Kishore Oil Mill, Howrah V. ITO,Ward 46(2),Kol., Kolkata

ITA 322/KOL/2017

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 1604 (ITAT-KOLKATA)
• Duration Of Justice: 4 month(s) 21 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 07-07-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 2012-2013
• Appeal Filed On: 16-02-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: M K BISWAS
• Assessee Lawyers: ASHISH RASTOGI
• Section: 143(3); 133(6)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL D BENCH : KOLKATA [BEFORE HONBLE SRI A.T.VARKEY, JM & SHRI M.BALAG ANESH, AM ] I.T.A NO.322/KOL/2017 ASSESSMENT YEAR : 2012-1 3 KISHORI OIL MILL -VS.- I.T.O., WARD-46 (2) KOLKATA KOLKATA [PAN : AAHFK 1751 B] (APPELLANT) (RESPONDENT) FOR THE APPELLANT : SHRI ASHISH RASTOG I, FCA FOR THE RESPONDENT : SHRI M.K.BISWAS, JCIT DATE OF HEARING : 22.06.2017. DATE OF PRONOUNCEMENT : 07.07.2017 ORDER PER M.BALAGANESH, AM 1. THIS APPEAL OF THE ASSESSEE ARISES OUT OF THE OR DER OF THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) -14 , KOLKATA [ IN SHORT THE L D CITA] IN APPEAL NO. 05/CIT(A)- 14/WARD-47(3)/2015-16. DATED 30.11.2016 AGAINST THE ORDER PASSED BY THE INCOME TAX OFFICER, WARD-46(2), KOLKATA [ IN SHORT THE LD AO] UNDER SECTION 143(3) OF THE INCOME TAX ACT, 1961 (HEREINAFTER REFERRED TO AS THE ACT ] DATED 13.03.2015 FOR THE ASST YEAR 2012-13. 2. THE FIRST ISSUE TO BE DECIDED IN THIS APPEAL IS AS TO WHETHER THE LD CITA WAS JUSTIFIED IN CONFIRMING THE ADDITION MADE IN THE SUM OF RS 5, 65,596/- BEING THE DIFFERENCE IN LEDGER BALANCE BETWEEN THE ASSESSEE AND THE CREDITO R M/S LOKHARIYA & SONS IN THE FACTS AND CIRCUMSTANCES OF THE CASE. 2.1. THE BRIEF FACTS OF THIS ISSUE IS THAT THE ASSE SSEE IS A PARTNERSHIP FIRM RUNNING AN OIL MILL FOR CRUSHING MUSTARD SEEDS FOR MAKING MUSTARD OIL. THE LD AO OBSERVED THAT ASSESSEE RAISED A PURCHASE ORDER ON M/S LOKHARIYA & SONS, BANDA U.P. BEFORE THE CLOSE 2 ITA NO.322/KOL/2017 KISHORI OIL MILL A.YR.2012-13 2 OF THE FINANCIAL YEAR 2011-12. THE SUPPLIER PREPAR ED A SALES INVOICE NO. 37 ON 29.3.2017 AND DISPATCHED THE GOODS ON THE SAME DATE BY ROAD. THE MATERIALS WERE DISPATCHED BY WAY BILL NO. 1920120331623 ISSUED BY DIRECTORATE OF COMMERCIAL TAXES, WEST BENGAL DATED 1.4.2012 AND ALL THE DETAILS OF P URCHASES I.E THE NAME OF THE PARTY, TRANSPORTER NAME, CONSIGNMENT NUMBER WHICH IS IN TH E INSTANT CASE IS 156 WERE FURNISHED. THOUGH THE DISPATCH HAS BEEN MADE BY M/ S LOKHARIYA & SONS VIDE INVOICE