RAJASTHAN DRUGS & PHARMACCUTICALS LTD., Jaipur V. JCIT, Jaipur

ITA 425/JPR/2015

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 5492 (ITAT-JAIPUR)
• Duration Of Justice: 9 month(s) 6 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 05-02-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2011-2012
• Appeal Filed On: 29-04-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Section: 194C

Judgement Text

VK;DJ VIHYH; VF/KDJ.K] T;IQJ U;K;IHB] T;IQJ IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCHES, JAIPUR JH VH-VKJ-EHUK] YS[KK LNL; ,OA JH YFYR DQEKJ] U;KF; D LNL; DS LE{K BEFORE: SHRI T.R.MEENA, AM & SHRI LALIET KUMAR, JM VK;DJ VIHY LA-@ ITA NO. 425/JP/2015 FU/KZKJ.K O'K Z@ ASSESSMENT YEARS : 2011-12 . RAJASTHAN DRUGS & PHARMACEUTICALS LTD., ROAD NO. 12, VKI AREA, JAIPUR. CUKE VS. THE JCIT, RANGE-4, JAIPUR. LFKK;H YS[KK LA-@THVKBZVKJ LA-@ PAN/GIR NO. AAACR 6741 D VIHYKFKHZ@ APPELLANT IZR;FKHZ@ RESPONDENT FU/KZKFJRH DH VKSJ LS@ ASSESSEE BY S BY : SHRI P.C. PARWAL (C.A.) JKTLO DH VKSJ LS@ REVENUE BY : SHRI O.P. BHATEJA (ADDL. CIT) LQUOKBZ DH RKJH[K@ DATE OF HEARING : 20 .01.2016. ?KKS'K .KK DH RKJH[K @ DATE OF PRONOUNCEMENT : 5/02/2016. VKNS'K@ ORDER PER SHRI LALIET KUMAR, J.M. THIS IS AN APPEAL FILED BY THE ASSESSEE AGAINST TH E ORDER OF LD. CIT (A)-2, JAIPUR DATED 23.03.2015 FOR THE ASSESSMENT YEAR 2011-12. T HE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS :- 1. THE LD. CIT (A) HAS ERRED ON FACTS AND IN LAW IN CO NFIRMING THE ADDITION OF RS. 1,76,84,743/- MADE BY AO ON ACCOUNT OF UNREC ORDED RECEIPT ON THE BASIS OF RECEIPT REFLECTED IN TDS DETAILS AS PE R 26AS BY NOT ACCEPTING THE EXPLANATION OF THE ASSESSEE THAT THES E RECEIPT DO NOT PERTAIN TO IT BUT PERTAIN TO HIS STOCKIEST M/S. EAST ERN DRUGS AND SANITARY PRODUCTS, MEERUT. 2 ITA NO. 425/JP/2015 A.Y. 2011-12. M/S.RAJASTHAN DRUGS & PHARMACEUTICALS LTD. 1.1. THE LD. CIT (A) HAS ERRED ON FACTS AND IN LAW IN NO T APPRECIATING THE VARIOUS EVIDENCES FILED BY ASSESSEE IN SUPPORT OF ITS CONTENTION AND THEREFORE THE VARIOUS OBSERVATIONS MADE BY HIM IN CONFIRMING THE ADDITION ARE NOT RELEVANT AS ALL THESE OBSERVAT IONS HAS ALREADY BEEN EXPLAINED BY THE ASSESSEE TO THE CIT (A). 1.2. THE LD. CIT (A) HAS ERRED ON FACTS AND IN LAW IN NO T DIRECTING THE AO TO ALLOW THE CREDIT OF TDS OF RS. 3,90,286/- WHI LE CONFIRMING THE ABOVE ADDITION. 