Bhaskar Tea & Industries Ltd., Kolkata V. DCIT, Circle - 4, Kolkata, Kolkata

ITA 2155/KOL/2009

• Counselvise Citation: [2011] 134 COUNSELVISE.COM (IT) 9277 (ITAT-KOLKATA)
• Duration Of Justice: 1 year(s) 2 month(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 11-03-2011
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Assessment Year: 1998-1999
• Appeal Filed On: 23-12-2009
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: S K MALAKAR
• Assessee Lawyers: P K SANGHAI
• Keywords: Bogus purchase; Opportunity of being heard; Additional evidence

Judgement Text

, , , IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH : KOLKATA () , , . .. . ! ! ! !. .. . , ,, , '# , ,, , ) [BEFORE HONBLE SRI MAHAVIR SINGH, JM & HONBLE SRI C. D. RAO, AM] $ / I.T.A NO. 2155/KOL/2009 %& '(/ ASSESSMENT YEAR : 1998-99 BHASKAR TEA & INDUSTRIES LIMITED -VS.- DY. COMMISSIONER OF INCOME TAX KOLKATA [PAN : AABCB 4084 F] CIRCLE-4, KOLKATA. [ *+ /APPELLANT ] [ -.*+/ RESPONDENT ] AND $ / I.T.A NO. 2147/KOL/2009 %& '(/ ASSESSMENT YEAR : 1998-99 DY. COMMISSIONER OF INCOME TAX -VS.- BHASKAR TEA & INDUSTRIES LIMITED CIRCLE-4, KOLKATA. KOLKATA. [PAN : AABCB 40 84 F] [ *+ /APPELLANT ] [ -.*+/ RESPONDENT ] *+ / FOR THE ASSESSEE : SHRI P. K. SANGHAI -.*+ / FOR THE DEPARTMENT : SHRI S. K. MALAKAR '/ /ORDER . .. . ! ! ! !. .. . , ,, , '# PER C. D. RAO, A. M. THESE ARE THE CROSS APPEALS ONE FILED BY ASSESSEE AND THE OTHER FILED BY REVENUE ARE PREFERRED AGAINST THE ORDER OF LD. CIT(A)-V, KOLKAT A DATED 14.10.2009 FOR ASSESSMENT YEAR 1998-99. 2. THE ASSESSEE HAS RAISED ONLY ONE ISSUE IN RESPEC T OF ADDITION ON ACCOUNT OF BOGUS PURCHASES AND REPAIRS IN RESPECT OF FOUR PARTIES. 3. ON THE OTHER HAND, THE DEPARTMENT HAS TAKEN FOLL OWING GROUNDS OF APPEAL :- 1. THAT, ON THE FACTS AND CIRCUMSTANCES OF T HE CASE, THE CIT(A) HAS ERRED IN LAW IN DELETING THE ADDITION OF PROVISION FOR BROKE RAGE TO THE TUNE OF RS.3,50,000/- WHEN SUCH PROVISION IS AN UNASCERTAIN ED LIABILITY. ITA NOS. 2155 & 2147/KOL/2009 2 2. THAT, ON THE FACTS AND CIRCUMSTANCES OF THE CASE, T HE CIT(A) HAS ERRED IN LAW IN DELETING THE ADDITION OF RS.36,14,788/- MADE ON ACCOUNT OF CESS ON GREEN LEAVES. 4. BRIEF FACTS OF THE ISSUE ARE THAT WHILE DOING SC RUTINY ASSESSMENT ASSESSING OFFICER HAS ADDED AN AMOUNT OF RS.32,95,091/- TOWARDS PURCHASE OF MATERIAL AND REPAIR CLAIMED BY THE ASSESSEE TO BE MADE FROM FOUR PARTIES - (A) PREMIER SALES AGENCIES (B) VENUS TRADE & MERCANTILE PVT. LTD. (C) ASIAN TRADERS (D) CROMATIC MARKETING PVT. LTD. BY OBSERVING THAT ENQUIRIES CAUSED TO BE REVEALED T HAT THE SAID PARTIES ARE NOT IN EXISTENCE IN THE GIVEN ADDRESSES. NO VERIFICATION COULD BE MADE IN RESPECT OF ALLEGED SUPPLIES OF CHEMICALS AND MANURES AND REPAIRS MADE TO ROAD AND BRIDGES IN THE GARDENS OF THE ASSESSEE UNLESS THE EVIDENCE WITH REGARD TO THEIR ABILITY TO MAKE SALES TO THE ASSESSEE-COMPANY OR RENDER SERVICES IN TERMS OF REPAIRS TO ROADS, BRIDGES ARE AVAILABLE , THE ASSESSEES CLAIM OF PURCHASE AND PAYMENTS AGAINST SERVICES REMAINS UNSUBSTANTIATED. 