A.C.I.T.-4(1), Agra V. M/s Bipin Sheet Grah (P) Ltd., Agra

ITA 268/AGR/2011

• Counselvise Citation: [2011] 119 COUNSELVISE.COM (IT) 6916 (ITAT-AGRA)
• Duration Of Justice: 5 month(s) 20 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-12-2011
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: SMC
• Next Hearing Date: 27-12-2011
• Assessment Year: 2006-2007
• Appeal Filed On: 08-07-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: A K SHARMA
• Assessee Lawyers: SHAISHAV AGARWAL
• Section: 143(3); 142(1)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, AGRA (SMC) BENCH, AGRA BEFORE SHRI H.S. SIDHU, JUDICIAL MEMBER ITA NO. 268/AGRA/2011 ASSTT. YEAR : 2006-07 A.C.I.T. 4(1), AGRA VS. M/S. VIPIN SHEET GRAH ( P) LTD., 21/32, FREEGANJ, AGRA. (PAN : AABCB 4401 E) C.O. NO. 38/AGRA/2011 (IN ITA NO. 268/AGRA/2011 ) ASSTT. YEAR : 2006-07 M/S. VIPIN SHEET GRAH (P) LTD., VS. A.C.I.T. 4(1) , AGRA 21/32, FREEGANJ, AGRA. (APPELLANT) (RESPONDENT) FOR REVENUE : SHRI A.K. SHARMA, JR. D.R. FOR ASSESSEE : SHRI SHAISHAV AGARWAL, ADVOCATE. DATE OF HEARING : 27.12.2011 DATE OF PRONOUNCEMENT : 28.12.2011 ORDER THE REVENUE HAS FILED THE PRESENT APPEAL AND THE ASSESSEE HAS FILED CROSS OBJECTION AGAINST THE IMPUGNED ORDER DATED 31.03.2011 PASSED BY THE LD. CIT(A)-II, AGRA. THE GROUNDS RAISED IN THE REVENUES APPEAL READ AS UNDER : 1. THAT THE LD. COMMISSIONER OF INCOME-TAX (APPEAL S) HAS ERRED IN LAW AND ON FACTS IN DELETING THE ADDITION OF RS.9,67,78 5/- MADE BY THE AO AFTER ESTIMATING THE COLD STORAGE RENT AT RS.78 LACS IGNO RING THE FACTS THAT THE ASSESSEE WAS SUPPRESSING THE RENTAL RECEIPTS BY SHOWING UNDE R UTILIZATION OF THE CAPACITY OF THE COLD STORAGE. 2. THAT THE LD. COMMISSIONER OF INCOME-TAX (APPEAL S) HAS ERRED IN LAW AND ON FACTS IN HOLDING THAT THE AO WAS NOT JUSTIFI ED IN INVOKING THE PROVISIONS OF SECTION 145(3) OF THE IT ACT, 1961 IGNORING THE FAC TS THAT IN ABSENCE OF MAINTAINING THE RECORDS OF LOADING AND UNLOADING EX PENSES, EXCESSIVE 2 CONSUMPTION OF POWER AND ON ACCOUNT OF NON-MAINTENA NCE OF SUCH DETAILS, THE BOOKS OF ACCOUNTS CANNOT BE TREATED AS CORRECT AND COMPLETE. 3. THAT THE LD. COMMISSIONER OF INCOME-TAX (APPEAL S) HAS ERRED IN LAW AND ON FACTS IN DELETING THE ADDITION OF RS.30,173/ - SHOWN TO HAVE BEEN PAID AS INTEREST ON THE LOANS TAKEN FROM THE CONCERNS OF GA NGA RAM GROUP IGNORING THE FACT THAT THE GROUP IS INVOLVED IN PROVIDING ACCOMM ODATION ENTRIES AND THE ASSESSEE COULD ALSO NOT PROVE THE GENUINENESS OF TH ESE LOANS IN AY. 1998-1999. 4. THAT THE LD. COMMISSIONER OF INCOME TAX (APPEAL S) BEING ERRONEOUS IN LAW AND ON FACTS DESERVES TO BE QUASHED AND THE ORD ER OF THE AO DESERVES TO BE RESTORED. 