ACIT 9(3), MUMBAI V. SEJAL INTERNATIONAL LTD, MUMBAI

ITA 1952/MUM/2011

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 88640 (ITAT-MUMBAI)
• Duration Of Justice: 4 year(s) 8 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 18-03-2015
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: J
• Next Hearing Date: 10-02-2015
• Assessment Year: 2007-2008
• Appeal Filed On: 10-03-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: AKHILENDRA P YADAV
• Assessee Lawyers: VIJAY KOTHARI
• Keywords: Business income
• Section: 143(3)

Judgement Text

J IN THE INCOME TAX APPELLATE TRIBUNAL J BENCH, MUMBAI BEFORE SHRI I.P. BANSAL, JUDICIAL MEMBER AND SHRI R.C. SHARMA, ACCOUNTANT MEMBER ./ I.T.A. NO.1952 /MUM/2011 ( / ASSESSMENT YEAR : 2007-2008 ASSTT. COMMISSONER OF INCOME TAX- CIRCLE 9(3), 2 ND FLOOR, ROOM NO. 229, AAYAKAR BHAVAN, M.K. ROAD, MUMBAI 400 020. / VS. M/S SEJAL INTERNATIONAL LTD., 201/202, ABHILASHA, S.V. ROAD, KANDIVALI (W), MUMBAI 400 067. ./ PAN : AAGCS9015G ( / APPELLANT ) .. ( / RESPONDENT ) A PPELLANT BY SHRI AKHILENDRA P. YADAV R E SPONDENT BY : SHRI VIJAY KOTHARI / DATE OF HEARING : 11-03-2015 / DATE OF PRONOUNCEMENT : 18-03-2015 [ !' / O R D E R PER R.C. SHARMA, A.M . : THIS IS AN APPEAL FILED BY THE REVENUE IS DIRECTED AGAINST THE ORDER PASSED BY THE LD. CIT(A) - 27, MUMBAI DATED 10-10- 2012 FOR THE A.Y. 2008-09 IN THE MATTER OF ORDER PASSED U/S 143(3) OF THE INC OME TAX ACT, 1961 WHEREIN FOLLOWING GROUND HAS BEEN TAKEN BY THE REVENUE:- ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND LAW, THE LD. CIT(A) HAS ERRED IN DELETING THE ADDITION OF RS. 15,09,668/- MADE IN RESPECT OF EXCESS DEBIT TO PURCHASES ACCOUNT, DISREGARDING THE FINDING IN THE ASSESSMENT ORDER THAT ASSESSEES CLAIM WAS EXCESSIVE. 2. RIVAL CONTENTIONS HAVE BEEN HEARD AND RECORD PE RUSED. THE ONLY ISSUE ARISING FOR ADJUDICATION IS AGAINST DELETION OF ADD ITION OF RS.15,09,668/- ON DISALLOWANCE OF PURCHASES. THE ASSESSEE IS ENGAGED IN THE BUSINESS OF TRADING ITA 1952/M/11 2 IN DECORATIVE GLASSES AND SANITARY WARES. DURING TH E COURSE OF SCRUTINY ASSESSMENT THE A.O. OBSERVED THAT THE ASSESSEE MADE IMPORT OF GLASSES WORTH RS. 1,23,12,824/- FROM M/S PILKINGTON WHICH WAS CLA IMED TO HAVE BEEN SOLD TO SAGL ON HIGH SEA SALES BASIS. HE NOTED THAT THE ASSESSEE MADE CLAIM ONLY OF RS. 1,08,03,156/- TO M/S. PILKINGTON FOR DEFECTI VE GOODS WHILE THE PURCHASES MADE FROM M/S. PILKINGTON STOOD AT RS.1,2 3,12,824/-. HE CONCLUDED THAT THE ASSESSEE HAD DEBITED EXCESS PURC HASES TO THE EXTENT OF THE DIFFERENCE AMOUNT OF RS.15,09,668/- (12312824-1080, 3156) AND ADDED BACK THE SAME TO THE INCOME RETURNED. BY THE IMPUGNED OR DER, THE LD. CIT(A) DELETED THE ADDITION AFTER HAVING FOLLOWING OBSERVA TION:- 5. I