ITO 2(1)(1), MUMBAI V. ALLAN INDUSTRIAL PRODUCT P. LTD, MUMBAI

ITA 243/MUM/2010

• Counselvise Citation: 24319914 RSA 2010
• Duration Of Justice: 2 year(s) 2 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 13-01-2012
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Assessment Year: 2005-2006
• Appeal Filed On: 11-01-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: MRS USHA NAIR
• Keywords: Additional evidence; Corroborative evidences
• Section: 143(3)

Judgement Text

1 ITA NO.243/MUM/2010 M/S ALLEN INDUSTRIAL PRODUCT PVT. LTD. IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI A BENCH MUMBAI BENCHES, MUMBAI BEFORE SHRI B.R. MITTAL AND SHRI R.K. PANDA, A.M. ITA NO. 243/MUM/2010 (ASST YEAR 2005-06) I.T.O. 2(1)(1), ROOM NO. 575, 5 TH FLOOR, AAYAKAR BHAWAN, M.K. ROAD, MUMBAI 20. VS M/S ALLEN INDUSTRIAL PRODUCT P. LTD., 71, ESPINANND MANSION, 144 M.G. ROAD, KALAGHODA, FORT, MUMBAI. 23. (APPELLANT) (RESPONDENT) PAN NO. AADCA8167E APPELLANT BY M RS. USHA NAIR RESPONDENT BY SHRI VIJAY MEHTA DATE OF HEARING 09.01.2012 DATE OF PRONOUNCEMENT 13.01.2012 ORDER PER R K PANDA, AM THIS APPEAL FILED BY THE REVENUE IS DIRECTED AGAINS T THE ORDER DATED 27.10.2009 OF THE COMMISSIONER OF INCOME TAX (A)- 4 , MUMBAI RELATING TO ASSESSMENT YEAR 2005-06. 2. THE GROUNDS RAISED BY THE REVENUE READ AS UNDER: - 1. THE ORDER OF THE CIT(A) IS OPPOSED TO LAW AND FA CTS OF THE CASE. 2. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A) ERRED IN RELYING UPON THE REMAND REPORT SUBMITTED BY THE A.O. IN VIEW OF THE FACTS THAT THE A.O. HAD NO0 T COMMENTED UPON IN THE REMAND REPORT ABOUT THE HIGHER PURCHASE PRICE AND THE INCLUSION OF THE YEAR END PURCHASE IN THE CLOSI NG STOCK OF THE RELEVANT ASSESSMENT YEAR WHICH WERE IDENTIFIED BY T HE A.O. IN THE ORIGINAL ASSESSMENT ORDER. 2 ITA NO.243/MUM/2010 M/S ALLEN INDUSTRIAL PRODUCT PVT. LTD. 2.1 FACTS OF THE CASE IN BRIEF ARE THAT THE ASSESSEE CO MPANY IS DEALING IN COAL, MARBLE, GRANITE AND MANUFACTURING & JOB WORK OF MACHINERY COMPONENTS. DURING THE COURSE OF ASSESSMENT PROCEED INGS THE A.O. ASKED THE ASSESSEE TO FURNISH PARTY-WISE DETAILS OF SALE, PURCHASES AND VARIOUS EXPENSES CLAIMED. HE NOTED FROM THE LEDGER ACCOUNT OF M/S LINKSON COAL & MINES PVT. LTD. AND M/S LM & GPL, M/S LINKSON LEASI NG LTD. THAT THE ASSESSEE HAS MADE MAJOR PURCHASES FROM THESE PARTIE S. FROM THE VARIOUS DETAILS FURNISHED BY THE ASSESSEE IT WAS OBSERVED T HAT IN A MAJORITY OF INSTANCES THE ASSESSEE HAD MADE PURCHASES AT A HIGH ER RATE AND SALES AT A LOWER RATE THAT TOO ON THE SAME DAY OR WITHIN A GAP OF VERY FEW DAYS. THE A.O., THEREFORE, ASKED THE ASSESSEE TO JUSTIFY THE SALES AT A LOWER PRICE. HE ALSO ASKED THE ASSESSEE TO JUSTIFY THE VARIOUS EXPE NSES CLAIMED. IN ABSENCE OF PRODUCTION OF BOOKS OF ACCOUNT THE A.O. REJECTED THE EXPLANATION