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

ITA 1596/HYD/2014

• Counselvise Citation: 159622514 RSA 2014
• 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.1596/HYD/14 : ASSESSMENT YEAR 2011 - 12 ASSTT . COMMISSIONER OF INCOME - TAX, CIRCLE 16(2), HYDERABAD V/S. M/S. MEENA JEWELLERS PVT. LTD., HYDERABAD (PAN AAFCM 1756 R ) (APPELLANT) (RESPONDENT) APPELLANT BY : S HRI RAJAT MITRA, DR RESPONDENT BY : SHRI P.MURALI MOHAN RAO DATE OF HEARING 25.2.2015 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 ORDER OF THE LEARNED CIT(A) V, HYDERABAD DATED 26.5.2014, WHEREBY HE DELETED THE ADDITION S MADE BY THE ASSESSING OFFICER ON ACCOUNT OF PROFIT EARNED BY THE ASSESSEE ON ALLEGED UNACCOUNTED SALES AND THE DISALLOWANCE MADE BY THE ASSESSING OFFICER ON ACCOUNT OF DELAYED PAYMENT OF EMPLOYEES CONTRIBUTION TO PROVIDENT FUND AND ESI. 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 INCOME FOR THE YEAR UNDER CONSIDERATION WAS FILED BY IT ON 30.09.2011, DECLARING TOTAL INCOME OF RS.55,77,49 7. A SURVEY UNDER S.133A WAS CONDUCTED ON 2.8.2011 IN THE BUSINESS PREMISES OF M/S. MEEENA JEWELLERS GROUP, INCLUDING THE ASSESSEE COMPANY. DURING THE COURSE OF SURVEY, LARGE NUMBER OF SALE BILLS WERE FOUND, WHICH, ACCORDING TO THE ASSESSING I TA NO. 159 6 /H YD/20 14 M/S.MEENA JEWELLERS PVT. LTD., HYDERABAD 2 OFFICER, WERE NOT ACCOUNTED BY THE ASSESSEE COMPANY IN ITS REGULAR BOOKS OF ACCOUNT. IN THIS REGARD, IT WAS CONTENDED ON BEHALF OF THE ASSESSEE BEFORE THE ASSESSING OFFICER THAT THE SAID BILLS WERE CANCELLED BILLS AND THEREFORE, THERE WAS NO QUESTION OF ACCOUNTING THE S AME IN THE REGULAR BOOKS OF ACCOUNT. IT WAS ALSO EXPLAINED THAT IT IS A NORMAL PRACTICE TO CANCEL THE SALE BILLS IF THEY HAVE SOME ERROR. THIS EXPLANATION OF THE ASSESSEE WAS NOT FOUND ACCEPTABLE BY THE ASSESSING OFFICER, AND APPLYING A GROSS PROFIT RATE OF 2.97% ON THE ALLEGED UNACCOUNTED SALES OF RS.19,05,39,633, AN ADDITION OF RS.56,59,027 WAS MADE BY HIM TO THE TOTAL INCOME OF THE ASSESSEE IN THE ASSESSMENT COMPLETED VIDE ORDER DATED 20.3.2014 PASSED UNDER S.143(3) OF THE ACT. IN THE SAID ASSESSMEN T, THE ASSESSING OFFICER HAS ALSO MADE AN ADDITION OF RS.97,600 TO THE TOTAL INCOME OF THE ASSESSEE, IN TERMS OF S.36(1)(VA) READ WITH S.2(24)(X) OF THE ACT, ON ACCOUNT OF DELAYED PAYMENT OF EMPLOYEES CONTRIBUTION TO THE PF AND ESI. 3. AGAINST THE ORD ER PASSED BY THE ASSESSING OFFICER UNDER S.143(3), AN APPEAL WAS PREFERRED BY THE ASSESSEE BEFORE THE LEARNED CIT(A), DISPUTING THEREIN THE ADDITION MADE BY THE ASSESSING OFFICER ON ACCOUNT OF PROFIT EARNED ON ALLEGED UNACCOUNTED SALES. AFTER CONSIDERING THE SUBMISSIONS MADE BY THE ASSESSEE AND THE MATERIAL AVAILABLE ON RECORD, THE LEARNED CIT(A) ACCEPTED THE STAND OF THE ASSESSEE THAT THE BILLS FOUND DURING THE COURSE OF SURVEY WERE NOTHING BUT THE CANCELLED BILLS AND THE ADDITION MADE BY THE ASSESSING O FFICER ON ACCOUNT OF PROFIT EARNED FROM SUCH ALLEGED UNACCOUNTED SALES WAS NOT SUSTAINABLE. HE THEREFORE, DELETED THE ADDITION MADE BY THE ASSESSING OFFICER ON THIS ISSUE. I TA NO. 159 6 /H YD/20 14 M/S.MEENA JEWELLERS PVT. LTD., HYDERABAD 3 4. AS FOR THE ADDITION OF RS.97,600 MADE ON ACCOUNT OF DELAYED PAYMENT OF EMPLO YEES CONTRIBUTIONS TO PF AND ESI, IT WAS CONTENDED BEFORE THE LEARNED CIT(A) DURING THE COURSE OF APPELLATE PROCEEDINGS THAT THE SAME HAVE BEEN CREDITED TO THE ACCOUNTS OF THE EMPLOYEES BEFORE THE DUE DATE FOR FILING OF RETURN OF INCOME UNDER S.139(1) OF THE ACT, AND HENCE THE ADDITION MADE BY THE ASSESSING OFFICER WAS NOT JUSTIFIED. THE LEARNED CIT(A) , RELYING ON THE DECISIONS OF THE GAUHATI HIGH COURT IN THE CASES OF CIT V/S. BHARAT BAMBOO & TIMBER SUPPLIERS (219 ITR 212) AND CIT V/S. ASSAM TRIBUNE (25 3 ITR 93), F OUND MERIT IN THE CONTENTION OF THE ASSESSEE IN THIS BEHALF AND DELETED THE ADDITION MADE BY THE ASSESSING OFFICER 5. AGGRIEVED BY THE ORDER OF THE LEARNED CIT(A), THE REVENUE HAS PREFERRED THIS APPEAL BEFORE THE TRIBUNAL, ON THE FOLLOWING G ROUNDS - 1. THE ORDER OF THE CIT(A) I S ERRONEOUS IN L A W AND ON FACTS OF THE CASE. 2. THE CIT(A) OUGHT TO HAVE APPRECIATED THE ASSESSING OFFICER MAKING ADDITION TOWARDS EMPLOYEES CONTRIB U TION TO P F & ESI WH E RE THE ASSESSEE FAILED TO COMPLY WITH TH E P R O VI SION S O F P F & ESI. 3. THE CIT(A) OUGHT TO HAVE CONS IDERE D THE SALE BILL S FOUN D DURING THE SURVEY WHICH ARE UNACC O UN T ED FORMS PART OF TURNOVER AND ARE NO T BILL S CANCELL E D AS ONLY ESTIMATE BILL S ARE RAISED B E FORE CONFIRMATION OF SALES. 4. ANY OTHER G ROU N D( S ) THAT MAY BE URGED AT THE TIME O F H E ARING. 6. WE HAVE HEARD THE ARGUMENTS OF BOTH THE SIDES AND ALSO PERUSED THE RELEVANT MATERIAL ON RECORD. GROUNDS NO.1 AND 4 RAISED BY THE REVENUE ARE GENERAL IN NATURE, SEEKING NO SPECIFIC ADJUDICATION. WITH REGARD TO GROUND NO.2 RELATING TO DISALLOWANCE IN RESPECT OF DELAYED PAYMENT OF PF AND ESI CONTRIBUTIONS BY THE I TA NO. 159 6 /H YD/20 14 M/S.MEENA JEWELLERS PVT. LTD., HYDERABAD 4 ASSESSEE, LEARNED REPRESENTATIVES OF BOTH THE SIDES HAVE AGREED THAT THE ISSUE INVOLVED IN THIS APPEAL OF THE REVENUE IS SQUARELY COVERED IN FAVOUR OF TH E ASSESSEE BY THE DECISION OF THE COORDINATE BENCH OF THIS TRIBUNAL IN ASSESSEES OWN CASE FOR THE IMMEDIATELY PRECEDING YEAR, VIS. ASSESSMENT YEAR 2010 - 11, RENDERED VIDE ITS ORDER DATED 10.12.2014 PASSED IN ITA NO.260/HYD/2014, WHEREIN THE ORDER OF THE LE ARNED CIT(A) DELETING A SIMILAR ADDITION MADE BY THE ASSESSING OFFICER ON ACCOUNT OF DELAYED PAYMENT OF EMPLOYEES CONTRIBUTIONS TO PF AND ESI WAS UPHELD BY THE TRIBUNAL FOLLOWING THE DECISION OF THE COORDINATE BENCH OF THE TRIBUNAL IN ITA NO.1769/ HYD/2012 DATED 5.3.2014 IN THE CASE OF M/S. VIBRANT DIGITAL LTD. V/S. DCIT. AS THE ISSUE INVOLVED IN THE YEAR UNDER CONSIDERATION AS WELL AS ALL THE MATERIAL FACTS RELATING THERETO ARE SIMILAR TO THE ONES CONSIDERED BY THE TRIBUNAL IN ASSESSEES OWN CASE IN THE IMMEDIATELY PRECEDING YEAR, WE RESPECTFULLY FOLLOW THE DECISION RENDERED BY THE COORDINATE BENCH OF THIS TRIBUNAL IN ASSESSEES OWN CASE FOR THE PRECEDING YEAR, AND UPHOLD THE IMPUGNED ORDER OF THE LEARNED CIT(A), DELETING THE ADDITION MADE BY THE ASSESSING OFFICER ON ACCOUNT OF DELAYED PAYMENT OF EMPLOYEES CONTRIBUTION TOWARDS PF AND ESI AND DISMISS THE GROUND NO.2 OF THE REVENUE IN THIS APPEAL. 