2. THE BRIEF FACTS OF THE CASE ARE THAT ASSESSEE IS A GOVERNMENT OF INDIA UNDERTAKING, ENGAGED IN MANUFACTURING OF PHARMACEUT ICAL PRODUCTS AND SUPPLYING THE SAME IN VARIOUS PARTS OF THE COUNTRY. DURING THE A SSESSMENT PROCEEDINGS, THE AO FOUND THAT AS PER DETAILS GIVEN IN AS 26 REGARDING DEDUCTION OF TAX AT SOURCE, THE AMOUNT OF RS. 3,90,286/- WAS DEDUCTED UNDER SECTIO N 194C ON THE RECEIPT OF RS.1,76,84,743/-. IT WAS NOTICED BY THE AO THAT TH E ASSESSEE HAS NEITHER CLAIMED AMOUNT OF TDS NOR COULD VERIFY SUCH RECEIPT IN ITS BOOKS OF ACCOUNT. IN RESPONSE THERETO, A QUERY WAS RAISED BY THE AO. THE ASSESSEE HAS FILED THE REPLY TO THE QUERY VIDE LETTER DATED 31.12.2013. THE MAIN CONTENTION OF THE ASSESSEE, AS MENTIONED IN THE REPLY IS REPRODUCED HEREIN BELOW : 3. THAT REST OF THE DETAILS MENTIONED IN FORM 26A S ARE IN RESPECT OF UTTAR PRADESH BUYERS. M/S. EDSP, MEERUTH, STOCKIEST OF THE COMPANY FOR UTTAR PRADESH IS REPRESENTING HIM AS SOLE DISTRIBUT OR OF ASSESSEE COMPANY. HOWEVER HE IS SUPPLYING GOODS PARTLY FROM RDPL AND PARTLY AT ITS OWN. THE ISSUE RELATING TO SUPPLIES MADE AT ITS OWN BY M /S. EDSP, MEERUTH IS UNDER INVESTIGATION OF CENTRAL BUREAU OF INVESTIGAT ION, SPECIAL TASK FORCE. COPY OF FEW CORRESPONDENCES IN THIS REGARD IS ENCLO SED. THESE TRANSACTION MAY BE PERTAINS TO M/S. EDSP, MEERUTH NOT TO ASSESSE E COMPANY. 3 ITA NO. 425/JP/2015 A.Y. 2011-12. M/S.RAJASTHAN DRUGS & PHARMACEUTICALS LTD. 4. THAT SOMETIMES UP CMOS IN RESPECT OF DIRECT SUP PLIES OF EDSP DEDUCTED TDS IN THE NAME & PAN OF ASSESSEE COMPANY. IN FACT THESE SALES TRANSACTIONS DO NOT PERTAINS TO ASSESSEE COMP ANY, HENCE NEITHER SALES WERE ACCOUNTED NOR TDS WAS CLAIMED BY ASSESSE E COMPANY. A FRESH REPLY WAS FILED ON 28.01.2014, WHEREIN IT W AS CATEGORICALLY MENTIONED THAT THE SUPPLIES WERE MADE BY M/S. EDSP AND NOT BY ASSESSEE COMPANY. IT IS THE CASE OF THE ASSESSEE THAT THE ASSESSEE WAS SUPPLYING THE GOODS TO M/S. EDSP AND IN TURN M/S. EDSP WAS SUPPLYING THE GOODS TO CMOS. IT WAS FURTHE R CONTENDED THAT SINCE ALL THE SALES MADE TO M/S. EDSP WAS INCLUDED IN THE INCOME O F THE ASSESSEE, HENCE NO FURTHER RECEIPT WAS REQUIRED. THE ASSESSEE HAS ALSO PLACED ON RECORD WITH THE AO THE INSTRUCTION FOR TENDERERS. AS PER THE SAID TENDER NOTICE DATED 27.10.2007 IT IS MENTIONED AT SL. NO. 15 & 18 AS UNDER :- 15. THE PROVISION IS MADE FOR THE PUBLIC SECTOR T HAT THE SUPPLY ORDER WILL BE ISSUED TO THE MANUFACTURING PUBLIC SECTOR F IRM. THE SUPPLY CAN BE MADE THROUGH AUTHORIZED DISTRIBUTOR BUT THE PAYMENT WILL BE MADE TO THE MANUFACTURING FIRM ONLY. 18. THE FIRM HAS TO SUBMIT THE UP TO DATE DETAILS O F ASSESSMENT AND PAID THE SALES TAX AND INCOME TAX ACCORDINGLY. THE FIRM HAS TO FURNISH A NOTARIZED AFFIDAVIT THAT ALL DUES AS PER TRADE TAX/INCOME TAX ASSESSMENTS RESPECTIVELY HAVE BEEN PAID AND IN CASE ANY DUES DUE TO ANY REASON ARE LEFT AS ASSESSED