DCIT, Central Circle, Kolhapur V. Ghodawat Foods International Pvt. Ltd., Kolhapur

ITA 2150/PUN/2012

• Counselvise Citation: 215024514 RSA 2012
• Duration Of Justice: 1 year(s) 2 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-12-2013
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Assessment Year: 2009-2010
• Appeal Filed On: 31-10-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: BHARAT H SHAH
• Assessee Lawyers: VERMA
• Keywords: Unexplained investment
• Section: 131

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH A, PUNE BEFORE SHRI SHAILENDRA KUMAR YADAV, JUDICIAL MEMBER, AND SHRI R.K. PANDA, ACCOUNTANT MEMBER ITA NOS.2147 TO 2150/2012 (A.YS.2005-06, 2007-08, 2008-09 & 2009-10) DY.CIT, CENTRAL CIRCLE, KOLHAPUR APPELLANT VS. GHODAWAT FOODS INTERNATIONAL PVT. LTD., PLOT NO.437, A/P CHIPRI, TAL SHIROL, DIST. KOLHAPUR PAN: AABCG7301E RESPONDENT APPELLANT BY : SMT. M.S. V ERMA DEPARTMENT BY : SHRI BHARA TH SHAH DATE OF HEARING : 05.12.2013 DATE OF ORDER : 31.12.2013 ORDER PER SHAILENDRA KUMAR YADAV, J.M: ALL THESE APPEALS FILED BY REVENUE PERTAINING TO T HE SAME ASSESSEE ON ALMOST COMMON ISSUE FOR VARIOUS YEARS. SO THESE WERE HEARD TOGETHER AND ARE BEING DISPOSED OFF BY THIS C ONSOLIDATED ORDER FOR THE SAKE OF CONVENIENCE. 2. IN ITA NO.2147/PN/2012 FOR A.Y. 2005-06 THE REVE NUE RAISED THE FOLLOWING GROUNDS: 1. WHETHER CIT(A) IS JUSTIFIED IN DELETING THE ADDITIO N OF RS.31,66,989/- ON ACCOUNT OF LAND OWNERS WHO SOLD T HEIR LAND TO THE ASSESSEE COMPANY AND THEY HAD RECEIVED MONIES OVER AND ABOVE THE DOCUMENTED PRICE. 2 2. THE APPELLANT CRAVES LEAVE TO ADD, ALTER, AMEND AND MODIFY THE ABOVE GROUND RAISED, ANY OTHER GROUNDS AT THE T IME OF PROCEEDINGS BEFORE THE HONBLE TRIBUNAL WHICH MAY P LEASED BE GRANTED. 3. THE ASSESSING OFFICER HAS MADE ADDITION OF RS.39 ,68,039/- ON ACCOUNT OF UNACCOUNTED INVESTMENT IN LAND. DURING THE A.Y. 2005- 06, 2007-08, 2008-09 AND 2009-10, THE ASSESSEE HAD PURCHASED LAND COSTING RS.39,68,039/-, RS.11,20,245/-, RS.92, 040/- AND RS.11,76/227/- RESPECTIVELY. THE ASSESSING OFFICER OBSERVED THAT IN POST SEARCH ENQUIRIES MADE, THE PERSONS WHO SOLD LA ND TO THE OTHER CONCERNS / INDIVIDUALS OF THE GHODAWAT GROUP, HAVIN G RECEIVED SALE CONSIDERATION OVER AND ABOVE THE DOCUMENTATION PRIC E. KEEPING THIS IN VIEW, IN THE INSTANT CASE, HE REQUIRED THE ASSES SEE TO PRODUCE THE SELLER OF THE LAND FOR EXAMINATION. HOWEVER, SINCE THE ASSESSEE WAS UNABLE TO PRODUCE THE CONCERNED SELLER OF THE LAND, THE ASSESSING OFFICER HELD THAT THE ASSESSEE HAD