The Income-tax Oficer, Amritsar. V. M/s. R.J. Traders, Amritsar.

ITA 430/ASR/2012

• Counselvise Citation: [2013] 120 COUNSELVISE.COM (IT) 0601 (ITAT-AMRITSAR)
• Duration Of Justice: 1 month(s) 18 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 07-01-2013
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Assessment Year: 2004-2005
• Appeal Filed On: 19-11-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: PADAM BAHL
• Keywords: Reassessment proceedings
• Section: 147; 148

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AMRITSAR BENCH; AMRITSAR. BEFORE SH. H.S. SIDHU, JUDICIAL MEMBER AND SH. B.P.JAIN, ACCOUNTANT MEMBER I.T.A. NO.430(ASR)/2012 ASSESSMENT YEAR:2004-05 PAN :AAEFR2622P INCOME TAX OFFICER, VS. M/S. R.J. TRADERS, WARD 3(3), AMRITSAR. 75, MEWA MANDI, AMRITSAR. (APPELLANT) (RESPONDENT) APPELLANT BY:SH. TARSEM LAL, DR RESPONDENT BY:SH. PADAM BAHL, CA DATE OF HEARING: 01 /01/2013 DATE OF PRONOUNCEMENT:07/01/2013 ORDER PER BENCH ; THE REVENUE HAS FILED THE PRESENT APPEAL AGAINST T HE IMPUGNED ORDER OF CIT(A), AMRITSAR, DATED 13.09.2012 FOR THE ASSES SMENT YEAR 2004-05, ON THE FOLLOWING GROUNDS : 1. THAT ON THE FACTS AND CIRCUMSTANCES OF THE CAS E, THE LD. CIT(A) HAS ERRED IN LAW IN REDUCING THE ADDITION OF RS.2 0,89,980/- TO RS.61,557/- MADE BY THE A.PO. ON ACCOUNT OF EXTRA COMMISSION EARNED BY THE ASSESSEE. ITA NO.430(ASR)/2012 2 2. THAT THE LD. CIT(A) HAS NOT APPRECIATED THE FAC TS THAT THE ASSESSEE FAILED TO PRODUCE THE BOOKS OF ACCOUNTS. HENCE, AO WAS RIGHT IN LAW IN MAKING THE ASSESSMENT AFTER CONSIDERING THE ORDER DATED 11.11.2010 PASSED BY THE MARKET COMMI TTEE, AMRITSAR KEEPING IN VIEW OF SECTION 153(1) OF THE INCOME TAX ACT, 1961 WHEN THE ORDER DATED 9.4.2012 PASSED BY THE SECRETARY, MARKET COMMITTEE, BHIKHIWIND, DISTT. T ARN TARAN WAS NOT EXISTED WHILE FRAMING THE ASSESSMENT IN A SSESSEES CASE. 2. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSE E-FIRM DERIVES COMMISSION INCOME ACTING AS KATCHA ARHATIA BEING E NGAGED IN THE BUSINESS OF MARKETING OF AGRICULTURE PRODUCE ON COMMISSION B ASIS. ORIGINAL RETURN WAS FILED ON 23.05.2005 DECLARING INCOME OF RS.23,5 07/- WHICH WAS PROCESSED U/S 143(1) OF THE ACT ON 06.05.2005. BUT ON THE INFORMATION OBTAINED FROM THE PUNJAB MANDI BOARD, OFFICE OF THE MARKET COMMITTEE, AMRITSAR, REVEALS THAT M/S. R.J. TRADERS, 75, MEWA MANDI, AMRITSAR HAD MARKETED AGRICULTURAL PRODUCE OF RS10,25,35,200/- A ND WAS LIABLE TO PAY MARKET FEE AT RS.20,50,704/- AGAINST RS.640/- PAID BY THE ASSESSEE, THEREBY CREATING ADDITIONAL LIABILITY OF MARKET