The DCIT, Central Circle-2, Surat V. Jivraj Tea Company, Surat

ITA 3042/AHD/2010

• Counselvise Citation: [2011] 134 COUNSELVISE.COM (IT) 6276 (ITAT-AHMEDABAD)
• Duration Of Justice: 7 month(s) 22 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-06-2011
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 17-06-2011
• Assessment Year: 2007-2008
• Appeal Filed On: 08-11-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: KARTAR SINGH
• Assessee Lawyers: M J SHAH
• Keywords: Sham transactions

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD BENCH A BEFORE SHRI MUKUL KR. SHRAWAT, JUDICIAL MEMBER AND SHRI A.K. GARODIA, ACCOUNTANT MEMBER DATE OF HEARING : 17/6/11 DRAFTED ON: 20 /6/11 ITA NO.3042/AHD/2010 ASSESSMENT YEAR : 2007-08 THE DY.CIT CIRCLE-6 SURAT VS. M/S.JIVRAJ TEA COMPANY 5/258-259, JIVRAJ CHAMBERS RUWALA TEKRA, BHAGAL SURAT PAN/GIR NO. : AAJPL 1371 N ( APPELLANT ) .. ( RESPONDENT ) APPELLANT BY : SHRI KARTAR SINGH, CIT-D.R. RESPONDENT BY: SHRI M.J.SHAH, A.R. O R D E R PER SHRI MUKUL KR. SHRAWAT, JUDICIAL MEMBER : THIS IS AN APPEAL AT THE BEHEST OF THE REVENUE WH ICH HAS EMANATED FROM THE ORDER OF LEARNED CIT(APPEALS)-II, AHMEDABAD DATED 01/09/2010 PASSED FOR ASSESSMENT YEAR 2007-08. T HE ONLY GROUND IS AS FOLLOWS: [1] ON THE FACTS AND CIRCUMSTANCES OF THE CASE, TH E HON'BLE C.I.T. (A) HAS ERRED IN DELETING THE ADDITION OF RS.3,88,10,114/- MADE BY A.O. ON ACCOUNT OF EXCESSIVE AND UNREASONABLE PAYMENTS MADE TO SISTER CONCERNS U/S.40A(2)(A) OF THE ACT., AFTER CONSIDERATION ALL THE FACTS AND CIRCUMSTANCES OF THE CASE AND PROVISION OF SECT ION 40A()2) OF THE I.T.ACT. ITA NO.3042/AHD /2010 DY.CIT VS. M/S.JIVRAJ TEA COMPANY ASST.YEAR - 2007-08 - 2 - 2. AT THE OUTSET, IT IS INFORMED THAT THE ADDITION MADE VIDE AN ORDER U/S.143(3) OF THE I.T.ACT DATED 30/12/2009 FOR THE YEAR UNDER CONSIDERATION IN RESPECT OF PAYMENTS ALLEGED TO BE EXCESSIVE AND UNREASONABLE TO RELATED CONCERNS, NAMELY, M/S.SURIN CORPORATION AND M/S.JIVRAJ TEA LTD. AND THEREAFTER, THE IMPUGNED DI SALLOWANCE U/S.40A(2)(A) OF THE I.T.ACT WAS MADE HAS ALREADY BEEN DECIDED IN ASSESSEES FAVOUR IN ASSESSEES OWN CASE FOR ASSESS MENT YEARS 2005-06 AND 2006-07 AND THIS FACT WAS NOTED BY THE LEARNED CIT(APPEALS) AS FOLLOWS:- 4. I HAVE CONSIDERED THE FACTS AND THE SUBMISSION S. I FIND THAT ON THE SIMILAR FACTS, THE ADDITION WAS MADE IN THE EAR LIER YEAR I.E. A.Y. 2006-07 WHICH WAS CONFIRMED BY THE UNDERSIGNED. HO WEVER, THE HONBLE ITAT AHMEDABAD HAVE DELETED THE ADDITION VI DE ORDER NO.ITA NO.3005/AHD/2009 DATED 26/03/2010 BY FINDING THAT YARD STICK ADOPTED BY THE ASSESSING OFFICER WAS AVERAGE PURCHASE PRICE OF TEA WITHOUT ASCERTAINING THE PRICE PREVAILING IN THE MARKET ON THE DATE WHEN THE PURCHASE WAS MADE FROM SISTER CON CERNS WITH THAT FROM OUTSIDE PARTIES AND WITHOUT COMPARING THE EXACT QUALITY, AND THE TRANSACTIONS OF PURCHASES FROM THE SISTER C ONCERNS WERE NOT THE SHAM TRANSACTIONS. AS THE FACTS OF THIS YE AR ARE SIMILAR TO THE LAST YEAR AND NO NEW FACTS HAVE BEEN BROUGHT ON RECORD, BY RESPECTFULLY FOLLOWING THE ORDER OF THE HON'BLE ITA T, THE ADDITION IS DELETED. ITA NO.3042/AHD /2010 DY.CIT VS. M/S.JIVRAJ TEA COMPANY ASST.YEAR - 2007-08 - 3 - 3. NOW BEFORE US, AN ORDER OF