Jayram Varandmal Meghani, Kolhapur V. Tax Recovery Officer,

ITA 426/PUN/2014

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 2812 (ITAT-PUNE)
• Duration Of Justice: 1 year(s) 10 month(s) 25 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-01-2016
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: B
• Next Hearing Date: 09-11-2015
• Assessment Year: 2009-2010
• Appeal Filed On: 05-03-2014
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: HITENDRA NINAWE
• Keywords: Bogus purchase; Rule of consistency
• Section: 234B

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH, PUN E , , !'#'' $ , % & BEFORE SHRI R.K. PANDA, AM AND SHRI VIKAS AWASTHY, JM / ITA NO. 423/PN/2014 %' ( ')( / ASSESSMENT YEAR : 2009-10 SOU. PUSHPA BRIJLAL LALWANI, PROP. M/S. SANJOG WINES, 250-B, TIRUMALA RESIDENCY, NAGALA PARI, KOLHAPUR PAN : AAJPL8168R ....... / APPELLANT ' / V/S. TAX RECOVERY OFFICER (CENTRAL), KOLHAPUR / RESPONDENT / ITA NO. 424/PN/2014 %' ( ')( / ASSESSMENT YEAR : 2009-10 SOU. PRITI UDDHAV MEGHANI, PROP. SAMATA WINES, 2100/155B, VIDYA COLONY, KOLHAPUR PAN : ABVPM4375N ....... / APPELLANT ' / V/S. TAX RECOVERY OFFICER (CENTRAL), KOLHAPUR / RESPONDENT / ITA NO. 425/PN/2014 %' ( ')( / ASSESSMENT YEAR : 2009-10 SHRI ASHOK BRIJLAL LALWANI, PROP. M/S. AIM LIQUORS, 250-B, TIRUMALA RESIDENCY, NAGALA PARI, KOLHAPUR PAN : AAIPL7795D ....... / APPELLANT ' / V/S. TAX RECOVERY OFFICER (CENTRAL), KOLHAPUR / RESPONDENT 2 ITA NOS.423 TO 427/PN/2014, A.Y. 200910 / ITA NO. 426/PN/2014 %' ( ')( / ASSESSMENT YEAR : 2009-10 SHRI JAYRAM VARANDMAL MEGHANI, PROP. SAGAR WINES, 2100/155B, VIDYA COLONY, KOLHAPUR PAN : ABNPM8623P ....... / APPELLANT ' / V/S. TAX RECOVERY OFFICER (CENTRAL), KOLHAPUR / RESPONDENT / ITA NO. 427/PN/2014 %' ( ')( / ASSESSMENT YEAR : 2009-10 SOU. DIVYA JAYRAM MEGHANI, PROP. SAHARA WINES, 2100/155B, VIDYA COLONY, KOLHAPUR PAN : ABVPM4374P ....... / APPELLANT ' / V/S. TAX RECOVERY OFFICER (CENTRAL), KOLHAPUR / RESPONDENT ASSESSEE BY : SHRI M.K. KULKARNI REVENUE BY : SHRI HITENDRA NINAWE / DATE OF HEARING : 20-01-2016 / DATE OF PRONOUNCEMENT : 29-01-2016 * / ORDER PER VIKAS AWASTHY, JM : THESE FIVE APPEALS ARE FILED BY THE ASSESSEES. ALL THE ASSE SSEES HAVE IMPUGNED THE ORDERS OF COMMISSIONER OF INCOME TAX (A PPEALS), 3 ITA NOS.423 TO 427/PN/2014, A.Y. 200910 KOLHAPUR FOR ASSESSMENT YEAR 2009-10 IN THEIR RESPECTIVE CASES. THE ORDERS IMPUGNED IN ALL THE CASES ARE DATED 17-01-2014. THE COMMON GROUNDS RAISED BY THE ASSESSEES IN THEIR RESPECTIVE APP EALS READ AS UNDER: 1) ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN L AW THE LD. CIT(A), KOLHAPUR WAS NOT JUSTIFIED IN SUSTAINING THE ADDITI ON EQUAL TO 1% AS AGAINST 1.5% MADE BY THE A.O. ON ACCOUNT OF TURNOVE R OF LIQUOR SALES MADE ON PREMIUM. THE ASSESSEE IS CONSISTENTLY FOLL OWING THIS TREND OF BUSINESS IN VIEW OF BUSINESS EXPEDIENCY. THE GENUI NITY OF SUCH PAYMENT IS NOT IN DOUBT. IN VIEW OF THIS THE ADDITION SUST AINED BY CIT(A) EQUAL TO 1% IS NOT JUSTIFIED. THE ADDITION BE DELETED. 2) ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN L AW THE LEVY OF INTEREST U/S. 234A, 234B AND 234C IS NOT JUSTIFIED. THE LEV Y OF INTEREST BE QUASHED. SINCE, IDENTICAL FACTS AND ISSUES ARE INVOLVED IN ALL THE APP EALS, THESE APPEALS ARE TAKEN UP TOGETHER FOR ADJUDICATION. HOWEVER, FOR THE SAKE OF CONVENIENCE WE HAVE TAKEN THE FACTS FROM ITA NO . 423/PN/2014. 2. THE ASSESSEES ARE ENGAGED IN RETAIL TRADING OF LIQUOR. THE ASSESSEES ARE MAINTAINING REGULAR BOOKS OF ACCOUNT BESIDE S MAINTAINING THE REGISTERS AS REQUIRED UNDER THE PROVISION S STATE EXCISE ACT. THE ASSESSEES ARE SUPPOSED TO SALE LIQUOR ONLY TO THE PERSONS HAVING VALID PERMIT. DURING THE COURSE OF SCRUTINY ASSESS MENT PROCEEDINGS, THE ASSESSING OFFICER OBSERVED THAT THE RETA IL SALE BILLS MAINTAINED BY THE ASSESSEES ARE NOT RELIABLE. ON NUMBER OF OCCASIONS SALE OF LARGE QUANTITY OF LIQUOR IS BOOKED IN THE NAME OF ONE PERMIT HOLDER. THE QUANTITIES PURCHASED BY A SINGLE PERSON ON A SINGLE DAY INDICATE THAT THE PERSON BUYS SMALL PACKINGS OF LIQUOR IN LAR GE NUMBER INSTEAD OF LARGE PACKING WHICH IS MORE ECONOMICAL. IT WAS FURTHER OBSERVED THAT THE PURCHASE OF LIQUOR BY A SINGLE PERSON FOR OWN 4 ITA NOS.423 TO 427/PN/2014, A.Y. 200910 CONSUMPTION IN ONE MONTH IS TO THE TUNE OF ` 52,453/-. THE ASSESSING OFFICER IN ORDER TO CHECK THE INSTANCES OF BOGUS PURCHASE MADE TEST CHECK IN THE CASE OF SHRI VINOD KALLAPPA ALASE HAVING PERMIT NO. 203331. THE TEST CHECK REVEALED THAT DURING THE PERIOD OF 28 DAYS IN A MONTH, HE HAS MADE PURCHASES OF ` 52,453/-. IN ONE OF THE CASES THE SO CALLED PURCHASER HAS DENIED THE PURCHASE OF LIQUOR FROM THE SHOPS OF THE ASSESSEE. THUS, THE ASSESSING OFFICER CONCLUDED THAT THERE ARE INSTANCES OF SALE OF LIQUOR TO THE NON-PERMIT HOLDERS. SALE S TO SUCH UNAUTHORIZED PERSONS BY THE ASSESSEE MUST HAVE BEEN MADE ON PREMIUM. THE ASSESSING OFFICER INSTEAD OF REJECTING THE BOO KS OF ACCOUNT, MADE ADDITION @ 1.5% OF TURNOVER FOR THE YEAR. S IMILAR ADDITIONS WERE MADE IN THE CASE OF ALL THE ASSESSEES BY T HE ASSESSING OFFICER. AGGRIEVED BY THE ASSESSMENT ORDERS IN THEIR RESPECTIVE CASES, THE ASSESSEES PREFERRED APPEALS BEFORE THE COMMISSIONER OF I NCOME TAX (APPEALS). THE COMMISSIONER OF INCOME TAX (APPEALS) UPHELD T HE FINDINGS OF THE ASSESSING OFFICER, BUT GRANTED PARTIAL RELIEF BY REDUCING THE ADDITION TO 1% OF THE GROSS PROFIT. STILL AGGRIEVED THE ASSESSEES ARE IN SECOND APPEAL BEFORE THE TRIBUNAL. 