ITO, Ward - 9(1), Kolkata, Kolkata V. M/s. Ambika Freight Carriers Pvt. Ltd., Kolkata

ITA 1782/KOL/2010

• Counselvise Citation: [2011] 140 COUNSELVISE.COM (IT) 54586 (ITAT-KOLKATA)
• Duration Of Justice: 1 year(s) 1 month(s) 1 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 17-10-2011
• Appeal Filed By: Department
• Order Result: Partly Allowed
• Bench Allotted: A
• Assessment Year: 2003-2004
• Appeal Filed On: 16-09-2010
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: K R MONDAL
• Assessee Lawyers: V N PUROHIT
• Keywords: Rejection of books of accounts
• Section: 143(3); 145

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH: KOL KATA () BEFORE , /AND , ! . '# . ) [BEFORE SRI MAHAVIR SINGH, JM & SHRI C. D. RAO, AM] $ $ $ $ / I.T.A NO. 1782/KOL/2010 %& '( %& '( %& '( %& '(/ // / ASSESSMENT YEAR : 2003-04 INCOME-TAX OFFICER, WARD-9(1), KOL. VS. AMBIKA F REIGHT CARRIERS (P) LTD. (PAN: AAECA 2611 C) (*+ /APPELLANT ) (,-*+/ RESPONDENT ) DATE OF HEARING: 17.10.2011 DATE OF PRONOUNCEMENT: 17.10.2011 FOR THE REVENUE: SHRI K. R. MONDAL. FOR THE ASSESSEE: SHRI V. N. PUROHIT . / ORDER PER MAHAVIR SINGH, JM ( , , , , ) THIS APPEAL BY REVENUE IS ARISING OUT OF ORDER OF C IT(A)-XVI, KOLKATA IN APPEAL NO 43/CIT(A)-XVI/IT/WD.9(1)/08-09 DATED 29.07.2010. AS SESSMENT WAS FRAMED BY ITO, WARD- 9(1), KOLKATA U/S. 143(3) OF THE INCOME TAX ACT, 1 961 (HEREINAFTER REFERRED TO AS THE ACT) FOR ASSESSMENT YEAR 2003-04 VIDE DATED 16.03.2006. 2. THE FIRST ISSUE IN THIS APPEAL OF REVENUE IS AG AINST THE ORDER OF CIT(A) DELETING THE ADDITION OF ESTIMATION OF G.P. FOR THIS, REVENUE H AS RAISED FOLLOWING GROUND NO. 1: 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE, THE CIT(A)-XVI, KOLKATA ERRED IN DELETING THE ADDITION OF RS.3,79,842/- RELATING TO ESTIMATED G.P. WITHOUT APPRECIATION THE SITUATION. 3. WE HAVE HEARD RIVAL SUBMISSIONS AND GONE THROUGH FACTS AND CIRCUMSTANCES OF THE CASE. WE FIND THAT ASSESSING OFFICER DURING THE COURSE OF ASSESSMENT PROCEEDINGS NOTED THAT ASSESSEE PRODUCED COMPLETE BOOKS OF ACCOUNT FOR VERIFICATION WITH SUPPORTING BILLS AND VOUCHERS AND DURING VERIFICATION, IT WAS OBSERVED THAT VOUCHERS RELATING TO LORRY HIRE CHARGES ARE SELF MADE VOUCHERS DISCHARGED BY SOME UNAUTHENTICATED PERSONS AND NO BILL/CHALLAN IS SUPPORTING THE VOUCHERS. ACCORDING TO ASSESSING OFFICER, THERE IS NO ADDRESS ALSO TO VERIFY THE EXPENDITURE. ACCORDINGLY, HE NOTED ON THE BASIS OF ABOVE FACTS T HAT THE G.P. RATE