ITO, Ward - 2(4), Durgapur, Durgapur V. Shri Nirmalya Saha, Kolkata

ITA 1555/KOL/2017

• Counselvise Citation: [2018] 125 COUNSELVISE.COM (IT) 3341 (ITAT-KOLKATA)
• Duration Of Justice: 1 year(s) 1 month(s) 24 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 24-08-2018
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Assessment Year: 2014-2015
• Appeal Filed On: 30-06-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: S DASGUPTA
• Assessee Lawyers: MIRAJ D. SHAH
• Keywords: Business income; Application of stay
• Section: 143(3)

Judgement Text

, B , IN THE INCOME TAX APPELLATE TRIBUNAL KOLKATA BENCH B KOLKATA BEFORE SHRI S.S.GODARA, JUDICIAL MEMBER AND SHRI, M. BALAGANESH, ACCOUNTANT MEMBER ITA NO. 1555 / KOL / 20 17 ASSESSMENT YEAR :2014-15 INCOME TAX OFFICER, WARD-2(4), AAYKAR BHAWAN, ANNEXE, CITY CENTRE, DURGAPUR-16 V/S . SHRI NIRMALYA SAHA PROP. OF M/S SURYA LAKSHMI SERVICE STATION, 61B R.K. CHATTERJEE ROAD, KOLKATA-700042 [ PAN NO.ASTPS 6417 L ] /APPELLANT .. / RESPONDENT /BY APPELLANT SHRI S. DASGUPTA, ADDL. CIT-DR /BY RESPONDENT SHRI MIRAJ.D. SHAH, ADVOCATE /DATE OF HEARING 26-07-2018 /DATE OF PRONOUNCEMENT 28-08-2018 / O R D E R PER S.S.GODARA, JUDICIAL MEMBER:- THIS REVENUES APPEAL FOR ASSESSMENT YEAR 2014-15 A RISES AGAINST THE COMMISSIONER OF INCOME TAX (APPEALS)-DURGAPURS ORD ER DATED 28.04.2017, PASSED IN CASE NO.171/CIT(A)/DGP/2016-17 REVERSING THE ASSESSING OFFICERS ACTION DISALLOWING ASSESSEES ENTIRE PADDY PURCHASE S OF 2,62,17,234/- IN ASSESSMENT ORDER DATED 30.12.2016 INVOLVING PROCEED INGS U/S 143(3) OF THE INCOME TAX ACT, 1961; IN SHORT THE ACT. HEARD BOTH THE PARTIES. CASE FILE PERUSED. 2. LEARNED DEPARTMENTAL REPRESENTATIVE, FIRST OF AL L INVITES OUR ATTENTION TO THE CIT(A)S DETAILED DISCUSSION DELETING THE IMPUG NED ADDITION OF THE ENTIRE PADDY PURCHASE AS FOLLOWS:- 9. DECISION:- ITA NO.1555/KOL/2017 A.Y. 2014-1 5 ITO WD-2(4) DGP VS. SH. NIRMLYA SAHA PAGE 2 GROUND NO.1 RELATES TO THE ADDITION OF RS.2,62,17,2 34/- CLAIMED BY THE APPELLANT AS PURCHASE OF PADDY. THE AFORESAID CLAIM OF PURCHASE OF PADDY CLAIMED BY THE APPELLANT WAS NOT ACCEPTED BY THE A.O. ON THE GROUN D THAT CERTAIN DETAILS WERE SUBMITTED ON 30. 12.2016 THERE WAS NOT TIME TO INQU IRE ABOUT IT. ON THE CONTRARY THE APPELLANT HAD PRODUCED LETTER DATED 26.12.2016 SUBM ITTED BEFORE THE A.O. WHEREIN THE DETAIL OF THE PURCHASE OF PADDY ALONGWITH QUANT ITY, RATE AND FULL AMOUNT HAVE BEEN MENTIONED. SUCH PURCHASE OF PADDY IS CLAIMED O F RS.2,62,17,234/-. THE APPELLANT HAS ALSO PRODUCED LETTER DATED 22.12.2016 WHICH IS DULY RECEIVED BY THE A.O. ON THE SAME DATE WHEREIN AT PARA NO.10 THE APP ELLANT HAS SUBMITTED THE BREAKUP OF PURCHASE PARTY-WISE WHEREIN THE PURCHASE OF DIESEL/PETROL HAS BEEN CLAIMED TO THE TUNE OF RS.18,20,49,271.80 FROM INDI