DCIT, C.C. - XVIII, Kolkata, Kolkata V. Diana Tea Company Ltd., Kolkata

ITA 160/KOL/2009

• Counselvise Citation: 16023514 RSA 2009
• Duration Of Justice: 2 year(s) 7 month(s) 4 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 14-09-2011
• Appeal Filed By: Department
• Bench Allotted: C
• Assessment Year: 2004-2005
• Appeal Filed On: 09-02-2009
• Court: TRIBUNAL
• Department Lawyers: NIRAJ KUMAR
• Assessee Lawyers: SUBHASH AGARWAL
• Keywords: Bogus purchase; Opportunity of being heard; Additional evidence

Judgement Text

, , , IN THE INCOME TAX APPELLATE TRIBUNAL, BEN CH C, KOLKATA [ () . .. . , ,, , , ! . .. .'# '#'# '#. .. . , , , , $% ] ]] ] [BEFORE HONBLE SRI N.VIJAYAKUMARAN, JM & HONBLE SRI C. D. RAO, AM] !' !' !' !' () *+/ ASSESSMENT YEARS ITA NO.160/KOL/2009 2004-05 ITA NO.161/KOL/2009 2005-06 ITA NO.1795/KOL/2010 2006-07 D.C.I.T.,CENTRAL CIRCLE-XVIII, - - M/S.DIANA TEA COMPANY LTD. KOLKATA -VERSUS- (PAN:AABCD 1021 G) (-. / APPELLANT ) ( /0-. /RESPONDENT) -. 1 2 $/ FOR THE APPELLANT: SHRI NIRAJ KUMAR /0-. 1 2 $/ FOR THE RESPONDENT: SHRI SUBHASH AGARWAL $3 / ORDER ( (( ( . .. .'# '#'# '#. .. . ) )) ), , , , $% PER SHRI C.D.RAO, AM THE ABOVE THREE APPEALS ARE FILED BY THE REVENUE A GAINST SEPARATE ORDERS DATED 26.11.2008, 24.11.2008 AND 25.05.2010 OF THE CIT(A)-CENTRAL-II, KOLKATA PERTAINING TO A.YRS. 2004-05, 2005-06 AND 2006-07. FOR THE SAKE OF CONVENIENCE ALL THE THREE APPEALS ARE DISPOSED OF TOGETHER BY A COM MON ORDER. ITA NO.160/KOL/2009 (A.YR.2004-05): 2. THE GROUNDS OF APPEAL IN THIS APPEAL READ AS UND ER :- 1. THAT IN THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW THE LD. CIT(A) HAS ERRED BOTH IN LAW AND IN FACTS IN DELETING THE ADDITION OF RS.2,83,14,481/- MADE BY THE ASSESSING OFFICER ON ACCOUNT OF SALES C ONSIDERATION OUT OF SUPPRESSED MANUFACTURED TEA OF 4,70,820 KGS. 2. THE LD. CIT(A) HAS ERRED IN LAW IN DELETING THE ADDITION BY RELYING ON THE ADDITIONAL EVIDENCES WITHOUT GIVING ANY OPPORTUNITY TO THE AO FOR VERIFICATION & VIOLATING RULE 46A OF THE I.T.RULES. 3. THAT THE DEPARTMENT CRAVES LEAVE TO ADD, MODIFY OR ALTER ANY OF THE GROUND(S) OF APPEAL AND/OR ADDUCE ADDITIONAL EVIDEN CE AT THE TIME OF HEARING OF HEARING OF THE CASE. 2 ITA NO.161/KOL/2009 (A.YR.2005-06): THE GROUNDS OF APPEAL IN THIS APPEAL READ AS UNDER :- 1. THAT IN THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW THE LD. CIT(A) HAS ERRED BOTH IN LAW AND IN