MR. VASANT R. SHINDE, MUMBAI V. ITO 19(1)(4), MUMBAI

ITA 1428/MUM/2011

• Counselvise Citation: 142819914 RSA 2011
• Duration Of Justice: 4 year(s) 3 month(s) 22 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 10-06-2015
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: F
• Next Hearing Date: 02-06-2015
• Assessment Year: 2007-2008
• Appeal Filed On: 18-02-2011
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: M RAJAN
• Keywords: Depreciation; Corroborative evidences
• Section: 143(3); 133(6)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, MUMBAI BENCH F, MUMBAI BEFORE SHRI R. C. SHARMA, ACCOUNTANT MEMBER AND MS. SUSHMA CHOWLA, JUDICIAL MEMBER ITA NO. 1428/MUM/2013 ASSESSMENT YEAR: 2007-08 MR. VASANT R. SHINDE SHOP NO. 1, KHAR, MUNICIPAL MKT. KHAR(W), MUMBAI 400 052 PAN:-AOWPS 4504 D .(APPELLANT) VS. ITO 19(1)(4) MITTAL COURT, B WING, 3 RD FLOOR NARIMAN POINT MUMBAI 400 096 (RESPONDENT) APPELLANT BY : NONE RESPONDENT BY : SHRI M. RAJAN DATE OF HEARING : 02.06.2015 DATE OF PRONOUNCEMENT : 10.06.2015 O R D E R PER SUSHMA CHOWLA, JM: THE APPEAL FILED BY THE ASSESSEE IS AGAINST THE ORD ER OF THE CIT(A)-30, MUMBAI DATED 22.11.2010 RELATING TO ASSESSMENT YEAR 2007-08 AGAINST ORDER PASSED UNDER SECTION 143(3) R.W.S. 144 OF THE I.T. ACT. 2. DESPITE APPEAL BEING FIXED FROM DATE TO DATE, NO NE APPEARED ON BEHALF OF THE ASSESSEE ON THE LAST DATE OF HEARING I.E. 16.03 .2015 AND ADJOURNMENT APPLICATION WAS MOVED, BUT NONE APPEARED ON BEHALF OF THE ASSESSEE. THE APPEAL WAS ADJOURNED TO 02.06.2015 BY ISSUE OF NOTICE THRO UGH RDAD. HOWEVER, ON ITA NO. 1428/MUM/2013 ASSESSMENT YEAR: 2007-08 2 THE APPOINTED DATE OF HEARING I.E. 02.06.2015, NONE APPEARED ON BEHALF OF THE ASSESSEE NOR ANY APPLICATION WAS MOVED FOR ADJOURNM ENT. WE PROCEED TO DECIDE THE PRESENT APPEAL AFTER HEARING THE LD. DR FOR THE REVENUE. THE ASSESSEE HAS RAISED FOLLOWING GROUNDS OF APPEAL:- 1. THE LD. C.LT. (A) ERRED IN DECIDING THE APPEAL FILED BY YOUR APPELLANT AS EX-PARTE. THE LAST NOTICE OF HEARING D T.8.11.2010 FOR HEARING ON 19.11.2010 WAS NOT RECEIVED BY YOUR APPE LLANT. 2. THE LD. C.LT. (A) ERRED IN NOT CONSIDERING THE F ACTS OF THE CASE MENTIONED IN THE STATEMENT OF FACTS SUBMITTED ALONG WITH FORM OF APPEAL. 3. THE LD. C.I.T.