M/s. B.T. Fabrics, Surat V. The ACIT.,Cent.Circle-4, Surat

ITA 450/AHD/2010

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 73117 (ITAT-AHMEDABAD)
• Duration Of Justice: 4 year(s) 1 month(s) 16 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-03-2014
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: D
• Next Hearing Date: 24-03-2014
• Assessment Year: 2006-2007
• Appeal Filed On: 11-02-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Unexplained expenditure; Document seized; Deemed to accrue or arise in india; Revised return; Documents seized
• Section: 69C; 153A

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD D BENCH BEFORE: SRI D.K TYAGI, JUDICIAL MEMBER AND SHRI ANIL CHATURVEDI, ACCOUNTAN T MEMBER M/S. B.T. FABRICS 3/1810, GHAMLAWAD, SHERI NO. 1, SALABATPURA, SURAT PAN: AACFB6378C (APPELLANT) VS ASSTT. COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE-4, SURAT (RESPONDENT) ASSESSEE BY: SRI RAJESH SHAH, A.R. REVENUE BY: SRI D.S. KALYAN CIT-DR WIT H SRI K.C. MATHEWS, SR.D.R. DATE OF HEARING : 24-03-2014 DATE OF PRONOUNCEMENT : 28-03-20 14 / ORDER PER : D.K. TYAGI, JUDICIAL MEMBER:- THIS IS THE ASSESSEES APPEAL AGAINST THE ORDER OF LD. CIT(A)-II AHMEDABAD DATED 27-11-2009. ITA NO. 450/AHD/2010 ASSESSMENT YEAR 2006-07 I.T.A NO. 450/AHD/2010 A.Y. 2006-07 PAGE NO M/S. B.T. FABRICS VS. ACIT 2 2. ASSESSEE HAS TAKEN FOLLOWING GROUNDS. 1. THAT ON THE FACTS AND CIRCUMSTANCES OF THE CASE THE LEARNED CIT(A)-II HAS ERRED IN SUSTAINING THE ADDITION MADE BY THE AO ON ACCOUNT OF UNEXPLAINED EXPENDITURE OF RS. 89,310/- WITHOUT CONSIDERING THE FACTS AND MERITS OF THE CASE. 2. WITHOUT PREJUDICE TO THE GROUND NO. 1 ABOVE. -THE LD. CIT(A)-II HAS ALSO ERRED IN CONFIRMING THE ACT OF AO OF NOT DOING TELESCOPING OF THE SAID UNEXPLAINED EXPENDITU RE AGAINST THE UN- RECONCILED SALES OF RS. 95,00/- ON WHICH GP ADDITIO N HAS BEEN DULY MADE BY THE LD. AO AND WHICH AHS NOT BEEN CONTESTED BY THE APPELLANT. -THE LD. CIT(A)-II ALSO ERRED IN NOT DIRECTING THE AO TO APPLY GROSS PROFIT RATE ON THE UN-RECONCILED EXPENDITURE(PURCHA SE) OF RS. 89,310/- 3. THAT ON THE FACTS AND CIRCUMSTANCES THE CIT(A)-I I HAS ERRED IN SUSTAINING THE ACT OF THE AO OF NOT DOING TELESCOPI NG IN THE APPELLANTS CASE- -OF THE DISCREPANCY IF ANY REMAINING UNIDENTIFIED I N THE HANDS OF SHRI NAGINBHAI KAPADIA AND / OR SHRI ASHOKBHAI JARIWALA AS CATEGORICALLY MENTIONED BY THEM IN NOTES FILED WITH THEIR REVISED RETURN U/S.. 153A STATING THAT- -THE CONDITIONAL DISCLOSURE MADE THEREIN IS A FIRST HAD APPROXIMATION WHICH MAY VARY WITHIN THE OVERALL AMOUNT DECLARED A T THE TIME OF ASSESSMENT PROCEEDINGS OR APPELLATE OR REVISION PRO CEEDINGS AND -THE AMOUNT OF CONDITIONAL DISCLOSURE REMAINING SPE CIFICALLY UNIDENTIFIED MAY BE TELESCOPED AGAINST ANY ADDITION OR DISALLOWANCES OF ANY EXPENSES OR DEDUCTION OR OTHERWISE MADE DURI NG THE COURSE OF ASSESSMENT PROCEEDINGS OR APPELLATE OR REVISION PRO CEEDINGS IN THE HANDS OF FAMILY MEMBERS OR ANY GROUP CONCERNS FOR T HE PERIOD COVERED UNDER THE NOTICE ISSUED U/S. 153A/153C OF T HE ACT. I.T.A NO. 450/AHD/2010 A.Y. 2006-07 PAGE NO M/S. B.T. FABRICS VS. ACIT 3 4. THAT THE FACTS AND CIRCUMSTANCES OF THE CASE, TH E AO BE DIRECTED TO CARRY OUT APPEAL EFFECTS CONSEQUENT TO THE PRESENT APPEAL ALSO IN THE CASE OF SHRI ASHOKBHAI JARIWALA AND SHR I NGINBHAI KAPADIA ON THE MATTER BEING FINALLY SETTLED. 