SHOWN BY THE ASSESSEE IS AT 9.5%, WHICH IS LOWER COMPARING WITH OTHER CONCERNS OF SAME TRADE NAMELY, MOONGIPA ROADWAYS PRIVATE LIMITED, WHICH IS 21.48% OF AVERAG E OF LAST FOUR YEARS I.E. ASSESSMENT YEAR 2001-02 TO 2004-05. ACCORDINGLY, HE ESTIMATED THE GP RATE AT 12% AND MADE ADDITION OF 2 ITA 1782/K/2010 AMBIKA FREIGHT CARRIERS (P) LTD. .., A.Y.2003-04 RS.3,79,842/-. AGGRIEVED, ASSESSEE PREFERRED APPEA L BEFORE CIT(A), WHO DELETED THE ADDITION BY GIVING FOLLOWING FINDING IN PARA 6 OF HIS APPELL ATE ORDER: 6. I HAVE CONSIDERED THE SUBMISSION OF THE APPELLA NT AND PERUSED THE ASSESSMENT ORDER. IT IS OBSERVED THAT THE A O HAS ESTIMATED T HE GROSS PROFIT @ 12% IN PLACE OF 9 5% FOR THE REASON THAT EXPENSES UNDER THE HEAD LORR Y HIRE CHARGES HAVE BEEN INCURRED BY SELF-MADE VOUCHERS AND THE APPELLANT COULD NOT P RODUCE THE NAME & ADDRESSES OF THE LORRY DRIVERS/OWNERS. IT IS OBSERVED THAT DURIN G THE COURSE OF ASSESSMENT PROCEEDINGS, VIDE LETTER DATED 10.01.2006, THE APPE LLANT HAS PRODUCED CASH BOOK/BANK BOOK, BANK STATEMENT, LORRY HIRE REGISTER ALONGWITH VOUCHERS AND DETAILS OF SUNDRY CREDITORS FOR LORRY HIRE ETC. IN THE ASSESSMENT ORD ER THE A.0 HIMSELF HAS MENTIONED THAT THE AR OF THE APPELLANT PRODUCED BOOKS OF ACCOUNTS FOR VERIFICATION WITH SUPPORTING BILLS AND VOUCHERS. HOWEVER. THE A.0 HAS NOT ACCEPT ED THE FINANCIAL RESULT OF THE APPELLANT MERELY FOR THE REASON THAT LORRY HIRE CHA RGES WERE INCURRED BY SELF-MADE VOUCHERS ARE SIGNED BY SOME UNAUTHENTIC PERSON AND THERE WAS NO ADDRESS ON THESE VOUCHERS. CONSIDERING THE NATURE OF BUSINESS, IT WA S SUBMITTED BEFORE THE A.O THAT THE APPELLANT COULD PRODUCE ONLY THE LORRY NUMBERS AND THE SELF-MADE VOUCHERS IN SUPPORT OF INCURRING OF EXPENSES AND THAT PAYMENTS WERE MAD E TO THE LORRY OWNER ON THE BASIS OF LORRY HIRE SLIP ISSUED BY THE APPELLANT AND CONF IRMED BY RECIPIENT OF THE GOODS TRANSPORTED. HOWEVER, THE EXPLANATION OF THE APPE LLANT WAS REJECTED BY THE A.O. ON CAREFUL CONSIDERATION OF THE FACTS OF THE CASE, I A M OF THE OPINION THAT THE A.O. WAS NOT JUSTIFIED IN MAKING THE ADDITION OF RS. 3,79,842/- BY ESTIMATING THE G.P @ 12% AS AGAINST 9.5% BECAUSE IN THE AUDITED BOOKS OF ACCOUN TS THE A.O. HAS NOT POINTED OUT ANY DEFECTS. MERELY FOR THE REASON THAT THE EXPENSE S ON ACCOUNT OF LORRY HIRE CHARGES WERE INCURRED THROUGH THE SELF-MADE VOUCHERS, THE P ROVISIONS OF SECTION 145 CANNOT BE INVOKED. THE NATURE OF BUSINESS OF APPELLANT IS SUC H THAT IT HAS TO