4.1 ON APPEAL, LD. CIT(A) HAS CONFIRMED THE ACTION OF THE ASSESSING OFFICER BY OBSERVING THAT ASSESSING OFFICER HAS ELABORATELY DISCUSSED RE GARDING EACH OF THE ENTITIES WITH WHICH THE ASSESSEE-COMPANY DID BUSINESS TRANSACTIONS. THE NEC ESSARY EVIDENCES REGARDING THE EXISTENCE OF THESE CONCERNS AND THE SERVICES RENDERED BY THEM WERE NOT PROVED BEFORE THE ASSESSING OFFICER. THE ASSESSEE SUBMITTED THAT ALL THE DETAIL S WILL BE FURNISHED AND IF REQUIRED BY LD. CIT(A) AND THE PERSONS OF THESE CONCERNS WILL ALSO BE PRODUCED. THESE AMOUNTS TO PRODUCTION OF ADDITIONAL EVIDENCES BEFORE THE APPELLATE AUTHOR ITY. IN THE OPINION OF LD. CIT(A), ASSESSING OFFICER HAS GIVEN SEVERAL OPPORTUNITIES T O THE ASSESSEE-COMPANY TO PROVE THE GENUINENESS OF THE TRANSACTIONS ENTERED WITH PREMIE R SALES AGENCIES, VENUS TRADE & MERCANTILE PVT. LTD., ASIAN TRADERS & CROMATIC MARK ETING PVT. LTD. THE ASSESSEE-COMPANY WAS NOT ABLE TO DISCHARGE ITS ONUS OF PROVING THE G ENUINENESS OF THE TRANSACTIONS. IN VIEW OF THIS ANY ADDITIONAL EVIDENCES AT THIS STAGE CAN NOT BE ADMITTED BECAUSE THE ASSESSEE WAS NOT PREVENTED BY SUFFICIENT CAUSE TO PRODUCE THE EVIDEN CES BEFORE THE ASSESSING OFFICER. IN VIEW OF THIS, THE ADDITION MADE BY ASSESSING OFFICER RS.32, 95,091 IS CONFIRMED. 5. AGGRIEVED BY THIS, NOW THE ASSESSEE IS IN APPEAL BEFORE US. ITA NOS. 2155 & 2147/KOL/2009 3 6. AT THE TIME OF HEARING BEFORE US, LD. COUNSEL AP PEARING ON BEHALF OF THE ASSESSEE HAS REITERATED THE SUBMISSIONS MADE BEFORE THE LD. CIT( A) THAT HE WILL FURNISH THE DETAILS AS REQUIRED BY ASSESSING OFFICER AND PRODUCE THE PERSO NS OF THOSE CONCERNS AND FURTHER PRODUCTION OF ADDITIONAL EVIDENCES IN SUPPORT OF TH E SAID EXPENDITURE. HOWEVER, LD. CIT(A) HAS NOT ACCEPTED THE SAME. HE FURTHER NOT CALLED FO R ANY REMAND REPORT FROM THE ASSESSING OFFICER AND HE SIMPLY REJECTED THE PLEA OF THE ASSE SSEE. THEREFORE, HE REQUESTED TO SET ASIDE THE MATTER TO THE FILE OF THE ASSESSING OFFICER TO REDE CIDE THE SAME AFRESH. 7. ON THE OTHER HAND, LD. DEPARTMENTAL REPRESENTAT IVE CONTENDED THAT ASSESSING OFFICER HAS GIVEN SEVERAL OPPORTUNITIES. HOWEVER, ASSESSEE HAS NOT AVAILED THE SAME. THIS FACT HAS ALREADY REITERATED BY LD. CIT(A) ALSO, THAT IS WHY LD. CIT(A) HAS NOT ACCEPTED THE ADDITIONAL EVIDENCES. THEREFORE, HE REQUESTED TO UPHOLD THE OR DERS OF THE REVENUE AUTHORITIES. 