Sharma Alloys., Belgaum V. Income Tax Officer, Ward-1 (1), Belgaum., Belgaum

ITA 392/PAN/2014

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 88747 (ITAT-PANAJI)
• Duration Of Justice: 3 month(s) 12 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 19-02-2015
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: DB
• Assessment Year: 2005-2006
• Appeal Filed On: 07-11-2014
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: ANAND S MARATHE
• Assessee Lawyers: UMESH SHARMA
• Keywords: Reasonable cause; Condonation of delay

Judgement Text

1 IN THE INCOME TAX APPELLATE TRIBUNAL PANAJI BENCH, PANAJI BEFORE SHRI P. K. BABNSAL, HONBLE ACCOUNTANT MEMBER AND SHRI D.T. GARASIA, HONBLE JUDICIAL MEMBER ITA NO. 392/PNJ/2014 (ASST. YEAR : 200 5 - 0 6 ) M/S. SHARMA ALLOYS, R.S.NO. 347, PLOT NO. 97, UDYAMABAG, BELGAUM. VS. ITO , WARD - 1(1), BELGAUM PAN NO. AAGFS 5882 E (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI UMESH SHARMA - A SSESSEE DEPARTMENT BY : SHRI ANAND S. MARATHE D . R . DATE OF HEARING : 16 / 0 2 /2015 . DATE OF PRONOUNCEMENT : 1 9 / 0 2 /201 5 . O R D E R PER D.T. GARASIA , J .M TH IS IS AN APPEAL BY THE ASSESSEE AGAINST THE ORDER DATED 18 /0 8 /2014 OF L D . CIT(A), BELGAUM . 2 THE REGISTRY HAS POINTED OUT THAT THE APPEAL BY THE ASSESSEE IS BARRED BY LIMITATION BY 0 3 DAYS. AN APPLICATION HAS BEEN FILED BY THE ASSESSEE FOR CONDONATION OF DELAY BY STATING THEREIN AS UNDER: - 2 WE ARE FILING APPEAL AGAINST THE ORDER PASSED BY CIT(A) , BELGAUM. THE ORDER WAS SERVED ON U/S. ON 05/09/2014 AND WE WERE REQUIRED TO FILE THE APPEAL WITHIN 60 DAYS I.E. ON 03/11/2014 . THE APPEAL WAS PREPARED ON 03/11/2014 AND WAS HANDED OVER TO OUR STAFF MR. ANIL MORAPPANAVAR ALONG WITH FILING FEES OF RS. 10,000/ - . THE STAFF ON HIS WAY TO THE BANK MET WITH AN ACCIDENT AND COULD NOT COMPLETE THE WORK BECAUSE OF INJURIES. HE DID NOT INFORM THIS FACT TO THE OFFICE. THE OFFICE CAME TO KNOW THIS FACT ON 04/11/2014 . THIS WAS BEING BANK HOLIDAY THE PAYMENT OF FILING FEES IS MADE ON 05/11/2014 AND APPEAL IS SENT BY SPEED POST. THERE IS NO INTENTION WHATSOEVER FOR MAKING DELAY IN FILING APPEAL. IT WAS BEYOND OUR CONTROL AND THEREFORE WE REQUEST YOUR HONOUR TO KINDLY CONDONE THE DELAY IN FILING APPEAL. WE HOPE THAT YOU WILL CONSIDER THIS APPLICATION FAVOURABLY AND OBLIGE. 