M/s Harsingar Gutkha (P) Ltd., Lucknow V. Asstt. Commissioner of Income Tax, Lucknow

ITA 481/LKW/2014

• Counselvise Citation: 48123714 RSA 2014
• Duration Of Justice: 1 year(s) 4 month(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 16-10-2015
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 10-09-2015
• Assessment Year: 2006-2007
• Appeal Filed On: 28-05-2014
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Section: 133(6)

Judgement Text

1 IN THE INCOME TAX APPELLATE TRIBUNAL LUCKNOW BENCH B, LUCKNOW BEFORE SHRI SUNIL KUMAR YADAV, JUDICIAL MEMBER AND SHRI A.K. GARODIA, ACCOUNTANT MEMBER ITA NO.481/LKW/2014 ASSESSMENT YEAR:2006-07 M/S HARSINGAR GUTKHA (P) LTD., GAURABAGH, 33-34, KURSHI ROAD, LUCKNOW. PAN:AABCH7617Q VS. A.C.I.T., CENTRAL CIRCLE-I, LUCKNOW. (APPELLANT) (RESPONDENT) ITA NOS.579 & 580/LKW/2014 ASSESSMENT YEARS:2006-07 & 2007-08 A.C.I.T., CENTRAL CIRCLE-I, LUCKNOW. VS. M/S HARSINGAR GUTKHA (P) LTD., GAURABAGH, 33-34, KURSHI ROAD, LUCKNOW. PAN:AABCH7617Q (APPELLANT) (RESPONDENT) SHRI P. K. KAPOOR, C.A. ASSESSEE BY SHRI A. K. SINGH, C.I.T., D. R. REVENUE BY 10/09/2015 DATE OF HEARING 16 / 1 0 /2015 DATE OF PRONOUNCEMENT O R D E R PER A. K. GARODIA: OUT OF THREE APPEALS, ONE APPEAL IS FILED BY THE A SSESSEE FOR ASSESSMENT YEAR 2006-07 AND TWO APPEALS ARE FILED B Y THE REVENUE FOR ASSESSMENT YEAR 2006-07 AND 2007-08. ALL THESE APPE ALS WERE HEARD TOGETHER AND ARE BEING DISPOSED OF BY WAY OF THIS C OMMON ORDER FOR THE SAKE OF CONVENIENCE. 2 2. FIRST WE TAKE UP THE APPEAL OF THE ASSESSEE I.E. I.T.A. NO.481/LKW/2014 FOR ASSESSMENT YEAR 2006-07. 3. IT WAS SUBMITTED BY LEARNED A.R. OF THE ASSESSEE THAT ALL THE GROUNDS RAISED BY THE ASSESSEE IN THIS APPEAL ARE N OT PRESSED AND ACCORDINGLY, THESE GROUNDS ARE REJECTED AS NOT PRES SED. 4. IN THE RESULT, THE APPEAL OF THE ASSESSEE STANDS DISMISSED. 5. NOW WE TAKE UP THE APPEAL OF THE REVENUE FOR ASS ESSMENT YEAR 2006-07 IN I.T.A. NO.579/LKW/2014. IN THIS APPEAL, THE REVENUE HAS RAISED THE FOLLOWING GROUNDS: 1. THAT ON THE FACTS AND CIRCUMSTANCES OF THE CASE , THE LD. CIT(A) HAS ERRED IN LAW IN DELETING THE ADDITION OF RS.11,66,728/- WITHOUT APPRECIATING THE FACTS THAT THE ADDITIONS WERE MADE BY THE ASSESSING OFFICER AFTER GIVING COGENT REASONS IN THE ADDITION ON ACCOUNT OF EXTRA PROFIT. 