PAID AN EQUAL AM OUNT OVER AND ABOVE THE PURCHASE CONSIDERATION SHOWN IN BOOKS AND MADE AN ADDITION OF RS.39,68,039/-, RS.11,20,245/-, RS.92,0 40/- AND RS.11,76,227/- TO THE ASSESSEE'S TOTAL INCOME FOR 3 ASSESSMENT YEARS 2005-06, 2007-08, 2008-09 AND 2009-10 RESPECTIVELY. THE MATTER WAS CARRIED BEFORE THE FIRST APPELLATE AUTHORITY, W HEREIN, THE ASSESSEE STATED THAT ASSESSING OFFICER HAS NOT BROUGHT ANY E VIDENCE ON RECORD TO ENABLE HIM TO MAKE THESE ADDITIONS. IT WAS ALSO CONTENDED ON BEHALF OF ASSESSEE, THERE WAS NO INCRIMINATING DOCU MENT DURING THE COURSE OF SEARCH IN THIS REGARD. THE ASSESSING OFFI CER HAS REFERRED TO TRANSACTIONS MADE IN CASES OF OTHER FIRM / INDIVIDU ALS OF THE GROUP, WHICH HAS NO BEARING TO THE ASSESSEE'S CASE. THE A SSESSEE CONTENDED THAT IT HAD NOT PAID ANYTHING MORE THAN T HE SALE DEED PRICE FOR PURCHASE OF THE LAND AND HENCE, THE ADDIT ION WAS NOT JUSTIFIED. THE LAND OWNERS FROM WHOM LAND WAS PURC HASED IN THE PREVIOUS YEARS RELEVANT TO ASSESSMENT YEARS 2005-06 , 2007-08, 2008-09 AND 2009-10 WERE NOT PRODUCED AS WITNESS FO R CROSS EXAMINATION. THE ASSESSING OFFICER COULD HAVE USED THE POWERS UNDER SECTION 131 TO ENFORCE THE ATTENDANCE OF WITN ESS, BUT HE DID 3 NOT CHOSE TO DO SO. SIXTEEN LAND OWNERS IN THE TR UST CASES, ONE LAND OWNER IN THE CASE OF SHRI SANJAY GHODAWAT, IND IVIDUAL AND GHODAWAT INDUSTRIES INDIA PVT. LTD. AND THREE LAND OWNERS IN THE CASE OF GHODAWAT FOODS INDUSTRY PVT. LTD. HAS S TATED THAT THEY HAD RECEIVED MONIES OVER AND ABOVE THE DOCUMENTED P RICE. THE ASSESSING OFFICER CONCLUDED THAT THE ASSESSEE HAS A LSO PAID AN EQUAL AMOUNT OF UNACCOUNTED CASH, OVER AND ABOVE THE PRIC E SHOWN AS LAND PURCHASED IN THE BOOKS OF ACCOUNT, THEREFORE M ADE THE ADDITION IN EVERY CASE OF LAND PURCHASE. THOUGH IN THE REA L ESTATE TRANSACTIONS THERE IS A ROLE OF ON MONEY. BUT IT COULD NOT BE SAID THAT EACH OF EVERY REAL ESTATE TRANSACTION INVOLVED CASH COMPONENT WHICH IS NOT PART OF DOCUMENTATION PRICE FOR THE PU RPOSE OF INCOME TAX. ONE CANNOT MAKE ADDITION MERELY ON ASSUMPTION THAT BECAUSE OTHER INDIVIDUALS OR PERSONS HAVE MADE PAYMENT OF E ARNED MONEY IN REAL ESTATE PURCHASES, ANOTHER PERSON BELONGING TO THE SAME GROUP WOULD HAVE ALSO MADE A SIMILAR PAYMENT OF ON MONEY TO ACQUIRE REAL ESTATE IN HIS OR HER OWN NAME. THERE IS NO PRESUMPT ION IN LAW THAT THERE HAS TO BE AN UNACCOUNTED TRANSACTION WHEN THE RE IS A DEALING IN REAL ESTATE. IT IS PERTINENT TO MENTION THAT SEA RCH AND SEIZURE WAS CONDUCTED ON THE PREMISES OF THE ASSESSEE AND NO DO CUMENT