FEES OF RS. 20,50,064/-. ACCORDING TO THE A.O. THE TOTAL BUSINESS TRANSACTIONS WERE TO T HE TUNE OF RS.10,25,35,200/-. THE COMMISSION ON THESE TRANSACT IONS @ 5% AMOUNTED TO RS.51,26,760/- WHEREAS THE ASSESSEE HAS SHOWN CO MMISSION OF RS.6,26,061/-, THEREBY THE COMMISSION TO THE TUNE OF RS.45,00,700/- HAS CAUSED SUPPRESSION AND IN ORDER TO TAX THIS ESCAPEM ENT OF INCOME ATTRIBUTED ITA NO.430(ASR)/2012 3 MAINLY FOR THE ASSESSEES FAILURE, REASSESSMENT PRO CEEDINGS WERE INITIATED U/S 147 BY ISSUING A NOTICE U/S 148 OF THE ACT ON 23.0 3.2011. IN RESPONSE TO NOTICE, THE ASSESSEE FILED RETURN OF INCOME ON 15. 04.2011 DECLARING INCOME OF RS.23,560/-. THE CONTENTION OF THE ASSESSEE THAT THE SECRETARY, PUNJAB MANDI BOARD, CHANDIGARH, VIDE HIS ORDER DATED 08.12 .2008 SET ASIDE THE ORIGINAL MARKET FEE ASSESSMENT ORDER. CONSEQUENTLY, THE ASSESSING AUTHORITY OF MARKET COMMITTEE, AMRITSAR VIDE ORDER DATED 11.1 1.2010 DETERMINED THE BALANCE MARKET FEE AT RS. 8,35,993/-. IN RESPONSE T O THE SHOW CAUSE NOTICE DATED 30.11.2011, THE ASSESSEES REPLY DATED 5.12.2 011 AND IN RESPONSE TO ANOTHER SHOW CAUSE NOTICE DATED 22.12.2011, THE ASS ESSEES REPLY DATED 05.12.2011, 26.12.2011 DID NOT FIND FAVOUR WITH ASS ESSING OFFICER. FURTHER, IN RESPONSE TO VERIFICATION NOTICE DATED 133(6), TH E SECRETARY, MARKET COMMITTEE, AMRITSAR HAS VIDE HIS LETTER DATED 21.1 2.2011 REITERATED THE ABOVE FIGURES, AS MENTIONED IN HIS ORDER DATED 11.1 1.2010. THE AO DETERMINED THE UNRECORDED TURNOVER AT RS.4,17,99,60 0/- AND COMMISSION EARNED @ 5% COMES TO RS.20,89,980/- WHICH HAS NOT B EEN SHOWN IN THE BOOKS OF THE ASSESSEE. THE AO REJECTED THE BOOKS OF ACCOUNT OF THE ASSESSEE U/S 145(3) OF THE ACT AND THE AO DETERMINED THE TOT AL ASSESSABLE INCOME AT RS.21,13,487/- INCLUDING THE TRADING ADDITION OF RS .20,89,980/-. ITA NO.430(ASR)/2012 4 3. AGGRIEVED BY THE ASSESSMENT ORDER, THE ASSESSE E FILED AN APPEAL BEFORE THE LD. FIRST APPELLATE AUTHORITY, WHO VIDE IMPUGNED ORDER DATED 13.09.2012 PARTLY ALLOWED THE APPEAL OF THE ASSESSE E BY MAKING ADDITION OF RS.61,557/- OUT OF THE ADDITION OF RS.20,89,980/- A ND THE ASSESSEE GETS RELIEF OF RS.20,28,423/-. NOW THE REVENUE IS AGGRIEVED B Y THE DELETION OF THIS ADDITION AND FILED THE PRESENT APPEAL BEFORE THIS BENCH. 4. AT THE TIME OF HEARING, THE LD. DR RELIED UPON T HE ORDER PASSED BY THE ASSESSING OFFICER. 5. ON THE CONTRARY, THE LD. COUNSEL FOR THE ASSESSE E RELIED UPON THE ORDER OF THE LD. CIT(A). 6. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE R ELEVANT RECORDS AVAILABLE WITH US. WE FIND THAT THE ASSESSEE HAS PO INTED OUT VARIOUS DEFECTS IN INITIATION OF REASSESSMENT PROCEEDINGS WHICH IS BASED ON THE ORDER DATED 08.12.2008 PASSED BY THE SECRETARY, PUNJAB MANDI B OARD, CHANDIGARH AND THE AO HAS GROSSLY ERRED IN TAKING COGNIZANCE OF O RDER DATED 11.11.2010 OF THE SECRETARY, MARKET COMMITTEE, AMRITSAR BUT THE L D. FIRST APPELLATE AUTHORITY HAD DECIDED THE ISSUE IN DISPUTE IN FAVOU R OF THE ASSESSEE. THE ITA NO.430(ASR)/2012 5 RELEVANT PORTION OF THE ORDER OF THE LD. FIRST APP ELLATE AUTHORITY AT PARA 8 (PAGE 10 & 11) IS REPRODUCED AS ORDER FOR THE SAKE OF CONVENIENCE: 8. VIDE GROUNDS OF APPEAL NO. 2 & 5 THE APPELLANT FIRM HAS CONTESTED THE TRADING ADDITION OF RS.20,89,980/- RE PRESENTING SUPPRESSED COMMISSION WORKED OUT @ 5% ON TOTAL ANNU AL TURNOVER OF RS.4,17,99,600/- BY REJECTING THE APPELLANT BOOK VE RSION BY RESORTING TO PROVISIONS OF SECTION 145(3) OF THE ACT, AS THE APPELLANT FAILED TO PRODUCE ITS BOOKS OF ACCOUNTS OF ON THE PLEA THAT THESE WERE NOT AVAILABLE/TRACEABLE AS ADMITTEDLY STATED VIDE ORDER -SHEET RECORDINGS DATED 28.12.2011. IT IS THE APPELLANTS CASE THAT T HE MARKET COMMITTEE, AMRITSAR HAS TAKEN THE WEIGHT FOR THREE FIRMS, NAMELY THE APPELLANT M/S. R.J. TRADER, M/S. RAM CHAND JUGAL K ISHORE AND M/S. AROR ATRADING CO. AND WHEREAS THE LD. A.O. HAS DETE RMINED TOTAL ASSESSABLE COMMISSION OF RS.37,52,298/- AND THE COM MISSION INCOME DECLARED BY THESE CONCERNS RUN AS UNDER: M/S. R.J.TRADERS RS.6,26,061/-(ADJUSTED BY AO) M/S. RAM CHAND JUGAL KISHORE RS.8,73,931/- M/S. ARORA TRADING CO. ` RS.9,88,383/- FURTHER, IT IS SEEN THAT AS PER EXTRACT OF THE ORDE R DATED 11.11.2010 OF THE ASSESSING AUTHORITY, MARKET COMMITTEE, AMRITSAR REPRODUCED AT PAGE 2 OF THE AOS REASSESSMENT ORDER IN QUESTION, HE HAS ADJUSTED MARKET FEE PAID BY THE THREE FIRMS AT RS.6,64,925/- . FROM IT, IT CAN BE SAFELY INFERRED THAT THE ASSESSING AUTHORITY, MKT. COMMITTEE, AMRITSAR APPEARS TO HAVE WORKED OUT NET BALANCE MARKET FEE P AYABLE AT RS.8,35,993/- BY ADJUSTING THE MARKET FEE OF RS.6,6 4,925/- PAID BY ALL THE THREE FIRMS. AS SUCH, IT IS THE APPELLANTS CAS E THAT WHILE DETERMINING THE SO-CALLED SUPPRESSED AND UNDISCLOSE D COMMISSION INCOME OF RS.20,89,980./- BEING @ 5% OF THE TOTAL T URNOVER OF RS.4,17,99,600/-, THE AO HAS FOLLOWED BLANKETLY THE FIGURES OF BALANCE MARKET FEE PAYABLE DETERMINED VIDE ORDER 11.11.2010 OF THE ASSESSING AUTHORITY, MKT. COMMITTEE, AMRITSAR AFTER ADJUSTING THE MARKET FEE ALREADY PAID BY THE THREE FIRMS (ASSOCIATED BUT IND EPENDENT CONCERNS OF THE APPELLANT). THIS POSITION FURTHER GETS CLEA RED