ITO, Tirunelveli V. Mani & Co., Tirunelveli

ITA 1685/CHNY/2014

• Counselvise Citation: [2015] 120 COUNSELVISE.COM (IT) 8733 (ITAT-CHENNAI)
• Duration Of Justice: 7 month(s) 9 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 23-01-2015
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 19-01-2015
• Assessment Year: 2010-2011
• Appeal Filed On: 13-06-2014
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: P RADHAKRISHNAN IRS
• Assessee Lawyers: G BASKAR
• Keywords: Income from undisclosed sources; Opportunity of being heard; Onus to prove
• Section: 133A

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH, CHENNAI .. , , BEFORE SHRI B.R. BASKARAN, ACCOUNTANT MEMBER AND SHRI VIKAS AWASTHY, JUDICIAL MEMBER ./ I.T.A. NO.1685/MDS/2014 ( ! / ASSESSMENT YEAR : 2010-2011) THE INCOME TAX OFFICER, WARD I(2) TIRUNELVELI . ( /APPELLANT) VS M/S. MANI & CO, NO.56/48, EAST CAR STREET, SANKARANKOIL, TIRUNELVELI DISTRICT . [PAN : AAIFM7671D] ( /RESPONDENT) ' # $ / APPELLANT BY : SMT. P. RADHA KRISHNAN, IRS. JCIT. %&' # $ / RESPONDENT BY : SHRI. G. BASKAR, ADVOCATE ' ( # )* /DATE OF HEARING : 19.01.2015. +,! # )* /DATE OF PRONOUNCEMENT : 23.01.2015. / O R D E R PER B.R. BASKARAN, ACCOUNTANT MEMBER THE REVENUE HAS FILED THIS APPEAL CHALLENGING THE O RDER DATED 28.03.2014 PASSED BY LD. COMMISSIONER OF INCOME TAX (APPEALS)-I, MADURAI AND IT RELATES TO THE ASSESSMENT YEAR 2010- 11. THE REVENUE IS AGGRIEVED BY THE DECISION OF LEARNED COMMISSIONE R OF INCOME TAX (APPEALS) IN DELETING THE ADDITION OF GROSS PROFIT ON SUPPRESSED SALES. I.T.A.NO.1685/MDS/2014 . :- 2 -: 2. THE FACTS RELATING TO THE ABOVE SAID ISSUE ARE STAT ED IN BRIEF. THE ASSESSEE IS A PARTNERSHIP FIRM AND IS ENGAGED I N THE BUSINESS OF MANUFACTURING AND SALE OF EDIBLE OIL. THE DEPARTME NT CARRIED OUT A SURVEY OPERATION U/S. 133A OF THE ACT AT THE BUSINE SS PREMISES OF THE ASSESSEE ON 03.03.2010. DURING THE COURSE OF SURVE Y, A COMPUTER PRINTOUT DISCLOSING MONTH WISE SALES FROM APRIL, 20 09 TO OCTOBER,2009 WAS FOUND OUT. THE ASSESSING OFFICER NOTICED THAT THE SALES NOTED DOWN IN THE COMPUTER SHEET WAS HIGHER THAN THE SALE S RECORDED IN THE BOOKS OF ACCOUNTS. IT WAS FURTHER STATED THAT PART NERSHIP FIRM WAS CLOSED ON 31.12.2009. ACCORDINGLY, THE ASSESSING O FFICER PROCEEDED TO COMPUTE THE SALES AMOUNT FOR THE PERIOD FROM 1.4.20 09 TO 31.12.2009 AND ALSO COMPUTED THE SUPPRESSED SALES AS UNDER:- APRIL , 2009 . 1,04,33,258 MAY, 2009 . 84,77,424 JUNE, 2009 . 70,71,663.45 JULY, 2009 . 72,96,218 AUGUST, 2009 . 62,87,205 SEPTEMBER, 2009 . 61,76,494.50 OCTOBER, 2009 . 59,79,784 TOTAL AS PER THE ASSESSEES REPORT . 