ACIT, Meerut V. M/s. V. Kumar Dyeing & Printing Works (P) Ltd., Meerut

ITA 4874/DEL/2011

• Counselvise Citation: 487420114 RSA 2011
• Duration Of Justice: 6 month(s) 17 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-05-2012
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: H
• Next Hearing Date: 21-05-2012
• Assessment Year: 2007-2008
• Appeal Filed On: 04-11-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: B R R KUMARDR
• Assessee Lawyers: SANJIV SAPRAAR
• Keywords: Business income; Corroborative evidences

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI H BENC H BEFORE SMT. DIVA SINGH, JM & SHRI A.N. PAHUJA, A M ITA NO.4874/DEL/2011 ASSESSMENT YEAR:2007-08 A.C.I.T.,CIRCLE-2, MEERUT V/S . V. KUMAR DYEING & PRINTING WORKS (P) LTD., MEERUT [PAN : AAACV 6068 J ] (APPELLANT) (RESPONDENT) ASSESSEE BY SHRI SANJIV SAPRA,AR REVENUE BY SHRI B.R.R. KUMAR,DR DATE OF HEARING 21-05-2012 DATE OF PRONOUNCEMENT 21-05-2012 O R D E R A.N.PAHUJA:- THIS APPEAL FILED ON 04.11.2011 BY THE REVENUE AGAI NST AN ORDER DATED 17.08.2011 OF THE LD. CIT(A), MEERUT, RAISES THE FOLLOWING GROUNDS:- 1. WHETHER IN THE FACTS AND CIRCUMSTANCES OF THE C ASE, THE LD. CIT(A) HAS ERRED IN LAW AND FACTS IN DELETI NG THE ADDITIONS OF ` `12,36,000/- MADE BY ASSESSING OFFICER ON ACCOUNT OF SALES RETURN AND ` ` 1,35,000/- ON ACCOUNT OF SAMPLE EXPENSES AFTER GIVING SO MANY OPPORTUNITIES TO THE ASSESSEE FOR PRODUCING THE BOO KS OF ACCOUNTS. 2. WHETHER IN THE FACTS AND CIRCUMSTANCES OF THE CA SE, THE LEARNED CIT(A) HAS ERRED IN LAW AND FACTS IN DELETING THE ABOVE ADDITIONS IGNORING THE FACTS THA T ASSESSEE HAD ITSELF ADMITTED ABOUT THE NON- MAINTENANCE OF STOCK REGISTER AND IN ABSENCE OF WHICH THE EXTRACT VALUE OF SALES RETURN WAS NOT VERIFIABLE AT THE TIME OF ASSESSMENT PROCEEDINGS. ITA N O.4874 /DEL./2011 2 3. IN THE FACT AND CIRCUMSTANCES OF THE CASE THE OR DER OF THE CIT(A) MAY BE SET ASIDE AND THAT OF THE ASSESSI NG OFFICER RESTORED. 2. FACTS, IN BRIEF, AS PER RELEVANT ORDERS ARE THA T E-RETURN DECLARING NIL INCOME FILED ON 31.10.2007 BY THE ASSESSEE, TRADING IN BED SHEETS AND CLOTH FOR TENT HOUSES, WAS TAKEN UP FOR SCRUTINY WITH THE SER VICE OF A NOTICE U/S 143(2) OF THE INCOME-TAX ACT,1961. DURING THE COURSE OF ASSES SMENT PROCEEDINGS, THE ASSESSING OFFICER (A.O. IN SHORT) NOTICED THAT THE ASSESSEE CLAIMED DEDUCTION OF SALES RETURNS FROM SALES MADE IN CASH. TO A QUERY BY THE AO, THE ASSESSEE DID NOT PRODUCE BILLS FOR THESE SALES RETURNS