ACIT, CHENNAI V. M/s. Cosmo Granites (P) Ltd., CHENNAI

ITA 354/CHNY/2011

• Counselvise Citation: [2011] 140 COUNSELVISE.COM (IT) 51948 (ITAT-CHENNAI)
• Duration Of Justice: 7 month(s) 13 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 12-10-2011
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 12-10-2011
• Assessment Year: 2003-2004
• Appeal Filed On: 28-02-2011
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: K GOPALAKRISHNAN SR
• Assessee Lawyers: T T DURAIRAJ
• Keywords: Search and seizure; Corroborative evidences; Block assessment
• Section: 69C

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH, CHENNAI BEFORE SHRI N. S. SAINI, ACCOUNTANT MEMBER AND SHRI GEORGE MATHAN, JUDICIAL MEMBER .. I.T.A. NO. 354/MDS/2011 ASSESSMENT YEAR : 2003-04 THE ASSISTANT COMMISSIONER OF INCOME-TAX, CENTRAL CIRCLE-II(5), CHENNAI. V. M/S. COSMO GRANITES (P) LTD., NO. 6, RANJITH ROAD, KOTTURPURAM, CHENNAI-600 085. [PAN : AAACC3044K] (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI K.GOPALAKRISHNAN,SR. DR RESPONDENT BY : SHRI T.T. DURAIRAJ, CA DATE OF HEARING : 12-10-201 1 DATE OF PRONOUNCEMENT : 12-10-2011 O R D E R PER GEORGE MATHAN, JUDICIAL MEMBER : THIS IS AN APPEAL FILED BY THE REVENUE AGAINST THE ORDER OF THE LEARNED CIT(APPEALS)-II, CHENNAI IN ITA NO. 28/06-07 DATED 12-11-2010 FOR THE ASSESSMENT YEAR 2003-04. 2. SHRI K. GOPALAKRISHNAN, LEARNED SR. DR REPRESENT ED ON BEHALF OF THE REVENUE AND SHRI T.T. DURAIRAJ, CA REPRESENTED ON BEHALF OF THE ASSESSEE. I.T.A. NO. 354/MDS/2011 2 3. IN THE REVENUES APPEAL, THE REVENUE HAS RAISED THE FOLLOWING GROUNDS : 1.A. ON THE FACTS AND IN THE CIRCUMSTANCES OF T HE CASE, THE LEARNED CIT(A) HAS ERRED IN DELETING THE ADDITION M ADE BY THE A.O. AT ` 12,72,180/-. 1.B THE LEARNED CIT(A) HAS FAILED TO NOTE THAT TH E UNACCOUNTED CASH PURCHASES HAS TO BE ADDED YU/S 69C AND AS PER PROVISO TO THIS SECTION, NO FURTHER DEDUCTION CAN BE ALLOWED UNDER ANY HEAD OF INCOME AND HENCE THERE CANNOT BE ANY ENTRY IN THE B OOKS OF ACCOUNTS WHICH NEUTRALIZES THE ADDITION ADMITTED OR UNADMITTED BY THE ASSESSEE BY ARTIFICIALLY INCREASING COST OF GOO DS SOLD BY CLAIMING DEDUCTION FOR SUCH UNACCOUNTED PURCHASE/ THE ACTIO N OF THE CIT(A) FRUSTRATES THE VERY PURPOSE THE PROVISO TO SECTION 69C. 1.C IT IS SUBMITTED THAT THE ASSESSEE HAS AGAIN R EDUCED THE UNACCOUNTED PURCHASE FROM THE COMPUTATION OF INCOME AND THUS CLAIMED DOUBLE BENEFIT. THEREFORE IT IS PRAYED THA T THE MATTER MAY BE RESTORED TO THE FILE OF EITHER THE A.O. OR THE L EARNED CIT(A) IN VIEW OF THE DECISIONS IN THE UNDER MENTIONED CASES. 