OR EVIDENCE WHATSOEVER WAS FOUND WHICH COULD INDICATE UNACCOUNTED TRANSACTIONS IN LAND DEALING BETWEEN THE MEMBERS OF THE GHODAWAT GROUP AND THE SELLERS. IT IS ONLY THE STATEMENT MAD E BY SOME OF THE LANDLORDS WHO HAD SOLD LANDS TO CERTAIN GHODAWAL GR OUP WHICH IMPLICATED SOME MEMBERS OF THE GHODAWAT GROUP OF IN DULGING IN TRANSACTIONS OF ON MONEY PAYMENTS. IN THE ABSENCE O F ANY DOCUMENTARY EVIDENCE, THE ORAL EVIDENCE OF LANDLORD S IN OTHER CASES COULD NOT BE USED TO JUSTIFY THE ADDITION OF ON MON EY PAYMENT IN THE HANDS OF THE ASSESSEE. THEREFORE, THE ASSESSEE WAS GIVEN RELIEF FOR ALL THE YEARS AND IN THE YEARS BEFORE US. HOWEVER, THE RELIEF HAS NOT BEEN GRANTED IN RESPECT OF THE LAND SOLD BY THE THR EE LANDOWNERS WHO HAVE MENTIONED THAT THEY HAVE RECEIVED EXTRA MONIES THAN WHAT WAS RECORDED AND DOCUMENTED IN SALE DEED. THIS IS FOR T HE REASON THAT 4 THOUGH THEIR STATEMENT WAS GIVEN TO THE ASSESSEE, T HE ASSESSEE DID NOT DENY THESE TRANSACTIONS. HENCE, ADDITION MADE T O THAT EXTENT WAS CONFIRMED WHICH IS NOT SUBJECT MATTER BEFORE. IN VIEW OF ABOVE, WE ARE NOT INCLINED TO INTERFERE IN FINDINGS OF CIT (A) BECAUSE ADDITION BASED ON PRESUMPTION CANNOT BE SUSTAINED. WE UPHOL D THE SAME. THIS TAKE CARES OF SIMILAR ISSUE AROSE IN THE A.YS. 2007-08 AND 2008- 09. FACTS BEING SIMILAR, SO FOLLOWING THE SAME REA SONING, ORDER OF CIT(A) NEEDS NO INTERFERENCE FROM OUR SIDE. WE UPH OLD THE SAME. 4. IN ITA FOR THE A.Y. 2009-10, OTHER ISSUE IS THAT OF ADDITION MADE ON ACCOUNT OF EXCESS STOCK FOUND ON VARIOUS ACCOUNT S AS UNDER: 5. FIRST IS ADDITION WITH REGARD TO VALUATION OF ON E ITEM IN ANNEXURE-A3 OF RS.7,41,571/- BY ASSESSING OFFICER. THE STAND OF THE ASSESSEE HAS BEEN THAT ONE ITEM APPEARING AT ANNEXU RE A3, PAGE NO.36, THE VALUATION SHOULD BE RS.7490.62 AND NOT T HE AMOUNT OF RS.7,49,062/- AS TAKEN IN THE ASSESSMENT ORDER. IN SUPPORT OF THIS CONTENTION, THE ASSESSEE DREW ATTENTION OF CIT(A) T O PAGE 36 OF THE ANNEXURE OF PHYSICAL INVENTORY AND POINTED OUT THAT THE TOTAL OVER THERE WAS RS.7490.62 AND NOT RS.7,49,062/-. THIS C ONTENTION OF THE ASSESSEE WAS FOUND PRIMA FACIE CORRECT AND THE DIFF ERENCE BETWEEN RS.7,49,062/- AND RS.7490.62 I.E. RS.7,4 1,571/- WA S FOUND AS EXPLAINED. ACCORDINGLY, CIT(A) GRANTED THE RELIEF. THIS REASONED FACTUAL FINDING OF CIT(A) NEED NO INTERFERENCE FROM OUR SIDE. WE UPHOLD THE SAME. 6. NEXT ISSUE IS WITH REGARD TO ADDITION ON ACCOUNT OF VALUATION OF SOYA SEED. ASSESSING OFFICER MADE ADDITION OF RS.3 9,97,015/- ON THIS ACCOUNT. THE STAND OF THE ASSESSEE HAS