INCUR EXPENSES ON LORRY HIRE THROUGH SELF-MADE VOUCHERS BUT IN SUPPOR T OF ITS CLAIM OF INCURRING SUCH EXPENSES IT HAS MAINTAINED LORRY HIRE REGISTER WHIC H CONTAINS THE RELEVANT DETAILS. UNDER THE CIRCUMSTANCES, IT IS TO BE HELD THAT THE AO WAS UNJUSTIFIED IN MAKING TH E ADDITION OF PS.3,79,842/- ON ACCOUNT OF ESTIMATION OF .P. AND THE SAME IS DIRECT ED TO BE DELETED. THE GROUND NO. 2 IS ALLOWED. 4. WE FIND THAT THE ASSESSING OFFICER HAS NOT REJE CTED THE BOOKS OF ACCOUNT AND ESTIMATED THE GP WITHOUT FINDING A FAULT IN THE BOOKS OF PROF IT. IT IS A FACT AS NOTED BY ASSESSING OFFICER THAT THE ASSESSEE PRODUCED COMPLETE BOOKS OF ACCOUN T ALONG WITH SUPPORTING VOUCHERS OF EXPENSES AND ONCE THERE IS NO DEFECT FOUND BY ASSES SING OFFICER AND EVEN WITHOUT REJECTING THE BOOKS OF ACCOUNT OF ASSESSEE, WH ETHER, ASSESSING OFFICER CAN ESTIMATE GROSS PROFIT RATE WITHOUT REJECTING THE BOOKS OF ACCOUNTS OR NOT. ON THE SAME SETS OF FACTS, IN ITA NO. 1685/KOL/2009, ASSESSMENT YEAR 2003-04 IN THE CASE OF M/S. SRK TEA PROCESSING INDUSTRIES LTD. VS. ASSTT. COMMISSIONER OF INCOME-T AX, C BENCH, KOLKATA VIDE ITS ORDER DATED 11.03.2011 HAS HELD AS UNDER: 4. WE HAVE HEARD RIVAL CONTENTIONS AND GONE THROUG H FACTS AND CIRCUMSTANCES OF THE CASE. WE FIND THAT THE ASSESSING OFFICER HAS N OT REJECTED THE BOOKS OF ACCOUNTS IN THE PRESENT CASE AND EVEN THE CIT(A) HAS NOT GIVEN ANY FINDING IN RESPECT TO THE SAME. THE CIT(A) SIMPLY GONE THROUGH THE ISSUE THAT THE G ROSS PROFIT RATE, IN THE PRESENT ASSESSMENT YEAR FROM EARLIER YEARS, IS LOWER. WHET HER, ASSESSING OFFICER CAN ESTIMATE GROSS PROFIT RATE WITHOUT REJECTING THE BOOKS OF AC COUNTS OR NOT, WE ARE OF THE VIEW THAT FIRST PROVISO TO SECTION 145(1) OR SECTION 145(2) C AN BE INVOKED ONLY IF AND WHERE THE ELEMENTS ATTRACTING EITHER OF THOSE PROVISIONS ARE FOUND TO EXIST. IN THIS REGARD, THE ASSESSING OFFICER HAS TO GIVE A CLEAR FINDING TO TH AT EFFECT, ALONG WITH THE MATERIAL ON 3 ITA 1782/K/2010 AMBIKA FREIGHT CARRIERS (P) LTD. .., A.Y.2003-04 WHICH SUCH FINDING IS BASED, HAS TO BE MADE OUT AND GIVEN BY THE AO. NO ASSESSMENT UNDER FIRST PROVISO TO SECTION 145(1) OR 145(2) CAN BE MADE BY THE ASSESSING OFFICER WITHOUT REJECTING THE BOOKS OF ACCOUNT. THERE IS N O FINDING IN THE ASSESSMENT ORDER IN RESPECT TO THE FACT THAT THE ASSESSEES METHOD OF A CCOUNTING IS NOT A REGULARLY EMPLOYED METHOD OR WHETHER HIS INCOME, PROFITS OR GAINS CANN OT BE DEDUCED OR ACCOUNTS ARE INCOMPLETE OR