BY RESPECTIV E DEPARTMENTS THEN THE FIRM WILL BE LIABLE FOR THE BALANCE PAYMEN T. THE ASSESSEE HAS ALSO FILED AN AFFIDAVIT ON BEHALF OF THE MANAGING DIRECTOR OF THE ASSESSEE COMPANY AND THE SAID MANAGING DIRECTOR HAS CATEGORICALLY SUBMITTED THAT THE SALES, AS REFLECTED IN 26AS WERE NOT RELATED TO ASS ESSEE AND, THEREFORE, IT HAS NOT BOOKED. IT WAS FURTHER SUBMITTED THAT THE TDS DOES NOT PERTAIN TO THE ASSESSEE HENCE 4 ITA NO. 425/JP/2015 A.Y. 2011-12. M/S.RAJASTHAN DRUGS & PHARMACEUTICALS LTD. NEITHER THE RECEIPT WAS ACCOUNTED FOR IN THE BOOKS OF ACCOUNTS NOR THE TDS WAS CLAIMED BY THE ASSESSEE. THE AO WAS NOT SATISFIED WITH THE REPLY SUBMITTED BY THE ASSESSEE AND AS SUCH THE AO HAS INCLUDED THE AMOUNT OF RS. 1 ,76,84,743/- AS INCOME OF THE ASSESSEE. THE CONCLUSION OF THE AO, AS MENTIONED I N THE ASSESSMENT ORDER IS REPRODUCED HEREIN BELOW : CONSIDERING THE ABOVE FACTS AND DISCUSSION, THE A SSESSEE HAD NOT DISCLOSED FULL AMOUNT OF RECEIPT AND ACCORDINGLY RS . 1,76,84,743/- AS MENTIONED IN SHOW CAUSE NOTICE IS ADDED BACK TO THE TOTAL INCOME. FOR THIS ADDITION, PENALTY PROCEEDINGS U/S 271(1)(C) IS INITIATED FOR CONCEALMENT OF INCOME BY WAY OF FURNI SHING INACCURATE PARTICULARS OF INCOME. 3. THE ASSESSEE HAS CHALLENGED THE FINDING OF THE A O BEFORE LD. CIT (A), WHO HAS UPHELD THE ORDER OF THE AO. THE FINDING OF THE LD. CIT (A) ARE MENTIONED IN PAGE 5 & 6 OF HIS ORDER AS UNDER : 2.4. DURING APPEAL PROCEEDINGS, THE APPELLANT STA TED THAT IT MAKES ITS ENTIRE SALE IN THE STATE OF UTTAR PRADESH TO ITS SO LE DISTRIBUTOR M/S. EASTERN DRUGS & SANITARY PRODUCTS (EDSP), MEERUT WHO IN TURN SELLS THE MEDICINES TO VARIOUS GOVT. HOSPITALS AND OTHER CONCERNS. IT H AS BEEN STATED BY THE APPELLANT THAT THESE TDS ENTRIES RELATE TO SALES MA DE IN THE STATE OF UTTAR PRADESH THROUGH M/S. EDSP. THESE RECEIPTS PERTAIN TO 18 HOSPITALS IN UTTAR PRADESH THROUGH THEIR CHIEF MEDICAL OFFICERS (CMO). THIS TDS IS STATED TO HAVE BEEN MADE ON THE SALE BY M/S. EDSP TO THE VARIO US CMOS. AS REGARDS, THIS EXPLANATION, THE FOLLOWING ISSUES MER IT CONSIDERATION (A) IF THE ABOVE EXPLANATION IS CORRECT, IT IS NOT CLEA R WHY THE CMOS WOULD DEDUCT TDS U/S 194C, ON PURCHASES MADE BY THEM FROM M/S. EDSP. (B) IF THE ABOVE EXPLANATION IS CORRECT, IT IS NOT CLEA R WHY TDS WOULD BE MADE IN THE NAME OF THE APPELLANT AND NOT M/S. EDSP WHEN THE TRANSACTION IS ONE OF PURCHASE SALE BETWEEN M/S. EDS P AND THE CMOS. 5 ITA NO. 425/JP/2015 A.Y. 2011-12. M/S.RAJASTHAN DRUGS & PHARMACEUTICALS LTD. (C) IF THE ABOVE EXPLANATION IS CORRECT, NO RECONCILIAT ION STATEMENT HAS BEEN GIVEN BETWEEN THE SALES MADE TO EDSP AND