I.T.O Wd - 9(4),Kol., Kolkata V. M/s Sakshi Commercial Co Pvt Ltd., Kolkata

ITA 1860/KOL/2012

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 92014 (ITAT-KOLKATA)
• Duration Of Justice: 2 year(s) 5 month(s) 24 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 11-06-2015
• Appeal Filed By: Department
• Bench Allotted: A
• Assessment Year: 2008-2009
• Appeal Filed On: 17-12-2012
• Court: TRIBUNAL
• Department Lawyers: K L KANAK
• Assessee Lawyers: J M THARD
• Keywords: Corroborative evidences

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH: KOLKATA [BEFORE SHRI P. K. BANSAL, AM & SHRI MAHAVIR SINGH, JM ] I.T.A NO. 1860 /KOL/20 12 ASSESSMENT YEAR : 200 8 - 0 9 INCOME - TAX OFFICER, WD - 9 ( 4 ), KOLKATA. VS. M/S. SAKSHI COMMERCIAL CO. PVT. LTD. (PAN:AA ECS8320G ) ( APPELLANT ) ( RESPONDENT ) DATE OF HEARING: 2 8 .0 5 .2015 DATE OF PRONOUNCEMENT: 11 . 0 6 . 2015 FOR THE APPELLANT: SHRI K. L. KANAK, SR. DR FOR THE RESPONDENT: SHRI J. M. THARD, ADVOCATE ORDER PER SHRI MAHAVIR SINGH, JM: THIS APPEAL BY REVENUE IS ARISING OUT OF ORDER PASSED BY CIT (A) - V III , KOLKATA VIDE APPEAL NO. 1 80 /CIT(A) - V II / KOL/10 - 11 DATED 09 . 1 0 .20 12 . ASSESSMENT WAS FRAMED BY ITO, WD - 9 ( 4 ), KOLKATA U/S. 14 3(3) OF THE INCOME - TAX ACT, 1961 (HEREINAFTER REFERRED TO AS THE ACT ) FOR ASSESSMENT YEAR 200 8 - 0 9 VIDE HIS ORDER DATED 30 . 12 .20 1 0 . 2. THE ONLY ISSUE IN THIS APPEAL OF REVENUE IS AGAINST THE ORDER OF CIT(A) DELETING THE ADDITIONS MADE BY AO ON ACCOUNT OF SHORTAGE OF 830 QUINTAL OF MAIZE AND 507 QUINTAL OF WHEAT AMOUNTING TO RS.6,68,150/ - AND RS.6,37,701/ - RESPECTIVELY. FOR THIS, REVENUE HAS RAISED FOLLOWING TWO GROUNDS: 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, LD. CIT(A) IS NOT JUSTIFIED IN ALLOWING CLAIM OF SHORTAGE OF 830 QUINTA LS OF MAIZE, IN RESPECT OF WHICH ADDITION OF RS. 6,68,150/ - WAS MADE ON ACCOUNT OF SALE AS INFERRED IN THE ASSESSMENT, TO ITS ENTIRETY WITHOUT PROPER EVALUATION OF THE FACT THAT THE TRANSACTIONS WERE DIRECTLY FROM PARTIES TO PARTIES WITHOUT NECESSITY OF ST ORAGE, THAT THE ADDRESSES OF PURCHASING AND SELLING COMPANIES WERE THE SAME AND THAT THE PURCHASES DATES AND CORRESPONDING SALE DATES EITHER WERE ON THE SAME OR THE DIFFERENCE BETWEEN THEM WERE OF VERY NEGLIGIBLE PERIOD OF ONE DAY OR TWO DAYS. 2. ON THE F ACTS AND IN THE CIRCUMSTANCES OF THE CASE, LD. CIT(A) IS