NOR THE S TOCK REGISTER OR COPY OF LEDGER ACCOUNT AND THE RELEVANT BOOKS OF ACCOUNT ,INCLUDI NG VOUCHERS DESPITE SEEKING A NUMBER OF ADJOURNMENTS. THOUGH THE ASSESSEE FILED WRITTEN SUBMISSIONS ON 11 TH DECEMBER, 2009, THE ASSESSEE DID NOT PRODUCE RELEVA NT BILLS OR VOUCHERS FOR THE SALES RETURNS; RATHER THE ASSESSEE ADMITTED THAT IT WAS NOT MAINTAINING ANY STOCK REGISTER. IN THESE CIRCUMSTANCES, THE AO DISALLOWE D THE CLAIM OF SALES RETURNS TO THE EXTENT OF ` ` 12,36,000/-. 2.1 BESIDES, THE ASSESSEE DID NOT PRODUCE BILLS FO R SAMPLE EXPENSES OF ` ` 1.35.500/-. ACCORDINGLY, THE AO DISALLOWED THE AMO UNT. 3. ON APPEAL, THE ASSESSEE FILED WRITTEN SUBMISSIO NS, WHICH WERE FORWARDED TO THE AO FOR A REMAND REPORT BY THE LD. CIT(A). IN HIS REMAND REPORT DATED 4 TH AUGUST, 2011, THE AO OBSERVED AS UNDER:- ..THESE DETAILS WERE NOT PRODUCED ORIGINALLY AT THE MATERIAL TIME IN THE COURSE OF ASSESSMENT PROCEEDIN GS. THEREFORE, IT SUFFICIENTLY GOES TO PROVE THAT THE REQUIRED DET AILS FILED NOW AT APPELLATE STAGE ARE NOTHING BUT CONCOCTED, FRESHLY PREPARED IN ORDER TO GET DESIRED RELIEF FROM THE CIT(A), MEERUT BEFORE WHOM THE PRESENT APPEAL IS BEING HEARD. IN VIEW OF THE ABOV E CIRCUMSTANCES, I AM OF THE FIRM OPINION THAT THESE DETAILS ALONG W ITH VOUCHERS WHICH HAVE BEEN FILED BY THE ASSESSEE BEFORE CIT(A), MEER UT THROUGH HIS COUNSEL ARE NOTHING BUT MANIPULATIONS AT THE INSTAN CE OF THE CA COUNSEL IN ORDER TO GET THE DESIRED RELIEF FROM, CI T(A), MEERUT. HAD ITA N O.4874 /DEL./2011 3 THESE DETAILED ALONG WITH VOUCHERS BEEN FILED AT TH E ASSESSMENT STAGE, THERE WOULD HAVE BEEN NO OCCASION FOR THE PR EDECESSOR ASSESSINGOFFICER TO ADD BACK AFORESAID EXPENSES IN HER ASSESSMENT ORDER. RATHER SMALL AMOUNTS COULD HAVE BEEN MADE TO THE RETURNED INCOME AT NIL. IN FILING THESE DET AILS THE ASSESSEE THROUGH HIS COUNSEL HAS TRIED TO PROVE ITS INNOCENC E AND LARGELY TO HOODWINK THE APPEAL AUTHORITY AND THE ASSESSING OFF ICER. THEREFORE, IN MY OPINION THE ASSESSMENT MADE BY MY PREDECESSOR WAS ABSOLUTELY RIGHT AND THE ASSESSMENT SO MADE DESERVES TO BE SUSTAINED. 3.1 AFTER HAVING COMMENTS OF THE ASSESEE ON THE AF ORESAID REMAND REPORT SUBMITTED BY THE AO, THE LD. CIT(A) CONCLUDE D AS UNDER:- 8. I HAVE CONSIDERED THE FINDINGS OF THE ASSESSING OFFICER, HIS REMAND REPORT AND SUBMISSIONS OF THE AR AND DECIDE THE ISSUES RAISED AS UNDER:- 8.1 GROUND NOS.1 & 2: THE ASSESSING OFFICER MADE ADDITION OF ` ` 12,36,000/- DISALLOWING THE SALES RETURNS MADE IN