Ranjit D. Rathod, Delwada V. Income Tax Officer, Ward-1(3), Rajkot

ITA 214/RJT/2017

• Counselvise Citation: [2019] 116 COUNSELVISE.COM (IT) 0245 (ITAT-RAJKOT)
• Duration Of Justice: 2 year(s) 3 month(s) 10 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 01-10-2019
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: RJT
• Assessment Year: 2011-2012
• Appeal Filed On: 21-06-2017
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Keywords: Business income
• Section: 201; 143(2)

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL, RAJKOT BENCH, RAJKOT BEFORE SHRI RAJPAL YADAV, HONBLE JUDICIAL MEMBER AND SHRI WASEEM AHMED HONBLE ACCOUNTANT MEMBER ITA NO.214/RJT/2017 / ASSTT. YEAR: 2011-12 RANJIT D. RATHOD PROP. OF M/S.SHREE GANESH MARINE NR. RAILWAY STATION DELWADA VS. ITO, WARD - 1(3) VERAVAL. ( APPLICANT ) ( RESPONENT ) ASSESSEE BY : WRITTEN SUBMISSIONS REVENUE BY : SHRI ANIL KUMAR DAS, DR / DATE OF HEARING : 20/09/2019 / DATE OF PRONOUNCEMENT: 01/10/2019 )*+/ O R D E R PER RAJPAL YADAV, JUDICIAL MEMBER: ASSESSEE IS IN APPEAL BEFORE THE TRIBUNAL AGAINST O RDER OF LD.CIT(A)-3, RAJKOT DATED 1.5.2017 PASSED FOR THE ASSTT.YEAR 201 1-12. 2. NONE APPEARED ON BEHALF OF THE ASSESSEE AT THE T IME OF HEARING. THEREFORE, WE PROCEED TO DISPOSE OF APPEAL EX PARTE QUA ASSESSEE-APPELLANT AFTER HEARING THE LD.DR AND CONSIDERING THE MATERIA L AVAILABLE ON RECORD. 3. GROUNDS OF APPEAL TAKEN BY THE ASSESSEE ARE NOT IN CONSONANCE WITH RULE 8 OF THE INCOME TAX (APPELLATE TRIBUNAL) RULES , 1963 - THEY ARE DESCRIPTIVE AND ARGUMENTATIVE IN NATURE. IN BRIEF , SOLE GRIEVANCE OF THE ITA NO.214/RJT/2017 2 ASSESSEE IS THAT THE LD.CIT(A) HAS ERRED IN CONFIRM ING ADDITION OF RS.1,30,168/- TO THE TOTAL INCOME OF THE ASSESSEE. 4. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE IS AN INDIVIDUAL AND PROPRIETOR OF M/S.SHREE GANESH MARINE AND TRADING I N FISH. HE FILED RETURN OF INCOME ON 29.9.2011 DECLARING A TOTAL INCOME AT RS. 3,03,870/-. THE CASE OF THE ASSESSEE WAS SELECTED SCRUTINY ASSESSMENT. NOT ICE UNDER SECTION 143(2) OF THE ACT WAS ISSUED AND SERVED UPON THE ASSESSEE. D URING THE ASSESSMENT PROCEEDINGS, CONTRA ACCOUNTS OF THE SUNDRY CREDITOR S WERE CALLED AND ON VERIFICATION OF THE ASSESSEE, THE LD.AO NOTICED CER TAIN DISCRIPANCIES. THE DISCREPANCIES NOTICED BY THE AO IN THE ACCOUNTS OF THE SUNDRY CREDITORS ARE UNDER: SR.NO. NAME OF THE PARTY DIFFERENCE (RS.) I) KALPATARU EXPORT (+) RS.24,398/- II) SILVER SEAFOODS (+) RS.1,310/- III) BHAVANI SEA FOODS (-) RS.1,30,168/- IV) SAGAR SEAFOODS (+) RS.99,830/- V) RAMESHWAR COLD STORAGE (+) RS.35,170/- THE LD.AO SOUGHT EXPLANATION FROM THE ASSESSEE ABOU T THESE VARIATIONS IN SALE OF FISH TO DEALERS. THE ASSESSEE EXPLAINED THAT AS SESSEE PURCHASES FISHES IN LARGE QUANTITY FROM SEA BANK AND DIRECTLY FROM FISH ERMEN, AND SELL THE SAME TO WHOLESALE DEALERS. WHILE TRANSPORTING THE FISHES T HERE BOUND TO BE A LOSS ON ACCOUNT WEIGHT LOSS AND NATURAL SPOILAGE. THIS AP ART, TO PRESERVE FISHES CERTAIN DEGREE OF DEEP TEMPERATURE HAS TO BE MAINTA INED, FOR THAT DEALERS DEBIT THE EXPENDITURE TO THEIR RESPECTIVE PURCHASES. THE REFORE, THERE WOULD BE VARIATIONS IN THE AMOUNT OF SALES TO THE VARIOUS DE ALERS. THE EXPLANATION OF THE ASSESSEE HAS BEEN ACCEPTED BY THE AO EXCEPT IN ONE CASE I.E. IN THE CASE OF BHAVANI SEA FOODS, WHERE AS PER THE BOOKS OF ACCOUN TS OF THE ASSESSEE, THE ITA NO.214/RJT/2017 3 SALE MADE TO THEM WAS RS.45,04,591/- WHILE IN THE B OOKS OF THE SAID BHAVANI SEA FOOD IT WAS RS.46,34,759/-. THE DIFFERENCE OF RS.1,30,168/- WAS TREATED AS OUT OF BOOK SALES AND ADDED TO THE TOTAL INCOME OF THE ASSESSEE. APPEAL TO THE CIT(A) DID NOT SUCCEED. THE ASSESSEE IS NOW BE FORE THE TRIBUNAL. 5. BEFORE US, ASSESSEE FILED WRITTEN SUBMISSIONS, I N WHICH IT IS PLEADED THAT THE AO HAD NOTICED DISCREPANCIES IN THE CASES OF FI VE PARTIES. OUT OF THAT, SALES MADE TO FOUR PARTIES HAVE BEEN ACCEPTED BY TH E AO EXCEPT ONE IN THE CASE OF BHAVANI SEAFOODS WHERE THE LD.AO OUGHT TO H AVE APPLIED SAME LOGIC AND NOT MADE ANY ADDITION. EVEN OTHERWISE, IT IS S ETTLED POSITION OF THE LAW THAT ADDITION CAN BE MADE ONLY TO THE EXTENT OF THE ESTIMATED PROFIT EMBEDDED IN THE SALES AND THE ENTIRE SALES AMOUNT CANNOT BE ADDED TO THE INCOME OF THE ASSESSEE. IN SUPPORT OF THIS CONTENTION, HE RELIED UPON CERTAIN JUDGMENTS. HE FURTHER SUBMITTED THAT AT THE MOST DIFFERENCE OF EX CESS SALES AND LESS SALES IS TO BE TAKEN FOR ADDITION, OR ESTIMATED GP EMBEDDED IN THE UNACCOUNTED SALES IS TO BE TAKEN FOR ADDITION. ON THE OTHER HAND, THE L D.DR RELIED UPON THE ORDERS OF THE REVENUE AUTHORITIES. 