3. DURING THE COURSE OF HEARING, LEARNED AR REITERATED THE CONTENTS OF THE AFORESAID APPLICATION FOR CONDONATION OF DELAY AND REQUESTED TO CONDONE THE DELAY. 4. IN HIS RIVAL SUBMISSIONS, LEARNED DR OPPOSED THE APPLICATION AND STATED THAT THE DELAY MAY NOT B E CONDONED. 5. WE HAVE CONSIDERED THE SUBMISSIONS OF BOTH THE PARTIES AND CAREFULLY GONE THROUGH THE MATERIAL AVAILABLE ON RECORD. IN OUR OPINION, THERE WAS A REASONABLE CAUSE FOR FILING THE APPEAL BELATED. WE, THEREFORE, CONDONE THE DELAY AND THE APPEAL IS ADMITTED. 6 . THE FOLLOWING GROUNDS ARE RAISED BY THE ASSESSEE : 1. ON FACTS AND CIRCUMS TANCES OF THE CASE, THE LD. CIT(A) , BELGAUM OUGHT TO H A VE ACCEPTED THE EXPLANATION AND 3 EVIDENCES FURNISHED AND DELETED THE ADDITION OF RS. 4,83,062/ - . 2. THE LD. CIT(A), BELGAUM OUGHT TO HAVE CONSIDERED THE FACT THE APPELLANT HAS FURNISHED CONFIRMATION LETTER OBTAINED FROM THE CREDITOR M/S. MARUTI MEALS DURING APPEAL PROCEEDINGS AND THEREFORE THE ADDITION OF RS. 3,11,321/ - BE DELETED . 3. THE LD. CIT(A) , BELGAUM OUGHT TO HAVE CONSIDERED THE FAT THAT MISS REKHA SHARMA IS EDUCATED AND IS A WORKING PARTNER HENCE THE REMUNERATION OF RS. 71,741/ - BE ALLOWED AS EXPENDITURE AS COMMENTED BY A.O. IN HIS REMAND REPORT. 4. THE LD. CIT(A) , BELGAUM OUGHT TO HAVE ALLOWED THE SET OFF OF RS. 1,00,000/ - IN RESPECT OF ENHANCED ADDITIONS MADE BY HIM OF RS. 1,39,945/ - IN CASE OF SUNDRY DEBTORS AS RECOMMEN D ED BY A.O. IN HIS REMAND REPORT. 5. FOR THESE AND SUCH OTHER GROUNDS WHICH MAY BE ARGUED AT THE TIME OF HEARING OF THE APPEAL, THE APPELLANT PRAYS THAT THE APPEAL MAY BE ALLOWED. 7 . SHORT FACTS OF THE CASE ARE THAT THE ASSESSEE HAS FILED THE RETURN OF INCOME FOR A.Y. 2005 - 06 DECLAR I NG AN INCOME OF RS. 1,37,780/ - . DURING THE COURSE OF ASSESSMENT PROCEEDINGS , THE ASSESSING OFFICER HAS VERIFIED THE SUNDRY CREDITORS APPEARING IN VARIOUS NAMES TO THE EXTENT OF RS. 1,71,78,571/ - . THE ASSESSEE HAS NOT PRODUCED THE BOOKS OF ACCOUNTS AND AL SO CONFIRMATION IN RESPECT OF BOTH THE CREDITORS AS WELL AS DEBTORS . HOWEVER , ON VERIFICATION OF THE RETURNS FILED BY SOME OF THE DEBTORS IN BELGAUM, IT WAS OBSERVED BY THE ASSESSING OFFICER THAT THERE WAS A DIFFERENCE IN THE BALANCES SHOWN BY THE ASSESSEE AND THE FOLLOWING DEBTORS: - 4 NAME OF THE DEBTOR AMOUNT SHOWN BY THE ASSESSEE AMOUNT SHOWN BY THE DEBTOR DIFFERENCES SHIVRAM FOUNDERS 12,90,450 14,75,509 1,85,059 MARUTI METALS 2,54,029 5,65,350 3,11,321 VLS METALS 2,46,978 2,61,978 