M/S. SHRI RAMAN LAL MANI BHAI & CO., Kota V. CIT, Kota

ITA 473/JPR/2011

• Counselvise Citation: [2012] 119 COUNSELVISE.COM (IT) 7558 (ITAT-JAIPUR)
• Duration Of Justice: 8 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 25-01-2012
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: A
• Assessment Year: 2006-2007
• Appeal Filed On: 18-05-2011
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: D K MEENA
• Assessee Lawyers: MADHUKAR GARG

Judgement Text

1 IN THE INCOME TAX APPELLATE TRIBUNAL JAIPUR BENCH A JAIPUR BEFORE SH. R.K. GUPTA, JUDICIAL MEMBER AND SH. N.L. KALRA, ACCOUNTANT MEMBER I.T.A. NO.473 /JP/2011 ASSESSMENT YEAR :2006-07 PAN:AABFR3348D M/S. RAMAN LAL MANIBHAI & CO. VS. INCOME TAX OFFIC ER, KOTA. WARD 1(1), KOTA. (APPELLANT) (RESPONDENT) APPELLANT BY:SH.MADHUKAR GARG, AR RESPONDENT BY :SH. D.K. MEENA, DR DATE OF HEARING :19.01.2012 DATE OF PRONOUNCEMENT:25.01.2012 ORDER PER N.L. KALRA, AM THE ASSESSEE HAS FILED THE PRESENT APPEAL AGAINST THE ORDER OF THE CIT(A), KOTA, DATED 29.02.2011 FOR THE ASSESSMENT YEAR 2006 -07. 2. THE ASSESSEE HAS RAISED FIVE GROUNDS OF APPEAL A ND DURING THE COURSE OF PROCEEDINGS BEFORE US, THE LD. COUNSEL HAS NOT PRES SED GROUND NOS. 4 & 5 AND, THEREFORE, THE SAME ARE DISMISSED AS NOT PRESSED. 3. GROUND NOS. 1, 2 & 3 OF THE APPEAL ARE AS UNDER: 1. THAT THE LD. CIT(A) HAS ERRED IN HOLDING THAT S HORTAGE OF DHANIA CLAIMED BY THE APPELLANT OF 123890 KG. IS VERY SUBS TANTIAL AND HOLDING THAT DISALLOWANCE OF RS.7,50,244/- MADE BY THE ASSESSING 2 OFFICER IS JUSTIFIED. THE ACTION OF THE LD. CIT(A) IN CONFIRMING THE ADDITION OF RS.7,50,244/- IS ILLEGAL, UNJUSTIFIED A ND AND EXCESSIVE. 2. THAT THE AUTHORITIES BELOW HAVE ERRED IN HOLDING THAT THE SHORTAGE IN DHANIA IS TO BE ALLOWED @ 2% AND THE EXCESS OF 2% I S TO BE TREATED AS UNDISCLOSED SALES. THE SAID ACTION IS ILLEGAL AND U NJUSTIFIED. 3. THAT THE AUTHORITIES BELOW HAVE ERRED IN TAKING THE VALUE OF 31696 KG. OF DHANIA AT THE AVERAGE SALE RATE OF RS.23.67 PER KG AND VALUING THE SAME AT RS.7,50,244/- AND ADDING THE SAID AMOUNT OF RS.7,50,244/- TO THE TOTAL INCOME OF THE ASSESSEE AS UNDISCLOSED SAL ES. THE ADDITION MADE TO THE INCOME IS ILLEGAL, UNJUSTIFIED AND EXCE SSIVE. 3. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSE E FIRM IS WHOLESALE GRAIN MERCHANT DEALING MAINLY IN DHANIA, SARSHOO, METHI, POPPY, LOSAN, KETHURI ETC. THE AO NOTICED THAT THE ASSESSEE HAS CLAIMED SHORTA GE OF 123890 KG IN THE DHANIA ACCOUNT AND THE SAME REPRESENTED 2.7% OF THE TOTAL SALES. ACCORDING TO THE AO, THE SHORTAGTE IS EXCESSIVE. BEFORE THE AO IT WAS SUBMIT TED THAT THE ASSESSEE IS FOLLOWING FIFO SYSTEM. BEFORE THE AO, IT WAS STATED THAT THE SHORTAGE IS DUE TO CLEANING AND DRYNESS. THE AO NOTICED THAT THE PURCH ASE AND SALE FIGURES FOR EVERY MONTH ARE MERELY THE SAME AND, THEREFORE, THERE SHO ULD NOT BE ANY SHORTAGE ON ACCOUNT OF DRYNESS. WEIGHT LOSS ON ACCOUNT OF DRYNE SS IN ONE MONTH SHOULD NOT EXCEED 0.7% OF SALE. CLEANING PROCESS OF DHANIA IS ALMOST WEIGHT LESS AND SHORTAGE ON ACCOUNT OF CLEANING COULD BE ONLY TO TH E EXTENT OF 1.3%. ACCORDING TO THE AO, THE SHORTAGE OF 1.7% OF TOTAL PURCHASES IS REASONABLE WHILE THE ASSESSEE HAS CLAIMED SHORTAGE AT 2.7%. BEFORE THE AO, THE AS SESSEE FILED AN EXPLANATION THAT THE ASSESSEE HAS PURCHASED DHANIA MAINLY IN THE FIR ST QUARTER OF THE CALENDER YEAR 3 AND DURING THIS PERIOD, THERE IS A HUGE CONTENT OF MOISTURE IN THE COMMODITY. SUCH MOISTURE CONTENT MAY VARIES FROM 10 TO 15%. IT WAS SUBMITTED THAT THE SHORTAGE OF 1.5% CLAIMED BY THE ASSESSEE IS REASONABLE AND JUST IFIED. THE AO AFTER CONSIDERING THE EXPLANATION OF THE ASSESSEE ESTIMATED THE SHORT AGE AT 2% AND MADE AN ADDITION OF RS.7,50,244/-. 4. BEFORE THE LD. CIT(A), IT WAS SUBMITTED THAT THE RE WAS A TYPING MISTAKE IN THE REPLY FILED BEFORE THE AO IN WHICH SHORTAGE OF 1.5% WAS TYPED AS AGAINST 2.5%. IT WAS AGAIN CONTENDED BEFORE THE LD. CIT(A) THAT T HE SHORTAGE CLAIMED BY THE ASSESSEE AT 2.5% OF THE TOTAL PURCHASE IS QUITE RE ASONABLE AND JUSTIFIABLE. BEFORE THE LD. CIT(A), IT WAS FURTHER SUBMITTED THAT THE APPELLATE TRIBUNAL HAS ALLOWED SHORTAGE OF 2.9% IN DHANIA ACCOUNT IN THE CASE OF S H. JASWANT LAL VS. ITO, KOTA (ITA NO.781/JP/2005). 5. THE LD. CIT(A) AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE, CONFIRMED THE ADDITION AFTER OBSERVING AS UNDER: 4.3. ARGUMENT OF THE APPELLANT HAS BEEN CAREFULLY CONSIDERED BUT THE SAME IS NOT ACCEPTABLE. THE SHORTAGE OF DHANIA CLAIMED B Y APPELLANT OF 123890 KG. IS VERY SUBSTANTIAL. MOREOVER, AO ALLOWED SHORT AGE @ 2% ON ESTIMATED BASIS. THUS, SHORTAGE OF 92,194 KG. WAS ALLOWED BY AO. RELIANCE PLACED BY APPELLANT ON THE DECISION OF HONBLE ITAT, SMC BENC H, JAIPUR IN THE CASE OF SH. JASWANT LAL, RAMGANGMANDI IN ITA NO.781/JP/2 005 IS OF NO HELP, BECAUSE THE SAME PERTAINS TO A.Y. 1997-98. ENVIRONM ENTAL CONDITIONS KEEP CHANGING FROM YEAR TO YEAR AND THEREFORE THE ABOVE ORDER CANNOT BE 4 GUIDELINE FOR JUSTIFYING SHORTAGE OF DHANIA IN A.Y. 2006-07. I,, THEREFORE, HOLD THAT DISALLOWANCE OF RS.7,50,244/- MADE BY AO IS JUSTIFIED AND THE SAME IS CONFIREMD. GROUND NO.5 IS THUS DISMISSED. 