V.Vignesh, Namakkal V. ACIT, Salem

ITA 1398/CHNY/2016

• Counselvise Citation: [2017] 130 COUNSELVISE.COM (IT) 7753 (ITAT-CHENNAI)
• Duration Of Justice: 9 month(s) 1 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-02-2017
• Appeal Filed By: Assessee
• Bench Allotted: C
• Next Hearing Date: 24-11-2016
• Assessment Year: 2011-2012
• Appeal Filed On: 20-05-2016
• Court: TRIBUNAL
• Department Lawyers: PATHRAVETH PEERYA CA
• Assessee Lawyers: T VASUDEVAN
• Section: 143(3); 263

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH, CHENNAI , . , ' # BEFORE SHRI SANJAY ARORA, ACCOUNTANT MEMBER AND SHRI G. PAVAN KUMAR, JUDICIAL MEMBER ./ I.T.A. NO. 1398/MDS/2016 / ASSESSMENT YEAR : 2011-12 SHRI V. VIGNESH, PROP. VIGNESH AGENCIES, NO. 39-A, DR. SANKARAN ROAD, GANDHI NAGAR, NAMAKKAL [PAN: ADDPV2616H] VS. PRINCIPAL COMMISSIONER OF INCOME TAX, SALEM. ( / APPELLANT) ( / RESPONDENT) % & / APPELLANT BY : SHRI T. VASUDEVAN, ADVOCATE )*% & / RESPONDENT BY : SHRI PATHRAVETH PEERYA, CA & /DATE OF HEARING : 24.11.2016 & /DATE OF PRONOUNCEMENT : 21.02.2017 /O R D E R PER G. PAVAN KUMAR, JUDICIAL MEMBER: THE ASSESSEE HAS FILED APPEAL AGAINST THE REVISION ORDER OF PRINCIPAL COMMISSIONER OF INCOME TAX, SALEM-7 IN C. NO. 9544( 30)/2014-2015/PCIT/SLM DATED 28.03.2016. :-2-: I.T.A. NO. 1398/MDS/2016 2. THE ASSESSEE HAS RAISED THE GROUNDS CHALLENGING THE ACTION OF THE LD CIT IN INITIATING REVISION PROCEEDINGS UNDER SECTI ON 263 OF THE ACT, WERE ASSESSMENT ORDER WAS PASSED U/S. 143(3) OF THE ACT. FURTHER LD CIT HAS NOT APPRECIATED THE FACTS, THAT THE ASSESSMENT ORDER DO ES NOT SATISFY THE CONDITIONS OF ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF THE REVENUE .LD CIT FURTHER ERRED IN NOT CONSIDERING THE FACTS THAT THE ASSESSING OFF ICER HAS VERIFIED THE STOCK DETAILS AND SATISFIED WITH THE CORRECTNESS OF THE R ECORDS, AND ALSO LD CIT DIRECTING TO RE-EXAMINE THE SETTLED ISSUES IS CONTRARY TO LAW . 3. THE BRIEF FACTS OF THE CASE, THAT THE ASSESSEE I S A PROPRIETOR OF M/S VIGNESH AGENCIES BEING WHOLESALE DISTRIBUTOR IN CIG ARETTES AND ITC PRODUCTS AND FILED THE RETURN OF INCOME ON 30.09.2011 WITH TOTA L INCOME OF RS. 42,88,670/- AND THE RETURN OF INCOME WAS PROCESSED U/S. 143(1)O F THE ACT. SUBSEQUENTLY THE CASE WAS SELECTED FOR SCRUTINY AND NOTICE U/S. 143(2) WAS ISSUED. IN COMPLIANCE TO NOTICE, LD. AR APPEARED FROM TIME TO TIME, PRODUCED BOOKS OF ACCOUNTS AND OTHER DETAILS AS CALLED FOR IN SUPPORT OF THE RETURN OF INCOME AND THE LD AO VERIFIED THE DETAILS AND ACCEPTED THE RET URNED INCOME AND PASSED ORDER U/S. 143(3) DATED 18.12.2013. SUBSEQUENTLY, THE LD. CIT ISSUED SHOW CAUSE