GIRIRAJ MINERALS LTD, MUMBAI V. ITO CIR 5(1)(2), MUMBAI

ITA 1714/MUM/2012

• Counselvise Citation: [2013] 120 COUNSELVISE.COM (IT) 4224 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 3 month(s) 29 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 10-07-2013
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: G
• Assessment Year: 2001-2002
• Appeal Filed On: 12-03-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: D K SINHA
• Assessee Lawyers: KIRIT MEHTA
• Section: 68

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL G , BENCH, MUMBAI , BEFORE SHRI R.K.GUPTA, JM & SHRI N.K.BILLAIYA , AM ITA NO . 1 714 / MUM/ 20 1 2 ( ASSESSMENT YEAR : 200 1 - 0 2 ) M/S GIRIRAJ MINERALS LTD. , 61 - A, MITTAL TOWERS, NARIMAN POINT, MUMBAI - 400 005 VS. ITO C I R. 5(1)(2), MUMBAI PAN/GIR NO. : A AACG 1714 A ( APPELLANT ) .. ( RESPONDENT ) /ASSESSEE BY : MR. KIRIT MEHTA /REVENUE BY : MR. D.K.SINHA DATE OF HEARING : 1 0 TH JUNE, 201 3 DATE OF PRONOUNCEMENT : 10 TH JULY, 2013 O R D E R PER SHRI R.K.GUPTA, JM : TH IS APPEAL HA S BEEN PREFERRED BY THE ASSESSEE AGAINST THE ORDER DATED 2 - 12 - 2011 PASSED BY THE LEANED CIT(A) - 9 , MUMBAI RELATING TO THE ASSESSMENT YEAR 200 1 - 02 . 2 . THE ASSESSEE IS OBJECTING IN CONFIRMING THE ADDITION OF RS. 40 LAKHS MADE BY THE AO ON ACCOUNT OF GOODS RETURNED TREATED AS PURCHASES OUTSIDE THE BOOKS OF ACCOUNT UNDER SECTION 68 OF THE ACT. 3 . IN FACT THIS IS A SECOND ROUND OF APPEAL BEFORE THE TRIBUNAL. ORIGIN ALLY THE ADDITION OF RS. 40 LAKHS WAS MADE BY THE AO, WHICH WAS CONFIRMED BY THE CIT(A). ON SECOND APPEAL, THE MATTER WAS RESTORED TO ITA NO . 1714 /201 2 2 THE FILE OF THE AO TO PASS A FRESH ORDER AFTER ALLOWING THE ASSESSEE TO PRODUCE THE BROKER THROUGH WHOM THE GOODS WERE SOLD . THEREAFTER ASSESSEE FILED MISCELLANEOUS APPLICATION BEFORE THE TRIBUNAL STATING THAT THE DIRECTION OF THE TRIBUNAL MAY NOT BE TAKEN IN RIGHT PERSPECTIVE BY THE AO AS THE BROKER IS NOT AVAILABLE AND COULD NOT BE PRODUCED, OTHERWISE ALL OTHER DETAILS ARE A VAILABLE WITH THE ASSESSEE. THEREAFTER RECTIFICATORY ORDER WAS PASSED BY WHICH THE AO WAS DIRECTED TO GIVE ONE MORE OPPORTUNITY TO ASSESSEE TO PRODUCE THE BROKER THROUGH WHOM THE SAID TRANSACTION S WAS TAKEN PLACE FOR HIS EXAMINATION. THE DIRECTION WAS ALSO GIVEN TO THE AO THAT ADEQUATE OPPORTUNITY SHOULD BE ALLOWED TO THE ASSESSEE BEFORE PASSING A FRESH ORDER AFTER CONSIDERING ALL THE ASPECTS. THEREAFTER THE REASSESSMENT PROCEEDING WERE STARTED AND THE ASSESSEE WAS ALLOWED TO FILE DETAILS AND TO PRODUCE THE BROKER. ALL THE DETAILS OF PURCHASE AND SALE AND THE RETURN OF GOODS WERE FILED. THE GOODS WERE RETURNED AFTER ALMOST ONE YEAR, THEREFORE, THE ASSESSEE WAS REQUIRED TO FILE FURTHER DETAILS. THE AO FURTHER NOTED THAT IN ORIGINAL ASSESSMENT, THE AO MADE ENQ UIRY FROM THE PARTIES, THROUGH WHOM THE SALES WERE EFFECTED, HOWEVER, THEY