DATED 29.3.2012 , THE ASSESSEE RECEIVED THE GOODS O NLY ON 2.4.2012 AND MADE ENTRIES OF PURCHASE IN THE FINANCIAL YEAR 2012-13. DURING THE ASSESSMENT PROCEEDINGS FOR THE ASST YEAR 2012-13, THE LD AO AS A PART OF VERIFICATION O F GENUINENESS OF TRANSACTIONS ISSUED NOTICE U/S 133(6) OF THE ACT TO THE SUPPLIER AND FO UND THAT THE SUPPKIER HAD SHOWN SALES OF RS 39,07,162/- TO THE ASSESSEE WHEREAS THE ASSES SEE HAD SHOWN PURCHASES OF RS 33,41,566/- FROM THE SAID SUPPLIER. THE LD AO ADDE D THE DIFFERENCE OF RS 5,65,596/- AND ADDED IT TO THE TOTAL INCOME OF THE ASSESSEE. THIS ACTION OF THE LD AO WAS ALSO CONFIRMED BY THE LD CITA. AGGRIEVED, THE ASSESSEE I S IN APPEAL BEFORE US ON THE FOLLOWING GROUNDS:- 2. FOR THAT THE LD. C.I.T(A) ERRED IN CONFIRMING T HE ADDITION OF RS. 5,65,596/- BEING THE DIFFERENCE IN LEDGER BALANCE BETWEEN THE APPELLANT COMPANY AND THE CREDITOR M/S LOKNARIYA& SONS WITHOUT CONSIDERING TH E FACTS AND CIRCUMSTANCES OF THE CASE. 3. FOR THAT THE LD. C.I.T(A) ERRED IN NOT CONSIDERI NG THE FACTS STATED IN THE REMAND REPORT THAT THE PURCHASES HAD BEEN RECORDED BY THE APPELLANT COMPANY IN F.Y 2012-13 ON RECEIPT OF THE MATERIAL WHEREAS THE CRED ITOR HAD RECORDED THE SALES IN THE YEAR 2011-12 ON DISPATCH OF THE MATERIAL. 4. FOR THAT THE LD. CIT (A) HAD ERRED IN ASSUMING T HAT THE ACCOUNTING PRACTICE OF THE APPELLANT FIRM IS SUCH THAT PURCHASES ARE RECOR DED ON PLACING OF THE ORDER AND NOT ON RECEIPT OF THE MATERIALS. 5. FOR THAT THE LD. C.I.T(A) ERRED IN CONFIRMING TH E ADDITION OF RS. 565596/- MADE BY THE LD. INCOME TAX OFFICER ON THE PREMISE THAT T HERE IS UNRECONCILED DISCREPANCY BETWEEN THE LEDGER OF THE APPELLANT FIR M AND THE BOOKS OF THE CREDITOR. 2.2. THE LD AR ARGUED THAT THE GOODS WERE RECEIVED BY THE ASSESSEE ONLY ON 2.4.2012 AND ENTRY OF PURCHASE WAS MADE IN FINANCIAL YEAR 20 12-13 . THE LD AR ALSO SHOWED THE 3 ITA NO.322/KOL/2017 KISHORI OIL MILL A.YR.2012-13 3 LEDGER OF THE SAID SUPPLIER FOR THE FINANCIAL YEAR 2012-13 TO PROVE THAT THE PURCHASES WERE BOOKED IN THE NEXT FINANCIAL YEAR BASED ON THE DATE ON WHICH GOODS WERE RECEIVED BY THE ASSESSEE. IT WAS ALSO EXPLAINED THAT THE DI FFERENCE IN PARTY BALANCE IS ONLY DUE TO GOODS IN TRANSIT AMOUNTING TO A SINGLE INVOICE FOR RS 5,65,596/- WHICH WAS ACCOUNTED AS SALES BY THE SAID SUPPLIER ON 29.3.2012 BUT WAS AC COUNTED CORRESPONDINGLY AS PURCHASE BY THE ASSESSEE IN FINANCIAL YEAR 2012-13 BASED ON THE DATE OF RECEIPT OF GOODS ON 2.4.2012. IT WAS ALSO ARGUED THAT IN ANY CASE, TH