2. THAT ON THE FACTS AND CIRCUMSTANCE OF THE CASE, THE LD. CIT(A) HAS ERRED IN LAW IN DELETING THE ADDITION OF RS.2,56,432/- WITHOUT APPRECIATING THE FACTS THAT T HE ADDITION WERE MADE BY THE ASSESSING OFFICER AFTER G IVING LOGICAL ANALYSIS OF THE FACT. 3. THAT THE APPELLANT CRAVES LEAVE TO AMEND OR ADD ANY ONE OR MORE OF THE GROUNDS OF THE APPEAL AS STATED ABOVE AS AND WHEN NEED FOR DOING SO MAY ARISE. 4. THAT THE ORDER OF THE LD. CIT (A) BEING ERRONEOU S IN LAW AND ON FACTS WHICH NEEDS TO BE VACATED AND THE ORDE R OF THE A.O. BE RESTORED. 3 6. LEARNED D. R. OF THE REVENUE SUPPORTED THE ASSES SMENT ORDER WHEREAS LEARNED A. R. OF THE ASSESSEE SUPPORTED THE ORDER OF LEARNED CIT(A). 7. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS. WE FI ND THAT THE ISSUE INVOLVED IN GROUND NO. 1 HAS BEEN DECIDED BY CIT(A) AFTER MAKING FOLLOWING OBSERVATIONS ON PAGES 29 & 30 OF HIS ORDE R: IT IS SEEN THAT IN FOUR CASES INFORMATION CALLED F OR U/S 133(6) OF THE L.T. ACT WAS NOT RECEIVED, WHEREAS IN OTHERS IT TALLIED. IN RESPONSE TO THIS THE ASSESSEE STATED THAT THE PAYME NT TO THE SUPPLIER LIKE M/S. DABBU & CO., BHEEMSAMUDRA SUPARI CO., & PIONEER AGENCIES ETC. WERE MADE THROUGH BANKING CHA NNEL ONLY, PURCHASE BILLS, BANK ACCOUNT ALONG WITH BOOKS OF ACCOUNT WERE DULY PRODUCED AND EXAMINED BY THE ASSESSING OF FICER DURING THE COURSE OF ASSESSMENT PROCEEDINGS AND NO DEFECT WAS POINTED OUT IN RESPECT OF ANY OF THE ENTRIES RELATI NG TO TRANSACTIONS ENTERED INTO WITH THE BOOKS OF ACCOUNT HAVE BEEN REJECTED BY THE ASSESSING OFFICER BY MAKING ADVE RSE OBSERVATIONS IN A VERY CASUAL MANNER. ME DID NOT MA DE ANY FURTHER ENQUIRES NOR THERE WAS ANY INCRIMINATING MA TERIAL RELATING TO THESE FOUR PARTIES FOUND IN COURSE OF S EARCH. GROSS SALES AND GROSS PROFIT RATE HAVE BEEN ESTIMATED IN AN ARBITRARY MANNER. IT IS ALSO SEEN THAT THE BOOKS OF ACCOUNTS MAINTAINED BY THE ASSESSEE WERE COMPLETE IN ALL RESPECT. THE S AME WERE AUDITED BY THE STATUTORY AUDITORS UNDER THE COMPANY 'S ACT AS WELL AS UNDER SECTION 44 AB OF THE INCOME-TAX ACT. NO ADVERSE QUALIFICATION IN THIS REGARD HAVE BEEN MADE BY THE AUDITORS. THE ASSESSING OFFICER SIMPLY ESTIMATED THE GROSS SA LES WITHOUT ANY BASIS THEREFORE THE ADDITION OF RS.11,66,728/- BY MADE ON ACCOUNT THE EXTRA PROFIT ON ESTIMATE BASIS, IS HERB Y DELETED. 