Appeal details
Counselvise Citation
[2019] 117 COUNSELVISE.COM (IT) 7273 (ITAT-CHENNAI)
Assessee PAN
Bench
Appeal Number
Duration Of Justice
6 month(s) 1 day(s)
Appellant
Respondent
Appeal Type
Income Tax Appeal
Pronouncement Date
25-04-2019
Appeal Filed By
Assessee
Order Result
Dismissed
Bench Allotted
D
Next Hearing Date
-
Assessment Year
2014-2015
Appeal Filed On
24-10-2018
Judgement Text
, , IN THE INCOME-TAX APPELLATE TRIBUNAL D BENCH, CHENNAI . , . , BEFORE SHRI ABRAHAM P. GEORGE, ACCOUNTANT MEMBER & SHRI DUVVURU RL REDDY, JUDICIAL MEMBER ./ I T.A. NO. 2958/CHNY/2018 / ASSESSMENT YEAR:2014-15 RANGANATHAN MARIAPPAN, NO. 77, MUTHU NAGAR, NARASIMHAN NAICKAN PALAYAM, COIMBATORE 641 031. [PAN:BCVPM6269H] VS. THE DEPUTY COMMISSIONER OF INCOME TAX, CIRCLE 1, OOTACAMUND. ( /APPELLANT ) ( / RESPONDENT ) / APPELLANT BY : SHRI K. BALASUBRAMANIAN, C.A. /RESPONDENT BY : SHRI M. SRINIVASA RAO, CIT / DATE OF HEARING : 27.03.2019 /DATE OF PRONOUNCEMENT : 25.04.2019 /O R D E R PER DUVVURU RL REDDY, JUDICIAL MEMBER: THIS APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER OF THE LD. COMMISSIONER OF INCOME TAX (APPEALS) 3, COIMBATORE DATED 28.08.2018 RELEVANT TO THE ASSESSMENT YEAR 2014-15. IN THE GROUNDS OF APPEAL, THE ASSESSEE CHALLENGED THE ORDER OF THE LD. CIT(A) IN CONFIRMING THE ADDITION TOWARDS PURCHASE MADE UNDER SECTION 69C OF THE INCOME TAX ACT, 1961 [ACT IN SHORT] AS WELL AS CONFIRMATION OF DISALLOWANCE OF TRAVELLING EXPENSES AND VEHICLE MAINTENANCE. I.T.A. NO.2958/CHNY/18 2 2. BRIEF FACTS OF THE CASE ARE THAT ASSESSEE IS AN INDIVIDUAL AND ENGAGED IN SALE OF SORTING MACHINE IN THE NAME AND STYLE OF M/S. I. TEK SYSTEM, COIMBATORE. THE ASSESSEE FILED THE RETURN ADMITTING INCOME OF .15,11,020/-. THE CASE WAS SUBSEQUENTLY SELECTED FOR SCRUTINY. AGAINST STATUTORY NOTICES, THE ASSESSEE FILED VARIOUS DETAILS. AFTER VERIFICATION OF DETAILS OF THE ASSESSEE, THE ASSESSING OFFICER OBSERVED THAT THE DESCRIPTION ON THE BILLS OF PURCHASE AND SALE OF THE MACHINE ARE NOT MATCHING, HAS NOT BEEN REBUTTED OR DISPROVED WITH DOCUMENTARY EVIDENCES. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE ASSESSING OFFICER POINTED OUT SPECIFIC DEFECTS WITH A SAMPLE OF DATE WISE INVOICES, WHEREAS, THE ASSESSEE MADE A GENERAL STATEMENT THAT THE MACHINES ARE SAME. FURTHER, THE ASSESSING OFFICER OBSERVED THAT THE CASH PAYMENT DETAILS AS PROVIDED IN THE LEDGER ACCOUNT COPIES DID NOT FIND ANY MENTION IN THE PURCHASE BILLS NOR WAS ANY CASH PAYMENT VOUCHERS SUBMITTED DURING THE ASSESSMENT PROCEEDINGS, WHICH WAS NOT REBUTTED BY THE ASSESSEE. BY OBSERVING VARIOUS SERIOUS LACUNAS IN THE SALE BILLS OF M/S. I SORT SOLUTIONS AND M/S. EVERGREEN SORTING TECHNOLOGIES GIVEN TO THE ASSESSEE AND TO OUTSIDE UNRELATED PARTIES AND MOREOVER, THE ASSESSEE HAS NOT EXPLAINED THE SOURCE FOR THE PURCHASES, THE EXPENDITURE OF .97,10,500/- CLAIMED BY THE ASSESSEE WAS ADDED TO THE TOTAL INCOME OF THE ASSESSEE. ON APPEAL, THE LD. CIT(A) CONFIRMED THE ADDITION. 