THE RESPECTED CO-ORDI NATE BENCH A ITAT AHMEDABAD BEARING ITA NO.3003/AHD/2009 & S.P.NO.1/AHD/2010 (A.Y. 2005-06) IN THE CASE OF JIV RAJ TEA & INDUSTRIES LTD. VS. DCIT, ITA NOS.3004 & 3005/AHD/2009 (A.YS. 2005-06 & 2006-07) AND SP NO.2/AHD/2010 [IN ITA NO.3005/AHD/2 009] IN ASSESSEES OWN CASE, ITA NOS.3006 & 3007/AHD/2009 (A.YS.2005-06 & 2006-07) AND S.P. NO.3/AHD/2010 [IN ITA NO.3007/AHD /2009] IN THE CASE OF JIVRAJ TEA LTD. VS. DCIT AND ITA NO.3019/AH D/2009 (A.Y.2006- 07) IN THE CASE OF ACIT VS. M/S.JIVRAJ TEA LTD., W HEREIN IT HAS HELD AS UNDER:- 10.3. MOREOVER, IT IS NOBODYS CASE THAT THE TRANS ACTIONS OF PURCHASE FROM THE SISTER CONCERNS WERE NOT BONA FID E TRANSACTIONS NOR IS IT THE CASE OF THE REVENUE THAT THESE WERE S HAM TRANSACTIONS OR THAT THE PRICE PAID IN RESPECT OF EACH OF THESE TRANSACTIONS BY THE ASSESSEE WAS OTHER THAN THE ONE SET OUT IN THE BOOKS OF ACCOUNT OF THE ASSESSEE. UNDER THESE CIRCUMSTANCES IT APPE ARS TO US THAT THE TAXING AUTHORITIES HAD NO RIGHT TO SUBSTITUTE T HE AVERAGE PRICE IN PLACE OF THE PRICE OR VALUE AGREED TO BETWEEN TH E PARTIES TO THE TRANSACTION SINCE THE TRANSACTION HAS NOT BEEN SHOW N TO BE A SHAM ONE NOR HAS IT BEEN SHOWN THAT THE VALUE WAS NOT TH E VALUE IN THE BOOKS OF ACCOUNT. 10.4. IN VIEW OF THE FOREGOING, WE ARE NOT INCLINED TO AGREE WITH THE REASONS OF THE LD. CIT(A) AND THEREFORE, DELETE THE DISALLOWANCE MADE BY THE AO. ACCORDINGLY, GROUND N OS.1 TO 3 IN THESE TWO APPEALS ARE ALLOWED. 4. ONCE A VIEW HAS ALREADY TAKEN BY A RESPECTED CO- ORDINATE BENCH IN ASSESSEES OWN CASE AND THE FIRST APPELLATE AUTH ORITY HAS CATEGORICALLY STATED THAT THE FACTS WERE IDENTICAL, THEREFORE, TH E JUDICIAL PROPRIETY REQUIRES ONE BENCH OF THE TRIBUNAL TO FOLLOW ANOTHE R BENCH WHERE FACTS ITA NO.3042/AHD /2010 DY.CIT VS. M/S.JIVRAJ TEA COMPANY ASST.YEAR - 2007-08 - 4 - ARE THE SAME. WE FIND NO REASON TO ADOPT ANY OTHER VIEW BECAUSE ON IDENTICAL FACTS AND CIRCUMSTANCES, THE AFORESAID R ESPECTED CO-ORDINATE BENCH HAS ALREADY TAKEN A DECISION WHICH OUGHT TO B E FOLLOWED IN THE PRESENT APPEAL. HENCE, THERE IS NO FORCE IN THE G ROUND RAISED BY THE REVENUE. 5. IN THE RESULT, REVENUES APPEAL IS DISMISSED. ORDER SIGNED, DATED AND PRONOUNCED IN THE COURT ON 30 TH JUNE, 2011. SD/- SD/- ( A.K. GARODIA ) ( MUKUL KR. SHRAWAT ) ACCOUNTANT MEMBER JUDICIAL MEM BER AHMEDABAD; DATED 30 / 06 /2011 T.C. NAIR, SR. PS COPY OF THE ORDER FORWARDED TO : 1. THE ASSESSEE. 2. THE DEPA RTMENT. 3. THE CIT CONCERNED. 4. THE LD. CIT(AP PEALS)-II, AHMEDABAD 5. THE DR, AHMEDABAD BENCH 6. THE GUARD FILE. BY ORDER, //TRUE COPY// (DY./ASSTT.REGISTRAR), ITAT, AHMEDABAD 1. DATE OF DICTATION.. 17/6/2011 2. DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE DICTATING MEMBER 20/6/2011 OTHER MEMBER 3. DATE ON WHICH THE APPROVED DRAFT COMES TO THE SR.P. S./P.S.. 4. DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE THE D ICTATING MEMBER FOR PRONOUNCEMENT 5. DATE ON WHICH THE FAIR ORDER COMES BACK TO THE SR.P .S./P.S 30.6.11 6. DATE ON WHICH THE FILE GOES TO THE BENCH CLERK 30.6.11 7. DATE ON WHICH THE FILE GOES TO THE HEAD CLERK . 8. THE DATE ON WHICH THE FILE GOES TO THE ASSISTANT RE GISTRAR FOR SIGNATURE ON THE ORDER.. 9. DATE OF DESPATCH OF THE ORDER