Income Tax Officer, Jammu V. Sh. Dinesh Singh Andotra, Jammu

ITA 221/ASR/2015

• Counselvise Citation: 22120914 RSA 2015
• Duration Of Justice: 6 month(s) 26 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 03-12-2015
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: SMC
• Assessment Year: 2009-2010
• Appeal Filed On: 08-05-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Tax effect
• Section: 144; 133(6)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL JAMMU CAMP, JAMMU BEFORE HONBLE SHRI A.D.JAIN, JUDICIAL MEMBER [SMC] I.T.A. NO 221(ASR)/2015 ASSESSMENT YEAR:2009-10 THE I . T .O , WARD-1(1), JAMMU. VS. SHRI DINESH SINGH ANDOTRA , BYE PASS ROAD, SAINIK COLONY JAMMU PAN: ACSPA 922268 N (APPELLANT) (RESPONDENT) APPELLANT BY: SHRI R.K. SHARDA(DR.) RESPONDENT BY: NONE DATE OF HEARING: 30.11.2015 DATE OF PRONOUNCEM ENT: 03.12 .2015 ORDER THE REVENUE HAS FILED THE PRESENT APPEAL AGAINST T HE ORDER OF THE CIT(A), JAMMU, DATED 13.02.2015 FOR THE ASSESSM ENT YEAR 2009- 10 ON THE FOLLOWING GROUNDS: 1. THAT WHETHER THE COMMISSIONER OF INCOME TAX (APPEALS), JAMMU WAS RIGHT IN LAW IN DELETING THE ADDITION MADE ON ACCOUNT OF PROFIT ON UNDISCLOSED SALES AS THE ASSESSEE HAS PREFERRED TWO DIFFERENT SETS OF ANNUAL ACCOUNTS STATEMENTS ONE FOR THE INCOME-TAX DEPARTMENT AND OTHER FOR THE BANK TO PROCURE LOAN WHICH IS AGAINST THE LAW AND ITA NO. 221(ASR)/2015 ASST. YEAR 2 009-10 2 PERTINENT TO MENTION THAT THE INCOME-TAX ACT 1961DOES NOT EMPOWER THE ASSESSEE TO PREPARE DIFFERENT SETS OF ACCOUNTS FOR THE DIFFERENT AUTHORITIES. 2. WHETHER THE COMMISSIONER OF INCOME TAX(APPEALS), JAMMU WAS RIGHT IN LAW IN DELETING THE ADDITION MADE ON ACCOUNT OF UNEXPLAINED ADDITION IN CAPITAL ACCOUNT AS THE ASSESSEE HAS PREFERRED TWO DIFFERENT SETS OF ANNUAL ACCOUNTS STATEMENTS ONE FOR THE INCOME-TAX DEPARTMENT AND OTHER FOR THE BANK TO PROCURE LOAN WHICH IS AGAINST THE LAW AND PERTINENT TO MENTION THAT THE INCOME-TAX ACT 1961DOES NOT EMPOWER THE ASSESSEE TO PREPARE DIFFERENT SETS OF ACCOUNTS FOR THE DIFFERENT AUTHORITIES. 3. WHETHER IN LAW, THE COMMISSIONER OF INCOME TAX (APPEALS, JAMMU WAS RIGHT IN LAW IN DELETING THE ABOVE ADDITIONS AS THE CASE OF THE ASSESSEE IS COVERED UNDER PARA 8 OF INSTRUCTION NO. 05/2014 DATED 10.07.2014 WHICH SAYS THAT THE ADVERSE JUDGMENT RELATING THE ISSUE WHERE THE CONSTITUTIONAL VALIDITY OF THE PROVISIONS OF AN ACT OR RULE ARE UNDER CHALLENGE, SHOULD BE CONTESTED ON MERITS NOTWITHSTANDING THAT THE TAX EFFECT ENTAILED IS LESS THAN THE MONETARY LIMITS SPECIFIED IN PARA 3 OF INSTRUCTION NO. 5/2014 DATED 10.07.2014 OR THERE IS NO TAX EFFECT. 