15,000 JYOTI FOUNDERS 2,28,508 1,69,093 59,415 TOTAL 5,70,795 8 . THE MATTER WAS CARRIED TO THE LD. CIT(A) . BE F ORE, THE LD. CIT(A) THE ASSESSEE HAS FILED THE CONFIRMATION LETTER ALONG WITH RECONCILI A TION STATEMENT . THE ASSESSEE WAS FILED RECONCILIATION STATEMENT IN RESPECT OF RS. 1,17, 460/ - , THEREFORE THAT AMOUNT WAS DELETED BY THE CIT(A) . B UT , REMAINING AMOUNT, THE ASSESSEE COULD NOT RECONCILE , THEREFORE , LD. CIT(A) IN HIS ORDER AT PARA 6.4 HAS OBSERVED AS UNDER: - 6.4 ADDITION HAS ALSO BEEN MADE OF RS.5,70,795/ - BY THE A.O ON ACCOUNT OF DIFFERENCE IN BALANCE OF FOUR DEBTORS. THE RECONCIL I ATION STATEMENT FILED BY THE APPELLANT RECONCILING THE DIFFERENCE IN BALANCE NOTICED IN RESPECT OF SHIVARANI FOUNDERS AND VLS METALS HAVE BEEN FOUND TO BE ACCEPTABLE BY THE A .O IN HIS AFORESAID REMAND REPORT. ACCORDINGLY, THE ADDITION MADE IN RESPECT OF THESE TWO DEBTORS S ORDERED TO BE DEL ETED. IN RESPECT OF JYOTI FOUNDERS , AFTE R CONCIL I ATION, A DIFFERENCE OF RS 3,441/ - STILL REMAINS. THEREFORE, OUT OF ADDITION OF RS 59,4 1 5/ - SUM OF RS 3,441/ - IS CONFIRMED AND THE BALANCE AMOUNT OF RS 55,974/ - IS ORDER ED TO B E DELE TED. IN RESPECT OF ADDITION MADE IN THE CASE OF MARUTI METALS) NO RECONCILIATION HAS B EEN F ILED IN THE PAPER BOOK NOR DURING THE REMAND PROCEEDINGS. DURING THE APPELLANT PROCEEDINGS, ON A LETTER HEAD OF ONE MARUTI METALS THE ASSESSEE HAS FILED A CONFIRMATION OF BALANCE WHICH CA N NOT BE RELIED UPON AS THE ASSESSEE COULD NOT PRODUCE THE SAME EARLIER AFTER HAVING GIVEN SO MANY OPPORTUNI TIES, THE SAID PARTY BEING LOCAL BASED IN BELGAUM. THE EXERCISE DONE BY T HE APPELLANT IS PURELY AN 5 AFTERTHOUGHT AIMED AT HOODWINKING THE REVENUE AND CANNOT BE ACCEP TED. ACCORDINGLY, THE ADDITION MADE OF RS 3,11 , 321/ - IS CONFIRMED. THUS, OUT OF TOTAL ADDITI ON MADE ON ACCOUNT OF DIFFERENCE NOTICED IN RESPECT OF DEBTORS OF RS 5,70,795/ - , ADDITION TO THE EXTENT OF RS 3,14,762/ - IS CONFIRMED AND THE BALANCE AMOUNT OF RS 2,56,033/ - S ORDERED TO BE DELETED. 9 . THE ASSESSEE HIMSELF REMAIN ED PRESENT BEFORE US AND SUBMITTED THAT IN RESPECT OF ADDITION OF RS. 3,11,321/ - , HE SUBMITTED CONFIRMATION LETTER BEFORE THE LD. CIT(A), BUT THE ASSESSEE COULD NOT FILE THE CONFIRMATION LETTER BEFORE REMAND PROCEEDINGS. NOW THE ASSESSEE HAS FILED THE CONFI RMATION LETTER WITH RECONCILIATION STATEMENT, THEREFORE THE ADDITION MAY BE DELETED. 