DENIED HAVING PURCHASED ANY MATERIAL FROM THE ASSESSEE. THE ASSESSEE WAS CONFRONTED TO THIS FACT. IT WAS STATED THAT, IN FACT, THERE WAS A DISPUTE THAT THE PARTIES WERE NOT MAKING P AYMENT AND ULTIMATELY AFTER ONE YEAR THE GOODS WERE TAKEN BACK BY THE ASSESSEE AND THEY WERE ADDED IN THE STOCK OF THE ASSESSEE. HOWEVER, THE BROKER THROUGH WHOM THE SALES WERE EFFECTED, COULD NOT BE PRODUCED AS HE WAS NOT AVAILABLE. THE AO BY OBSERVING IN HIS ORDER THAT THE ASSESSEE WAS ALLOWED OPPORTUNITY TO PRODUCE THE ITA NO . 1714 /201 2 3 BROKER, HOWEVER, HE FAILED TO PRODUCE THE BROKER. THEREFORE, HE MADE THE ADDITION AGAIN. 4 . THE CIT(A) ALSO CONFIRMED THE ACTION OF THE AO. 5 . NOW, THE ASSESSEE IS IN APPEAL HERE BEFOR E THE TRIBUNAL. 6 . THE CONTENTIONS RAISED BEFORE THE LOWER AUTHORITIES, WERE REITERATED HERE BEFORE THE TRIBUNAL . LEARNED COUNSEL OF THE ASSESSEE FURTHER STATED THAT ALL THE DETAILS OF PURCHASE AND SALES WERE FILED. THE NAME S OF PARTIES ARE APPEARING IN LETTERS PLACED IN THE BALANCE SHEET. WHEN THE PARTIES DID NOT MAY ANY PAYMENT, THE GOODS WERE TAKEN BACK BY THE ASSESSEE, WHICH WERE ADDED TO THE STOCK OF THE ASSESSEE. IT WAS FURTHER EXPLAINED THAT NOW, THESE GOODS HAVE BEEN SOLD BY THE ASSESSEE. THE PROF IT S ON THESE GOODS HAVE BEEN SHOWN BY THE ASSESSEE. IT WAS ALSO STATED THAT WHEN THE GOODS WERE SOLD ORIGINALLY IN EARLIER YEAR, THEN ALSO THE PROFIT WAS ADDED. ACCORDINGLY, IT WAS SUBMITTED THAT THE DEPARTMENT SHOULD NOT HAVE MADE ANY ADDITION BECAUSE ON THE MATERIAL SOLD BY THE ASSESSEE, THE PROFIT HAS BEEN SHOWN IN EARLIER YEAR AS WELL AS DURING THE YEAR UNDER CONSIDERATION WHEN THESE MATERIALS WERE SOLD. PURCHASE BILLS OF THE MATERIAL WHICH HAS BEEN ACCEPTED BY THE DEPARTMENT WERE PRODUCED. THIS IS NOT A CASE OF THE DEPARTMENT THAT THE ASSESSEE HAS SOLD SOME OTHER MATERIALS AS FINALLY WHEN THESE GOODS WERE SOLD TO ANOTHER PARTY, THE SAME MATERIAL WERE SOLD. COPIES OF ALL THESE MATERIALS ARE PLACED ON RECORD. ULTIMATELY, IT WAS SUBMITTED THAT THIS IS NOT A CASE OF ADDITION UNDER SECTION 68 AS THE ASSESSEE HAS NOT TAKEN ANY LOAN OR HAS NOT ITA NO . 1714 /201 2 4 CREDITED ANY AMOUNT IN ITS BOOKS OF ACCOUNT. PURCHASE OF MATERIAL CANNOT BE ADDED UNDER SECTION 68 OF THE ACT. IT WAS ALSO SUBMITTED THAT DURING THE YEAR, THE ASSESSEE HA S NOT PURCHASED ANY MATERIAL BUT HAS ADDED IN ITS STOCK ON ACCOUNT OF GOODS RETURNED, WHICH IS EVIDENT FROM THE BOOKS OF ACCOUNT. ALL THE COPIES OF ACCOUNTS FOR THREE YEARS ARE PLACED ON RECORD SHOWING THE NAME OF PARTIES TO WHOM THE GOODS WERE SOLD IN TH E DEBTOR LIST OF THE ASSESSEE. RELIANCE WAS PLACED ON CERTAIN CASE LAWS. COPIES OF WHICH WERE ALSO FILED. 7 . ON THE OTHER HAND, LEARNED DR STRONGLY PLACED RELIANCE ON THE ORDER OF AO AS WELL AS CIT(A). 