The ITO, Ward-1, GANDHIDHAM V. M/s Dhanlaxmi Petrolium Pvt. Ltd., GANDHIDHAM

ITA 285/RJT/2008

• Counselvise Citation: [2011] 140 COUNSELVISE.COM (IT) 50030 (ITAT-RAJKOT)
• Duration Of Justice: 3 year(s) 18 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-05-2011
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: DB
• Next Hearing Date: 02-05-2011
• Assessment Year: 2004-2005
• Appeal Filed On: 12-05-2008
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: AVINASH KUMAR
• Assessee Lawyers: RD LALCHANDANI
• Section: 133(6)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL RAJKOT BENCH, RAJKOT BEFORE SHRI A.L. GEHLOT (AM) AND SHRI N.R.S. GANESA N (JM) I.T.A. NO.285/RJT/2008 (ASSESSMENT YEAR 2004-05) ITO, WD.1 VS M/S DHANLAXMI PETROLEUM PVT LTD GANDHIDHAM 106, GOKULPARK, PLOT NO.356 WARD 12/B, GANCDHIDHAM-KUTCH PAN : AABCD7301P (APPELLANT) (RESPONDENT) C.O. NO.56/RHT/2010 (ARISING OUT OF I.T.A. NO.285/RJT/2008) (ASSESSMENT YEAR 2004-05) REVENUE BY : SHRI AVINASH KUMAR ASSESSEE BY : SHRI RD LALCHANDANI O R D E R PER N.R.S. GANESAN, JM THE REVENUE HAS FILED THE APPEAL AGAINST THE ORDER OF CIT(A)-II, RAJKOT DATED 28-02-2008 AND THE ASSESSEE HAS FILED THE CRO SS OBJECTION AGAINST THE VERY SAME ORDER OF CIT(A). THEREFORE, WE HEARD THE APPE AL AS WELL AS THE CROSS OBJECTION TOGETHER AND ARE DISPOSING OFF THE SAME B Y THIS COMMON ORDER. 2. THE FIRST GROUND IN THE REVENUES APPEAL IS WITH REGARD TO THE RESTRICTION OF ADDITION TO RS.97,011 AS AGAINST THE ADDITION OF RS . 35,09,197 MADE BY THE ASSESSING OFFICER ON ACCOUNT OF ESTIMATION OF PROFI T. THE ASSESSEE HAS FILED THE CROSS OBJECTION WITH REGARD TO THE ESTIMATION OF PR OFIT AT 0.5%. 3. SHRI AVINASH KUMAR, THE LD.DR SUBMITTED THAT THE ASSESSING OFFICER HAS MADE THE ADDITION WITH REGARD TO UNVERIFIABLE SALES OF SKO AT 3%. THE ASSESSING OFFICER FOUND THAT THE SALE OF SKO TO THE EXTENT OF RS.1,21,03,707 WAS FOUND TO BE UNVERIFIABLE. HOWEVER, ON APPEAL BY THE ASSESSE E, THE CIT(A) CALLED FOR A REMAND REPORT FROM THE ASSESSING OFFICER. THE ASSE SSING OFFICER, AFTER VERIFICATION ITA NO.285/RJT/2008 CO 56/RJT/2010 2 FOUND THAT THE SALES MADE TO VINAY TRADERS IS ONLY RS. 42,31,375 AND IN THE ASSESSMENT ORDER THE FIGURE OF SALES WAS TAKEN BY M ISTAKE AT RS. 4,62,68,095. WITH REGARD TO THE SALES MADE TO M/S KAKAK KEROSENE & OIL DEPOT AND M/S NATIONAL TRADERS, THE ASSESSING OFFICER, AFTER VERI FICATION FOUND THAT THE SALES MADE BY THE ASSESSEE WERE