M/s. Chandan Rice & Pulse Mills, KHAMBHAT V. The Income tax Officer,Ward-3(3), Petlad

ITA 3515/AHD/2010

• Counselvise Citation: 351520514 RSA 2010
• Duration Of Justice: 2 year(s) 8 month(s) 18 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 19-09-2013
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Next Hearing Date: 16-09-2013
• Assessment Year: 2002-2003
• Appeal Filed On: 31-12-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: B L YADAV
• Assessee Lawyers: N C AMIN
• Keywords: Opportunity of being heard
• Section: 40A(3); 143(3); 133A; 131

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD SMC BENCH M/S CHANDAN RICE & PULSE MILLS GIDC, KANSARI KHAMBHAT-388620 PAN: AABFC1682M (APPELLANT) VS THE INCOME TAX OFFICER, WARD-3(3), PETLAD (RESPONDENT) ASSESSEE BY: SRI N.C. AMIN, A.R. REVENUE BY: SRI B.L. YADAV, SR .D.R. DATE OF HEARING : 16-09-2013 DATE OF PRONOUNCEMENT : 19-09-20 13 / ORDER PER : B.P. JAIN, ACCOUNTANT MEMBER:- THIS APPEAL OF THE ASSESSEE ARISES FROM THE ORDER OF LD. CIT(A)-I BARODA DATED 19-11-2010 FOR THE ASSESSMENT YEAR 200 2-03. 2. THE ASSESSEE HAS RAISED FOLLOWING GROUNDS OF APP EAL:- 1. THAT THE STATEMENT RECORDED U/S 131 DURING SURVE Y PROCEEDINGS ON OATH IS NOT LEGAL AND VALID IN LAW AND THEREFORE WHATEVER ADDITIONS MADE ON THE BASIS OF SAID STATEMENT DESERVES TO BE DELETED. ITA NO. 3515/AHD/2010 ASSESSMENT YEAR 2002-03 I.T.A NO. 3515/AHD/2010 A.Y. 2002-03 PAGE NO SRI CHANDAN RICE & PULSE MILLS VS. ITO 2 2. THAT THE AUTHORIZED OFFICER HAS NO POWER U/S 133A TO TAKE STATEMENT ON OATH DURING SURVEY AS AVAILABLE IN SEC . 132(4) OF THE IT ACT 1961 AND THEREFORE ADDITIONS BASED ON THE SAID STATEMENT IS ILLEGAL, BAD IN LAW AND VOID. 3. THAT THE LEARNED CIT(A) HAS ACCEPTED TRADING RESULT OF THE APPELLANT AND THEREFORE ENHANCEMENT OF ASSESSMENT T O THE EXTENT OF RS.1,52,402/- IS WHOLLY UNJUSTIFIED AND THEREFORE D ISALLOWANCE OF EXPENDITURE OF RS.5,16,000/-DESERVES TO BE DELETED. 4. THAT THE BOOKS OF ACCOUNTS OF THE APPELLANT IS AUDITED U/S 44AB AND THERE IS NO ADVERSE COMMENTS REGARDING ANY ITEM S FOR WHICH ENHANCEMENT HAS BEEN MADE BY LEARNED CIT (A), EVEN ON IDENTICAL FACTS IN EARLIER YEARS THE BOOK RESULTS HAVE BEEN A CCEPTED EVEN IN ASSESSMENT MADE 143(3) FOR A.Y 1999-2000 AND ALL TH E DETAILS ARE LYING ON THE RECORD OF THE LEARNED A.O, IN PRECEDIN G YEARS AND SUBSEQUENT YEARS AND WITHOUT CONSIDERING, IT IN P ROPER PERSPECTIVE, THE ADDITIONS DESERVES TO BE DELETED. 