E SAID PURCHASES EVEN IF IT HAD TO BE ACCOUNTED IN THE YEAR UNDER APPEAL, THE SAME WOULD REMAIN IN CLOSING STOCK AS ON 31.3.2012 AND HENCE IT WOULD BE REVENUE NEUTRAL HAV ING NO IMPACT ON THE NET PROFIT OF THE ASSESSEE AND THE TAXABLE INCOME. HE FURTHER ARG UED THAT THIS FACT HAS BEEN DULY ACCEPTED BY THE LD AO IN THE REMAND REPORT DATED 29 .9.2016. DESPITE THIS FACT, THE LD CITA CONFIRMED THE ADDITION MADE BY THE LD AO. I N RESPONSE TO THIS, THE LD DR FAIRLY CONCEDED WITH THE ARGUMENT OF THE LD AR THAT NO ADD ITION NEEDS TO BE MADE IN THE FACTS OF THE INSTANT CASE. 2.3. WE HAVE HEARD THE RIVAL SUBMISSIONS. WE ARE I NCLINED TO ACCEPT THE ARGUMENTS OF THE LD AR AS DETAILED IN PARA 2.2. ABOVE AND ACCORD INGLY DIRECT THE LD AO TO DELETE THE ADDITION MADE IN THE SUM OF RS 5,65,596/- . ACCORD INGLY, THE GROUNDS 2 TO 5 RAISED BY THE ASSESSEE ARE ALLOWED. 3. THE LAST ISSUE TO BE DECIDED IN THIS APPEAL IS A S TO WHETHER THE LD CITA WAS JUSTIFIED IN UPHOLDING THE DISALLOWANCE OF FREIGHT PAYMENT I N THE SUM OF RS 97,912/- IN THE FACTS AND CIRCUMSTANCES OF THE CASE. 3.1. THE BRIEF FACTS OF THIS ISSUE IS THAT M/S DAFT ARI COMMERCIAL, SUPPLIER OF MUSTARD SEEDS HAS SHOWN THE SALES OF RS 25,11,142/- DURING THE FINANCIAL YEAR 2011-12 WHEREAS THE TOTAL PURCHASES SHOWN BY THE ASSESSEE WAS RS 26 ,09,054/- LEADING TO A DIFFERENCE OF RS 97,912/- WHICH WAS ADDED BY THE LD AO AS UNRECON CILED PURCHASES. THE ASSESSEE 4 ITA NO.322/KOL/2017 KISHORI OIL MILL A.YR.2012-13 4 SUBMITTED BEFORE THE LD AO THAT IT WAS THE PRACTICE THAT LORRY FREIGHT WAS SETTLED BY THE ASSESSEE AND M/S DAFTARI COMMERCIAL HAD PAID THE FR EIGHT CHARGES AS ADVANCE AND ULTIMATELY DEBITED THE ASSESSEE FIRM AND AS IT WAS THE OBLIGATION OF THE ASSESSEE FIRM TO BEAR THE FREIGHT AND THEREFORE THE SAME WAS DEBITED TO PURCHASE ACCOUNT BY THE ASSESSEE FIRM. IT WAS EXPLAINED THAT M/S DAFTARI COMMERCIAL NEED NOT BEAR THE FREIGHT AND THEREFORE THE SAME WAS NOT REQUIRED TO BE SHOWN AS SALES IN THEIR BOOKS. THE ASSESSEE FIRM HAD SHOWN THE PURCHASES INCLUDING FREIGHT UNDE R THE HEAD PURCHASES IRRESPECTIVE OF THE FACT WHETHER THE SAME WAS INCURRED BY THE ASSES SEE OR THE VENDOR. THE ASSESSEE SUBMITTED THAT THE SELLER M/S DAFTARI COMMERCIAL DE BITS THE ACCOUNT OF THE ASSESSEE WITH THE SALE FIGURE AS WELL AS PART OF THE ADVANCE TOWA RDS FREIGHT. HOWEVER, THE ASSESSEE CREDITED THE ACCOUNT OF THE SELLER WITH TOTAL AMOUN T OF FREIGHT INCURRED IN THAT TRANSACTION AND PAID TO THE SELLER ON ACCOUNT OF AMOUNT