ITO, Tirunelveli V. Mani & Co., Sankarankoil

ITA 1479/CHNY/2015

• Counselvise Citation: [2017] 130 COUNSELVISE.COM (IT) 8184 (ITAT-CHENNAI)
• Duration Of Justice: 1 year(s) 6 month(s) 26 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 13-01-2017
• Appeal Filed By: Department
• Bench Allotted: D
• Next Hearing Date: 22-12-2016
• Assessment Year: 2010-2011
• Appeal Filed On: 17-06-2015
• Court: TRIBUNAL
• Department Lawyers: R DURAI PANDIAN SR
• Assessee Lawyers: G BASKAR
• Keywords: Business income; Onus to prove
• Section: 133A

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL D BENCH: CHENNAI . . . , ! ' .. # $!% , ' () BEFORE SHRI N.R.S. GANESAN, JUDICIAL MEMBER AND SHRI D.S.SUNDER SINGH, ACCOUNTANT MEMBER ! ./ ITA NO.1479/MDS/2015 * +* /ASSESSMENT YEAR: 2010-11 THE INCOME TAX OFFICER, WARD-5, TIRUNELVELI. VS. M/S. MANI & CO., 56/48, EAST CAR STREET, SANKARANKOIL. [PAN: AAIFM 7671 D ] ( ,- /APPELLANT) ( ./,- /RESPONDENT) ,- 0 1 / APPELLANT BY : MR.R. DURAI PANDIAN, SR.AR ./,- 0 1 /RESPONDENT BY : MR.G. BASKAR, ADV. # 0 2' /DATE OF HEARING : 22.12.2016 34+ 0 2' /DATE OF PRONOUNCEMENT : 13.01.2017 / O R D E R PER D.S.SUNDER SINGH , ACCOUNTANT MEMBER : THIS IS AN APPEAL FILED BY THE REVENUE AGAINST THE ORDER DATED 30.03.2015 OF COMMISSIONER OF INCOME TAX (APPEALS)- 3, MADURAI, IN ITA NO.009/2014-15 FOR THE AY 2010-11. THE REVENUE HAS RAISED THE FOLLOWING GROUNDS IN THE APPEAL: ITA NO.1479/MDS/2015 :- 2 -: GROUNDS OF APPEAL : 1. THE ORDER OF THE CIT(A) IS OPPOSED TO LAW ON THE FA CTS AND IN THE CIRCUMSTANCES OF THE CASE. 2. THE CIT(A) ERRED BY WAY OF REJECTING THE MATERIAL E VIDENCE (I.E. COMPUTER PRINTOUT CONTAINING MONTH WISE SALES DETAILS FOR THE PERIOD FROM APRIL 2010 TO OCTOBER 2010) FOUND IN THE ASSESSEES PREMISES DURING THE COURSE OF SURVEY CONDUCTED U/S I 33A OF THE INCOME TAX ACT. 3. THE CIT(A) FAILED TO NOTE THAT THE PROJECTED SALES IN A STATEMENT OF COMPUTER PRINTOUT FOUND DURING THE COURSE OF SURVEY IS NOT IN ROUND F IGURES AND IT RESEMBLES AS ACTUAL SALES. 4. THE CIT(A) ERRED THAT THE ASSESSING OFFICER MADE THE ADDITION SOLELY ON THE BASIS OF A LOOSE COMPUTER PRINTOUT, WHICH DOES NOT DISPLAY A R EMOTE CONNECTION TO THE DATA AVAILABLE IN THE BOOKS OF ACCOUNTS OF THE ASSESSEE. AS PER PROVISION OF SEC.292C OF THE ACT, THE DOCUMENTS IMPOUNDED AT THE TIME OF SURVEY U/S 133A OF THE ACT MAY BE PRESUMED TO BE TRUE. AS PER ITATS ORDER, THE ASSES SEE HAS TO SHOW THAT THE CONTENTS OF THE SAID DOCUMENTS ARE NOT TRUE. HENCE, THE ASSE SSEE HAS THE RESPONSIBILITY TO PROVE HIS SUBMISSIONS THAT THE COMPUTER PRINTOUT OF PROJE CTED SALES PREPARED FOR BANK LOAN PURPOSES BY PRODUCING THE DOCUMENTS FILED WITH THE BANK. 5. THE CIT(A) FAILED TO NOTE THAT THERE WILL BE NO NEC ESSITY OF PROJECTING SALES PERTAINING TO PAST MONTHS. THE EXPLANATION OF THE ASSESSEE DOES N OT SUIT THE SITUATION. 