BEEN T HAT IN RESPECT OF STOCK OF SOYA SEED AS AGAINST THE ACTUAL STOCK OF 4 552.010 MT THE VALUATION OF ITEMS IN ANNEXURE - A3 RS.7,41,571/ - VALUATION OF STOCK OF SOYA SEEDS RS.19,98,507/ - EXCESS STOCK OF CRUDE & REFINED OIL RS.25,39,568/ - VALUATION OF STOCK ON STORES RS.31,62,510/ - VALUATION OF STOCK IN SILOS RS.39,30,120/ - PURCHASE OF TIN PLATES RS.34,72,238/ - 5 STOCK OF SOYA IS TAKEN OF 4756.440 MT. THUS THERE W AS A DIFFERENCE OF 204.43 MT ARRIVED AT BY THE SURVEY PARTY TO WHICH T HE RATE OF RS.19552/MT WAS APPLIED AND THE VALUE OF DIFFERENCE CAME TO RS.39,97,015/-. IT WAS EXPLAINED THAT WHILE ENTERIN G THE QUANTITY OF SOYA SEED IN THE BOOKS, CERTAIN DEDUCTIONS WERE MAD E ON VARIOUS COUNTS FROM THE GROSS WEIGHT. FURTHER IT WAS STATED THAT THE WEIGHT TAKEN PHYSICALLY WAS THE THEORETICAL WEIGHT, WHICH WOULD BE AVAILABLE IN EVERY BAG FOUND IN THE FACTORY PREMISES. IT WAS STATED THAT DEDUCTIONS ARC MADE ON VARIOUS COUNTS FROM GROSS WE IGHT WHICH SHOULD BE ALLOWED TO ASSESSEE. HOWEVER, THE ASSESSE E DID NOT PROVIDE ANY DETAIL OF THE DEDUCTIONS WHICH WERE MADE FROM T HE GROSS WEIGHT OF SOYA SEEDS TO ARRIVE AT THE BOOK VALUE OF SOYA S EEDS. IN THIS BACKGROUND, CIT(A) FOUND THAT NORMALLY IN THIS INDU STRY SOME DISAGGREGATION IS DONE ON ACCOUNT OF HUMIDITY, WAST E AND DUST WHICH IS INCLUDED IN THE PACKAGING OF THE SEEDS. SO IT IS NOT ENTIRELY WRONG WHEN THE ASSESSEE STATES THAT SOME DEDUCTION HAS TO BE MADE FROM THE GROSS WEIGHT WHICH A GUNNY BAG CAN THEORET ICALLY HOLD. HOWEVER, THERE WAS NOTHING ON RECORD TO SUGGEST THA T THE DIFFERENCE WOULD BE 204.43MT. ACCORDINGLY, TAKING ALL FACTS I NTO CONSIDERATION, CIT(A) GRANTED 50% ALLOWANCE TO THE ASSESSEE. ACCO RDINGLY REMAINING RS.19,98,508/- WAS CONFIRMED, WHICH HAS N OT BEEN CHALLENGED BEFORE US ON BEHALF OF ASSESSEE. UNDER THESE FACTS AND CIRCUMSTANCES, THIS REASONED FACTUAL FINDING OF CIT (A) NEED NO INTERFERENCE FROM OUR SIDE WHO HAS GRANTED RELIEF T O THE ASSESSEE TO THE TUNE OF RS.19,98,508/-. THE SAME IS UPHELD. 7. NEXT ISSUE IS WITH REGARD TO EXCESS STOCK OF CRU DE & REFINED OIL. ASSESSING OFFICER HAS MADE ADDITION OF RS.25,39,568 /- IN RESPECT OF EXCESS STOCK OF CRUDE AND REFINED OIL FOUND IN THE FACTORY PREMISES ALL AGGREGATING TO RS.25,39,568/-. THE ASSESSEE ACCEPT ED THAT THE FACTORY IS RUN BY PROFESSIONAL WORKERS AND ADMINIST RATIVE STAFF. IN ORDER TO MAINTAIN A STRICT VIGIL OVER PRODUCTION, T HE STOCK OF FINISHED PRODUCTS IS TAKEN AT THE END OF EVERY SHIFT. THIS I S DONE ALSO TO STOP ANY PILFERAGE AND TO HAVE ADEQUATE