M/s. Shree Krishna Enterprises, Moga V. The Income-tax Officer, Moga

ITA 127/ASR/2011

• Counselvise Citation: 12720914 RSA 2011
• Duration Of Justice: 11 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-03-2012
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Next Hearing Date: 22-03-2012
• Assessment Year: 2007-2008
• Appeal Filed On: 13-04-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: AMRIK CHAND
• Assessee Lawyers: RAVISH SOOD
• Section: 133(6)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AMRITSAR BENCH; AMRITSAR. BEFORE SH. H.S. SIDHU, JUDICIAL MEMBER AND SH. B.P.JAIN, ACCOUNTANT MEMBER I.T.A. NO. 127(ASR)/2011 ASSESSMENT YEAR:2007-08 PAN: AAUFS6954K M/S. SHREE KRISHNA ENTERPRISES, VS. THE INCOME-TAX OFFICER, MOGA. WARD-II, MOGA. (APPELLANT) (RESPONDENT) ITA NO.311(ASR)/2011 ASSESSMENT YEAR : 2007-08 THE INCOME-TAX OFFICER, VS. M/S. SHREE KRISHNA ENT ERPRISES, WARD-II, MOGA. MOGA. (APPELLANT) (RESPONDENT) ASSESSEE BY: SH. RAVISH SOOD, ADV. DEPARTMENT BY: SH. AMRIK CHAND, DR DATE OF HEARING : 22/03/2012 DATE OF PRONOUNCEMENT:28/03/2012 ORDER PER BENCH: THESE CROSS APPEALS ONE BY THE ASSESSEE AND ANOTH ER BY THE REVENUE ARISE FROM THE ORDER OF THE CIT(A)-II, LUDHIANA, DA TED 29.03.2011 FOR THE ASSESSMENT YEAR 2007-08. ITA NO.127(ASR)/2011 ITA NO.311(ASR)/2011 2 2. THE ASSESSEE HAS RAISED FOLLOWING GROUNDS OF APP EAL: 1. THAT THE CIT(A) HAS ERRED IN LAW AND FACTS OF T HE CASE IN PARTLY SUSTAINING THE ADDITIONS MADE BY THE A.O. 2. THAT THE CIT(A) HAS ERRED IN LAW AND FACTS OF TH E CASE IN PARTLY SUSTAINING THE ADDITION OF RS.19,90,000/- IN THE HA NDS OF THE ASSESSEE. 3. THAT THE CIT(A) WHILE SUSTAINING THE DISALLOWANC E OF AN AMOUNT OF RS.19,90,000/- ACTED MOST ARBITRARILY AND RATHER ERRED IN FAILING TO APPRECIATE THAT IN ABSENCE OF ANY ADV ERSE REMARK OR INFIRMITY POINTED OUT BY THE AO IN HIS REMAND REPO RT AS REGARDS HE SAME, NO ADVERSE INFERENCE WAS LIABLE TO E DRAWN IN THE HANDS OF THE ASSESSEE FIRM. 4. THAT THE CIT(A) HAS ERRED IN SUSTAINING THE DISA LLOWANCE OF RS.25,014/- IN THE HANDS OF THE ASSESSEE FIRM. 5. THAT THE CIT(A) HAS ERRED IN SUSTAINING THE DISA LLOWANCE OF RS.5,000/- IN THE HANDS OF THE ASSESSEE FIRM ON THE BASIS OF ALLEGED NON-PRODUCTION OF VOUCHERS. 6. THAT THE CIT(A) HAS ERRED IN SUSTAINING THE DISA LLOWANCE OF RS.15,000/- IN THE HANDS OF THE ASSESSEE FIRM ON TH E BASIS OF ALLEGED PERSONAL USAGE. 7. THAT THE CIT(A) HAS ERRED IN SUSTAINING THE DISA LLOWANCE OF RS.9,067/- OUT OF STAFF WELFARE EXPENSES IN THE HAN DS OF THE ASSESSEE FIRM. 8. ANY OTHER GROUND OF APPEAL AS MAY BE ALLOWED TO BE RAISED AT THE TIME OF HEARING OF APPEAL. 3. THE REVENUE HAS RAISED FOLLOWING GROUNDS OF APPE AL: 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE, THE LD. CIT(A)-II, LUDHIANA HAS ERRED IN DELETING THE ADDIT ION OF RS.12,67,326/- ON ACCOUNT OF DISCOUNTED SALE OF E-T OP, RECHARGE COUPONS SIMS SALE ETC. 2. THAT THE ORDER OF THE LD. CIT(A), LUDHIANA BE SE T ASIDE AND THAT OF THE A.O. BE RESTORED. 