6. THE CIT(A) HAS ALSO NOT CALLED FOR A REMAND REPORT BASED ON THE EXPLANATION/REBUTTAL SUBMITTED BY THE ASSESSEE AS DIRECTED BY THE HONBL E ITAT. 7. FOR THESE AND SUCH OTHER GROUNDS THAT MAY BE ADDUCE D AT THE TIME OF HEARING AND IT IS PRAYED THAT THE ORDER OF THE CIT(A) MAY BE SET ASID E AND THAT THE ORDER OF ASSESSING OFFICER MAY BE RESTORED. 2. A SURVEY U/S.133A OF INCOME TAX ACT WAS CONDUCTE D IN THIS CASE ON 03.03.2010. DURING THE COURSE OF SURVEY MONTH-WISE SALES FROM APRIL, 2010 TO OCTOBER, 2010 WERE SEEN IN THE COMPUTER SYS TEM OF THE ASSESSEE AND COPY OF THE PRINTOUT WAS TAKEN BY THE ASSESSING OFFICER AT THE TIME OF SURVEY. THE TOTAL SALES FOR THE PERIOD FROM 04/2009 TO 10/2009 WORKED OUT TO RS.5,17,22,046/- AS PER THE COMPUTER PRINTOU T AND THE SALES FOR THE MONTHS OF NOVEMBER, 2009 AND DECEMBER 2009 WAS RS.1 3,27,174/- AND RS.43,64,913/- RESPECTIVELY. THE TOTAL SALES FOR TH E PERIOD FROM APRIL TO DECEMBER, 2009 WAS WORKED OUT TO RS.5,74,14,133/- AGAINST WHICH THE ASSESSEE HAD ADMITTED A SUM OF RS.1,86,41,430/- AND THERE WAS DIFFERENCE OF RS.3,87,72,703/-. THE AO HAS CALLED F OR THE EXPLANATION AT ITA NO.1479/MDS/2015 :- 3 -: THE TIME OF SURVEY AND THE ASSESSEE EXPLAINED THAT THE SALES FIGURES IN THE COMPUTER SYSTEM WERE PROJECTIONS PREPARED FOR THE P URPOSE OF BANK LOAN AND IT WAS NOT ACTUAL SALES. THE AO DISBELIEVED TH E EXPLANATION OF THE ASSESSEE AND HELD IT AS THE UNACCOUNTED SALES OF TH E ASSESSEE AND ESTIMATED THE GROSS PROFIT @22.75% ON DIFFERENCE AM OUNT OF SALES OF RS.3,87,72,703/- (RS.5,74,14,133 RS.1,86,41,430) AND MADE THE ADDITION OF RS.88,20,790/- TO THE RETURNED INCOME. THE MATTER WENT UP TO THE HONBLE ITAT AND THE HONBLE ITAT DISPOSED O F THE APPEAL IN ITA NO.1685/MDS/2014 DATED 23.01.2015 REMITTING THE MAT TER BACK TO THE FILE OF CIT(A) AS UNDER: WE HEARD THE RIVAL CONTENTIONS AND PERUSED THE REC ORD. WE NOTICE THAT THE IMPUGNED ADDITION HAS BEEN MADE SOLELY ON THE BASIS OF A COM PUTER PRINTOUT FOUND AT THE TIME OF SURVEY. ACCORDING TO THE ASSESSING OFFICER, THE SAME WAS AVAILABLE ON THE COMPUTER SYSTEM AND A PRINT OUT OF THE SAME WAS TAKEN OUT ON 06.11. 2009. THE SALES FIGURES NOTED THEREIN PERTAINED TO THE PERIOD FROM APRIL 2009 TO OCTOBER, 2009. HENCE, THE LD. DR CONTENDED THAT THERE WILL NOT BE ANY NECESSITY OF PROJECTING SALES PERTAINING TO PAST MONTHS. THUS, IT IS SEEN THAT THE EXPLANATION OF THE ASSESSEE DOES NOT SUIT THE SITUATION. AT THE SAME TIME, IT IS ALSO A FACT THAT THE SURVEY OFFICIAL DID NOT STUMBL E UPON ANY EXCESS/SHORTAGE STOCK, UNACCOUNTED PURCHASES, UNACCOUNTED SALES, ETC., AT THE TIME OF SURVEY OPERATION. HOWEVER, BEFORE US, BOTH THE PARTIES FAILED TO FURN ISH A COPY OF THE COMPUTER PRINTOUT, ON THE BASIS OF WHICH THE