ITO, Ghaziabad V. Shri Ajay Kumar, Ghaziabad

ITA 2136/DEL/2011

• Counselvise Citation: 213620114 RSA 2011
• Duration Of Justice: 1 year(s) 3 month(s) 10 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 09-08-2012
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 05-07-2012
• Assessment Year: 2007-2008
• Appeal Filed On: 29-04-2011
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: MRS ANUSHA KHURANA
• Keywords: Gross profit estimation; Depreciation
• Section: 144

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL (DELHI BENCH A NEW DELHI) BEFORE SHRI R.P. TOLANI, JUDICIAL MEMBER AND SHRI T.S. KAPOOR, ACCOUNTANT MEMBER I.T.A. NO.2136/DEL/2011 ASSESSMENT YEAR : 2007-08 ITO, SHRI AJAY KUMAR, WARD-1 (1), 85-KANHAYA LAL MARKET, GHAZIABAD. V. NEW GATE, GHAZIABAD. (APPELLANT) (RESPONDENT) PAN /GIR/NO. PAN /GIR/NO. PAN /GIR/NO. PAN /GIR/NO.ADPPK ADPPK ADPPK ADPPK- -- -0897 0897 0897 0897- -- -K KK K APPELLANT BY : MRS. ANUSHA KHURANA, SR. DR. RESPONDENT BY : NONE. ORDER PER TS KAPOOR, AM: THIS IS AN APPEAL FILED BY THE REVENUE AGAINST THE ORD ER OF LD CIT(A) DATED 28.2.2011. THE GROUNDS RAISED BY THE RE VENUE ARE AS UNDER:- SHIV SHANKER TRADING CO. 1. LD CIT(A) HAS ERRED IN LAW AND ON THE FACTS AND CIRCU MSTANCES OF THE CASE, BY DELETING THE ADDITION OF ` .1,18,613/- OUT OF EXPENSES, AS THE PAYMENTS ARE INCURRED IN CASH AND NOT FULLY VERIFIABLE AS COMPLETE BILLS AND VOUCHERS WERE NOT AVA ILABLE IN THE COURSE OF ASSESSMENT PROCEEDINGS, NOR IN THE COURSE O F REMAND PROCEEDINGS. ITA NO2136/DEL/2011 2 AJAY TRADERS. 1. LD CIT(A) HAS ERRED IN LAW AND ON THE FACTS AND CIRCU MSTANCES OF THE CASE, BY DELETING THE ADDITION OF ` .10,00,000/- MADE ON ACCOUNT OF TRADING RESULTS WHEN THE ASSESSEE DID NOT PROD UCE STOCK REGISTER BEFORE THE ASSESSING OFFICER, NEITHER IN T HE COURSE OF ORIGINAL ASSESSMENT PROCEEDINGS, NOR IN THE COURSE OF REMAND PROCEEDINGS. 2. HENCE THE ORDER OF THE LD CIT(A) DESERVES TO BE SET ASI DE AND THE ORDER OF THE ASSESSING OFFICER BE RESTORED. 2. THE BRIEF FACTS OF THE CASE ARE THAT MR. AJAY KUMA R IS SOLE PROPRIETOR OF TWO TRADING FIRMS M/S SHIV SHANKER TRAD ING CO. AND M/S AJAY TRADERS. FOR THE YEAR ENDING 31.3.2007, THE RET URN OF INCOME WAS FILED ON 25.10.2007 SHOWING TAXABLE INCOME OF ` .3,06,345/-. THE ASSESSEE DERIVED HIS INCOME FROM TRADING IN SUGAR. THE C ASE OF THE ASSESSEE WAS SELECTED FOR SCRUTINY AND SHRI RAJESH GUPTA, C .A. OF THE ASSESSEE ATTENDED THE PROCEEDINGS INITIALLY ON 17.11.200 