Sivasundaram & Co., CHENNAI V. ITO, CHENNAI

ITA 1669/CHNY/2012

• Counselvise Citation: [2013] 120 COUNSELVISE.COM (IT) 4612 (ITAT-CHENNAI)
• Duration Of Justice: 1 year(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 11-09-2013
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: C
• Next Hearing Date: 13-08-2013
• Assessment Year: 2008-2009
• Appeal Filed On: 27-08-2012
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: T N BETGERI
• Assessee Lawyers: P RANGA RAMANUJAM
• Section: 133A

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH : CHENNAI [BEFORE DR. O.K. NARAYANAN, VICE PRESIDENT & SHRI VIKAS AWASTHY, JUDICIAL MEMBER] I.T.A. NO. 1669/MDS/2012 ASSESSMENT YEAR : 2008-09 SIVASUNDARAM & CO., NO. 231, ARCOT ROAD, VADAPALANI, CHENNAI-600 026. [PAN: AACFS 4757 J] (APPELLANT) VS THE INCOME TAX OFFICER, BUSINESS WARD-V(2), CHENNAI 600 034. (RESPONDENT) APPELLANT BY : SHRI P.RANGA RAMANUJAM, C.A RESPONDENT BY : SHRI T.N. BETGERI, JCIT DATE OF HEARING : 13-08-2013 DATE OF PRONOUNCEMENT : 11-09-2013 O R D E R PER VIKAS AWASTHY, JUDICIAL MEMBER: THE APPEAL HAS BEEN FILED BY THE ASSESSEE AGAINST THE ORDER OF THE COMMISSIONER OF INCOME TAX(APPEALS)-VIII, CH ENNAI DATED 26-06-2012, RELEVANT TO THE ASSESSMENT YEAR (AY) 20 08-09. I.T.A. NO. 1669/MDS/2012 2 2. THE ASSESSEE IS A FIRM AND A WHOLESALE DEALER IN WHEAT, SUGAR AND FOOD GRAIN ITEMS. A SURVEY U/S. 133A OF THE INCOME TAX ACT, 1961 (HEREIN AFTER REFERRED TO AS THE ACT) W AS CONDUCTED AT THE BUSINESS PREMISE OF THE ASSESSEE ON 27-02-2008. DURING THE SURVEY PROCEEDINGS THE ASSESSEE OFFERED ` 50 LAKHS AS UN- DISCLOSED INCOME FOR THE AY. 2008-09. THE UN-DISCLO SED INCOME WAS OFFERED IN RESPECT OF: I. DISCREPANCIES IN STOCK ` 25.00 LAKHS II. BOOSTING OF EXPENSES FOR WANT OF PROPER VOUCHERS ` 25.00 LAKHS ------------------- ` 50.00 LAKHS ------------------- THE ASSESSEE FILED HIS RETURN OF INCOME FOR THE AY. 2008-09 ON 29-09-2008 DECLARING ITS TOTAL INCOME AS ` 3,84,175/-. DURING THE COURSE OF ASSESSMENT PROCEEDINGS U/S. 143(3), THE A SSESSING OFFICER OBSERVED THAT THE ASSESSEE HAS FAILED TO IN CLUDE ` 50.00 LAKHS CONCEDED BY HIM. THE ASSESSING OFFICER MADE ADDITION OF ` 50.00 LAKHS IN THE INCOME RETURNED BY THE ASSESSEE VIDE ASSESSMENT ORDER DATED 28-12-2010. AGGRIEVED AGAINST THE ASSESSMENT ORDER, THE ASSESSE E PREFERRED AN APPEAL BEFORE THE CIT(APPEALS). THE C IT(APPEALS) I.T.A. NO. 1669/MDS/2012 3 ON THE BASIS OF WRITTEN SUBMISSIONS FURNISHED BY TH E ASSESSEE SOUGHT REMAND REPORT FROM THE ASSESSING OFFICER. I N THE REMAND REPORT DATED 15-05-2012, THE ASSESSING OFFICER OBSE RVED THAT THERE IS A DIFFERENCE OF ` 17,51,240/- IN ANNUAL STOCK VIZ-A-VIZ THE BOOKS OF ACCOUNT. AS REGARDS OTHER EXPENDITURE REL ATING TO LOADING AND UN-LOADING EXPENSES, PAYMENT TO MAISTRY , SALARY, MESS EXPENSES ETC., THE ASSESSING OFFICER