(A) ERRED IN DISMISSING THE GROUND NO.1 TAKEN BY YOUR APPELLANT WITH STATING AS 'TO MY MIND THERE IS NOT SUCH STIPULATION UNDER THE I.T. ACT FOR OBTAINING APPROV AL UNDER SECTION 144A OF THE I.T. ACT FROM THE ADDL. COMMISSIONER OF INCOME TAX BEFORE PASSING THE ORDER UNDER SECTION. 144 OF THE I.T. ACT, 1961', YOUR APPELLANT PRAYS TO CONSIDER THE SAME AS PER TH E PROVISIONS UNDER THE ACT. SO YOUR GOODSELVES IS REQUESTED TO A LLOW THE SAME. 4. THE LD. C.LT. (A) ERRED IN DISMISSING THE GROUND NO.2 HOLDING THE ADDITION OF RS.6,46,097/- ON ACCOUNT OF SHORT F ALL IN G.P. WITHOUT CONSIDERING THE SUBMISSION THAT YOUR APPELL ANT HAD CHANGED FROM RETAIL SALE TO WHOLE SALE BUSINESS DUR ING THE SAID PREVIOUS YEAR THEREFORE THE G.P. (GROSS PROFIT) IS NOT COMPARABLE WITH THE LAST YEAR'S RATIO. SO YOUR GOODSELVES IS R EQUESTED TO DELETE THE SAID ADDITION. 5. THE LD. C.LT. (A) ERRED IN DISMISSING THE GROUND NO.3 IN HOLDING THE ADDITION OF RS.17,57,134/- UNDER SECTIO N 41(1) OF THE I.T. ACT, 1961 ON ACCOUNT TO PROVE THE GENUINENESS OF THE LIABILITY WITHOUT CONSIDERING THE SUBMISSION THAT YOUR APPELL ANT HAD SUBMITTED DETAIL OF CREDITORS WITH FULL NAME AND TH EIR ADDRESSES AND THE LD. ASSESSING OFFICER / THE LD. C.I.T. (A) DID NOT GRANT ANY OPPORTUNITY TO YOUR APPELLANT TO RECONCILE THE BALA NCES BEFORE MAKING SUCH ADDITION YOUR GOODSELVES IS REQUESTED T O DELETE THE SAID ADDITION. ITA NO. 1428/MUM/2013 ASSESSMENT YEAR: 2007-08 3 6. THE LD. C.I.T. (A) ERRED IN DISMISSING THE GROUN D NO.4 IN HOLDING THE ADDITION OF RS.3,42,037/- BEING 20% OF SEVERAL EXPENSES NAMELY CONVEYANCE, DELIVERY, LABOUR, SALAR IES, SHOP EXPENSES AND STAFF WELFARE ON ACCOUNT THAT THEY ARE NOT VERIFIED WITHOUT CONSIDERING THE SUBMISSIONS / DETAILS SUBMI TTED AND WHICH ARE LYING BEFORE THE LD. ASSESSING OFFICER. SO YOUR GOODSELVES IS REQUESTED TO DELETE THE SAID DISALLOWANCE. 7. THE LD. C.L.T. (A) ERRED IN DISMISSING THE GROUN D NO.5 IN HOLDING THE DISALLOWANCE OF DEPRECIATION RS.87,731/ - BEING DEPRECIATION ON VEHICLES (I.E. MINI-TRUCK / PASSENG ER CAR) WITHOUT CONSIDERING THE SUBMISSIONS / DETAILS SUBMITTED AND WHICH ARE LYING BEFORE THE LD. ASSESSING OFFICER. SO YOUR GOODSELVE S IS REQUESTED TO DELETE THE SAID DISALLOWANCE. 3. THE ISSUE IN GROUND OF APPEAL NO. 1 AND 2 IS AGA INST THE EX-PARTE ORDER PASSED BY THE CIT(A). 