3. ON BEING AGGRIEVED, THE ASSESSEE IS IN APPEAL BEFORE THE TRIBUNAL. I.T.A. NO.2958/CHNY/18 3 4. WE HAVE HEARD BOTH THE SIDES, PERUSED THE MATERIALS AVAILABLE ON RECORD AND GONE THROUGH THE ORDERS OF AUTHORITIES BELOW INCLUDING PAPER BOOK FILED BY THE ASSESSEE. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE ASSESSING OFFICER NOTICED THAT THE ASSESSEE MADE PURCHASE OF .11,40,59,850/- DURING THE RELEVANT FINANCIAL YEAR. VIDE POINT 2(A) OF NOTICE UNDER SECTION 142(1) DATED 23.11.2016, THE ASSESSEE WAS REQUESTED TO PROVIDE LEDGER ACCOUNT COPIES OF 'PURCHASE - PARTY-WISE' WITH FULL DESCRIPTION. ON VERIFICATION OF THE LEDGER ACCOUNT, THE ASSESSING OFFICER NOTICED THAT THE ASSESSEE HAD PURCHASED MACHINES ONLY FROM TWO PARTIES I.E. EVERGREEN SORTING TECHNOLOGIES AND I SORT SOLUTIONS OF .7,89,93,605/- AND .3,88,57,400/- RESPECTIVELY. IT WAS FURTHER NOTICED THAT THE LEDGER ACCOUNT DID NOT GIVE FULL DESCRIPTION/DETAILS. FURTHER, MANY ENTRIES WERE CASH PAYMENT ENTRIES. TO BE SPECIFIC, IN THE LEDGER ACCOUNT OF EVERGREEN SORT SOLUTION, THERE WERE 366 CASH PAYMENT ENTRIES OF .19,000/- EACH AND IN THAT OF I SORT SOLUTION, THERE WERE 149 CASH PAYMENT ENTRIES OF .18,500/- EACH. DURING SUCH VERIFICATION, THE ACCOUNTS HEAD, MR. KANNADHASAN STATED THAT THE MACHINES WOULD BE PURCHASED AND TRANSFERRED FROM EVERGREEN SORT SOLUTION OR I SORT SOLUTION AND THEN WOULD BE SOLD THE SAME OR NEXT DAY. THIS PATTERN WAS FOUND CORRECT. HOWEVER, NO CASH PAYMENT DETAILS AS PROVIDED IN THE LEDGER ACCOUNT COPIES WERE AVAILABLE ON SUCH BILLS. FURTHER, NO VOUCHERS WERE ALSO AVAILABLE FOR SUCH CASH PAYMENTS. ON PERUSAL OF THE BILLS OF PURCHASE AND THEN SALE OF THE MACHINES, THE ASSESSING OFFICER NOTICED THAT I.T.A. NO.2958/CHNY/18 4 THE DESCRIPTION WAS NOT MATCHING. BY REPRODUCING INVOICE DATED 22.04.2013 SUPPORTING PURCHASE OF AN 'APPLE MAKE COLOUR SORTER WITH CONTROLLER, CCD CAMERA TECHNOLOGY WITH AUTOMATIC CLEANING SYSTEMS, LONG DURABLE EJECTORS, TOUCH SCREEN AND ACCESSORIES' FROM I SORT SOLUTIONS ALONG WITH ITS DELIVERY CHALLAN, IT WAS NOT EVIDENT AS TO WHICH MACHINE WAS ACTUALLY PURCHASED AND WHICH ONE WAS SOLD SINCE THE DESCRIPTION OF THESE MACHINES WERE NOT MATCHING. ON BEING ASKED FOR EXPLANATION, MR. KANNADHASAN, ACCOUNTS HEAD STATED THAT THE MACHINE WHICH WAS PURCHASED WAS SOLD ON THE SAME DAY. BUT, HE COULD NOT EXPLAIN THE DIFFERENCE IN DESCRIPTION OF THE MACHINES. BOTH THE PROPRIETORS OF I SORT SOLUTIONS AND EVERGREEN SORTING