Smt. Saroj Bala, Kaithal V. Addl. CIT, Kurukshetra

ITA 197/CHANDI/2012

• Counselvise Citation: [2012] 140 COUNSELVISE.COM (IT) 60877 (ITAT-CHANDIGARH)
• Duration Of Justice: 3 month(s) 28 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 13-06-2012
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: B
• Next Hearing Date: 11-06-2012
• Assessment Year: 2008-2009
• Appeal Filed On: 15-02-2012
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Assessee Lawyers: JYOTI

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL CHANDIGARH BENCH B CHANDIGARH BEFORE SHRI H.L.KARWA, VICE PRESIDENT AND SHRI T.R.SOOD, ACCOUNTANT MEMBER ITA NO.197/CHD/2012 ASSESSMENT YEAR: 2008-09 SMT. SAROJ BALA, V ADDL. CIT, PROP. SHRI RAM RICE & GEN.MILLS, KURUKSHETRA RANGE DHAND, KAITHAL. KURUKSHETRA. PAN: AGZPG-5384Q (APPELLANT) (RESPONDENT) APPELLANT BY : SMT. JYOTI RESPONDENT BY : SHRI AKHILESH GUPTA DATE OF HEARING : 11.06.2012 DATE OF PRONOUNCEMENT : 13.06.2012 ORDER PER T.R.SOOD, AM IN THIS APPEAL, ASSESSEE HAS RAISED FOLLOWING GROUN DS: 1. THAT THE ORDERS OF THE LD. CIT (A), CHANDIGARH IS ARBITRARY BASED ON EXTRANEOUS CONSIDERATIONS, DEVOID OF FACTS ON RECORD, AGAINST PRINCIPL ES OF JUSTICE THEREFORE ILLEGAL, ERRONEOUS, PERVERSE AND THUS UNCALLED FOR. 2. THAT WITHOUT PREJUDICE TO THE ABOVE GROUND OF APPEAL THE APPELLANT DISPUTES THE ADDITION ON ACCOUNT OF FREIGHT CHARGES OF RS. 91,316/- U/S 40(A)(IA) OF INCOME TAX ACT, 1961. 3. THAT WITHOUT PREJUDICE TO THE ABOVE GROUND OF APPEAL THE APPELLANT DISPUTES THE DISALLOWANCE OF LABOUR EXPENSES OF RS. 1,00,000/- ON ESTIMATION BASIS AND THE ADDITION THEREOF. 2 4. THAT WITHOUT PREJUDICE TO THE ABOVE GROUND OF APPEAL THE APPELLANT DISPUTES THE ADDITION ON ACCOUNT OF LOW HOUSEHOLD EXPENSES. 2. THE FIRST GROUND IS OF GENERAL NATURE AND DOES N OT REQUIRE SEPARATE ADJUDICATION. 3. IN GROUND NO. 2, DURING ASSESSMENT PROCEEDINGS, AO NOTICED THAT ASSESSEE HAS CLAIMED FREIGHT EXPENSES, OUT OF WHICH A SUM OF RS.91,316/- WAS IN RESPECT OF TRUCK NO. HR- 08-7008 ON WHICH NO TDS WAS DEDUCTED AND THEREFORE, THIS SUM WAS ADDED TO THE INCOME OF THE ASSESSEE. ON APP EAL, THE ADDITION WAS CONFIRMED BY THE LD. CIT(A). 4. BEFORE US, LD. COUNSEL FOR THE ASSESSEE SUBMITTE D THAT THIS AMOUNT WAS PAID DURING THE YEAR, THEREFORE NO DISALLOWANCE CAN BE MADE IN VIEW OF THE DECISION OF SPECIAL BENCH IN CASE OF MERILYN SHIPING & TRANSPORTS V ACI T, VISHAKHAPATNAM (IT APPEAL NO. 477 (VIZ) 2008, DATED 29.03.2012, WHEREIN IT WAS HELD THAT THE ADDITION U /S 40(A)(IA) CAN BE MADE IN RESPECT OF AMOUNTS PAYABLE . 5. ON THE OTHER HAND, LD. DR SUBMITTED THAT IT IS N OT CLEAR FROM RECORDS, WHETHER THE AMOUNT WAS PAID DURING TH E YEAR OR NOT. THEREFORE, SAME MAY BE SENT FOR VERIFICATI ON. 6. AFTER CONSIDERING THE RIVAL SUBMISSIONS, IT IS N OT CLEAR FROM RECORDS WHETHER THE AMOUNT WAS PAID DURING THE YEAR OR NOT. THEREFORE, IN INTEREST OF JUSTICE, WE SET ASID E THE ORDER OF THE CIT(A) AND REMIT THE MATTER BACK TO THE FILE OF AO FOR FRESH EXAMINATION AND THE SAME MAY BE DECIDED IN TH E LIGHT OF SPECIAL BENCH DECISION IN THE CASE OF MERILYN SH IPPING & 3 TRANSPORTS (SUPRA). 