DCIT CORPORATE CIRCLE-2, MADURAI V. STANDARD PRESS INDIA PVT LTD, VIRUDHUNAGAR

ITA 1618/CHNY/2019

• Counselvise Citation: [2022] 104 COUNSELVISE.COM (IT) 0331 (ITAT-CHENNAI)
• Duration Of Justice: 3 year(s) 4 month(s) 26 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 18-10-2022
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 10-10-2022
• Assessment Year: 2013-2014
• Appeal Filed On: 22-05-2019
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Search and seizure; Additional evidence
• Section: 13

Judgement Text

आयकर अपीलीय अिधकरण, ‘ए’ ᭠यायपीठ,चे᳖ई IN THE INCOME TAX APPELLATE TRIBUNAL ‘A’ BENCH, CHENNAI Įी महावीर ͧसंह, उपाÚय¢ एवं Įी मनोज क ु मार अĒवाल, लेखा सदèय के सम¢ BEFORE SHRI MAHAVIR SINGH, VICE PRESIDENTAND SHRI MANOJ KUMAR AGGARWAL, ACCOUNTANT MEMBER आयकरअपीलसं./ITA No.: 1618/CHNY/2019 िनधाᭅरण वषᭅ/Assessment Year: 2013-14 The ACIT, Central Circle-2, Madurai. vs. M/s. Standard Press (India) Pvt. Ltd., 34G Poothaiammal Nagar, Sivakasi, Virudhunagar District – 626 123. PAN: AADCS 4974K (अपीलाथᱮ/Appellant) (ᮧ᭜यथᱮ/Respondent) अपीलाथᱮ कᳱ ओर से/Appellant by : Shri AR.V. Sreenivasan, Addl.CIT ᮧ᭜यथᱮ कᳱ ओर से/Respondent by : Shri K. Balasubramanian, Advocate स ु नवाई कȧ तारȣख/Date of Hearing : 11.10.2022 घोषणा कȧ तारȣख/Date of Pronouncement : 19.10.2022 आदेश /O R D E R PER MAHAVIR SINGH, VICE PRESIDENT: This appeal by the Revenue is arising out of the order of Commissioner of Income Tax (Appeals)-19, Chennai in ITA No.59/16-17 dated 28.02.2019. The assessment was framed by the DCIT, Central Circle-2, Madurai for the assessment year 2013-14 u/s.143(3) of the Income Tax Act, 1961 (hereinafter the ‘Act’) vide order dated 31.03.2016. 2 ITA No.1618/Chny/2019 2. At the outset, it is noticed that this appeal is barred by limitation by 5 days and Revenue has filed condonation petition supported by affidavit. The order of CIT(A) is received on 19.03.2019. The appeal is to be filed before Tribunal on or before 18.05.2019 but actually appeal was filed only on 23.05.2020 thereby there is a delay of 5 days. The Revenue has stated the following reason for not filing within 60 days in its affidavit vide para 3, which reads as under:- “3. It is submitted that due to postal delay, pre occupation of the undersigned in making appearance before ITAT & ITSC proceedings in the pending cases were got delayed 5 days in this office. Hence the delay.” We find the cause as reasonable and hence, condone the delay and admit the appeal. 3. The only issue in this appeal of Revenue is as regards to the order of CIT(A) deleting the addition made by the AO on account of omission of net profit amounting to Rs.6,06,85,743/- pertaining to branch office of assessee i.e., Mumbai branch and deleting the addition by admitting additional evidence in violation of Rule 46A of the Income Tax Rules, 1962. For this, Revenue has raised following effective ground No.2:- 2. The learned CIT(A) erred in directing the Assessing Officer to delete the addition made on account of omission of net profit amounting to 3 ITA No.1618/Chny/2019 Rs.6,06,85,743/- in the assessment order passed u/s.143(3) of the Income Tax Act, 1961 on 31.03.2016. 2.1 The learned CIT(A) erred in holding that accounts / details of branch office were submitted before the Assessing Officer without appreciating the fact mentioned in para no.4.9 of the assessment order that no such details were submitted. 2.2 Having regard to the production of branch office accounts before the learned CIT(A) which were not produced before the Assessing Officer, the learned CIT(A) ought to have given an opportunity to the Assessing Officer to examine the branch accounts evidence as envisaged by Rule 46A of the I.T. Rules, 1962. 4. Brief facts are that the assessee is engaged in the business of printing in Sivakasi, Tamil Nadu. A search and seizure operation u/s.132 of the Act was conducted by the Income Tax Department in the group cases of Standard Fireworks Pvt. Ltd., on 16.10.2014 and consequently, the assessee being a group concern, a survey u/s.133A of the Act was carried out on the business premises of the assessee on 16.10.2014. The AO noted that the assessee has filed return of income with audited accounts in Form No.3CD and declared net profit of Rs.76,14,663/-. The AO on verification of impounded documents and verification of profit & loss account noted that there is a working copy of the profit & loss account, which was impounded vide ANN/HVR/SPIPL/IMP/ED dated 11.12.2014 being external