NOT JUSTIFIED IN ALLOWING CLAIM OF SHORTAGE OF 507.02 QUINTALS OF WHEAT, IN RESPECT OF WHICH ADDITION OF RS. 6,37,701/ - WAS MADE ON ACCOUNT OF SALE AS INFERRED IN THE ASSESSMENT, TO ITS ENTIRETY WITH OUT PROPER EVALUATION OF THE FACT THAT THE TRANSACTIONS WERE MOSTLY DIRECTLY FROM PARTIES TO PARTIES WITHOUT NECESSITY OF STORAGE, THAT THE ADDRESSES OF PURCHASING AND SELLING COMPANIES WERE THE SAME AND THAT THE PURCHASES DATES AND CORRESPONDING SALE DATE S EITHER WERE ON THE SAME OR THE DIFFERENCE BETWEEN THEM WERE OF VERY NEGLIGIBLE PERIOD OF ONE DAY OR TWO DAYS. 2 ITA NO . 1860 /K/20 12 SAKSHI COMMERCIAL CO. PVT. LTD. AY 200 8 - 09 3 . BRIEFLY STATED FACTS ARE THAT THE ASSESSEE CARRIES ON BUSINESS OF WHOLESALE OF WHEAT AND MAIZE AND OTHER FOOD PRODUCTS. THE ASSESSEE FOR AY 2008 - 09 FILED ITS RETURN OF INCOME ON 29.09.2008. DURING SCRUTINY ASSESSMENT PROCEEDING, ASSESSEE PRODUCED COMPLETE BOOKS OF ACCOUNT ALONG WITH SUPPORTING EVIDENCE AND AS PER THE ASSESSMENT ORDER, WHICH W ERE TEST CHECKED AND VERIFIED. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE AO REQUIRED THE ASSESSEE TO EXPLAIN THE SHORTAGE OF WHEAT OF 507 QUINTALS AND MAIZE OF 830 QUINTALS. THE ASSESSEE PRODUCED COMPLETE BOOKS OF ACCOUNT BEFORE THE AO AND THERE WAS N O DEFECT POINTED OUT BY THE AO IN THE SAME. THE ASSESSEE EXPLAINED THE SHORTAGE THAT THERE IS TRANSIT LOSS WHICH VARIES FROM 0.5% TO 2% AND SHORTAGE OF LOSS WHICH VARIES FROM 2% TO 3% BECAUSE OF MOISTURE LOSS. BUT THE AO WAS NOT CONVINCED WITH THE EXPLANA TION OF THE ASSESSEE AND A CCORDINGLY, HE MADE ADDITION OF THE SHORTAGE OF WHEAT AND MAIZE BY OBSERVING AS UNDER: IT IS FOUND FROM THE ABOVE MENTIONED TABLE THAT YOUR COMPANY HAD PURCHASE OF MAIZE ON VARIOUS DAY AND THE SAME QUANTITY WAS SOLD IN SAME DAY OR DAY AFTER TOMORROW. MAINLY FROM BENGALI FOOD PRODUCT PVT. LTD. IN CASE OF PURCHASE AND M/S. BENGANI EXPORT (INDIA) PVT. LTD. IN CASE SALES AND THE ADDRESS OF THE COMPANIES ARE SAME. BUT IN THE CASE OF MAIZE PURCHASE 111870.400 QUINTAL ON 01.02.2008 WH ICH WAS SOLD 198334.400 QUINTAL OF MAIZE ON 30.02.2008 AND 2706 QUINTAL OF MAIZE ON 31.03.2008 AND CLAIM SHORTAGE 830 QUINTAL OF MAIZE AS PER YOUR REPLY DATED 27.09.2010. 