OBSERVED THAT THE ASSESSEE HAS NOT MAINTAINED PROPER VOUCHERS. THE A SSESSEE HAS SUBMITTED SELF-MADE VOUCHERS WHEREIN PAYMENTS WERE MADE IN CASH AND THE IDENTITIES OF THE PERSON WHO HAVE RECE IVED THE PAYMENTS ARE NOT MENTIONED IN THESE VOUCHERS. THE CIT(APPEALS) ON THE BASIS OF REMAND REPORT, CONFIRMED THE ADDITI ON MADE BY THE ASSESSING OFFICER ON ACCOUNT OF DISCREPANCY IN STOC K TO THE TUNE OF ` 17,51,240/- AND ` 25.00 LAKHS TOWARDS INFLATION OF EXPENDITURE. THE ASSESSEE, AGGRIEVED BY THE ORDER OF THE CIT(APP EALS) HAS COME IN SECOND APPEAL BEFORE US. 3. SHRI P. RANGA RAMANUJAM, C.A., APPEARING ON BEHA LF OF THE ASSESSEE SUBMITTED THAT ALTHOUGH THE ASSESSING OFFI CER IN HIS REMAND REPORT HAS RECOMMENDED REDUCTION IN ADDITION ON ACCOUNT OF STOCK DISCREPANCY TO ` 17,51,240/- AS AGAINST THE ADDITION OF ` 25.00 LAKHS MADE IN THE ASSESSMENT ORDER. THE CIT( APPEALS) I.T.A. NO. 1669/MDS/2012 4 WHILE CONFIRMING THE ADDITION AS PER REMAND REPORT , DISMISSED THE APPEAL OF THE ASSESSEE. AS REGARDS THE OTHER A DDITION MADE TOWARDS LOADING AND UN-LOADING EXPENSES, PAYMENT TO MAISTRY, MESS EXPENSES AND SALARIES TO STAFF ARE CONCERNED, THE LD. COUNSEL SUBMITTED THAT THE ASSESSEE IS A WHOLESALE DEALER, DURING THE DAY LOADING AND UN-LOADING ACTIVITIES ARE CARRI ED ON REGULARLY. IT IS VERY DIFFICULT TO OBTAIN VOUCHERS FOR PETTY A MOUNTS EVERY DAY. MOREOVER, THE LABOURERS EMPLOYED IN LOADING AND UN- LOADING ACTIVITIES ARE ILLITERATE AND CASUAL, IT IS NOT POS SIBLE TO HAVE THE TRACK OF SUCH PERSONS REGULARLY. THE LD. COUNSEL F URTHER SUBMITTED THAT AS REGARDS RENT AND VEHICLE MAINTENANCE EXPENS ES IS CONCERNED, THE ASSESSING OFFICER IN HIS REMAND REPO RT HAS CATEGORICALLY STATED THAT NO DISCREPANCY IS NOTICED , STILL THE CIT(APPEALS) HAS CONFIRMED THE ADDITION MADE IN ASS ESSMENT ORDER. THE LD. AR CONTENDED THAT THE ASSESSING OFF ICER HAS MADE ADDITION MERELY ON THE STATEMENT MADE BY ONE OF THE PARTNERS DURING SURVEY PROCEEDINGS U/S. 133A. NO INCRIMINAT ING MATERIAL WAS FOUND DURING THE COURSE OF SURVEY AND ALSO DURI NG THE ASSESSMENT PROCEEDINGS. THE STATEMENT WAS GIVEN BY THE PARTNER PURELY FROM MEMORY AND NOT AFTER VERIFICATION OF RE CORDS. MERE ADMISSION IN THE COURSE OF SURVEY IS NOT ENOUGH TO MAKE ADDITION I.T.A. NO. 1669/MDS/2012 5 IN THE ASSESSMENT, THERE MUST BE CORROBORATIVE EVID ENCE TO SUPPORT THE ADMISSION IN SUPPORT OF SUBMISSION. 4. ON THE OTHER HAND, SHRI T.N. BETGERI, APPEARING ON BEHALF OF THE REVENUE STRONGLY SUPPORTED THE ORDER OF THE CIT (APPEALS) AND PRAYED FOR THE DISMISSAL OF THE APPEAL OF THE ASSES SEE. 5. WE HAVE HEARD THE SUBMISSIONS MADE BY THE REPRESENTATIVES OF BOTH THE SIDES AND HAVE PERUSED THE ORDERS OF THE AUTHORITIES BELOW. IT IS A WELL SETTLED LAW TH AT ADDITION CANNOT BE MADE MERELY ON THE BASIS OF STATEMENT MADE U/S. 133A OF THE ACT. CORROBORATIVE EVIDENCE