drive which show further net profit of Rs.6,83,00,406/-. According to AO, as per this impounded material, the assessee has 4 ITA No.1618/Chny/2019 shown profit of Rs.55,60,215/- as against net profit in the impounded documents of Rs.6,83,00,406/-. The AO accordingly issued show cause notice to the assessee as to why the branch profit of Rs.6,26,79,809/- be not added to the returned income of the assessee i.e., the profit declared in the impounded documents of Rs.6,83,00,406/- minus already declared profit of Rs.55,60,215/-. The AO noted that the assessee has not filed any reconciliation and also noted the submissions made by the assessee that the transactions pertaining to branch office at Mumbai were kept at Mumbai branch. Hence, the AO noted that the assessee could not produce the accounts relating to branch transactions and clear contention that oracle software maintained in the head office did not have details of branch accounts and this position was also confirmed by the oracle data available in the custody of the Department in the impugned documents. Therefore, the AO added this amount of Rs.6,06,85,743/- as suppressed profit not declared in the return of income by observing in para 4.10 as under:- “4.10 From the above discussion, it is proved that the assessee omitted to admit the net profit to the extent of Rs.6,06,85,743/- (i.e. net profit as per oracle software Rs.7,83,00,406 – income admitted in the return of income Rs.76,14,663). All the transactions in the debit side of the Profit & Loss account were verified and found to be correct with statement of accounts in the oracle software at the time of survey. Hence, the omitted net profit of Rs.6,06,85,743/- is added in the income of the assessee.” Aggrieved, assessee came in appeal before the CIT(A). 5 ITA No.1618/Chny/2019 5. The CIT(A) after going through the submissions of the assessee and reconciliation statement filed, deleted the addition by observing in paras 5.2 to 5.4 as under:- “5.2 In the P& L A/c for YE 31-3-2013 Net Profit before tax and after tax of Head office Sivakasi is shown at Rs.6,83,00,406 which is the figure as per impounded P & L A/c. In the consolidated P &L A/c Loss of Mumbai Branch (started on 23-10-2012) is admitted at Rs.6,06,85,739. Consolidating both, NP shown in the consolidated P &L A/c is Rs.76,14,663 which is the figure admitted in the ROI vide extract above, filed before Survey. There are separate P & L A/c for Bombay branch (loss at RS.6,08,85,738), Head office Sivakasi (profit at Rs.6,83,00,406) and consolidated P & L of both (NP at Rs.76,14,663) copies of which have all been filed both before AO and at appellate stage. Thus, the NP as per impounded P& L A/c fully tallies with the NP shown against Sivakasi HO. 5.3. The mistake lies in not considering the Bombay branch loss and not fully perusing the consolidated P & Alc. Therefore, there is no omission of any net profit as assumed by the learned A/O who has considered the P &L A/c of Head office only and the Bombay branch P & L A/c was omitted to be considered. 5.4. Even on the T/O side, the sales shown in the impounded P & L A/C are grouped under various heads and correct T/O is admitted in the Sivakasi P & L A/c/consolidated P & L A/c. This is an accepted fact by the learned A/O herself when she recorded in para 4.3 of the asst order to the effect that: "Hence the sales transactions under the head Sales of Paper & Board is undoubtedly a true transaction". The closing stock of Bombay branch is also accounted for in the HO (para 4.5 of the asst.order) vide Schedule 13 to P & L A/c with a Note that "The closing stock of Mumbai branch were considered in only in Head office books of accounts". Even sales to M/s.Vimala Paper Co.Ltd., referred to in para 4.3 were fully included in the total T/o.” Aggrieved, now Revenue is in appeal before the Tribunal. 