TECHNOLOGIES I.E. SHRI ANNAMALAI BALACHANDRAN SUDHAKARAN (BVSPS1471B) AND SHRI KRIAHRIAN RAJMOHAN (AMYPR5864P) WERE SELECTED IN SCRUTINY AND ON VERIFICATION, THE ASSESSING OFFICER OBSERVED THAT ALL THREE CONCERNS WERE TAKEN CARE OF FROM THE SAME PREMISES TO ESTABLISH THE PROXIMITY OF THESE THREE CONCERNS AND THE IMAGINABLE CONVENIENCE THAT WOULD HAVE BEEN AVAILABLE TO THE ASSESSEE TO KEEP TRACK OF EXACT MACHINE COMING IN AND GOING OUT. FURTHER, BY REPRODUCING THE SALE INVOICE OF I SORT SOLUTION DATED 14.02.2014 OF AN APPLE MAKE COLOUR SORTER WITH CONTROLLER BASED, CCD CAMERA TECHNOLOGY, EXTRUDED CHUTES, AUTOMATIC CLEANING SYSTEM AND ACCESSORIES SOLD TO M/S. SHRI SHYAM RICE MILL, THE ASSESSING OFFICER OBSERVED THAT THE SALE INVOICE INCLUDED EXACT DESCRIPTION OF THE MACHINE / SORTER SOLD AND EVEN DETAILED LIST OF ACCESSORIES WHILE NO SUCH DETAILS WERE I.T.A. NO.2958/CHNY/18 5 AVAILABLE FOR PURCHASE MADE BY THE ASSESSEE FROM I SORT SOLUTIONS. THE ABOVE DISCREPANCY WAS EVIDENT IN ALMOST ALL THE BILLS BOTH OF I SORT SOLUTIONS AND EVERGREEN SORTING TECHNOLOGIES. ACCORDINGLY, VIDE ORDER SHEET ENTRY DATED 16.12.2016, THE ASSESSING OFFICER REQUESTED MR. KANNADHASAN REQUESTED TO EXPLAIN THE FOLLOWING: ' ... (A) ON A PERUSAL OF PARTY-WISE PURCHASE DETAILS, IT WAS NOTICED THAT CERTAIN AMOUNTS WERE PAID IN CASH BOTH TO I SORT SOLUTIONS AND EVERGREEN SORTING TECHNOLOGIES DURING THE YEAR AGAINST THE BILLS RAISED BY THEM. ON VERIFICATION OF SUCH BILLS, IT WAS NOTICED THAT NO DETAILS OF THE SORTER SO PURCHASED WAS AVAILABLE ON THE BILLS IN THE MANNER, IT WAS GIVEN FOR SALE TO OTHER PARTIES BY L-SORT SOLUTIONS AND EVERGREEN SORTING TECHNOLOGIES. HOWEVER, NO ONE ATTENDED THE PROCEEDINGS ON THE DATE OF HEARING FIXED ON 20.12.2016, NOR WAS ANY WRITTEN SUBMISSION OR APPLICATION FOR ADJOURNMENT OR TELEPHONIC CALL FOR ADJOURNMENT WAS MADE RECEIVED IN THIS OFFICE. EVIDENTLY, THE ASSESSEE HAS NOT BEEN ABLE TO GIVE ANY EXPLANATION FOR THE DISCREPANCIES AS MENTIONED ABOVE. ON ANALYSING THE ABOVE MENTIONED DISCREPANCIES, THE ASSESSING OFFICER OBSERVED THAT: (A) THE ASSESSEE COULD NOT EXPLAIN WHICH MACHINE WAS PURCHASED AGAINST WHICH INVOICE AND WHICH ONE SO PURCHASED WAS SOLD WHEN. (B) THE ASSESSEE COULD NOT EXPLAIN THE CASH PAYMENTS TO BOTH THE PURCHASE PARTIES. THERE WAS NO SUCH ENTRY OR HAND WRITTEN NOTE ON ANY OF THE BILLS PRODUCED (COPIES KEPT ON RECORD) TO SUPPORT SUCH CASH PAYMENTS. (C) ALL THREE CONCERNS' ACCOUNTS ARE MAINTAINED AT ONE PLACE AND BY ONE ACCOUNTANT ONLY. IT WOULD HAVE BEEN VERY CONVENIENT FOR THE ASSESSEE I.T.A. NO.2958/CHNY/18 6 TO MAINTAIN MACHINE-WISE DETAILS PURCHASED AND SOLD ON THE SAME OR NEXT DAY BUT THE DISCREPANCIES COULD NOT BE EXPLAINED BY HIM. IN VIEW OF THE ABOVE AND SINCE THE ASSESSEE COULD NOT MATCH THE CASH PAYMENT ENTRIES WITH THE PURCHASE INVOICES AND NOR COULD EXPLAIN THE DISCREPANCIES, THE ASSESSING OFFICER TREATED THE CASH PAYMENTS OF . 