3. THAT THE APPELLANT CRAVES LEAVE TO ADD OR AMEND ANY GROUND OF APPEAL BEFORE IT IS FINALLY DISPOSED OFF. ITA NO.127(ASR)/2011 ITA NO.311(ASR)/2011 3 4. AT THE OUTSET, THE LD. COUNSEL FOR THE A SSESSEE, SH. RAVISH SOOD, ADV. DID NOT PRESS GROUNDS NO.4,5,6 & 7 AND THE SAM E ARE DISMISSED AS NOT PRESSED. 5. GROUND NO.8 IS GENERAL IN NATURE AND, T HEREFORE, DO NOT REQUIRE ANY ADJUDICATION. 6. AS REGARDS GROUNDS NO.1, 2 & 3 OF THE A SSESSEE AND GROUNDS NO.1,2 & 3, THE BRIEF FACTS AS APPEARING VIDE PARAS 3.1 T O 4.1 OF THE CIT(A) ORDER ARE AS UNDER: 3.1 FACTS IN BRIEF DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE APPELLANT WAS ASKED TO PRODUCE THE VOUCHERS/BILLS I N RESPECT OF DISTRIBUTION EXPENSES ALONGWITH NAMES AND ADDRESSES OF THE PARTIES AND PANS OF THOSE DEALERS TO WHOM THESE EXPENSES WE RE PAID. IN RESPONSE, THE APPELLANT PRODUCED CASH BOOK, LEDGER AND DISTRIBUTION EXPENSES BOOK BUT NOT PRODUCED PURCHASE/SALES BILLS ETC. THEREAFTER, THE APPELLANT ASKED TO PRODUCE THE BOOKS OF ACCOUNT . THE AO TEST CHECKED BOOKS OF THE APPELLANT AND FOUND CERTAIN DI SCREPANCIES IN RESPECT OF PURCHASES & SALES SHOWN IN THE BOOKS OF ACCOUNT AS THE SAME WERE NOT TALLIED WITH THE RETURN OF INCOME FIL ED. AUDIT REPORT WAS ALSO EXAMINED BY THE A.O. AND REVEALED THAT PUR CHASES AMOUNTING TO RS.05,40,593/- AND SALES AT RS.2,23,22,462/- HAD BEEN REFLECTED AGAINST THE PURCHASE OF RS.8,85,60,101/- AND RS.8,9 6,32,772/- RESPECTIVELY AS SHOWN IN THE THEREFORE, THE AO REJE CTED APPELLANTS BOOKS OF ACCOUNT IN VIEW OF PROVISIONS OF SECTION 1 45(3) OF THE ACT. 3.2. FURTHER, THE A.O. HAD OBSERVED THAT THE MAJORI TY OF THE EXPENSES WERE PAID IN CASH, THEREFORE, THE PARTIES TO WHOM T HESE WERE PAID ARE UNIDENTIFIABLE. THE APPELLANT ALSO FAILS TO PRODUCE VOUCHERS PERTAINING TO DISTRIBUTION EXPENSES AND ADDRESSES OF THE PERSO NS TO WHOM THESE WERE PAID. DURING ASSESSMENT PROCEEDINGS, THE APPEL LANTS COUNSEL CONTENDED BEFORE THE A.O. THAT THE VOUCHERS WE RE IN THE CUSTODY OF ITA NO.127(ASR)/2011 ITA NO.311(ASR)/2011 4 ACCOUNTANT AND THERE WAS DISPUTE BETWEEN ACCOUNTANT AND THE ASSESSEE. THE A.O. NOT ACCEPTED APPELLANTS CONTENT ION AND REJECTED THE SAME. FINALLY, THE AO DISALLOWED DISTRIBUTION E XPENSES AMOUNTING TO RS.1,07,36,450/- ON THE GROUND THAT TH E APPELLANT FAILS TO GIVE NAME AND ADDRESSES OF THE PERSONS/PARTIES TO W HOM THESE EXPENSES WERE PAID. 3.3. DURING APPELLATE PROCEEDINGS, THE COUNSELS FOR THE APPELLANT APPEARED ON BEHALF OF THE APPELLANT AND FILED WRITT EN SUBMISSIONS IN SUPPORT OF HIS CONTENTION ALONGWITH VARIOUS ENCLOSU RES, WHICH IS PLACED IN CASE FILE. THE COUNSELS ALSO DISCUSSED TH E VARIOUS FACTS OF THE CASE. 3.4. THE SUBMISSIONS OF THE APPELLANT FORWARDED TO THE CONCERNED A.O. I.E. I.T.O., WARD-II, MOGA, FOR HIS COMMENTS/V IEWS AND LOOKING TO THE FACTS AND CIRCUMSTANCES AND FOR PROPER JUSTI CE, THE CASE WAS ALSO REMANDED TO HIM U/S 250(4) OF THE ACT. THE AO VIDE HIS OFFICE LETTER DATED 11.02.2011 FORWARDED HIS REPORT THROUGH ADDL. CIT, MOGA RANGE TO THIS OFFICE. 