2. NONE APPEARED ON BEHALF OF THE ASSESSEE AT TH E TIME OF HEARING DESPITE ISSUANCE OF NOTICES FOR 08.11.2015 AND 30.11.2015, WHICH HAVE NOT BEEN RECEIVED BACK UNSERVED. HOWEVE R, FINDING ITA NO. 221(ASR)/2015 ASST. YEAR 2 009-10 3 THAT THE MATTER CAN BE PROCEEDED WITH IN THE ABSENC E OF THE ASSESSEE, I ARE DOING SO. 3. FACTS OF THE CASE, IN BRIEF, ARE THAT DURING THE COURSE OF ASSESSMENT THE AO CALLED FOR CERTAIN INFORMATION U/ S 133(6) FROM THE BANKERS OF THE ASSESSEE. THE SAID DETAILS WERE RECEIVED ON 1.11.2011. ON PERUSAL OF THE BALANCE SHEET SUBMITT ED TO THE BANKERS FOR THE PURPOSES OF ENHANCEMENT OF WORKING CAPITAL LIMITS VIDE APPLICATION DATED 25.5.2010 [PAGE 7 OF THE PB] , THE AO FOUND THAT THE ASSESSEE HAD REFLECTED A SALE OF RS. 84,58 ,750/- IN THE PROFIT AND LOSS ACCOUNT [PAGE 28 OF THE PAPER BOOK] , WHILE THE SALES REFLECTED IN THE RETURN OF THE INCOME WERE OF RS. 5 3,80,573/- [PAGE 64 OF THE PAPER BOOK]. SIMILARLY, THE BALANCE SHEE T AS SUBMITTED TO THE BANK REFLECTED THE OPENING CAPITAL AT R. 8,35,4 49/- [PAGE 27 OF THE PB], WHEREAS IN THE RETURN OF INCOME FOR THE AY 2008-09, THE CLOSING BALANCE OF THE CAPITAL WAS RS. 4,24,097/- [ PAGE 39 OF THE PB]. AFTER GIVING THE SHOW CAUSE TO THE ASSESSEE A ND CALLING FOR OTHER DETAILS, THE AO REJECTED THE BOOKS AND PROCEE DED TO MAKE THE ASSESSMENT U/S 144 BY APPLYING A NET PROFIT RAT E OF 10% ON THE ENTIRE SALE OF RS. 84,58,750/- AND ALSO MADE ADDITI ONS ON DIFFERENCE ITA NO. 221(ASR)/2015 ASST. YEAR 2 009-10 4 IN OPENING BALANCE OF THE CAPITAL ACCOUNT, TO THE E XTENT OF RS. 4,11,352/-. 4. THE LD. CIT(A)ALLOWED THE ASSESSEES APPEAL AND DELETED THE ADDITION MADE DIRECTING THE AO TO ACCEPT THE ASSESS EES RETURNED INCOME. 5. AGGRIEVED, THE DEPARTMENT IS IN APPEAL. 6. THE LD. DR, CHALLENGING THE IMPUGNED ORDER, HAS CONTENDED THAT THE COMMISSIONER OF INCOME TAX (APPEALS), JAMM U WAS NOT RIGHT IN LAW IN DELETING THE ADDITION MADE ON ACCOU NT OF PROFIT ON UNDISCLOSED SALES, AS THE ASSESSEE HAD FILED TWO DI FFERENT SETS OF ANNUAL ACCOUNTS STATEMENTS - ONE FOR THE INCOME-TAX DEPARTMENT AND THE OTHER FOR THE BANK, TO PROCURE LOAN, WHICH IS AGAINST THE LAW, SINCE THE INCOME-TAX ACT 1961DOES NOT EMPOWER THE ASSESSEE TO PREPARE DIFFERENT SETS OF ACCOUNTS FOR DIFFERENT AUTHORITIES. THE LD. DR FURTHER CONTENDED