ITO, Cuttack V. Sitaram Agarwal, Cuttack

ITA 441/CTK/2010

• Counselvise Citation: [2011] 134 COUNSELVISE.COM (IT) 4346 (ITAT-CUTTACK)
• Duration Of Justice: 6 month(s) 20 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-06-2011
• Appeal Filed By: Department
• Bench Allotted: DB
• Next Hearing Date: 14-06-2011
• Assessment Year: 2007-2008
• Appeal Filed On: 10-12-2010
• Court: TRIBUNAL
• Department Lawyers: K N JANA
• Assessee Lawyers: D K SETH
• Keywords: Business income

Judgement Text

IN THE INCME TAX APPELLATE TRIBUNAL, CUTTACK BENCH, CUTTACK BEFORE : HONBLE SHRI K.K.GUPTA, ACCOUNTANT MEMBER, AND HONBLE SHRI K.S.S.PRASAD RAO, JUDICIAL MEMBER. ITA NO. 441/CTK/2010 (ASSESSMENT YEAR 2007 - 08) INCOME - TAX OFFICER, WARD 1(1), CUTTA CK. VERSUS SRI SITARAM AGARWAL, PROP. M/S.SALASAR INDUSTRIES, JOBRA ROAD, CUTTACK. (APPELLANT) (RESPONDENT) FOR THE APPELLANT: SHRI K.N.JANA, DR FOR THE RESPONDENT SHRI D.K.SETH, AR ORDER SHRI K.S.S.PRASAD RAO, JUDICIAL MEMBER : THIS APPEAL IS FILED BY THE DEPARTMENT HAVING BEEN AGGRIEVED BY THE ORDER OF THE COMMISSIONER OF INCOME - TAX (APPEALS) DT.28.9.2010 FOR THE ASSESSMENT YEAR 2007 - 08 IN THE CASE OF THE ASSESSEE RAISING THE FOLLOWING GROUNDS. 01. ON THE FACT AND CIRCUMSTANCES OF THE CASE, THE L D. CIT(A) HAS ERRED IN DELETING THE ADDITION OF 21,01,864 MADE IN THE ASSESSMENT ORDER BY REJECTING THE BOOK RESULT. 02. ON THE FACT AND CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) IS NOT JUSTIFIED IN DELETING THE ADDITION OF 12,09,182 MADE IN THE ASSESSMENT ORDER ON ACCOUNT OF UNDISCLOSED COMMISSIO N SALES AND DIRECTING FOR ESTIMATE IN OF PROFIT THERE FROM @ 5%. 03. ON THE FACT AND CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) IS NOT JUSTIFIED IN DELETING THE ADDITION OF 2,60,060 MADE IN THE ASSESSMENT ORDER BY DISALLOWING 3% OF THE CLAIM OF FREIGHT AND LOADING CHARGES NOT DISCLOSED IN THE RETURN AS NOT GENUINE . 2. BOTH THE PARTIES WERE HEARD REGARDING THE ISSUES RAISED BY THE DEPARTMENT AND THEIR LEGAL IMPLICATIONS. 3. ON CAREFUL CONSIDERATION OF THE MATERIAL MADE AVAILABLE TO THE TRIBUNAL, THE UND ISPUTED FACTS RELATING TO THE ISSUE IN GROUND NO.1 ARE THAT DURING THE ASSESSMENT PROCEEDINGS, THE LEARNED ASSESSING OFFICER HAS FOUND THAT THE TOTAL SALES MADE BY THE ASSESSEE AS PER VAT RETURN WAS AT 12,11,24,441 . HE ESTIMATED THE PROFIT @1.74% BASING ON THE PREVIOUS YEARS FIGURES WHICH CAME TO 21,08,400, OUT OF WHICH HE HAS DEDUCTED ITA NO. 