5,17,22,046 NOVEMBER, 2009(AS PER SALES TAX REPORT) . 13,27,174 DECEMBER, 2009 (AS PER SALES TAX REPORT) . 43,64,913 TOTAL . 5,74,14,133 LESS : ADMITTED IN THE RETURN . 1,86,41,430 SALES SUPPRESSION . 3,87,72,703 I.T.A.NO.1685/MDS/2014 . :- 3 -: THE ASSESSING OFFICER ADOPTED THE SALES FIGURES FOR THE PERIOD FROM APRIL, 2009 TO OCTOBER, 2009 FROM THE COMPUTER PRIN T OUT. THE SALES PERTAINING TO NOVEMBER, 2009 AND DECEMBER, 2009 WAS TAKEN FROM THE BOOKS OF THE ASSESSEE. ACCORDINGLY, THE ASSESS ING OFFICER ARRIVED AT THE SALES FIGURE FOR THE PERIOD FROM 1.4.2009 TO 31.12.2009 AT ` 5,74,14,133/-. SINCE THE ASSESSEE HAD DISCLOSED SA LES AT ` 1,86,41,430/- FOR THE ABOVE SAID PERIOD IN THE BOOK S OF ACCOUNT, THE ASSESSING OFFICER TREATED THE DIFFERENCE BETWEEN TH E ABOVE SAID TWO FIGURES AMOUNTING TO ` 3,87,72,703/- AS SUPPRESSED SALES. THE ASSESSEE HAD DECLARED THE GROSS PROFIT RATE OF 22.7 5% IN THE BOOKS OF ACCOUNTS. ADJUSTING THE SAME RATE OF GROSS PROFIT, THE ASSESSING OFFICER ESTIMATED THE PROFIT ON SUPPRESSED SALES AT ` 88,20,790/- (22.75% OF ` 3,87,72,703/-) AND ASSESSED THE SAME AS INCOME OF T HE ASSESSEE. 3. IN THE APPELLATE PROCEEDINGS, THE LEARNED COMMIS SIONER OF INCOME TAX (APPEALS) DELETED THE ABOVE SAID ADDITIO N WITH THE FOLLOWING OBSERVATIONS:- 7. ENTIRE ADDITION, WHICH IS VERY SUBSTANTIAL, IS BAS ED ON A SINGLE PIECE OF DOCUMENT FOUND AT THE TIME OF SURVEY WHERE IN SOME SALES FIGURE IS MENTIONED. ASSESSING OFFICERS REASONING AND JUSTIFICATION, IN THE ASSESSMENT ORDER, FOR CONCLUDING THAT APPELL ANT HAS RESORTED UNACCOUNTED SALES IS VERY CRYPTIC, TO SAY THE LEAST . THE APPELLANT WAS ARGUING, BOTH AT THE TIME OF SURVEY AND DURING THE ASSESSMENT THAT THE SALES FIGURES ARE ONLY FOR THE PURPOSE OF APPLYING FOR A BANK LOAN. IF APPELLANT WAS INDULGING IN SALES OUTSIDE THE BOOKS, AS IS BEING HELD BY THE ASSESSING OFFICER, SOME OTHER REL ATED EVIDENCES LIKE SHOULD HAVE BEEN FOUND AT THE TIME OF SURVEY. UNACCOUNTED SALES ARE OUT OF UNACCOUNTED MANUFACTURING WHICH RE QUIRES I.T.A.NO.1685/MDS/2014 . :- 4 -: UNACCOUNTED PURCHASE OF RAW MATERIALS. NORMALLY UN ACCOUNTED SALES AND UNACCOUNTED MANUFACTURING ALWAYS HAVE SO ME TRAIL ABOUT THE UNACCOUNTED BUSINESS ACTIVITY LIKE DEBTORS/CRED ITORS, CASH TRANSACTIONS DETAILS ETC., SINCE A SURVEY WAS COND UCTED IN APPELLANTS PREMISES SOME OF THESE ARE EXPECTED TO B E FOUND OUT SHOULD THERE IS UNACCOUNTED BUSINESS ACTIVITY. NO EVIDENCE WAS FOUND WITH REGARD TO ANY OF THE ABO VE DUE TO WHICH THE ASSESSING OFFICER CONCLUSION OF UNACCOUNTED BUS INESS ACTIVITY SEEMS TO BE WITHOUT BASIS. SINCE APPELLANT IS A MA NUFACTURER THE MACHINERY INSTALLED BY THE APPELLANT SHOULD HAVE TH E CAPACITY TO PRODUCE SALES VOLUME ESTIMATED BY THE ASSESSING OFF ICER. APPELLANT HAS ARGUED THAT THE MACHINERY HAS NO SUCH CAPACITY TO MANUFACTURE THE SALES VOLUME ARRIVED AT BY THE ASSESSING OFFICE R, WHICH SHOULD HAVE BEEN REBUTTED BY THE ASSESSING OFFICER. 