7. IN GROUND NO.3, AFTER HEARING FROM BOTH THE PART IES, WE FIND, DURING ASSESSMENT PROCEEDINGS AO NOTICED THAT GP RATE OF THE ASSESSEE HAS FALLEN FROM 2.29% IN LAST YEAR TO 2.22% IN THE YEAR. IN RESPONSE TO THE QUERY, IT WAS STATED AS UNDER : THE ASSESSEE VIDE LETTER DATED 13.10.2010 EXPLAINED THAT THERE IS MINOR DIFFERENCE OF 0.07% I N THE GP RATE WHEN COMPARED TO PREVIOUS ASSESSMENT YEAR. THIS IS DUE TO 16383.76 QUINTAL OF GOVT. MILL ING DONE DURING THE ASSESSMENT YEAR 2007-08. IF WE DEDUCT ALL THE AMOUNT RECEIVED DUE TO GOVT. MILLING AND ALSO REDUCE THE EXPENDITURE MADE FOR THE GOVT. MILLING, WE FIND THAT THE GP RATIO DURING THE RELEV ANT ASSESSMENT YEAR IS MUCH HIGHER. DURING THE YEAR NO GOVT. MILLING WAS DONE. 8. THE AO WAS NOT SATISFIED WITH THE ABOVE REPLY BE CAUSE METHOD ADOPTED BY ASSESSEE WAS NOT CORRECT, BECAUSE GROSS PROFIT FOR THE LAST YEAR OF SELF MILLING @ 0.03% DO ES NOT APPEAR TO BE REASONABLE. HE, ALSO NOTED THAT HUSK HAS BEEN VALUED AT ESTIMATED VALUE. FURTHER, IT WAS FOUND T HAT OPENING STOCK OF THE SUPER FINE RICE WAS VALUED AT RS.1349.95 PER QUINTAL, WHEREAS THE AVERAGE PURCHASE RATE WAS RS.1154.69 PER QUINTAL AND AVERAGE SALE PRICE WAS RS.1122.60 PER QUINTAL. THE CLOSING STOCK WAS VALU ED AT RS.1500/-. IN RESPONSE, IT WAS STATED THAT VALUE O F THE CLOSING STOCK WAS MUCH HIGHER THAN THE LAST SALE PR ICE OF RS.1400/- PER QUINTAL. THEREFORE, NO FAULT CAN BE FOUND WITH THE VALUATION OF CLOSING STOCK. IN VIEW OF THESE DISCREPANCIES, AO MADE AN ADHOC ADDITION OF RS.4,00 ,000/- TOWARDS TRADING RESULTS OF THE ASSESSEE. 4 9. BEFORE CIT(A), SIMILAR SUBMISSIONS WERE REITERAT ED. THE LD. CIT(A) AFTER CONSIDERING THE SUBMISSIONS, RESTR ICTED THE ADDITION TO RS.1,00,000/- VIDE PARA 2.04, WHICH IS AS UNDER : 2.04 NO PLAUSIBLE EXPLANATION OF THE ABOVE DEFICIENCIES NOTED BY THE AO COULD BE GIVEN BY THE APPELLANT IN THE WRITTEN SUBMISSIONS EXCEPT TO REITERATE THE SUBMISSIONS MADE BEFORE THE AO DURING THE ASSESSMENT PROCEEDINGS. IN VIEW OF THE ABOVE FACTS, IT IS HELD THAT TRADING RESULTS DECLAR ED BY THE APPELLANT ARE NOT SUBJECT TO VERIFICATION AN D HENCE THE SAME ARE REJECTED. THE CASE LAWS REFERRED TO BY THE APPELLANT ARE OF NO HELP IN VIEW OF THE SPECIFIC FACTS OF THE CASE OF THE APPELLANT, AS HAS BEEN DISCUSSED ABOVE. AS FAR AS THE TRADING ADDITION MADE BY THE AO, THE APPELLANT IN THE WRITTEN SUBMISSIONS SUBMITTED THAT THE ADDITION ON THE BASIS OF DECLINE IN G.P. WORKS OUT OF RS.40,298/-ONLY. IN THIS REGARD, IT IS NOTED THAT T HE AO SPECIFICALLY MENTIONED IN THE ASSESSMENT ORDER THAT THE GP DECLARED IN THE YEAR UNDER CONSIDERATION IS NOT COMPARABLE WITH THE LAST YEAR SINCE TRADING ACCOUNT HAS NOT BEEN PREPARED ON THE SAME BASIS IN VIEW OF THE FACT THAT PRICE OF BARDAN A WAS INCLUDED IN THE TURNOVER OF THE LAST YEAR BUT NOT OF THE YEAR UNDER CONSIDERATION. TAKING IN CONSIDERATION THE ENTIRETY OF FACTS, THE ADDITION MADE BY THE AO IS RESTRICTED TO RS.1 LAKH WHICH WOULD MEET THE END OF JUSTICE. 