6. WE HAVE HEARD BOTH THE PARTIES. WE HAVE GONE THR OUGH THE SHORTAGE CLAIMED BY THE ASSESSEE IN THE PRECEDING ASSESSMENT YEARS A ND DETAILS OF WHICH ARE REPRODUCED AS UNDER: ASSTT. YEAR PURCHASE (KGS) SHORTAGE (KGS) SHORTAGE % 2003-04 35,28,448 80785 2.29% 2004-05 38,33,284 125801 3.28% 2005-06 39,73,321 107958 2.72% 2006-07 49,76,805 123890 2.49% 6.1. IT IS TRUE THAT THE ASSESSEE HAS MAINTAINED TH E QUANTITATIVE DETAILS. WE HAVE SEEN THE TAX AUDIT REPORT IN WHICH IT HAS BEEN MENT IONED THAT THE ASSESSEE-FIRM IS MAINTAINING CASH BOOK, NAKAL, PAYMENT REGISTER BILL S ETC. HOWEVER, IT IS NOWHERE MENTIONED THAT THE ASSESSEE IS MAINTAINING STOCK RE GISTER. HOWEVER, THE AO IN HIS ORDER HAS MENTIONED THAT THE ASSESSEE HAS PRODUCED STOCK REGISTER. ONCE THE ASSESSEE HAS MAINTAINED STOCK REGISTER THEN THE AO SHOULD HAVE BEEN ABLE TO IDENTIFY THE MONTH IN WHICH THE ASSESSEE HAS CLAIME D EXCESSIVE SHORTAGE. ONCE THE STOCK REGISTER IS KEPT, THEN THE ONUS WAS ON THE RE VENUE TO ESTABLISH THAT THE ENTRIES IN THE STOCK REGISTER WERE NOT CORRECT. IT IS TRUE THAT THE ASSESSEE IN HIS EXPLANATION BEFORE THE AO SUBMITTED THAT SHORTAGE SHOULD BE TO THE EXTENT OF 1.5%. BEFORE THE 5 LD. CIT(A) IT WAS SUBMITTED THAT IT WAS TYPING ERR OR AND THE NORMAL SHORTAGE SHOULD BE 2.5%. WE HAVE SEEN THE SHORTAGE CLAIMED I N THE PRECEDING ASSESSMENT YEARS. LOOKING TO THE SHORTAGE CLAIMED IN THE PRECE DING ASSESSMENT YEARS, THE SHORTAGE CANNOT BE CONSIDERED AS EXCESSIVE. THE AO HAS ALSO NOT MENTIONED ANY COMPARABLE CASE TO SHOW THAT THE SHORTAGE SHOWN BY THE ASSESSEE IS EXCESSIVE. ONE HAS TO CONSIDER THE PAST HISTORY OF THE CASE AN D LOOKING TO THE PAST HISTORY OF THE CASE, WE FEEL THAT THE LD. CIT(A) WAS NOT JUSTI FIED IN CONFIRMING THE ADDITION. ACCORDINGLY, THE ADDITION CONFIRMED BY THE LD. CIT( A) TO THE EXTENT OF RS.7,50,244/- IS DELETED. 7. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS PARTLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 25 /01/201 2 SD/- SD/- (R.K. GUPTA) (N.L. KALRA) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED:25/01/2012 /SKR/ COPY OF THE ORDER IS FORWARDED TO: 1. THE ASSESSEE: M/S. SHRI RAMAN LAL MANI BHAI & CO. K OTA. 2. THE ITO WARD 1(1), KOTA. 3. THE CIT(A) 4. THE CIT 5. THE SR DR, ITAT, ASR 6. GUARD FILE ITA NO.473/JP/2011