4. I HAVE GONE THROUGH THE FACTS AND CIRCUMSTANCES OF THE CASE AND ALSO PERUSED THE RELEVANT ASSESSMENT ORDER UNDER AP PEAL AS WELL AS REMAND REPORT SUBMITTED BY THE A.O. IN THIS REGARD. VIDE HIS REPORT, THE AO SUBMITTED THAT EXPENSES AMOUNTING TO RS.75,6 8,134/- IS APPEAR TO BE GENUINE AS THE SAME WAS REIMBURSED BY THE CON CERNED COMPANY I.E. VODAFONE ESSAR SOUTH LIMITED, C-131, INDUSTRIA L AREA, PHASE VIII, MOHALI, PUNJAB. THE RELEVANT PARAGRAPH OF THE AOS REPORT IS AS UNDER: : FROM THE PERUSAL OF INFORMATION RECEIVED FROM VODAF ONE ESSAR SOUTH LIMITED, C-131, INDUSTRIAL AREA, PHASE VIII, MOHALI, PUNJAB U/S 133(6) OF THE ACT, IT REVEALED THAT THE CLAIM ON AC COUNT OF SERVICE TAX AMOUNTING TO RS.8,33,487/- AND FRC AND SALARIES AMO UNTING TO RS.67,34,647/- TOTALING TO RS.75,68,134/- WHICH WAS REIMBURSED BY THE ABOVESAID COMPANY TO THE ASSESSEE FIRM APPEARS TO B E GENUINE AS THE ASSESSE FIRM HAS DEBITED AND CREDITED THE SAME TO I TS P/L A/C UNDER THE HEAD DISTRIBUTION EXPENSES AND COMMISSION RECEI VED RESPECTIVELY. HOWEVER, THE ASSESSEE FIRM COULD NOT FURNISH ANY EVIDENCE WITH REGARD TO THE CLAIM OF RS.25,014/- ON ACCOUNT OF FRC, THEREFORE, THE SAME MAY BE DECIDED ON FACTS AND MER ITS OF THE CASE. SINCE THE AO HIMSELF IN HIS REPORT WHICH IS DULY FO RWARDED BY THE RANGE JCIT HAS AFTER CONDUCING NECESSARY INQUIRY CE RTIFIED THAT THESE EXPENSES ARE GENUINE. IT WOULD NOT BE OUT OF PLACE TO MENTION HERE ITA NO.127(ASR)/2011 ITA NO.311(ASR)/2011 5 THAT THE AO HAS MADE SUCH HUGE ADDITION U/S 143(3). HENCE, UNDER THE CIRCUMSTANCES BY ACCEPTING AOS VERSION IN THIS REG ARD, THE A.O. IS DIRECTED TO DELETE THIS ADDITION TO THE EXTENT OF R S.75,43,120/-. 4.1. AS FAR AS BALANCE ADDITION OF RS.31,68,316/- I S CONCERNED, THE A.O. IN THE LAST PARAGRAPH OF HIS REPORT DATED 11.0 2.2011 HAS STATED THAT LOOKING TO THE VOLUMINOUS NATURE OF THE ENTRIE S, THE SAME CANNOT BE VERIFIED AT HIS END EXCEPT FOR SOME SMALL ACCOU NTS IN RESPECT OF M/S. MAHINDRA TELECOM AND M/S. MAJESTIC COMMUNICATI ON, MOGA. DESPITE BEING GIVEN AMPLE OPPORTUNITIES BOTH TO THE AO AND THE APPELLANT NEITHER THE A.O. NOR THE APPELLANT COULD STATE THAT HOW MUCH EXPENSES RELATED TO SALES OF E-TOPS, RECHARGE COUPONS AND SIMS. HENCE, UNDER THE CIRCUMSTANCES, AT THE BEST I T WOULD BE FAIR AND JUSTIFIABLE TO RESTRICT THE DISALLOWANCE TO THE EXT ENT OF 60% AND BALANCE 40% IS DIRECTED TO BE DELETED. 7. THE LD. CIT(A) AS MENTIONED HEREINABOVE, RESTRIC TED THE DISALLOWANCE TO THE EXTENT OF 60% AND BALANCE OF THE 40% WAS DIR ECTED TO BE DELETED. 