441/CTK/2010 2 PROPORTIONATE PROFIT SHOWN AT 6,536 AND ADDED THE BALANCE OF 21,01,084 TO THE TOTAL INCOME OF THE ASSESSEE ON ACCOU NT OF INCOME FROM TRADING AND COMMISSION SALES. ON APPEAL, THE LEARNED CIT(A) FOUND THAT THE SALES AS PER VAT RETURN FOR THE PERIOD FROM JULY,2006 TO MARCH,2007 IS 12,14,63,803.98 BUT THE ASSESSING OFFICER HAS ARRIVED THE SAME AT 12,11,72,441. THE HAD RE TURNED GROSS TURNOVER OF 27,03,14,939.15 DURING THE TAX PERIOD 1.7.2006 TO 31.7.2007 AS PER FORM VAT - 312. THIS RETURN MADE BY THE ASSESSEE WAS ACCEPTED BY THE JOINT COMMISSIONER OF SALES TAX, CUTTACK - 2 RANGE , CUTTACK IN HIS ORDER DT.8.2.2010. CONSIDERING THE ABOVE FACTS, THE LEARNED CIT(A) HELD THE ADDITION OF 21,01,864 MADE BY THE ASSESSING OFFICER BASING ON THE VAT RETURN, TO BE NOT CORRECT. ON CAREFUL ANALYSIS OF THE FINDINGS GIVEN BY THE LEARNED CIT(A) IN HIS ORDER, WE FIND THAT THE LEARNED CIT(A) HAS CORRECTED THE MISTAKE, WHICH WAS COMMITTED BY THE ASSESSING OFFICER BY TAKING INTO CONSIDERATION WRONG FIGURES AND THEREFORE, HE DELETED THE IMPUGNED ADDITION OF 21,01,864. BEFORE US, THE LEARNED DR COULD NOT CONTROVERT THE ABOVE FACTS AS WELL AS THE FI NDING OF THE LEARNED CIT(A). THEREFORE, WE DO NOT FIND ANY INFIRMITY IN THE ORDER OF THE LEARNED CIT(A) ON THIS ISSUE REQUIRING OUR INTERFERENCE AND AS SUCH, WE UPHOLD THE SAME AND DISMISS GROUND NO.1 RAISED BY THE REVENUE. 4. AS REGARDS GROUND NO.2 , THE F ACTS ARE THAT THE ASSESSEE SHOWN COMMISSION SALES OF 12,09,182. THE ASSESSING OFFICER MADE THE ADDITION AS THE ASSESSEE FAILED TO EXPLAIN THE COMMISSION SALES BEFORE HIM. BUT THE ASSESSEE EXPLAINED BEFORE THE LEARNED CIT(A) REGARDING THE SAID AMOUNT STATING THAT THE PROFIT EARNED ON COMMISSION SALES HAS BEE N ACCOUNTED FOR IN THE P & L ACCOUNT UNDER THE HEAD BANK COMMISSION AND OTHER COMMISSION. AFTER VERIFICATION OF THE SAME, THE ACTUAL ASPECT, THE LEARNED CIT(A) DIRECTED DELETION OF THE ENTIRE AMOUNT OF RS. 12,09,182 AND BY FOLLOWING THE DECISION ITA NO. 441/CTK/2010 3 OF THE I TAT, CUTTACK BENCH IN THE CASE OF M/S.HARI ROADWAYS V. ITO (ITA NO.458,459 AND 460/CTK/1998 DIRECTED THE ASSESSING OFFICER TO ESTIMATE THE PROFIT @5% ON THE ABOVE COMMISSION SALES, AS INCOME OF THE ASSESSEE. 5. ON CAREFUL ANALYSIS OF THE FINDINGS GIVEN BY THE LEARNED CIT(A) AND IN ABSENCE OF ANYTHING CONTRARY MATERIAL BEING PRODUCED BY THE REVENUE BEFORE US, WE DO NOT FIND ANY INFIRMITY IN THE ORDER OF THE LEARNED CIT(A), WHICH WE UPHOLD AND DISMISS GROUND NO.2 RAISED BY THE REVENUE BEING DEVOID OF MERIT. 