The ACIT, Ratlam V. Shri Ghanshyam Goyal, Neemuch

ITA 404/IND/2008

• Counselvise Citation: [2009] 115 COUNSELVISE.COM (IT) 2390 (ITAT-INDORE)
• Duration Of Justice: 1 year(s) 3 month(s) 17 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 14-12-2009
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: DB
• Next Hearing Date: 24-11-2009
• Assessment Year: 2003-2004
• Appeal Filed On: 28-08-2008
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: APARNA KARAN
• Section: 133A

Judgement Text

PAGE 1 OF 6 - I.T.A.NO. 404/IND/2007 SHRI GHANSHYAM GOYAL, NEEMUCH. IN THE INCOME TAX APPELLATE TRIBUNAL INDORE BENCH : INDORE BEFORE SHRI JOGINDER SINGH, JUDICIAL MEMBER AND SHRI V.K. GUPTA, ACCOUNTANT MEMBER PAN NO. : AASPG9601P I.T.A.NO.404/IND/2008 A.Y. : 2003-04 ACIT, SHRI GHANSHYAM GOYAL, RATLAM VS PROP. M/S. R.K.BROKERS, 560, TILAK MARG, NEEMUCH APPELLANT RESPONDENT APPELLANT BY : SMT.APARNA KARAN, SR. DR RESPONDENT BY : SHRI MANJEET SACHDEVA, ADV. DATE OF HEARING : 24/11/2009 O R D E R PER V.K. GUPTA, A.M. THIS APPEAL FILED BY THE REVENUE ARISES OUT OF ORDE R OF THE LD. CIT(A), UJJAIN, DATED 18.06.2008 FOR THE ASSESSMENT YEAR 2003-04. 2. WE HAVE HEARD BOTH THE PARTIES AND HAVE ALSO PERUSE D THE MATERIAL AVAILABLE ON RECORD. 3. GROUND RAISED IN THIS APPEAL READS AS UNDER :- ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) ERRED IN DELETING THE ADDITION OF RS. 12,07, 205/- ON PAGE 2 OF 6 - I.T.A.NO. 404/IND/2007 SHRI GHANSHYAM GOYAL, NEEMUCH. ACCOUNT OF DISALLOWANCE OF LOSS CLAIMED BY THE ASSE SSEE ON TRADING OF GARLIC. 4. THE FACTS, IN BRIEF, ARE THAT THE ASSESSEE IS ENGAG ED IN THE BUSINESS OF HUNDI DALALI. DURING THE YEAR UNDER CON SIDERATION , THERE WAS A SURVEY ACTION AGAINST THE ASSESSEE U/S 133A ON 18.2 .2003, WHEREIN THE ASSESSEE SURRENDERED AN ADDITIONAL INCOME OF RS. 31 .70 LAKHS. THE ASSESSEE FILED THE RETURN OF INCOME DECLARING TOTAL INCOME AT RS. 11,81,200/- WHICH INCLUDED THE AMOUNT DECLARED DURI NG THE COURSE OF SURVEY PROCEEDINGS. THE A.O., HOWEVER, NOTED THAT S UBSEQUENTLY THE ASSESSEE CLAIMED A LOSS OF RS. 12,87,205/- IN GARLI C BUSINESS AND , THEREFORE, HE FORMED A PRIMA FACIE OPINION THAT THE LOSS IN THE GARLIC BUSINESS WAS SHOWN JUST TO REDUCE THE AMOUNT OF INC OME SURRENDERED DURING THE COURSE OF SURVEY U/S 133A. THE A.O., THE REAFTER, SCRUTINIZED THE PURCHASES/SALES TRANSACTION OF GARLIC TRADING A ND ON THE BASIS OF MARKET QUOTATIONS IN RESPECT OF BEST GARLIC AS REPO RTED IN THE PUROHIT DAINIK MARKET REPORT NEWS PAPER AND FOUND THAT THE ASSESSEE HAD SHOWN PURCHASES AT MUCH HIGHER RATE AS COMPARED TO THE PR EVAILING RATE ON THE DATE OF SUCH PURCHASES. THE A.O., ACCORDINGLY, REJE CTED THE LOSS SO CLAIMED BY THE ASSESSEE. AGGRIEVED BY THIS, THE ASS ESSEE PREFERRED AN APPEAL BEFORE THE LD. CIT(A), WHEREIN IT WAS SUBMIT TED THAT ALL THE TRANSACTIONS OF PURCHASES AND SALES WERE THROUGH BA NKING CHANNEL AND PAGE 3 OF 6 - I.T.A.NO. 