4. THE PERUSAL OF THE RECORD REFLECTS THAT THE ASSE SSEE WAS PROVIDED SEVERAL OPPORTUNITIES OF HEARING BY THE CIT(A) BUT NONE APP EARED BEFORE HIM NOR ANY APPLICATION WAS MOVED FOR ADJOURNMENT. IN THE ABOVE SAID CIRCUMSTANCES THE APPEAL OF THE ASSESSEE WAS DECIDED EX-PARTE ON THE BASIS OF MATERIAL ON RECORD. IN THE ABSENCE OF THE ASSESSEE HAVING EXPLAINED REA SON FOR NON ATTENDANCE BEFORE THE CIT(A) ON DIFFERENT DATES OF HEARING, WE FIND NO MERIT IN THE PLEA OF THE ASSESSEE. AUTHOR PLEA RAISED BY THE ASSESSEE WA S THAT CIT(A) HAD NOT CONSIDERED THE STATEMENT OF FACTS FILED BY ASSESSEE . HOWEVER, PERUSAL OF ORDER OF CIT(A) REFLECTS THAT THE STATEMENT OF FACTS ARE INC ORPORATED GROUND WISE. HENCE WE FIND NO MERIT IN THE PLEA OF THE ASSESSEE. THE G ROUNDS OF APPEAL NO.1 AND 2 RAISED BY THE ASSESSEE ARE DISMISSED. 5. THE ISSUE IN GROUND OF APPEAL NO. 3 IS AGAINST T HE ORDER OF THE AO IN NOT OBTAINING THE NECESSARY APPROVAL/DIRECTION UNDER SE CTION 144A OF THE ACT. THE ASSESSEE WAS AGGRIEVED BY THE EX-PARTE ORDER PASSED BY THE AO UNDER SECTION 143(3) R.W.S. 144 OF THE ACT, WITHOUT THE AO TAKING THE NECESSARY APPROVAL FROM THE JCIT BEFORE PASSING THE SAID ORDER. THE RELIANC E BY THE ASSESSEE ON THE ITA NO. 1428/MUM/2013 ASSESSMENT YEAR: 2007-08 4 PROVISION OF SECTION 144A OF THE ACT IN THIS REGARD IS NOT CORRECT AS PASSING A BEST JUDGMENT ASSESSMENT UNDER SECTION 144 OF THE A CT IS INDEPENDENT FROM THE POWERS OF THE JCIT TO ISSUE DIRECTION IN CERTAIN CA SES UNDER SECTION 144A OF THE ACT. CONSEQUENTLY WE UP HOLDING THE ORDER OF CIT(A) DISMISS THE GROUND OF APPEAL NO. 3 RAISED BY THE ASSESSEE. 6. THE ISSUE IN GROUND NO. 4 RAISED BY THE ASSESSEE IS AGAINST ADDITION OF RS.6,46,097/-. THE AO NOTED THAT AS AGAINST G.P. RA TE OF 14% DECLARED IN THE PRECEDING YEAR, FOR THE YEAR UNDER CONSIDERATION TH E ASSESSEE HAD DECLARED G.P. RAGE OF 6%. THE ASSESSEE WAS SPECIFICALLY ASKED TO EXPLAIN THE FALL IN G.P. RATE. IN REPLY THE ASSESSEE SUBMITTED THAT FOR THE YEAR U NDER CONSIDERATION, HE WAS ENGAGED IN WHOLESALE BUSINESS WHEREIN HIS TURNOVER HAD INCREASED. TILL LAST YEAR THE ASSESSEE WAS ENGAGED IN RETAIL BUSINESS. THE AO NOTED THAT THE SUBMISSION OF THE ASSESSEE CANNOT BE ACCEPTED FOR THE FOLLOWIN G REASONS:- (I) THE PARTYWISE DETAILS OF SALES SUBMITTED DUR ING THE COURSE OF ASSESSMENT PROCEEDINGS SHOWS 40 ENTRIES WHEREIN AT SR. NO. 1 TO 39 THE NAMES OF THE PARTY AND AMOUNTS HAVE BEEN GIVEN. THE MINIMUM AND MAXIMUM AMOUNT OF SALE IN CASE OF SINGLE PARTY IS SHOWN AS RS.5650/- AND RS.9745270/-. AT SR. NO. 40 THE FOLLO WING