3. SHRI M.K. KULKARNI APPEARING ON BEHALF OF THE ASSESSEE SUBMITTED THAT THE ADDITIONS HAVE BEEN MADE BY THE AUTHORITIES BE LOW IN AN ARBITRARY AND UNJUSTIFIED MANNER. THE ACCOUNTS OF THE AS SESSEES ARE SUBJECT TO AUDIT UNDER THE PROVISIONS OF SECTION 44AB OF THE INCOME TAX ACT. THE AUDIT REPORT HAS BEEN FURNISHED DURING THE COU RSE OF SCRUTINY ASSESSMENT PROCEEDINGS. THE ASSESSING OFFICER HAS NOT POINTED OU T ANY DEFECT IN THE BOOKS OF ACCOUNT. THE ASSESSEES ARE ENG AGED IN LIQUOR TRADING BUSINESS SINCE LONG AND IN THE PRECEDING ASSESSME NT YEARS NO SUCH AD HOC ADDITION HAS BEEN MADE. THE RULE OF CONSIS TENCY HAS TO BE 5 ITA NOS.423 TO 427/PN/2014, A.Y. 200910 FOLLOWED. THEREFORE, THE ADDITIONS SUSTAINED BY THE COMMISS IONER OF INCOME TAX (APPEALS) SHOULD BE DELETED. 4. ON THE OTHER HAND SHRI HITENDRA NINAWE REPRESENTING THE DEPARTMENT VEHEMENTLY SUPPORTED THE FINDINGS OF THE CO MMISSIONER OF INCOME TAX (APPEALS). THE LD. DR SUBMITTED THAT IN INCOME TAX PROCEEDINGS THE PRINCIPLE OF RES JUDICATA DOES NOT APPLY. THEREFORE, THE CONTENTIONS OF THE LD. AR THAT SINCE NO SUCH ADDITION HAS BEEN MADE IN THE PRECEDING ASSESSMENT YEARS, THE ADDITION MADE IN THE IMPUGNED ASSESSMENT YEAR SHOULD ALSO BE DELETED DOES NOT HOLD GR OUND. THE LD. DR FURTHER SUBMITTED THAT IT HAS COME ON RECORD THAT T HE ASSESSEESS HAVE BEEN SELLING LIQUOR TO NON-PERMIT HOLDER AND SUCH SALE S ARE GENERALLY ON PREMIUM. THEREFORE, THE COMMISSIONER OF INCOM E TAX (APPEALS) HAS RIGHTLY UPHELD THE FINDINGS OF THE ASSESSING OFFIC ER AND SUSTAINED ADDITION TO THE EXTENT OF 1% OF THE TOTAL TURN OVER. THE LD. DR PRAYED FOR DISMISSING THE APPEALS OF THE ASSESSEES. 5. BOTH SIDES HEARD. ORDER OF THE AUTHORITIES BELOW PER USED. THE ASSESSEES HAVE ASSAILED THE FINDINGS OF COMMISSIONER OF INCO ME TAX (APPEALS) IN SUSTAINING THE ADDITION OF 1% OF GROSS PROFIT ON ACCOUNT OF PREMIUM ON SALE OF LIQUOR TO NON-PERMIT HOLDERS. THE CONTE NTIONS OF THE ASSESSEES ARE THAT NO SUCH ADDITION HAS BEEN MADE IN THE PAST. IT IS ONLY IN THE IMPUGNED ASSESSMENT YEAR THAT SUCH AD H OC ADDITION HAS BEEN MADE IN RESPECT OF ALLEGED SALE OF LIQUOR TO NON-PERM IT HOLDERS. IT IS A TRITE LAW THAT PRINCIPLE OF RES JUDICATA DOES NOT APP LY IN PROCEEDINGS UNDER THE INCOME TAX ACT. EVERY ASSESSMENT YEAR