ITO, Karnal V. M/s. Shree Jagdamba Rice & General Mills, Karnal

ITA 3109/DEL/2009

• Counselvise Citation: [2010] 119 COUNSELVISE.COM (IT) 5676 (ITAT-DELHI)
• Duration Of Justice: 7 month(s) 5 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 11-02-2010
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: D
• Next Hearing Date: 11-02-2010
• Assessment Year: 2006-2007
• Appeal Filed On: 06-07-2009
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: JA KHAN
• Keywords: Assessment record

Judgement Text

ITA NO. 3109/DEL/09 A.Y. 2006-07 1 IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH D NEW DELHI BEFORE SHRI C.L. SETHI, JUDICIAL MEMBER AND SHRI SHAMIM YAHYA, ACCOUNTANT MEMBER I.T.A. NO. 3109/DEL/2009 A.Y. 2006-07 INCOME TAX OFFICER, WARD-2, VS. M/S. SHREE J AGDAMBA RICE KARNAL & GENL. MILLS, ARIANPURA ROAD, GHARAUNDA DISTT., KARNAL (PAN: AADFS6386G) [APPELLANT] (RESPONDENT) ASSESSEE BY : NONE DEPARTMENT BY : SH. J.A. KHAN, SR. DR ORDER PER SHAMIM YAHYA, AM THIS APPEAL BY THE REVENUE IS DIRECTED AGAINST T HE ORDER OF THE CIT(A) DATED 19.1.2009 FOR THE ASSESSMENT YEAR 2006-07. 2. THE ISSUE RAISED IS THAT THE LD. CIT(A) ERRED IN DELETING THE TRADING ADDITION OF RS. 1,00,000/- AND DISALLOWANCE OF RS. 722049/- U/S 40(A)(IA). 3. REGARDING THE TRADING ADDITION THE AO NOTED THA T ASSESSEE IS MAINTAINING QUANTITATIVE RECORD OF THE PURCHASE OF PADDY, CONSU MPTION OF PADDY AND THE QUANTITY MANUFACTURED. AO ALSO NOTED THAT THE CLOS ING STOCK OF THE ASSESSEE HAS BEEN VALUED AT DIFFERENT RATES DEPENDING UPON THE A VAILABILITY OF THE PRODUCT. BUT THE VALUATION OF THE RATE ADOPTED FOR THE DIFF ERENT TYPE OF PRODUCT IS NOT FULLY ITA NO. 3109/DEL/09 A.Y. 2006-07 2 VERIFIABLE. AO CONCLUDED THAT ON BEING CONFRONTED THE ASSESSEE HAS SURRENDERED AN AMOUNT OF RS. 1 LAKH ON THIS ACCOUNT TO THE TRAD ING RESULT DECLARED. 4. BEFORE THE LD. CIT(A) IT WAS SUBMITTED THAT ASS ESSEE HAD FURNISHED COMPLETE DETAILS OF STOCK VALUATION ALONGWITH SALE PRICES AND THE SAME DETAIL WAS AGAIN FURNISHED DURING THE APPELLATE PROCEEDINGS A ND IT WAS FURTHER CLAIMED THAT NO SURRENDER OF INCOME WAS MADE. UPON CONSIDERING THE ASSESSEES SUBMISSIONS AND AOS COUNTER CLAIM IN THIS REGARD, LD. CIT(A) O BSERVED THAT LEGALLY THE AO HAS NO POWER TO ACCEPT ANY SUCH SURRENDER AND ASSESSEE HAS NO RIGHT TO MAKE ANY OFFER OF ANY SUCH SURRENDER. LD. CIT(A) CONCLUDED AS UNDER:- FROM THE FACTS IT IS CLEAR THAT EITHER THE AO FOR CED THE ASSESSEE TO MAKE SIGNATURE ON SURRENDER OF RS. 1,00,000/- OR AL TERNATIVELY HE MIGHT HAVE ALLOWED GREATER INCOME TO ESCAPE BY WAY OF ACCEPTING A SURRENDER OF RS. 1,00,000/- BUT ANY APPELLATE AUTHO RITY CAN NOT BE A PARTY TO SUCH ILLEGAL EXERCISE OF POWER BY THE AO. THEREFORE, THE ISSUE HAS TO BE SEEN ON MERIT ONLY IN THE APPELLATE PROCEEDINGS. THE AO HAS MERELY ALLEGED THAT THE STOCK PRICES WERE NO T VERIFIABLE, WHEREAS, AS PER DETAIL FURNISHED BY THE ASSESSEE T HE COMPLETE DETAIL OF THE STOCK WERE AVAILABLE AND AO HAS NOT FOUND OU T ANY PARTICULAR ITEM OF DEFECT OR PRICE WHICH WAS NOT VERIFIABLE A ND THEREFORE, THERE IS NO BASIS FOR MAKING DISALLOWANCE OF RS. 1,00,000 /-, HENCE IT IS DELETED AND THE GROUND OF APPEAL OF THE ASSESSEE IS ALLOWED. 5. AGAINST HIS ORDER THE REVENUE IS IN APPEAL BEFO RE US. ITA NO. 3109/DEL/09 A.Y. 2006-07 3 6. WE HAVE HEARD LD. DR. NONE APPEARED ON BEHALF O F THE ASSESSEE. UPON CAREFUL CONSIDERATION, WE FIND THAT AO HAS NOT BROU GHT ABOUT ANY DETAIL OF THE SHORTCOMINGS OBSERVED BY HIM IN THE STOCK VALUATIO N. HE HAS MERELY STATED THAT THE RATE ADOPTED FOR STOCK VALUATION ARE NOT FULLY VERIFIABLE AND ON BEING CONFRONTED THE ASSESSEE SURRENDERED AN AMOUNT OF RS . 