27,56,500/- (.18500 X 149) AND OF .69,54,000/- (.19000 X 366) MADE TO M/S. I SORT SOLUTIONS AND EVERGREEN SORTING TECHNOLOGIES RESPECTIVELY ARE BEING TREATED AS PAYMENTS TOWARDS BOGUS PURCHASES (OR BEING NOT PAID AT ALL) AND THUS, THE TOTAL AMOUNT OF .97,10,500/- WAS BROUGHT TO TAX. 5. AFTER EXAMINING THE FACTS OF THE CASE, THE LD. CIT(A) HAS OBSERVED THAT THE SUPPOSED CASH PAYMENTS MADE BY THE ASSESSEE TO M/S. I. SORT SOLUTIONS AND M/S. EVERGREEN SORTING TECHNOLOGIES ARE NOT TOWARDS PURCHASE OF THE MACHINES BY THE ASSESSEE. THE FACT THAT MACHINES HAVE BEEN SOLD BY THE ASSESSEE INDICATES PURCHASE OF THE SAME MACHINE, BUT THE SOURCE FOR SUCH PURCHASE HAS NOT BEEN EXPLAINED BY THE ASSESSEE. ACCORDINGLY, THE LD. CIT(A) CONFIRMED THE ADDITION OF .97,10,500/- UNDER SECTION 69C OF THE ACT. WE HAVE PERUSED THE PAPER BOOK FILED BY THE ASSESSEE . THE ASSESSEE ALSO FILED AFFIDAVIT OF PROPRIETOR OF M/S. I SORT SOLUTIONS WITH REGARD TO PAYMENT. AS PER INVOICE, M/S. I SORT SOLUTIONS, SOLD THE MACHINE WITH THE DESCRIPTION OF APPLE MAKE COLOR SORTER WITH CONTROLLER BASED, CCD CAMERA TECHNOLOGY WITH AUTOMATIC CLEANING SYSTEMS, LONG DURABLE EJECTORS, TOUCH SCREEN AND ACCESSORIES FOR .20.00 LAKHS TO THE ASSESSEES CONCERN M/S. I TEK SYSTEMS, I.T.A. NO.2958/CHNY/18 7 WHEREIN, THERE IS NO MENTION OF PARTY PURCHASE ORDER NUMBER, INSTEAD, IT WAS MENTIONED AS ORAL CONFIRMATION. SIMILARLY, THE ASSESSEES CONCERN SOLD THE MACHINE WITH THE DESCRIPTION OF APPLE MAKE COLOR SORTER WITH CONTROLLER BASED, LONG DURABLE EJECTORS, 5.1 COLOR TOUCH SCREEN, AUTOMATIC CLEANING SECTION AND RELATED ACCESSORIES FOR .22.00 LAKHS TO M/S. KRISHI RICE MILL, WHEREIN, THERE IS NO MENTION OF PARTY PURCHASE ORDER NUMBER, INSTEAD, IT WAS MENTIONED AS VERBAL/ORAL CONFIRMATION. THE DESCRIPTION OF MACHINE PURCHASED BY THE ASSESSEE WAS CCD CAMERA TECHNOLOGY WITH AUTOMATIC CLEANING SYSTEM, WHEREAS, THE MACHINE SOLD WAS 5.1 COLOR TOUCH SCREEN, AUTOMATIC CLEANING SECTION, WHICH IS NOT MATCHING. THE COLOR TOUCH SCREEN IS COMMON IN THE SORTER MACHINE, BUT THE ITEM PURCHASED BY THE ASSESSEE WAS CCD CAMERA TECHNOLOGY, WHICH IS DIFFERENT FROM WHAT THE ASSESSEE CLAIMED TO HAVE SOLD. M/S. I SORT SOLUTIONS ALSO SOLD THE MACHINE WITH THE DESCRIPTION OF APPLE MAKE COLOR SORTER WITH CONTROLLER BASED, CCD CAMERA TECHNOLOGY, EXTRUDED CHUTES, AUTOMATIC CLEANING SYSTEM AND ACCESSORIES TO M/S. SHRI SHYAM RICE MILL AND THE COST OF THE ITEM WAS ONLY .12,74,510/-. IT IS CLEAR FROM THE DESCRIPTION OF MACHINES THAT THE MACHINES ARE NOT