7 . AS REGARDS THE ISSUE INVOLVED IN GROUND NO.3 RELATING TO THE ADDITION MADE BY THE ASSESSING OFFICER ON ACCOUNT OF ESTIMATED PROFIT ON THE UNACCOUNTED SALES, 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 TH IS TRIBUNAL IN ASSESSEES OWN CASE FOR THE IMMEDIATELY PRECEDING YEAR, VIS. ASSESSMENT YEAR 2010 - 11, RENDERED VIDE ITS ORDER DATED 10.12.2014 PASSED IN ITA NO.260/HYD/2014, WHEREIN THE ORDER OF THE LEARNED CIT(A) DELETING A SIMILAR ADDITION MADE BY THE ASS ESSING OFFICER ON ACCOUNT OF PROFIT I TA NO. 159 6 /H YD/20 14 M/S.MEENA JEWELLERS PVT. LTD., HYDERABAD 5 EARNED ON ALLEGED UNACCOUNTED SALES, WAS UPHELD BY THE TRIBUNAL FOR THE FOLLOWING REASONS GIVEN IN PARAGRAPHS 20 TO 24 OF ITS ORDER - 20. WE HAVE HEARD BOTH THE PARTIES. WE NOTE THE FOLLOWING: A) THE INTERNAL CONTROL SY STEM 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 ENTERED 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 WRONGLY IS TO BE RECTIFIED FOR PREPARING THE INVOICE IN THE CORRECT NAME. 21. WE AL SO 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 REPRODU CED, 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 SUPPR ESS 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 THAT THE ASSESSEE HAS NOT BEEN CONFRONTED WITH THE STATEMENT OF N.B. GOPINATH AND THE STATEMENT WAS RECORDED ON THE B ACK OF THE ASSESSEE. I TA NO. 159 6 /H YD/20 14 M/S.MEENA JEWELLERS PVT. LTD., HYDERABAD 6 22. FURTHER THE CONCLUSIONS MADE BY THE AO ARE INCORRECT WITH RESPECT TO THE STATEMENTS MADE BY GIRITECH TECHNOLOGY AND UMESH JETHWANI. THE DEPARTMENT HAS NOT BROUGHT IN ANY MATERIAL TO PROVE THAT THE ASSESSEE HAS DEMANDED FOR A PA RTICULAR 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 TO 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 CANCELLED BILLS ALONG WITH COPIES OF SALES BILLS IN SUPPORT OF THE RECONCILIATION STAT EMENT. 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 EXPLANATION IN THIS REGARD IS NOT BASED ON SOUND FOOTING.' 24. HENCE, WE CONFIRM ORD ER OF THE CIT(A) AND DISMISS THE GROUND RAISED BY THE DEPARTMENT ON THIS ISSUE. AS THE ISSUE INVOLVED IN THE PRESENT CASE AS WELL AS ALL THE MATERIAL FACTS RELATING THERETO ARE SIMILAR TO THE ONES CONSIDERED BY THE TRIBUNAL IN ASSESSEES OWN CASE FOR THE IMMEDIATELY PRECEDING YEAR, WE RESPECTFULLY FOLLOW THE DECISION RENDERED BY THE COORDINATE BENCH OF THIS TRIBUNAL IN THE SAID CASE AND UPHOLD THE IMPUGNED ORDER OF THE LEARNED CIT(A), DELETING THE ADDITION MADE BY THE ASSESSING OFFICER ON ACCOUNT OF PROF IT EARNED BY THE ASSESSEE ON ALLEGED UNACCOUNTED SALES AND DISMISS GROUND NO.3 OF THE REVENUE IN THIS APPEAL. I TA NO. 159 6 /H YD/20 14 M/S.MEENA JEWELLERS PVT. LTD., HYDERABAD 7 8 . IN THE RESULT, APPEAL OF THE REVENUE 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 COPY FORWARDED TO: 1. M/S. MEENA JEWELLERS PVT. LTD., 5 - 9 - 58/1 - 15, SHOPNO.201/A, BABUKHAN ESTATE, BASHEERBAGH, HYDERABAD 2 . DY. 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