INCORRECT IN THE PRESENT CASE. IN TH E ABSENCE OF THIS FINDING AND IN THE ABSENCE OF REJECTION OF BOOKS OF ACCOUNT, WE ARE UN ABLE TO ACCEPT THAT THE ASSESSING OFFICER HAS RIGHTLY ESTIMATED THE GROSS PROFIT. AC CORDINGLY, WE ARE OF THE VIEW THAT THE LOWER AUTHORITIES HAVE ERRED IN APPLYING GROSS PROF IT RATE ON THE BASIS OF EARLIER YEARS, WITHOUT REJECTING BOOKS OF ACCOUNT. WE ALLOW THE CL AIM OF THE ASSESSEE AND THIS ISSUE OF ASSESSEES APPEAL IS ALLOWED. IN VIEW OF THE ABOVE, WE DO NOT FIND ANY INFIRMITY IN THE ORDER OF CIT(A) AND THE SAME IS HEREBY UPHELD. THIS GROUND OF REVENUE IS DISMISSED . 5. THE NEXT ISSUE IN THIS APPEAL OF REVENUE IS AGAI NST THE ORDER OF CIT(A) DELETING THE ADDITION OF SUNDRY CREDITORS. FOR THIS, THE REVENU E HAS RAISED FOLLOWING GROUND NO.2: ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE CIT(A)-XVI, KOLKATA ERRED IN DELETING THE ADDITION OF RS.8,52,742/- RELATING TO SUNDRY CREDITORS WITHOUT APPRECIATION THE SITUATION 6. WE HAVE HEARD RIVAL SUBMISSIONS AND GONE THROUGH FACTS AND CIRCUMSTANCES OF THE CASE. WE FIND THAT THE ASSESSEE COULD NOT PRODUCE THE DET AILS OF SUNDRY CREDITORS AND QUA THAT CIT(A) HAS GIVEN FOLLOWING FINDING: I HAVE CONSIDERED THE SUBMISSIONS OF APPELLANT AND PERUSED THE ASSESSMENT ORDER. ON PERUSAL OF ASSESSMENT ORDER IT IS OBSERVED THAT THE A.O. HAS MADE ADDITION OF RS.8,52,742/- BEING THE DIFFERENCE BETWEEN THE CLOS ING AND OPENING BALANCE OF THE SUNDRY CREDITORS FOR THE REASONS MENTIONED BY HIM F OR ESTIMATION OF GROSS PROFIT AS DISCUSSED ABOVE IN GROUND NO.2. I FIND FORCE IN TH E SUBMISSION OF THE APPELLANT THAT IT IS NOT KNOWN THAT UNDER WHICH PROVISION OF INCOME TAX ACT THE A.O. HAS MADE SUCH ADDITION AND AS TO HOW ADDITION ON ACCOUNT OF DIFFE RENCE BETWEEN THE CLOSING AND OPENING BALANCE OF THE SUNDRY CREDITORS CAN BE MADE . THE OPENING BALANCE OF SUNDRY CREDITORS ON ACCOUNT OF LORRY HIRE CHARGES WAS RS.8 ,03,791/- AND SUCH CREDITORS WERE PAID DURING THE RELEVANT YEAR. ON CAREFUL CONSIDER ATION OF THE FACTS AND THE NATURE OF ADDITION MADE BY THE A.O., I AM OF THE OPINION THA T THE NO ADDITION BEING THE DIFFERENCE IN THE CLOSING AND OPENING BALANCE OF SUNDRY CREDIT ORS CAN BE MADE. THE A.O. IS DIRECTED TO DELETE THE ADDITION OF RS.8,52,742/-. THE GROUND NO. 3 IS ALLOWED. WE FIND THAT THE CIT(A) DELETED THE ADDITION JUST O N THE BASIS OF CONJECTURES AND SURMISES THAT THIS BEING A DIFFERENCE BETWEEN CLOSING AND OPENING BALANCE OF THE SUNDRY CREDITOR, WHICH