10. BEFORE US, LD. COUNSEL FOR THE ASSESSEE REITERA TED THE SUBMISSIONS MADE BEFORE LOWER AUTHORITIES. SHE FUR THER SUBMITTED THAT ADDITION HAS BEEN MADE ON ADHOC BASI S, WHICH IS NOT SUSTAINABLE IN LAW. ON THE OTHER HAND , LD.DR STRONGLY SUPPORTED THE ORDER OF AO AND CIT(A) AND S UBMITTED THAT SPECIFIC FIGURES HAVE BEEN POINTED OUT BY THE AO. 5 11. AFTER CONSIDERING RIVAL SUBMISSIONS, WE FIND TH AT OVER VALUATION OF CLOSING STOCK CANNOT BE A REASON FOR M AKING ADDITION TO THE TRADING RESULTS BECAUSE OVER VALUAT ION WOULD ITSELF RESULT INTO HIGHER PROFITS. SIMILARLY, THE FIGURE OF OPENING STOCK CAN ALSO NOT BE INTERFERED. NO OTHER SPECIFIC DEFECT HAS BEEN POINTED OUT BY THE AO AND ADDITION SEEMS TO BE MERELY ON ADHOC BASIS, WHICH CANNOT BE MADE AS P ER THE LAW. ACCORDINGLY, WE SET ASIDE THE ORDER OF THE CI T(A) AND DELETE THE ADDITION. 12. IN GROUND NO.4, AFTER CONSIDERING BOTH PARTIES, WE FOUND THAT DURING ASSESSMENT PROCEEDINGS, AO NOTICE D THAT ASSESSEE HAS SHOWN HOUSEHOLD WITHDRAWALS ONLY FOR RS.81,000/- AND AFTER CONSIDERING REPLY OF THE ASSE SSEE, AO ESTIMATED THE WITHDRAWALS AT RS.15,000/- PER MONTH, WHICH WOULD MAKE THE TOTAL EXPENDITURE REQUIRED AT RS.1,8 0,000/- AND ACCORDINGLY, HE MADE ADDITION OF RS.1,00,000/-. ON APPEAL, ADDITION WAS CONFIRMED BY LD. CIT(A). 13. BEFORE US, LD. COUNSEL FOR THE ASSESSEE SUBMITT ED THAT THIS ADDITION HAS ALSO BEEN MADE ON PURELY ESTIMATE D BASIS. SHE FURTHER SUBMITTED THAT ASSESSEE IS WIFE OF SHRI DES RAJ AND WAS LIVING WITH HER TWO GROWN-UP SONS. NO EXPEN DITURE WAS INCURRED ON EDUCATION. MOREOVER, HER HUSBAND A S WELL AS BOTH SONS WERE INCOME TAX ASSESSEES AND HAD ALSO MADE SOME WITHDRAWALS. IN THIS REGARD, SHE REFERRED TO P AGE NO.4 TO 7 OF THE PAPER BOOK. 14. ON THE OTHER HAND, LD. DR STRONGLY SUPPORTED TH E ORDER OF CIT(A) AND SUBMITTED THAT ASSESSMENT YEAR INVOLV ED IS 2008-09 AND IN THE PRESENT INFLATIONARY TIME, WITHD RAWAL OF 6 RS.15,000/- PER MONTH ESTIMATED BY THE AO WAS QUITE REASONABLE. 15. WE HAVE CONSIDERED RIVAL SUBMISSIONS CAREFULLY AND FIND SOME FORCE IN THE CONTENTIONS OF BOTH PARTIES. IT CANNOT BE DOUBTED THAT IN THE PRESENT INFLATIONARY TIMES, SOME MINIMUM WITHDRAWALS ARE REQUIRED BY EVERYBODY. THO UGH, IT WAS FOUND THAT ASSESSEE'S HUSBAND AND BOTH HER SONS HAD FILED RETURNS OF INCOME TAX, BUT NO DETAILS OF THEI R WITHDRAWALS HAVE BEEN FURNISHED BEFORE US. THEREFO RE, CONSIDERING OVERALL CIRCUMSTANCES, WE RESTRICT THE ADDITION OF RS.1,00,000/- TO RS.50,000/-. ACCORDINGLY, WE SE T ASIDE THE ORDER OF LD. CIT(A) AND DIRECT AO TO MAKE ADDIT ION OF RS.50,000/- TOWARDS HOUSEHOLD WITHDRAWALS. 16. IN THE RESULT, APPEAL IS PARTLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 13 TH JUNE,2012. SD/- SD/- (H.L.KARWA) (T.R.SOOD) VICE PRESIDENT ACCOUNTANT MEMBER DATED: JUNE,2012. POONAM COPY TO: THE APPELLANT, THE RESPONDENT, THE CIT(A), THE CIT ,DR ASSISTANT REGISTRAR, ITAT CHANDIGARH