CASH BY THE A PPELLANT AND ALSO DISALLOWING ` ` 1,35,570/- BEING THE SAMPLE EXPENSES INCURRED IN CASH. THE MAIN FINDINGS OF TH E ASSESSING OFFICER WERE THAT THE APPELLANT COMPANY W AS NOT MAINTAINING ANY STOCK REGISTER AS SUCH AND, THEREFO RE, IT WAS NOT POSSIBLE TO CHECK THE RETURN OF GOODS IN THE MO NTHLY STOCK STATEMENT. ACCORDING TO THE ASSESSING OFFICE R ON THE FACTS ON RECORD IT EMERGED DURING EXAMINATION OF BO OKS OF ACCOUNT THAT CASH EXPENSES DEBITED UNDER THE HEAD S ALES RETURNS WAS NOT VERIFIABLE AND THEREFORE, SHE DISAL LOWED ` `12,36,000/-. THE ASSESSING OFFICER FURTHER DISALL OWED CASH SAMPLE EXPENSES OF ` ` 1,35,570/- FOR WANT OF SUPPORTING EVIDENCE FOR THOSE EXPENSES. IN THE REMAND REPORT, ON THE SUBMISSIONS MADE BY THE APPELLANTS AR ALONG WITH T HE COPIES OF LEDGER ACCOUNTS AND PHOTOCOPIES OF VOUCHE RS, THE ASSESSING OFFICER STATED THAT THE DETAILS AT THE AP PEAL STAGE ARE NOTHING BUT CONCOCTED AND FRESHLY PREPARED IN ORDER TO GET DESIRED RELIEF. AO FURTHER STATED THAT IF THESE DETAILS ALONG WITH VOUCHERS WERE AVAILABLE AT THE ASSESSMENT STAG E, THE THEN AO WOULD NOT HAVE ANY OCCASION TO ADD THE EXPE NSES UNDER REFERENCE. THE AO DID NOT SEND ANY DIRECT COM MENTS ON THE MATERIAL SUBMITTED BEFORE HIM BUT INDIRECTLY HE STATED ITA N O.4874 /DEL./2011 4 THAT THE MATERIAL SUBMITTED IN APPELLATE PROCEEDING S WAS FRESHLY PREPARED MATERIAL AND DID NOT DESERVE TO BE ADMITTED. THE APPELLANT SUBMITTED THAT THE TOTAL SALES RETURN S WERE TO THE TUNE OF ` .42,40,240.75 OUT OF WHICH THE AO ACCEPTED THE RETURNS OF ` .29,84,240.75 AND DISALLOWED THE SAME TO THE EXTENT OF ` .12,36,000/-. THE APPELLANT SUBMITTED THAT OUT OF TOTAL SALES OF ` .6,32,90,534.75, SALES WORTH ` .2,09,19,688/- WERE MADE IN CASH. THE APPELLANT SUB MITTED THAT THE CASH PARTIES, TO WHOM THE APPELLANT DID NO T SELL ON CREDIT, WOULD NOT UNDER ANY CIRCUMSTANCES ACCEPT CH EQUE AGAINST THE RETURN OF MATERIAL SOLD TO THEM, AND/OR WOULD NOT RETURN THE MATERIAL AGAINST CREDITS TO THEIR ACCOUN TS. AS PER THE APPELLANT, BOOKS OF ACCOUNT WERE PRODUCED. THE FINDING OF THE AO THAT DETAILS AND VOUCHERS WERE NOT PRODUC ED IS BASED ON WRONG APPRECIATION OF FACTS. THE APPELLANT FURTHER SUBMITTED THAT THE BILLS AND VOUCHERS WERE AVAILABL E WITH IT WHICH COULD BE PRODUCED EVEN IN APPEAL PROCEEDINGS. THE APPELLANT FILED THE DETAILED COPY OF LEDGER ACCOUNT OF SALES RETURNS ALONG WITH PHOTOCOPIES OF PAYMENT VOUCHERS WITH REFERENCE TO SALES RETURNS IN CASH. WITH REFERENCE