The ACIT, Circle-5, Surat V. M/s. Utkal Viral & Co., Surat

ITA 2655/AHD/2009

• Counselvise Citation: [2011] 134 COUNSELVISE.COM (IT) 6043 (ITAT-AHMEDABAD)
• Duration Of Justice: 1 year(s) 10 month(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-07-2011
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 21-07-2011
• Assessment Year: 2006-2007
• Appeal Filed On: 25-09-2009
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SAMIR TEKRIWAL SRDR
• Assessee Lawyers: RASESH SHA
• Keywords: Bogus purchase
• Section: 133(6)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AT AHMEDABAD AHMEDABAD B BENCH BEFORE SHRI G.D. AGARWAL, HONBLE VICE-PRESIDENT (AZ) AND SHRI D.K. TYAGI, HONBLE JUDICIAL MEMBER ITA NO.2655/AHD/2009 ASSESSMENT YEAR:2006-07 DATE OF HEARING: 21.7.11 DRAFTED:25.7.11 ASSTT. COMMISSIONER OF INCOME-TAX, CIRCLE-5, ROOM NO.309, AAYAKAR BHAVAN, MAJAURA GATE, SURAT V/S . M/S. UTKAL VIRAL & CO. 101-106, SUPER YARN MARKET, ZAMPA BAZAR, SURAT PAN NO.AAAFU6178P (APPELLANT) .. (RESPONDENT) APPELLANT BY :- SHRI SAMIR TEKRIWAL, SR-DR RESPONDENT BY:- SHRI RASESH SHA, AR O R D E R PER D.K. TYAGI, JUDICIAL MEMBER:- THIS IS REVENUES APPEAL AGAINST THE ORDER OF COMM ISSIONER OF INCOME- TAX (APPEALS)-III, SURAT DATED 20-07-2009 FOR THE A SSESSMENT ORDER 2006-07. THE REVENUE HAS RAISED THE FOLLOWING EFFECTIVE TWO GROUNDS:- [1] ON THE FACTS AND IN THE CIRCUMSTANCES OF THE C ASE AND IN LAW, THE LD. CIT(A)-III, SURAT HAS ERRED IN DELETING THE ADD ITION OF RS.8,40,735/- MADE ON ACCOUNT OF BOGUS PURCHASES. [2] ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE AND IN LAW, THE LD. CIT(A)-III, SURAT HAS ERRED IN DELETING THE DIS ALLOWANCE OF RS.9,919/- ON ACCOUNT OF CARTAGE EXPENSES. 2. THE BRIEF FACTS OF THE CASE ARE THAT ASSESSEE IS ENGAGED IN MANUFACTURING OF TEXTURISING OF YARN AND YARN COMMI SSION AGENT. DURING THE ITA NO.2655/AHD/2009 A.Y. 2006-07 ACIT CIR-5, SRT V. M/S. UTKAL VIRAL & CO. PAGE 2 COURSE OF ASSESSMENT PROCEEDINGS NOTICE U/S 133(6) OF THE INCOME-TAX ACT, 1961 WAS ISSUED BY THE ASSESSING OFFICER TO M/S. VE ER KRUPA PACKAGING FROM WHOM THE ASSESSEE HAS CLAIMED TO HAVE PURCHASED PAC KING MATERIAL OF RS.8,40,735/- WAS RETURNED UNSERVED BY THE POSTAL A UTHORITY WITH THE REMARK NO SUCH PERSON EXISTS AT THE ADDRESS GIVEN BY THE ASSESSEE. IN REPLY TO SHOW-CAUSE NOTICE ISSUED BY ASSESSING OFFICER IT WA S STATED BY ASSESSEE THAT SAID PAYMENT WAS MADE BY ACCOUNT PAYEE CHEQUE. ACCO RDING TO AO MERE PAYMENT BY