GIVEN BY THE ASSESSEE AND OBSERVED THAT THE ASSESSEE COULD N OT ESTABLISH THE SALES AND PURCHASES, SHORTAGE OF STOCK AND THE EXPENSES C LAIMED. THE A.O. HELD THAT THE BOOK RESULTS DISCLOSED BY THE ASSESSEE ARE NOT RELIABLE AND THEREFORE REJECTED THE BOOK RESULTS AND ESTIMATED T HE PROFIT OF THE ASSESSEE COMPANY @ 20% OF THE BUSINESS TURNOVER AT RS. 14,50 ,14,960/-. THUS HE DETERMINED THE NET PROFIT AT RS. 2,90,02,992/- AS A GAINST THE RETURNED INCOME OF RS. 35,663/-. 2.2 BEFORE THE LD. CIT(A) IT WAS SUBMITTED THAT THE ASSESSEE COULD NOT PRODUCE BOOKS OF ACCOUNT AS THOSE WERE GIVEN TO UTT AM PRAKASH AGARWAL OF M/S UTTAM ASARWAL & CO. WHO WAS BUSY IN CONTESTING THE ELECTION FOR THE 3 ITA NO.243/MUM/2010 M/S ALLEN INDUSTRIAL PRODUCT PVT. LTD. POST OF VICE PRESIDENT OF THE ICAI. DURING THAT PE RIOD HE WAS EXTENSIVELY TRAVELLING FROM ONE PLACE TO ANOTHER. THEREFORE, TH E ASSESSEE COULD NOT PRODUCE THE SUPPORTING EVIDENCES BEFORE THE A.O. REFERRING TO THE DECISION OF HONBLE JURISDICTIONAL HIGH COURT IN THE CASE OF SMT. PRABHADEVI S. SHAH V. CIT REPORTED IN 231 ITR 1 IT WAS SUBMITTED THAT THE ADDITIONAL EVIDENCES SHOULD BE ADMITTED IF IT IS VITAL AND ESSENTIAL FOR THE PURPOSE OF THE SUBJECT MATTER OF APPEAL AND TO ARRIVE AT A FINAL AND ULTIM ATE DECISION. 2.3 THE THEN LD. CIT(A) FORWARDED THE ADDITIONAL EV IDENCES FILED BEFORE HIM TO THE A.O. AND CALLED FOR A REMAND REPORT FROM HIM . ACCORDING TO HIM ESTIMATION OF PROFIT AT 20% OF THE TURNOVER BY THE A.O. WAS WITHOUT ANY BASIS. HE SHOULD HAVE LOOKED INTO THE PREVIOUS RESU LTS OF THE ASSESSEE OR SOME COMPARABLE CASES. HE FURTHER NOTED THAT OTHER PARTIES IN THE SAME BUSINESS ARE SHOWING LESS THAN 1% NET PROFIT OF THE TOTAL TURNOVER. HE ALSO NOTED THAT FAILURE TO PRODUCE BOOKS OF ACCOUNT IS N OT DUE TO THE FAULT OF THE ASSESSEE BUT DUE TO THE FAULT OF THE A.R. 2.4 THE A.O. SUBMITTED HER REMAND REPORT VIDE HER L ETTER DT. 22.4.2009 THROUGH THE ADDL. CIT RG. 2(1). THE LD. CIT(A) NOTE D FROM THE REMAND REPORT THAT THE A.O. HAS ACCEPTED THE BOOKS OF ACCOUNT AND DOCUMENTARY EVIDENCES PRODUCED BY THE ASSESSEE DURING THE REMAND PROCEEDI NGS AND HAS REPORTED THAT NO ADVERSE INFERENCE COULD BE DRAWN ON THE BAS IS OF THE DETAILS PRODUCED BY THE ASSESSEE AND WHICH ARE TAKEN ON REC ORD. 4 ITA NO.243/MUM/2010 M/S ALLEN INDUSTRIAL PRODUCT PVT. LTD. 2.5 BASED ON THE REMAND REPORT SUBMITTED BY THE A.O . THE LD. CIT(A) DELETED THE ADDITION BY HOLDING AS UNDER:- I HAVE DULY CONSIDERED THE SUBMISSIONS OF THE AUTHO RISED REPRESENTATIVE AND I FIND THAT INITIALLY THE A.O. R EJECTED THE BOOK RESULTS UNDER THE PROVISIONS OF SEC. 145(3) MAINLY ON THE GROUND THAT THE ASSESSEE DID NOT PRODUCE BOOKS OF ACCOUNTS AND SUPPORTING EVIDENCES DURING THE COURSE OF ASSESSMEN T PROCEEDINGS. NOW THE ASSESSEE HAS PRODUCED THE BOOKS OF ACCOUNTS