AN OIL CORPORATION LTD., M/S. RAN LUBES AND M/S. DEY'S ENTERPRISE. REMAINING PURCHASE OF PADDY WAS CLAIMED FROM THE FARMERS TO THE EXTENT OF RS.2,62,17,234/- IN CA SH. THE APPELLANT CLAIMED THAT THE PURCHASE OF PADDY WERE MADE IN CASH AND SALE WAS AL SO MADE IN CASH. THE APPELLANT SUBMITTED THAT THE TRADING ACCOUNT OF PAD DY BUSINESS RESULTING INTO PROFIT OF 4.2%. THE SAME IS MENTIONED AS UNDER: OPENING STOCK OF PADDY RS. 89,80,500.00 ADD: PURCHASE OF PADDY RS.2,62,17,234.00 TOTAL : RS.3,51,97,734.00 LESS: CLOSING STOCK OF PADDY RS.1,43,69,777.00 COST OF PADDY SOLD RS.2,08,27,957.00 SALES OF PADDY RS.2,17,00,500.00 PROFIT FROM PADDY BUSINESS RS. 8,72,543.00 PROFIT @ FROM PADDY BUSINESS 4.02% IN THIS CASE IT IS PERTINENT TO MENTION HERE THAT T HE APPELLANT IS RUNNING PETROL PUMP WHERE PURCHASE WERE MADE FROM THE INDIAN OIL CORPOR ATION (IOC). THE PRICE OF SALE AND PURCHASE ARE ALSO FIXED BY THE ONGC AND THE SAL E IS MADE ON COMMISSION AND INCENTIVE BASIS; ONLY. THE APPELLANT HAS SUBMITTED THAT THE SALE DISCLOSED FROM PUMP BUSINESS AND PADDY BUSINESSES ARE VERY APPARENT FRO M TRADING ACCOUNT. IN THIS REGARD THE APPELLANT SUBMITTED AS UNDER: 'THE ASSESSING OFFICER IN HIS ASSESSMENT ORDER ADMI TTED THAT THE APPELLANT DURING THE YEAR UNDER CONSIDERATION MADE PURCHASE O F PETROLEUM PRODUCT TO THE TUNE OF RS.180829533/- FROM THE INDIAN OIL CORP ORATION LIMITED & OTHERS. OWING TO HIGH FLUCTUATIONS IN OIL PRICES, THE MAXIM UM TO MAXIMUM PROFIT ON PURCHASE OF BOTH PETROL & DIESEL VARIES IN-BETWEEN 2.00 % TO 3.00 % IN ANY CIRCUMSTANCES. IF THE PETROLEUM PRODUCTS PURCHASED BY THE APPELLANT WAS RS.1808295331-/ AS ADMITTED BY THE A.O IN THE ASSES SMENT ORDER) AND IF THE AVERAGE PROFIT PERCENTAGE @ 3.00% MAXIMUM TO MAXIMU M (THOUGH ALMOST IMPOSSIBLE) IS CALCULATED THE SALES OF PETROL & DIE SEL PRODUCT SHOULD HAVE BEEN TO RS,1805700861/- X 3.00% = RS.1859871891- (K EEPING OPENING & CLOSING STOCK UNTOUCHED) + LUBRICANT & DISTILL WATE R SALE RS, 2627421-, THEN THE TOTAL SALES IN ANY CIRCUMSTANCES MAXIMUM TO MAX IMUM SHOULD NOT HAVE MORE THAN RS.1862499311-, BUT THE APPELLANT DISCLOS ED TOTAL SALES OF RS.2088678231- WHICH IS RS.22617892/- MORE THAN, WH AT IT SHOULD HAVE BEEN. THE A.O WHILE PASSING HIS ORDER ACCEPTED THE EXCESS SALES OF RS, 22613404/-, WHICH FORMS PART OF PADDY SALES OF RS.2 1700500/- AND PART OF SALES OUT OF STOCK ADJUSTMENT OF PETROLEUM PRODUCTS (PETROL & DIESEL) OF RS, 917392/-. DURING THE COURSE OF ASSESSMENT PROCEEDIN GS THE SAID SALES WERE DULY EXPLAINED BEFORE THE LEARNED ITO, BUT THE LEAR NED ITO DENIED AND DISALLOWED THE PURCHASE OF PADDY AND OPINED THAT EV IDENCES PRODUCED / FURNISHED BY THE APPELLANT IS ' HARD TO ACCEPT ' WITHOUT JUSTIFYING ANY REASON. THE THUMB RULE OF THE ACCOUNTANCY IS THAT WHEN THER E IS A SALE, THERE MUST