SHYAM BOHARA & CO., Jaipur V. ITO, BEHROR

ITA 171/JPR/2011

• Counselvise Citation: [2011] 119 COUNSELVISE.COM (IT) 7206 (ITAT-JAIPUR)
• Duration Of Justice: 8 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 04-11-2011
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: SMC
• Next Hearing Date: 24-10-2011
• Assessment Year: 2006-2007
• Appeal Filed On: 25-02-2011
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: D K MEENA
• Assessee Lawyers: S L PODDAR

Judgement Text

1 IN THE INCOME TAX APPELLATE TRIBUNAL JAIPUR BENCH SMC JAIPUR (BEFORE SHRI N.L. KALRA, ACCOUNTANT MEMBER) ITA NO. 171/JP/2011 ASSESSMENT YEAR: 2006-07 PAN AATFS 3848 K M/S. SHYAM BOHARA & CO. VS. THE ITO VILLAGE NAWAL KUSHALPURA WARD- BEHROR KOTPUTLI (APPELLANT) (RESPONDENT) ASSESSEE BY: SHRI S.L. PODDAR DEPARTMENT BY: SHRI D.K. MEENA DATE OF HEARING: 24-10-2011 DATE OF PRONOUNCEMENT: 04-11-2011 ORDER THE ASSESSEE HAS FILED AN APPEAL AGAINST THE ORDER OF THE LD. CIT(A) , ALWAR DATED 25-01-2011 FOR THE ASSESSMENT YEAR 2006 -07. 2.0 IN THE MEMO OF APPEAL, THE ASSESSEE HAS MENTION ED THE DATE OF COMMUNICATION OF ORDER OF LD. CIT(A) AS 19-02-2011 WHILE THE DATE OF ORDER IS DATED 15-01-2010. BEFORE ME, THE LD. AR HAS FILE D THE SUBMISSION TO EXPLAIN AS TO HOW THE DATE OF 19-02-2011 HAS BEEN M ENTIONED IN FORM NO. 36. THE AFFIDAVIT OF THE ASSESSEE HAS ALSO BEEN ENCLO SED. IN THE AFFIDAVIT, IT IS MENTIONED THAT THE ORDER WAS NOT SERVED ON THE ASSE SSEE. WHEN THE DEPARTMENTAL AUTHORITY APPROACHED FOR RECOVERY OF T HE DEMAND THEN IT CAME 2 TO THE NOTICE OF THE ASSESSEE THAT APPEAL HAS BEEN DECIDED EX-PARTE. THE ASSESSEE OBTAINED THE ORDER ON 19-02-2011 AND ACCOR DINGLY THE ASSESSEE HAS MENTIONED THE DATE OF COMMUNICATION OF THE ORDER AS 19-02-2011. ALTERNATIVELY, IT WAS SUBMITTED THAT THE DELAY IN F ILING OF APPEAL MAY BE CONDONED. 2.1 I HAVE HEARD BOTH THE PARTIES. THE ASSESSEE IN HIS AFFIDAVIT HAS MENTIONED THAT THE ORDER OF THE LD. CIT(A) WAS NOT SERVED. IT IS TRUE THAT RECORD OF THE LD. CIT(A) SHOWS THAT THE ORDER WAS S ENT VIDE DISPATCH NO. 1528 DATED 24-02-2010 THROUGH REGISTERED POST. THER E IS NO MENTION IN THE LETTER GIVEN BY THE LD. CIT(A), ALWAR THAT A.D. HA S BEEN RECEIVED BACK. CONSIDERING THE FACTUAL ASPECTS OF THE CASE, I FEEL THAT THE APPEAL IS TO BE ADMITTED. IN CASE THERE IS ANY DELAY THEN THE SAME IS CONDONED. 3.1 DURING THE COURSE OF HEARING, THE LD. AR OF THE ASSESSEE HAS NOT PRESSED THE FIRST GROUND OF APPEAL. THEREFORE, THE SAME IS DISMISSED BEING NOT PRESSED. 4.1 THE SECOND GROUND OF APPEAL OF THE ASSESSEE IS THAT THE LD. CIT(A) HAS ERRED IN CONFIRMING THE TRADING ADDITION OF RS. 1,2 1,640/- ON ACCOUNT OF ALLEGED UNRECORDED TURNOVER WITHOUT ANY BASIS. 