The ACIT, Circle-4, Surat V. M/s. Rashmi Polyfab Pvt.Ltd., Surat

ITA 482/AHD/2010

• Counselvise Citation: [2013] 120 COUNSELVISE.COM (IT) 2117 (ITAT-AHMEDABAD)
• Duration Of Justice: 3 year(s) 3 month(s) 12 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 24-05-2013
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: D
• Next Hearing Date: 29-04-2013
• Assessment Year: 2006-2007
• Appeal Filed On: 12-02-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: A TIRKERY
• Assessee Lawyers: K N BHATT
• Section: 69C; 40A(3); 133A

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL D BENCH AHMEDABAD (BEFORE SHRI MUKUL KUMAR SHRAWAT, J.M. AND SHRI T.R . MEENA, A.M.) ITA NO.482/AHD/2010 ACIT, CIRCLE-4, ROOM NO.223, AAYAKAR BHAWAN, SURAT VS M/S. RASHMI POLYFEB PVT. LTD., PLOT NO.19-21, ANAND IND. ESTATE UDHNA MAGDALLA ROAD, SURAT. PAN: AACCR1188B (APPELLANT) (RESPONDENT) APPELLANT BY SHRI A. TIRKERY, SR. D.R. RESPONDENT BY SHRI K.N. BHATT, A.R. DATE OF HEARING: 29.4.2013 DATE OF PRONOUNCEMENT: 24-5 -2013 ORDER PER SHRI T.R. MEENA, A.M. : THIS IS AN APPEAL AT THE BEHEST OF THE REVENUE WHIC H HAS EMANATED FROM THE ORDER OF CIT(A)-IV, SURAT, DATED 30.11.2009 FOR A.Y. 2006-07. THE EFFECTIVE GROUNDS OF APPEAL ARE AS UND ER: 1. ON THE FACTS AND IN CIRCUMSTANCES OF THE CA SE AND IN LAW, THE LD. CIT(A)-IV, SURAT HAS ERRED IN RESTRICTING THE A DDITION AT RS.2,27,768/- INSTEAD OF RS.19,39,440/- MADE BY THE AO U/S. 69C OF THE ACT. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E AND IN LAW, THE LD. CIT(A) IV, SURAT HAS ERRED IN DELETING THE ADDITION OF RS.5,47,465/- MADE BY THE AO U/S. 69C. 3. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E AND IN LAW, THE LD. CIT(A)-IV, SURAT HAS ERRED IN DELETING THE ADDITION OF RS.3,87,888/- MADE BY THE AO U/S. 40A(3). 4. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E AND IN LAW, THE LD. CIT(A)-IV, SURAT OUGHT TO HAVE UPHELD THE ORDER U/S.144 OF THE ACT PASSED BY THE ASSESSING OFFICER. 5. IT IS, THEREFORE, PRAYED THAT THE ORDER OF THE L D. CIT(A)-IV, SURAT MAY BE SET-ASIDE AND THAT OF THE ASSESSING OF FICER RESTORED. ITA NO.482/AHD/2010 (AY:2006-07) (2) 2. THE A.O. OBSERVED THAT THE ASSESSEE IS ENGAGED I N THE BUSINESS OF KNITTING AND PROCESSING OF TEXTILES FABRICS. THERE WAS A SURVEY UNDER SECTION 133A ON 13.1.2006 AT THE BUSINESS PREMISES OF THE ASSESSEE. HE HAD OFFERED AN ADDITIONAL INCOME OF RS.26,26,042/- UNDER THE HEAD INCOME DISCLOSED. THE LEARNED A.O. ANALYSED THE E VIDENCE AND FOUND AS ANNEXURE-BF-28 IN TOTAL PAGE 36. IT WAS FOUND THAT ASSESSEE HAS MADE PURCHASE FROM TWO PARTIES, NAMELY, M/S. HUKMI YARN AGENCY AND M/S. SIDDHANT INTERNATIONAL BOTH BASED AT PANIPATH, HARY ANA. DURING THE COURSE OF SURVEY, IT WAS FOUND THAT TO THE ABOVE TW O SUPPLIERS THE ASSESSEE MADE CASH PAYMENT AND UNDER INVOICING WAS BEING MADE. CASH PORTION OF AMOUNT WAS