7.1 THE ADDITION DEPENDS UPON THE RULE OF EVIDENCE. THE RESPONSIBILITY THAT THERE IS UNACCOUNTED BUSINESS A CTIVITY WHICH IS RESULTING IN UNACCOUNTED INCOME, AS IS BEING HELD BY THE ASSESSING OFFICER, IS ALWAYS ON THE DEPARTMENT. THIS FACT MUS T BE ESTABLISHED THROUGH REASONABLY IRREFUTABLE EVIDENCES. EXCEPT O NE PIECE OF PAPER, NO OTHER EVIDENCE IS BROUGHT ON RECORD BY TH E ASSESSING OFFICER TO PROVE THAT THERE IS UNACCOUNTED BUSINESS ACTIVITY. 7.2 AS SEEN FROM THE ABOVE DISCUSSION, THE ONLY BAS IS OF ADDITION IS JUST A COMPUTER PRINTOUT SHOWING SALES FOR 7 MON THS. THE BURDEN IS ON THE ASSESSING OFFICER TO PROVE CONCLUSIVELY T HAT THE CONTENTS OF THE DOCUMENT ARE CORRECT THROUGH CORROBORATIVE EVID ENCES. THE UNDISCLOSED INCOME IS TO BE COMPUTED BY THE ASSESSI NG OFFICER ON THE BASIS OF THE AVAILABLE MATERIAL ON RECORD. IT S HOULD NOT AND CANNOT BE BASED ON CONJECTURES AND SURMISES. THE MATERIAL CONSIDERED BY THE ASSESSING OFFICER FOR MAKING THE ADDITIONS IS A DOCUMENT CONTAINING THE SALES WHICH WAS EXPLAINED ALL ALONG THE APPELLANT THAT IT WAS PREPARED FOR THE PURPOSE OF BANK LOAN AND HA S NO LINK TO THE BOOKS OF ACCOUNTS OR THE ACTUAL BUSINESS ACTIVITY. THE ASSESSING OFFICER HAS NOT REBUTTED THESE ARGUMENTS AT ALL, WH ICH IS MANDATORY. ASSESSING OFFICER JUST BRUSHED ASIDE THE APPELLANTS ARGUMENTS. THERE WAS A SURVEY U/S. 133A AND THE ASSESSING OFFI CER IS NOT ABLE TO UNEARTH ANY OTHER DOCUMENT OR MATERIAL OR ANY FO RM OF CORROBORATIVE MATERIAL TO SHOW THAT THE APPELLANT S UPPRESSED SALES BY 3.7 CR. THE DEPARTMENT CANNOT DRAW INFERENCE ON THE BASIS OF SUSPICION, CONJECTURES AND SURMISES. SUSPICION HOW EVER STRONG, (HERE IT IS FAR FROM BEING STRONG) CANNOT TAKE PLAC E OF EVIDENCE IN SUPPORT OF THE FINDING OF THE ASSESSING OFFICER. T HE ASSESSING OFFICER SHOULD ACT IN A JUDICIAL MANNER, PROCEED WI TH JUDICIAL SPIRIT AND COME TO A JUDICIAL CONCLUSION. THE ASSESSING OFFIC ER IS REQUIRED TO ACT FAIRLY AS A REASONABLE PERSON AND NOT ARBITRARI LY AND CAPRICIOUSLY. THE ASSESSMENT MADE SHOULD HAVE ENOUGH MATERIAL AND IT SHOULD STAND ON ITS OWN LEGS. ALL THESE ELEMENTS ARE TOTAL LY LACKING HERE. I.T.A.NO.1685/MDS/2014 . :- 5 -: 7.3 IN THE ABSENCE OF CORROBORATIVE MATERIAL OR ANY FORM OF CIRCUMSTANTIAL EVIDENCE TO SHOW THAT THERE ARE UNAC COUNTED SALES THE ADDITION MADE IS CONSIDERED ARBITRARY AND HENCE