ACIT, CHENNAI V. M/s. Free World House Of Exports, CHENNAI

ITA 505/CHNY/2012

• Counselvise Citation: [2012] 140 COUNSELVISE.COM (IT) 64184 (ITAT-CHENNAI)
• Duration Of Justice: 5 month(s) 17 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 24-08-2012
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: C
• Next Hearing Date: 07-08-2012
• Assessment Year: 2007-2008
• Appeal Filed On: 08-03-2012
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: S DASGUPTA
• Assessee Lawyers: PRATAPKARAN PA UL
• Keywords: Unexplained expenditure
• Section: 133A; 144; 2

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH, CHENNAI BEFORE SHRI N.S. SAINI, ACCOUNTANT MEMBER AND SHRI VIKAS AWASTHY, JUDICIAL MEMBER ITA NO.505 /MDS/2012 (ASSESSMENT YEAR: 2007-08) ASSISTANT COMMISSIONER OF INCOME TAX, BUSINESS CIRCLE-III, CHENNAI-600 034. VS. M/S. FREE WORLD HOUSE OF EXPORTS, 45, 2 ND FLOOR, 1 ST MAIN ROAD, GANDHI NAGAR, ADYAR, CHENNAI-600 020. PAN: AAAFF1414B (APPELLANT) (RESPONDENT) APPELLANT BY : MR. S.DASGUPTA, JCIT RESPONDENT BY : MR. PRAT APKARAN PAUL, CA DATE OF HEARING : 7 TH AUGUST, 2012 DATE OF PRONOUNCEMENT : 24 TH AUGUST, 2012 O R D E R PER VIKAS AWASTHY, JUDICIAL MEMBER: THE APPEAL HAS BEEN FILED BY THE DEPARTMENT IMPUGNING THE ORDER OF THE CIT(A)-VIII, CHENNAI DAT ED 23.12.2011. 2. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE HA D FILED RETURN OF INCOME RELEVANT TO THE ASSESSMENT YEAR 20 07-08 ON 29.10.2007 ADMITTING TOTAL INCOME OF ` 2,28,31,248/-. A SURVEY UNDER SECTION 133A WAS CONDUCTED AT THE BUSINESS P REMISES OF THE ASSESSEE ON 6.3.2007. NOTICE UNDER SECTION 143(2) ITA NO. 505/MD S/2012 2 DATED 26.8.2008 WAS ISSUED TO THE ASSESSEE. THE ASS ESSING OFFICER VIDE ASSESSMENT ORDER DATED 31.12.2009 PAS SED UNDER SECTION 144 MADE CERTAIN ADDITIONS IN THE INC OME RETURNED BY THE ASSESSEE. THE ASSESSING OFFICER MA DE ADDITIONS ON ACCOUNT OF (I) PAYMENT OF COMMISSION TO PARTNERS OF THE ASSESSEE FIRM AMOUNTING TO ` 15,00,000/-. (II) DIFFERENCE IN ACCOUNTS AMOUNTING TO ` 14.75 LAKHS (III) INFLATED PURCHASES TO THE TUNE OF ` 8,20,738/-. AGGRIEVED AGAINST THE ASSESSMENT ORDER, THE ASSESSE E PREFERRED AN APPEAL BEFORE THE CIT(A)-VIII, CHENNAI . THE CIT(A) VIDE ORDER DATED 23.12.2011 DELETED THE ADDI TION MADE BY THE ASSESSING OFFICER ON ACCOUNT OF COMMISS ION RECEIVED BY THE PARTNERS. HOWEVER, THE CIT(A) DISMI SSED THE GROUND OF APPEAL OF THE ASSESSEE ON ACCOUNT OF DIFF ERENCE IN ACCOUNTS AMOUNTING TO ` 14.75 LAKHS. THE CIT(A) FURTHER PARTLY GRANTED RELIEF TO THE ASSESSEE ON ACCOUNT OF INFLATED PURCHASES AND DIRECTED THE ASSESSING OFFICER TO DEL ETE THE ADDITION MADE AMOUNTING TO ` 7,02,353/-. THUS, THE APPEAL OF THE ASSESSEE WAS PARTLY ALLOWED BY THE CIT(A). ITA NO. 505/MD S/2012 3 THE DEPARTMENT AGGRIEVED AGAINST THE ORDER OF THE CIT(A) HAS COME IN SECOND APPEAL BEFORE THE TRIBUNA L IMPUGNING THE ORDER OF THE CIT(A). 3. SHRI S. DASGUPTA, REPRESENTING THE DEPARTMENT SUBMITTED THAT THE CIT(A) HAS ERRED IN DELETING THE ADDITIONS MADE BY THE ASSESSING OFFICER WITHOUT APPRECIATING THE FACTS OF THE CASE. THE DR SUBMITTED THAT COMMISSION WAS R ECEIVED BY THE PARTNERS, WHEREAS, THE COMMISSION AMOUNT SHO ULD HAVE BEEN CREDITED TO THE FIRM INSTEAD OF INDIVIDUA L ACCOUNTS OF THE PARTNERS. HE FURTHER SUBMITTED THAT THE DIF FERENCE IN ACCOUNTS IS EVIDENT AND NO VALID EXPLANATION WHATSO EVER HAS BEEN FURNISHED BY THE ASSESSEE. THE ASSESSEE IS TRY ING TO RECONCILE THE DIFFERENCE WITH M/S. PSTS & SONS PVT. LTD. INSTEAD OF M/S. PSTS LOGISTICS PVT. LTD. THESE