DETAILS ARE GIVEN. SR. NO. NAME OF THE PARTY AMOUNT (RS.) 40 SUNDRY PARTIES/CASH SALES 80,76,223 FROM THE ABOVE NARRATION, IT CAN BE UNDERSTOOD THAT THE AMOUNT OF RS.80,76,223/- PERTAINS TO RETAIL SALES. FURTHER, D URING THE COURSE OF ASSESSMENT PROCEEDINGS THE AR HAS EXPLAINED THAT WHEREVER SALES ARE MADE ON RETAIL FOR DOMESTIC CUSTOMERS, TH E SAME ARE ACCOUNTED UNDER THE HEAD SUNDRY PARTIES / CASH SAL ES. AS SUCH THE CONTENTION THAT ASSESSEE HAS BEEN ENGAGED IN WHOLES ALE BUSINESS CANNOT BE SAID TO BE FULLY TRUE TO THE EXTENT THAT ASSESSEE HAS MADE RETAIL SALES OF RS.80,76,223/-. (II) ASSESSEE HAS NOT BEEN ABLE TO PRODUCE THE OR IGINAL PURCHASE BILLS, SALES BILLS AS ALSO THE PURCHASE REGISTER, S ALES REGISTER AND ITA NO. 1428/MUM/2013 ASSESSMENT YEAR: 2007-08 5 HENCE THE ARGUMENT MADE IN SUPPORT OF FALL IN G.P. CANNOT BE ACCEPTED. (III) ASSESSEE HAS TAKEN A PLEA THAT ALL THE PAPERS , DOCUMENTS, BOOKS KEPT IN THE SHOP GOT WE AND DAMAGE, HOWEVER, NO SUPPORTING EVIDENCE HAS BEEN FURNISHED SUCH AS INSURANCE CLAIM ETC. HENCE, ASSESSEES CONTENTION CANNOT BE ACCEPTED. AS SUCH THE GROSS PROFIT ON RETAIL SALES IS ES TIMATED AT 14% AS DECLARED BY THE ASSESSEE FOR A.Y. 2006-07. THE DIFF ERENCE AMOUNT OF G.P. I.E. GP@ 14% ESTIMATED LESS GP @ 6% DECLARE D BY THE ASSESSEE ON RETAIL SALE OF RS.80,76,223/- WORKED OU T AS UNDER, IS ADDED BACK TO THE TOTAL INCOME OF THE ASSESSEE. RETAIL SALES = RS.80,76,223/- ESTIMATED GP @ 14% LESS DECLARED GP @ 6% = GP @ 8% DIFFERENTIAL GP @ 8% OF RS.80,76,223/- = RS.6,46,09 7/- IN VIEW THEREOF ADDITION OF RS.6,46,097/- WAS MADE ON ACCOUNT OF FALL IN G.P. RATE. 7. AFTER GOING THROUGH THE STATEMENT OF FACTS FILED ALONG WITH APPEAL MEMO AND IN THE ABSENCE OF THE ASSESSEE HAVING FAILED TO PRODUCE THE ORIGINAL PURCHASE AND SALE BILLS AND ALSO PURCHASE AND SALE REGISTER, THE CIT(A) UP HELD THE ADDITION OF RS.6,46,097/-. THE ASSESSEE HAS FAILED TO CONTROVERT FINDING OF THE CIT(A) AND IN THE ABSENCE OF THE SAME AND THE ASSES SEE HAVING FAILED TO FILE ORIGINAL PURCHASE AND SALE BILLS BEFORE THE AUTHORI TIES BELOW, WE ARE INCONFORMITY WITH THE ORDER OF THE CIT(A) IN THIS R EGARD AND THE GROUND OF APPEAL NO. 4 RAISED BY THE ASSESSEE IS DISMISSED. 