AND SUPPORTING EVIDENCES AND ALSO EXPLAINED THE REASONS FOR NOT PRODUCING THE BOOKS OF ACCOUNTS DURING THE COURSE O F ASSESSMENT PROCEEDINGS. HE FURTHER EXPLAINED THAT THE BOOKS O F ACCOUNTS WERE GIVEN TO THE C.A. WHO FAILED TO PRODUCE THE BOOKS O F ACCOUNTS BEFORE THE A.O. AS HE HIMSELF WAS BUSY IN ELECTION TO THE POST OF VICE PRESIDENT OF THE INSTITUTE OF CHARTERED ACCOUNTANTS OF INDIA. NOW THE BOOKS OF ACCOUNTS HAVE BEEN PRODUCED BY THE ASS ESSEE DURING THE REMAND PROCEEDINGS BEFORE THE A.O. AND THE A.O. HAS ACCEPTED THAT NO ADVERSE INFERENCE CAN BE DRAWN AFTER LOOKIN G INTO THE BOOKS OF ACCOUNTS AND SUPPORTING EVIDENCES PRODUCED BY TH E ASSESSEE. SINCE THE A.O. HAS VERIFIED THE BOOKS OF ACCOUNTS O F THE ASSESSEE THE ADDITION MADE BY THE A.O. IS REQUIRED TO BE DEL ETED. THE A.O. IS DIRECTED TO DELETE THE ADDITION. ALL OTHER GROUNDS OF APPEALS MERGE INTO THE MAIN GROUND OF APPEAL. AGGRIEVED WITH SUCH ORDER OF THE LD. CIT(A), THE RE VENUE IS IN APPEAL BEFORE US. 3. WE HAVE CONSIDERED THE RIVAL ARGUMENTS MADE BY B OTH THE SIDES, PERUSED THE ORDERS OF THE ASSESSING OFFICER AND THE CIT(A) AND THE PAPER BOOK FILED ON BEHALF OF THE ASSESSEE. FROM THE PAPE R BOOK PAGE 5 WE FIND THE A.O. DURING THE COURSE OF REMAND PROCEEDINGS HAS AS KED THE ASSESSEE TO PRODUCE THE BOOKS OF ACCOUNT AND ALL THE SUPPORTING EVIDENCES WITH VOUCHERS AND BILLS ETC. FOR HER VERIFICATION. SHE HAD ALSO ASKED THE ASSESSEE TO FURNISH ALL THE DETAILS CALLED FOR BY THE A.O. O N VARIOUS STAGES OF ASSESSMENT PROCEEDINGS. AFTER EXAMINING THE VARIOU S DETAILS AS CALLED FOR BY HER AND AFTER EXAMINING THE VARIOUS DOCUMENTS FILED IN THE PAPER BOOK 5 ITA NO.243/MUM/2010 M/S ALLEN INDUSTRIAL PRODUCT PVT. LTD. BEFORE THE LD. CIT(A) THE A.O. IN HER REPORT SUBMIT TED TO THE LD. CIT(A) THAT NO ADVERSE INFERENCE COULD BE DRAWN ON THE BASIS OF DETAILS PRODUCED AND TAKEN ON RECORDS. IT IS PERTINENT TO MENTION HERE THAT THE A.O. MRS. RAJESHWARI R MENON WHO PASSED THE ORDER U/S 143(3) ESTIMATING THE INCOME OF THE ASSESSEE @ 20% OF THE TURNOVER IS THE SAME P ERSON WHO ACCEPTED THE BOOKS OF ACCOUNT IN THE REMAND PROCEEDINGS. THE LD. D.R. ALSO COULD NOT CONTROVERT THE FINDINGS GIVEN BY THE LD. CIT(A). U NDER THESE CIRCUMSTANCES WE DO NOT FIND ANY INFIRMITY IN THE ORDER OF THE LD . CIT(A) DELETING THE ESTIMATED ADDITION MADE BY THE A.O. THE GROUNDS RA ISED BY THE REVENUE ARE ACCORDINGLY DISMISSED. 4. IN THE RESULT, THE APPEAL FILED BY THE REVENUE IS DISMISSED. ORDER PRONOUNCED ON 13.1.2012. SD/- (B.R. MITTAL) JUDICIAL MEMBER SD/- ( R K PANDA ) ACCOUNTANT MEMBER PLACE: MUMBAI : DATED: 13.01.2012 RK 6 ITA NO.243/MUM/2010 M/S ALLEN INDUSTRIAL PRODUCT PVT. LTD. COPY FORWARDED TO: 1 APPELLANT 2 RESPONDENT 3 CIT, II, MUMBAI 4 CIT(A) 4, MUMBAI 5 DR BENCH A 6 MASTER FILE /TRUE COPY/ BY ORDER DY /AR, ITAT, MUMBAI