4.2 THE ASSESSEE FIRM IS RUNNING A STONE CRUSHING P LANT. DURING THE YEAR UNDER CONSIDERATION, THERE WERE THREE CHANGES IN TH E CONSTITUTION OF THE FIRM 3 AND ACCORDINGLY TRADING RESULTS HAVE BEEN DISCLOSED IN 03 PARTS OF EACH PERIOD I.E. FROM 01-04-2005 TO 30-04-2005, 01-05-20 05 TO 30-06-2005 AND 01-07-2005 TO 31-03-2006. THE TRADING RESULTS FOR A LL THREE PERIOD HAVE BEEN MENTIONED BY THE AO IN HIS ORDER. THE AO EXAMINED T HE BOOKS OF ACCOUNTS PRODUCED DURING THE COURSE OF ASSESSMENT AND NOTICE D THE FOLLOWING DEFECTS. I. THAT FROM AUGUST 2005 TO NOV. 2005, THE PLANT WAS CLOSED AND THERE WAS NO PRODUCTION WHICH IS FACTUAL LY INCORRECT. II. ON 31-08-2005 PURCHASES OF RS. 19,875/- HAVE BE EN RECODED IN THE CASH BOOK BUT NO RECORD IN THE STOCK REGISTER. III. IT WAS ALSO ADMITTED THAT THOUGH THE FIRM IS F OLLOWING MERCANTILE SYSTEM OF ACCOUNTING BUT IN SOME OF THE CASES THE COST AND REVENUE WAS NOT MATCHING. FOR EXAMPLE, SOM E PURCHASES MADE DURING THE YEAR HAVE NOT BEEN ACCOUN TED FOR DURING THE YEAR BUT ACCOUNTED FOR IN SUBSEQUENT YEA R IV. THE BOOKS OF ACCOUNTS HAVE NOT BEEN WRITTEN DAY TO DAY BASIS BUT THESE HAVE BEEN WRITTEN PERIODICALLY BASI S. 2. ON EXAMINATION OF BOOKS OF ACCOUNTS, IT WAS FOUN D THAT THE ASSESSEE FIRM HAS NOT RECORDED SALES AND PURCHA SES AND ALSO ELECTRICITY BILLS. 3. DURING THE ASSESSMENT PROCEEDINGS VERIFICATION F ROM JAIPUR VIDYUT VITRAN NIGAM LTD., KOTPUTLI WAS MADE AND IT WAS FOUND THAT THE ASSESSEE FIRM HAS DEPOSITED ELECTRIC ITY BILLS FOR THE MONTH OF SEPT. OCT. AND NOV. 2005 WHICH COULD N OT BE FOUND RECORDED IN THE REGULAR BOOKS OF ACCOUNT. AS PER THE DETAILS FURNISHED, THE ASSTT. AEN, THE ASSESSEE FIR M HAS MADE 4 PAYMENT OF RS. 6,36,533/- ON ACCOUNT OF ELECTRICIT Y CHARGES WHEREAS AS PER BOOKS OF ACCOUNTS THE ELECTRICITY CH ARGES CLAIMED WERE OF RS. 4,29,552 (82,589+3,46,963). 4.3 ON THE BASIS OF THE DEFECTS, THE AO ISSUED SHOW CAUSE LETTER DATED 10- 11-2008. THE CONTENTS OF THE SHOW CAUSE LETTER ARE AVAILABLE AT PAGES 2 AND 3 OF THE ASSESSMENT ORDER. THE ASSESSEE FILED REPLY V IDE LETTER DATED 19-11- 2008. THE RELEVANT PORTION OF THE REPLY IS REPRODU CED AS UNDER:- (CC) DURING THE ABOVE CONSTITUTIONAL CHANGE IN TH IRD PHASE THE ASSESSEE HAS ALSO ENTERED INTO AN AGREEME NT WITH M/S. TIRUPATI STONE CRUSHING CO. NAWAL KUSHALPURA FOR SA LE OF HIS ENTIRE STONE CRUSHER PLANT W.E.F. 14-08-2005 AND HA S PARTLY EXECUTED THE SALE AGREEMENT. THE ASSESSEE FIRM HAS ALSO HANDED OVER THE PLANT OPERATION TO M/S. TIRUPATI STONE CRU SHING CO. AND ON ITS TURN M/S. TIRUPATI STONE CRUSHING CO HAS STARTED OPERATION AND STARTED PRODUCTION AND SALE OF MATERI AL W.E.F. 14- 08-2005. BUT SUBSEQUENTLY IN THE MONTH OF DEC. 2005 IN THE MONTH OF DEC. 2005 DUE TO OBJECTIONS OF SALES TAX D EPARTMENT THE AGREEMENT TO SALE WAS CANCELED AND ALL THE PLAN TS WITH ENTIRE