8. THE LD. COUNSEL FOR THE ASSESSEE, SH. RAVISH SOO D, ADV. ARGUED THAT IN THE REMAND PROCEEDINGS, THE ASSESSEE PRODUCED AL L THE 11 FILES WHICH WERE REQUIRED TO BE VERIFIED BY THE A.O. BUT THE A.O. CO ULD NOT VERIFY THE SAME LOOKING TO THE VOLUMINOUS NATURE OF ENTRIES. THE LD . COUNSEL FOR THE ASSESSEE, PRODUCED ALL THE 11 FILES OF THE ACCOUNTS WHICH WERE REQUIRED BY THE A.O. DURING REMAND PROCEEDINGS, BEFORE THE BENC H ALSO, WHICH HAS VOLUMINOUS NATURE OF ENTRIES. IT WAS ARGUED THAT IF THE SAID RECORD IS NOT VERIFIED BY THE A.O. BECAUSE OF THE VOLUMINOUS NATU RE OF ENTRIES THEN THE ASSESSEE CANNOT BE PENALIZED. HE FURTHER ARGUED THA T THE LD. CIT(A) WAS NOT JUSTIFIED IN OBSERVING THAT NO ONE FROM ASSESSEES SIDE APPEARED TO SUBMIT THE EXPLANATION. ITA NO.127(ASR)/2011 ITA NO.311(ASR)/2011 6 9. THE LD. DR, ON THE OTHER HAND, RELIED UPON THE O RDER OF THE ASSESSING OFFICER. 10. AFTER HEARING THE PARTIES AND PERUSAL OF THE RE CORD, WE ARE OF THE VIEW THAT THE A.O. INITIALLY MADE THE ADDITION OF RS.1,0 7,36,450/-, WHICH IN THE REMAND PROCEEDINGS WAS REDUCED BY RS.75,68,134/-. I T IS ALSO NOT DISPUTED THAT THE A.O. IN THE REMAND PROCEEDINGS DID NOT VE RIFY THE BOOKS OF ACCOUNT AND OTHER DOCUMENTARY EVIDENCES PRODUCED BY THE ASS ESSEE LOOKING TO THE VOLUMINOUS NATURE OF ENTRIES. THE AO PREFERRED TO V ERIFY THE SMALL AMOUNT IN RESPECT OF M/S. MOHINDRA TELECOM AND M/S. MAJEST IC COMMUNICATION, MOGA. IN CASE THE AO DOES NOT VERIFY THE BOOKS OF A CCOUNT PRODUCED BEFORE HIM, THE AO THEN IS NOT AUTHORIZED TO COME TO THE C ONCLUSION ADVERSE TO THE ASSESSEE. SO THE LD. CIT(A) WITHOUT ANY BASIS OR CO GENT MATERIAL ON RECORD HAS OBSERVED THAT THE ASSESSEE DID NOT APPEAR AND H AS NOT SUBMITTED THE EXPENSES IN RELATION TO THE SALES OF VARIOUS E-TOP, RECHARGED COUPONS AND SIMS. THEREFORE, THE LD. CIT(A) WAS NOT FURTHER JUS TIFIED IN COMING TO THE CONCLUSION BY RESTRICTING THE DISALLOWANCE AT 60% A ND DELETING THE SAME AT 40% ONLY. THE ASSESSEE HAS DISCHARGED ITS ONUS BY P RODUCING DOCUMENTARY EVIDENCES/BOOKS OF ACCOUNT BEFORE THE A.O., WHICH W ERE MADE AVAILABLE BEFORE THIS BENCH ALSO AND, THEREFORE, THE AO WAS N OT JUSTIFIED IN MAKING ANY ADDITION ON THIS ACCOUNT. THE LD. CIT(A) IS NOT JUSTIFIED IN SUSTAINING ITA NO.127(ASR)/2011 ITA NO.311(ASR)/2011 7 ANY ADDITION ON THE SAID ACCOUNT. THEREFORE, GROUN D NOS. 1 TO 3 OF THE ASSESSEE ARE ALLOWED AND ALL THE GROUNDS OF THE REV ENUE ARE DISMISSED. 11. IN THE RESULT, THE APPEAL OF THE ASSESSEE IN I TA NO.127(ASR)/2011 IS PARTLY ALLOWED AND APPEAL OF THE REVENUE IN ITA NO. 311(ASR)/2011 IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 28TH MARCH, 2012. SD/- SD/- (H.S. SIDHU) (B.P. JAIN) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 28TH MARCH , 2012 /SKR/ COPY OF THE ORDER IS FORWARDED TO : 1. THE ASSESSEE:M/S. SHREE KRISHNA ENTERPRISES, MOGA. 2. THE ITO WARD-II, MOGA. 3. THE CIT(A), LUDHIANA. 4. THE CIT, LUDHIANA 5. THE SR DR, ITAT, ASR. TRUE COPY BY ORDER (ASSISTANT REGISTRAR) INCOME TAX APPELLATE TRIBUNAL AMRITSAR BENCH : AMRITSAR.