8. AFTER HEARING THE RIVAL SUBMISSIONS AND ON CAREF UL PERUSAL OF THE MATERIAL AVAILABLE ON RECORD AND KEEPING IN VIEW OF THE FACT THAT LD. COU NSEL APPEARING ON BEHALF OF THE ASSESSEE HAS GIVEN AN UNDERTAKING THAT HE WILL PRODUCE THE PARIT IES AS WELL AS DETAILS AS CALLED FOR BY THE REVENUE AUTHORITIES. IN THE INTEREST OF JUSTICE, WE CONSIDER IT PRUDENT TO SET ASIDE THE ISSUE TO THE FILE OF THE ASSESSING OFFICER FOR FRESH CONSIDERATI ON AND DISPOSE OF THE SAME AS PER LAW AFTER GIVING REASONABLE OPPORTUNITY OF BEING HEARD TO THE ASSESSEE. THE ASSESSEE IS AT LIBERTY TO FILE ADDITIONAL EVIDENCES IN SUPPORT OF HIS CLAIM BEFORE THE ASSESSING OFFICER. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSES . 9. NOW, WE SHALL TAKE UP THE APPEAL OF THE REVENUE IN ITA NO.2147/KOL/2009. 10. THE FIRST GROUND IN RESPECT OF PROVISION FOR BR OKERAGE TO THE TUNE OF RS.3,50,000/- WHEN SUCH PROVISION IS AN UNASCERTAINED LIABILITY. 11. AFTER HEARING THE RIVAL SUBMISSIONS AND ON CARE FUL PERUSAL OF THE MATERIAL AVAILABLE ON RECORD AND KEEPING IN VIEW OF THE FACT THAT LD. DEP ARTMENTAL REPRESENTATIVE COULD NOT CONTRADICT THE OBSERVATIONS MADE BY THE LD. CIT(A) WHICH ARE AS UNDER :- GROUND NO.5: IS REGARDING ADDITION OF A SUM OF RS. 3,50,000/- TOWARDS LIABILITY FOR BROKERAGE & COMMISSION. THE ASSESSEE SUBMITTED THAT IT FOLLOWS THE MERCANTILE SYSTEM OF ACCOUNTING AND ACCORDINGLY MAK ES THE PROVISION OF ALL THE LIABILITIES AT THE END OF THE YEAR IN THE BOOKS OF ACCOUNT. THEREFORE, THE AMOUNT WHICH IS ACCRUED AT THE END OF THE FIN.YEAR 1977-78 ON ACCOUNT OF BROKERAGE HAS ITA NOS. 2155 & 2147/KOL/2009 4 BEEN PROVIDED IN THE BOOKS BUT REMAINS UNPAID. THE APPELLANT SUBMITTED A COPY OF THE LEDGER OF BROKERAGE OF THE COMPANY FOR THE F IN.YEAR 1998-99 WHERE THE LIABILITY FOR BROKERAGE OF RS.3.50 LACS HAS BEEN DU LY REVERSED BY CREDITING THE BROKERAGE ACCOUNT THE A/R, ARGUED THAT IT IS A NORM AL PRACTICE OF THE COMPANY TO PROVIDE FOR ASCERTAINED LIABILITIES BY MAKING THE L UMP SUM PROVISION, IN CASE A DEFINITE AMOUNT IS NOT ASCERTAINABLE AT THE TIME OF FINALIZATION OF THE BALANCE SHEET OF THE COMPANY. THE AO AT PAGE-13 OF THE ORDE R TREATING THE PROVISION FOR BROKERAGE AND COMMISSION AS RELATING TO UNASCERTAIN ABLE LIABILITIES ADDED BACK THE SAME TO THE INCOME OF THE ASSESSEE. I HAVE GONE THROUGH THE SUBMISSION OF THE APPELLANT , AND IN MY OPINION THE APPELLANT DULY REVERSED A LIABILITY FOR BROKERAGE B Y CREDITING THE BROKERAGE ACCOUNT FOR THE FIN. YEAR 1998-99. HENCE, I DIRECT THE AO TO ALLOW THE AMOUNT OF RS.3.50 LACS TOWARDS LIABILITY FOR BROKERAGE AND CO MMISSION. IN VIEW OF THE ABOVE, WE FIND NO INFIRMITY IN THE O RDER OF LD. CIT(A). THEREFORE, WE CONFIRM THE SAME AND DISMISS THE GROUND OF THE REVENUE. 