10 . LEARNED DR RELIED UPON THE ORDER OF LD. CIT(A) . 11 . WE HAVE HEARD RIVAL CONTENTIONS OF BOTH THE PARTIES . LOOKING THE FACTS AND CIRCUMSTANCES OF THE CASE, WE FIND THAT IN RESPECT OF M/S. MARUTI METALS, NO RECONCILIATION STATEMENT HAS BEEN FILED DURING THE REMAND PROCEEDINGS, BUT DURING THE PROCEEDINGS BEFORE THE COMMISSIONER , THE ASSESSEE HAS FILED THE CONFIRMATION LETTER AND THE LD. CIT(A) DID NOT ACCEPT HIS CONFIRMATION LETTER . WE FIND THAT WHEN THE ASSESSEE HAS FILED THE CONFIRMATION LETTER, THE ADDITION CANNOT BE MADE ON ACCOUNT OF SUNDRY CREDITORS AS THE SUNDRY DEBTORS ARE ON THE 6 BOOKS OF ACCOUNTS AND M/S. MARUTI METALS HAS ALREADY CONFIRMED THE SAME . T HEREFORE , THERE IS NO REASON FOR MAKING THE ADDITION ON ACCOUNT OF M/S. MARUTI METALS LTD., THEREFORE WE DELETE THE SAME. 12 . REMUNERATION TO WORKING PARTNER OF RS. 71,741/ - . ON VERIFICATION OF RETURN, THE ASSESSING OFFICER FOUND THAT THE ASSESSEE HAS DEBITED REMUNERATION TO THE EXTENT OF RS. 1,79,353/ - WHICH INCLUDES A SUM OF RS. 71,741/ - IN THE NAME OF LADY PARTNER MISS REKHA SHARMA . TO VERIFY THE GENUINENESS OF THIS EXPENDITURE, A DISCREET ENQUIRY WAS CONDUCTED IN THE NEIGHBOUR HOOD WHICH REVEALED THAT SHE IS ATTENDING ONLY HOUSE HOLD WORK AND NEVER ATTENDS THE BUSINESS . THEREFORE THE ASSESSING OFFICER DISALLOWED THE REMUNERATION PAID TO MISS REKHA SHARMA OF RS. 71,741/ - . 13 . THE MATTER WAS CARRIED TO THE LD. CIT(A) AND THE LD. CIT(A) HAS CONFIRMED THE SAME. 14 . WE HAVE HEARD RIVAL CONTENTIONS OF BOTH THE PARTIES. LOOKING TO THE FACTS AND CIRCUMSTANCES OF THE CASE, WE FIND THAT MISS REKHA SHARMA IS DIPLOMA IN COMPUTER SCIENCE AND SHE ATTENDS TO THE OFFICE WORK AND ALSO LOOKS OF THE COMPUTER RELATED TRANSACTION S INCLUDING THAT OF ENTRIES IN THE BOOKS OF ACCOUNTS . DURING THE COURSE OF ASSESSMENT 7 PROCEEDINGS BEFORE THE ASSESSING OFFICER , THE ASSESSEE HAS SUBMITTED THAT MISS REKHA SHARMA IS A DIPLOMA HOLDER IN COMPUTER SCIENCE AND SHE IS USEFUL IN DAY TO DAY RUNNING OF ASSESSEES BUSINESS AS THE BOOKS OF ACCOUNTS ARE MAINTAINED ON COMPUTER. THE DAY TO DAY BUSINESS RECORDED ON COMPUTER, THE PARTNER S REMUNERATION CANNOT BE RULED OUT , BUT THE LD. CIT(A) WAS NOT SATISFIED WITH THIS SUBMISSIONS OF ASSESSEE . WE FIND THAT THE ASSESSEE HAS SUBMITTED ENOUGH EVIDENCE BEFORE US THAT MISS REKHA SHARMA IS A DIPLOMA HOLDER IN COMPUTER SCIENCE AND SHE IS HAVING KNOWLEDGE OF COMPUTER, THEREFORE WHEN SHE IS GIVING SER VICE AS A PARTNER TO THE FIRM, THEN THE REMUNERATION I S TO BE ALLOWED . WE ALLOW THIS GROUND OF APPEAL OF THE ASSESSEE. 