CONTROL OVER PRO DUCTION. ON THE 6 DATE OF SURVEY ACTION, THE BOOK STOCK INDICATED THE STOCK TAKEN AT 8 A.M. WHEREAS THE SURVEY PARTY TOOK THE STOCK OF FIN ISHED PRODUCTS LATER DURING THE DAY WHEN PRODUCTION OF VARIOUS REF INED OIL HAD TAKEN PLACE AND CONSUMPTION OF THE CRUDE OIL HAD ALSO TAK EN PLACE. ACCORDINGLY, THE ASSESSEE PROVIDED A CHART OF PRODU CTION AND CONSUMPTION DURING THE DAY AND AS EVIDENCE, PROVIDE D THE LOG SHEETS PERTAINING TO THE SAME. CIT(A) HAVING GONE THROUGH THE SAME OBSERVED THAT VARIATION STANDS ADEQUATELY EXPLAINED BY THE ASSESSEE. ACCORDINGLY, THE DIFFERENCE TO THE EXTENT OF RS.25, 39,568/- STOOD EXPLAINED ON ACCOUNT OF CONSUMPTION AND PRODUCTION DURING THE DAY. THE ASSESSEE WAS GIVEN RELIEF ACCORDINGLY. T HIS REASONED FACTUAL FINDING OF CIT(A) NEED NO INTERFERENCE, WHE REBY HE HAS DELETED THE ADDITION ON ACCOUNT OF DIFFERENCE TO TH E EXTENT OF RS.25,39,568/- AS DISCUSSED ABOVE. WE UPHOLD THE S AME. 8. NEXT ISSUE IS WITH REGARD TO ADDITION MADE ON AC COUNT OF VALUATION OF STOCK ON STORES. IN THIS REGARD, THE STAND OF THE ASSESSEE HAS BEEN THAT THE ASSESSING OFFICE HAS MAD E ADDITION IN RESPECT OF THE ACTUAL VALUE OF STOCK OF STORES LYIN G WITH THEM WAS ONLY RS.26.60 LAKHS. IT WAS STATED ON BEHALF OF AS SESSEE THAT THE MACHINERY PARTS OF WHICH HAS BEEN TRANSFERRED TO TH E GANGAKHED PLANT, WHICH WAS ERECTED AT THAT RELEVANT TIME. IT WAS EXPLAINED THAT THE VALUE OF STOCK TAKEN BY THE SURVEY PARTY IN RES PECT OF THIS ITEM ALSO INCLUDED THE VALUE OF WORK IN PROGRESS WHICH W AS ALREADY DISCLOSED IN THE BOOKS OF ACCOUNT. HENCE IT WAS STA TED THAT THE DIFFERENCE TO THE EXTENT OF RS.31.70 LAKHS STOOD EX PLAINED BY THE WORK IN PROGRESS. IN THIS BACKGROUND, CIT(A) OBSER VED THAT ASSESSING OFFICER HAS WRONGLY GIVEN CREDIT OF RS.7. 42 LAKHS FROM THE TOTAL VALUE OF STOCK OF STORES. THE ACTUAL CREDIT S HOULD HAVE BEEN FOR RS.7,490/- ONLY. THEREFORE, THE VALUE OF STOCK WHIC H WAS REQUIRED TO BE EXPLAINED BY THE ASSESSEE WAS TO THE TUNE OF RS. 58,22,510/-. THE STOCK OF WORK IN PROGRESS PROVIDED BY THE ASSESSEE WAS RS.31,24,524/-. HENCE, ACCORDING TO THE CALCULATION PROVIDED BY THE ASSESSEE, THE STOCK OF STORES SHOULD BE RS.26,97,99 6/- AGAINST WHICH 7 THE VALUE OF STOCK OF STORES FURNISHED WAS RS.26.60 LAKHS. THUS, THERE WAS A SMALL INFIRMITY OF RS.37,996-/-. ACCO RDINGLY, THE ASSESSING OFFICER WAS DIRECTED TO FIND OUT FROM REC ORDS WHETHER THE WORK IN PROGRESS HAS BEEN SHOWN AT RS.31.25 LAKHS O R NOT. IF THE CONTENTION IS FOUND TO BE CORRECT THEN, THE ADDITIO N SHALL