5. THAT THE LEARNED A.O. HAS MADE ADDITIONS ON ASSU MPTIONS AND PRESUMPTIONS THAT THE APPELLANT MIGHT HAVE EARNED I NCOME OUTSIDE THE BOOKS OF ACCOUNTS AND ADDITIONS MADE ON GUESS WORK AND ENHANCED ASSESSMENT BY CIT(A) ON SAME SET OF FACTS AMOUNTING TO RS.1,52,404/- BY DELETING G.P. ADDITIONS OF RS.3,33 , 598/- AND MAKING ALLEGED ADDITIONS UNDER THE HEAD TRUCK AND TEMPO EXPENDITUR E OF RS.2,00,000/- AND, ALLEGED SUPPRESSION OF STOCK OF RS.2,36,000/- AND OUT OF LABOUR EXPENDITURE OF RS.80,000/- WHICH DESE RVES TO BE DELETED. 6. THE LEARNED C1T(A) HAS FURTHER ERRED IN DISALLOW ING EXPENDITURE DURING THE APPELLATE PROCEEDINGS WITHOU T CONSIDERING MATERIALS AVAILABLE ON RECORD BEFORE A.O. 7. THAT THE ADDITIONS OF RS.2 00 LACS UNDER THE HEA D ALLEGED EXPENDITURE INCURRED OUT SIDE BOOKS OF ACCOUNTS ON ASSUMPTION AND PRESUMPTION AND WITHOUT CONSIDERING THE PAST RECORD S INCLUDING ASSESSMENT ORDER FOR 1999-2000 PASSED U/S 143(3) AN D CONSIDERING THE SAME, ENHANCEMENT OF RS.2.00 LACS MADE BY LEARN ED CIT(A) CONSIDERING THE FACTS NARRATED BY LEARNED A.O. IN T HE ASSESSMENT ORDER, DESERVES TO BE DELETED. I.T.A NO. 3515/AHD/2010 A.Y. 2002-03 PAGE NO SRI CHANDAN RICE & PULSE MILLS VS. ITO 3 1) THE LEARNED CIT(A) HAS FURTHER MADE ADDITIONS OF RS.2,36,000/- ON ACCOUNT OF ALLEGED SUPPRESSION OF STOCK, EVEN THOUGH BOOKS OF ACCOUNTS ARE AUDITED AND TOTAL PURC HASES AND SALES REGISTER DAY TODAY HAVE BEEN PRODUCED AND QUA NTITY DETAILS SUBMITTED BEFORE LEARNED A.O. AND COPIES OF THE SAME SUPPLIED TO A.O. AS WELL AS CIT(A). HOWEVER, ON UNW ANTED GROUNDS AND FACTS ENHANCEMENT MADE BY LEARNED CIT(A ) AMOUNTING TO RS. 2 , 36,000/- REQUIRES BE DELETED. 1) THAT THE LEARNED CIT(A) HAS FURTHER ERRED IN DIS ALLOWING LABOUR CHARGES OF RS.80,000/- BEING ALLEGED NON-GEN UINE EXPENDITURE EVEN THOUGH IT IS PAID BY BEARER CHEQUE AND SUPPORTED BY VOUCHERS AND OTHER EVIDENCES DURING TH E YEAR UNDER ACCOUNT AND IN EARLIER YEARS ON IDENTICAL FAC TS AND THE LEARNED A.O. HAS DISALLOWED THE EXPENDITURE AND DUR ING THE YEAR UNDER CONSIDERATION AFTER SURVEY PROCEEDINGS T HE LABORER HAS LEFT FOR RAJASTHAN PERMANENTLY WHICH IS ADMITTE D FACTS ON STATEMENT RECORDED AND KNOWN TO THE LEARNED A.O. AS WELL AS CIT(A). HOWEVER, ON UNWANTED FACTS AND FINDING THE ENHANCEMENT TO THE EXTENT OF RS. 80,000/- MADE BY LEARNED CIT(A) DESERVES TO BE DELETED. 8. ON THE FACTS AND CIRCUMSTANCES OF THE CASE OF TH E APPELLANT, THE TRADING RESULTS HAS BEEN ACCEPTED BY LEARNED A.O. A S WELL AS CIT(A) AND THERE IS NO REASONING TO DISALLOW AFORESAID EXP ENDITURE BY LEARNED CIT(A) BY MAKING ENHANCEMENT OF ASSESSMENT WHICH DESERVES TO BE DELETED. 3. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE-FI RM IS ENGAGED IN THE MILLING OF PADDY I.E. RICE MILL. SURVEY WAS CONDUC ED WHERE INVENTORY OF PHYSICAL STOCKS AVAILABLE AT THE BUSINESS PREMISES AND GODOWN OF THE ASSESSEE WAS PREPARED WHERE CERTAIN DIFFERENCES AS PER BOOKS OF ACCOUNT AND PHYSICAL VERIFICATION WERE FOUND. STATEMENT OF THE PARTNER OF THE ASSESSEE- FIRM WAS TAKEN ON THE DATE OF SURVEY ON 12-02-2002 AND ON THAT NO EXPLANATION WAS GIVEN FOR THE EXCESS STOCK OF 62 QU INTALS. SUBSEQUENTLY VIDE LETTER DATED 29-12-2003 THE ASSESSEE SUBMITTED THAT THIS SHORTFALL OF 62 I.T.A NO. 3515/AHD/2010 A.Y. 2002-03 PAGE NO SRI CHANDAN RICE & PULSE MILLS VS. ITO 4 QUINTALS OF BROKEN RICE KANKI WAS NOT SHORTFALL AND THE SAID QUANTITY OF GOODS WAS LYING IN THE LOOSE UNPACKED CONDITION. THE ENTRY OF SUCH QUANTITY IS MADE IN THE RECORD AND COPY OF STOCK RE CORD SHOWING THE ENTRY OF SUCH GOODS ON 12 TH FEBRUARY 2002 WAS SUBMITTED. THE ASSESSEE HAS ALS O FILED THE ZEROX COPY OF STOCK REGISTER IN WHICH EXC ESS STOCK OF KANKI OF 62 QUINTALS HAD BEEN ENTERED. THE AO ALSO NOTICED THE SAME DEFECTS IN THE BOOKS OF ACCOUNT AND SHOW CAUSE LETTER WAS ISSUED T O THE ASSESSEE. THESE DEFECTS WERE THAT THE ASSESSEE OWNED TRUCK AND TEMP O WHICH ARE USED FOR BRINING ITS OWN RAW MATERIAL AND SUPPLYING OF FINIS HED PRODUCTS TO CUSTOMERS. THE ASSESSEE HAS CREDITED RS. 1,98,064/ - ON ACCOUNT OF TRUCK/TEMPO HIRE CHARGES WHEREAS THE ASSESSEE HAS D EBITED 4,38,385/- ON ACCOUNT OF TRUCK/TEMPO EXPENSES. THESE EXPENSES WE RE NOT VERIFIED IN THE ABSENCE OF TRIP REGISTER OR MOVEMENT OF VEHICLE REC ORDS. THE ASSESSEE HAS SUBMITTED THE EXPLANATION WHICH WAS NOT FOUND SATIS FACTORY. AS PER ITS LETTER DATED 07/01/2004 AND 03/02/2004, DURING THE YEAR, T HE ASSESSEE HAS CONSUMED 4001 BARDANS OF 50 KGS. PACKING AND 53717 BARDANS OF 25 KGS. PACKING FOR PACKING OF RICE. CONSIDERING THE CONSU MPTION OF THESE BARDANS, THE RICE PACKED WAS WORKED OUT TO 15429.75 QUNTLS. AS AGAINST THE PACKING OF 15429.75 QUNTLS OF RICE, THE YIELD OF RICE HAS B EEN DISCLOSED BY THE ASSESSEE AT 14360 QUNTLS. AFTER EXCLUDING THE RE -PACKING OF RICE OF 840 QUNTLS. PURCHASED FROM AMBICA RICE MILLS AND MAYUR RICE MILLS (AS PER ITS LETTER DATED 02/01/2004), THE UNDER STATEMENT OF YI ELD OF RICE WORKS OUT TO THE TUNE OF 229.75 QUNTLS. THE ASSESSEE SUBMITTED THE E XPLANATION WHICH WAS NOT FOUND SATISFACTORY TO THE AO, THOUGH TO VERIFY THE STATEMENT OF THE