DEL ETED. AGGRIEVED, THE REVENUE HAS FILED THIS APPEAL BEFORE US. 4. THE LD D.R SUBMITTED THAT THE COMPUTER PRINTOU T DISCLOSING THE DETAILS OF SALES WAS FOUND FROM THE BUSINESS PR EMISES OF THE ASSESSEE. HE FURTHER SUBMITTED THAT THE ASSESSEE D ID NOT DISOWN THE SAME, BUT EXPLAINED THE SAME TO BE A STATEMENT FOR AVAILING BANK LOAN. THE LD D.R SUBMITTED THAT THE SURVEY TOOK PL ACE AT THE BUSINESS PREMISES OF THE ASSESSEE ON 03.03.2010 AND THE COMP UTER PRINTOUT RELATED TO THE PERIOD FROM APRIL, 2009 TO SEPTEMBER , 2009. HENCE, AS ON THE DATE OF SURVEY, THERE WAS NO NECESSITY FOR T HE ASSESSEE TO PROJECT THE SALES PERTAINING TO THE EXPIRED MONTHS. HE FURTHER SUBMITTED THAT THE PROJECTIONS ARE GENERALLY MADE I N ROUND FIGURES, WHERE AS THE SALES NOTED DOWN IN THE COMPUTER PRINT OUT WAS IN ODD FIGURES AND HENCE THE ASSESSING OFFICER HAS SAFELY TAKEN THE VIEW THAT THE SAME REPRESENTS ACTUAL SALES. 5. ON THE CONTRARY, THE LD A.R SUBMITTED THE DE PARTMENT OFFICIALS DID NOT FIND ANY OTHER MATERIAL LIKE UNACCOUNTED PU RCHASES, UNACCOUNTED SALES, EXCESS/SHORTAGE OF STOCK, DEBTOR S LEDGER, CREDITORS LEDGER RELATING TO THE SAME ETC., AT THE TIME OF SU RVEY OPERATIONS. HE FURTHER SUBMITTED THAT THE SALES TAX ASSESSMENT WAS ALSO COMPLETED BY I.T.A.NO.1685/MDS/2014 . :- 6 -: ACCEPTING THE BOOK RESULTS AND THEY DID NOT FIND FA ULT WITH THE BOOKS OF ACCOUNTS OF THE ASSESSEE. HE FURTHER SUBMITTED THA T THE ASSESSING OFFICER HAS ACCEPTED THE SALES REPORTED BY THE ASSE SSEE FOR THE MONTHS OF NOVEMBER AND DECEMBER. THE LD A.R DREW OUR ATTE NTION TO THE ASSESSMENT ORDER AND SUBMITTED THAT THE ASSESSEE HA S BEEN CONSISTENTLY STATING THAT THE COMPUTER PRINTOUT REL ATE TO PROJECTED SALES PREPARED FOR BANK PURPOSES. 6. WE HEARD THE RIVAL CONTENTIONS AND PERUSED T HE RECORD. WE NOTICE THAT THE IMPUGNED ADDITION HAS BEEN MADE SOL ELY ON THE BASIS OF A COMPUTER PRINTOUT FOUND AT THE TIME OF SURVEY. ACCORDING TO THE ASSESSING OFFICER, THE SAME WAS AVAILABLE ON THE CO MPUTER SYSTEM AND A PRINT OUT OF THE SAME WAS TAKEN OUT ON 06.11.2009 . THE SALES FIGURES NOTED THEREIN PERTAINED TO THE PERIOD FROM APRIL 2009 TO OCTOBER, 2009. HENCE, THE LD D.R CONTENDED THAT TH ERE WILL NOT BE ANY NECESSITY OF PROJECTING SALES PERTAINING TO PAS T MONTHS. THUS, IT IS SEEN THAT THE EXPLANATION OF THE ASSESSEE DOES NOT SUIT THE SITUATION. AT THE SAME TIME, IT IS ALSO A FACT THAT THE SURVEY OFFICIAL DID NOT STUMBLE UPON ANY EXCESS/SHORTAGE STOCK, UNACCOUNTED PURCHASES, UNACCOUNTED SALES ETC AT THE TIME OF SURVEY OPERATI ON. HOWEVER, BEFORE US, BOTH THE PARTIES FAILED TO FURNISH A COP Y OF THE COMPUTER PRINTOUT, ON THE BASIS