NOTICE U/S. 263 OF THE ACT BASED ON PROFIT AN D LOSS ACCOUNT AND TAX AUDIT REPORT FORM NO. 3CD WHERE DETAILS OF CLOSING STOCK, PURCHASE, SALES ARE REFLECTED AND OBSERVED THAT THERE IS DIFFERENCE IN THE VALUE OF PURCHASE OF CIGARETTE AND THE CLOSING STOCK AS THE AVERAGE VAL UE OF PURCHASE OF CIGARETTES BEING RS. 3,310/- AND THE SAME VALUE SHOULD BE ADOP TED FOR THE OPENING STOCK AND EXCESS VALUE OF SUCH STOCK IS REQUIRED TO BE D ISALLOWED. IN COMPLIANCE TO :-3-: I.T.A. NO. 1398/MDS/2016 THE NOTICE, LD. AR SUBMITTED EXPLANATIONS ON THE FI NDINGS OF THE LD CIT, TAX AUDIT REPORT, PROFIT AND LOSS ACCOUNT EMPHASISING ON OP ENING STOCK, PURCHASES, SALES AND CLOSING STOCK. THE THE LD. AR RELIED ON LEG AL DECISIONS AND FILED WRITTEN SUBMISSIONS ON 31.07.2015 REFERRED IN PARA 3 AT PA GE 2 OF THE CIT ORDER WHICH READS AS UNDER: 'THE COMMISSIONER OF INCOME TAX HAS TAKEN THE VALU E OF 142.65 MILLION OF CIGARETTES AT RS. 32,82,385/- BASED ON T HE QUANTITY DETAILS FURNISHED IN CLAUSE 28 OF FORM 3 CD REPORT. THE VAL UE OF OPENING STOCK OF RS. 32,82,385/- AS 0N 01.04.2010 IS FOR CIGARETTES (142.65 MILLIONS) VALUED AT RS. 14,00,962/- AND OTHER NON TOBACCO ITEMS AT R S. 18,81,423/- (AS PER ANNEXURE ENCLOSED). THE ASSESSEE HAS TO DECLARE INF ORM 3 CD ONLY QUANTITY PARTICULARS RELATING TO PRINCIPAL ITEMS OF TRADED GOODS. SINCE, ONLY CIGARETTE IS THE PRINCIPAL ITEMS OF GOODS TRADED, O NLY ITS QUANTITY IS SHOWN IN CLAUSE 28 OF 3 CD. NO WHERE HE HAS STATED THAT T HE VALUE OF 42.65 MILLION IF RS. 32,82,385/-. DURING THE COURSE OF T HE SCRUTINY ASSESSMENT, THE ACIT HAD GONE INTO THE VALUE OF OPENING STOCK A S PER RECORDS MAINTAINED AND HAVING BEEN SATISFIED ABOUT THE CORR ECTNESS HAD PROCEEDED TO COMPLETE THE ASSESSMENT. THE COMMISSIONER OF INCOME TAX HAS TAKEN THAT THE PURCHASE VALUE OF 78,353.20/- MILLION CIGARETTES AT RS. 25,94,00,495/ - AND ARRIVED AT AN AVERAGE COST OF RS. 3,310/-. IN FACT THE TOTAL PURC HASE CONSISTS OF CIGARETTES (78,353.20 MILLIONS) COSTING RS. 21,75,1 4,409/- NON TOBACCO PRODUCTS LIKE FOOD ITEMS, BISCUITS ETC., COSTING RS . 4,18,86,087/- WHICH WAS VERIFIED BY THE ASSESSING OFFICER. SIMILARLY THE CLOSING STOCK OF 729.65 MILLION CIGA RETTES IS RS. 20,14,006/- AND NOT RS. 50,80,880/-. THE CLOSING ST OCK OF RS. 50,80,880/- COMPRISES OF CIGARETTES (729.65 MILLIONS VALUED AT RS. 20,14,006/- AND NON TOBACCO PRODUCTS VALUED AT RS. 30,66,874/-). THE BR EAK UP FOR CLOSING STOCK IS ENCLOSED HEREWITH. THESE ITEMS WERE PART O F THE ORIGINAL BOOKS AND DOCUMENTS AND PRODUCED FOR VERIFICATION AT THE TIME OF ASSESSMENT AND CONSIDERED BY THE ACIT. SINCE THE DISCLOSURE REQUIREMENT WARRANTED ONLY QU ANTITY PARTICULARS OF ITEMS WHOSE MONETARY VALUE EXCEEDS 10% OF TOTAL TRA DED VALUE, THE QUANTITY PARTICULARS OF OTHER ITEMS WERE NOT FURNIS HED IN CLAUSE 28 OF 3 CD. THE ASSESSING OFFICER HAD GONE THROUGH THE ACCOUNTS IN DETAIL AND HAS :-4-: I.T.A. NO. 1398/MDS/2016 ACCEPTED THE TRADING RESULTS INCLUDING VALUATION OF OPENING AND CLOSING STOCK. HENCE THE PRESUMPTION THAT OPENING STOCK HAS BEEN OVER STATED TO THE TUNE OF RS. 28,10,213/- IS NOT THE CORRECT APPRECIA TION OF FACTS AND THE PROPOSAL TO DISALLOW THE SAME IS PRAYED TO BE DROPP ED AND JUSTICE RENDERED.' 4. THE LD. AR SUBMITTED SUMMARY OF CLOSING STOCK OF CIGARETTE WITH QUANTITATIVE DETAILS AND UNIT VALUE OF PURCHASE AND DIFFERENCE IN VALUE. THE LD. CIT OBSERVED THAT THE VALUE ADOPTED BY THE ASSESSEE IS COMPARATIVELY LOWER THAN UNIT VALUE. SIMILARLY FOUND DIFFERENCE IN THE VALUE OF CIGARETTES, ATTA AND BISCUITS AND THE ASSESSEE HAS NOT PRODUCED QUANTITA TIVE DETAILS OF ATTA AND BISCUITS IN FORM NO. 3CD.THE LD AO HAS NOT VERIFIED THE DIFFERENCE IN STOCK AND THE ASSESSEE HAS NOT PRODUCED THE DETAILS OF NON-TO BACCO PRODUCTS IN FORM NO. 3CD.WITH THESE OBSERVATIONS THE LD CIT CANCELLED THE ASSESSMENT AND ISSUED DIRECTIONS TO THE ASSESSING OFFICER. 5. AGGRIEVED BY THE REVISION ORDER OF THE CIT, ASSE SSEE HAS FILED AN APPEAL WITH THE TRIBUNAL. BEFORE US THE LD AR SUBMI TTED THAT THE ASSESSEE IS ENGAGED IN THE BUSINESS AS WHOLESALE DISTRIBUTOR OF ITC PRODUCTS AND THE ASSESSMENT WAS COMPLETED U/S. 143(3) ON 18.12.2013 AND SUPPORTED HIS SUBMISSIONS WITH PAPER BOOK WERE ASSESSING OFFICER VIDE LETTER DATED 25.04.2013 CALLED FOR SPECIFIC DETAILS AND IN COMPLIANCE THE A SSESSEE HAS FILED REPLY REFERRED AT PAGE 26 OF PAPER BOOK. THE LD. AR ALSO DREW ATT ENTION TO THE LETTERS FILED BEFORE THE ASSESSING OFFICER ON 07.08.2013 AND 30.0 8.2013 AND ALSO EXPLANATIONS FILED BEFORE THE CIT IN THE REVISION P ROCEEDINGS ON 31.07.2015 ON PURCHASE AND SALE OF PRODUCTS IN THE ASSESSMENT YEA R 2011-12. THE LD AR :-5-: I.T.A. NO. 1398/MDS/2016 EMPHASISED THAT THE CIT HAS RELIED ON RECORDS, BUT THE ASSESSEE HAS FILED SUMMARY OF STOCK AT PAGE 37 OF THE PAPER BOOK, WITH THE BREAKUP OF PRODUCTS AS ON 31.03.2010 AND DUE TO CALCULATION ERRORS, THE VA LUE WAS DISCLOSED AT RS14,00,962/- AND THE ASSESSEE HAS RECONCILED THE QUANTITATIVE TALLY, HENCE THERE IS NO DIFFERENCE IN THE OPENING BALANCE AND THE ASSESSING OFFICER HAS MADE ENQUIRIES IN THE ASSESSMENT PROCEEDINGS AND THE LD AR PRAYED FOR QUASHING THE REVISION ORDER OF CIT. CONTRA, LD. DR RELIED ON TH E CIT ORDER. 