AR E TWO DIFFERENT PARTIES AND THE DIFFERENCE AMOUNTING TO ` 14.70 LAKHS IS STILL UNEXPLAINED. THE CIT(A) HAS ERRED IN COMI NG TO THE CONCLUSION THAT THE TRANSACTION WITH ONE COMPANY MA Y HAVE BEEN WRONGLY ACCOUNTED IN SISTER COMPANY WHICH HAS BEEN RECONCILED NOW. HE FURTHER SUBMITTED THAT THE ASSE SSEE HAS INFLATED THE PURCHASES. THE ASSESSEE HAS TRIED TO R ECONCILE ITA NO. 505/MD S/2012 4 PURCHASES MADE FROM M/S. SHREE VENKATESHWARA ROCK CORPORATION WHEREAS PURCHASES WERE MADE FROM M/S. SHREE VENKATESWARA GRANITES. 4. ON THE OTHER HAND, SHRI P.PAUL, AUTHORIZED REPRESENTATIVE APPEARING ON BEHALF OF THE ASSESSEE SUBMITTED THAT THE ORDER PASSED BY THE CIT(A) IS A WELL- REASONED AND DETAILED ORDER, THEREFORE, NO INTERFER ENCE IN THE ORDER PASSED BY THE CIT(A) IS CALLED FOR. THEREFOR E, THE APPEAL FILED BY THE REVENUE IS LIABLE TO BE DISMISS ED BY THE TRIBUNAL BEING DEVOID OF MERITS. 5. WE HAVE PERUSED THE ORDER PASSED BY THE CIT(A) A S WELL AS THE ASSESSING OFFICER AND HAVE HEARD THE SU BMISSIONS OF THE RESPECTIVE PARTIES. THE COMMISSION AMOUNT WH ICH HAS BEEN ADDED BACK BY THE ASSESSING OFFICER IS ALLEGED TO HAVE BEEN RECEIVED BY THE PARTNERS OF THE ASSESSEE FIRM. THE CIT(A) HAS CALLED FOR REMAND REPORT BEFORE PASSING THE IMPUGNED ORDER. THE CIT(A) IN HIS ORDER HAS MENTIO NED THAT ON VERIFYING THE MATERIAL AND EXPLANATION FILED BY THE A.R., AN AMOUNT OF ` 15.00 LAKHS HAVE BEEN RECEIVED BY THE ASSESSEE. HOWEVER, THE CIT(A) HAS NOT MENTIONED AS TO HOW HE HAS ITA NO. 505/MD S/2012 5 COME TO THE CONCLUSION THAT THE AMOUNT OF ` 15.00 LAKHS HAS BEEN RECEIVED BY THE PARTNERS OF THE ASSESSEE FIRM AND THAT THE SAME AMOUNT HAS BEEN OFFERED TO TAX BY THE PART NERS IN THEIR RESPECTIVE RETURN OF INCOME. A PERUSAL OF TH E ORDER PASSED BY THE CIT(A) SHOWS THAT THE CIT(A) HAS ONLY RELIED ON THE BALD STATEMENT MADE BY THE A.R. OF THE ASSESSEE FIRM. WE THEREFORE, DEEM IT APPROPRIATE TO REMIT THE MATT ER BACK TO THE ASSESSING OFFICER TO VERIFY THE FACT WHETHER TH E AMOUNT OF COMMISSION HAS BEEN MENTIONED IN THE RETURN OF INCO ME FILED BY THE PARTNERS. IN CASE, THE AFOREMENTIONED COMM ISSION HAS BEEN REFLECTED IN THE RETURN OF INCOME FILED B Y THE INDIVIDUAL PARTNERS, NO FURTHER ACTION IS REQUIRED. AS ACCOUNTING THE SAME AMOUNT IN THE INCOME OF THE AS SESSEE FIRM WOULD AMOUNT TO DOUBLE TAXATION. IN CASE, THE AMOUNT OF COMMISSION IS NOT SHOWN IN THE RETURN OF THE INDIVI DUAL PARTNERS, THE ASSESSING OFFICER IS DIRECTED TO PROC EED AGAINST THE ASSESSEE IN ACCORDANCE WITH LAW. 6. AS REGARDS UNEXPLAINED EXPENDITURE OR THE DIFFER ENCE IN ACCOUNTS ON ACCOUNT OF PAYMENTS MADE TO M/S. PSTS LOGISTICS PVT. LTD./ PSTS SONS PVT.LTD., AND INFLA TED ITA NO. 505/MD S/2012 6 PURCHASES MADE FROM M/S. SREE VENKATESWARA ROCK CORPORATION / M/S. SREE VENKATESWARA GRANITES, THE ASSESSEE HAS NOT BEEN ABLE TO CLEARLY EXPLAIN THE REASONS FO R THE DIFFERENCE IN THE ACCOUNTS. THE ALLEGED RECONCILI ATION OF ACCOUNTS CANNOT BE DONE ON MERE ASSUMPTIONS. THEREF ORE, WE REMIT THIS MATTER BACK TO THE ASSESSING OFFICER TO RE- EXAMINE THE ISSUE AFRESH AFTER AFFORDING ADEQUATE OPPORTUNITY OF HEARING TO THE ASSESSEE TO EXPLAIN D IFFERENCE IN ACCOUNTS. 7. IN THE RESULT, THE APPEAL OF THE REVENUE IS ALLO WED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON FRIDAY, THE 24 TH DAY OF AUGUST, 2012 AT CHENNAI. SD/- SD/- ( N.S. SAINI ) (VIKAS AWASTHY) ACCOUNTANT MEMBER JUDICIAL MEMBER CHENNAI, DATED THE 24 TH AUGUST, 2012. SOMU COPY TO: (1) APPELLANT (4) CIT(A) (2) RESPONDENT (5) D.R. (3) CIT (6) G.F.