THE RE CEIPTS ON WHICH TDS HAS BEEN DEDUCTED. IN VIEW OF THE ABOVE DISCUSSION, THE AFFIDAVIT OF T HE MANAGING DIRECTOR OF THE APPELLANT THAT THESE RECEIPTS DO NOT PERTAIN TO THE APPELLANT COMPANY TO THE BEST OF HIS KNOWLEDGE, DOES NOT HAVE MUCH EV IDENTIARY VALUE. ALSO, THE CORRESPONDENCE BETWEEN THE APPELLANT AND M/S. ED SP DOES NOT EXPLAIN THE LACUNAE, AS DISCUSSED AT SERIAL NO. A, B & C ABOVE. 2.5. IN VIEW OF THE ABOVE DISCUSSION AND MORE IMPOR TANTLY IN THE ABSENCE OF ANY RECONCILIATION STATEMENT, THE EXPLAN ATION FURNISHED BY THE APPELLANT CANNOT BE ACCEPTED. THEREFORE, THE ADDIT ION MADE BY THE ASSESSING OFFICER OF RS. 1,76,84,743/- ON THE BASIS OF RECEIPTS SHOWN IN THE 26AS STATEMENT, IS UPHELD. GROUND NO 1 IS DISMI SSED. 4. FEELING AGGRIEVED BY THE ORDER PASSED BY LD. CIT (A), ASSESSEE IS IN APPEAL BEFORE US. 5. THE LD. A/R HAS CONTENDED BEFORE US THAT THE ASS ESSEE HAS APPOINTED M/S. EDSP AS THEIR SOLE STOCKIEST FOR THE SUPPLY OF DRUGS AND MEDICINES TO THE GOVERNMENT HOSPITALS VIDE AGREEMENT DATED 30.04.2009. IT WAS FURTHER CONTENDED THAT THE AGREEMENT WAS FOR THE PERIOD OF 2 YEARS FROM 1 ST MAY, 2009 TO 30 TH APRIL, 2011 AND AS PER THE CLAUSE (3) OF THE SAID AGREEMENT, THE ASSES SEE SHALL INVOICE THE PRODUCTS TO THE STOCKIEST AND THE STOCKIEST SHALL INVOICE THE PRODU CTS AS PER COMPANYS PRICE LIST PROVIDED FOR GOVT. SALE OR TO ANY OTHER CUSTOMER. ACCORDINGLY, IT WAS ALSO CONTENDED THAT THE ASSESSEE SUPPLY THE MEDICINES TO EDSP BY R AISING ITS INVOICE AND EDSP FURTHER SUPPLY THE GOODS TO GOVT. HOSPITAL BY RAISING ITS O WN INVOICE. 5.1. IT MAY BE RELEVANT TO MENTION HERE THAT ON 01. 01.2016 THE TRIBUNAL HAS GRANTED THE STAY AGAINST THE ENFORCEMENT OF THE REMAINING B ALANCE AMOUNT FROM THE ASSESSEE. 6 ITA NO. 425/JP/2015 A.Y. 2011-12. M/S.RAJASTHAN DRUGS & PHARMACEUTICALS LTD. AFTER PASSING OF THE INTERIM ORDER IN FAVOUR OF THE ASSESSEE, THE ASSESSEE HAS FILED PAPER BOOK AND APPLICATION FOR ADMISSION OF ADDITIO NAL EVIDENCE UNDER RULE 29 OF ITAT RULES. IN THE SAID APPLICATION, IT WAS SUBMITTED T HAT THE ASSESSEE WAS ABLE TO COLLECT THE CORRESPONDING INVOICES RAISED BY THE EDSP TO TH E CMOS AND THE AMOUNT MATCHES WITH THE FORM 26AS. 5.2. THE LD. A/R FOR THE ASSESSEE HAS DEMONSTRATED IN RESPECT OF THE BILLS RAISED FROM 30 TH AUGUST, 2010 TO 20 TH MARCH, 2011 AT SL. 1 TO 7 IN FORM 26AS AND STATED THAT THE BILLS WERE RAISED BY EDSP TO THE CMOS AND THE AMOUNT MENTIONED THEREIN MATCHES WITH THE AMOUNT REFLECTED IN FORM 26AS. SIMILARLY, IN R ESPECT OF OTHER INVOICES, IT WAS ALSO CONTENDED THAT THE ENTIRE BILLS WERE RAISED FOR WHI CH THE TDS HAS BEEN CREDITED