8 . AFTER CONSIDERING THE RIVAL SUBMISSIONS AND PERUS ING THE MATERIAL ON RECORD, WE FOUND THAT THE ASSESSEE DESERVES TO SUCCEED ON THE ISSUE INVOLVED. NO DOUBT, THE TRIBUNAL HAS ASKED THE ASSESSEE TO PRODUCE THE BROKER BEFORE THE AO ALONG WITH OTHER DETAILS. HOWEVER, THE ASSESSEE COULD NOT PRODUCE THE BROKER BEFORE THE AO AS THE SAME WAS NOT AVAILABLE AT THAT POINT OF TIME BECAUSE GOODS WERE SOLD LONG BACK. IN OUR CONSIDERED VIEW, IF BY ANY REASON THE BROKER COULD NOT BE PRODUCED, THE OTHER MATERIAL SHOULD HAVE BEEN TAKEN INTO CONSIDERATION BY THE AO OR BY TH E LEARNED CIT(A) . WE FURTHER NOTICED THAT THE MATERIAL WAS PURCHASED SOMETIME IN THE YEAR OF 1998 - 99. P ROPER BILLS FOR PURCHASE WERE PRODUCED . N O DEFECT WAS POINTED OUT. PAYMENTS WERE MADE THROUGH PROPER BANKING CHANNEL AND THE GOODS WERE TAKEN TO THE STOC K ACCOUNT, THEREAFTER GOODS AMOUNTING TO RS. 40 LAKHS WERE SOLD TO TWO PARTIES. PROFIT AND LOSS ACCOUNT WAS PREPARED FOR 1999 - 2000 AND ITA NO . 1714 /201 2 5 THE PROFIT WAS SHOWN IN THE BOOKS OF ACCOUNT ON ACCOUNT OF SALE OF GOODS. HOWEVER, THE PAYMENTS WERE NOT RECEIVED AND ULTI MATELY THESE GOODS WERE RECEIVED DURING THE YEAR UNDER CONSIDERATION. WE HAVE SEEN COPY OF BALANCE SHEET ALONG WITH SCHEDULE AND FOUND THAT THE NAME OF TWO PARTIES ARE APPEARING IN THE DEBTOR LIST OF ASSESSMENT YEAR 1999 - 2000 AND 2000 - 2001. THE SAME GOODS WERE ADDED TO THE STOCK BY THE ASSESSEE ON RECEIPT OF GOODS BACK AS PAYMENTS WERE NOT RECEIVED FROM THE RESPECTIVE PARTIES AS STATED BY THE LEARNED AR. IN OUR VIEW, THE BENEFIT OF DOUBT SHOULD BE GIVEN TO THE ASSESSEE AS THE SAME MATERIAL WAS SOLD BY THE A SSESSEE IN A LATER YEAR WHICH WAS PURCHASED ORIGINALLY IN ASSESSMENT YEAR 1998 - 1999/1999 - 2000. WE ARE ALSO OF THE VIEW THAT THE ADDITION CANNOT BE MADE UNDER SECTION 68 AS NO LOAN WAS RECEIVED BY THE ASSESSEE DURING THE YEAR, NEITHER THERE WAS ANY CASH WAS CREDITED IN THE ACCOUNT OF THE ASSESSEE DURING THE YEAR. THEREFORE, FOR THIS REASON ALSO, ADDITION SHOULD NOT HAVE BEEN MADE UNDER SECTION 68 OF THE ACT. THE PROFIT ON THE SALE OF GOODS HAS BEEN SHOWN BY THE ASSESSEE. FIRSTLY, IN THE YEAR 1999 - 2000, WHEN THESE GOODS WERE SOLD ORIGINALLY TO THE TWO PARTIES AND THEREAFTER THE MATERIAL WERE SOLD DURING THE YEAR UNDER CONSIDERATION AND AGAIN ON SALE THESE GOODS, THE PROFIT WAS SHOWN IN THE PROFIT AND LOSS ACCOUNT. THEREFORE, IN OUR CONSIDERED VIEW, THIS IS NOT A CASE OF ADDITION UNDER SECTION 68 OF THE ACT. ACCORDINGLY, WE DELETE THE ADDITION OF RS. 40 LAKHS. 9 . IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWED. ITA NO . 1714 /201 2 6 ORDER PRONOUNCED IN THE OPEN COURT ON THIS 10 TH DAY OF JULY 2013 . SD/ - ( ) ( N.K.BILLAIYA ) SD/ - ( ) ( R.K.GUPTA ) / ACCOUNTANT MEMBER / JUDICIAL MEMBER MUMBAI ; DATED : 10/07 /2013 . /PKM , PS COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. / THE CIT(A) , MUMBAI. 4. / CIT 5. / DR, ITAT, MUMBAI 6. GUARD FILE. //TRUE COPY // / BY ORDER, ( ASSTT. REGISTRAR) / ITAT, MUMBAI