4. AGGRIEVED, ASSESSEE PREFERRED APPEAL BEFORE CIT(A) . BEFORE HIM, ASSESSEE ALSO C ONTENDED THAT YES THERE IS A SHORTAGE OF STOCK OF WHEAT TO THE EXTENT OF 507 QUINTALS AND MAIZE TO THE EXTENT OF 830 QUINTALS. THE ASSESSEE HIMSELF HAS GIVEN THE TOTAL QUANTITY OF WHEAT AND MAIZE TRADED DURING THE YEAR, WHICH IS AS UNDER: ON THE CONTRARY , IT IS EVIDENT FROM RECORD THAT THE ASSESSEE HAS PURCHASED THE ITEM WHEAT OF 64,355.30 QUINTAL VALUED RS.7,65,82,807/ - AND DECLARED SALE IS 63,847.98 QUINTALS OF WHEAT AT A TOTAL CONSIDERATION OF RS.7,58,82,839.74 AND THERE IS NO RECORD OF CLOSING STOCK O F THE SAID ITEM FOR BALANCE 507.32 QUINTAL OF WHEAT NOR THERE WAS ANY REFLECTION OF VALUE OF SHORTAGE GOODS IN THE SCHEDULE 8 IN THE BALANCE SHEET OF THE ASSESSEE FILED WITH RETURN. FURTHER, IN RESPECT TO WHEAT THE AO HAS RECORDED THE FOLLOWING: ON THE OTHER HAND, THE FACTS ON RECORDS SUGGESTS THAT THE ASSESSEE HAS NOT DISCLOSED THE SALE OF ENTIRE BALANCE QUINTAL OF THE WHEAT AND MAIZE MADE EITHER IN THE DECLARED PURCHASE RATE OR LAST SALE RATE OF THAT. IN THE LIGHT OF THE ABOVE FACTS ON RECORD AND CONSIDERING VALUE TAKEN FOR WHEAT AND MAIZE IN THE LAST DECLARED SALE RATE. WHEAT 507 QUINTAL X 1257 PER QUINTAL = RS.6,37,701/ - MAIZE 830 QUINTAL X 805 PER QUINTAL = RS.6,68,150/ - 3 ITA NO . 1860 /K/20 12 SAKSHI COMMERCIAL CO. PVT. LTD. AY 200 8 - 09 THE TOTAL UNDISCLOSED SALES CONSIDERATION OF BALANCE 507.32 QUINTAL OF WHEAT AND 830 QUINTAL OF MAIZE COMES TO RS.13,05,851/ - IS BEING ADDED BACK WITH THE TOTAL INCOME OF THE ASSESSEE AS UNDISCLOSED SALES CONSIDERATION. THERE IS NO DISPUTE THAT THE SHORTAGE WORKED OUT IS ONLY 0.7 AND IN VIEW OF THIS, THE CIT(A) DELETED THE ADDITION MADE ON ACCOUNT OF SHORTAGE OF WHEAT AND MAIZE IN THE BOOKS OF ACCOUNT OF THE ASSESSEE. FOR THIS, HE NOTED THAT THE ASSESSEE HAS PRODUCED C OMPLETE BOOKS OF ACCOUNT AND COMPLETE SUPPORTING DOCUMENTS I.E. STOCK REGISTER, CASH MEMOS, VOUCHERS ETC. BEFORE THE AO DURING THE COURSE OF SCRUTINY ASSESSMENT. NO DEFECT WHATSOEVER WAS POINTED OUT BY THE AO AND THERE IS CLAIM OF SHORTAGE ON ACCOUNT OF L OSS OF WHEAT AT 507 QUINTALS AND MAIZE AT 830 QUINTALS, THE CIT(A) GOING BY THE FACT THAT THIS IS A QUITE NORMAL LOSS CLAIMED BY THE ASSESSEE HE DELETED THE ADDITION. AGGRIEVED, NOW REVENUE IS IN APPEAL BEFORE US. 5 . WE HAVE HEARD RIVAL SUBMISSIONS AND GONE THROUGH FACTS AND CIRCUMSTANCES OF THE CASE. LD. SR. DR SHRI K. L. KANAK ARGUED THAT THERE IS A SHORTAGE OF STOCK AND HE ADMITTED THAT THE ASSESSEE HAS PRODUCED COMPLETE BOOKS OF ACCOUNT INCLUDING SALE AND