6 ITA No.1618/Chny/2019 6. Before us, Shri AR.V. Sreenivasan, Addl.CIT argued on behalf of Revenue and relied on the assessment order. He stated that the assessee before CIT(A) filed additional evidences i.e., separate profit & loss account maintained by branch office at Mumbai and claimed loss of Rs.6,08,85,738/-. According to him, these were new evidences and hence, requested that if at all these evidences are to be considered for the purpose of reconciliation of profit & loss account, the same may be referred to the file of the AO. 7. On the other hand, the ld.counsel for the assessee drew our attention to assessee’s paper-book consisting of 1 to 27 pages and stated that the alleged documents referred to by the ld.counsel for the assessee were very much filed before the AO during the course of assessment proceedings and he referred to the letter filed before DCIT dated 24.03.2016, wherein complete reconciliation of sale of paper & board in head office with audited statement and reconciliation of sale in head office, profit & loss account with audited statement were filed. In this reconciliation, ld.counsel showed us the transfer made from branch during the year and considered in the profit & loss account was disclosed. The assessee filed complete sale of paper and board including branch office sale as well as domestic sales and receipts. The ld.counsel for the 7 ITA No.1618/Chny/2019 assessee drew our attention to page 5 of the assessee’s paper-book and drew our attention to sales account to tally the figures. Finally, the ld.counsel for the assessee further drew our attention to page 7 of assessee’s paper-book wherein letter dated 26.03.2016 addressed to AO was filed and the relevant consolidation of head office and branch figures were recorded. The relevant para 3 of the letter including the reconciliation reads as under:- “3. On consolidation of Head office & Branch figures, the net profit shall be at Rs.76,14,663/- as stated I audited statement of accounts and return of income filed. The reconciliation of net profit of Rs.6,83,00,406 as per oracle software and net profit of Rs.76,14,663/- as per audited statement of accounts is furnished below for your consideration. PARTICULARS Rs. Rs. Net Profit as per Profit & Loss Account in Oracle Software (taken during survey) 68,300,406 Less: Expenses side of Branch P&L account Branch transfers made during the year as per P&L Account in Oracle software (taken during survey) 54,259,988 Direct Purchases made by the branch as per Mumbai Branch Profit & Loss Account 28,184,370 Indirect Expenses as per Mumbai Branch Profit & Loss Account 12,283,003 94,727,361 (26,426,955) Add: Income side of Branch P&L account Sales made by the branch during the year as per Mumbai Branch P&L Account 33,557,370 Indirect Income/Discount received as per Mumbai Branch P&L account 484,253 34,041,623 Profit to be as per audited statement of accounts / return of income filed 7,614,668 Profit as per audited statement of accounts / Return of Income filed 7,614,663 Difference 5 8 ITA No.1618/Chny/2019 The ld.counsel for the assessee also stated that these figures were explained to AO vide letter dated 30.03.2016 including the work-in- progress, financial cost, physical stock. In view of the above, the ld.counsel stated that the entire reconciliation and consolidation of both Profit & Loss account are before the AO during the original assessment proceedings and even these were filed before the CIT(A). He contended that nothing new documents were filed. 8. When these were confronted to ld. Senior DR, he only stated that for verification purpose matter can be referred back to the file of the AO. 9. After hearing rival contentions and going through the above facts narrated, we find that the assessee has filed complete consolidation of both Profit & Loss account i.e., for head office as well as Mumbai branch. It is clear that there is a loss on Mumbai branch of Rs.6,08,85,738/- and profit of Rs.6,83,00,406/- on head office at Sivakasi. The consolidated figure comes to net profit of Rs.76,14,663/-, which is declared by the assessee. We noted that since the above details were incorporated in the relevant schedules in the audited accounts and return of income is filed much before the survey conducted by the Department u/s.133A of the Act, we 9 ITA No.1618/Chny/2019 find no reason to refer the matter back to the file of the AO particularly, when all the information were filed by the assessee before him. Hence, we find no infirmity in the order of CIT(A) deleting the addition. We confirm the order of CIT(A) and dismiss this appeal of Revenue. 10. In the result, the appeal filed by the Revenue is dismissed. Order pronounced in the open court on 19 th October, 2022 at Chennai. Sd/- Sd/- (मनोज कुमार अᮕवाल) (MANOJ KUMAR AGGARWAL) लेखा सद᭭य/ACCOUNTANT MEMBER (महावीर ᳲसह ) (MAHAVIR SINGH) उपा᭟यᭃ /VICE PRESIDENT चे᳖ई/Chennai, ᳰदनांक/Dated, the 19 th October, 2022 RSR आदेशकᳱᮧितिलिपअᮕेिषत/Copy to: 1. अपीलाथᱮ/Appellant 2. ᮧ᭜यथᱮ/Respondent 3. आयकरआयुᲦ (अपील)/CIT(A) 4. आयकरआयुᲦ /CIT 5. िवभागीयᮧितिनिध/DR 6. गाडᭅफाईल/GF.