Aditya Processors Pvt.Ltd., Surat V. The Income tax Officer, Ward-1(1), Surat

ITA 2266/AHD/2011

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 1061 (ITAT-AHMEDABAD)
• Duration Of Justice: 4 year(s) 10 month(s) 18 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 26-07-2016
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: D
• Next Hearing Date: 02-06-2016
• Assessment Year: 2003-2004
• Appeal Filed On: 07-09-2011
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: O P CHAUDHARY
• Assessee Lawyers: SHAH
• Section: 133(6); 144

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD D BENCH BEFORE: S H RI PRAMOD KUMAR , ACCOUNTANT MEMBER AND SHR I S. S. GODARA , JUDICIAL MEMBER ADITYA PROCESSORS PVT. LTD. FLAT NO. 6A, H - TOWER, RATNA JYOTI APARTMENT, NEAR SIDDHI VINAYAK TEMPLE, VESU, SURAT - 395003 (APPELLANT) VS THE ITO, WARD - 1(1), SURAT (RESPONDENT) REVENUE BY : S H RI O.P. CHAUDHARY , SR. D . R. ASSESSEE BY: S H RI M.R. SHAH , A.R. DATE OF HEARING : 02 - 06 - 2 016 DATE OF PRONOUNCEMENT : 26 - 07 - 2 016 / ORDER P ER : S. S. GODARA , JUDICIAL MEMBER : - THIS ASSESSEE S APPEAL FOR A.Y. 2003 - 04 , AR I SES FROM ORDER OF THE CIT(A) - I, SURAT DATED 28 - 06 - 2011 IN APPEAL NO. CAS - I/132/10 - 11 , IN PROCEEDINGS UNDER SECTION 144 OF THE INCOME TAX ACT, 1961; IN SHORT THE ACT . I T A NO . 2266 / A HD/20 11 A SSESSMENT YEAR 200 3 - 04 I .T.A NO. 2266 /AHD/20 11 A.Y. 2003 - 04 PAGE NO ADITYA PROCESSORS PVT. LTD. VS. ITO 2 2. THE ASSESSEE RAISES TWO SUBSTANTIVE GROUNDS IN CHALLENGING THE CIT(A) S ORDER CONFIRMING ASSESSING OFFICER S ACTION DISALLOWING/ADDING A SUM OF RS. 1,35,75,233/ - FOR UNEXPLAINED PURCHASES @ 25% OF TOTAL AMOUNT OF RS. 5,43,00,935/ - AND THE ONE PERTAINING TO ALLEGED SUPPRESSION OF STOCK AMOUN TING TO RS. 13,46,948/ - MADE IN ASSESSMENT ORDER DATED 17 - 03 - 2006. 3. WE COME TO FORMER ISSUE OF PURCHASE DISALLOWANCE OF RS. 1,35,75,233/ - . THE ASSESSEE - COMPANY IS IN TEXTILE BUSINESS. IT FILED RETURN ON 28 - 11 - 2003 DECLARING NIL INCOME ALONG WITH BO OK PROFITS OF RS. 1,09,002/ - . THE ASSESSING OFFICER CAME ACROSS ITS TRADING ACCOUNT SHOWING GREY CLOTH PURCHASE AGGREGATING TO RS . 5,43,00,935/ - IN THE COURSE OF SCRUTINY. THE SAME INVOLVED 36 ENTITIES INVOLVING PAYMENTS OF OVER AND ABOVE RS. 2 LACS. TH E ASSESSING OFFICER ISSUED SECTION 133(6) NOTICES TO 17 OF THEM. ALL NOTICES CAME BACK UN - SERVED. THE ASSESSING OFFICER ASKED THE ASSESSEE TO PRODUCE ALL OF THEM. HE FURTHER DEPUTED DEPARTMENT OFFICIALS TO TRACE ASSESSEE S PAYEES. THE INCOME TAX INSPECT O R REPORTED THESE ENTITIES HAVING FAKE ADDRESSES. IT IS EVIDENT FROM THE ASSESSMENT ORDER THAT ASSESSEE EXPRESSED ITS INABILITY IN PRODUCING THE NECESSARY DETAILS SINCE BOOKS OF ACCOUNTS HAD BEEN MISPLACED. THIS MADE THE ASSESSING OFFICER TO INVOKE BES T JUDGMENT ASSESSMENT PROCESS U/S. 144 OF THE ACT LEADING TO THE IMPUGNED DISALLOWANCE @ 25% OF GROSS PURCHASE AMOUNT HEREINABOVE COMING TO RS. 1,35,75,233/ - . I .T.A NO. 2266 /AHD/20 11 A.Y. 2003 - 04 PAGE NO ADITYA PROCESSORS PVT. LTD. VS. ITO 3 4. THE ASSESSEE PREFERRED APPEAL. IT ARGUED IN C OURSE THEREOF THAT ITS CREDITOR BANK HAD SEA LED THE PREMISES. THE CIT(A) CONCLUDES THAT THERE IS NO CORRESPONDING ON ASSESSEE S PART SEEKING TO RETRIEVE THE RELEVANT RECORDS FROM CREDITORS POSSESSION. HE THEREAFTER CONFIRMS ASSESSING OFFICER S ACTIN ON MERITS. 