ASSESSMENT AND LIABILITIES WERE RECEIVED BACK TO M/ S. SHREE SHYAM BOHRA & CO. AND THEN ASSESSEE FIRM HAS AGAIN TAKEN OVER THE ENTIRE PLANT AND STARTED OPERATION W.E.F. 14-8-2005 TO 31-12-2005. SO DURING THE PERIOD 14-8-2005 TO 31-12 -2005, THE ENTIRE PRODUCTION WAS SOLD BY M/S. TIRUPATI STONE C RUSHING CO. AND ALL THE OPERATIONAL EXPENSES WERE INCURRED BY M /S. TIRUPATI STONE CRUSHING CO. DURING THE PERIOD, ALL THE ELECT RICITY 5 EXPENSES WERE ALSO PAID BY M/S. TIRUPATI STONE CRUS HING CO. AND THE D.G. SET WAS ALSO PURCHASED BY M/S. TIRUPAT I STONE CRUSHING CO. AND BUT PAYMENT WAS MADE BY THE ASSESS EE. 4.4 THE AO CONSIDERED THE REPLY AND ACCORDING TO T HE HIM, THE REPLY IS NOT ACCEPTABLE FOR THE REASONS THAT NO RETURN OF IN COME HAS BEEN FILED BY THE SO CALLED FIRM M/S. TIRUPATI STONE CRUSHING CO.. AC CORDING TO THE AO, THE ASSESSEE HAS COOKED UP THE STORY AND HAS PREPARED T HE TRADING AND PROFIT AND LOSS ACCOUNT FOR THE PERIOD 14-08-2005 TO 31-12-20 05. THE AO ACCORDINGLY MADE THE ADDITION OF RS. 1,21,640/-. 4.5 I HAVE HEARD BOTH THE PARTIES. I HAVE ALSO GONE THROUGH THE AGREEMENT WITH M/S. TIRUPATI STONE CRUSHING CO. THE ASSESSEE HAS FILED THE COPY OF THE AGREEMENT BEFORE THE AO AND HAS MADE THE CONTENTION VIDE LETTER DATED 19 TH NOV. 2008 THAT STONE CRUSHER WAS RUN BY M/S. TIRUPA TI STONE CRUSHING CO.. THE AO NEITHER MADE ANY ENQUIRY NOR ASKED THE ASSES SEE TO ESTABLISH THAT SALES DURING THE PERIOD 14-08-05 TO 31-12-05 HAVE BEEN SHOWN BY M/S. TIRUPATI STONE CRUSHING CO.. THE AO PASSED THE ASSE SSMENT ORDER ON 25-11- 2008. BEFORE, THE AO, THE LD. AR STATED THAT M/S. TIRUPATI STONE CRUSHING CO. HAS SHOWN THE TURNOVER FOR THE PERIOD 14-08-05 TO 31-12-2005. I THEREFORE, HOLD THAT TURNOVER FOR THE PERIOD 14-08 -05 TO 31-12-05 IS NOR REQUIRED TO BE CONSIDERED IN THE HANDS OF THE ASSES SEE AND IN CASE M/S. 6 TIRUPATI STONE CRUSHING CO. HAS NOT SHOWN SUCH TURN OVER THEN THE AO WILL BE FREE TO TAKE ACTION AGAINST THAT CONCERN. THUS T HE ADDITION MADE AMOUNTING TO RS. 1,21,640/- IS DELETED. 5.1 THE GROUNDS OF APPEAL NOS. 3 AND 4 ARE AGAINST DISALLOWANCE OF RS. 15,264/- AND 5,670/- ON ACCOUNT OF REPAIR & MAINTE NANCE AND SALES TAX PENALTY RESPECTIVELY. 5.2 DURING THE COURSE OF PROCEEDING BEFORE ME, THE LD. AR HAS NOT PRESSED THE GROUNDS OF APPEAL NOS. 3 AND 4. HENCE, THESE GR OUNDS OF APPEALS ARE DISMISSED BEING NOT PRESSED. 6. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS PA RTLY ALLOWED.. THE ORDER IS PRONOUNCED IN THE OPEN COURT ON 04-11 -2011 SD/- (N.L. KALRA) ACCOUNTANT MEMBER JAIPUR DATED: 04/11/2011 *MISHRA COPY FORWARDED TO:- 1. M/S. SHYAM BOHARA & CO. KOTPUTLI 2.THE I.T.O. , WARD BEHROR BY ORDER 3.THE LD. CIT(A) 4.THE LD. CIT 5.THE LD. DR 6.THE GUARD FILE (I.T.A. NO 171/JP/11) A.R. ITAT: JAIPUR 7