FACTS IN DELETING THE ADDITION OF RS.4,31,97,440/- MADE BY THE ASSESSING OFFICER ON ACCOUNT OF SALES C ONSIDERATION OUT OF SUPPRESSED MANUFACTURED TEA OF 6,39,015.38 KGS. 2. THE LD. CIT(A) HAS ERRED BOTH IN LAW AND IN FACT S IN DELETING THE ADDITION OF RS.1,03,16,891/-MADE BY THE ASSESSING OFFICER ON AC COUNT BOGUS PURCHASE AS SHOWN IN THE P & L A/C. 3. THE LD. CIT(A) HAS ERRED IN LAW IN DELETING THE ADDITION BY RELYING ON THE ADDITIONAL EVIDENCES WITHOUT GIVING ANY OPPORTUNITY TO THE AO FOR VERIFICATION & VIOLATING RULE 46A OF THE I.T.RULES. 4. THAT THE DEPARTMENT CRAVES LEAVE TO ADD, MODIFY OR ALTER ANY OF THE GROUND(S) OF APPEAL AND/OR ADDUCE ADDITIONAL EVIDEN CE AT THE TIME OF HEARING OF HEARING OF THE CASE. ITA NO.1795/KOL/20010 (A.YR.2006-07): THE GROUNDS OF APPEAL IN THIS APPEAL READ AS UNDER :- 1. THAT LD. CIT(A) CENTRAL-II, KOLKATA HAS ERRED I N LAW AS WELL AS ON FACTS OF THE CASE IN DELETING THE ENTIRE ADDITION MADE BY TH E ASSESSING OFFICER IN SUPPRESSION OF SALES AMOUNTING TO RS.5,46,18,972/- WITHOUT CONSIDERING THE VARIOUS OTHER FACTS NARRATED BY THE AO IN THE ASSES SMENT ORDER. 2. THE LD. CIT(A)-CENTRAL-II, KOLKATA HAS ERRED IN LAW AS WELL AS ON FACTS OF THE CASE IN DIRECTING THE ASSESSING OFFICER TO ADD THE DISALLOWANCE MADE BY THE A.O. OF RS.1,28,060/- ON ACCOUNT OF LOSS ON DISCARD OF TEA PLANTATION BEFORE APPLYING RULE 8(2) I.E. ADDITION WILL BE INCLUDED I N THE COMPOSITE INCOME NOT UNDER 100% CENTRAL INCOME. 3. THE LD. CIT(A) CENTRAL-II, KOLKATA HAS ERRED IN LAW AS WELL AS FACTS OF THE CASE IN DIRECTING THE ASSESSING OFFICER TO CALCULAT E THE TAX IN RESPECT OF STCG OF RS.1,71,125/- AT SPECIAL RATE MENTIONED U/S 111A WITHOUT VERIFYING THE RECORDS THAT ASSESSEE DID NOT PROVE ANY EVIDENCE TO ESTABLISH THAT STT WAS PAID IN RESPECT OF THE TRANSACTION MADE. 4. THAT THE APPELLANT CRAVES FOR LEAVE TO ADD, DELE TE OR MODIFY ANY OF THE GROUNDS OF APPEAL BEFORE OR AT THE TIME OF HEARING. 3. AT THE TIME OF HEARING, THE LD. DR APPEARING ON BEHALF OF THE REVENUE BY REFERRING TO GROUND NO.1 IN ALL THE APPEALS REITERA TED THE OBSERVATIONS MADE BY AO IN THE ASSESSMENT ORDER AT PAGES 2,3 AND 4 WHILE WORKI NG OUT THE SUPPRESSED SALES AND AGAIN BY REFERRING TO LD. CIT(A)S ORDER AT PAGE NO .4 SUBMITTED THAT LD. CIT(A) IS NOT JUSTIFIED IN COMING TO THE CONCLUSION THAT I AM UN ABLE TO LOCATE THE PAPER WHERE THE AR ADMITTED ACTUAL AVERAGE PRODUCTIVITY OF 21 KG PE R MANDAY. HE FURTHER POINTED OUT 3 THAT LD. CIT(A) HAS ACCEPTED MONTHLY-WISE DETAILS O F ACTUAL PLUCKING FURNISHED IN THE COURSE OF APPEAL PROCEEDINGS. IT IS NIL FOR JANUA RY & FEBRUARY, AND RANGED FROM 11.29 KG TO 25.86 KG FOR THE REST OF F.Y. 03-04 IN THE CASE OF THE ASSESSEE. THAT THIS IS LESS THAN THE NORM IN THE FORM OF PLUCKING TASK IS THE ARGUMENT OF THE TEA- MANUFACTURERS. THE GRIEVANCE OF THE WORKERS IS THAT WITHOUT PROPER WAGE SETTLEMENT PRODUCTIVITY CANNOT IMPROVE. WHEREAS LD. AO HAS CAT EGORICALLY MENTIONED IN THE ASSESSMENT ORDER ITSELF THAT ASSESSEE HAS CONFIRMED THAT IN ONE MANDAY MINIMUM 21 KGS OF LEAVES ARE PLUCKED WHICH WERE RECORDED BY AO IN THE ORDER SHEET DATED 19.12.2006. IN SUPPORT OF THIS HE FILED COPY OF THE SAME. THEREFORE HE REQUESTED TO SET ASIDE THE MATTER TO THE FILE OF AO FOR FRESH ADJUDI CATION. 4. ON THE OTHER HAND, THE LD. COUNSEL APPEARING ON BEHALF OF ASSESSEE SUBMITTED THAT LD. CIT(A) IS JUSTIFIED IN DELETING THE ARBITR ARY AND UNJUSTIFIED ADDITION MADE BY AO. THEREFORE HE REQUESTED TO CONFIRM THE ACTION OF LD. CIT(A). 5. AFTER HEARING THE RIVAL SUBMISSIONS AND ON CARE FUL PERUSAL OF MATERIALS AVAILABLE ON RECORD, WE ARE OF THE CONSIDERED VIEW THAT THIS ISSUE REQUIRES FURTHER VERIFICATION OF THE FACTS. THEREFORE WE SETA SIDE T HE ORDERS OF LD. CIT(A) AND REMIT BACK TO THE FILE OF AO FOR FRESH CONSIDERATION AFTE R GIVING A REASONABLE OPPORTUNITY OF BEING HEARD TO ASSESSEE. 6. AS REGARDING THE OTHER GROUNDS RAISED BY THE REV ENUE I.E. DELETION OF ADDITION OF RS.1,03,16,891/- ON ACCOUNT OF BOGUS PURCHASES FOR A.YR.2005-06. 7. AFTER HEARING THE RIVAL SUBMISSIONS AND ON CAREF UL PERUSAL OF MATERIALS AVAILABLE ON RECORD IT IS EVIDENT FROM THE OBSERVAT IONS MADE BY LD. CIT(A) AT PARA 3.4. THAT LD. CIT(A) HAS ACCEPTED THE ADDITIONAL EVIDENC ES IN VIOLATION OF RULE 46A OF IT RULES. THE RELEVANT OBSERVATIONS OF LD. CIT(A) AT P ARA 3.4. OF THE IMPUGNED ORDER ARE AS UNDER :- IN THIS CONTEXT THE DETAILS NOW FURNISHED SUPPORT THE PROOF OF IDENTITY OF THE SUPPLIER AND GENUINENESS OF TRANSACTIONS EVIDENCED BY PAYMENT THROUGH ACCOUNTS PAYEE CHEQUE. 4 SINCE LD. CIT(A) HAS NOT CALLED FOR THE REMAND REPO RT FROM AO BEFORE ACCEPTING THE ADDITIONAL EVIDENCES WE ARE OF THE VIEW THAT LD. CI T(A) IS NOT JUSTIFIED IN DELETING THE SAME BY ACCEPTING THE ADDITIONAL EVIDENCES. THEREFO RE WE SET ASIDE THE ORDERS OF LD. CIT(A) AND REMIT BACK TO THE FILE OF AO TO DECIDE A FRESH AS PER LAW AFTER GIVING A REASONABLE OPPORTUNITY OF BEING HEARD TO ASSESSEE. 