ACIT., Circle-16(2), Hyderabad, Hyderabad V. M/s Meena Jewellers Exclusive Private Limited, Hyderabad

ITA 1595/HYD/2014

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 87384 (ITAT-HYDERABAD)
• Duration Of Justice: 4 month(s) 10 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 26-02-2015
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 25-02-2015
• Assessment Year: 2011-2012
• Appeal Filed On: 16-10-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: RAJAT MITRA
• Assessee Lawyers: P MURALI MOHAN RAO

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCH B', HYDERABAD BEFORE SHRI P.M.JAGTAP, ACCOUNTANT MEMBER AND SMT.ASHA VIJAYARAGHAVAN, JUDICIAL MEMBER ITA NO.1595/HYD/14 : ASSESSMENT YEAR 2011 - 12 ASSTT . COMMISSIONER OF INCOME - TAX, CIRCLE 16(2), HYDERABAD V/S. M/S. MEENA JEWELLERS EXCLUSIVE PVT. LTD., HYDERABAD (PAN AA GCM 2967 H ) (APPELLANT) (RESPONDENT) APPELLANT BY : S HRI RAJAT MITRA, DR RESPONDENT BY : SHRI P.MURALI MOHAN RAO DATE OF HEARING 2 5 .2.2015 DATE OF PRONOUNCEMENT 26.2.2015 O R D E R PER P.M.JAGTAP, ACCOUNTANT MEMBER : TH IS APPEAL IS PREFERRED BY THE REVENUE AGAINST THE O R DER OF THE LEARNED CIT(A) V, HYDERABAD DATED 26.5.2014 AND IN THE SOLITARY SUBSTANTIVE G R OUND RAISED THEREIN, THE DEPARTMENT HA S CHALLENGED THE ACTION OF TH E LEARNED CIT(A) IN DELETING THE AD D ITION OF R S .15,60,761 M A DE BY THE ASSESSING OFFICER ON ACCOUN T OF PROFIT ALLEGED LY E A RNED F R OM UN A CCOUNTED SALES. 2. THE ASSESSEE IN THE PRESENT CASE IS A COMPANY, WHICH IS ENGAGED IN THE BUSINESS OF TRADING IN DIAMONDS, GOLD ORNAMENTS AND DIAMOND ORNAMENTS, ETC. THE RETURN OF IN C OM E FOR THE Y E AR UN D ER CONSIDERATION WAS FILED BY IT ON 30.09.2011, DECL A RIN G TOTAL INCOME O F R S .32,42,917. A SU RVEY UNDER S.133A WAS CONDU C TED ON 2.8.2011 IN TH E BU S IN E SS PREMISES OF M /S. MEEENA JEWELLERS GROUP, IN C LU D IN G THE ASSESSEE COMPANY. DURIN G THE COURSE OF SURVEY, LARGE NUMBER OF SALE BILLS WERE FOUND, WHICH , ACCOR D I NG TO THE ASSESSING OFFICER, WERE NOT ACC OUN T ED BY THE ASSESSEE COMPANY IN ITS REGULAR I TA NO. 1595/H YD/20 14 M/S.MEENA JEWELLERS EXCLUSIVE PVT. LTD., HYDERABAD 2 BOOKS O F AC C OUNT. IN THIS REGARD, IT WAS CONTENDED ON BEHALF O F TH E ASSESSEE BEFORE THE ASSESSING OFFICER THAT THE SAID BILL S WER E CANCELL E D BILLS AND THEREFORE, THERE WAS NO QUESTION OF ACCO U NTING THE SAME IN TH E R E GULAR BOOKS OF ACCOUNT. IT WAS ALSO EXPLAINED THAT IT IS A NORMAL PRACTICE TO CANCEL THE SALE BILL S IF THEY HAVE SOME ERROR. THIS EXPLANATION OF TH E ASSESSEE WAS NO T FOUND ACCEPTABLE BY THE ASSESSING OFFICER, AND APPLYING A GROSS PROFIT RATE OF 2 . 0 1 % ON TH E ALL E GED UN A CCOUN T ED SALES OF R S .7,76,49,804, AN ADDITION OF RS.15,6 0 ,7 6 1 WAS M A DE BY HIM TO THE TOTAL INCOME O F THE ASSESSEE IN THE ASSESSMENT COMPLETED VIDE O R DER DATE D 20.3.2014 PASSED UN D ER S.143(3) OF THE ACT. 3. AGAIN S T THE ORDER PASSED B Y TH E ASSESSING OFFICER UN D ER S.143(3), AN APP E AL WAS PREFERRED BY THE ASSESSEE BEFORE THE LEARNED CIT(A), DISP U TING THEREIN TH E ADDITION MADE BY THE ASSESSING OFFICER ON ACCOUN T O F PROFI T EARNED ON AL LE GED UNACCOUN T ED SALES. AFTER CON S ID E RING THE SUBMI S SION S MADE BY THE ASSESSEE AND THE M A TERIAL AVAILABLE ON RECORD, THE LEARNED CIT(A) ACCEPTED THE STAND OF THE ASSESSEE THAT THE BILL S FOUND DURING THE COURSE OF SURVEY WERE NOTHING BUT THE CANCELLED BILLS AND THE ADDITION MADE BY THE ASSESSING OFFICER ON A CCOUNT O F P RO FIT EARNED FROM SUCH ALLEGED UNACCOUNTED S A L E S WAS NO T SUSTAINABLE. HE THEREFORE, DELETED THE ADDITION MADE BY THE ASSESSING OFFICER ON THIS ISSUE. AGGRIEVED BY THE O R DER OF THE LEARNED CIT( A), THE REVENUE HAS PREFERRED THIS APPEAL BEFORE THE TRIBUNAL. 4. WE HAVE HEARD THE ARGUMENTS OF BOTH THE SIDES AND ALSO PERUSED THE RELEVANT MATERIAL ON RECORD. LEARNED REPRESENTATIVES OF BOTH THE SIDES HAVE AGREED THAT THE ISSUE INVOLVED IN THIS APPEAL OF THE REVENUE IS SQUARELY COVERED IN FAVOUR OF THE ASSESSEE BY THE DECISION OF THE COORDINATE BENCH OF THIS TRIBUNAL IN THE CASE OF OTHER GROUP CONCERN, VIZ. M/S. MEENA JEWELLERS P. LTD. RENDERED VIDE ITS ORDER DATED 10.12.2014 PASSE D IN I TA NO. 1595/H YD/20 14 M/S.MEENA JEWELLERS EXCLUSIVE PVT. LTD., HYDERABAD 3 ITA NO.260/HYD/2 014, WHEREIN THE ORDER OF THE LEARNED CIT(A) DELETING A SIMI L AR ADDITION MADE BY THE ASSESSING OFFICER ON AC C OUN T OF PROFIT EARNED ON ALLEGED UN A CCOUN T E D SALES, WAS UPHELD BY THE TRIBUNAL FOR THE FOLLO W IN G REASONS GIVEN IN PARAGRAPH S 20 TO 24 OF ITS ORDER - 20. WE HAVE HEARD BOTH THE PARTIES. WE NOTE THE FOLLOWING: A) THE INTERNAL CONTROL SYSTEM IN THE BILLS DO NOT PERMIT ANY CORRECTIONS AND THE ONLY WAY IS TO CANCEL AND ENTER AGAIN. B) THE BILLS HAVE TO BE CANCELLED IN CASE THE BILLS WHICH ARE ENTERE D IN ONE FIRM'S NAME ARE GOING TO ANOTHER CONCERN'S NAME DUE TO TECHNICAL SNAG. C) SOMETIMES, THE QUANTITIES WERE ENTERED WRONGLY AND THE INVOICES HAVE TO BE PREPARED AGAIN REFLECTING THE CORRECT QUANTITIES. D) NAME OF THE DEALER/CUSTOMER IF ENTERED WR ONGLY IS TO BE RECTIFIED FOR PREPARING THE INVOICE IN THE CORRECT NAME. 21. WE ALSO NOTE FROM THE STATEMENT MADE BY SRI N.B. GOPINATH IN REPLY TO QUESTION NO. 5 THAT CERTAIN CHANGES IN THE DATA BASE WERE MADE AS PER THE DIRECTION OF HIS EMPLOYER SRI UMESH JETHWANI. FURTHER THE EXTRACT OF STATEMENT OF SRI UMESH JETHWANI HAS BEEN REPRODUCED, FROM WHICH WE FIND THAT THE STATEMENT OF GIRITECH TECHNOLOGY WAS PUT AS QUESTION TO SRI UMESH JETHWANI. WE NOTE THAT GIRITECH TECHNOLOGY WERE DEVELOPING VARIOUS SOFTWARE AND IT WAS STATED BY THEM THAT THEY WERE NOT PREPARING SOFTWARE WHICH WOULD SUPPRESS THE GROSS RECEIPTS ON THE REQUEST OF THE ASSESSEE. THE STATEMENT OF GIRITECH TECHNOLOGY WAS OBVIOUSLY MISUNDERSTOOD BY THE DEPARTMENT INASMUCH AS TO ANSWER TO QUESTION NO . 13 IT HAS BEEN STATED THAT THEY HAVE NO INTENTION TO SUPPRESS THE SALES AND THEY HAVE ALSO STATED THAT MAY BE THE DIFFERENCE IS BECAUSE OF INTER TRANSACTION BETWEEN THE FIRM AND BRANCHES. IT IS THE CASE OF THE ASSESSEE I TA NO. 1595/H YD/20 14 M/S.MEENA JEWELLERS EXCLUSIVE PVT. LTD., HYDERABAD 4 THAT THE ASSESSEE HAS NOT BEEN CONF RONTED WITH THE STATEMENT OF N.B. GOPINATH AND THE STATEMENT WAS RECORDED ON THE BACK OF THE ASSESSEE. 22. FURTHER THE CONCLUSIONS MADE BY THE AO ARE INCORRECT WITH RESPECT TO THE STATEMENTS MADE BY GIRITECH TECHNOLOGY AND UMESH JETHWANI. THE DEPARTMENT H AS NOT BROUGHT IN ANY MATERIAL TO PROVE THAT THE ASSESSEE HAS DEMANDED FOR A PARTICULAR TYPE OF SOFTWARE WHICH WOULD SUPPRESS GROSS RECEIPTS. 23. IN THESE CIRCUMSTANCES, IN THE ABSENCE OF ANY EVIDENCE TO PROVE THAT THE ASSESSEE HAD TAMPERED THE BILLS T O SUPPRESS GROSS SALES THE CONTENTIONS OF REVENUE CANNOT BE ACCEPTED. FURTHER, THE ASSESSEE HAS PREPARED THE RECONCILIATION AND TABLE THE CIT(A) HAS STATED AS FOLLOWS: ' ... FURTHER, THE APPELLANT HAD ALSO PRODUCED BEFORE THE AO, COPIES - OF INDIVIDUAL CANC ELLED BILLS ALONG WITH COPIES OF SALES BILLS IN SUPPORT OF THE RECONCILIATION STATEMENT. THE VERY SAME RECONCILIATION STATEMENT ALONG WITH PARTY - WISE BREAK UP FOR CANCELLED BILLS WHICH ARE FILED BEFORE ME ARE VERIFIED. THE AO'S REJECTION OF APPELLANT'S EXP LANATION IN THIS REGARD IS NOT BASED ON SOUND FOOTING.' 24. HENCE, WE CONFIRM ORDER OF THE CIT(A) AND DISMISS THE GROUND RAISED BY THE DEPARTMENT ON THIS ISSUE. AS THE I SSUE INVOLVED IN THE PR E S E N T CA S E AS WELL AS ALL THE M A TERIAL FACTS RELATING THERET O ARE SIMILAR TO THE C AS E OF M/S. MEENA JEWELLERS (P) LTD, WE RESPECTFULLY FOLLOW THE DECISION RENDERED BY THE COORDINATE BENCH OF THI S TRIBUNAL IN TH E SAI D CASE AND UPHOLD THE IMPU G N E D ORDER OF THE LEARNED CIT(A), DELETING THE ADDIT I ON MADE BY THE ASSESSI NG OFFICER ON AC C OUN T OF P R OFIT EARNED BY TH E ASSESSEE ON ALLEGED UNACCOUNTED SALES AND DISMISS THE GROUNDS OF THE REVENUE IN THIS APPEAL. I TA NO. 1595/H YD/20 14 M/S.MEENA JEWELLERS EXCLUSIVE PVT. LTD., HYDERABAD 5 5. IN TH E RESULT, APPEAL OF THE R E V E NU E IS DISMISSED. ORDER PRONOUNCED IN THE COURT ON 26 TH FEBRUARY, 2015 SD/ - SD/ - ( ASHA VIJAYARAGHAVAN ) ( P.M.JAGTAP ) JUDICIAL MEMBER ACCOUNTANT MEMBER D T/ - 26 TH FEBRUARY, 201 5 C OPY FORWARDED TO: 1. M/S. MEENA JEWELLERS EXCLUSIVE PVT. LTD., 5 - 90 - 58/1 - 15, SHOP NO.201/A, BABUKHAN ESTATE, BASHEERBAGH, HYDERABAD 2 . ASSTT COMMISSIONER OF INCOME - TAX CIRCLE 16(2), HYDERABAD 3. COMMISSIONER OF INCOME - TAX(APPEALS) V HYDERABAD 4. COMMISSIONER OF INCOME - TAX IV , HYDERABAD 5. DEPARTMENTAL REPRESENTATIVE, ITAT, HYDERABAD. B.V.S