ACIT, CHENNAI V. M/s. Sri Renga Enterprises, Trichy

ITA 507/CHNY/2010

• Counselvise Citation: [2011] 140 COUNSELVISE.COM (IT) 52205 (ITAT-CHENNAI)
• Duration Of Justice: 1 year(s) 8 month(s) 2 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 23-12-2011
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 22-12-2011
• Assessment Year: 2006-2007
• Appeal Filed On: 21-04-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: R VENKATESH

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL BENCH A CHENNAI BEFORE SHRI N. S. SAINI, ACCOUNTANT MEMBER AND SHRI GEORGE MATHAN, JUDICIAL MEMBER .. I.T.A. NOS. 505, 506, 507 & 1289/MDS/2010 ASSESSMENT YEARS : 2004-05, 2005-06, 2006-07 & 200 7-08 THE ASSISTANT COMMISSIONER OF INCOME-TAX, CENTRAL CIRCLE-II(2), CHENNAI. V. M/S. SRI RENGA ENTERPRISES, NO.5, SRINIVASA RESIDENCY SANKARAN PILLAI STREET, TRICHY-620 002. [PAN: AAWFS5391J] (APPELLANT) (RESPONDENT) A N D C.O. NOS. 35, 36 & 37/MDS/2010 (IN ITA NOS. 505, 506 A& 507/MDS/2010) ASSESSMENT YEARS : 2004-05, 2005-06 & 2006-07 M/S. RENGA ENTERPRISES, V . THE ASSISTANT COMMISSIONER OF NO.6, SRINIVASA RESIDENCY, INCOME-TAX, CENTRAL CIRCLE-II(2), SANKARAN PILLA ST., TRICHY-620 002. CHENNAI. (CROSS OBJECTOR) (RESPONDE NT) DEPARTMENT BY : SHRI SHAJI P. JACOB, SR. DR ASSESSEE BY : SHRI R. VENKATESH, CA DATE OF HEARING : 22-12-2011 DATE OF PRONOUNCEMENT : 23-12-2011 I.T.A. NOS 505-507 & 1289/MDS/2010 AND CO NOS. 35-37/MDS/2010 2 O R D E R PER BENCH; I.T.A. NOS. 505 TO 507/MDS/2010 ARE APPEALS FILED BY THE REVENUE AGAINST THE ORDER OF THE LEARNED CIT(APPEAL S)-II, CHENNAI IN ITA NOS. 124 TO 126/08-09 DATED 07-01-2010 FOR THE ASSESSMENT YE ARS 2004-05, 2005-06 AND 2006-07 RESPECTIVELY. I.T.A. NO. 1289/MDS/2010 I S AN APPEAL FILED BY THE REVENUE AGAINST THE ORDER OF THE LEARNED CIT(APPEALS)-II, C HENNAI IN ITA NO. 186/09-10 DATED 12-04-2010 FOR THE ASSESSMENT YEAR 2007-08. C.O. NOS. 35, 36 & 37/MDS/2010 ARE THE CROSS OBJECTIONS FILED BY THE A SSESSEE IN THE REVENUES APPEALS IN ITA NOS. 505 TO 507/MDS/2010 RESPECTIVEL Y. 2. SHRI SHAJI P. JACOB, LEARNED SR. DR REPRESENTED ON BEHALF OF THE REVENUE AND SHRI R. VENKATESH, CA REPRESENTED ON BEHALF OF THE ASSESSEE. 3. ON 22-12-2011 WHEN THE MATTER CAME UP FOR HEARIN G SHRI S. SRIDHAR, ADVOCATE REPRESENTING ON BEHALF OF SHRI R. VENKATES H, CA REQUESTED FOR AN ADJOURNMENT. THE REQUEST WAS SUBSEQUENTLY WITHDRAW N AND THE APPEALS AND THE CROSS OBJECTIONS WERE HEARD ON MERITS. 