7.1 FROM THE ABOVE PARA REPRODUCED FROM THE ORDER O F CIT(A), IT IS SEEN THAT IT IS OBSERVED BY CIT(A) THAT BOOKS OF ACCOUNT HAVE BEEN REJECTED BY THE ASSESSING OFFICER BY MAKING ADVERSE OBSERVATION S IN A CASUAL MANNER. IT IS ALSO NOTED BY CIT(A) THAT IN FOUR CASES, INFO RMATION CALLED FOR U/S 4 133(6) OF THE ACT WAS NOT RECEIVED WHEREAS IN OTHER CASES, IT TALLIED. UNDER THESE FACTS, WE ARE OF THE CONSIDERED OPINION THAT MERELY BECAUSE IN FOUR CASES, INFORMATION CALLED FOR U/S 133(6) WAS N OT RECEIVED, NO CASE IS MADE OUT FOR REJECTION OF BOOKS OF ACCOUNT PARTICUL ARLY WHEN IN ALL OTHER CASES WHERE INFORMATION CALLED FOR U/S 133(6) WERE RECEIVED, WERE TALLIED. HENCE, IT IS SEEN THAT THE BOOKS OF ACCOUNT WERE RE JECTED WITHOUT POINTING OUT ANY SPECIFIC DEFECT IN THE BOOKS OF ACCOUNT AND WITHOUT POINTING OUT ANY DISCREPANCIES IN ANY OF THE ENTRIES IN THE BOOK S OF ACCOUNT. HENCE, WE DO NOT FIND ANY REASON TO INTERFERE IN THE ORDER OF CIT(A) ON THIS ISSUE. GROUND NO. 1 IS REJECTED. 8. REGARDING GROUND NO. 2, WE FIND THAT THE ADDITIO N WAS DELETED BY CIT(A) ON THE BASIS OF THIS FINDING THAT IT IS SEEN FROM THE BALANCE SHEET OF THE ASSESSEE THAT THE ASSESSEE HAS SUFFICIENT INTER EST FREE FUNDS TO GIVE INTEREST FREE ADVANCES OF RS.15 LAC TO THE SISTER C ONCERN M/S MEGHA MOTORS. THIS FINDING OF CIT(A) COULD NOT BE CONTRO VERTED BY LEARNED D.R. OF THE REVENUE. AS PER BALANCE SHEET OF THE ASSESS EE COMPANY AS ON 31/03/2006, AVAILABLE ON PAGE NO. 50 OF THE PAPER B OOK, IT IS SEEN THAT THE ASSESSEE COMPANY WAS HAVING SHARE CAPITAL OF RS.14. 02LAC, SHARE APPLICATION MONEY PENDING ALLOTMENT RS.16 LAC AND R ESERVE AND SURPLUS RS.68.49 LAC. HENCE, IT IS SEEN THAT THE INTEREST FREE FUNDS AVAILABLE WITH THE ASSESSEE COMPANY WAS MUCH MORE THAN THE INTERES T FREE ADVANCES GIVEN BY THE ASSESSEE TO SISTER CONCERN OF RS.15 LA C. IN VIEW OF THESE FACTS, WE FIND NO REASON TO INTERFERE IN THE ORDER OF LEARNED CIT(A). ACCORDINGLY, GROUND NO. 2 IS REJECTED. 9. IN THE RESULT, THE APPEAL OF THE REVENUE STANDS DISMISSED. 5 10. NOW WE TAKE UP THE APPEAL OF REVENUE FOR ASSESS MENT YEAR 2007- 08 I.E. I.T.A. NO.580/LKW/2014. IN THIS APPEAL, TH E REVENUE HAS RAISED THE FOLLOWING GROUNDS: 1. THAT ON THE FACTS AND CIRCUMSTANCES OF THE CASE , THE LEARNED CIT(A) HAS ERRED IN LAW IN DELETING THE ADD ITION OF RS.16,35,848/- WITHOUT APPRECIATING THE FACTS TH AT THE ADDITION WERE MADE BY THE ASSESSING OFFICER AFTER G IVING COGENT REASONS IN THE ADDITION ON ACCOUNT OF EXTRA PROFIT. 10. LEARNED D. R. OF THE REVENUE SUPPORTED THE ASSE SSMENT ORDER WHEREAS LEARNED A. R. OF THE ASSESSEE SUPPORTED THE ORDER OF LEARNED CIT(A). 11. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS. WE F IND THAT THIS ISSUE WAS DECIDED BY LEARNED CIT(A) AFTER MAKING FOLLOWIN G OBSERVATIONS ON PAGE 32 OF HIS ORDER: IT IS SEEN: THAT IN ONLY FOUR CASES INFORMATION CA LLED FOR U/S 133(6) OF THE I.T. ACT WAS NOT RECEIVED, WHEREAS IN OTHERS IT TALLIED. IN RESPONSE TO THIS THE ASSESSEE STATED TH AT THE PAYMENT TO THE SUPPLIER LIKE M/S. DABBU & CO., BHEE MSAMUDRA SUPARI CO., & PIONEER AGENCIES ETC. WERE MADE THROU GH BANKING CHANNEL ONLY, PURCHASE BILLS, BANK ACCOUNT ALONG WITH BOOKS OF ACCOUNT WERE DULY PRODUCED AND EXAMINED BY THE ASSESSING OFFICER DURING THE COURSE OF ASSESSMENT P ROCEEDINGS AND NO DEFECT WAS POINTED OUT IN RESPECT OF ANY OF THE ENTRIES RELATING TO TRANSACTIONS ENTERED INTO WITH THESE PA RTIES. THE BOOKS OF ACCOUNT HAVE BEEN REJECTED BY THE ASSESSIN G OFFICER BY MAKING ADVERSE OBSERVATIONS IN A VERY CASUAL MAN NER. HE DID NOT MADE ANY FURTHER ENQUIRES NOR THERE WAS ANY INCRIMINATING MATERIAL RELATING TO THESE FOUR PARTI ES FOUND IN COURSE OF SEARCH. GROSS SALES AND GROSS PROFIT RATE HAVE BEEN ESTIMATED IN AN ARBITRARY MANNER. IT IS ALSO SEEN T HAT THE BOOKS OF ACCOUNTS MAINTAINED BY THE ASSESSEE WERE COMPLET E IN ALL 6 RESPECT. THE SAME WERE AUDITED BY THE STATUTORY AUD ITORS UNDER THE COMPANY'S ACT AS WELL AS UNDER SECTION 44 AB OF THE INCOME-TAX ACT. NO ADVERSE QUALIFICATION IN THIS RE GARD HAVE BEEN MADE BY THE AUDITORS. THE ASSESSING OFFICER SI MPLY ESTIMATED THE GROSS SALES WITHOUT ANY BASIS THEREFO RE THE ADDITION OF RS. 16,35,848/- MADE ON ACCOUNT THE EXT RA PROFIT ON ESTIMATE BASIS, IS HERBY DELETED. 11.1 FROM THE ABOVE PARA FROM THE ORDER OF LEARNED CIT(A), IT IS SEEN THAT IN THIS YEAR ALSO, ONLY IN 4 CASES, INFORMATIO N CALLED FOR U/S 133(6), WAS NOT RECEIVED WHEREAS IN OTHER CASES, IT TALLIED . HENCE, IT IS SEEN THAT THE FACTS IN THE PRESENT YEAR ARE IDENTICAL TO THE FACTS IN ASSESSMENT YEAR 2006-07 AND THEREFORE, IN LINE WITH OUR DECISION IN ASSESSMENT YEAR 2006- 07 FOR GROUND NO. 1 IN THAT YEAR, IN THE PRESENT YE AR ALSO, THIS ISSUE IS DECIDED IN FAVOUR OF THE ASSESSEE. 12. IN THE RESULT, THE APPEAL OF THE REVENUE STANDS DISMISSED. 13. IN THE COMBINED RESULT, THE APPEAL OF THE ASSES SEE AS WELL AS BOTH THE APPEALS OF THE REVENUE ARE DISMISSED. (ORDER WAS PRONOUNCED IN THE OPEN COURT ON THE DATE MENTIONED ON THE CAPTION PAGE) SD/. SD/. (SUNIL KUMAR YADAV) ( A. K. GARODIA ) JUDICIAL MEMBER ACCOUNTANT MEMB ER DATED:16/10/2015 *SINGH COPY OF THE ORDER FORWARDED TO : 1. THE APPELLANT 2. THE RESPONDENT. 3. CONCERNED CIT 4. THE CIT(A) 5. D.R., I.T.A.T., LUCKNOW ASSTT. R EGISTRAR