12. AS REGARDS OTHER GROUND IN RESPECT OF ADDITION OF RS.36,14,788/- MADE ON ACCOUNT OF CESS ON GREEN LEAVES. 13. THE BRIEF FACTS OF THIS ISSUE ARE THAT THE ASSE SSING OFFICER WHILE DOING THE SCRUTINY ASSESSMENT DISALLOWED AN AMOUNT OF RS.36,14,788/- O N ACCOUNT OF CESS ON GREEN LEAF BY OBSERVING THAT ASSESSEE COMPANY IS ENGAGED IN GROWI NG, MANUFACTURING AND SALE OF TEA. IN THE BOOKS OF ACCOUNT, IT HAS DEBITED CESS ON GREEN LEAF FOR AN AMOUNT OF RS.36,14,788/-. CESS ON GREEN LEAF IS TOTALLY RELATED TO AGRICULTURAL INCOM E. THEREFORE, THIS AMOUNT IS DISALLOWED AND ADDED BACK. 14. ON APPEAL, LD. CIT(A) DISALLOWED THE SAME BY RE SPECTFULLY FOLLOWING THE ORDER OF HONBLE CALCUTTA HIGH COURT IN THE CASE OF AFT IND USTRIES LTD. VS CIT (270 ITR 167). 15. THE LD. DEPARTMENTAL REPRESENTATIVE APPEARING O N BEHALF OF THE REVENUE RELIED ON THE ORDER OF THE ASSESSING OFFICER. 16. AFTER HEARING THE RIVAL SUBMISSIONS AND ON CARE FUL PERUSAL OF THE MATERIALS AVAILABLE ON RECORD, KEEPING IN VIEW OF THE FACT THAT THE ISSUE IS CONCLUDED BY THE DECISION OF THE HONBLE JURISDICTIONAL HIGH COURT IN THE CASE OF CIT VS. AF T INDUSTRIES LTD. 270 ITR 167 (CAL.), WHERE THE AMOUNT PAID AS CESS WAS HELD AS ELIGIBLE FOR DE DUCTION IN COMPUTING THE COMPOSITE INCOME ITA NOS. 2155 & 2147/KOL/2009 5 UNDER RULE 8 OF I.T. RULES. THIS ISSUE IS, THEREFO RE, DECIDED IN FAVOUR OF THE ASSESSEE AND AGAINST THE REVENUE BY UPHOLDING THE ORDER OF THE L D. CIT(A), WHO HAS ALLOWED THE DEDUCTION OF PAYMENT OF CESS ON GREEN LEAVES IN COMPUTING THE COMPOSITE INCOME FROM TEA BUSINESS OF THE ASSESSEE UNDER RULE 8 OF THE I.T. RULES. SINCE THE LD. CIT(A) HAS FOLLOWED THE RATIO LAID DOWN BY THE HONBLE JURISDICTIONAL HIGH COURT, WE FIND N O INFIRMITY IN THE ORDER OF THE LD. CIT(A) TO BE INFERRED WITH. THIS GROUND OF THE REVENUE IS DIS MISSED. 17. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWE D FOR STATISTICAL PURPOSES AND REVENUES APPEAL IS DISMISSED. '/ #0' 1 0% 2 3 ORDER PRONOUNCED IN THE OPEN COURT ON 11. 03. 2011 . SD/- SD/- [ , ] [ . .. . ! ! ! !. .. . , ,, , '# ] [MAHAVIR SINGH ] [ C. D. RAO ] JUDICIAL MEMBER ACCOUNTANT MEMBER (!#) DATED : 11. 03. 2011. '/ 4 -5 6'5'/ COPY OF THE ORDER FORWARDED TO: 1. *+ /APPELLANT- BHASKAR TEA & INDUSTRIES LTD., 2, BRA BOURNE ROAD, KOLKATA-700001. 2 -.*+ / RESPONDENT : DY. COMMISSIONER OF INCOME TAX, CIRC LE-4, P-7, CHOWRINGHEE SQUARE, KOLKATA-700 069. 3. /%/ THE CIT, 4. /% ()/ THE CIT(A), KOLKATA. 5. <2 -%/ DR, KOLKATA BENCHES, KOLKATA [.5 -/ TRUE COPY] '/%0/ BY ORDER, > /DEPUTY/ASSTT. REGISTRAR [ KKC ?@ %A> B /SR.PS]