The ITO, 3(2), V. Shri Gurunam Singh,

ITA 358/IND/2006

• Counselvise Citation: [2009] 115 COUNSELVISE.COM (IT) 1411 (ITAT-INDORE)
• Duration Of Justice: 3 year(s) 6 month(s) 9 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-11-2009
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Next Hearing Date: 09-11-2009
• Assessment Year: misc
• Appeal Filed On: 18-05-2006
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: APARNA KARAN
• Assessee Lawyers: S S MUNDRA
• Section: 133(6)

Judgement Text

PAGE 1 OF 9 I.T.A.NO. 358/IND/2006 & C.O. NO.78/I ND/2006 SHRI GURNAM SINGH, P/O M/S. NIJJAR AUTOMOBILES, BHO PAL THE INCOME TAX APPELLATE TRIBUNAL INDORE BENCH : INDORE BEFORE SHRI JOGINDER SINGH, JUDICIAL MEMBER AND SHRI V.K. GUPTA, ACCOUNTANT MEMBER PAN NO. : N.A. I.T.A.NO.358/IND/2006 A.Y. : 2002-03 INCOME-TAX OFFICER, SHRI GURNAM SINGH, 3(2), VS PROP. M/S. NIJJAR AUTOMOBILES, BHOPAL 30, SHAH BUILDING, HAMIDIA ROAD, BHOPAL. APPELLANT RESPONDENT C.O.NO.78/IND/2006 A.Y. : 2002-03 SHRI GURNAM SINGH, INCOME-TAX OFFICER, PROP. M/S. NIJJAR AUTOMOBILES, VS 3(2), 30, SHAH BUILDING, HAMIDIA ROAD, BHOPAL. BHOPAL CROSS OBJECTOR RESPONDENT DEPARTMENT BY : SMT. APARNA KARAN, SR. DR ASSESSEE BY : SHRI S.S.MUNDRA, C. A. DATE OF HEARING : 09/11/2009 PAGE 2 OF 9 I.T.A.NO. 358/IND/2006 & C.O. NO.78/I ND/2006 SHRI GURNAM SINGH, P/O M/S. NIJJAR AUTOMOBILES, BHO PAL O R D E R PER V.K. GUPTA, A.M. THIS APPEAL FILED BY THE REVENUE AND CROSS OBJECTIO N FILED BY THE ASSESSEE ARISE OUT OF ORDER OF THE LD. CIT(A) DATED 18.4.2006, FOR THE ASSESSMENT YEAR 2002-03. 2. WE HAVE HEARD BOTH THE PARTIES AND HAVE ALSO PERUSE D THE MATERIAL AVAILABLE ON RECORD. 3. AT THE VERY OUTSET, THE LEARNED COUNSEL FOR THE ASS ESSEE SUBMITTED THAT HE WAS NOT PRESSING CROSS OBJECTION FILED BY THE ASSESSEE. HENCE, WE DISMISS ALL THE GROUNDS RAISED IN THE CRO SS OBJECTION AS NOT PRESSED. 4. IN THE RESULT, THE CROSS OBJECTION FILED BY THE ASS ESSEE STANDS DISMISSED. 5. NOW WE SHALL TAKE UP THE REVENUES APPEAL IN I.T.A.NO.358/IND/2006. 6. GROUND NOS. 1,2, 3 AND 7 READ AS UNDER :- 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) ERRED IN DELETING THE ADDITION OF RS. 1,23,4 00/- RIGHTLY MADE BY THE ASSESSING OFFICER ON ACCOUNT OF DIFFERENCE IN CLOSING BALANCE OF ACCOUNTS OF SIX PA RTIES. PAGE 3 OF 9 I.T.A.NO. 358/IND/2006 & C.O. NO.78/I ND/2006 SHRI GURNAM SINGH, P/O M/S. NIJJAR AUTOMOBILES, BHO PAL 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) ERRED IN DELETING THE AMOUNT OF RS. 3,21,966 /- RIGHTLY MADE BY THE ASSESSING OFFICER ON ACCOUNT OF VARIOUS TRADE CREDITORS, WHO HAVE NOT REPLIED TO THE NOTICE ISSUE D U/S 133(6) OF THE INCOME-TAX ACT, 1961, BY THE ASSESSIN G OFFICER. 3. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) ERRED IN GRANTING THE RELIEF OF RS. 2,54,351 /- OUT OF THE TOTAL ADDITION OF RS. 3,03,560/- RIGHTLY MADE B Y THE ASSESSING OFFICER ON ACCOUNT OF VARIOUS TRADE CREDI TORS WHO WERE NOT TRACEABLE DESPITE EFFORTS MADE BY THE ASSE SSING OFFICER DURING THE INQUIRIES. 7. ON THE FACTS AND IN THE CIRCUMSTANCE S OF THE CASE, THE LD. CIT(A) ERRED IN DIRECTING THE A.O. TO VERIFY THE E NTRIES AS PER CONTENTION OF THE ASSESSEE AND THEREAFTER DELET E THE ADDITIONS OF (RS. 70,000/- + RS. 50,000/- +RS. 1,07 ,720/-). THE DIRECTION OF THE CIT(A) IS THEREBY BEYOND THE P OWERS U/S 251(1)(A) OF THE INCOME-TAX ACT, 1961,. 7. AS REGARDS THE ISSUE RAISED BY THE REVENUE IN GROUN D NOS. 1, 2 & 3, THE LD. DEPARTMENTAL REPRESENTATIVE SUBMITTED THAT THE DIRECTIONS OF THE LD. CIT(A) IN DELETING THE MAJOR ADDITIONS WERE SELF-CONTRADICTORY I.E. PAGE 4 OF 9 I.T.A.NO. 358/IND/2006 & C.O. NO.78/I ND/2006 SHRI GURNAM SINGH, P/O M/S. NIJJAR AUTOMOBILES, BHO PAL HE DELETED THE ADDITION AS WELL AS DIRECTED THE A.O . TO VERIFY THE SAME AND IF THE CONTENTIONS OF THE ASSESSEE WERE NOT FOUND C ORRECT, THEN TO MAKE THE ADDITION. HENCE, THE MATTER COULD GO BACK TO THE FI LE OF THE LD. CIT(A) FOR GIVING CLEAR FINDINGS. THE LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE GROUND NO. 7 WAS RELEVANT IN THIS REGARD, WHERE IN IN RESPECT OF SOME OF THE ADDITIONS DELETED BY THE LD. CIT(A) IN GROUN D NOS. 1, 2 & 3, THE CONTENTIONS MADE BY THE LD. DEPARTMENTAL REPRESENT ATIVE WERE TRUE. HENCE, TO THAT EXTENT, THE MATTER COULD BE RESTORED TO THE FILE OF LD. CIT(A) FOR RE-ADJUDICATION THEREOF AFRESH AS PER LA W AFTER GIVING DUE OPPORTUNITY OF HEARING TO THE ASSESSEE. WE ,ORDER, ACCORDINGLY. 8. AS REGARDS THE OTHER CONDITIONS MADE BY THE ASSESSI NG OFFICER IN REGARD TO DIFFERENCE IN CLOSING BALANCE IN RESPE CT OF OTHER PARTIES, THE ADDITION ON ACCOUNT OF CASH CREDITOR OF NOT REPLYIN G TO THE NOTICE ISSUED BY THE ASSESSING OFFICER U/S 133(6) OF THE INCOME-T AX ACT, 1961, AND IN RESPECT OF TRADE CREDITORS, WHO WERE NOT TRACEABLE DESPITE EFFORTS MADE BY THE ASSESSING OFFICER. DURING THE COURSE OF HEARING , THE LD. DEPARTMENTAL REPRESENTATIVE SUBMITTED THAT THE A.O. SENT LETTERS OR MADE ENQUIRIES AT THE ADDRESSES PROVIDED BY THE ASSESSEE. HOWEVER, IN THE COURSE OF APPELLATE PROCEEDINGS, THE CONFIRMATORY LETTERS OF THE SAME CREDITORS AT THE SAME ADDRESS WERE PROVIDED BY THE ASSESSEE, WHEREAS IN THE COURSE OF ASSESSMENT PROCEEDING, THE LETTERS SENT BY THE ASSE SSING OFFICER REMAINED PAGE 5 OF 9 I.T.A.NO. 358/IND/2006 & C.O. NO.78/I ND/2006 SHRI GURNAM SINGH, P/O M/S. NIJJAR AUTOMOBILES, BHO PAL UNSERVED, HENCE, THE ACTION OF THE A.O. WAS LIABLE TO BE CONFIRMED. AT THIS STAGE, A QUERY WAS POSED TO THE LD. DEPARTMENTAL RE PRESENTATIVE THAT WHEN THE LD. CIT(A) SENT ALL THESE DOCUMENTARY EVID ENCES TO THE A.O. IN THE REMAND PROCEEDINGS WHY THE A.O. DID NOT MAKE FU RTHER ENQUIRIES INSTEAD OF REITERATING ITS ORIGINAL STAND, THE LD. DEPARTMENTAL REPRESENTATIVE COULD NOT GIVE ANY EFFECTIVE REPLY. HOWEVER, SHE PREFERRED TO RELY ON HER SUBMISSIONS MADE EARLIER. LEARNED CO UNSEL FOR THE ASSESSEE, ON THE OTHER HAND, PLACED STRONG RELIANCE ON THE OR DER OF THE LD. CIT(A). 