5. WE HAVE HEARD BOTH THE PARTIES . RELEVANT FACTS NARRATED IN PRECEDING PARAGRAPHS ARE NOT REPEATED FOR THE SAKE OF BREVITY. BOTH THE LOWER AUTHO RI TIES INVOKE THE IMPUGNED PURCHASES DISALLOWANCE @ 25% OF THE GROSS AMOUNT QUOTING ASSESSEE S FAILURE IN PRODUCING EVEN A SINGLE SUPPLIER. LEARNED COUNSEL SUBMITS THAT ITS CREDITOR INSTITUTION HAD TAKEN OVER THE PREMISES. THE SAME FAILS TO IMPRESS UPON US. WE REITERATE THAT THE ASSESSEE HAD SUPPLIED NAMES AND OTHER DETAILS OF ITS SUPPLIERS INVOLVING PAYMENTS OF RS. 2 LACS OR ABOVE. THE PRE SUMPTION THEREFORE RATHER GOES AGAINST IT SINCE NONE OF ITS PAYEE S HAS BEEN FOUND TO HAVE A GENUINE ADDRESS. IT HAS FURTHER COME ON RECORD THAT THE ASSESSEE HAS BEEN HAVING ALL OTHER DETAILS EXCEPT RELEVANT BOOKS OF ACCOUNTS. WE OBSERVE IN THESE P ECULIAR FACTS THAT THIS ASSESSE E S PLEA IS ENTIRELY MISCONCEIVED FOR THE REA SONS INDICATED HEREINABOVE. LEARNED COUNSEL AT THIS STAGE QUOTES SOME CASE LAWS WITH A FURTHER PLEA TO ESTIMATE REASONABLE GROSS P ROFITS. WE ARE OF THE OPINION THAT NON E OF THE JUDICIAL PRECEDEN TS INVOLVES IDENTICAL FACTS AS IN THE INSTANT CASE WHEREIN THE ASSESSEE HAS QUOTED ALL ITS FAKE SUPPLIERS. WE REJECT THESE LATTER TWO ARGUMENTS IN THESE FACTS AND CIRCUMSTANCES IN PRINCIPLE. I .T.A NO. 2266 /AHD/20 11 A.Y. 2003 - 04 PAGE NO ADITYA PROCESSORS PVT. LTD. VS. ITO 4 NEXT COMES ASSESSEE S ARGUMENTS IN QUANTUM DISALLOW ANCE ISSUE . THERE IS NO QUARREL THAT THE ASSESSING OFFICER HAS NOT DISALLOWED ENTIRE PURCHASES SINCE THE SAME IS REJECTED @ 25% ONLY. HE HAS NOT DRAWN A COMPARATIVE CHART OF PURCHASES CONSUMED IN ASSESS EE S MANUFACTURING PROCESS IN PRECEDING OR SUCCEEDIN G ASSESSMENT YEARS. HE HAS RANDOMLY DISALLOWED 25% OF THEM. WE ARE OF THE OPINION THAT THE SAME IS VERY MUCH ON HIGHER SIDE IN THE ABOVE STATED PECULIAR FACTS. WE FEEL APPROPRIATE IN LARGER INTEREST OF JUSTICE WOULD BE MET IN CASE THE IMPUGNED DISALLOWA NCE OF RS. 1,35,75,233/ - IS RESTRICTED TO A LUMP SUM AMOUNT OF RS. 75 LACS ONLY IN THESE PECULIAR FACTS AND CIRCUMSTANCES. THIS FIRST SUBSTANTIVE GROUND IS PARTLY ACCEPTED. 6. THIS LEAVES US WITH THE LATTER ISSUE OF CORRECTNESS OF SUPPRESSION OF CLOSING STOCK ADDITION O F RS. 13,46,948/ - . THE SAME EMA NATES FROM CLOSING STOCK FIGURE IN THE BALANCE SHEET OF RS. 1,20,60,461/ - AND THE ONE IN STOCK STATEMENT GIVEN TO THE STATE BANK TRANVANC ORE, SURAT STATING THE VERY FIGURE TO BE RS. 1,34,07,409/ - FOR AVAILI NG CREDIT FACILITY. THE ASSESSING OFFICER ADDED THE DIFFERENTIAL SUM IN QUESTION. HE IS FAIR ENOUGH IN CONCLUDING THAT THIS DIFFERENCE IS OF VALUE IN RUPEES ONLY AND NOT IN QUAN TITY. WE FIND THAT HON BLE JURISDICTIONAL HIGH COURT IN CIT VS. RIDDHI STEE L AND TUBES PVT. LTD. 40 TAXMANN.COM 177 (GUJ) DELETES AN IDENTICAL ADDITION INVOLVING A SIMILAR DIFFERENCE IN STOCK VALUE ARISING FROM THE CORRESPONDING FIGURE IN BOOKS AND THAT SUBMITTED TO CREDITOR BANK. THE REVENUE DOES NOT POINT OUT ANY DISTINCTION O N FACTS OR LAW INV OLVED THEREIN. WE I .T.A NO. 2266 /AHD/20 11 A.Y. 2003 - 04 PAGE NO ADITYA PROCESSORS PVT. LTD. VS. ITO 5 ACCORDINGLY TREATED AS A CASE OF INFLATION OF STOCK VALUE FOR THE PURPOSE OF AVAILING HIGHER CREDIT FROM BANKI NG INSTITUTIONS WITHOUT ANY ACTUAL DIFFERENCE IN THE STOCK QUANTITY. THE ASSESSEE SUCCEEDS IN THE INSTANT GR OUND. 7. THI S ASSESSEE S APPEAL IS PARTLY ALLOWED ORDER PR ONOUNCED IN THE OPEN C OURT ON 26 - 07 - 201 6 SD/ - SD/ - ( PRAMOD KUMAR ) ( S. S. GODARA ) ACCOUNTANT MEMBER JUDICIAL MEMBER AHMEDABAD : DATED 26 /07 /2016 AK / COPY OF ORDER FORWARDED TO: - 1. ASSESSEE 2. REVENUE 3. CONCERNED CIT 4. CIT (A) 5. DR, ITAT, AHMEDABAD 6. GUARD FILE. BY ORDER/ , / ,