GENUINE. HOWEVER, WITH R EGARD TO THE SALES MADE TO PURUSARTH PETROLEUM AND M/S ASHOK TRADING CO, THE P ARTIES COULD NOT FILE ANY DETAILS AS CALLED FOR BY THE ASSESSING OFFICER. T HEREFORE, THE CIT(A) RESTRICTED THE ADDITION WITH REGARD TO THESE TWO PARTIES AND ESTIM ATED THE NET PROFIT AT 0.5% ON THE SALES MADE TO PURUSARTH PETROLEUM AND ASHOK TRA DING. ACCORDING TO THE LD.DR THE NET PROFIT SHALL BE ESTIMATED AT 3%. 4. ON THE CONTRARY, SHRI RD LALCHANDANI, THE LD.COU NSEL FOR THE ASSESSEE SUBMITTED THAT ON VERIFICATION, THE ASSESSING OFFIC ER FOUND THAT THE SALES MADE TO M/S VINAY TRADERS, M/S KAKAK KEROSENE & OIL DEPOT A ND NATIONAL TRADERS ARE GENUINE. WITH REGARD TO THE SALES MADE TO PURUSART H PETROLEUM AND ASHOK TRADING THE ASSESSEE HAS FILED THE NAMES AND ADDRES S , PAN AND CERTIFIED COPIES OF THE CONTRA ACCOUNTS BEFORE THE LOWER AUTH ORITIES. AS PER THE CONTRA ACCOUNTS, ALL THE TRANSACTIONS ARE EXACTLY MATCHING . THE PAYMENTS WERE MADE THROUGH BANKING CHANNELS. THEREFORE, MERELY BECAUS E M/S PURUSARTH PETROLEUM AND M/S ASHOK TRADING COULD NOT FILE THE DETAILS CA LLED FOR BY THE ASSESSING OFFICER, THE ASSESSEE CANNOT BE PENALIZED WITHOUT F URTHER EXAMINATION. THEREFORE, THE ADDITION SUSTAINED BY THE CIT(A) IS NOT JUSTIFIED. 5. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS ON EITH ER SIDE AND HAVE ALSO PERUSED THE MATERIAL AVAILABLE ON RECORD. ADMITTEDL Y, THE ASSESSING OFFICER VERIFIED THE SALES MADE TO M/S VINAY TRADERS, M/S K AKAK KEROSENE & OIL DEPOT AND NATIONAL TRADERS AND FOUND THAT ALL TRANSACTION S ARE GENUINE. THEREFORE, THE CIT(A) HAS RIGHTLY DELETED THE ADDITION. IN RESPEC T OF SALES MADE TO PURUSARTH PETROLEUM AND ASHOK TRADING IT APPEARS THAT THE ASS ESSING OFFICER CALLED FOR DETAILS U/S 133(6) OF THE ACT. HOWEVER, NO DETAILS COULD BE FURNISHED BY PURUSARTH PETROLEUM AND ASHOK TRADING. SINCE THE A SSESSING OFFICER COULD NOT ITA NO.285/RJT/2008 CO 56/RJT/2010 3 VERIFY THE DETAILS WITH REGARD TO THOSE TWO PARTIES , THE CIT(A) SUSTAINED THE ADDITION. THE FACT REMAINS THAT THE ASSESSEE HAS F ILED THE NAMES AND ADDRESS AND CERTIFIED COPIES OF THE CONTRA ACCOUNTS OF THOS E PARTIES. THE ASSESSEE HAS ALSO FILED THE PAN OF THOSE TWO PARTIES. THEREFORE , IT IS NOT DIFFICULT FOR THE ASSESSING OFFICER TO CALL FOR THE DETAILS AND ENFOR CE THE ATTENDANCE OF THOSE TWO PARTIES FOR EXAMINATION. A WIDE POWER IS GIVEN TO THE ASSESSING OFFICER AS A CIVIL COURT TO EXAMINE AND ENFORCE THE ATTENDANCE