BE RESTRICTED TO RS.37,996/- ONLY OR ELSE, THE ADDITIO N WILL BE OF RS.31,62,510/-. THIS REASONED FACTUAL FINDING OF C IT(A) NEED NO INTERFERENCE FROM OUR SIDE. WE UPHOLD THE SAME. 9. NEXT ISSUE IS WITH REGARD TO ADDITION MADE ON AC COUNT OF VALUATION OF STOCK IN SILO OF RS.39,30,120/-, WHICH WAS DELETED BY CIT(A). THE STAND OF THE ASSESSEE HAS BEEN THAT TH E STOCK IN SILOS IS IN THE RANGE OF APPROXIMATELY 50 MT TO 200 MT AND I N THE PHYSICAL INVENTORY THE SAME IS ASSUMED AT 130 MT. THE ASSESS EE EXPLAINED THAT SINCE THE QUANTUM IN SILOS IS VALUED ON THE BA SIS OF AN ASSUMPTION, THERE IS A POSSIBILITY OF DIFFERENCE BE TWEEN BOOK STOCK AND DISCLOSED STOCK. IN THE ABSENCE OF ANY CORRECT METHODOLOGY WHICH WOULD ENTITLE A CONCLUSION THAT THE PHYSICAL STOCK IN SILOS WAS TO THE EXTENT OF 130 MT. ASSESSING OFFICER WAS DIR ECTED TO ADOPT THE VALUE OF STOCK AS AVAILABLE IN THE BOOKS OF ACCOUNT . AGAIN THIS REASONED FACTUAL FINDING OF CIT(A) NEED NO INTERFER ENCE FROM OUR SIDE. WE UPHOLD THE SAME. 10. NEXT ISSUE IS WITH REGARD TO ADDITION MADE ON A CCOUNT OF PURCHASE OF TIN PLATES. ASSESSING OFFICER HAS MADE ADDITION OF RS.34,72,238/-. ON THIS ACCOUNT, THE STAND OF THE ASSESSEE THAT PURCHASE BILLS IN RESPECT OF TIN PLATES RECEIVED ON VARIOUS DATES PRIOR TO THE DATE OF SURVEY HAD REMAINED TO BE ENTE RED IN THE BOOKS OF ACCOUNT. IT WAS STATED THAT ON ACCOUNT OF THIS ITEM, THE PHYSICAL GOODS WERE ALREADY RECEIVED AND THE BILLS WERE ALSO RECEIVED EARLIER BUT REMAINED TO BE ENTERED, AN AMOUNT OF RS.34,72,2 38/- SHOULD BE TAKEN AS EXPLAINED. THE ASSESSEE ALSO PROVIDED A C OPY OF C & F AGENTS AND THE CARRIAGES EVIDENCING THE RECEIPT OF GOODS AND BILLS PRIOR TO THE DATE OF SURVEY. IN THIS BACKGROUND, C IT(A) FOUND THE 8 CLAIM OF ASSESSEE AS GENUINE AND SINCE AN AMOUNT OF RS.34,72,238/- REMAINED TO BE ENTERED IN THE BOOKS OF ACCOUNT, CI T(A) DIRECTED THE ASSESSING OFFICER TO CREDIT OF THE SAME. AGAIN THI S REASONED FACTUAL FINDING OF CIT(A) NEED NO INTERFERENCE FROM OUR SID E, WHEREBY HE HAS DELETED THE ADDITION OF RS.34,72,238/-. WE UPHOLD THE SAME. 11. IN THE RESULT, ALL APPEALS OF REVENUE ARE DISMI SSED AS INDICATED ABOVE. PRONOUNCED IN THE OPEN COURT ON THE DAY OF 31 ST DECEMBER 2013. SD/- SD/- (R.K. PANDA) (SHAILENDRA KUMAR YADAV) ACCOUNTANT MEMBER JUDICIAL MEMBER PUNE, DATED: 31 ST DECEMBER, 2013 GCVSR COPY TO:- 1. DEPARTMENT 2. ASSESSEE 3. THE CIT(A), KOLHAPUR 4. THE CIT, KOLHAPUR 5. THE DR, A BENCH, I.T.A.T., PUNE. 6. GUARD FILE BY ORDER //TRUE COPY// SENIOR PRIVATE SECRETARY, I.T.A.T., PUNE