1 LAKH. HENCE WE AGREE WITH THE CONTENTION OF THE LD. CIT(A) THAT IN THIS CASE THERE IS NO APPLICATION OF MIND BY THE AO. THERE IS NO INDICATION WHATSOEVER AS TO WHAT IS MAGNITUDE IF ANY, OF SHORTCOMINGS OBSERVED BY HIM. MOREOVER THE ASSESSEE HAS CLEARLY STATED BEFORE THE LD. CIT(A) THAT IT HAD NOT MADE ANY SUCH SURRENDER AND IT HAD SUBMITTED ALL THE OTHER DETAILS OF STOCK VALUATIO N IN THIS REGARD. UNDER THE CIRCUMSTANCES, WE DO NOT FIND ANY ILLEGALITY OR INF IRMITY IN THE ORDER OF THE LD. CIT(A) ON THIS ISSUE. ACCORDINGLY WE AFFIRM THE S AME. 7. ON THE NEXT ISSUE OF DISALLOWANCE OF RS. 722049 /-, THE FACTS OF THE CASE AS PER AO ARE THAT WHILE EXAMINING THE DETAILS OF EXP ENDITURE UNDER THE HEAD FREIGHT EXPENSES, AO OBSERVED THAT ASSESSEE HAS M ADE PAYMENTS TO TRANSPORTERS IN CASH ABOVE RS. 20,000/- AND THAT TO WITHOUT DEDU CTING THE TAX AT SOURCE. ASSESSEE RESPONDED THAT TAX HAS BEEN DEDUCTED, BUT FAILED TO PROVIDE ANY EVIDENCE IN SUPPORT OF HIS CLAIM. AO PROCEEDED TO DISALLOW EXPENDITURE OF RRS. 763327/- UNDER SECTION 40(A)(IA) OF THE IT ACT. 7.1 UPON ASSESSEES APPEAL LD. CIT(A) NOTED THAT I T WAS CLEAR FROM THE ASSESSMENT RECORD THAT NO OPPORTUNITY FOR FILING TH E DETAILS RELATING TO TDS ON FREIGHT WAS GIVEN TO THE ASSESSEE. THEREFORE, THE DETAILS AND EVIDENCES FILED BY THE ASSESSEE DURING APPELLATE PROCEEDINGS WERE ADMI TTED AFTER THE COMMENTS OF THE AO. LD. CIT(A) FURTHER OBSERVED AS UNDER:- ITA NO. 3109/DEL/09 A.Y. 2006-07 4 AS PER THE DETAILS FILED BY THE ASSESSEE, ALL THE PAYMENTS FOR FREIGHT ARE TO INDIVIDUAL TRUCKERS AND NONE OF THEM IS EXCE EDING RS. 20,000/- ON A SINGLE DAY EXCEPT THE PAYMENTS MADE ON 22.2.20 06 OUT OF WHICH TDS HAS BEEN MADE AND DEPOSITED AGAINST THE PAYMENT OF RS. 68,212/- AND NO TDS WAS MADE FOR TWO PAYMENTS O N THE SAME DAY TOTALING TO RS. 41,278/-. FROM THE COMMENTS OF THE AO, IT IS CLEAR THAT HE HAS NOT DISPUTED THE CLAIM OF THE ASSESSEE ON MERIT AND BASED ON THE FATS AND DETAILS SUBMITTED BY THE AS SESSEE. THE AO HAS MERELY COMMENTED THAT THESE DETAILS WERE NOT FURNISHED DURING ASSESSMENT PROCEEDINGS BUT AS IS EVIDENT FROM THE A SSESSMENT PROCEEDINGS SUCH AN OPPORTUNITY WAS NOT GIVEN TO T HE ASSESSEE. THEREFORE, THE DISALLOWANCE IS RESTRICTED TO THE A MOUNT OF RS. 41,278/- ON WHICH TDS WAS REQUIRED TO BE MADE B UT NO TDS WAS MADE AND THE BALANCE IS DELETED. IN THE RESULT, T HE GROUND OF APPEAL OF THE ASSESSEE IS PARTLY ALLOWED. 7.2 AGAINST THIS ORDER THE REVENUE IS IN APPEAL BEF ORE US. 7.3 WE HAVE HEARD LD. DR. NONE APPEARED ON BEHALF O F THE ASSESSEE. WE FIND THAT LD. CTI(A) HAS GIVEN A CATEGORICALLY FINDING T HAT THERE WERE ONLY A FEW INSTANCES OF PAYMENTS EXCEEDING RS. 20,000/- IN A S INGLE DAY. THE NECESSARY DETAILS IN THIS REGARD WERE SUBMITTED BEFORE THE CI T(A) AND AO HAS ONLY COMMENTED THAT THE DETAILS WERE NOT FURNISHED DURIN G THE ASSESSMENT PROCEEDINGS. AFTER CAREFUL EXAMINATION, THE CIT(A) HAS RESTRICTED THE DISALLOWANCE TO RS. 41,278/-. IN OUR CONSIDERED OPINION, THERE IS NO ILLEGALITY OR INFIRMITY IN THE ORDER OF THE LD. CIT(A) IN THIS REGARD. ACCORDING LY WE AFFIRM THE SAME. ITA NO. 3109/DEL/09 A.Y. 2006-07 5 8 IN THE RESULT, THE APPEAL FILED BY THE REVENUE IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 11/02/201 0 UPON CONCLUSION OF THE HEARING. SD/- SD/- [C.L. SETHI] [SHAMIM YAHYA] JUDICIAL MEMBER ACCOUNTANT MEMBER DATE:- 11/02/2010 SRB COPY FORWARDED TO: - 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT (A) 5. DR, ITAT TRUE COPY BY ORDER, DEPUTY REGISTRAR, ITAT, DELHI BENCHES