IS IN DEPENDENT. HOWEVER, AT THE SAME TIME RULE OF CONSISTENCY HAS TO BE FOLLOWED. A QUERY WAS PUT TO THE LD. AR WHETHER IN THE SUBSEQUENT ASSESSMENT YEARS SUCH ADDITION HAS BEEN MADE IN THE HANDS OF THE A SSESSEES. THE 6 ITA NOS.423 TO 427/PN/2014, A.Y. 200910 LD. AR SUBMITTED THAT IN THE CASE OF TWO ASSESSEES I.E. MRS. PRITI UDDHAV MEGHANI AND MRS. DIVYA JAIRAM MEGHANI, THE ASSESSING OFFICER HAS MADE AD HOC ADDITION OF ` 1,50,000/- AND ` 2,50,000/-, RESPECTIVELY ON ACCOUNT OF FALL IN GROSS PROFIT AS WELL AS EXTRA PREMIUM CHARGED. 6. IN THE IMPUGNED ASSESSMENT YEAR, THE ASSESSING OFFICER HAS MADE ADDITION OF 1.5% OF THE TOTAL TURNOVER AS PREMIUM ON SALE OF LIQUOR TO NON-PERMIT HOLDERS. THE ASSESSEES HAVE NOT B EEN ABLE TO CONTROVERT THE FINDINGS OF THE ASSESSING OFFICER WITH RESPEC T TO SALE OF LIQUOR TO NON-PERMIT HOLDERS. THE ASSESSING OFFICER HAS GIVE N A SPECIFIC INSTANCE OF BOGUS SALES IN THE CASE OF SHRI VINOD KALLAPPA ALASE HOLDING PERMIT NO. 203331. THE LD. AR OF THE ASSESSEES HAS NOT REFUTED THE FINDINGS OF THE ASSESSING OFFICER IN RESPECT OF SAID BOGUS SALE S. THE FIRST APPELLATE AUTHORITY HAS ALSO GIVEN A CONCURRENT FINDING OF FACT. IN THE FACTS AND CIRCUMSTANCES OF THE CASE, WE ARE OF TH E CONSIDERED VIEW THAT THE ASSESSEES IS SELLING LIQUOR TO NON -PERMIT HOLDERS AT PREMIUM. THEREFORE, SOME ADDITION HAS TO BE M ADE ON THIS COUNT. TAKING INTO CONSIDERATION THE ENTIRE FACTS OF THE C ASE AND UNREFUTED FINDINGS OF THE AUTHORITIES BELOW, WE RESTRICT THE ADDITION ON ACCOUNT OF SALE OF LIQUOR ON PREMIUM TO NON-PERMIT HOLDERS TO 0.5% OF GROSS PROFIT. ACCORDINGLY, THE FIRST GROUND RAISED IN THE A PPEALS OF THE ASSESSEES IS PARTLY ACCEPTED. 7. THE SECOND GROUND RAISED IN THE APPEALS BY THE ASSE SSEES RELATE TO LEVY OF INTEREST U/S. 234A, 234B AND 234C OF THE ACT. THE LEVY OF INTEREST IS CONSEQUENTIAL AND MANDATORY. ACCORDINGLY, THE SECOND GROUND RAISED IN THE APPEALS IS DISMISSED. 7 ITA NOS.423 TO 427/PN/2014, A.Y. 200910 8. IN THE RESULT, THE APPEALS OF THE ASSESSEES ARE PART LY ALLOWED IN THE AFORESAID TERMS. ORDER PRONOUNCED ON FRIDAY, THE 29 TH DAY OF JANUARY, 2016. SD/- SD/- ( . . / R.K. PANDA) ( ! ' / VIKAS AWASTHY) #' / ACCOUNTANT MEMBER $ % #' / JUDICIAL MEMBER / PUNE; &# / DATED : 29 TH JANUARY, 2016 RK *+,%-.#/#)- / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT. 2. / THE RESPONDENT. 3. ' () / THE CIT(A), KOLHAPUR 4. ' / THE CIT-II, KOLHAPUR 5. !*+ %%,- , ,- , . ./0 , / DR, ITAT, B BENCH, PUNE. 6. + 1 23 / GUARD FILE. // ! % // TRUE COPY// #4 / BY ORDER, %5 ,0 / PRIVATE SECRETARY, ,- , / ITAT, PUNE