3. THE ASSESSEE IS AGGRIEVED BY THE ACTION OF LD. C IT(A) IN SUSTAINING THE ADDITION OF RS. 89,310/- MADE BY AO ON ACCOUNT OF UNEXPLAINED EXPENDITURE OF THIS AMOUNT. AO WHILE MAKING THIS A DDITION HAS OBSERVED AS UNDER:- AS PER ANNEXURE BF-19/BS-2, PAGE NO 1 AND PAGE NO. 3 AND PAGE NO. 108 IT HAS BEEN THAT PURCHASES HAVE BEEN UNDERT AKEN DURING NOV. 2005 FROM CERTAIN YOUNGWON CORPORATION, KOREA. THE EXPENDITURE ON THESE IMPORTS OF ALUMINIUM WIRE HAVE NOT BEEN REFLE CTED IN THE PURCHASE REGISTER, OR BANK STATEMENT SHOWING THE DE BIT, FOR THE A Y 200607 TO THE TUNE OF RS 1950 = RS 89,310/- (US $ = RS 45.80 EXCHANGE RATE) THE EXPLANATION THAT THESE ARE FREE SAMPLES IS ALSO NOT ACCEPTABLE AS THE DETAILS OF T.T. PAYMENT AMOUN T AND DUE DATES ARE MENTIONED. IF THE CLAIM OF THE ASSESSEE IS ACCE PTED THAT THESE ARE FREE SAMPLES, THEN PRICES AND PAYMENT SCHEDULES SHO ULD NOT HAVE APPEARED. ON THE IMPUGNED TRANSACTIONS, EVEN THE D UE DATES OF PAYMENTS HAVE BEEN MENTIONED. IN CASE OF FREE SAMP LES, THE PAYMENT DATE WOULD NOT HAVE APPEARED. THUS, CONSIGNMENT DOE S NOT REPRESENT FREE SAMPLE BUT IMPORT EXPENDITURES TO THE TUNE OF 89,310/- HAVE BEEN MADE OUTSIDE THE BOOKS OF ACCOUNTS WHICH HAVE BEEN ADMITTED TO BE SO AND FOR WHICH NO ACCEPTABLE SOURCE HAS BEEN EXPLAIN ED. SECTION 69C DEALS WITH UNEXPLAINED SOURCE OF EXPEND ITURE. SECTION 69C WAS INSERTED ON STATUTE BOOK BY THE TAXATION LA WS (AMENDMENT) ACT, 1975 W.E.F. 1ST APRIL, 1976 AND READS AS UNDER : S. 69C. UNEXPLAINED EXPENDITURE, ETC- WHERE IN ANY FINANCIAL YEAR AN ASSESSEE HAS INCURRED ANY EXPENDITURE AND THE OF FERS NO I.T.A NO. 450/AHD/2010 A.Y. 2006-07 PAGE NO M/S. B.T. FABRICS VS. ACIT 4 EXPLANATION ABOUT THE SOURCE OF SUCH EXPENDITURE OR PART THEREOF, OR THE EXPLANATION, IF ANY, OFFERED BY HIM IS NOT, IN THE OPINION OF THE ASSESSING OFFICER, SATISFACTORILY, THE AMOUNT COVER ED BY SUCH EXPENDITURE OR PART THEREOF, AS THE CASE MAY BE, MA Y BE DEEMED TO BE THE INCOME OF THE ASSESSEE FOR SUCH FINANCIAL YEAR: PROVIDED THAT, NOTWITHSTANDING ANYTHING CONTAINED I N ANY OTHER PROVISION OF THIS ACT, SUCH UNEXPLAINED EXPENDITURE WHICH IS DEEMED TO BE THE INCOME OF THE ASSESSEE SHALL NOT BE ALLOW ED AS A DEDUCTION UNDER ANY HEAD OF INCOME. FROM SEIZED DOCUMENTS IT IS EVIDENT THAT THERE HAVE BEEN EXPENDITURES TO THE TUNE OF RS 89.310/-, FOR WHICH THE SOURCE HA VE NOT BEEN SATISFACTORILY EXPLAINED. THUS AS PER SECTION 69C, THE EXPENDITURE IS DEEMED TO BE THE INCOME OF THE ASSESSEE FOR RELEVAN T FINANCIAL YEAR. THE QUESTION OF ADDITION HAS BEEN HINGED UPON THE S ATISFACTORY EXPLANATION OF THE SOURCE. THE ASSESSEE HAS UNDERT AKEN UNACCOUNTED PURCHASES FOR WHICH HE HAS NOT MAINTAINED ANY ACCOU NTS OR JOURNALS. ALSO NO SATISFACTORY