FROM THE ATTESTED ITA NO.430(ASR)/2012 6 COPY OF THE RE-ASSTT. ORDER NO.1226 DATED 9.4.2012 PASSED BY THE ASSESSING AUTHORITY, MKT. COMMITTEE, BHIKHIWIND (AP PEARS TO BE FINALLY ASSIGNED ASSESSING AUTHORITY IN THIS CASE) PURSUANT TO APPELLATE AUTHORITY, MANDI BOARD, CHANDIGARHS APPE LLATE DIRECTIONS CONVEYED VIDE HIS LETTER NO. LEGAL 450 DATED 9.3.20 12 AS PER WHICH NET DIFFERENCE OF AVOIDED MARKET FEE PAYABLE BY THE APPELLANT WAS DETERMINED AT RS.24,623/- AND ON WHICH BY APPLYING THE SAME FORMULA AS ADOPTED BY THE AO I.E. CONVERTING IT INTO TOTAL TURNOVER @ 100/2 WHICH COMES TO RS.12,31,150/- AND AS SUCH ADDITION ON ACCOUNT OF NET ASSESSABLE ACCRUED COMMISSION @ 5% COMES TO RS.61,5 57/- AND THE SAME HAS BEEN ADMITTED BY THE LD. AR VIDE PENULTIMA TE PARA OF HIS REPLY DT.30.5.2012 FURNISHED DURING THE APPELLATE P ROCEEDINGS IN THE SHAPE OF AN ALTERNATIVE PLEA ( COPY OF THE AFORESAI D FINAL RE-ASSTT. ORDER NO.1226 DATED 9.4.2012 IS APPENDED AND ATTACH ED TO THIS APPELLATE ORDER AS ANNEXURE-1 THERETO FORMING PART OF THIS APPELLATE ORDER). IN THE ABSENCE OF THE ANY INFORMATION OTHER WISE THAN THE FINALLY AVAILABLE ON RECORD AS PER ANNEXURE-1, THE MATTER WHICH HAS ATTAINED ITS FINALITY WITH THE HELP OF THIS FINAL P IECE OF EVIDENCE CANNOT BE BRUSHED ASIDE. UNDER THESE FACTS AND CIRCUMSTANC ES DISCUSSED SUPRA, AND TO PUT THE MATTER AT REST, THE TRADING A DDITION MADE AT RS.20,89,980/- IS REDUCED TO RS.61,557/- WHICH MEAN S THAT THE APPELLANT FIRM WOULD BE ENTITLED TO A NET RELIEF OF RS.20,28,423/- ON THIS SCORE. HENCE, THE GROUNDS OF APPEAL NO. 2 & 5 ARE PARTLY ALLOWED. 7. AFTER GOING THROUGH THE AFORESAID ORDER PASSED B Y THE LD. FIRST APPELLATE AUTHORITY, WE ARE OF THE VIEW THAT THE LD . CIT(A) HAS PASSED A WELL REASONED ORDER ON THE BASIS OF VARIOUS DOCUMENTARY EVIDENCE FILED BY THE ASSESSEE BEFORE HIM. WE ARE OF THE VIEW THAT NO INT ERFERENCE IS CALLED FOR IN THE WELL REASONED ORDER PASSED BY THE LD. FIRST APP ELLATE AUTHORITY. WE UPHOLD THE SAME BY DISMISSING THE APPEAL FILED BY THE REVE NUE. ITA NO.430(ASR)/2012 7 8. IN THE RESULT, THE APPEAL FILED BY THE REVENUE I S DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 7TH JANUARY, 2013. SD/- SD/- (B.P. JAIN) (H.S. SIDHU) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 7TH JANUARY, 2013 /SKR/ COPY OF THE ORDER FORWARDED TO: 1. THE ASSESSEE:M/S. R.J.TRADERS, AMRITSAR. 2. THE WARD 3(3), ASR. 3. THE CIT(A), ASR. 4. THE CIT, ASR. 5. THE SR DR, ITAT, AMRITSAR. TRUE COPY BY ORDER (ASSISTANT REGISTRAR) INCOME TAX APPELLATE TRIBUNAL, AMRITSAR BENCH: AMRITSAR.