TO THE SAMPLE EXPENSES APPELLANT STATED THAT LABOUR CHARGES FOR DEVELOPMENT AND PREP ARATION OF SAMPLES OF FINISHED GOODS WERE DEBITED UNDER THE SAID HEAD. THE APPELLANT SUBMITTED THAT VOUCHERS HAVE DU LY BEEN MAINTAINED AND WERE PRODUCED IN THE ASSESSMENT PROCEEDINGS AND CAN BE PRODUCED EVEN IN APPELLATE PROCEEDINGS. IT IS ALSO SUBMITTED BY THE APPELLANT THAT IN THE MANUFACTURING BUSINESS TO ASSUME THAT NO SAMPLE EXP ENSES MUST HAVE INCURRED OR SPENT BY THE APPELLANT SOUNDS UNREASONABLE. COPIES OF LEDGER ACCOUNT ALONG WITH THE PHOTOCOPY O F VOUCHERS WERE FILED DURING APPELLATE PROCEEDINGS, W HICH WERE REMANDED TO THE AO. IT IS ALSO SUBMITTED BY TH E APPELLANT THAT THE DETAILED COPY OF ACCOUNT FILED D URING ASSESSMENT PROCEEDINGS DID CONTAIN VOUCHER NUMBERS OF ALL TRANSACTIONS AND THEREFORE THE ASSUMPTION OF AO DUR ING ASSESSMENT PROCEEDINGS THAT VOUCHERS WERE NOT MAINT AINED WAS ILL FOUNDED. THE APPELLANT FURTHER SUBMITTED TH AT THERE IS A TRANSCRIPTION MISTAKE IN THE COMPUTATION PORTION OF THE ASSESSMENT ORDER AS THE DISALLOWANCE ON ACCOUNT OF SAMPLE EXPENSES OF ` .L,35,570/- HAS WRONGLY BEEN ADDED IN THE ITA N O.4874 /DEL./2011 5 COMPUTATION PORTION AS ` .2,35,570/- AND THEREBY COMPUTING THE ASSESSED INCOME EXCESSIVE BY ` .1,00,000/-, ON ACCOUNT OF THIS MISTAKE ALONE. IN THE REJOINDER, THE APPELL ANT STRESSED THAT THE ALLEGATION OF THE AO THAT THE MATERIAL SUB MITTED IN APPELLATE PROCEEDINGS WAS FRESHLY PREPARED MATERIAL IS WITHOUT ANY BASE AND THE AO DID NOT CONSIDER THE DE TAILED COPIES OF ACCOUNT HAVING INDIVIDUAL VOUCHER NO. OF EACH AND EVERY TRANSACTION AS SUBMITTED BY THE APPELLANT ALO NG WITH THE SUBMISSIONS DATED 10.12.2009 DURING ASSESSMENT PROCEEDINGS. THE APPELLANT FURTHER SUBMITTED THAT B ARRING THIS ALLEGATION THE ASSESSING OFFICER IS HIMSELF CO NVINCED THAT HAD THIS MATERIAL BEEN CONSIDERED BY THE THEN AO THE IMPUGNED ADDITION COULD NOT HAVE BEEN MADE AT THE T IME OF ASSESSMENT. IN THIS VIEW THE APPELLANT REQUESTED DE LETION OF BOTH THE ADDITIONS. I HAVE GONE THROUGH THE FACTS, REMAND REPORT AND TH E SUBMISSIONS OF THE AR. THE EVIDENCES SUBMITTED BY T HE APPELLANT DURING APPELLATE PROCEEDINGS DID NOT SEEM TO BE THE FRESHLY PREPARED EVIDENCE AS INDIVIDUAL VOUCHER NUMBERS WERE APPEARING IN THE DETAILED COPIES OF ACCOUNTS O F THE TWO EXPENSE HEADS AS SUBMITTED DURING ASSESSMENT PROCEEDINGS. DURING THE COURSE OF APPELLATE PROCEED INGS SAME DETAILS WERE FILED ALONG WITH PHOTOCOPIES OF VOUCHERS. THE AO DID NOT