6. WE HAVE HEARD THE LD.DR AND ALSO WRITTEN SUBMISS IONS FILED BY THE ASSESSEE. WE HAVE ALSO GONE THROUGH THE RECORD AND ORDERS OF REVENUE AUTHORITIES. WE FIND THAT THE MISMATCHES IN THE CA SES OF FOUR PARTIES VIZ. KALPATARU EXPORT, SILVER SEAFOODS, SAGAR SEAFOODS A ND RAMESHWAR COLD STORAGE HAVE BEEN ACCEPTED BY THE REVENUE AND NO AD VERSE INFERENCE WAS TAKEN. BUT IN THE CASE OF BHAVANI SEAFOODS, AS PER THE BOOKS OF THE ASSESSEE TOTAL SALES WAS SHOWN AT RS.45,04,591/- WHEREAS AS PER THE BOOKS OF THIS PARTY, IT WAS SHOWN AT RS.46,34,759/-, THEREFORE, DIFFEREN CE OF RS.1,30,168/- LESS SHOWN IN THE BOOKS OF ASSESSEE WAS TREATED AS OUT O F BOOK SALES AND ADDED TO THE TOTAL INCOME OF THE ASSESSEE. WE FIND THAT THE REVENUE AUTHORITIES HAVE TAKEN A DIFFERENT YARDSTICK FOR THE SAME SET OF TRA NSACTIONS. THERE SHOULD BE ITA NO.214/RJT/2017 4 LOGICAL CONCLUSION AT THE END OF THE REVENUE WHILE MAKING SUCH ADDITION. IN THIS NATURE OF BUSINESS, WHICH IS PERISHABLE NATURE THERE BOUND TO BE LOSS ON ACCOUNT OF WEIGHT LOSS, SPOILAGE ETC. AT THE TIME W HEN PRODUCE REACHES AT THE DESTINATION. THE REASONS POINTED OUT BY THE ASSESS EE, CANNOT BE SIMPLY BRUSHED ASIDE, THOUGH THERE MAY NOT BE DOCUMENTARY EVIDENCE TO PROVE SAME. IN THIS KIND OF BUSINESS, 100% RECONCILIATION OF AC COUNTS IS NOT POSSIBLE. IF THE REAL INTENTION OF THE ASSESSEE TO BOOK LESS SAL ES IN THE ACCOUNT, AND TO EVADE TAX, THEN HE WOULD NOT HAVE SHOWN HIGHER FIGU RES SALES IN THE CASES OF FOUR PARTIES CITED ABOVE. AN ASSESSEE HAVING A TUR NOVER OF MORE THAN RS.45 LAKHS, CANNOT BE SAID OR BELIEVED TO BE INDULGING I N UN-REPORTING A MEAGER SALE FIGURE OF RS.1,30,168/-. FURTHER, IF THE AO CAN BU Y THE EXPLANATION OF THE ASSESSEE IN THE CASE OF SALES EFFECTED TO ABOVE FOU R PARTIES, WHY HE CANNOT APPLY SAME LOGIC TO THE SALES MADE TO BHAVANI SEA F OOD. AFTER ALL ONLY ACTUAL AND REAL INCOME IS TO BE TAXED. WE ARE NOT CONVINC ED WITH LOGIC GIVEN BY THE REVENUE IN MAKING THE IMPUGNED ADDITION. THEREFORE , WE ARE OF THE VIEW THAT LOOKING TO THE NATURE OF THE BUSINESS, EXCESS SALES NOTICED BY THE AO AMOUNTING TO RS.1,60,708/- SHOULD BE SET OFF AGAINS T LESS SALES SHOWN OF RS.1,30,168/-. IN OTHER WORDS, ONLY AN AMOUNT OF RS .30,540/- IS TO BE ADDED TO THE INCOME OF THE ASSESSEE. WE RESTRICT THE ADDITI ON TO THE EXTENT OF RS.30,540/- AND ALLOW THE GROUND OF APPEAL PARTLY. 6. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS PAR TLY ALLOWED. ORDER PRONOUNCED IN THE COURT ON 1 ST OCTOBER, 2019 AT AHMEDABAD. SD/- SD/- (WASEEM AHMED ) ACCOUNTANT MEMBER (RAJPAL YADAV) JUDICIAL MEMBER AHMEDABAD; DATED 01/10/2019