ASSESSEE M/S JAI HIND RICE MILL, CAMBAY WERE SUMMONED WHOSE STATEMENT HAS BEEN RECORDED WHO HAD DENIED THAT THEY HAVE SOLD RICE IN THE PACKING MATERIAL SUPPLIED BY THE ASSESSEE. THE AO AFTER DISCUSSING AT PAGES 3-7 WAS OF THE I.T.A NO. 3515/AHD/2010 A.Y. 2002-03 PAGE NO SRI CHANDAN RICE & PULSE MILLS VS. ITO 5 VIEW THAT THE ACTUAL CLOSING STOCK OF RICE WAS 1889 .73 QUINTALS WHERE THE ASSESSEE HAS DECLARED 1702.25 QUINTALS AND ACCORDIN GLY ASSESSEE SUPPRESSED THE YIELD OF 188 QUINTALS VALUE OF WHICH WAS 2,36,0 00/-. 4. THE ASSESSEE HAS ALSO DEBITED RS. 5,27,182/- LAB OUR EXPENSES TO THE MANUFACTURING ACCOUNT OUT OF WHICH RS. 4,08,020/- PERTAINS TO LABOUR CHARGES PAID TO SRI BABUBHAI MARWADI. THE AO OBSE RVED THAT THE PAYMENTS ARE MADE ON SELF MADE VOUCHERS AND BY BEARER CHEQUE S. THE ADDRESS OF SRI BABUBHAI MARWADI WAS NOT PRODUCED BY THE ASSESSEE A ND SUBMITTED THAT SRI BABUBHAI MARWADI IS NOT TRACEABLE. IT IS NOT POSSI BLE TO PRODUCED HIM. THE EXPLANATION BY THE ASSESSEE WAS NOT FOUND SATISFACT ORY FOR THE REASONS THAT THE ADDRESS OF SRI BABUBHAI MARWADI WAS NOT FURNISH ED AND HE WAS ALSO NOT PRODUCED FOR VERIFICATION. THE SAID PAYMENT WHETHE R IT IS GENUINE OR NOT COULD NOT BE VERIFIED AND ALSO PAYMENTS WERE MADE B Y BEARER CHEQUES EXCEEDING RS. 20,000/- VIOLATING THE PROVISIONS OF SEC. 40A(3) OF THE ACT. FOR THESE REASONS THE AO REJECTED THE BOOKS OF ACCO UNTS AND APPLIED GP 8% ON THE SALES OF 3,10,09,232/- ACCORDINGLY MADE THE ADDITION OF RS. 3,33,598/-. IT WAS MENTIONED BY THE AO THAT NO SEP ARATE ADDITION ON THE FOLLOWING ACCOUNT IS MADE SINCE AO HAS ESTIMATED TH E INCOME. I) SUPPRESSION IN YIELD OF RICE; II) DISALLOWANCE OUT OF LABOUR EXPENSES INCLUDING 2 0% OF PAYMENT COVERED BY THE PROVISIONS OF SEC. 40A(3) OF THE ACT ; III) DISALLOWANCE OF RS. 2,095/- BEING EXPENSES OF EARLIER YEAR DEBITED IN THIS YEAR AS PER AUDIT REPORT AND IV) DISALLOWANCE ON ACCOUNT OF BHADA-BHATTA EXPENSE S AND EXPENSES INCURRED OUT SIDE THE BOOKS TO RUN THE TRUCK/TEMP D URING THE EARLIER MONTHS I.T.A NO. 3515/AHD/2010 A.Y. 2002-03 PAGE NO SRI CHANDAN RICE & PULSE MILLS VS. ITO 6 OF THE YEARS ARE MADE, AS THE SAME ARE TREATED AS C OVERED IN GROSS PROFIT ADDITION. 