THAT THE COMMISSIONER OF I NCOME TAX(APPEALS), JAMMU WAS NOT RIGHT IN LAW IN DELETIN G THE ADDITION MADE ON ACCOUNT OF UNEXPLAINED ADDITION IN CAPITAL ACCOUNT, AS THE ITA NO. 221(ASR)/2015 ASST. YEAR 2 009-10 5 ASSESSEE HAD PREPARED TWO DIFFERENT SETS OF ANNUAL ACCOUNTS STATEMENTS. HE FURTHER CONTENDED THAT THE COMMISSI ONER OF INCOME TAX (APPEALS), JAMMU WAS NOT RIGHT IN LAW IN DELETING THE ABOVE ADDITIONS AS THE CASE OF THE ASSESSEE IS COVE RED UNDER PARA 8 OF CBDT INSTRUCTION NO. 05/2014 DATED 10.07.2014, W HICH SAYS THAT THE ADVERSE JUDGMENT RELATING THE ISSUE WHERE THE C ONSTITUTIONAL VALIDITY OF THE PROVISIONS OF AN ACT OR RULE ARE UN DER CHALLENGE, SHOULD BE CONTESTED ON MERITS, NOTWITHSTANDING THA T THE TAX EFFECT ENTAILED IS LESS THAN THE MONETARY LIMITS SPECIFIED IN PARA 3 OF INSTRUCTION NO. 5/2014 DATED 10.07.2014, OR THERE I S NO TAX EFFECT. 7. I HAVE HEARD THE LD. DR AND HAVE PERUSED THE REL EVANT MATERIAL ON RECORD. THE LD. CIT(A) HAS DELETED THE ADDITION BY HOLDING THAT THE JUDGMENTS DISCUSSED BY THE ASSESSE E IN HIS SUBMISSIONS HOLD THAT ADDITIONS CANNOT BE MADE ARBI TRARILY; AND THAT ONCE IT HAS BEEN ADMITTED BY THE ASSESSEE THAT HE H AD INFLATED THE FIGURES IN ANNUAL ACCOUNTS AS FURNISHED TO THE BANK WITH PRIME MOTIVE TO GAIN LOAN FROM BANK, IT WAS REQUIRED OF T HE AO TO DISAPPROVE THE SAME WITH TANGIBLE EVIDENCE, WHEREA S CONTRARY TO IT, THE FIGURES OF TURNOVER, PURCHASES, INSURANCE, EXPENSES, TDS, ITA NO. 221(ASR)/2015 ASST. YEAR 2 009-10 6 BANK INTEREST AND OTHER INCOME ALL GET PROVED TO BE CORRECT AS PER THE ANNUAL ACCOUNTS AS FURNISHED WITH RETURN OF INC OME. IN VIEW OF THESE FINDINGS, THE LD. CIT(A) HELD THAT THE ADDITI ONS OF RS. 569089/- ON ACCOUNT OF SALES OF RS. 4,11,352/- AS DEEMED INC OME ARE GUESS WORK OF THE AO AND CONTRARY TO THE FACTS OF THE CAS E. THE LD. CIT(A) HELD THAT THE AO HAS ADOPTED THE BASIS OF BALANCE S HEET AND P & L ACCOUNT FURNISHED TO THE BANK, WHICH ARE NOT SUPPOR TED BY CORROBORATIVE EVIDENCE, WHEREAS THE ASSESSEE HAS SU CCESSFULLY MADE OUT A CASE THAT THE FINAL ACCOUNTS, AS FURNISHED WI TH THE RETURN OF INCOME, ARE NOT FALSE. 