BE A PURCHASE. NO SALE CAN BE MATERIALIZED WITHOUT MAK ING A PURCHASE. ITA NO.1555/KOL/2017 A.Y. 2014-1 5 ITO WD-2(4) DGP VS. SH. NIRMLYA SAHA PAGE 3 THEREFORE WHEN THE AO ADMITTED THE SALES OF PADDY O F RS, 21700,500/- HE SHOULD HAVE ADMIT PURCHASE OF PADDY OF RS.26217234/ , AS FURNISHED BY THE APPELLANT. THE EVIDENCES CANNOT BE REJECTED ON THE WILLS/WHIMS OF THE ASSESSING OFFICER UNLESS HE PROVES THAT THE EVIDENC ES SO PRODUCED / FURNISHED IS/ARE FALSE. ' DURING THE COURSE OF ASSESSMENT PROCEEDINGS THE APP ELLANT HAD ALSO SUBMITTED CERTAIN BILLS RELATING TO PURCHASE OF PADDY. PERUSA L OF ASSESSMENT ORDER SHOWS THAT THE A.O. HAS NOT DENIED THE CLAIM OF THE PADDY SALE MADE BY THE APPELLANT. IT IS ALSO ON RECORD THAT PURCHASE MADE BY THE APPELLANT FROM ONGC WAS CONFIRMED TO THE EXTENT OF RS.18,08,29,533/-. THE REMAINING PURCHASE OF RS.2,57,447/- WAS CLAIMED AS LUBE CHARGES AND RS.5,295/- WAS FURTHER CLAIMED AS DISTILLED WATER PURCHASE. DURING THE COURSE OF APPELLATE PROCEEDINGS THE APPE LLANT PERSUADED HIS CASE FOR EARLIER HEARING AND STAY OF DEMAND AND THE SALE OF PADDY WAS CLAIMED TO THE TUNE OF RS.2,12,54,874/- AND RS.1,43,69,745/- WAS CLAIMED A S STOCK OF PADDY. THE AFORESAID INFORMATION WAS SUBMITTED BY THE APPELLANT ON 09.03 .2017 TO THE A.O. IN HIS PETITION OF STAY WHICH COPY WAS ALSO SUBMITTED TO THE UNDERS IGNED. THE A.O. CONSIDERING THE ARGUMENT OF THE APPELLANT ON THE SAME DATE REMAND R EPORT WAS CALLED FOR AND THE REMAND REPORT FROM THE A.O. AS UNDER: 'DURING THE COURSE OF APPELLATE PROCEEDINGS THE APP ELLANT HAS SUBMITTED THAT THE DETAILS OF PURCHASES WERE SUBMITTED TO THE A.O. BUT A.O. ACCEPTED THE SAY BUT THE CORRESPONDING PURCHASES WERE NOT ALLOWE D. THE PURCHASES WERE ADDED WITHOUT ANY REASONS. THE APPELLANT FURTHER SU BMITTED THAT THE APPELLANT IS DEALING WITH INDIAN OIL CORPORATION LTD. WHEREIN PURCHASE AND SALES BOTH THE PRICES ARE FIXED. THE APPELLANT CANNOT FETCH AN Y EXTRA INCOME OVER AND ABOVE. THE A.O. HAS CONSIDERED ONLY DIFFERENCE IN P URCHASES WHICH WAS EXPLAINED TO HIM AS A PURCHASE FROM PADDY TRADING F ROM THE DIFFERENT FARMERS IN CASH WHICH IS EXEMPTED UNDER RULE 6DD. ONCE HIS SALES WERE ADMITTED THEN PURCHASES WHICH WERE CORRESPONDING TO THE SALE SHOULD HAVE BEEN ALLOWED. THE ACTION OF THE A.O. IS UNILATERAL AND U NJUSTIFIED THAT TOO WITHOUT ANY BASIS. THE A.O. HAS HIMSELF ADMITTED IN THE ASS ESSMENT ORDER THAT THE APPELLANT HAD PRODUCED DETAILS REGARDING PURCHASE A ND WITHOUT EXAMINING THE SAME THE A.O. HAS ADDED ENTIRE DIFFERENCE OF PURCHA SE. IN THIS REGARD THE CONTENTION OF THE APPELLANT HAS TO BE EXAMINED IN T HE LIGHT OF HIS AFORESAID SUBMISSION.' IN HIS REMAND REPORT THE A.O. HAS SUBMITTED THAT TH E AFORESAID ADDITION WAS MADE BECAUSE THE CONFIRMATORY LETTER FILED BY THE APPELL ANT WERE RELATING