8. NOW COMING TO THE GROUND NO. 5 THE ISSUE IS WITH REGARD TO THE ADDITION MADE UNDER SECTION 41(1) OF THE ACT, WHEREIN THE AS SESSEE HAD FAILED TO RECONCILE BALANCES. THE AO NOTED THAT THE ASSESSEE HAD SHOWN LIABILITY OF RS.48,49,258/- UNDER THE HEAD SUNDRY CREDITORS. NOT ICES UNDER SECTION 133(6) OF THE ACT WERE ISSUED TO THE PERSONS, WHICH IN SOME C ASES WERE RETURNED UNSERVED AND IN SOME CASES CONFIRMATION WAS GIVEN BY THE SUC H PARTY DID NOT MATCH WITH ITA NO. 1428/MUM/2013 ASSESSMENT YEAR: 2007-08 6 THE LIABILITY DECLARED BY THE ASSESSEE. THE ASSESSE E WAS ASKED TO RECONCILE THE SAID DIFFERENCES. HOWEVER, THE ASSESSEE FAILED TO A PPEAR BEFORE THE AO ON THE APPOINTED DATES OF HEARING AND CONSEQUENTLY WHERE T HE ASSESSEE HAD FAILED TO EXPLAIN AND PROVE THE SAID LIABILITY, ADDITION OF R S.17,57,134/- WAS MADE UNDER SECTION 41(1) OF THE ACT. THE SAID ADDITION WAS UP HELD BY THE CIT(A) AS THOUGH THE ISSUE WAS RAISED BEFORE THE CIT(A), BUT THE ASS ESSEE FAIL TO FILE RECONCILIATION STATEMENT. THE RELEVANT FINDING OF THE CIT(A) ARE V IDE PARA 5.1 WHICH READ AS UNDER:- I HAVE CAREFULLY GONE THROUGH THE ASSESSMENT ORDER, THE SUBMISSIONS MADE ON BEHALF OF THE APPELLANT IN THE STATEMENT OF FACTS AND THE FACTS OF THE CASE. AT THE OUTSET IT M AY BE MENTIONED THAT IN THIS CASE THE APPELLANT CHOSE NOT TO REPRES ENT HIS CASE BEFORE THE AO. FURTHER, THE AO HAD ISSUED NOTICES U NDER SECTION 133(6) WHICH IN SOME CASES THE NOTICES WERE RETURNE D UNSERVED AS THE PARTIES WERE NOT FOUND ON THE ADDRESSES GIVEN B Y THE APPELLANT AND IN SOME CASES THE CONFIRMATION GIVEN BY THOSE P ARTIES DID NOT MATCH WITH THE LIABILITY DECLARED BY THE APPELLANT. THE AMOUNTS INVOLVED ON SUCH TYPE OF CASES ARE RS.5,30,266/- IN THE CASE OF M/S. YUPPA INTERNATIONAL, RS.4,44,708/- IN THE CASE OF M /S. I.G. INTERNATIONAL AND RS.7,82,160/- IN THE CASE OF MR. RAJKUMAR YASHWANT KARLE TOTALING TO RS.17,57,134/-. IN THIS CASE THE ONUS IS ON THE APPELLANT TO PROVE THE GENUINENESS OF LIABIL ITY SHOWN BY HIM. THE APPELLANT HAS FILED TO DO SO WITH RESPECT TO TH E THREE PARTIES MENTIONED ABOVE. THEREFORE, IN MY CONSIDERED VIEW, THE AO IS QUITE JUSTIFIED IN MAKING THE ADDITION OF RS.17,57, 134/- UNDER SECTION 41(1) OF THE ACT. THEREFORE, THE ADDITION S O MADE BY THE AO OF RS.17,57,134/- IS ACCORDINGLY CONFIRMED. THIS GR OUND OF APPEAL IS DISMISSED. 9. THE ASSESSEE BEFORE US HAS FAILED TO FURNISH ANY RECONCILIATION STATEMENT AND IN THE ABSENCE OF THE SAME WE FIND NO MERIT IN THE GROUND OF APPEAL NO. 5 RAISED BY THE ASSESSEE AND THE SAME IS DISMISSED. 