IN THE ACCOUNT OF THE ASSESSEE PERTAINING TO EDSP AND WAS N OT RELATED TO THE ASSESSEE, BE THAT AS MAY BE. THIS TRIBUNAL, AT THIS STAGE IS NO T REQUIRED TO EXAMINE AND SCRUTINIZE THE DOCUMENT FILED BEFORE US. SINCE THE SAID DOCUM ENTS, WHICH ARE NOW PLACED BEFORE THE TRIBUNAL, WERE NOT STATED TO BE IN POSSESSION O F THE ASSESSEE, BEFORE THE AO OR AS WELL AS BEFORE LD. CIT (A), THEREFORE, THESE DOCUME NTS ARE REQUIRED TO BE EXAMINED. ACCORDINGLY IT WILL BE IN THE FITNESS OF CIRCUMSTAN CES REQUIRE THAT THE MATTER BE REMANDED TO THE AO FOR EXAMINATION, DENOVO, THE DOC UMENTS FILED BY THE ASSESSEE BEFORE US AND COME TO A CONCLUSION IN ACCORDANCE WI TH LAW. NEEDLESS TO STATE THAT SINCE THE STAY HAS BEEN GRANTED ON 1 ST JANUARY, 2016, IT MAY BE IN THE INTEREST OF PARTIES, THE PROCEEDINGS BE DECIDED EXPEDITIOUSLY A S FAR AS POSSIBLE BUT NOT LATER THAN 30 TH JULY, 2016. WE MAY ADD THAT THE AO SHALL CONSIDER ALL THE DOCUMENTS ALREADY ON 7 ITA NO. 425/JP/2015 A.Y. 2011-12. M/S.RAJASTHAN DRUGS & PHARMACEUTICALS LTD. RECORD AND NOW FILED BEFORE US IN DECIDING THE MATT ER. FURTHER, THE AO MAY ISSUE APPROPRIATE NOTICES TO THE EDSP AND OTHER AGENCIES I NVOLVED IN THE MATTER TO FIND OUT THE TRUTH AS TO 1) WHOM THE TENDER HAS BEEN ISSUED FOR SUPPLY OF DRUGS & MEDICINES. 2) WHICH AGENCY WAS REQUIRED TO SUPPLY THE GOODS. 3) WHICH AGENCY WAS REQUIRED TO RAISE THE BILLS AND WH ICH AGENCY HAD ACTUALLY SUPPLIED THE GOODS, TO WHOM THE AMOUNT HAS BEEN PAID BY THE CMOS. 5.3. FROM THE PERUSAL OF THE WRITTEN SUBMISSIONS BE FORE US, IT TRANSPIRED THAT A PRELIMINARY ENQUIRY IS PENDING WITH THE CBI IN RESPE CT OF THE DRUGS SUPPLIED BY M/S. EDSP UNDER NRHM. THE AO, IF REQUIRED, MAY ALSO CALL THE RECORDS FROM THE CBI, TO FIND OUT THE CORRECT FACTS AND CIRCUMSTANCES. 5.4. IN THE LIGHT OF ABOVE SAID OBSERVATIONS, WE RE STORE THE MATTER TO THE AO FOR FRESH ASSESSMENT. 6. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 5/02/201 6. SD/- SD/- VH-VKJ-EHUK YFYR DQEKJ (T.R. MEENA) (LALIET KUMAR) YS[KK LNL;@ ACCOUNTANT MEMBER U;KF;D LNL;@ JUDICIAL MEMBER TK;IQJ@ JAIPUR FNUKAD@ DATED:- 5/02/2016 DAS/ 8 ITA NO. 425/JP/2015 A.Y. 2011-12. M/S.RAJASTHAN DRUGS & PHARMACEUTICALS LTD. VKNS'K DH IZFRFYFI VXZSFKR@ COPY OF THE ORDER FORWARDED TO: 1. VIHYKFKHZ@ THE APPELLANT-M/S. RAJASTHAN DRUGS & PHARMACEUTICALS LTD. JAIPUR. 2. IZR;FKHZ@ THE RESPONDENT- THE JCIT, RANGE-4, JAIPUR. 3. VK;DJ VK;QDR@ CIT 4. VK;DJ VK;QDRVIHY@ THE CIT(A) 5. FOHKKXH; IZFRFUF/K] VK;DJ VIHYH; VF/KDJ.K] T;IQJ@ DR, ITAT, JAIPUR 6. XKMZ QKBZY@ GUARD FILE (ITA NO. 425/JP/2015) VKNS'KKUQLKJ@ BY ORDER, LGK;D IATHDKJ@ ASST. REGISTRAR