9 WITHOUT ANY RECORDS. THE CASE WAS ADJOURNED TO 23.11.2009 ON WHICH DATE NOBODY APPEARED. THEN THE CASE WAS FIXED FOR 21.12.2009 VIDE NOTICE THROUGH AFFIXTURE ON 14.12.2009. HOWEVER, ON THAT DATE ALSO , NOBODY APPEARED. THEREFORE, THE ASSESSING OFFICER COMPLETED ASSE SSMENT U/S 144 ON THE BASIS OF MATERIAL ON RECORD. THE ASSESSING OFF ICER MADE FOLLOWING ADDITIONS IN RESPECT OF TWO PROPRIETARY FIR MS:- SHIV SHANKE SHIV SHANKE SHIV SHANKE SHIV SHANKER TRADING CO. R TRADING CO. R TRADING CO. R TRADING CO. 1. DIFFERENCE DUE TO LOWER GROSS PROFIT (BECAUSE OF NON AVAILABILITY OF QUANTITATIVE RECORDS AND VALUE OF STOCK ON ESTIMATED BASIS AND ALSO IN THE ABSENCE OF SALE BILLS AND OTHER RECORDS & DUE TO 7,01,550/ - UN-VERIFIABLE NATURE OF EXPENSES. 2. DISALLOWANCE OF DEPRECIATION DUE TO THE FAC T THAT BUILDING WAS SEALED BY SYNDICATE BANK. 1,20,96 0/- ITA NO2136/DEL/2011 3 AJAY TRADERS: AJAY TRADERS: AJAY TRADERS: AJAY TRADERS: 3. DIFFERENCE DUE TO LOWER GROSS PROFIT (BECAUSE OF NO N AVAILABILITY OF QUANTITATIVE RECORDS AND VALUE OF STOCK ON ESTIMATED BASIS AND ALSO IN THE ABSENCE OF SALE BILLS AND OTHER RECORDS. 10,00,000/- 4. DUE TO NON IDENTIFICATION CREDITWORTHINESS AND GENUINENESS OF CREDITOR. 8,91,026/- 5. DUE TO NON IDENTIFICATION & CREDITWORTHINESS AND GENUINENESS OF UNSECURED LOANS. 10,00,00 0/- 3. AGGRIEVED, THE ASSESSEE FILED APPEAL BEFORE LD CIT( A) AND SUBMITTED AS UNDER:- I) THAT THE OFFICE PREMISES OF THE ASSESSEE WERE SEALED BY SYNDICATE BANK. THEREFORE, THE ASSESSEE COULD NOT PROVIDE ALL THE REQUIRED INFORMATION SOUGHT BY THE ASSESSING OFFICER. II) THAT ASSESSEE HAS PURCHASED SUGAR FROM VARIOUS SUGAR MILLS AND HAD PAID FREIGHT EXPENSES FROM SUGAR MILLS TO ITS GODOWN AND HAS ALSO INCURRED UN-LOADING EXPENSES. III) THAT THE CLOSING STOCK WAS NOT VALUED ON ESTIMATE BASIS BUT WAS VALUED AND WAS CERTIFIED BY PROPRIETOR. IV) THAT BUILDING OF THE ASSESSEE WAS SEALED BY SYNDICATE BANK ON 4.12.2007. THEREFORE, IT IS VERY MUCH CLEAR THAT POSSESSION OF THE BUILDING WAS WITH ASSESSEE DURING FINANCIAL YEAR 2006-07 AND THE SAME WAS USED FOR THE PURPOSE OF BUSINESS OF THE ASSESSEE. V) THAT M/S AJAY TRADERS HAD PURCHASED SUGAR ON FOR BASIS FROM M/S SHIV SHANKER TRADING CO. HENCE NEITHE R FREIGHT NOR UNLOADING CHARGES WAS PAID BY M/S AJAY TRADERS. ITA NO2136/DEL/2011 4 VI) THAT ALL CREDITORS ARE GENUINE AND THAT AMOUNT IS OUTSTANDING IS STILL PAYABLE. VII) THAT UNSECURED LOAN OF M/S AMBICA TRADING CO. AMOUNTING TO ` .10,00,000/- WAS ADDED BACK BY ASSESSING OFFICER BECAUSE OF ABSENCE OF CONFIRMATION ONLY. IN THIS RESPECT, CONFIRMATION WAS FILED WITH LD CIT(A) . THE LD CIT(A) AFTER CALLING REMAND REPORT FROM ASSESSING OFFICER AND AFTER HEARING SUBMISSIONS OF THE ASSESSEE DELETED ALL ADDITIONS EXCEPT UPH OLDING THE ADDITION OF ` .50,000/- WHICH WAS MADE AGAINST DISALLOWANCE OF EXPENSES OF ` .1,68,613/-. 4. AGGRIEVED THE REVENUE HAS FILED APPEAL AGAINST DEL ETION OF ` .1,18,613/- IN RESPECT OF EXPENSES OF SHIV SHANKER TRA DING CO. AND ` .10,00,000/- ON ACCOUNT OF TRADING RESULTS IN RESPECT OF M/S AJAY TRADERS. 5. THE LD DR AT THE OUTSET, ARGUED THAT RECORDS WERE NOT PRODUCED BEFORE ASSESSING OFFICER DURING ASSESSMENT PROCEEDINGS AS W ELL AS DURING REMAND PROCEEDINGS. THEREFORE, HE ARGUED THAT DELETION MADE BY THE LD CIT(A) OF ` .10,00,000/- IN RESPECT OF M/S AJAY TRADERS WAS NOT JUSTIFIED. SIMILARLY, HE ARGUED THAT LD CIT(A) HAS GI VEN RELIEF OF ` .1,18,613/- OUT OF EXPENSES IN THE ABSENCE OF VERIFICA TION OF VOUCHERS/BILLS. THEREFORE, HE ARGUED THAT THE CASE MAY BE SET ASIDE TO THE OFFICE OF ASSESSING OFFICER FOR RE-ADJUDICATION ON THESE TWO DELETIONS. 6. NONE WAS PRESENT ON BEHALF OF ASSESSEE. ITA NO2136/DEL/2011 5 7. WE HAVE HEARD THE LD DR AND HAVE GONE THROUGH TH E MATERIAL PLACED ON RECORD. WE HAVE OBSERVED THAT COMPLETE BOO KS OF ACCOUNTS WERE NOT PRODUCED DURING ASSESSMENT PROCEEDINGS AS WELL A S DURING REMAND PROCEEDINGS. THE STOCK REGISTER CONTAINING QUAN TITATIVE RECORDS OF SUGAR WERE NOT PRODUCED BEFORE ASSESSING OFFIC ER ALONG WITH EXPENSES OF VOUCHERS. THEREFORE, TO MEET BOTH ENDS OF J USTICE, WE ARE OF THE VIEW THAT CASE SHOULD BE REMANDED BACK TO THE OFFICE OF ASSESSING OFFICER FOR RE-ADJUDICATION. NEEDLESS TO SAY TH AT PROPER OPPORTUNITY WILL BE GRANTED TO ASSESSEE OF BEING HEARD. 8. IN THE RESULT, THE APPEAL OF THE REVENUE IS ALLOWE D FOR STATISTICAL PURPOSES. 9. ORDER PRONOUNCED IN THE OPEN COURT ON 9 TH DAY OF AUGUST, 2012. SD/- SD/- (R.P. TOLANI) (T.S. KAPOOR) JUDICIAL MEMBER ACCOUNTANT MEMBER DT. 9.8.2012. HMS COPY FORWARDED TO:- 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT 4. THE CIT (A)-, NEW DELHI. 5. THE DR, ITAT, LOKNAYAK BHAWAN, KHAN MARKET, NEW DEL HI. TRUE COPY. (ITAT, NEW DELHI). DATE OF HEARING 6.8.2012 DATE OF DICTATION 6.8.2012 DATE OF TYPING 9.8.2012 DATE OF ORDER SIGNED BY BOTH THE MEMBERS & PRONOUNCEMENT. DATE OF ORDER UPLOADED ON NET 9.8.2012 & SENT TO THE BENCH CONCERNED. ITA NO2136/DEL/2011 6