2. THE ASSESSEE IS A PRIVATE LIMITED COMPANY AND FI LED ITS RETURN OF INCOME ON 16.11.2006 DECLARING INCOME OF RS. NIL. THE ASSESSING OFFICER SELECTED THE CASE OF THE ASSESSEE FOR SCRUTINY BY ISSUING A NOTICE U/S. 143(2) AND 142(1) OF THE I NCOME-TAX ACT, 1961 (HEREINAFTER CALLED THE ACT). IN RESPONSE TO THE SAME, THE AUTHORIZED REPR ESENTATIVE OF THE ASSESSEE APPEARED AND FILED WRITTEN REPLY AND DETAILS. HE ALSO PRODUCED THE BOO KS OF ACCOUNT. THE ASSESSING OFFICER PERUSED THE PROFIT & LOSS ACCOUNT OF THE ASSESSEE AND FOUND THAT THE ASSESSEE HAS SHOWN RECEIPT ON ACCOUNT OF COLD STORAGE RENT OF RS.68,32,630/- ON S TORAGE OF 193557 BAGS AND CHARGED AS A RENT @ RS.40/- PER BAG OUT OF WHICH DEDUCTION OF RS.5/- PER BAG WAS ALLOWED TO THE FARMERS FOR LOADING AND UNLOADING. THE ASSESSEE WAS REQUIRED TO FURNISH EVIDENCE INCURRED FOR LOADING AND UNLOADING AND BAGS SHIFTING CHARGES, BUT NO EVIDENC E HAS BEEN PRODUCED BY THE ASSESSEE BY SAYING THAT LOADING AND UNLOADING EXPENSES @ RS.5/- PER BAG WAS ALLOWED TO THE FARMERS ON BILLS ITSELF AND NO SEPARATE EVIDENCE REGARDING ALLOWING OF RS.5/- PER BAG TO FARMERS HAVE BEEN KEPT AND THIS SYSTEM IS FOLLOWED BY THE ASSESSEE COMPANY TO AVOID HEADACHE OF LOADING AND UNLOADING. THE ASSESSING OFFICER DID NOT ACCEPT THE EXPLANATION OF THE ASSESSEE AND HE MADE AN ADDITION OF RS.9,67,785/- BY APPLYING THE PROVISION S OF SECTION 145(3) OF THE ACT BY HOLDING THAT THE INCOME OF THE ASSESSEE IS REQUIRED TO BE ESTIMA TED CONSIDERING THE RECEIPTS OF COMPARABLE 3 CASES. THE ASSESSING OFFICER ALSO MADE ADDITION OF RS.30,173/- ON ACCOUNT OF INTEREST PAID TO M/S. VIJAY KUMAR, PROP. V.K. TRADERS AND SHRI NITIN KR. AGARWAL AND COMPLETED THE ASSESSMENT U/S. 143(3) OF THE ACT ON 01.12.2008. AGGRIEVED BY THE SAME, THE ASSESSEE FILED APPEAL BEFORE THE LD. FIRST APPELLATE AUTHORITY, WHO VIDE IMPUGNED OR DER DATED 31.03.2011 DELETED THE ADDITION IN DISPUTE ON THE BASIS OF VARIOUS DECISIONS RENDERED BY THE ITAT, WHICH HE HAS MENTIONED IN THE IMPUGNED ORDER. NOW, THE REVENUE HAS FILED THE PRES ENT APPEAL. 3. AT THE TIME OF HEARING, THE LD. DR RELIED ON THE ORDER PASSED BY THE ASSESSING OFFICER AND ON THE CONTRARY, THE LD. COUNSEL FOR THE ASSESSEE R ELIED ON THE ORDER PASSED BY THE LD. CIT(A). 4. I HAVE HEARD THE BOTH PARTIES, PERUSED THE RELEV ANT RECORD AVAILABLE WITH US AND I AM OF THE CONSIDERED OPINION THAT THE ASSESSEE HAS ALLOWE D REBATE OF RS.5/- PER BAG TO THE FARMERS ON ACCOUNT OF LOADING AND UNLOADING EXPENSES WHICH THE FARMERS THEMSELVES DID THIS JOB. THE ASSESSING OFFICER HAS ASKED THE ASSESSEE TO FURNISH EVIDENCE OF LOADING AND UNLOADING, BUT THE ASSESSEE COULD NOT PRODUCE THE SAME BECAUSE THE ASS ESSEE IS NOT DOING THIS JOB FOR THE FORMERS. THEREFORE, QUESTION OF CALLING FOR EVIDENCE BY THE ASSESSING OFFICER DOES NOT ARISE AND THE LD. FIRST APPELLATE AUTHORITY HAS RIGHTLY APPRECIATED T HE VERSION OF THE ASSESSEE AND DELETED THE ADDITION IN DISPUTE KEEPING IN VIEW OF THE PAST AND FUTURE PRACTICE OF THE ASSESSEE. THEREFORE, IN MY CONSIDERED OPINION, NO INTERFERENCE IS CALLED IN THE WELL REASONED ORDER PASSED BY THE LD. FIRST APPELLATE AUTHORITY ON THE ISSUE INVOLVED IN GROUND NO. 1. 