TO ONLY 20 PARTIES AND IT IS FURTHER COMMENTED THAT THE APPELLANT NEVE R PRODUCED ANY FURTHER DETAILS. IT IS ALSO SEEN THAT THE A.O. DID NOT EXAMINE THE CLAIM O F SALE OF PADDY ITS OPENING STOCK AND PURCHASE CLAIMED BY THE APPELLANT NEITHER IT WA S DENIED. PERUSAL OF FACT SUBMITTED BEFORE ME AND BEFORE THE A.O. SHOWS THAT THE LEDGER COPY OF ENTIRE PURCHASE OF PADDY WERE SUBMITTED TO THE A .O. THE SAMPLE CONFIRMATION FROM THE FARMER HAS ALSO BEEN SUBMITTED. THE SALE OF PAD DY DISCLOSED BY THE APPELLANT HAS NOT BEEN CHALLENGED BY THE A.O. THE CLOSING STO CK AND SALE OF PADDY WHICH BREAK UP HAS BEEN SUBMITTED PRIOR TO SUBMISSION OF REMAND REPORT HAS NOT BEEN COMMENTED UPON BY THE A.O. IT IS ALSO A CASE WHERE NO CASH DEPOSIT WAS MADE IN THE BANK ACCOUNT. PURCHASES WERE MADE IN CASH FROM THE FARMERS AND SALES WERE ALSO MADE IN CASH BELOW RS.20,000/- AS CLAIMED BY T HE APPELLANT. THE APPELLANT CLAIMED THAT THE DEALING OF PADDY BUSINESS WERE MAD E WITH THE FARMERS WHO TOMES IN THE MARKET NOW AND THEN. THE APPELLANT HAS FURTHER SUBMITTED THAT IF HE HAD INTENTION TO HIDE THE AFORESAID TURNOVER OF PADDY BUSINESS TH EN THERE WAS NO TRAIL WITH THE DEPARTMENT TO BRING THE AFORESAID TURNOVER INTO TAX NET. THE APPELLANT MADE A BONA ITA NO.1555/KOL/2017 A.Y. 2014-1 5 ITO WD-2(4) DGP VS. SH. NIRMLYA SAHA PAGE 4 FIDE CLAIM OF PADDY BUSINESS WHICH WAS NOT THROUGH THE BANKING CHANNEL. CONSIDERING THE AFORESAID SUBMISSION OF THE APPELLA NT AND OBSERVATION OF THE A.O. THAT THE ADDITION WAS MADE DUE TO LACK OF ENQUIRY A ND EVEN AFTER PROVIDING HIM OPPORTUNITY NO FURTHER ENQUIRY WAS MADE, IT IS A CA SE WHERE THE GROSS PROFIT OF 4.2% ON ACCOUNT OF PADDY BUSINESS DISCLOSED BY THE APPEL LANT ON HIS OWN SHOULD HAVE BEEN ACCEPTED. THE ARGUMENT OF THE APPELLANT THAT A GAINST PUMP BUSINESS APPELLANT HAS SHOWN ITS SALE AT PROFIT OF MORE THAN 3%, IS AL SO ACCEPTABLE BECAUSE IN PUMP BUSINESS THE PURCHASE AND SALE PRICES ARE DECIDED B Y THE OIL COMPANIES AND ITS LOW MARGIN TRADING ACTIVITY. THE DEMAND OF THE A.O. THA T HE WANTS TO MAKE VERIFICATION OF SALE AND PURCHASES HAS NO GAIN FOR THE DEPARTMENT A S THE PADDY TRADING CLAIMED BY THE APPELLANT HAS RESULTED IN TO GAIN OF 4.2% OF PR OFIT WHICH IS REASONABLY GOOD. THE SALE & PURCHASE WHICH ONE CLAIMED BY THE APPELLANT BOTH CAN BE UNVERIFIABLE AS THE SAME ARE CLAIMED TO BE PURCHASED AND SOLD FROM & TO THE FARMER WHAT IS RELEVANT TO THE PROFIT PORTION WHICH IS DISCLOSED BY THE APPELL ANT. IN VIEW OF THE AFORESAID OBSERVATION ONCE THE SALE AS WELL AS CLOSING STOCK WAS ACCEPTED THE A.O. WAS NOT JUSTIFIED IN ADDING THE PURCHASE OF PADDY 'AS THERE CANNOT BE ANY SALE WITHOUT ANY PURCHASE PARTICULARLY IN TRADING PADDY. HENCE THE A DDITION MADE BY THE A.O. TO THE EXTENT OF RS.2,62,20,529/- IS HEREBY DELETED AND TH E GROUND OF