15 . REGARDING GROUND NO.4, THE ASSESSING OFFICER HAS VERIFIED THE SUNDRY DEBTORS AND INFORMATION WAS COLLECTED IN RESPECT OF SUNDRY DEBTORS. THE ASSESSEE HAD TOTAL DEBTORS OF RS. 1,84, 99,366/ - IN RESPECT OF FOUR CASES AND THE DEBTORS WERE NOT FOUND, THEREFORE , ASSESSEE HAS AGREED TO ADD THE DIFFERENCE OF RS. 1,00,000/ - TO HIS RETURN OF INCOME. DURING THE COURSE OF ASSESSMENT PROCEEDINGS , THE ASSESSING OFFICER VERIFIED THE DIFFERENCE IN RESPECT OF M/S. METAL ARTS OF RS. 1,39,945/ - REPRESENTS SALES MADE WHICH HAS NOT BEEN ACCOUNTED FOR IN THE BOOKS OF ACCOUNTS BY THE ASSESSEE AND THE LD. CIT(A) HAS 8 ENHANCED THE ADDITION OF RS. 1 LAC. TO RS. 1,39,945/ - . DURING THE COURSE OF HEARING, THE ASSESSEE SUBMIT T ED BEFORE US THAT THERE WAS A DIFFERENCE IN RESPECT OF M/S. METAL CART, THE DIFFERENCE WAS OF RS. 1,39,945/ - REPRESENT THE SALES MADE WHICH WAS NOT ACCOUNTED FOR. T HE AMOUNT OF OUTSTANDING WAS CONFIRMED BY THE PARTY. THE ASSESSEE HAS UNDERSTATED ITS DEBTORS BY RS. 1,39,945/ - , THEREFORE LD. CIT(A) HAS MADE THIS ADDITION. DURING THE COURSE OF HEARING, THE ASSES SEE SUBMITTED THAT BEFORE THE ASSESSING OFFICER HE AGREED FOR ADDITION OF RS. 1 LAC INSTE A D OF RS. 1,39,945/ - . THE SAME SUBMISSIONS HAS BEEN MADE BEFORE U S ALSO THAT INSTEAD OF RS. 1,39,945/ - , THE ADDITION OF RS. 1 LAC SHOULD BE MADE AND HE HAS NO OBJECTION IF THE ADDITION OF RS. 1 LAC IS CONFIRMED AS HE HAS AGREED DURING THE COURSE OF ASSESSMENT PROCEEDINGS. 16 WE HAVE HEARD RIVAL CONTENTION S OF BOTH THE PARTIES . LOOKING TO THE FACTS AND CIRCUMSTANCES OF THE CASE, WE FIND THAT WHEN THE ASSESSEE HAS ALREADY AGREED FOR ADDITION OF RS. 1 LAC. AND SURRENDERED THE SAME , WE ARE OF THE VIEW THAT WHEN AN ESTIMATED ADDITION IS MADE, NO FURTHER ADDITION IS REQUIRED. HENCE, W E ALLOW THIS GROUND OF APPEAL . 9 17. I N THE RESULT, APPEAL OF THE ASSESSEE IS PARTLY ALLOWED. ( ORDER PRONOUNCED IN THE OPEN COURT ON 1 9 T H FEBRUARY , 201 5 ). S D / - S D / - (P.K. BANSAL) (D.T. GARASIA) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED : 1 9 T H FEBRUARY , 201 5 . VR/ - COPY TO: 1 . THE APPELLANT 2 . THE RESPONDENT 3 . THE LD. CIT 4 . THE CIT(A) 5 . THE D.R 6 . GUARD FILE. BY ORDER ASSISTANT REGISTRAR I.T.A.T., PANAJI