IS NECESSARY FOR MAKIN G ADDITIONS. THIS VIEW HAS REPEATEDLY BEEN TAKEN IN VARIOUS ORDE RS OF THE TRIBUNAL. THE HONBLE MADRAS HIGH COURT IN THE CAS E OF CIT VS. S. KHADAR KHAN SON REPORTED AS 300 ITR 157 (MDS) HAS ALSO TAKEN A SIMILAR VIEW. A PERUSAL OF THE REMAND REPORT WHICH IS AT PG NOS. 19 TO 25 OF THE PAPER BOOK FILED BY THE ASSESSEE SH OWS THAT THE ASSESSING OFFICER HAS CATEGORICALLY STATED THAT THE DIFFERENCE IN ACTUAL STOCK AS PER THE BOOKS OF ACCOUNT IS ` 17,51,240/-. THIS FACT HAS ALSO BEEN RECORDED BY THE CIT(APPEALS) IN HIS I MPUGNED ORDER. HOWEVER, WHILE CONCLUDING THE ORDER, THE CI T(APPEALS) HAS DISMISSED THE APPEAL OF THE ASSESSEE IN FULL. WE M ODIFY THE ORDER I.T.A. NO. 1669/MDS/2012 6 OF THE CIT(APPEALS) ON THIS GROUND AND CONFIRM THE ADDITION TO THE EXTENT OF ` 17,51,240/- INSTEAD OF ` 25.00 LAKHS AS HELD IN THE ASSESSMENT ORDER. 6. AS REGARDS ADDITION MADE ON ACCOUNT OF BOOSTING OF EXPENSES, THE ASSESSING OFFICER HAS MADE CONSOLIDAT ED ADDITION OF ` 25.00 LAKHS. DURING THE APPELLATE PROCEEDINGS, IN THE REMAND REPORT THE ASSESSING OFFICER HAS MENTIONED THAT THE RE IS NO DISCREPANCY NOTED WITH REGARD TO THE PAYMENT OF REN T AND VEHICLE MAINTENANCE EXPENSES. IN RESPECT OF OTHER EXPENSES RELATING TO LOADING AND UN-LOADING, PAYMENT TO MISTRY, SALARY A ND MESS EXPENSES, THE ASSESSING OFFICER HAS SUPPORTED HIS O RDER. IT IS AN ADMITTED FACT THAT THE ASSESSEE IS A WHOLESALE DEAL ER. DURING THE COURSE OF HIS BUSINESS ACTIVITIES LOADING AND UN-L OADING EXPENSES ARE ROUTINE AFFAIR FOR WHICH OBTAINING VOUCHERS FRO M EACH AND EVERY LABOUR WHO ARE MOSTLY ILLITERATE AND ARE WORKING AS CASUAL LABOURERS IS EXTREMELY DIFFICULT. AS REGARDS SALA RY TO EMPLOYEES, MESS EXPENSES AND PAYMENTS TO MAISTRY IS CONCERNED, THE AR HAS NOT BEEN ABLE TO CONTROVERT THE FINDINGS OF THE REV ENUE. THE ASSESSEE IS DUTY BOUND TO MAINTAIN PROPER BOOKS OF ACCOUNT WITH SUPPORTING VOUCHERS ETC. THE ASSESSEE WAS NOT ABLE TO I.T.A. NO. 1669/MDS/2012 7 SUBSTANTIATE HIS STAND WITH DOCUMENTARY EVIDENCE EI THER BEFORE THE ASSESSING OFFICER OR CIT(APPEALS). 7. AFTER TAKING INTO CONSIDERATION THE FACTS AND CI RCUMSTANCES OF THE CASE, THE NATURE OF BUSINESS ACTIVITIES OF THE ASSESSEE, THE HEADS OF EXPENSES AND THE REMAND REPORT, IT WOULD BE APPROPRIATE IF THE ADDITION MADE BY THE ASSESSING OFFICER IS RE DUCED FROM ` 25.00 LAKHS TO ` 10.00 LAKHS IN RESPECT OF INFLATED EXPENSES. 8. IN THE RESULT, ADDITION TO THE TUNE OF ` 17,51,240/- WITH RESPECT TO DIFFERENCE IN VALUE OF STOCK AND ` 10.00 LAKHS TOWARDS BOOSTING OF EXPENSES IS CONFIRMED. THE APPEAL OF THE ASSESS EE IS PARTLY ALLOWED. ORDER PRONOUNCED ON WEDNESDAY, THE 11 TH SEPTEMBER, 2013 AT CHENNAI. SD/- SD/- (DR. O.K. NARAYANAN) (VIK AS AWASTHY) VICE PRESIDENT JUDICIAL MEMBER DATED: 11 TH SEPTEMBER, 2013 TNMM COPY TO: APPELLANT/RESPONDENT/CIT(A)/CIT/DR