404/IND/2007 SHRI GHANSHYAM GOYAL, NEEMUCH. WITH THE REGISTERED DEALER, WHO WERE INCOME TAX ASS ESSEES AS WELL. HENCE, THE GENUINENESS OF THE TRANSACTION COULD NOT BE DOUBTED. THE ASSESSEE ALSO STATED THAT IT SUFFERED LOSS DUE TO C HANGE IN MARKET CONDITIONS WHEREBY, HE WAS COMPELLED TO SELL THE GA RLIC AT LESSER RATE TO SAVE FURTHER LOSS AS THIS PRODUCT WAS OF PERISHABLE NATURE. THE ASSESSEE ALSO SUBMITTED THAT NECESSARY DOCUMENTARY EVIDENCES IN SUPPORT OF TRANSACTIONS WITH REGISTERED PARTIES. IT WAS ALSO C ONTENDED THAT MERELY, BECAUSE THE GARLIC TRADING TRANSACTION TOOK PLACE A FTER THE DATE OF SURVEY, WHEREIN THE ASSESSEE SUFFERED THE LOSS, THE A.O. PR ESUMED THAT THESE TRANSACTIONS WERE SHAM AND THERE WAS NO BASIS FOR S UCH PRESUMPTION. HENCE, THE ACTION OF THE A.O. WAS NOT CORRECT IN LA W. THE ASSESSEE ALSO PLACED RELIANCE ON VARIOUS JUDICIAL DECISIONS FOR T HE PROPOSITION THAT IN THE ABSENCE OF ANY EVIDENCE WITH THE DEPARTMENT, GENUIN E TRANSACTION COULD NOT BE REJECTED. THE LD. CIT(A) AGREEING WITH THIS CONTENTION DELETED THE ADDITION. THE RELEVANT FINDINGS OF THE LD. CIT(A) A RE AS UNDER :- 1.3. ON CAREFUL CONSIDERATION OF ALL THE FACTS AND CIRCUMSTANCES OF THE CASE AS WELL AS THE JUDICIAL PRONOUNCEMENTS OF VARIOUS COURTS I FOUND SUBSTANCE IN THE ARGUMENT OF THE APPELLANT. THE PURCHASE AND SALE OF GARLIC IS VERIFIABLE. THE PAYMENTS HAVE BEEN MADE AND RECEIVE D THROUGH A/C PAYEE CHEQUES/DEMAND DRAFTS WHICH ARE REFLECTED IN BANK STATEMENT. ALL THE PARTIES ARE IN COME-TAX PAGE 4 OF 6 - I.T.A.NO. 404/IND/2007 SHRI GHANSHYAM GOYAL, NEEMUCH. ASSESSEES HAVING PAN NO. THE A.O. WAS NOT ABLE TO F IND ANY ADVERSE MATERIAL AND HE MADE DISALLOWANCES ON THE B ASIS OF PRESUMPTION ONLY. NO DOUBT, PRIMA FACIE, THE TRANSA CTIONS APPEAR TO BE SUSPICIOUS, BUT ULTIMATELY ASSESSMENT HAS TO BE BASED ON FACTS AND EVIDENCE ON RECORD. THE ADDITION S CANNOT BE SUSTAINED WITHOUT HAVING ANY CONTRARY EVIDENCE O N RECORD. UNLESS IT IS PROVED THAT THE PURCHASE OF SA LES ARE BOGUS OR THERE IS MANIPULATION IN PURCHASE/SALE PRI CE, THE LOSS CLAIMED BY THE APPELLANT CANNOT BE DENIED. IN VIEW OF THESE FACTS THE ADDITION MADE BY A.O. AMOUNTING TO RS. 12,87,205/- IS DELETED. 5. AGGRIEVED BY THIS, THE REVENUE IS IN APPEAL BEFORE US. 6. THE LD. DEPARTMENTAL REPRESENTATIVE NARRATED THE FA CTS AND PLACED STRONG RELIANCE ON THE ORDER OF THE A.O. AND ALSO SUBMITTED THAT EVEN THE LD. CIT(A) HAD FOUND THE TRANSACTIONS TO B E OF SUSPICIOUS NATURE. SHE ALSO CONTENDED THAT THERE WAS AN EVIDEN CE BY WAY OF MARKET QUOTATIONS, HENCE, THE OBSERVATIONS OF THE LD. CIT( A) THAT THERE WAS NO EVIDENCE ON RECORD WERE ALSO NOT CORRECT. 