NOT BEING RECORDED IN THE BOO KS OF ACCOUNTS. THE COMPARATIVE CHART OF THE ACCOUNTED AND UNACCOUNTED PAYMENT PER METER OF PAPER IN BOTH THE CONCERN ARE AS UNDER: SUPPLIERS CONCERN INVOICE RATE (PER METER) CASH RATE (PER METER) HUKMI YARN AGENCY 2.50 5.00 SIDDHANT INTERNATIONAL 1.30 2.30 3. THE APPELLANT HAD PURCHASED HTPP TO THE TUNE OF RS.20,79,899/-. OUT OF TOTAL ACCOUNTED PURCHASE, HTPP AMOUNTING TO RS.3,67,120/- AND RS.6,81,200/- WAS PURCHASED FROM AGENCIES, NAMELY, M/S. HUKMI YARN AGENCY AND M/S. SIDDHANT INTERNATIONAL, RESPECTIVEL Y. BY APPLYING THE INVOICE RATE AS ALSO FOUND FROM THE IMPOUNDED MATER IAL, TOTAL QUANTITY PURCHASED FROM BOTH THE CONCERNS COME OUT TO 1,46,8 48/- METERS AND 5,24,000 METERS, RESPECTIVELY. THE A.O. HAD CALCULA TED CASH PORTION PAID TO BOTH THE PARTIES OF RS.7,34,240/- AND RS.12,05,2 00/- IN TOTAL RS.19,39,440/- AS PER CALCULATION GIVEN BY THE AO A T PAGE 7 OF THE ASSESSMENT ORDER. THE ASSESSEE WAS PROVIDED REASONA BLE OPPORTUNITY ITA NO.482/AHD/2010 (AY:2006-07) (3) BEING HEARD ON THIS ISSUE BUT ASSESSEES EXPLANATIO N WAS NOT FOUND CONVINCING TO HIM, THEREFORE, HE MADE AN ADDITION O F RS.19,39,440/- UNDER SECTION 69C OF THE I.T. ACT. SIMILARLY, FOR THE ADD ITION OF RS.5,47,465/- WAS MADE AGAIN UNEXPLAINED PURCHASE DECLARED BY THE ASS ESSEE AND ADDITION UNDER SECTION 40A(3) OF THE I.T. ACT WAS MADE ON CA SH PAYMENT AT RS.4,7,381/-. 4. THE ASSESSEE CARRIED THE MATTER BEFORE THE LEARN ED CIT(A) WHEREIN THE APPEAL WAS PARTLY ALLOWED ON THE BASIS OF REMAN D REPORT OF THE AO DATED 30.11.2009 AND IT WAS OBSERVED THAT APPELLANT HAD PURCHASED ONLY 90,000 AND 20,00,000 METERS OF HTPP FROM M/S. HUKMI YARN AGENCY AND M/S. SIDDHANT INTERNATIONAL, RESPECTIVELY. FROM THE VERIFICATION OF BILLS, IT IS FOUND THAT THE BILLS HAVE BEEN RAISED ROLLWISE AND THE LENGTH OF HTPP HAS BEEN TAKEN AS 1,000 METERS. THE AO VERIFIED THE CAL CULATION AND HELD CORRECT. THE LEARNED AO HAS FURTHER SUBMITTED IN HI S REMAND REPORT THAT VERIFICATION OF OTHER INCOME ACCOUNT INDICATES THAT A SUM OF RS.9,87,900/- HAD BEEN OFFERED FOR TAXATION. SINCE, THE ASSESSEE HAD OFFERED THE SAME IN PROFIT & LOSS ACCOUNT IT HAD NO EFFECT ON THE IN COME IF THE ASSESSEE DEBITS THE SAME AS PURCHASE AND INCLUDES IN CLOSING STOCK ALSO. IF IT IS ASSUMED THAT ASSESSEE RECORDED THE ENTIRE SALES DUR ING THE YEAR, THE CONTENTION OF THE ASSESSEE IS CORRECT. AS PER THE C HART SUBMITTED BY THE ASSESSEE BEFORE THE AO, QUANTITYWISE, FOR PURCHASE OF HTPP THE ASSESSEE HAD SHOWN FIGURES OF 5,11,631 METER INSTEA D OF 5,42,000 METER. THEREFORE, THE DIFFERENCE WAS 30,369 METER WHICH WA S NOT INCLUDED BY THE ASSESSEE VALUED RS.2,27,768/-. THE LEARNED CIT(A) V ERIFIED AND ACCEPTED THE CALCULATION OF THE AO RECEIVED THROUGH REMAND R EPORT AND IT WAS HELD THAT ASSESSEE HAS RIGHTLY DEBITED THE DISCLOSURE AM OUNT IN THE PROFIT & LOSS ACCOUNT