OF WHICH THE IMPUGNED ADDITI ON HAS BEEN MADE. I.T.A.NO.1685/MDS/2014 . :- 7 -: 7. WE FURTHER NOTICE THAT THE LD CIT(APPEALS) HA S EXPRESSED THE VIEW THAT THE BURDEN TO PROVE THE CONTENTS OF THE D OCUMENT IS PLACED UPON THE ASSESSING OFFICER. (SEE. PARA 7.2 OF CIT(A PPEALS)S ORDER). THE SAID OBSERVATIONS ARE AGAINST THE PROVISIONS OF SEC. 292C OF THE ACT, WHEREIN IT IS PROVIDED THAT THE DOCUMENTS IMPO UNDED AT THE TIME OF SURVEY U/S 133A OF THE ACT MAY BE PRESUMED TO BE TRUE. IN THAT CASE, THE BURDEN IS PLACED UPON THE ASSESSEE TO REB UT THE SAID PRESUMPTION. AT THE TIME OF HEARING, THE LD A.R WA S SPECIFICALLY ASKED AS TO WHETHER THE ASSESSEE WAS ABLE TO PROVE HIS SU BMISSIONS THAT THE COMPUTER PRINTOUT RELATE TO THE PROJECTED SALES PRE PARED FOR BANK PURPOSES BY PRODUCING THE DOCUMENTS FILED WITH THE BANK, THE LD A.R SUBMITTED THAT HE IS NOT HAVING THOSE DETAILS. 8. UNDER THESE SET OF FACTS, WE ARE OF THE VIEW THAT THE LD CIT(APPEALS) WAS NOT JUSTIFIED IN DELETING THE ADDI TION BY PLACING BURDEN UPON THE ASSESSING OFFICER. IN OUR CONSIDER ED OPINION, THE BURDEN TO SHOW THAT THE CONTENTS OF THE SAID DOCUME NT ARE NOT TRUE IS PLACED UPON THE ASSESSEE. HENCE THE ORDER OF LD CI T(APPEALS) GETS VITIATED IN VIEW OF THE PROVISIONS OF SEC. 292C OF THE ACT. IT IS ALSO NOT CLEAR AS TO WHETHER THE IMPUGNED COMPUTER PRINTOUT IS A REPORT GENERATED OUT OF THE COMPUTER SYSTEM OR IT WAS MERE A PRINTOUT OF SOME DOCUMENT PREPARED UNDER WORD OR EXCEL FORMAT. THE I.T.A.NO.1685/MDS/2014 . :- 8 -: CONSEQUENCE OF BOTH TYPES SHALL BE DIFFERENT. HENC E, WE NOTICE THAT THE ASSESSING OFFICER HAS ALSO MADE THE IMPUGNED AD DITION IN A MECHANICAL MANNER. ACCORDINGLY, WE ARE OF THE VIEW THAT THIS ISSUE REQUIRES FRESH EXAMINATION AT THE END OF THELD CIT( APPEALS). ACCORDINGLY, WE SET ASIDE THE ORDER OF LD CIT(APPEA LS) AND RESTORE THE MATTER TO HIS FILE WITH THE DIRECTION TO EXAMINE TH IS ISSUE AFRESH BY AFFORDING NECESSARY OPPORTUNITY OF BEING HEARD TO T HE ASSESSEE. IF THE ASSESSEE FURNISHES ANY NEW EXPLANATION OR EVIDENCE, THE LD CIT(APPEALS) MAY CONFRONT THE SAME TO THE ASSESSING OFFICER BY CALLING FOR A REMAND REPORT AND THEN DECIDE THE ISSUE IN AC CORDANCE WITH THE LAW. 9. IN THE RESULT, THE APPEAL FILED BY THE REVEN UE IS TREATED AS ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED ON THE 23RD DAY OF JANUARY , 2015, AT CHENNAI. SD/- ( ) (VIKAS AWASTHY) /JUDICIAL MEMBER SD/ - ( .. ) (B.R. BASKARAN) # / ACCOUNTANT MEMBER 1 /DATED:23.01.2015. K.V 2 # %)3 4!) /COPY TO: 1. '/ APPELLANT 2. %&' / RESPONDENT 3. ' 5) ( )/CIT(A) 4. ' 5) /CIT 5. 67 %) 8 /DR 6. 79 :( /GF. I.T.A.NO.1685/MDS/2014 . :- 9 -: