ITO, Ward - 2(3)/Hooghly, Hooghly V. M/s. S.M. Enterprise, Hooghly

ITA 1987/KOL/2009

• Counselvise Citation: 198723514 RSA 2009
• Duration Of Justice: 1 year(s) 11 month(s) 2 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 25-10-2011
• Appeal Filed By: Department
• Bench Allotted: A
• Assessment Year: 2005-2006
• Appeal Filed On: 23-11-2009
• Court: TRIBUNAL
• Department Lawyers: SOUMITRA CHOW DHURY
• Assessee Lawyers: S M BHATTACHARYA
• Keywords: Tax effect
• Section: 260A

Judgement Text

, , , IN THE INCOME TAX APPELLATE TRIBUNAL, BEN CH A, KOLKATA () BEFORE , , , , , SHRI MAHAVIR SINGH, JUDICIAL MEMBER. /AND . .. . ! ! ! !. .. . , '# SHRI C.D.RAO, ACCOUNTANT MEMBER $ $ $ $ / ITA NO . 1920/KOL/2009 %& '(/ ASSESSMENT YEAR : 2005-06 (*+ / APPELLANT ) M/S. S.M.ENTERPRISE, HOOGHLY (PAN: AAWFS 5706 R) - % - - VERSUS - . (-.*+/ RESPONDENT ) I.T.O.WARD-2(3), HOOGHLY $ $ $ $ / ITA NO . 1987/KOL/2009 %& '(/ ASSESSMENT YEAR : 2005-06 (*+ / APPELLANT ) I.T.O.WARD-2(3), HOOGHLY - % - - VERSUS - . (-.*+/ RESPONDENT ) M/S. S.M.ENTERPRISE, HOOGHLY (PAN: AAWFS 5706 R) *+ / 0 '/ FOR THE DEPARTMENT: SHRI SOUMITRA CHOWDHURY -.*+ / 0 '/ FOR THE RESPONDENT: SHRI S.M.BHATTACHARYA 1%2 / !# /DATE OF HEARING : 25.10.2011. 3' / !# /DATE OF PRONOUNCEMENT : 25.10.2011 '4 / ORDER ( (( ( . .. . ! ! ! !. .. . ) )) ), , , , '# PER SHRI C.D.RAO, AM THE ABOVE TWO ARE CROSS APPEALS ONE FILED BY ASSES SEE AND THE OTHER FILED BY THE REVENUE ARE AGAINST ORDERS DATED 31.08.2009 OF THE CIT(A)-XXXVI, KOLKATA PERTAINING TO A.YR. 2005-06. 2 2. THE BRIEF FACTS OF THE ISSUE OF ARE THAT WHILE D OING THE SCRUTINY ASSESSMENT ASSESSING OFFICER HAS MADE AN ADDITION OF RS.13,32, 022/- ON ACCOUNT OF DISCREPANCY IN PURCHASES BY M/S. DABUR INDIA LTD. BY OBSERVING THAT ASSESSEE IS UNABLE TO RECONCILE THE PURCHASES MADE BY ASSESSEE FIRM FROM M/S. DABUR INDIA LTD. FROM THE STATEMENT OF ACCOUNTS FILED BY ASSESSEE AND THAT OF M/S.DABUR INDIA LTD. AND FURTHER MADE AN ADDITION OF RS.7,67,323/- ON ACCOUNT OF UND ISCLOSED STOCK BY OBSERVING THAT ASSESSEE HAS SHOWN LESS CLOSING STOCK TO THE REVENU E TO THE EXTENT OF RS.7,67,323/ WHEN COMPARED TO THE TOTAL STOCK SUBMITTED TO THE B ANKER OF ASSESSEE. 2.1. ON APPEAL LD. CIT(A) HAS CONFIRMED THE ADDITI ON ON ACCOUNT OF PURCHASES MADE FROM M/S. DABUR INDIA LTD. AND HE DELETED THE ADDIT ION MADE ON ACCOUNT OF DIFFERENCES IN CLOSING STOCK OF RS.7,67,323/-. 2.2. AGGREIVED BY THIS BOTH ASSESSEE AS WELL AS TH E REVENUE ARE IN APPEAL BEFORE US. 3. AT THE TIME OF HEARING THE LD. COUNSEL APPEARIN G ON BEHALF OF ASSESSEE BY REFERRING TO THE CERTIFICATE ISSUED BY M/S. DABUR I NDIA LTD. DATED 23/11/2010 CONTENDED THAT THESE PURCHASES SHOWN BY ASSESSEE IN THE BOOKS OF ACCOUNTS IS CORRECT AND M/S. DABUR INDIA LTD. HAS ALSO CERTIFIED THE SA ME IN THE SAID LETTER. THEREFORE HE REQUESTED TO DELETE THE ADDITION OF RS.13,32,022/-. 4. ON THE OTHER HAND, THE LD. DR APPEARING ON BEHA LF OF THE REVENUE SUBMITTED THAT AT THE TIME OF ASSESSMENT OR AT THE APPELLATE STAGE THE LD. COUNSEL FOR ASSESSEE HAS NOT PRODUCED THE SAID LETTER AND THE CERTIFICATE IS SUED BY M/S. DABUR INDIA LTD. SINCE THIS CANNOT BE CONSIDERED AS AUTHENTIC EVIDENCE TO SUPPORT THE CONTENTION OF THE ASSESSEE. THEREFORE HE REQUESTED TO UPHELD THE ACTI ON OF REVENUE. 5. AFTER HEARING THE RIVAL SUBMISSIONS AND ON CARE FUL PERUSAL OF MATERIALS AVAILABLE ON RECORD INCLUDING THE MONTHLY PURCHASE AND SALE STATEMENT SHOWN BY ASSESSEE AS PER PAGE NO.3 OF THE PAPER BOOK AS WELL AS P&L A./C WHICH WAS APPEARING AT PAGE 28 OF THE PAPER BOOK AND PARTICULARS OF TRA NSACTIONS WITH M/S. DABUR INDIA LTD. 3 APPEARING AT PAGE NO.4 TO 14 OF THE PAPER BOOK AND THE CERTIFICATE DATED 23.11.2010, EVEN THEN WE HAVE OBSERVED THAT THERE IS A DIFFEREN CE YET TO BE RECONCILED. IN VIEW OF THIS WE CONSIDER THAT 10% OF THE DIFFERENCE OF PURC HASE AS POINTED OUT BY AO IS JUSTIFIABLE ON ACCOUNT OF UNACCOUNTED PURCHASE. THE REFORE, WE RESTRICT THE ADDITION AMOUNTING TO RS.1,33,200/- AS AGAINST THE ADDITION OF RS.13,32,022/- ON ACCOUNT OF PURCHASE. 6. IN THE RESULT THE APPEAL OF ASSESSEE IS ALLOWED IN PART. 7. AS REGARDING THE REVENUES APPEAL THE LD. COUNSE L APPEARING ON BEHALF OF ASSESSEE SUBMITTED THAT THE TAX EFFECT INVOLVED IN THIS CASE IS LESS THAN RS. 2 LAKHS AND HAS GIVEN THE COMPUTATION OF TAX INVOLVED IN THE RE VENUES APPEAL WHICH IS AS UNDER :- TAX EFFECT RELIEF ALLOWED BY CIT(A) RS.7,62,723.00 INCOME TAX RS.2,02,816.00 ADD: EDUCATION CESS @ 2% RS.4,056.00 TOTAL TAX RS.2,06,872.00 THEREFORE HE REQUESTED TO DISMISS THE APPEAL OF THE REVENUE IN VIEW OF INSTRUCTION NO.3/2011 [F.NO.279/MISC.142/2007-ITJ], DATED 9.2.2 011 WHERE MONETARY LIMIT HAS BEEN RAISED TO RS.3 LAKHS. 8. AFTER HEARING THE RIVAL SUBMISSIONS AND ON CAREF UL PERUSAL OF MATERIAL ON RECORD KEEPING IN VIEW OF THE FACT THAT THE LD. DR COULD N OT GIVE CONTRARY JUDGEMENT TO THE ONE ON WHICH THE LD. COUNSEL FOR THE ASSESSE HAS RE LIED WHEREIN THE HONBLE DELHI HIGH COURT IN THE CASE OF CIT VS DELHI RACE CLUB IN ITA NO.128/2008 DATED 03.03.2011 HAS HELD AS UNDER :- THE TAX EFFECT INVOLVED IN THE PRESENT APPEAL IS R S.4,65,860/-. AS PER RECENT GUIDELINES OF THE CBDT, APPEAL IN THOSE CASES WHERE THE TAX EFFECT IS LESS THAN 10 LACS, ARE NOT BE ENTERTAINED. THIS COURT IN THE CASE OF COMMISSIONER OF INCOME TA X-III V. M/S. P.S.JAIN AND CO. BEING NO.179/1991 DECIDED ON 2 ND AUGUST, 2010 HAS TAKEN A VIEW THAT SUCH CIRCULAR WOULD ALSO APPLY TO PENDING CASES. 8.1. ADMITTEDLY THE TAX PAYABLE IN RESPECT OF GROUN DS OF APPEAL BY THE DEPARTMENT IS LESS THAN RS.3 LAKHS AND AS PER REVISED INSTRUCT ION OF THE CBDT NO. 3 DATED 4 9.2.2011 WHEREIN THE CBDT HAS REVISED THE FILING LI MITS FILED BEFORE THE TRIBUNAL, HIGH COURT AND SUPREME COURT AS UNDER :- BEFORE THE INCOME TAX APPELLATE TRIBUNAL : RS. 3 L AKHS, APPEALS U/S 260A OF THE IT ACT BEFORE THE HONBLE HIGH COURT : RS.10 LAKHS AND BEFORE THE HONBLE SUPREME COURT : RS.25 LAKHS SINCE IN THE PRESENT CASE THE ABOVE REVISED INSTRUC TION IS WELL APPLICABLE IN VIEW OF THE HONBLE DELHI HIGH COURT (SUPRA) HENCE IN OUR OPINI ON THE REVENUES APPEAL IS NOT MAINTAINABLE IN VIEW OF THE SAID CIRCULAR OF THE CB DT. 8.2. WE FURTHER FIND THAT IT IS A SETTLED LAW THAT THE CIRCULARS ISSUED BY CBDT ARE BINDING ON THE REVENUE. THIS POSITION WAS CONFIRMED BY THE APEX COURT IN THE CASE OF COMMISSIONER OF CUSTOMS VS INDIAN OIL CORPORATIO N LTD. REPORTED IN 267 ITR 272 WHEREIN THEIR LORDSHIPS EXAMINED THE EARLIER DECISI ONS OF THE APEX COURT WITH REGARD TO BINDING NATURE OF THE CIRCULAR AND LAID DOWN THA T WHEN A CIRCULAR ISSUED BY THE BOARD REMAINS IN OPERATION THEN THE REVENUE IS BOUN D BY IT AND CANNOT BE ALLOWED TO PLEAD THAT IT IS NOT VALID OR THAT IT IS CONTRARY T O THE TERMS OF THE STATUTE. THE APPEAL UNDER CONSIDERATION HAS CERTAINLY BEEN FILED CONTRA RY TO THE CIRCULAR ISSUED BY THE CBDT INSTRUCTION NO.3 DATED 9.2.2011. 8.3. IN VIEW OF THE ABOVE, WE HOLD THAT THE APPEAL FILED BY THE DEPARTMENT, AGAINST THE IMPUGNED ORDER OF THE LD. CIT(A), IS CONTRARY T O THE POLICY DECISION OF THE DEPARTMENT AND AS SUCH THE APPEAL FILED BY THE DEPA RTMENT IS DISMISSED IN LIMINE . 9. IN THE RESULT THE APPEAL OF ASSESSEE IS ALLOWED IN PART AND APPEAL OF THE REVENUE IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 25.10.2011. SD/- SD/- , , , , MAHAVIR SINGH, JUDICIAL MEMBER . .. . ! ! ! !. .. . , ,, , ' '' '# ## # , C.D.RAO, ACCOUNTANT MEMBER. ( (( (!# !# !# !#) )) ) DATE: 25.10.2011. R.G.(.P.S.) 5 '4 / -5 6'5'7- COPY OF THE ORDER FORWARDED TO: 1. M/S.S.M.ENTERPRISE, VIDYASAGAR PALLY, PEARABAGAN, P .O.CHINSURAH, DIST.HOOGHLY. 2 THE I.T.O., WARD-2(3), HOOGHLY 3. THE CIT, 4. THE CIT(A)-XXXVI, KOLKATA 5. DR, KOLKATA BENCHES, KOLKATA .5 -/ TRUE COPY, '4%1/ BY ORDER, DEPUTY /ASST. REGISTRAR , ITAT, KOLKATA BENCHES