6 . NOW COMING TO GROUND NO.3 , THE BRIEF FACTS ARE THAT THE ASSESSEE SHOWN 83,81,928 AND 2,86,730 ON ACCOUNT OF FREIGHT CHARGES AND LOADING & UNLOADING CHARGES RESPECTIVELY TOTALLING 86,68,658, APART FROM ENTRY TAX OF 17,16,813. THE ASSESSING OFFICER HAS NOTED THAT DESPITE BEING ASKED, THE ASSESSEE COULD NOT PRODUCE THE INDIVIDUAL VOUCHERS EVIDENCING THE PAYMENTS OF FREIGHT AND LOADING & UNLOADING CHARGES. HE THEREFORE, MADE AN ADHOC DISALLOWANCE @3% OF THE SAID EXPENSES WHICH WAS WORKED OUT TO 2,60,060 AND ADDED THE SAME TO THE TOTAL INCOME OF THE ASSESSEE. IN APPEAL, IT WAS CONTENDED ON BEHALF OF THE ASSESSEE BEFORE THE LEARNED CIT(A) THAT THE ADDITION RELATES TO DISCREPANCY IN PURCHASE ACCOUNT, WHICH DISCREPANCY WAS DULY RECONCILED. THEREFORE, THE DISALLOWANCE OF EXPENDITURE BY WAY OF MERE ESTIMATE @3% IS NOT JUSTIFI ED. THE LEARNED CIT(A) CONSIDERING THE SUBMISSIONS OF THE ASSESSEE AND VERIFYING THE ACCOUNTS, HAS OBSERVED THAT THE BOOKS OF ACCOUNT OF THE ASSESSEE ARE AUDITED U/S.44AB OF THE I.T.ACT. HE FURTHER OBSERVED THAT AFTER VERIFICATION OF THE BOOKS OF ACCOUNTS FOR THE PERIOD FROM 1.4.2006 TO 31.7.2007 THE JT. COMMISSIONER OF SALES TAX, CUTTACK - 2 RANGE, CUTTACK HAS ACCEPTED THE GROSS TURNOVER RETURNED BY THE ASSESSEE AT 27,03,14,939.15 AND THIS TURNOVER WAS NOT FOUND TO BE INCORRECT BY THE ASSESSING OFFICER. TH EREFORE, CONSIDERING THE ABOVE FACTS AND IN ABSENCE OF ANY CONTRARY MATERIAL BROUGHT ON RECORD BY THE DEPARTMENT, WE ARE OF THE ITA NO. 441/CTK/2010 4 CONSIDERED VIEW THAT THE IMPUGNED ADDITION OF 2,60,600 BY WAY OF ADHOC ESTIMATION OF 3% OF RS.86,68,658 CLAIMED AS FREIGHT AND LOADING & UNLOADING CHARGES IS NOT JUSTIFIED, WHICH THE LEARNED CIT(A) HAS RIGHTLY DELETED. THEREFORE, WE UPHOLD THE ORDER OF THE LEARNED CIT(A) IN THIS REGARD AND DISMISS GROUND NO.3 RAISED BY THE REVENUE. 7. IN THE RESULT, THE APPEAL OF THE REVENUE IS D ISMISSED. PRONOUNCED IN OPEN COURT ON DT. 30 TH JUNE, 2011 S D/ - S D/ - (K.K.GUPTA) ACCOUNTANT MEMBER (K.S.S.PRASAD RAO) JUDICIAL MEMBER DATE: 30 TH JUNE, 2011 H.K.PADHEE, SENIOR PRIVATE SECRETARY. COPY O F THE ORDER FORWARDED TO : 1. THE APPELLANT: INCOME - TAX OFFICER, WARD 1(1), CUTTACK. 2. THE RESPONDENT: SRI SITARAM AGARWAL, PROP. M/S.SALASAR INDUSTRIES, JOBRA ROAD, CUTTACK. 3. THE CIT, 4. THE CIT(A), 5. THE DR, CUTTACK 6. GUARD FILE (IN DUPLICATE ) TRUE COPY, BY ORDER, SENIOR PRIVATE SECRETARY.