CHEQUE WAS NOT SUFFICIENT TO PROVE THAT THE ASSESSEE HAD GENUINELY INCURRED SUCH EXPENDITURE WHOLLY AND EXCL USIVELY FOR THE PURPOSE OF ITS BUSINESS. IN THE ABSENCE OF ANY PROOF TO SHOW T HAT THE PARTY FROM WHOM THIS PACKING MATERIAL WAS CLAIMED TO HAVE BEEN PURC HASED WAS A GENUINE PERSON THE CLAIM OF THE ASSESSEE FOR DEDUCTION OF R S.8,40,735/- WAS DISALLOWED AND ADDED BACK TO THE TOTAL INCOME OF TH E ASSESSEE. IT WAS ALSO NOTED BY AO THAT IN THE IMMEDIATELY PRECEDING YEAR THE SAME PARTY HAD BEEN TREATED AS BOGUS AND SIMILAR ADDITION HAD BEEN MADE IN THAT YEAR ALSO. 3. THE ASSESSEE ALSO CLAIMED CARTAGE EXPENSES OF RS .39,675/- WHICH WAS INCURRED IN CASH. IT WAS OBSERVED BY ASSESSING OFFI CER THAT ASSESSEE DID NOT MENTION PROPER BILLS FOR EACH AND EVERY EXPENDITURE DEBITED IN THIS ACCOUNT. IN VIEW OF THIS, IT WAS HELD BY AO THAT ASSESSEE HAD F AILED TO DISCHARGE THE ONUS OF PROVING THAT THE EXPENSES WERE WHOLLY AND EXCLUS IVELY INCURRED FOR THE PURPOSE OF ITS BUSINESS AND 25% OF THE CLAIM EXPENS ES AMOUNTING TO RS.9,919/- WERE DELETED BY ASSESSING OFFICER. 4. IN APPEAL LD. CIT(APPEALS) FOUND THAT BOTH THE I SSUES WERE COVERED IN FAVOUR OF ASSESSEE BY THE ORDER OF HONBLE ITAT IN ASSESSEES OWN CASE FOR ASSESSMENT ORDER 2005-06 IN WHICH SIMILAR DISALLOWA NCE WERE MADE OUT OF PACKING EXPENSES AND CARTAGE EXPENSES ON IDENTICAL GROUNDS (THE ONLY DIFFERENCE BEING IN THE AMOUNTS OF DISALLOWANCE). F OLLOWING THE ORDER OF ITAT HE RESTRICTED DISALLOWANCE MADE ON ACCOUNT OF PACKI NG MATERIAL TO RS.1,01,375/- BEING 5% OF THE TOTAL PACKING EXPENSE S OF RS.20,27,501/- ITA NO.2655/AHD/2009 A.Y. 2006-07 ACIT CIR-5, SRT V. M/S. UTKAL VIRAL & CO. PAGE 3 CLAIMED BY ASSESSEE AND THE DISALLOWANCE OF RS.9,91 9/- OUT OF CARTAGE EXPENSES WAS DELETED. 5. SINCE THE LD. CIT(APPEALS) HAS GIVEN RELIEF TO T HE ASSESSEE BY FOLLOWING THE HONBLE ITATS ORDER IN ASSESSEES OWN CASE FOR ASSESSMENT ORDER 2005- 06 ON IDENTICAL GROUNDS, WE FEEL NO NEED TO INTERFE RE WITH THE ORDER PASSED BY LD. CIT(APPEALS) AND THE SAME IS HEREBY UPHELD. 6. IN THE RESULT, REVENUES APPEAL IS DISMISSED. ORDER PRONOUNCED ON THIS DAY OF 28 TH JULY, 2011 SD/- SD/- ( G.D.AGARWAL ) ( D.K. TYAGI ) (VICE PRESIDENT) (JUDICIAL MEMBER) AHMEDABAD, DATED : 28/07/2011 *DKP COPY OF THE ORDER FORWARDED TO :- 1. THE ASSESSEE. 2. THE REVENUE. 3. THE CIT(APPEALS)-III, SURAT 4. THE CIT CONCERNS. 5. THE DR, ITAT, AHMEDABAD 6. GUARD FILE. BY ORDER, /TRUE COPY/ DEPUTY / ASSTT.REGISTRAR ITAT, AHMEDABAD