IMPUGNED ADDITION HAS BEEN M ADE. WE FURTHER NOTICE THAT THE LD.CIT(APPEALS) HAS EXPR ESSED THE VIEW THAT THE BURDEN TO PROVE THE CONTENTS OF THE DOCUMENT IS PLACED UPON T HE ASSESSING OFFICER. (SEE. PARA 7.2 OF CIT(APPEALS)S ORDER). THE SAID OBSERVATIONS ARE AGA INST THE PROVISIONS OF SEC. 292C OF THE ACT, WHEREIN IT IS PROVIDED THAT THE DOCUMENTS IMPO UNDED AT THE TIME OF SURVEY U/S.133A OF THE ACT MAY BE PRESUMED TO BE TRUE. IN THAT CASE , THE BURDEN IS PLACED UPON THE ASSESSEE TO REBUT THE SAID PRESUMPTION. AT THE TIME OF HEARING, THE LD A.R WAS SPECIFICALLY ASKED AS TO WHETHER THE ASSESSEE WAS ABLE TO PROVE HIS SUBMISSIONS THAT THE COMPUTER PRINTOUT RELATE TO THE PROJECTED SALES PREPARED FOR BANK PURPOSES BY PRODUCING THE DOCUMENTS FILED WITH THE BANK, THE LD. AR SUBMITTED THAT HE IS NOT HAVING THOSE DETAILS. 3. CONSEQUENT TO THE ORDER OF THE ITAT, THE LD.CIT( A) HAS PASSED THE ORDER IN ITA NO.009/2014-15 DATED 30/03.2015 AND DE LETED THE ADDITION MADE BY THE ASSESSING OFFICER. WHILE DELETING THE A DDITION THE LD.CIT(A) RELIED ON THE LETTER SUBMITTED BY THE A.O ON 23.03. 2015 WHICH WAS REPRODUCED BY THE CIT(A) IN HIS ORDER IN PARAGRAPH NO.12. FOR THE SAKE OF ITA NO.1479/MDS/2015 :- 4 -: CONVENIENCE WE REPRODUCE THE RELEVANT PARAGRAPHS OF THE LD.CIT(A)S ORDER IN PARAGRAPH NO.12 AND 13 AS UNDER: 12. AO VIDE LETTER DATED 23.03.2015 SUBMITTED AS UND ER: I SUBMIT THAT APROPOS TO MY PERSONAL APPEARANCE BE FORE THE COMMISSIONER OF INCOME TAX (APPEALS)-3, MADURAI, ON 10.03.2015, AND AS PER DIRECTIONS, I HAVE GONE THRO. THE SURVEY MATERIALS RELEVANT TO THE ASSESSMENT YEA R 2010-11 IMPOUNDED DURING SURVEY U/S.133-A OF THE INCOME TAX ACT, 1961, 03.03.2010, IN THE ASSESSEES CASE AND THE COMPUTER PRINT OUT IN QUESTION (PURPORTED TO BE DAT ED 06.11.2009), ON THE BASIS OF WHICH ADDITIONS WERE MADE BY THE THEN ASSESSING OFFICER, WARD-1(2), TIRUNELVELI, IN THE ASSESSMENT ORDER PASSED U/S.143(3) OF THE INCOME TAX ACT, 1961, ON 28.03.2013. A CAREFUL EXAMINATION OF BOTH SHOWS THAT THERE IS NO RESEMBLANCE/NEXUS BETWEEN FIGURES AS REFLECTED IN THE IMPOUNDED BOOKS AND THE COMPUTER PRINT OUT. IT APPEARS THAT THE COMPUTER PRINTOUT IS NOT IN AN EXCEL FORMAT, BUT FIGURES THAT COULD HAVE BEEN SIMPLY TYPED. THERE IS A SOUND REASONING FOR M Y CONSIDERED OPINION; SAY, 1. AS PER PROFIT & LOSS ACCOUNT FOR THE PERIOD ENDING ON 31.12.2009 (AS AVAILABLE IN THE FILE), SALES FIGURES ARE CATEGORICALLY STATED I TEM-WISE, SUCH AS GROUND NUT SEED, GROUND NUT OIL, CASTOR OIL, VANASPATHI OIL, REFINED OIL AND GROUND NUT OIL CAKE. 2. IN THE COMPUTER PRINTOUT BASED ON WHICH ADDITIONS W ERE MADE, SUCH BROADER DETAILS ARE COMPLETELY ABSENT, JUST WITH NAME(S) OF MONTHS AND FIGURES IN THE NEXT COLUMN. 