EXPLANATION ABOUT THE SOURCE O F SUCH EXPENDITURE HAVE BEEN PROVIDED. THE ASSESSEE HAS FAILED TO FURN ISH THE EXACT DETAILS OF UNEXPLAINED PURCHASES AND THE SALES MADE FROM THESE PURCHASES, IN UNACCOUNTED MANNER TO EXPLAIN THE SOURCES OF UNACCOUNTED EXPENDITURES. ON THE FAILURE TO EXPLAIN THE SOURCE OF THE EXPENDITURE, IT IS DEEMED TO BE INCOME OF THE ASSES SEE AND LIABLE TO BE ADDED U/SECTION 69C. FURTHER, AS PER THE PROVISO T O THE SECTION, NO DEDUCTION CAN BE ALLOWED IN RESPECT OF SUCH EXPENDI TURES. HENCE, THIS SUM IS TREATED AS DEEMED INCOME OF THE ASSESSEE FOR THE F.Y. 2005-06, RELEVANT A.Y. 2006-07 AS PER PROVISIONS OF SECTION 69C OF THE INCOME TAX ACT 1961. THUS FROM THE ABOVE DISCUSSION IT IS EVIDENT THAT T HE ASSESSEE HAS FURNISHED INACCURATE PARTICULARS BY SUPPRESSING AND UNDER-REPORTING THE INCOME DEEMED TO HAVE. THE ENSUING INCOME HAS BEEN UNDER- REPORTED BY THIS FURNISHING OF INACCURATE PARTICULA RS AND HENCE THERE HAS BEEN RESULTANT CONCEALMENT OF INCOME. THEREFORE , SATISFIED ON ACCOUNT OF THESE REASONS AS ABOVE, PENALTY PROCEEDI NGS U/S 271(1)(C) I.T.A NO. 450/AHD/2010 A.Y. 2006-07 PAGE NO M/S. B.T. FABRICS VS. ACIT 5 IS BEING INITIATED FOR FURNISHING INACCURATE PARTIC ULARS OF INCOME AND THEREBY LEADING TO CONCEALMENT OF INCOME. ADDITION ON ACCOUNT OF UNEXPLAINED EXPENDITURE-RS. 89,310/- 4. THIS ACTION OF THE ASSESSING OFFICER WAS CONFIRM ED BY LD. CIT(A). 5. BEFORE US LEARNED COUNSEL OF THE ASSESSEE PLACIN G RELIANCE ON THE SEIZED DOCUMENTS ON WHICH CUSTOMS STAMP IS CLEARLY VISIBLE MENTIONING SAMPLE ONLY NO COMMERCIAL VALUE REITERATED THE SU BMISSION MADE BEFORE THE LOWER AUTHORITIES THAT DOCUMENTS WHICH WERE BAS IS OF THIS ADDITION WERE IN FACT PERFORMA INVOICES ONLY AND NOT PURCHASE BIL LS AND THEREFORE NO ADDITION SHOULD HAVE BEEN MADE TREATING THESE PERFO RMA INVOICES AS PURCHASE OF THE ASSESSEE. LD. DR HOWEVER RELIED ON THE ORDERS OF LOWER AUTHORITIES. 6. AFTER HEARING BOTH THE PARTIES AND PERUSING THE RECORD, WE FIND FORCE IN THE CONTENTION OF THE LEARNED COUNSEL OF THE ASS ESSEE THAT ON PAGES 1, 3 AND 108 OF ANNEXURE B-F-19/B-S-2, IT HAS BEEN CLEA RLY MENTIONED THAT THESE ARE PERFORMA INVOICES AND ON ONE OF THESE DOCUMENTS THERE IS STAMP OF CUSTOM DEPARTMENT MENTIONING THAT THESE WERE SAMPLE ONLY AND HAD NO COMMERCIAL VALUE, THEREFORE WE ARE OF THE CONSIDERE D OPINION THAT AO WAS NOT JUSTIFIED IN TREATING THESE PERFORMA INVOICES/S AMPLES AS PURCHASE BILLS AND MAKING ADDITION OF RS. 89,310/- FOR UNEXPLAINED PURCHASES MADE BY ASSESSEE AND THEREFORE THE ADDITION SO MADE BY AO A ND SUSTAINED BY LD. CIT(A) IS HEREBY DELETED. I.T.A NO. 450/AHD/2010 A.Y. 2006-07 PAGE NO M/S. B.T. FABRICS VS. ACIT 6 7. IN THE RESULT, ASSESSEES APPEAL IS ALLOWED. ORDER PRONOUNCED IN OPEN COURT ON THE DATE MENTIONE D HEREINABOVE AT CAPTION PAGE SD/- SD/- (ANIL CHATURVEDI) ( D.K. TYAGI) ACCOUNTANT MEMBER J UDICIAL MEMBER AHMEDABAD : DATED 28/03/2014 AK / COPY OF ORDER FORWARDED TO:- 1. ASSESSEE 2. REVENUE 3. CONCERNED CIT 4. CIT (A) 5. DR, ITAT, AHMEDABAD 6. GUARD FILE. BY ORDER/ , / ,