1. BHAVANA CHEMICALS LTD. VS. CIT (SC) 231 ITR 507 2. STATE OF KERALA VS. VIJAYA STORES (SC) 116 ITR 15 3. CIT VS. ASSAM TRAVEL SHIPPING SERVICE (SC) 199 ITR 1 2. THE APPELLANT CRAVES LEAVE TO, ADD TO AMEND OR ALTER THE ABOVE GROUNDS OF APPEAL AS MAY BE DEEMED NECESSARY. RELIEF CLAIMED IN APPEAL THE ORDER OF THE LEARNED CIT(APPEALS) MAY BE SET A SIDE AND THAT OF THE ASSESSING OFFICER BE RESTORED. I.T.A. NO. 354/MDS/2011 3 4. IT WAS SUBMITTED BY THE LEARNED DR THAT THE ASSE SSEE COMPANY WAS SUBJECTED TO SEARCH AND SEIZURE OPERATION ON 02-01- 2003. IT WAS THE SUBMISSION THAT IN THE RETURN FILED FOR THE ASSESSMENT YEAR 20 03-04 THE ASSESSEE HAD IN THE STATEMENT OF COMPUTATION OF TOTAL INCOME CLAIMED DE DUCTION OF ` 12,72,180/- ON THE GROUND THAT THE SAID AMOUNT HAD BEEN INCLUDED I N THE PROFIT & LOSS ACCOUNT AND WAS CONSIDERED SEPARATELY U/S 158BB OF THE INCO ME-TAX ACT, 1961 IN THE BLOCK ASSESSMENT. IT WAS SUBMITTED THAT THE CLAIM OF DEDUCTION WAS MADE BY CREDITING THE SAID SUM IN THE PROFIT & LOSS ACCOUNT AS UNACCOUNTED CASH PAYMENTS AND THE SAME HAD BEEN INCLUDED AS UNACCOUNTED PURCH ASES ALSO IN THE COST OF GOODS SOLD. IT WAS THE SUBMISSION THAT ON APPEAL BE FORE THE LEARNED CIT(A), THE LEARNED CIT(A) DELETED THE ADDITION BY ACCEPTING TH E CLAIM OF THE ASSESSEE THAT THE AMOUNT HAD BEEN DISCLOSED IN THE BLOCK RETURN. IT WAS THE SUBMISSION THAT THE ACTION OF THE ASSESSEE IN DEBITING AND CREDITIN G THE SAME AMOUNT IN THE PROFIT & LOSS ACCOUNT FOR THE RELEVANT ASSESSMENT YEAR RES ULTED IN A NIL EFFECT TO THE PROFIT & LOSS ACCOUNT AND CONSEQUENTIAL NON-DISCLOS URE OF THE AMOUNT OFFERED IN THE COURSE OF THE SEARCH. IT WAS THE SUBMISSION TH AT THE ORDER OF THE LEARNED CIT(A) WAS LIABLE TO BE REVERSED. 5. IN REPLY, THE LEARNED AUTHORISED REPRESENTATIVE SUBMITTED THAT THE AMOUNT HAD BEEN DISCLOSED IN THE BLOCK ASSESSMENT AND THE SAME HAD ALSO BEEN ASSESSED IN THE BLOCK ASSESSMENT. IT WAS THE FURTHER SUBMIS SION THAT THE SAME HAD BEEN INCLUDED IN THE PURCHASES AND THIS HAD INCREASED TH E VALUE OF THE STOCK AND AS THE I.T.A. NO. 354/MDS/2011 4 SALES WERE NOT ADJUSTED THE AMOUNT REMAINED TAXED. IT WAS THE SUBMISSION THAT THE ORDER OF THE LEARNED CIT(A) WAS LIABLE TO BE UP HELD. 6. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS. AT TH E OUTSET IT WOULD BE WORTHWHILE TO MENTION HERE THAT EVEN THOUGH THIS IS SUE IS RELATING TO THE ACCOUNTS AND THE ADJUSTMENTS TO THE ACCOUNTS, NEITHER SIDE H AS TAKEN ANY ACTION TO FILE THE COPIES OF THE ACCOUNTS BEFORE THE TRIBUNAL. IT IS IN THE ABSOLUTE ABSENCE OF ANY SUPPORTING EVIDENCE THAT THIS TRIBUNAL HAS NOW BEEN COMPELLED TO DECIDE THIS APPEAL WHICH IS PURELY AN ISSUE OF FACT. A PERUSAL OF THE ORDER OF THE ASSESSING OFFICER IN PARA 2 IN PAGE 2 CLEARLY SHOWS THAT THE CLAIM THAT THE ASSESSEE HAD OFFERED THIS AMOUNT UNDER SEC. 158BB HAD BEEN CALLE D FOR JUSTIFICATION AND THE ASSESSING OFFICER HAS CATEGORICALLY STATED THAT THE ASSESSEE HAS FAILED TO OFFER ANY JUSTIFICATION. THOUGH ON BEHALF OF THE ASSESSEE IT HAS BEEN STATED THAT THE AMOUNT HAS BEEN OFFERED IN THE BLOCK ASSESSMENT AND TAXES PAID AND ACCEPTED, THE COPY OF THE BLOCK ASSESSMENT RETURN OR THE ASSE SSMENT ORDER HAS NOT BEEN PLACED BEFORE US. RELIANCE HAS BEEN PLACED AT PAGE 2 OF THE ASSESSMENT ORDER WHEREIN THE ASSESSING OFFICER HAS EXTRACTED PART OF THE ACCOUNTS IN WHICH IT IS SHOWN THAT EXCESS STOCK HAD BEEN ADMITTED AT ` 20,31,732/- AND THERE IS AN UNACCOUNTED PURCHASE OF ` 12,72,180/- FURTHER ADDED. HOWEVER, IN REGARD TO THE COST OF GOODS SOLD THE ASSESSING OFFICER HAS MENTIO NED THAT THE SAID AMOUNT OF ` 12,72,180/- HAS BEEN ADDED BUT THE COST OF GOODS SO LD THE ACTUAL FIGURE IS MISSING. A PERUSAL OF THE ORDER OF THE LEARNED CIT (A) IN PARA 8 OF HIS ORDER SHOWS I.T.A. NO. 354/MDS/2011 5 THAT IT HAS BEEN STATED BY THE LEARNED AUTHORISED R EPRESENTATIVE THAT THE INCOME ADMITTED IN THE BLOCK RETURN WAS BROUGHT INTO THE B OOKS. HOW THIS HAS HAPPENED AND HOW IT HAS BEEN DONE THERE IS NO EVIDENCE OR AN Y DISCUSSION. FURTHER, IN PARA 9 OF THE ORDER OF THE LEARNED CIT(A) HE ACCEPT S THAT THE NET EFFECT TO THE TRADING AND PROFIT & LOSS ACCOUNT WOULD BE NIL. ST ILL HE PROCEEDS TO DIRECT THE ASSESSING OFFICER TO DELETE THE ADDITION. WHY? WE FAIL TO UNDERSTAND. IN THE CIRCUMSTANCES, AS THE ASSESSEE HAS NOT BEEN ABLE TO JUSTIFY ITS CLAIM THAT THE AMOUNT OF ` 12,72,180-/- HAS BEEN OFFERED TO TAX NOR THE ASSES SEE HAS BEEN ABLE TO PROVE WITH JUSTIFICATION THAT THE AMOUNT OFFERED HAS BEEN DISCLOSED AND BROUGHT TO TAX, WE ARE OF THE VIEW THAT THE ORDER O F THE LEARNED CIT(A) SUFFERS FROM INFIRMITIES WHICH CALLS FOR ITS REVERSAL AND W E DO SO. IN THE CIRCUMSTANCES, THE APPEAL OF THE REVENUE IS ALLOWED. 7. THE ORDER WAS PRONOUNCED IN THE COURT ON 12/10/2 011. SD/- SD/- (N. S. SAINI) (GEORGE MATHAN) ACCOUNTANT MEMBER JUDICIAL MEMBER CHENNAI, DATED THE 12 TH OCTOBER, 2011. H. COPY TO: ASSESSEE/AO/CIT (A)/CIT/D.R./GUARD FILE