PURCHASE VOUCHER, STOCK REGISTER AND OT HER VOUCHERS IN SUPPORT OF THE BOOKS OF ACCOUNT. HE ADMITTED THAT THERE IS NO DEFECT IN THE BOOKS OF ACCOUNT AS POINTED OUT FROM THE BENCH. BUT LD. SR. DR INSISTED ON THE ASPECT THAT IN THE AUDIT REPORT THE ASSESSEE S CHARTERED ACCOUNTANT HAS MENTIONED T HAT THERE IS NEGATIVE STOCK. HE INSISTED THAT THIS NEGATIVE STOCK SHOULD NOW BE CONSIDERED AS AN ADDITION. HE REFERRED TO PAGE 32 OF ASSESSEE S PAPER BOOK WHEREIN THE CLOSING STOCK OF MAIZE IS NEGATIVE TO THE EXTENT OF 7400 QUINTAL. WHEN A QUERY WAS PUT TO LD. SR. DR, HOW THE BENCH NOW CAN LOOK INTO THIS ISSUE WHEN THE AO HAS NOT MADE THIS ADDITION? HE COULD NOT EXPLAIN BUT HE INSISTED THAT THIS SHOULD BE SENT BACK TO THE FILE OF AO. WE FIND THAT THERE IS N O SUCH ADDITION MADE BY AO AND NO SUCH ISSUE I S RAISED BEFORE CIT(A) OR BEFORE US NOW. FROM THE GROUNDS OF APPEAL FILED BEFORE US AND BEFORE CIT(A), IT IS CLEAR THAT THE ONLY ISSUE IS REGARDING SHORTAGE OF STOCK OF WHEAT AND MAIZE AND NOTHING ELSE. THE ASSESSEE HAS FILED THE COMPLETE QUANTITATIVE AN D QUALITATIVE DETAILS OF STOCK TALLY BEFORE THE AO, BEFORE CIT(A) AND EVEN NOW BEFORE US, WHICH IS ENCLOSED IN ASSESSEE S PAPER BOOK AT PAGES 12 TO 14 AND ALSO AT PAGE 16. WE FIND THAT THERE IS NO DIFFERENCE IN THE TOTAL QUANTITY OF STOCK IN TERM OF QUANT ITY AND QUALITY. IN SUCH CIRCUMSTANCES, WE DO NOT WANT TO INTERFERE 4 ITA NO . 1860 /K/20 12 SAKSHI COMMERCIAL CO. PVT. LTD. AY 200 8 - 09 IN THE ORDER OF CIT(A), WHICH IS BASED ON FACTS AND SHORTAGE CLAIMED BY THE ASSESSEE IS VERY MUCH WITHIN THE REASONABLE LIMIT I.E. 0.7%. THE SHORTAGE IS WITHIN THE PARAMETER LAID DOWN BY GOVERNMENT ORGANIZATION LIKE FCI. THE SHORTAGE IS DUE TO TRANSIT LOSS AND LOSS OF MOISTURE. IN TERM OF THE ABOVE, WE CONFIRM THE ORDER OF CIT(A) AND CONSEQUENTLY, THIS ISSUE OF REVENUE S APPEAL IS DISMISSED. 6 . IN THE RESULT, APPEAL OF REVENUE IS DISM ISSED. 7 . ORDER IS PRONOUNCED IN THE OPEN COURT ON 11.06.2015 SD/ - SD/ - ( P. K. BANSAL ) (MAHAVIR SINGH) ACCOUNTANT MEMBER J UDICIAL MEMBER DATED : 11TH JUNE , 201 5 JD.(SR.P.S.) COPY OF THE ORDER FORWARDED TO: 1 . A PPELLANT ITO, WARD - 9 ( 4 ), KOLKATA. 2 RESPONDENT M/S. SAKSHI COMMERCIAL CO. PVT. LTD.,73, COTTON STREET, 2 ND FLOOR, KOLKATA - 700 007. 3 . THE CIT (A), KOLKATA 4. 5. THE CIT, KOLKATA DR, KOLKATA BENCHES, KOLKATA / TRUE COPY, BY ORDER, ASSTT. REGISTRAR .