POINT OUT ANY DISCREPANCY IN THE MAT ERIAL SO CONFRONTED TO HIM WITH REFERENCE TO THE MATERIAL IN THE FORM OF COPIES OF ACCOUNT AVAILABLE ON RECORD HAVING BEE N SUBMITTED IN THE ASSESSMENT PROCEEDINGS. ON THE OTH ER HAND, BARRING THE ALLEGATION OF PREPARING THE SAME AS FRESH EVIDENCE THE AO HIMSELF HAS ACCEPTED THAT IN VIEW O F THE EVIDENCES CONFRONTED TO HIM NO ADDITION COULD HAVE BEEN MADE AT THE TIME OF ASSESSMENT. IN THIS VIEW AND HO LDING THAT THE SUPPORTING MATERIAL SUBMITTED IN APPELLATE PROCEEDINGS DOES NOT SEEM TO BE A FRESHLY PREPARED MATERIAL THE, I DELETE THE ADDITIONS OF ` .12,36,000/- AND ` .1,35,570/- AS MADE BY THE AO IN THE INCOME OF THE APPELLANT. T HE AO IS ALSO DIRECTED TO RECTIFY THE TRANSCRIPTION MISTAKE OF RUPEES ONE LAKH IN THE COMPUTATION PORTION IN THE DISALLOW ANCE OF SAMPLE EXPENSES. 4. THE REVENUE IS NOW IN APPEAL BEFORE US AGAINST THE AFORESAID FINDINGS OF THE LD. CIT(A). THE LD. DR SUPPORTED TH E ORDER OF THE AO WHILE THE LD. AR ON BEHALF OF THE ASSESSEE RELIED UPON THE FINDIN GS OF THE LD. CIT(A). ITA N O.4874 /DEL./2011 6 5. WE HAVE HEARD BOTH THE PARTIES AND GONE THROUG H THE FACTS OF THE CASE. INDISPUTABLY, THE ASSESSEE DID NOT PRODUCE R ELEVANT BILLS AND VOUCHERS IN SUPPORT OF THEIR CLAIM FOR SALES RETURNS AND SAMPLE EXPENSES. THE LD. CIT(A) AFTER HAVING A REMAND REPORT FROM THE AO AND COMMENTS OF THE ASSESSEE THEREON, DELETED BOTH THE ADDITIONS ON THE GROUND THAT THE A O HIMSELF ACCEPTED THAT IN VIEW OF EVIDENCES SUBMITTED DURING THE COURSE OF AP PEAL PROCEEDINGS, NO ADDITION COULD HAVE BEEN MADE AT THE TIME OF ASSESS MENT. IN THESE CIRCUMSTANCES, ESPECIALLY WHEN THE LD. DR DID NOT P LACE BEFORE US ANY MATERIAL IN ORDER TO CONTROVERT THE AFORESAID FINDINGS OF THE L D. CIT(A) SO AS TO ENABLE US TO TAKE A DIFFERENT VIEW IN THE MATTER, WE ARE NOT INC LINED TO INTERFERE WITH THE FINDINGS OF THE LD. CIT(A). THEREFORE, GROUND NOS. 1 AND 2 IN THE APPEAL ARE DISMISSED. 6.. GROUND NO.3 IN THE APPEAL BEING GENERAL IN NAT URE, DOES NOT REQUIRE ANY SEPARATE ADJUDICATION AND IS, THEREFORE, DISMIS SED. 7. NO OTHER PLEA OR ARGUMENT WAS MADE BEFORE US. 8.. IN RESULT, APPEAL IS DISMISSED. SD/- SD/- (DIVA SINGH) (A.N. PAHUJA) (JUDICIAL MEMBER) (ACCOUNTANT MEMBER) NS COPY OF THE ORDER FORWARDED TO :- 1. ASSESSEE 2. A.C.I.T.,CIRCLE-2, MEERUT 3. CIT CONCERNED 4. CIT (A), MEERUT 5. THE DR, ITAT,H BENCH, NEW DELHI 6. GUARD FILE. BY ORDER, DEPUTY / ASSTT.REGISTRAR ITAT, DELHI ORDER PRONOUNCED IN OPEN COURT