9. WE HAVE CONSIDERED THE SUBMISSIONS MADE BY BOTH THE SIDES, MATERIAL ON RECORD AND THE ORDERS OF THE AUTHORITIE S BELOW. WE FIND THAT VARIOUS DIFFERENCES HAVE BEEN NOTED BY THE ASSESSIN G OFFICER WHILE MAKING SUCH ADDITIONS. HOWEVER, IN THE COURSE OF AP PELLATE PROCEEDINGS, THE ASSESSEE HAS SUBMITTED DOCUMENTARY EVIDENCES AN D VARIOUS EXPLANATIONS IN REGARD TO EACH PARTY. THE LD. CIT(A ) HAS ALSO CALLED COMMENTS FROM THE A.O. ON THESE SUBMISSIONS/EVIDENC ES. IN SOME OF THE CASES, THE A.O. HAS CONFIRMED THE CORRECTNESS OF AS SESSEES CLAIMS, WHEREAS IN SOME CASES THE A.O. HAS NOT OFFERED ANY COMMENTS. THUS, IN OUR OPINION, WHEN THE FACTS HAVE BEEN CORRECTLY STA TED ALONGWITH THE DOCUMENTARY EVIDENCES, THEN THERE REMAINS NO QUESTI ON FOR MAKING ADDITIONS. ACCORDINGLY, SUBJECT TO OUR FINDING GIVE N IN RESPECT OF GROUND NO.7 HEREINBEFORE, WE UPHOLD THE ORDER OF THE LD. C IT(A). THUS, GROUND PAGE 6 OF 9 I.T.A.NO. 358/IND/2006 & C.O. NO.78/I ND/2006 SHRI GURNAM SINGH, P/O M/S. NIJJAR AUTOMOBILES, BHO PAL NO.1, 2, 3 & 7 STAND PARTLY ALLOWED FOR STATISTICAL PURPOSES IN TERMS OF OUR DIRECTIONS GIVEN ABOVE. 10. IN GROUND NO. 4, THE REVENUE IS AGGRIEVED BY THE D ECISION OF THE LD. CIT(A) IN DELETING THE ADDITION MADE BY THE ASSESSING OFFICER ON ACCOUNT OF GROSS PROFIT. 11. THE FACTS, IN BRIEF, ARE THAT THE A.O. FOUND THAT T HE GROSS PROFIT RATE IN THE YEAR UNDER CONSIDERATION WAS 12 % AS CO MPARED TO 14.53 % SHOWN IN THE IMMEDIATELY PRECEDING PREVIOUS YEAR. T HE A.O. TAKING INTO CONSIDERATION THE FACTS RELATING TO DIFFERENCE IN C REDITORS ACCOUNT ETC. AND MORE FAVOURABLE CONDITIONS IN THE YEAR UNDER CONSID ERATION ADOPTED A RATE OF 15 % AND WORKED OUT GROSS PROFIT ACCORDINGLY. TH E A.O., THUS, MADE AN ADDITION OF RS. 56,875/- BEING THE DIFFERENCE BE TWEEN THE GROSS PROFIT SO ESTIMATED BY THE ASSESSING OFFICER AND THE GROSS PROFIT ACTUALLY SHOWN BY THE ASSESSEE. AGGRIEVED BY THIS, THE ASSESSEE CA RRIED THE MATTER INTO APPEAL BEFORE THE LD. CIT(A), WHEREIN CONSOLIDATED GROSS PROFIT CHART FOR THREE ASSESSMENT YEARS 2000-01, 2001-02 & 2002-03 W AS SUBMITTED, WHICH SHOWED THE GROSS PROFIT IN THE YEAR UNDER CON SIDERATION @ 19.02 %, BEING THE HIGHEST IN THREE YEARS. THE LD. CIT(A) , ACCORDINGLY, HELD THAT THE A.OS ACTION WAS NOT PROPER AND, THUS, HE DELETED THE ADDITION MADE BY THE ASSESSING OFFICER. PAGE 7 OF 9 I.T.A.NO. 358/IND/2006 & C.O. NO.78/I ND/2006 SHRI GURNAM SINGH, P/O M/S. NIJJAR AUTOMOBILES, BHO PAL 12. THE LD. DR NARRATED THE FACTS AND PLACED RELIANCE O N THE ORDER OF THE AO. THE LD. COUNSEL FOR THE ASSESSEE, ON THE OT HER HAND, PLACED STRONG RELIANCE ON THE ORDER OF THE LD. CIT(A). 