3. DURING ASSESSMENT PROCEEDINGS, THE BRASS TACKS COUL D HAVE BEEN FERRETED OUT FROM THE ASSESSEE, SHOULD THERE BE A DEFINITE CONNECTION BETWEEN THE FIGURES FOUND IN THE COMPUTER PRINTOUT AND BOOKS OF ACCOUNT/OTHER RE CORDS FOUND IN THE PREMISES & IMPOUNDED, AND THERE WAS NO MATCH BETWEEN THE TWO R ECORDS ON HAND. 4. IF A PLAIN QUESTIONNAIRE WAS PUT TO THE ASSESSEE TO EXTRACT A COMPARATIVE ANALYSIS OF FIGURES, THE OUTCOME WOULD HAVE BEEN MORE ACCURA TE, WITHOUT GIVING AN IOTA OF SUSPICION/DISPUTE. 5. THE IMPLIED MEANING IS THAT THE ASSESSING OFFICER M ADE THE ADDITION SOLELY ON THE BASIS OF A LOOSE COMPUTER-PRINTOUT, WHICH DO ES NOT DISPLAY A REMOTE CONNECTION TO THE DATA AVAILABLE IN THE BOOKS OF AC COUNTS OF THE ASSESSEE. IN THIS REGARD, I SOLICIT THE COMMISSIONERS KIND ATTENTION TO ANSWER GIVEN BY SHRI K.BALASUBRAMANIAN, PROP MANI & CO, TO QUESTION NO.1 8 OF THE SWORN STATEMENT RECORDED AT THE TIME OF SURVEY WHEN HE WAS REQUESTE D TO EXPLAIN FOR THE FIGURE SHOWN IN THE PRINT OUT (TOTAL AMOUNT RS.5,17,22,046/-), H E HAD ANSWERED THAT THE TURNOVER WAS A PROJECTED ONE AND PREPARED FOR OBTAINING LOAN FROM M/S.INDIAN BANK, TIRUNELVELI AND M/S.TAMIL NADU MERCANTILE BANK; THE ACTUAL TURNOVER IS WHAT I DECLARED EARLIER 13. IN VIEW OF THE AOS COMMENTS THAT THE IMPLIED MEANING IS THAT THE ASSESSING OFFICER MADE THE ADDITION SOLELY ON THE BASIS OF A LOOSE COMPUTER-PRINTOUT, WHICH DOES NOT DISPLAY A REMOTE CONNECTION TO THE DATA AV AILABLE IN THE BOOKS OF ACCOUNTS OF THE ASSESSEE SUGGESTS THAT THE ADDITION MADE BY THE AO IN THE ASSESSMENT IS WITHOUT BASIS AND IS MADE WITHOUT REB UTTING APPELLANTS EXPLANATION AT THE TIME OF SURVEY THAT THE FIGURES REPRESENT PROJECTED SALES AT ALL. 4. AGGRIEVED BY THE LD.CIT(A)S ORDER, THE DEPARTME NT IS IN APPEAL BEFORE US. ITA NO.1479/MDS/2015 :- 5 -: THE LD.DR ARGUED THAT THE INFORMATION OF MONTH WIS E SALES FROM APRIL TO OCTOBER, 2009 WAS FOUND DURING THE COURSE OF SURVEY IN THE COMPUTER SYSTEM OF THE ASSESSEE WAS PREPARED ON 06. 11.2009. THE ASSESSEE NEED NOT TAKE PROJECT, THE SALES FOR THE P ARTIAL PERIOD FOR THE PURPOSE OF BANK LOAN AND THE ASSESSEE WOULD TAKE TH E SALES PROJECTIONS FOR THE COMPLETE YEAR. THE HONBLE ITAT IN THEIR O RDERS DIRECTED THE LD.CIT(A) TO RE-EXAMINE THE ISSUE. THE HONBLE ITA T ALSO VIEWED THAT IT IS THE BURDEN OF THE ASSESSEE TO SHOW THE CONTENTS OF THE INFORMATION IS WRONG. IN THE SECOND ROUND ALSO, THE ASSESSEE HAS NOT FURNISHED ANY EVIDENCE TO SHOW THAT THE DETAILS WRITTEN IN THE CO MPUTER PRINTOUT WAS NOT RELATING TO THE SALES FOR THE PERIOD OF APRIL T O OCTOBER- 2009 AND BURDEN HAS NOT BEEN DISCHARGED AS PER SEC.292C OF T HE INCOME TAX ACT. ACCORDING TO THE LD.DR, THE ADDITION MADE BY THE AO REQUIRED TO BE CONFIRMED. ON THE OTHER HAND, THE LD.AR ARGUED THA T THE INFORMATION WAS PREPARED FOR THE PURPOSE OF BANK LOAN AND AT THE TI ME OF SURVEY