8. THE OTHER ISSUE RAISED BY THE REVENUE FOR A.YR. 2006-07 IS RELATING TO THE DISALLOWANCE OF RS.1,28,060/- UNDER RULE 8(2) AND THE CALCULATION OF TAX IN RESPECT OF SHORT TERM CAPITAL GAIN OF RS.1,71,125/- AT SPECIAL RATES U/S 111A OF THE IT ACT. 9. AFTER HEARING BOTH THE SIDES AND ON PERUSAL OF M ATERIALS AVAILABLE ON RECORD WE ARE OF THE VIEW THAT AS REGARDING COMPUTATION OF SH ORT TERM CAPITAL GAIN BY APPLYING THE PROVISIONS OF SECTION 111A THE EVIDENCES OF PAY MENTS OF SECURITY TRANSACTION TAX (STT) IS ESSENTIAL. HOWEVER, IN THIS CASE NEITHER A SSESSEE HAS FILED NOR LD. CIT(A) HAS MENTIONED THAT ASSESEE HAS PAID STT CHARGES TO THE APPROPRIATE AUTHORITIES. THEREFORE WE CONSIDER IT FIT TO SET ASIDE THIS ISSUE TO THE F ILE OF AO AND DIRECT ASSESSEE TO FILE EVIDENCES IN SUPPORT OF THE STT PAID ON SHORT TERM CAPITAL GAIN IN ORDER TO GET SPECIAL RATES MENTIONED U/S 111A OF THE IT ACT. 10. REGARDING THE OTHER ISSUE REGARDING APPLYING OF RULE 8(2) OF IT RULES WHETHER DISALLOWANCE MADE BY AO ON ACCOUNT OF LOSS ON DISCA RD OF TEA PLANTATION. AO HAS DISALLOWED THE SAME BY OBSERVING THAT ASSESSEE COMP ANY HAS FAILED TO GIVE ANY SATISFACTORY EXPLANATION THAT AN AMOUNT OF RS.1,28, 060/- WAS SPENT BY ASSESSEE ON ACCOUNT OF COMBINED ACTIVITY OF TEA GROWING AND MAN UFACTURING.. HOWEVER LD. CIT(A) HAS ALLOWED THE SAME AFTER TAKING INTO CONSIDERATIO N OF THE SUBMISSIONS OF ASSESSEE THAT THE LOSS IN TEA PLANTATION IS RELATING TO THE COMBINED ACTIVITY OF TEA GROWING AND MANUFACTURING WITHOUT EXAMINING ITS FACTS WITH SUPP ORTING EVIDENCES. THEREFORE WE SET ASIDE THIS ISSUE ALSO TO THE FILE OF AO TO DECI DE AFRESH AFTER GIVING A REASONABLE OPPORTUNITY OF BEING HEARD TO ASSESSEE. 5 11. IN THE RESULT ALL THE THREE APPEALS OF THE REVE NUE ARE ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 14.09.2011. SD/- SD/- . .. . , , , , ( ( ( ( N.VIJAYAKUMARAN, JUDICIAL MEMBER . .. .'# '#'# '#. .. . , ,, , $% $% $% $% , C.D.RAO, ACCOUNTANT MEMBER. ( (( (#% #% #% #%) )) ) DATE: 14.09.2011. $3 1 /(( 4$*5- COPY OF THE ORDER FORWARDED TO: 1. M/S.DIANA TEA COMPANY LTD., 3B/LAL BAZAR STREET, KO LKATA-700001. 2 THE D.C.I.T., CENTRAL CIRCLE-XVIII, KOLKATA 3. THE CIT, 4. THE CIT(A)-CENTRAL-II, KOLKATA 5. DR, KOLKATA BENCHES, KOLKATA 0 /(/ TRUE COPY, $3/ BY ORDER, DEPUTY /ASST. REGISTRAR , ITAT, KOLKATA BENCHES R.G.(.P. S.)