APPEAL IS ALLOWED. THE REVENUE CHALLENGES THE ABOVE EXTRACTED FINDINGS THAT BY ACCEPTING THE TAXPAYERS CONTENTIONS OF HAVING DECLARED PROFIT AT NORMAL RATE 4.02% WITHOUT CHECKING VERACITY OF CALCULATION AS WELL AS THE SOU RCE OF FIGURE, IN ABSENCE OF RAISING ANY QUERY ABOUT STORAGE AND SELLING PRICE O F PADDY, WITHOUT CONSIDERING THE FACT THAT ASSESSEE HAD DISCLOSED ON LY ONE BUSINESS OF SELLING PETROLEUM PRODUCTS AND ALSO THAT THERE WAS NO LEDGE R BOOK WITH RESPECT TO HIS PADDY BUSINESS, THE CIT(A) HAS ERRED IN LAW AND ON FACTS IN REVERSING ASSESSMENT FINDINGS. WE FIND NO SUBSTANCE IN REVEN UES ARGUMENTS AS PER ITS PLEADINGS. THERE IS NO DISPUTE THAT THE INSTANT TAXPAYER HAS BEEN DERIVING INCOME FROM SALE OF PETROLEUM PRODUCTS AS WELL AS P ADDY / RICE TRADING. THE REVENUES FAIR ENOUGH IN NOT QUESTIONING CORRECTNES S OF INCOME FROM THE FORMER SOURCE. ITS GRIEVANCE IN INSTANT APPEAL IS C ONFINED TO LATTER SOURCE OF PADDY / RICE BUSINESS. IT FAILS TO DISPUTE THAT THE ASSESSING AUTHORITY ITSELF HAS ACCEPTED THE VERY BUSINESS IN ASSESSMENT YEARS 2009 -10 AND 2011-12 INVOLVING SCRUTINY ASSESSMENTS. COUPLED WITH THIS, THERE IS NO REBUTTAL OF THE FACT THAT QUESTION BEFORE US; AS PER REVENUES SOLE SUBSTANTIVE GRIEVANCE, IS THAT OF CORRECTNESS OF PADDY PURCHASE DISALLOWANCES WHEREIN THE CORRESPONDING SALES HAVE ALREADY BEEN ACCEPTED AS B USINESS INCOME. PAGE 75 OF THE PAPER BOOK IS ASSESSEES TRADING ACCOUNT ENDING ON 31.03.2014. THE RELEVANT HEAD OF NON-PETROLEUM PRODUCTS THEREIN SPECIFICALLY INDICATES THE ITA NO.1555/KOL/2017 A.Y. 2014-1 5 ITO WD-2(4) DGP VS. SH. NIRMLYA SAHA PAGE 5 CORRESPONDING FIGURES OF PADDYS OPENING STOCK, PUR CHASES, SALES AND CLOSING STOCK FOLLOWED BY THE ROUTINE GROSS PROFIT @ 4.02% AS PER THE PAST PRACTICE. ALL THESE CLINCHING FINDINGS RECORDED IN THE CIT(A)S O RDER HEREINABOVE HAVE GONE UNREBUTTED FROM THE REVENUE SIDE. WE THEREFORE CONC LUDE THAT CIT(A) AUTHORITY HAS RIGHTLY EXERCISED HIS JURISDICTION IN DELETING THE IMPUGNED ADDITION AS PER LAW AFTER GRANTING SUFFICIENT REMAN DED OPPORTUNITY TO THE ASSESSING OFFICER IN LOWER APPELLATE PROCEEDINGS. T HE REVENUES SOLE SUBSTANTIVE GROUND IS DECLINED ACCORDINGLY. 3. THIS REVENUES APPEAL IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT 24 /08/2018 SD/- SD/- ( %) (' %) (M.BALAGANESH) (S.S.GODARA) (ACCOUNTANT MEMBER) (JUDICIAL MEMBER) KOLKATA, *DKP, SR.P.S (- 24 / 08 /201 8 / COPY OF ORDER FORWARDED TO:- 1. /APPELLANT-ITO WARD-2(4), AAYKAR BHAWAN, ANNEXE, CI TY CENTRE, DURGAPUR-16 2. /RESPONDENT-SHRI NIRMALYA SAHA, PROP M/S SURYA LAKS HMI SERVICE STATION 61B R.K. CHATTE RJEE ROAD KOLAKTA-42 3. 3 4 / CONCERNED CIT KOLKATA 4. 4- / CIT (A) KOLKATA 5. 7 ''3, 3, / DR, ITAT, KOLKATA 6. < / GUARD FILE. BY ORDER/ , /TRUE COPY/ SR. PRIVATE SECRETARY, HEAD OF OFFICE/DDO 3,