IS ON ACCOUNT OF LORRY HIRE CHARGES AND SUCH CREDITORS WE RE PAID DURING THE RELEVANT YEAR. WE ARE NOT GOING INTO THE MERITS OF THE CASE SINCE THE ASSESSE E COULD NOT PRODUCE THE DETAILS BEFORE ASSESSING OFFICER, HE HAS NO OPTION EXCEPT TO ADD T HE AMOUNT AS THE SAME IS NON-VERIFIABLE. ACCORDINGLY, WE SET ASIDE THIS ISSUE AND DIRECT THE ASSESSING OFFICER TO VERIFY AFRESH IN CASE THE ASSESSEE IS ABLE TO PRODUCE RELEVANT DETAILS. ASSE SSEE IS ALSO DIRECTED TO PRODUCE RELEVANT 4 ITA 1782/K/2010 AMBIKA FREIGHT CARRIERS (P) LTD. .., A.Y.2003-04 DETAILS AS CALLED FOR BY ASSESSING OFFICER. ACCORD INGLY, THIS ISSUE OF REVENUES APPEAL IS SET ASIDE AND ALLOWED FOR STATISTICAL PURPOSES. 7. THE NEXT ISSUE IN THIS APPEAL OF REVENUE IS AGAI NST THE ORDER OF CIT(A) IN DELETING THE ADDITION ON ACCOUNT OF MOTOR CAR EXPENSES. FOR THI S, REVENUE HAS RAISED FOLLOWING GROUND NO.3: ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE CIT(A)-XVI, KOLKATA ERRED IN DELETING THE ADDITION OF RS.76,096/- RELATING TO MO TOR CAR EXPENSE. 8. WE HAVE HEARD RIVAL SUBMISSIONS AND GONE THROUGH FACTS AND CIRCUMSTANCES OF THE CASE. WE FIND THAT AT THE TIME OF ASSESSMENT PROCEEDINGS THE ASSESSING OFFICER FOUND THAT ASSESSEE COMPANY DEBITED RS.95,120/- AS CAR MAINTENANCE EXPE NSES. BUT ON PERUSAL OF SCHEDULE-6 OF BALANCE SHEET HE OBSERVED THAT THE ASSESSEE HAD NO CAR. HE, THEREFORE, DISALLOWED AND ADDED THE SAME TO THE INCOME OF THE ASSESSEE. IN APPEAL, CIT(A) DIRECTED THE ASSESSING OFFICER TO RESTRICT THE DISALLOWANCE @ 20% OF RS.95,120/- SINC E QUANTUM OF DISALLOWANCE MADE BY ASSESSING OFFICER WAS ON HIGHER SIDE. AGGRIEVED, R EVENUE IS NOW IN APPEAL BEFORE US. WE FIND NO INFIRMITY IN THE SAID ORDER OF CIT(A) SINCE HE R EASONABLY RESTRICTED THE DISALLOWANCE @ 20% OF RS.95,120/-. THIS GROUND OF APPEAL OF REVENUE I S DISMISSED. 9. IN THE RESULT, APPEAL OF THE REVENUE IS PARTLY A LLOWED FOR STATISTICAL PURPOSES. 10. ORDER PRONOUNCED IN OPEN COURT. SD/- SD/- . '# '#'# '# . ! , (C. D. RAO) (MAHAVIR SINGH) ACCOUNTANT MEMBER JUDICIAL MEMBER ( #! #! #! #!) )) ) DATED : 17TH OCTOBER, 2011 /0 %12 3 JD.(SR.P.S.) . 4 ,5 6 5'7- COPY OF THE ORDER FORWARDED TO: 1 . *+ / APPELLANT ITO, WARD-9(1), KOLKATA. 2 ,-*+ / RESPONDENT, AMBIKA FREIGHT CARRIERS (P) LTD., 184 , JAMUNALAL BAJAJ STREET, KOLKATA-700 007. 3 . .% ( )/ THE CIT(A), KOLKATA 4. .% / CIT, KOLKATA 5 . >? ,% / DR, KOLKATA BENCHES, KOLKATA -5 ,/ TRUE COPY, .%@/ BY ORDER, 2 /ASSTT. REGISTRAR .