INCURRE D BY THEM. IT WAS PLEADED THAT THE LD AO MADE THE ADDITION OF RS 97,912/- WITHOUT APPRECI ATING THE FACTS OF THE CASE. IT WAS ALSO EXPLAINED THAT THE TOTAL FREIGHT INCURRED FOR THE MATERIALS IS RS 1,37,912/- AND THE VENDOR HAD INCURRED RS 40,000/- WHICH CLEARLY IMPLI ES THAT THE BALANCE RS 97,912/- WAS DIRECTLY PAID TO THE TRANSPORTERS. THE AMOUNT OF R S 26,09,052/- INCLUDES THE FIGURE OF RS 1,37,912/- AND THE FIGURE OF RS 25,11,142/- INCLUDE S JUST RS 40,000/- WHICH WAS DIRECTLY PAID TO THE TRANSPORTERS BY M/S DAFTARI COMMERCIAL. ACCORDINGLY IT WAS ARGUED THAT THERE IS NO CASE FOR MAKING ANY ADDITION IN THIS RE GARD. HOWEVER, THE LD CITA DID NOT APPRECIATE THE CONTENTIONS OF THE ASSESSEE AND UPHE LD THE DISALLOWANCE MADE BY THE LD AO INSPITE OF THE FACT THAT THE LD AO HAD ACCEPTED THE CONTENTIONS OF THE ASSESSEE IN THE REMAND REPORT DATED 29.9.2016. AGGRIEVED, THE ASSE SSEE IS IN APPEAL BEFORE US ON THE FOLLOWING GROUNDS :- 6. THAT THE LD. CIT (A) HAD ERRED IN CONFIRMING DI SALLOWANCE MADE BY THE LD INCOME TAX OFFICER OF RS. 97912/- WITHOUT CONSIDERI NG THE FACTS AND CIRCUMSTANCES OF THE CASE. 7. THAT THE LD. CIT (A) HAD ERRED IN NOT CONSIDERIN G THE FACT THAT THE FREIGHT PAID BY THE CREDITOR M/S DAFTARI COMMERCIAL WAS ON BEHAL F OF THE APPELLANT FIRM AND THE SAME WAS INTEGRAL PART OF THE PURCHASES SHOWN B Y THE APPELLANT FIRM. 5 ITA NO.322/KOL/2017 KISHORI OIL MILL A.YR.2012-13 5 3.2. WE HAVE HEARD THE RIVAL SUBMISSIONS. WE FIND THAT THE LD DR FAIRLY CONCEDED WITH THE ARGUMENT OF THE LD AR THAT NO ADDITION NEEDS TO BE MADE IN THE FACTS OF THE INSTANT CASE. WE ARE INCLINED TO ACCEPT THE ARGUMENTS OF T HE LD AR AND THE ACCOUNTING TREATMENT GIVEN BY THE ASSESSEE AS DETAILED IN PARA 3.1. ABOVE AND ACCORDINGLY DIRECT THE LD AO TO DELETE THE ADDITION MADE IN THE SUM OF RS 97,912/- . ACCORDINGLY, THE GROUNDS 6 & 7 RAISED BY THE ASSESSEE ARE ALLOWED. 4. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALL OWED. ORDER PRONOUNCED IN THE COURT ON 07.07.2017 SD/- SD/- [A.T.VARKEY] [ M.BALAGANESH ] JUDICIAL MEMBER ACCOUNTANT MEMBER DATED : 07.07.2017 [RG PS] COPY OF THE ORDER FORWARDED TO: 1. KISHORI OIL MILL, 3, BIKI HAKHOLA HIGH SCHOOL RO AD, JAYNAGAR, RANIHATI, HOWRAH- 711322. 2. I.T.O., WARD-46(2), KOLKATA. 3..C.I.T.(A)-14, KOLKATA 4. C.I.T.-16, KOLKATA. 5. CIT(DR), KOLKATA BENCHES, KOLKATA. TRUE COPY BY ORDER SENIOR PRIVAT E SECRETARY HEAD OF OFFICE/D.D.O., ITAT, KOLKATA BENCHE S 6 ITA NO.322/KOL/2017 KISHORI OIL MILL A.YR.2012-13 6