORDER SHOWS THAT IN IMMEDIATELY PRECEDING ASSESSMENT YEAR SIMILAR TYPE OF TRANSACTIONS WERE CARRIED OUT BY THE ASSESSEE IN RESPECT OF SALE AND PURCHASE OF TURMERIC . THE PAYMENTS WERE RECEIVED BY THE ASSESSEE FROM SHRI BHARAT NILAKHE BY WAY OF CHEQUES DRAWN ON THE RATNAKAR BANK LTD., SANGLI. THE NATURE AND MODE OF TRANSACTIONS IN BOTH THE ASSESSMENT YEARS I.E. ASSESSMENT YEARS 2009 - 10 AND 2010 - 11 ARE SAME. THE ASSESSING OFFICER AFTER EXAMINING THE TRANSACTIONS IN ASSESSMENT YEAR 2009 - 10 CON CLUDED AS UNDER : 4. THEREAFTER NOTICE U/S. 142(1) WAS ISSUED ON 21 - 06 - 2016. DURING THE COURSE OF ASSESSMENT PROCEEDINGS THE ASSESSEE HAS FURNISHED THE 6 ITA NO . 1238/PUN/2014, A.Y. 2010 - 11 DETAILS/INFORMATION IN RESPECT OF THE ENTRIES OF RS.93,22,935/ - RECEIVED FROM SHRI.BHARAT JAYPAL NI LAKHE. IN RESPECT OF ENTRY OF RS.93, 22,935/ - THE A. R. OF THE ASSESSEE SUBMITTED THAT THIS IS THE PROFIT EARNED ON ACCOUNT OF TRADING OF TURMERIC. IN SUPPORT OF HIS ARGUMENT, THE ASSESSEE FURNISHED COPY OF INCOME COMPUTATION SHEET, PURCHASE AND SALE PATTIES OF TURMERIC TRADING, TRADING ACCOUNT, CAPITAL ACCOUNT, BANK ACCOUNT AND VAT AUDIT REPORT AND VAT ASSESSMENT ORDER IN SUPPORT OF TILE INCOME EAR NED IN THE BUSINESS CARRIED ON OF TURMERIC. FURTHER, IT HAS ALSO B EEN STATED BY THE ASSESSEE THAT HE HAS NOT OBTAINED ANY ENTRY FROM SHRI.BHARAT JAYPAL NILAKHE AND HAS FURTHER ASSERTED THAT IT IS A GENUINE TRANSACTION OF TURMERIC TRADING. THEREFORE, THE ASSESSEE'S CONTENTION THAT HE HAS EARNED A PROFIT OF RS.93,22,935/ - FROM TURMERIC TRADING IS ACCEPTED. THE COMPANY IS ENGAGED IN THE MANUFACTURING AND TRADING OF A L UMINUM PROFILES AND THE COMBINED PROFIT & LOSS OF THE COMPANY FROM TURMERIC AS WELL AS ALUMINUM DIVISION OR ALUMINUM BUSINESS SHOWS NET LOSS OF RS .16,26,694/ - AS PER PROFIT & LOSS ACCOUNT AS PER COMPANIES ACT. AFTER DISALLOWING DEPRECIATION AS PER COMPANIES ACT AND ALLOWING DEPRECIATION AS PER INCOME TAX ACT THE NET LOSS OF THE COMPANY FROM ALL THE OPERATIONS COMES TO RS.19,67,692/ - , AFTER CONSIDERING PROFIT OF RS.93,22,935/ - . 8. WE FIND THAT THE FACTS IN THE ASSESSMENT YEAR UNDER APPEAL AND THE ASSESSMENT YEAR 2009 - 10 ARE IDENTICAL. THE LD. DR HAS NOT BEEN ABLE TO CONTROVERT THE FINDINGS OF ASSESSING OFFICER IN REASSESSMENT PROCEEDINGS FOR ASSESSMENT YEAR 2009 - 10. SINCE, THE DEPARTMENT HAS ACCEPTED THE TRANSACTIONS IN ASSESSMENT YEAR 2009 - 10, WE FIND NO REASON TO TAKE A DIFFERENT VIEW IN ASSESSMENT YEAR 2010 - 11 WHEN THERE HAS BEEN NO CHANGE IN THE FACTS AND TRANSACTIONS CARRIED OUT BY THE ASSESSEE. IT IS A WELL SETTLED LAW THAT PRINCIPLES OF RES JUDICATA DOES NOT APPLY UNDER INCOME TAX ACT, HOWEVER, RULES OF CONSISTENCY HAVE TO BE FOLLOWED WHERE THERE HAS BEEN NO CHANGE IN FACTS AND CIRCUMSTANCES IN SUBSEQUENT ASSESSMENT YEAR [RADHASOAMI SATSANG VS. COMMIS SIONER OF INCOME TAX, 193 ITR 321 (SC)]. 7 ITA NO . 1238/PUN/2014, A.Y. 2010 - 11 ACCORDINGLY, THE IMPUGNED ORDER IS SET ASIDE AND THE APPEAL OF THE ASSESSEE IS ALLOWED. 9. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED ON FRIDAY, THE 12 TH DAY OF MAY, 201 7 . SD/ - SD/ - ( . /D. KARUNAKARA RAO ) ( / VIKAS AWASTHY) / ACCOUNTANT MEMBER / JUDICIAL MEMBER / PUNE; / DATED : 12 TH MAY, 2017 RK / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT. 2. / THE RESPONDENT. 3. ( ) / THE CIT(A) , KOLHAPUR 4. / THE CIT - I /II, KOLHAPUR/CIT (CENTRAL), PUNE 5. , , , / DR, ITAT, B BENCH, PUNE. 6. / GUARD FILE. / / // TRUE COPY// / BY ORDER, / ASSISTANT REGISTRAR , , / ITAT, PUNE