8. IT IS SEEN THAT, IN FACT, THE ISSUE IS COVERED I N FAVOUR OF THE ASSESSEE BY THE DECISION OF THE AMRITSAR BENCH OF T HE TRIBUNAL IN THE CASE OF M/S AMRITSAR CROWN CAPS LTD VS. ACIT IN ITA NO. 135/ASR/2012 FOR A.Y 2005-06, VIDE ORDER DATED 20.0 9.2012, WHEREIN, IT HAS BEEN HELD AS UNDER: WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE FACTS OF THE CASE. THERE IS NO DISPUTE TO THE FACT THAT THE ASSESSEES COUNSEL HAD SUBMITTED THE EXPLANATION WHICH IS REPRODUCED IN THE ORDER OF THE LD. CIT(A) AT PAGE 7 THAT THE ASSESSEE CANNOT COMPILE AND VALUE TH ESE ITA NO. 221(ASR)/2015 ASST. YEAR 2 009-10 7 EACH AND EVERY ITEM OF STOCKS AND SPARES SUBMITTED T O THE BANK AND, THEREFORE, THE FIGURES ARE GIVEN ON AD HOC AND ESTIMATED BASIS. IT IS ALSO NOT IN DISPUTE THAT THE AO OR THE LD. CIT(A) HAS NOT REJECTED THE BOOKS OF ACCOUNT AND HAVE NOT POINTED OUT ANY DIFFERENCE IN T HE PURCHASES, SALES, OPENING STOCK AND IN THE CLOSING S TOCK ON THE BASIS OF THE STOCK REGISTER AND THE BOOKS OF ACCOUNT MAINTAINED BY THE ASSESSEE. IT IS ALSO NOT THE CASE THAT THE ASSESSEE HAD PLEDGED THE STOCK WITH T HE BANK RATHER IT IS A CASE OF HYPOTHECATION OF STOCK. THEREFORE, ANY STATEMENT MADE TO THE OUTSIDE PARTY I.E. BANK, CANNOT BE A CONCLUSIVE EVIDENCE IN THE ABSENCE OF REJECTION OF BOOKS OF ACCOUNT, PARTICULARL Y WHEN THE ASSESSEE HAD SUBMITTED THE EXPLANATION THA T SUCH STATEMENT OF STOCK IS GIVEN TO THE BANK ON ADHO C AND ESTIMATED BASIS. IN THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) IS NOT JUSTIFIED IN CONFIRM ING THE ACTION OF THE AO. THEREFORE, THE AO IS DIRECTED TO DELETE THE ADDITION SO MADE. THUS, GROUND NO. 3 OF THE ASSESSEE IS ALLOWED. 9. THE FACTS OF THE CASE IN HAND ARE, MUTATIS MUTAN DIS, EXACTLY SIMILAR TO THOSE IN THE CASE OF M/S AMRITSAR CROWN CAPS LTD VS. ACIT [SUPRA]. THE SAID ORDER OF THE TRIBUNAL HAS NOT BEE N SHOWN TO HAVE BEEN UPSET OR EVEN STAYED ON APPEAL. THEREFORE, FO LLOWING THE SAID ITA NO. 221(ASR)/2015 ASST. YEAR 2 009-10 8 TRIBUNAL ORDER, THE GRIEVANCE SOUGHT TO BE RAISED B Y THE DEPARTMENT IS FOUND TO BE SHORN OF MERIT AND IT IS REJECTED AS SUCH. IT MAY BE POINTED OUT THAT NO DECISION CONTRARY TO THAT OF THE AMRITSAR BENCH OF THE TRIBUNAL IN THE CASE OF M/S A MRITSAR CROWN CAPS LTD VS. ACIT [SUPRA] HAS BEEN BROUGHT ON RECOR D. IN VIEW OF THE ABOVE, GROUND NO. 1 IS RENDERED AS MERELY ACADEMIC AND IS REJECTED AS SUCH. 10. IN THE RESULT, THE APPEAL FILED BY THE DEPARTME NT IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 3 RD DECEMBER, 2015. SD/- (A.D.JAIN) JUDICIAL MEMBER DATED:3 RD DECEMBER, 2015 VL/ COPY OF THE ORDER FORWARDED TO: 1. THE ASSESSEE: 2. THE 3. THE CIT(A) 4. THE CIT 5. THE SR DR, ITAT, AMRITSAR. BY ORDER (ASSISTANT REGISTRAR) INCOME TAX APPELLATE TRIBUNAL, AMRITSAR BENCH: AMRITSAR.