6. WE HEARD THE RIVAL SUBMISSIONS, PERUSED THE MATE RIAL ON RECORD AND JUDICIAL DECISIONS. THE LD. AR ARGUED THE GROUNDS AND REITERATED THE SUBMISSIONS OF ASSESSMENT AND REVISIONARY PROCEEDINGS AND EXP LAINED THAT THE REVISION ORDER PASSED BY THE LD CIT DOES NOT SATISFY TWIN C ONDITIONS, BEING THE ASSESSMENT ORDER IS ERRONEOUS AND PREJUDICIAL TO TH E INTEREST OF THE REVENUE. THE LD. AR SUBSTANTIATED HIS SUBMISSIONS WITH PAPER BOOK CONTAINING DETAILS OF CORRESPONDENCE/LETTERS BETWEEN THE ASSESSEE AND THE INCOME TAX OFFICER IN THE COURSE OF ASSESSMENT PROCEEDINGS. WE HAVE PERUSED T HE MATERIAL AND RECONCILIATION OF VALUE BASED ON THE TAX AUDIT REPO RT .THE ASSESSEE IS A DISTRIBUTOR OF ITC PRODUCTS AND FILING INCOME TAX RETURNS REGUL ARLY, BUT ON PERUSAL OF THE ASSESSMENT ORDER, WE COULD NOT ARRIVE AT A CONCLUSI ON THAT ASSESSING OFFICER HAS VERIFIED THE QUANTITATIVE DETAILS AND VALUE ON RECO NCILIATION AND HAS NOT MADE SATISFACTORY NOTE IN THE ASSESSMENT ORDER. WE CONS IDERED THE GENUINENESS OF THE TRANSACTIONS AND STATEMENTS OF THE ASSESSEE, BU T THE QUESTION ARISES, WHETHER THE ASSESSING OFFICER HAS VERIFIED THE ESSE NTIAL FACTS BEFORE ACCEPTING THE RETURNED INCOME AND CONCLUDED THE ASSESSMENT. T HE CIT IN HIS ORDER :-6-: I.T.A. NO. 1398/MDS/2016 OBSERVED AND DEALT EXHAUSTIVELY ON THE STOCK OF CIG ARETTES AND OTHER ITC PRODUCTS. WE FIND THE ASSESSEE IS MAINTAINING BOOK S OF ACCOUNTS AND ACCOUNTS WHICH ARE AUDITED U/SEC44AB OF THE ACT, BUT THE LD. CIT FOUND THAT THERE IS DIFFERENCE IN QUANTITATIVE DETAILS OF PRODUCTS AND FORM3CD REPORT. FURTHER THE ASSESSING OFFICER OVERLOOKED THE RECONCILIATION ISS UE. WE ARE OF THE OPINION THAT THE GENUINENESS OF THE FINANCIAL TRANSACTIONS MAY N OT BE IN DISPUTE, BUT THE LD. CIT HAS CANCELLED THE ASSESSMENT AND ISSUED DIRECTI ONS TO THE ASSESSING OFFICER TO PASS THE ORDER AFRESH. WE FIND SUBSTANCE IN HIS OBSERVATIONS AND, ACCORDINGLY, APPROVING HIS ORDER, REMIT THE SPECIFIC DISPUTED IS SUE TO THE FILE OF THE ASSESSING OFFICER TO VERIFY AND EXAMINE THE QUANTITATIVE DETA ILS AND RECONCILE THE VALUE OF PRODUCTS, AND DECIDE ISSUING DEFINITE FINDINGS OF F ACT. NEEDLESS TO ADD, THE ASSESSEE SHALL BE PROVIDED ADEQUATE OPPORTUNITY OF HEARING BEFORE PASSING THE ORDER ON MERITS. WE DECIDE ACCORDINGLY. 7 IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALLO WED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED ON TUESDAY, THE 21ST DAY OF FEBRUA RY, 2017 AT CHENNAI. SD/ - ( ) (SANJAY ARORA) / ACCOUNTANT MEMBER SD/ - ( . ) (G. PAVAN KUMAR) $ /JUDICIAL MEMBER /CHENNAI, / /DATED: 21ST FEBRUARY, 2017 JPV & )'12 32 /COPY TO: 1. APPELLANT 2. )*% /RESPONDENT 3. 4 ( )/CIT(A) 4. 4 /CIT 5. 2 )'' /DR 6. 8 /GF