OF THE PARTIES CONCERNED. THEREFORE, MERELY BECAUSE THOSE TWO PARTIES COULD N OT COMPLY WITH THE DIRECTION OF THE ASSESSING OFFICER THERE IS NO JUSTIFICATION TO DRAW ADVERSE INFERENCE AGAINST THE ASSESSEE. ADVERSE INFERENCE AGAINST THE ASSESS EE COULD BE DRAWN ONLY IN CASE THE ASSESSEE WITHHELD THE MATERIAL DOCUMENTS. IN THIS CASE IT IS NOBODYS CASE THAT THE ASSESSEE IS WITHHOLDING ANY OF THE MA TERIAL DOCUMENTS. IN FACT THE ASSESSEE HAS FILED THE CONTRA ACCOUNTS OF THE OTHER TWO PARTIES AND CLAIMS THAT THE CONTRA ACCOUNTS EXACTLY TALLY WITH THE TRANSACT IONS AND PAYMENTS MADE. IN SUCH CIRCUMSTANCES, IN OUR OPINION, THE ASSESSING O FFICER IS BOUND TO EXAMINE ALL THE RECORDS, IF NECESSARY, BY CALLING FOR THE DETAI LS AND ENFORCING THE ATTENDANCE OF THOSE PARTIES IN ACCORDANCE WITH LAW. ACCORDING LY WE SET ASIDE THE ORDER OF THE LOWER AUTHORITIES IN RESPECT OF THE TRANSACTION MADE TO PURUSARTH PETROLEUM AND M/S ASHOK TRADING AND REMAND BACK THE MATER TO THE FILE OF THE ASSESSING OFFICER. THE ASSESSING OFFICER SHALL EXAMINE THE T RANSACTIONS, AFTER GIVING REASONABLE OPPORTUNITY TO THE ASSESSEE AND THEREAFT ER DECIDE THE ISSUE IN ACCORDANCE WITH LAW. 6. WITH REGARD TO THE ESTIMATION OF PROFIT, SINCE T HE ISSUE OF UNEXPLAINED SALE PURUSARTH PETROLEUM AND M/S ASHOK TRADING IS REMAND ED BACK TO THE FILE OF THE ASSESSING OFFICER, IN OUR OPINION, IT NEEDS TO BE R ECONSIDERED. THE CIT(A) APPEARS TO HAVE FIXED THE NET PROFIT AT 0.5% WITHOU T TAKING INTO CONSIDERATION THE PROFIT RATIO OF THE SIMILARLY PLACED TRADERS IN THA T LOCALITY. THEREFORE, THE ISSUE OF RATE OF PROFIT IS ALSO SET ASIDE AND REMANDED BACK TO THE FILE OF THE ASSESSING OFFICER TO DECIDE THE SAME AFRESH. THE ASSESSING O FFICER SHALL RECONSIDER THE ISSUE, AFTER TAKING INTO CONSIDERATION OF THE COMPA RATIVE PROFIT RATIO OF THE SIMILARLY ITA NO.285/RJT/2008 CO 56/RJT/2010 4 PLACED TRADERS IN THAT LOCALITY AND THEREAFTER DECI DE THE ISSUE IN ACCORDANCE WITH LAW AFTER GIVING REASONABLE OPPORTUNITY TO THE ASSE SSEE. 7. IN THE RESULT, THE APPEAL OF THE REVENUE AND THE CROSS OBJECTION OF THE ASSESSEE ARE ALLOWED, FRO STATISTICAL PURPOSE. ORDER PRONOUNCED IN THE OPEN COURT ON 31-05-2011. SD/- SD/- (A.L. GEHLOT) (N.R.S. GANESAN) ACCOUNTANT MEMBER JUDICIAL MEMBER RAJKOT, DT : 31 ST MAY, 2011 PK/- COPY TO: 1. ASSESSEE 2. REVENUE 3. THE CIT(A)-II, RAJKOT 4. THE CIT-I, RAJKOT 5. THE DR, I.T.A.T., RAJKOT (TRUE COPY) BY ORDER ASSTT.REGISTRAR, ITAT, RAJKOT