10. THE ISSUE IN GROUND NO. 6 RAISED BY THE ASSESSE E IS AGAINST THE DISALLOWANCE TO THE EXTENT OF 20% OUT OF CONVEYANCE , DELIVERY, LABOUR, SALARIES SHOP EXPENSES AND STAFF WELFARE. THE AO VIDE PARA 6 NOTED THAT THOUGH THE ITA NO. 1428/MUM/2013 ASSESSMENT YEAR: 2007-08 7 ASSESSEE HAD DEBITED THE SAID EXPENSES TO THE P/L A CCOUNT BUT CERTAIN EXPENSES WERE UNTRUE AND THE ASSESSEE HAD ONLY FURNISH MONTH WISE BIFURCATION OF THE UNDER-MENTIONED EXPENSES. A) CONVEYANCE RS.54,850/- B) DELIVERY RS.5,52,039/- C) LABOUR RS..4,25,170/- D) SALARIES RS.5,07,240/- E) SHOP EXPENSES RS.79,057/- G) STAFF WELFARE EXPENSES RS.91,840/- 11. BEFORE THE CIT(A) ASSESSEE FAILED TO FILE ANY D ETAILS AND HENCE THE ADDITION MADE BY THE AO WAS CONFIRMED. EVEN BEFORE US DESPITE AN OPPORTUNITY BEING GRANTED, THE ASSESSEE HAS FAILED TO APPEAR AN D JUSTIFY THE NATURE OF EXPENSES AND FILE REQUISITE DETAILS. IN THE ABSENCE OF THE SAME WE FIND NO MERIT IN THE GROUND OF APPEAL NO. 6 RAISED BY THE ASSESSE E AND THE SAME IS DISMISSED. 12. THE LAST ISSUE RAISED BY THE ASSESSEE IS VIDE G ROUND NO. 7 AGAINST THE DISALLOWANCE OF DEPRECIATION ON VEHICLES AMOUNTING TO RS.87,731/- BRIEFLY IN THE FACTS RELATING TO THE ISSUE, THE ASSESSEE HAD M ADE ADDITION TO THE FIXED ASSETS AMOUNTING TO RS.6,58,882/- ON ACCOUNT OF MINI TRUCK S OF RS.3,27,832/- AND PERSONAL CAR OF RS.2,57,040/-. THE ASSESSEE ASKED F OR PURCHASE BILLS AND INVOICES AND ALSO THE R.C. BOOK OF THE VEHICLES. IN RESPONSE THE ASSESSEE SUBMITTED DEBIT NOTE FROM ONE DINESH SHINDE REGARDING THE PURCHASE OF TWO VEHICLES. NO OTHER DETAILS WERE FILED BY THE ASSESSEE, HENCE DEPRECIAT ION ON THE SAID VEHICLES AMOUNTING TO RS.87,731/- WAS DISALLOWED WHICH IN TU RN WAS UP HELD BY THE CIT(A). THE ASSESSEE BEFORE HAS FAILED TO FURNISH T HE REQUISITE DOCUMENTS IN SUPPORT OF PURCHASE OF THE SAID VEHICLES AND IN THE ABSENCE OF THE SAME WE FIND NO MERIT IN THE CLAIM OF THE ASSESSEE. HENCE THE GR OUND OF APPEAL 7 IS DISMISSED. ITA NO. 1428/MUM/2013 ASSESSMENT YEAR: 2007-08 8 13. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 10 TH DAY OF JUNE, 2015. SD/- SD/- (R. C. SHARMA) (SUSHMA CHOWLA) ACCOUNTANT MEMBER J UDICIAL MEMBER MUMBAI, DATED: 10.06.2015 *SRIVASTAVA COPY TO: THE APPELLANT THE RESPONDENT THE CIT, CONCERNED, MUMBAI THE CIT(A) CONCERNED, MUMBAI THE DR F BENCH //TRUE COPY// BY ORDER DY/ASSTT. REGISTRAR, ITAT, MUMBAI.