ONE AND THE SAME BUT IT IS DIFFERENT. MOREOVER, THE COST OF THE MACHINE IS NOT IN HUNDREDS OR THOUSANDS, BUT IN LAKHS AND IT IS UNBELIEVABLE THAT SUCH MACHINE COULD BE PURCHASED AND SOLD PURELY ON THE BASIS OF ORAL CONFIRMATION. SINCE, AS PER INVOICE, THE DESCRIPTION OF THE MACHINE DIFFERS FROM WHICH THE ASSESSEE SOLD, THE ASSESSEE IS LIABLE TO FURNISH THE DETAILS WITH REGARD TO THE DATE OF PURCHASE, I.T.A. NO.2958/CHNY/18 8 FROM WHOM IT WAS PURCHASED BY FURNISHING PURCHASE ORDER, INVOICE, ETC., WHICH THE ASSESSEE COULD NOT FURNISH EITHER BEFORE THE AUTHORITIES BELOW OR EVEN BEFORE THE TRIBUNAL TO ACCEPT THE CLAIM OF THE ASSESSEE. IN VIEW OF THE ABOVE, WE SUSTAIN THE ADDITION AND THUS, THE GROUND RAISED BY THE ASSESSEE STANDS DISMISSED. 6. THE NEXT GROUND RAISED IN THE APPEAL OF THE ASSESSEE RELATES TO DISALLOWANCE OF TRAVELLING EXPENSES AND VEHICLE MAINTENANCE AT .3,09,320/-. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, ON EXAMINATION OF THE BOOKS OF ACCOUNTS ALONG WITH BILLS AND VOUCHERS, THE ASSESSING OFFICER NOTICED THAT NOT EVEN SINGLE BILL OR VOUCHER WAS AVAILABLE IN SUPPORT OF TRAVELLING EXPENSES OF .15,46,601/- WHICH WERE DEBITED TO THE PROFIT AND LOSS ACCOUNT. WHEN THIS FACT WAS BROUGHT TO THE NOTICE OF THE ASSESSEE, NO EXPLANATION ON THE DISCREPANCY WAS FILED. INCIDENTALLY, NO BILLS OR VOUCHERS WERE AVAILABLE FOR TRAVELLING EXPENSES INCURRED BY SHRI ANNAMALAI BALACHANDRAN SUDHAKARAN AND SHRI KRISHNAN RAJMOHAN TOO. ACCORDINGLY, THE ASSESSING OFFICER DISALLOWED 20% OF SUCH EXPENSES AT . 3,09,320/- AND ADDED BACK TO THE TOTAL INCOME OF THE ASSESSEE, WHICH WAS CONFIRMED BY THE LD. CIT(A) ON APPEAL. IF THE ASSESSEE REALLY INCURRED THE EXPENSES, HE WOULD HAVE BROUGHT ON RECORD COMPLETE DETAILS EVEN BEFORE THE TRIBUNAL. ON PERUSAL OF THE PAPER BOOK, WE FIND EXPENSE REPORT OF ONE SHRI N. SHANMUGAM FOR .2,907/- AT PAGE 52, RAILWAY SLEEPER CLASS E-TICKET FOR .316.24 AT PAGE 53 AND HOTEL BILL I.T.A. NO.2958/CHNY/18 9 IN RESPECT MR. U. PRADEEP FOR .1,040/- AT PAGE 54 AND NOTHING MORE THAN THAT AGAINST THE CLAIM OF .15,46,601/- MADE BY THE ASSESSEE. IN VIEW OF THE ABOVE, THE ASSESSING OFFICER HAS REASONABLY AND MAGNANIMOUSLY ALLOWED 80% OF THE CLAIM AND ONLY 20% OF THE CLAIM WAS BROUGHT TO TAX. IN THE ABSENCE OF COMPLETE DETAILS OF CLAIM OF TRAVEL EXPENSES BROUGHT ON RECORD, THE GROUND RAISED BY THE ASSESSEE STANDS DISMISSED. 7. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS DISMISSED. ORDER PRONOUNCED ON THE 25 TH APRIL, 2019 AT CHENNAI. SD/- SD/- (ABRAHAM P. GEORGE) ACCOUNTANT MEMBER (DUVVURU RL REDDY) JUDICIAL MEMBER CHENNAI, DATED, THE 25.04.2019 VM/- /COPY TO: 1. /APPELLANT, 2. / RESPONDENT, 3. ( )/CIT(A), 4. /CIT, 5. /DR & 6. /GF.
Mehul