7. THE LEARNED COUNSEL FOR THE ASSESSEE, ON THE OTHER HAND, BESIDES REITERATING THE SUBMISSIONS MADE BEFORE THE LD. CIT(A) ALSO CONTENDED THAT IT WAS FIRST YEAR OF GARLIC TRANSACT IONS, HENCE, DUE TO INEXPERIENCE THE ASSESSEE SUFFERED THE LOSS AND WHI CH ALSO PRECLUDED THE ASSESSEE FROM CARRYING ON SUCH ACTIVITIES IN THE NE XT YEAR. HENCE, THE PAGE 5 OF 6 - I.T.A.NO. 404/IND/2007 SHRI GHANSHYAM GOYAL, NEEMUCH. ASSESSEES ACTION WAS BONA FIDE AND, THEREFORE, THE LD. CIT(A) RIGHTLY DELETED THE ADDITION MADE BY THE ASSESSING OFFICER. IT WAS ALSO CONTENDED THAT THE CORRECTNESS AND COMPLETENESS OF THE ACCOUN TS WAS TO BE PRESUMED AND NO DEFECTS WAS FOUND IN SUCH BOOKS, HENCE, THE TRADING RESULTS SHOWN BY THE ASSESSEE WERE TO BE ACCEPTED. FOR THIS PROPO SITION, HE RELIED ON THE JUDICIAL DECISIONS CITED BEFORE THE LD. CIT(A). 8. WE HAVE CONSIDERED THE SUBMISSIONS MADE BY BOTH THE SIDES, MATERIAL ON RECORD AND THE ORDERS OF THE AUTHORITIE S BELOW. 9. IT IS NOTED THAT THE SURVEY OPERATIONS TOOK PLACE O N 18.2.2003, WHEREIN THE ASSESSEE HAD DECLARED SUBSTANTIAL ADDIT IONAL INCOME. THUS, IN THIS SITUATION, THE NORMAL BEHAVIOUR OF A PRUDENT P ERSON MAY NOT BE OF ENTERING INTO A NEW LINE OF TRADING ACTIVITY AND TH AT TOO FOR WHICH THE SAID PERSON DOES NOT HAVE ANY EXPERIENCE AND WHEREAS THE ASSESSEE HAS STARTED THIS ACTIVITY ON 20.2.2003 JUST TWO DAYS AFTER THE SURVEY. IT IS FURTHER NOTED THAT THE MARKET RATE OF BEST QUALITY GARLIC ON THE DATE OF PURCHASE OF GARLIC BY THE ASSESSEE ARE SUBSTANTIALLY LOWER FROM THE PU RCHASE PRICE PAID BY THE ASSESSEE. THE LD. CIT(A) HAS ALSO DOUBTED THE G ENUINENESS OF THESE TRANSACTIONS THOUGH HE HAS GIVEN THE RELIEF. FURTHE R, THE LD. CIT(A)S OBSERVATION THAT NO EVIDENCE WAS BROUGHT ON RECORD BY THE ASSESSING OFFICER REGARDING THE VARIATION OF PURCHASE PRICE I S ALSO NOT CORRECT AS AN INDEPENDENT MATERIAL IN THE FORM OF NEWS PAPER QUOT ATIONS HAS BEEN PAGE 6 OF 6 - I.T.A.NO. 404/IND/2007 SHRI GHANSHYAM GOYAL, NEEMUCH. BROUGHT ON RECORD BY THE ASSESSING OFFICER. WE FURT HER FIND THAT THE ASSESSEE HAS MERELY STATED THAT THESE PURCHASES AND SALES WERE WITH REGISTERED DEALERS AND PAYMENTS HAVE BEEN MADE THRO UGH CHEQUES. HOWEVER, NO EVIDENTIARY EVIDENCES REGARDING TRANSPO RTATION OF SUCH GOODS, STORAGE THEREOF HAVE BEEN BROUGHT ON RECORD, WHICH FACT ALSO GOES AGAINST THE ASSESSEE. WE ARE FURTHER OF THE OPINION THAT IF THE FACTS OF THE ISSUE BEFORE US ARE ANALYZED AS A WHOLE, THEN AS AG AINST THE EVIDENTIARY EVIDENCES PRODUCED BY THE ASSESSEE, HIS CONDUCT AND THE CIRCUMSTANCES SPEAK VOLUME AGAINST HIM. WE FURTHER FIND THAT THE ASSESSEE HAS ALSO NOT ANY MATERIAL ON RECORD TO SHOW THAT WHY IT SOLD THE GOODS IN LATTER HALF OF THE MARCH, 2003,ONLY IF THE TREND OF PRICES WAS AGA INST THE ASSESSEE. THUS, WE ARE OF THE VIEW THAT LD. CIT(A) IS NOT CORRECT I N LAW AND, THEREFORE, WE QUASH THE SAME AND RESTORE THAT OF THE A.O. THUS, T HIS GROUND OF THE REVENUE IS ALLOWED. 10. IN THE RESULT, THE APPEAL FILED BY THE REVENUE IS A LLOWED. THIS ORDER HAS BEEN PRONOUNCED IN THE OPEN COURT ON 14 TH DECEMBER, 2009. SD/- SD/- (JOGINDER SINGH) (V. K. GUPTA) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED : 14 TH DECEMBER, 2009. CPU* 2711812