AND INCLUDED THE CLOSING STOCKS ONLY D IFFERENCE IN QUANTITY OF 30369 METER VALUED AT RS.2,27,768/- WAS FOUND BY TH E CIT(A) WHICH IS BEING CONFIRMED BY HIM. SIMILARLY, THE DISCLOSURE O F RS.54,7465/- ALSO DEBITED IN THE PROFIT & LOSS ACCOUNT AND INCLUDED I N THE CLOSING STOCKS AND ITA NO.482/AHD/2010 (AY:2006-07) (4) THERE IS NO BEARING ON THE INCOME OF THE ASSESSEE. WHEN ALL CASH PAYMENTS HAVE BEEN ADDED IN THE INCOME OF THE ASSES SEE, THERE CANNOT BE ADDITION UNDER SECTION 40A(3) OF THE IT ACT AT R S.497381. 5. NOW, THE ASSESSEE IS BEFORE US. THE LEARNED D.R. ARGUED THAT A.O. HAS CALCULATED THE DIFFERENCE ON ACCOUNT OF ACTUAL RATE PAYMENT AT PAGE 7 OF THE ASSESSMENT ORDER ON THE BASIS OF IMPOUNDED D OCUMENTS FOUND DURING THE COURSE OF SURVEY. THE WORKING WAS ON THE BASIS OF EVIDENCE, THE APPELLANT HAD NOT SPECIFICALLY EXPLAINED THE DI FFERENCE BEFORE THE AO, THEREFORE, HE WAS RIGHT TO MAKE ADDITION OF RS.19,3 9,440/-. SIMILARLY, THE AMOUNT DISCLOSED DURING THE COURSE OF SURVEY AT RS. 5,47,465/- HAS BEEN DEBITED IN THE PROFIT & LOSS ACCOUNT AND AS PER SEC TION 40A(3), 20 PER CENT IS REQUIRED TO BE DISALLOWED AS CASH PAYMENT. THUS, HE REQUESTED TO CONFIRM THE ORDER OF THE AO AND REVERSE THE ORDER O F LEARNED CIT(A). 6. AT THE OUTSET, THE LEARNED COUNSEL FOR THE APPEL LANT PLACED RELIANCE UPON THE COPY OF THE REMAND REPORT DATED 30.11.2009 SUBMITTED TO THE LEARNED CIT(A) BY THE ACIT, CIRCLE-4, SURAT ON EACH ISSUE AND ARGUED THAT CONCERN AO HAS SATISFIED HIMSELF AND PARTLY ACCEPTE D THE ASSESSEES SUBMISSION, THEREFORE, CIT(A) WAS RIGHT IN ALLOWING THE APPEAL PARTLY. 7. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE MATERIAL AVAILABLE ON RECORD. THE DISCREPANCY FOUND BY THE R EVENUE AT THE TIME OF SURVEY UNDER SECTION 133A HAS BEEN ADMITTED BY THE ASSESSEE AND DISCLOSED ADDITIONAL INCOME OF RS.26,26,042/- UNDER THE HEAD OTHER INCOME. HE HAS DEBITED THE PURCHASE OF HTTP AT RS. 5,47,465/- IN THE PROFIT & LOSS ACCOUNT AND ALSO INCLUDED THE SAME IN THE CLOSING STOCKS AND THERE NO BEARING IN THE INCOME. THE LEARNED AO S CALCULATION AT PAGES 6 AND 7 HAS BEEN EXPLAINED BY THE ASSESSEE THROUGH THE REMAND REPORT WHICH HAS BEEN ACCEPTED BY HIM IN REMAND REPORT. W E ARE OF THE CONSIDERED VIEW THAT LEARNED CIT(A) WAS RIGHT IN AL LOWING THE APPEAL ITA NO.482/AHD/2010 (AY:2006-07) (5) PARTLY, WE DO NOT FIND ANY REASON TO INTERVENE IN T HE ORDER OF THE LEARNED CIT(A), WE DISMISS THE APPEAL OF THE REVENUE. 8. IN THE RESULT, THE REVENUES APPEAL IS DISMISSE D. ORDER PRONOUNCED IN THE OPEN COURT ON 24-5-2013. SD/- SD/- ( MUKUL KUMAR SHRAWAT ) JUDICIAL MEMBER ( T.R. MEENA ) ACCOUNTANT MEMBER TRUE COPY PRABHAT/- COPY OF THE ORDER FORWARDED TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT CONCERNED 4. THE CIT(A) CONCERNED 5. THE DR, ITAT, AHMEDABAD 6. GUARD FILE BY ORDER ASSISTANT REGISTRAR, ITAT, AHMEDABAD