ITSELF THE ASSESSEE HAS EXPLAINED THE SAME. THE ASSESSEE HAS CLARIFIED THAT LOOSE SHEET SHOWING PROJECTION OF SALES WAS PREPARED FOR THE PURPOSE OF BANK LOAN ONLY. NO EVIDENCE WAS FOUND DURING THE SURVEY SUPPORTING THE UNACCOUNTED SALES MADE BY THE ASSESSEE. THERE WAS N O STOCK DIFFERENCE AND NO OTHER LOOSE SHEETS EVIDENCING SALES MADE OUT SIDE THE BOOKS OF ACCOUNTS WERE FOUND. THE DEPARTMENT HAS IMPOUNDED ALL THE BILL BOOKS, STOCK REGISTERS, ETC., BUT NONE OF THE REGISTER/BIL L BOOKS SHOWS THAT THE ASSESSEE HAS INDULGED IN MAKING UNACCOUNTED SALES, IT IS UNJUSTIFIED TO MAKE ADDITION MERELY ON THE BASIS OF SIMPLE LOOSE S HEET. ITA NO.1479/MDS/2015 :- 6 -: 5. WE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE M ATERIAL PLACED ON RECORD. WE HAVE GONE THROUGH THIS TRIBUNAL DECISION AND DI RECTIONS ISSUED BY THE HONBLE ITAT TO THE LD.CIT(A). IN THE EARLI ER ORDER, THE HONBLE ITAT HAS VIEWED THAT IT IS THE BURDEN OF THE ASSESS EE TO SHOW THAT THE CONTENTS OF THE DOCUMENT ARE NOT TRUE AS PER SEC.29 C OF INCOME TAX ACT. FROM THE ORDER OF THE LD.CIT(A), WE NOTICED THAT TH E LD.CIT(A) HAS CALLED FOR THE REMAND REPORT, AND THE AO SUBMITTED THE REM AND REPORT ANALYZING THE LOOSE SHEETS AND THE INFORMATION AVAI LABLE ON RECORD AND ACCEPTED THAT THE INFORMATION IN THE COMPUTER SYSTE M WAS PROJECTIONS BUT NOT ACTUAL SALES. HAVING ACCEPTED THAT THE INFORMAT ION IN COMPUTER SYSTEM RELATED TO THE PROJECTIONS BUT NOT THE SALES, THE D EPARTMENT SHOULD NOT HAVE FILED THE APPEAL. THE LD.AR HAS FILED THE PAPE R BOOK ENCLOSING THE VAT ORDER DISCLOSING THE SALES AT RS.3,23,37,125/- AND STATED THAT FROM THE IMPOUNDED MATERIAL NO EVIDENCE IS AVAILABLE EVI DENCING THE UNACCOUNTED SALES. THE A.R FURTHER SUBMITTED THAT T HE LOAN PROPOSAL WAS SUBMITTED TO THE BANK AND BANK HAS REFUSED TO SANCT ION LOAN AND CONSEQUENTLY BUSINESS OF THE ASSESSEE WAS ALSO CLOS ED AND ALSO REGRETTED HIS INABILITY TO SUBMIT THE EVIDENCE REGARDING THE LOAN PROPOSAL SUBMITTED TO THE BANK. SINCE NO OTHER INFORMATION WAS AVAILAB LE AND THE ASSESSING OFFICER IN HIS LETTER STATED THAT PRINTOUT DOES NOT DISPLAY A REMOTE CONNECTION TO THE DATA AVAILABLE AND THE TURNOVER D ECLARED BY THE ASSESSEE MATCHES WITH THE TURNOVER DECLARED IN VAT AND THE BOOKS OF ITA NO.1479/MDS/2015 :- 7 -: ACCOUNTS MAINTAINED BY THE ASSESSEE, WE CONFIRM THE ORDER OF THE LD.CIT(A) AND DISMISS THE REVENUES APPEAL. 6. IN THE RESULT, THE APPEAL OF THE REVENUE IS DISMISSED . ORDER PRONOUNCED IN THE OPEN COURT ON 13 TH JANUARY, 2017, AT CHENNAI. SD/- SD/- ( . . . ) (N.R.S. GANESAN) /JUDICIAL MEMBER ( ' . . # $!% ) (D.S.SUNDER SINGH) ' /ACCOUNTANT MEMBER /CHENNAI, 5! /DATED: 13 TH JANUARY, 2017. TLN 0 .2$6 76+2 /COPY TO: 1. ,- /APPELLANT 4. # 82 /CIT 2. ./,- /RESPONDENT 5. 6 9 .2 /DR 3. # 82 ( ) /CIT(A) 6. * < /GF