4 5. AS REGARDS TO THE APPLICABILITY OF THE PROVISION S OF SECTION 145(3) OF THE ACT, THE LD. FIRST APPELLATE AUTHORITY AHS PASSED A WELL REASONED ORDE R AT PAGES 4 & 5 PARA 2.1, WHICH IS REPRODUCED AS UNDER : 2.1. I HAVE GONE THROUGH THE ASSESSMENT ORDER AND SUBMISSION OF LD. AR. I AGREE WITH THE AO THAT IT IS USUAL FIRST TO RAISE THE BILL OF RS.40/- PER BAG AND THEN ALLOW REBATE OF RS.5. BUT, THIS ITSELF CANNOT BE A REASON FOR REJECTION OF BOOKS OF ACCOUNT. THIS COULD HAVE ALERTED THE AO TO MAKE FURTHER ENQUIRIES TO ESTABLISH THAT THE ACTUAL RENT RECEIVED BY THE ASSESSEE WAS R S.40/- PER BAG AND REBATE OF RS.5 PER BAG SHOWN IN THE BILL WAS NOT GENUINE. IT HAS NOT BEEN ESTABLISHED BY THE AO THAT IT IS NOT RS.35 PER BAG BUT ACTUALLY RS.40 PER BAG HAS BEEN RECEIVED BY THE APPELLANT. THEREFORE, I AM OF THE OPINION TH AT THE SAME CANNOT BE A REASON FOR REJECTION OF BOOKS OF ACCOUNT. ANOTHER REASON C ITED BY THE AO IS WITH REGARD TO UNDER UTILIZATION OF CAPACITY, HERE ALSO, I AM O F THE OPINION THAT UNLESS AND UNTIL IT IS ROVED THAT THERE WAS FULL CAPACITY UTIL IZATION, BUT THE SAME HAS BEEN SUPPRESSED BEFORE THE DEPARTMENT THEN ONLY THERE WO ULD BE A CASE WITH THE AO FOR REJECTION OF BOOKS OF ACCOUNT. THE THIRD REASON GIV EN BY THE AO IS ALLEGED EXCESS CONSUMPTION OF POWER, HERE ALSO I AM IN AGREEMENT W ITH THE LD. AR THAT FUEL AND POWER EXPENSES ARE DIRECTLY RELATED TO THE RUNNING OF COLD STORAGE, SOME COLD STORAGES MIGHT RUN FOR LONGER TIME THAN THE OTHERS PARTICULARLY IN VIEW OF THE FACT THAT RENT IS RELATABLE TO WHOLE YEAR AND IS NOT CHA RGED ON DAY TO DAY BASIS. THEREFORE, I AM OF THE OPINION THAT AO WAS NOT JUST IFIED IN INVOKING THE PROVISIONS OF SEC 145(3) OF THE ACT. THE GROUNDS ARE ALLOWED. 6. KEEPING IN VIEW OF THE AFORESAID FINDING GIVEN B Y THE LD. FIRST APPELLATE AUTHORITY AS WELL AS THE ORDER PASSED BY THE ASSESSING OFFICER, I AM OF THE CONSIDERED OPINION THAT THE REASONS MENTIONED BY THE LD. FIRST APPELLATE AUTHORITY IN T HE AFORESAID PARAGRAPH ARE VALID REASONS TO CANCEL THE ORDER OF THE ASSESSING OFFICER, IN WHICH HE HAS APPLIED THE PROVISIONS OF SECTION 145(3) OF THE ACT. I UPHOLD THE SAME BY DISMISSING THE ISSUE INVOLVED IN GROUND NO. 2. 7. AS REGARD TO THE DELETION OF ADDITION OF RS.30,1 73/-, THE LD. FIRST APPELLATE AUTHORITY HAS DELETED THE ADDITION ON THE BASIS OF ORDER DATED 06 .02.2009 PASSED BY THIS BENCH IN ITA NO. 210/AGRA/2006. THEREFORE, NO INTERFERENCE IS CALLED IN THE IMPUGNED ORDER ON THE ISSUE INVOLVED IN GROUND NO. 3. IN THE RESULT, THE APPEAL FILED BY THE REVENUE DESERVES TO BE DISMISSED. 5 8. AS REGARD TO THE CROSS-OBJECTION, THE LD. AR OF THE ASSESSEE STATED THAT HE IS NOT PRESSING THE ISSUE INVOLVED IN THE CROSS-OBJECTION AND THE S AME MAY BE DISMISSED. I DISMISS THE CROSS- OBJECTION OF THE ASSESSEE ACCORDINGLY. 9. IN THE RESULT, THE APPEAL FILED BY THE REVENUE A ND THE CROSS OBJECTION FILED BY ASSESSEE ARE DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 28.12.2011. SD/- (H.S. SIDHU) JUDICIAL MEMBER DATED: 28 TH DECEMBER, 2011 *AKS/- COPY OF THE ORDER FORWARDED TO : 1. APPELLANT 2. RESPONDENT 3. CIT(A) BY ORDER 4. CIT, CONCERNED 5. DR, ITAT, AGRA 6. GUARD FILE ASSISTANT REGISTRAR TRUE COPY