13. ON DUE CONSIDERATION OF FACTS AND CIRCUMSTANCES OF THE CASE, WE HOLD THAT THE TRADING RESULT SHOWN BY THE ASSESSEE AS A WHOLE ARE BETTER AS COMPARED TO EARLIER YEARS. HENCE, ACTION OF THE A.O . IS NOT CORRECT. ACCORDINGLY, WE CONFIRM THE FINDINGS OF THE LD. CIT (A). THUS, THIS GROUND OF REVENUE IS DISMISSED. 14. IN GROUND NO.5, THE REVENUE IS AGGRIEVED BY THE DEC ISION OF LD. CIT(A) IN DELETING THE ADDITION OF RS. 37,02,100/- MADE BY THE ASSESSING OFFICER. THE A.O. IN THE COURSE OF ASSESSMENT PROCE EDINGS, FOUND THAT THERE WAS A DISCOUNT/T.O.D. RECEIVED BY THE ASSESS EE M/S. KANSARA ENGINEERING PRIVATE LIMITED, WHICH WERE ADDED BY TH E ASSESSING OFFICER AS THE INCOME OF THE ASSESSEE INSPITE OF THE FACT T HAT IT HAD BEEN SHOWN IN THE PROFIT AND LOSS ACCOUNT AND THE A.O. IN DOING S O OBSERVED THAT SUCH AMOUNT SHOW IN THE PROFIT AND LOSS ACCOUNT BELONGED TO OTHER PARTY AND NOT TO M/S. KANSARA ENGINEERING PRIVATE LIMITED. 15. AGGRIEVED BY THIS, THE ASSESSEE CARRIED THE MATTER INTO APPEAL BEFORE THE LD. CIT(A), WHO FOUND THAT THE ASSESSEE S CONTENTION WAS ACCEPTABLE AS THE IMPUGNED SUM HAD BEEN RECEIVED FR OM M/S. KANSARA ENGINEERING PRIVATE LIMITED ONLY AND HAD BEEN SHOWN AS ITS INCOME IN PAGE 8 OF 9 I.T.A.NO. 358/IND/2006 & C.O. NO.78/I ND/2006 SHRI GURNAM SINGH, P/O M/S. NIJJAR AUTOMOBILES, BHO PAL THE PROFIT AND LOSS ACCOUNT. AGGRIEVED BY THIS, THE REVENUE IS IN APPEAL BEFORE US. 16. THE LD. DR NARRATED THE FACTS AND PLACED RELIANCE O N THE ORDER OF THE AO. THE LD. COUNSEL FOR THE ASSESSEE, ON THE OT HER HAND, PLACED STRONG RELIANCE ON THE ORDER OF THE LD. CIT(A). 17. WE FIND THAT THE FINDINGS OF THE LD. CIT(A) THAT TH E IMPUGNED AMOUNT HAD BEEN RECEIVED FROM M/S. KANSARA ENGINEER ING PVT.LTD.,ONLY WHICH HAD BEEN SHOWN AS INCOME ALSO HAVE REMAINED U NCONTROVERTED BEFORE US. HENCE, THERE IS NO REASON NOT TO ACCEPT THE SAME. ACCORDINGLY, WE CONFIRM THE ORDER OF THE LD. CIT(A). THUS, THIS GROUND OF THE REVENUE IS ALSO DISMISSED. 18. AS REGARDS THE ISSUE RAISED IN GROUND NO. 6, THE LE ARNED COUNSEL SUBMITTED THAT THIS GROUND WAS MISCONCEIVED AS THE LD. CIT(A) HAD CONFIRMED THE DISALLOWANCE. THE LD. DEPARTMENTAL RE PRESENTATIVE ALSO AGREED. ACCORDINGLY, WE DISMISS THIS GROUND AS MISC ONCEIVED. 19. IN THE RESULT, THE APPEAL FILED BY THE REVENUE STA NDS PARTLY ALLOWED FOR STATISTICAL PURPOSES. 20. TO SUM UP, THE ASSESSEES CROSS OBJECTION IS DISMIS SED AND REVENUES APPEAL STANDS PARTLY ALLOWED. PAGE 9 OF 9 I.T.A.NO. 358/IND/2006 & C.O. NO.78/I ND/2006 SHRI GURNAM SINGH, P/O M/S. NIJJAR AUTOMOBILES, BHO PAL THIS ORDER HAS BEEN PRONOUNCED IN THE OPEN COURT ON 27 TH NOVEMBER, 2009. SD/- SD/- (JOGINDER SINGH) (V. K. GUPTA) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED : 27 TH NOVEMBER, 2009. CPU* 9.13D16