5. BEFORE LD. CIT(A), THE LEARNED COUNSEL FOR THE A SSESSEE MADE THE SUBMISSIONS WHICH WERE SENT TO THE AO FOR THE REMAN D REPORT WHICH WAS SUBMITTED. LD. CIT(A) DELETED THE TRADING ADDITION BUT PROCEEDED TO MAKE THE ENHANCEMENT ON ACCOUNT OF USE OF THE VEHICLES F OR FIRST HALF YEAR FOR RS. 2 LACS, ON ACCOUNT OF SUPPRESSION OF STOCK OF 188 Q UINTALS AT 2,36,000/- AND RS. 80,000/- ON ACCOUNT OF NON-VERIFIABILITY OF EXP ENSES ON PAYMENT MADE TO SRI BABUBHAI MARWADI AND ACCORDINGLY MADE ADDITION AS MENTIONED HEREINABOVE AFTER DELETING THE TRADING ADDITION OF 3,33,598/- AND MADE THE ENHANCEMENT OF INCOME ACCORDINGLY. LEARNED COUNSEL FOR THE ASSESSEE SRI N.C. AMIN ARGUED AT THE OUTSET THAT THE ASSESSEE HA S SUBMITTED ALL THE DETAILS AND EXPLANATION AND THE LD. CIT(A) HAS NOT TAKEN IN TO CONSIDERATION THE EXPLANATION SO SUBMITTED. IN THE REMAND REPORT ALS O, THE AO HAS NOT CONSIDERED THE EXPLANATION SO SUBMITTED. LEARNED C OUNSEL INVITED MY ATTENTION AT VARIOUS PAGES OF THE PAPER BOOK CONTAI NING 331 PAGES AND THE ADDITIONAL PAPER BOOK HAVING 11 PAGES IN THIS REGAR D. LEARNED COUNSEL FOR THE ASSESSEE PRAYED TO ALLOW THE GROUNDS OF THE ASS ESSEE ACCORDINGLY. 6. LD. DR ON THE OTHER HAND RELIED UPON THE ORDERS OF AUTHORITIES BELOW. 7. I HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED T HE FACTS OF THE CASE, THE VARIOUS PAGES/DOCUMENTS IN THE PAPER BOOKS MENT IONED HEREINABOVE PLACED ON RECORD BY THE ASSESSEE WHICH AS PER LD. A R HAS NOT BEEN TAKEN INTO CONSIDERATION BY THE LD. CIT(A) AS WELL AS BY THE ASSESSING OFFICER IN THE REMAND REPORT. MOREOVER BEFORE MAKING ANY ENHA NCEMENT, THE LD. I.T.A NO. 3515/AHD/2010 A.Y. 2002-03 PAGE NO SRI CHANDAN RICE & PULSE MILLS VS. ITO 7 CIT(A) U/S. 251(2) HAS TO GIVE A REASONABLE OPPORTU NITY OF SHOWING THE CAUSE AGAINST THE ENHANCEMENT OR REDUCTION. THE AS SESSEE HAD SUBMITTED THE EXPLANATION WHICH HAS NOT BEEN DEALT BY THE LD. CIT (A) OR LD. AO. THEREFORE LD. CIT(A) IS NOT JUSTIFIED IN MAKING SUC H ENHANCEMENT WITHOUT AFFORDING ADEQUATE OPPORTUNITY OF BEING HEARD BEFOR E MAKING SUCH ENHANCEMENT OF THE INCOME. THEREFORE I AM OF THE VIEW THAT THE IT WILL BE IN THE INTEREST OF JUSTICE IF THE MATTER IS SET ASIDE TO THE FILE OF LD. CIT(A) WHO WILL PROVIDE OPPORTUNITY OF BEING HEARD TO THE ASSE SSEE AND RE-ADJUDICATE THE ISSUE OF ENHANCEMENT OF INCOME BY AFFORDING ADEQUAT E OPPORTUNITY OF BEING HEARD TO THE ASSESSEE. IT IS ORDERED ACCORDINGLY. ACCORDINGLY ALL THE GROUNDS OF THE ASSESSEE ARE ALLOWED FOR STATISTICAL PURPOSE . 8. IN THE RESULT, ASSESSEES APPEAL IS ALLOWED FOR STATISTICAL PURPOSE. ORDER IS PRONOUNCED IN OPEN COURT ON 19-09- 2013 SD/- ( B. P. JAIN) ACCOUNTANT MEMBER AHMEDABAD : DATED 19/09/2013 AK / COPY OF ORDER FORWARDED TO:- 1. ASSESSEE 2. REVENUE 3. CONCERNED CIT 4. CIT (A) 5. DR, ITAT, AHMEDABAD 6. GUARD FILE. BY ORDER/ , / ,