HAVE CONSIDERED THE ISSUE. I FIND MERIT IN TH E APPEAL. IT IS SEEN THAT THE APPELLANT MADE TOTAL SALES OF RS. 4,24,46, 720/- INCLUDING' HIGH SEA SALES OF RS.1,25,59,080/- TO SAGL. IT DEBITED T OTAL PURCHASES AMOUNTING TO RS. 3,59,21,410/- WHICH INCLUDED IMPOR T OF RS. 1 ,23,12,824/- FROM M/S PILKINGTON. THE APPELLANT ON RECEIPT OF DEFECT CLAIM REDUCED IT SALES BY RS.1 ,04,42,181/- TO THE EXTENT OF CLAIMS MADE BY SAGL AND REDUCED ITS PURCHASES ALSO BY RS.1 ,08,03,156/- TO THE EXTENT OF CLAIM MADE WITH M/S PILKINGTON. THE A .O. HAS WITHOUT BASIS MADE THE IMPUGNED ADDITION ASSUMING THAT ENTI RE SALES OF RS. 1,23,12,824/- MADE TO SAGL WERE DEFECTIVE. I, THERE FORE, DELETE THE ADDITION MADE OF RS.15,09,668/- ON ACCOUNT DISALLOW ANCE OF ALLEGED EXCESS PURCHASES. AGGRIEVED BY THE ORDER OF LD. CIT(A), THE REVENUE I S IN FURTHER APPEAL BEFORE US. 4. WE HAVE CONSIDERED THE RIVAL CONTENTIONS, CAREFU LLY GONE THROUGH THE ORDERS OF AUTHORITIES BELOW AND FOUND FROM THE RECO RD THAT THE ASSESSEE HAS DEBITED TOTAL PURCHASE AMOUNTING TO RS. 3.59 CRORES WHICH INCLUDED IMPORT FROM M/S PILKINGTON. AS THERE WAS DEFECT IN THE GOO DS SO PURCHASED, THE CLAIM WAS FILED AND ACCORDINGLY THE PRICE WAS REDUCED BY RS. 1,04,42,182/-. THERE WAS CORRESPONDING REDUCTION IN SALES VALUE ALSO BY RS. 1.08 CRORES TO THE EXTENT OF CLAIM MADE WITH M/S PILKINGTON. THE A.O. HAS MADE AN ADDITION BY PRESUMING THAT THE ASSESSEE HAD SHOWN PURCHASES OF RS. 1.23 CRORES WHILE IT REDUCED FROM PURCHASE VALUE RS. 1.08 CRORES. THE LD . CIT(A) DELETED THE ITA 1952/M/11 3 ADDITION AFTER RECORDING HIS FINDING AT PARA 5 WHIC H HAS NOT BEEN CONTROVERTED BY THE LD. D.R. IT IS ALSO NOT A CASE OF DEPARTMEN T THAT THE LD. CIT(A) HAS RELIED ON ANY EVIDENCE IN CONTRAVENTION TO RULE 46A . THE ADDITION WAS MADE BY THE A.O. WITH REGARD TO THE DIFFERENCE IN SALE O F RS. 1.23 CRORES ASSUMED BY THE A.O. VIS--VIS ACTUAL SALE OF RS. 1.08 CRORES R ECORDED BY THE ASSESSEE IN ITS BOOKS OF ACCOUNT. ACCORDINGLY WE DO NOT FIND ANY M ERIT IN THE ADDITION MADE BY THE A.O. WITHOUT CONSIDERING THE SUBMISSION OF T HE ASSESSEE WITH REGARD TO CREDIT FOR DEFECTIVE GOODS GIVEN BY THE SUPPLIER WH ICH CORRESPONDINGLY PASSED TO HIS CUSTOMER. 5. IN THE RESULT, APPEAL OF THE REVENUE IS DISMISS ED. ORDER PRONOUNCED IN THE OPEN COURT ON 18 TH MARCH, 2015. !' # $% &! ' 18-03-2015 ( ) SD/- SD/- (I.P. BANSAL) (R.C. SHARMA) JUDICIAL MEMBER ACCOUNTANT MEMBER $ 5 MUMBAI ; &! DATED 18-03-2015 [ .6../ RK , SR. PS ! '#$% &%# / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. 7 () / THE CIT(A) 27, MUMBAI 4. 7 / CIT 16, MUMBAI 5. :;( 66<= , <= , $ 5 / DR, ITAT, MUMBAI J BENCH 6. (?@ A / GUARD FILE. ' / BY ORDER, : 6 //TRUE COPY// (/') * ( DY./ASSTT. REGISTRAR) , $ 5 / ITAT, MUMBAI