3. IT WAS SUBMITTED BY THE LEARNED DR THAT THE ONLY ISSUE IN THE APPEALS WAS AGAINST THE ACTION OF THE LEARNED CIT(A) IN DELETIN G THE ADDITION MADE BY THE ASSESSING OFFICER ON ACCOUNT OF THE INFLATION ON AC COUNT OF THE PURCHASE OF OLD BOTTLES. IT WAS THE SUBMISSION THAT THE AVERAGE CO ST PER BOTTLE WORKED OUT TO ` 1.40 PER BOTTLE IN RESPECT OF REGULAR TRADERS WHERE AS IN REGARD TO THE PURCHASES MADE THROUGH BOUGHT NOTES IT WAS NOTICED THAT THEY WERE PURCHASED INVARIABLY AT ` I.T.A. NOS 505-507 & 1289/MDS/2010 AND CO NOS. 35-37/MDS/2010 3 1.80 PER BOTTLE. IT WAS THE SUBMISSION THAT THE AS SESSEE IS ENGAGED IN THE BUSINESS OF SUPPLY OF BOTTLES TO M/S. MIDAS GOLDEN DISTILLER IES P. LTD. IT WAS THE SUBMISSION THAT THE ASSESSING OFFICER HAD CONSEQUENTLY TREATED ` 0.40 AS THE INFLATION IN THE PURCHASE PRICE OF BOTTLES AND HAD MADE AN ADDITION. IT WAS THE SUBMISSION THAT THE LEARNED CIT(A) HAD DELETED THE ADDITION BY HOLDING THAT THE GROSS PROFIT DECLARED BY THE ASSESSEE FOR THE RELEVANT ASSESSMENT YEARS WHEN COMPARED TO THE EARLIER YEARS SHOWED CONSISTENCY. IT WAS SUBMITTED BY THE LEARNE D DR THAT HE VEHEMENTLY SUPPORTED THE ORDER OF THE ASSESSING OFFICER. 4. IN REPLY, THE LEARNED AUTHORISED REPRESENTATIVE VEHEMENTLY SUPPORTED THE ORDER OF THE LEARNED CIT(A). 5. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS. A PER USAL OF THE ASSESSMENT ORDER CLEARLY SHOWS THAT THE ASSESSING OFFICER HAS RECOGNIZED THAT THE ASSESSEE IS PURCHASING BOTTLES FROM VARIOUS PERSONS AT THE PRI CES RANGING BETWEEN ` 1/- AND ` 2/-. IT WAS AFTER TAKING INTO CONSIDERATION THIS P RICE THAT THE ASSESSING OFFICER HAS ARRIVED AT THE AVERAGE PRICE OF ` 1.40 PER BOTTLE. NOW THE ASSESSING OFFICER IS ATTEMPTING TO PUT THIS AVERAGE RATE ON THE PURCHASE PRICE MADE THROUGH BOUGHT NOTES. THE PURCHASES THROUGH BOUGHT NOTES IT IS NO TICED, IS ALSO WITHIN THE ACCEPTED PARAMETER RAGE OF ` 1/- AND ` 2/- PER BOTTLE WHICH WAS THE VERY FOUNDATION FOR DERIVING THE AVERAGE OF ` 1.40 PER BOTTLE. ONCE THE PURCHASE PRICE IS WITHIN THE PARAMETER WHICH IS USED FOR ARRIVING AT THE AVERAGE, THAT PARAMETER CANNOT BE SHIFTED TO SAY THAT THE AVERAGE PRICE IS LOWER THAN THE ACTUAL PURCHASE I.T.A. NOS 505-507 & 1289/MDS/2010 AND CO NOS. 35-37/MDS/2010 4 PRICE FOR MAKING AN ADDITION. FURTHER THE FINDING OF THE LEARNED CIT(A) THAT THE GROSS PROFIT AS DECLARED BY THE ASSESSEE IS CONSIST ENT HAS NOT BEEN DISLODGED BY THE REVENUE. ANOTHER FINDING THAT IS NOTICED IN THE PR ESENT APPEALS IS THAT THE BOOKS OF ACCOUNT HAVE NOT BEEN REJECTED, I.E. THE PURCHASE A CCOUNT OF THE ASSESSEE HAS NOT BEEN REJECTED. ONCE THIS IS NOT REJECTED, TINKERIN G WITH THE SAME WOULD NOT BE PERMISSIBLE. IN THE CIRCUMSTANCES, WE ARE OF THE V IEW THAT THE FINDING OF THE LEARNED CIT(A) IS ON A RIGHT FOOTING AND DOES NOT C ALL FOR ANY INTERFERENCE. 6. THE CROSS OBJECTIONS AS FILED BY THE ASSESSEE, I T IS NOTICED, ARE IN SUPPORT OF THE ORDER OF THE LEARNED CIT(A) AND AS WE HAVE ALRE ADY CONFIRMED THE ORDER OF THE LEARNED CIT(A), THE CROSS OBJECTION AS FILED BY THE ASSESSEE STAND DISMISSED. 7. IN THE CIRCUMSTANCES, ALL THE APPEALS FILED BY T HE REVENUE AS ALSO THE CROSS OBJECTIONS FILED BY THE ASSESSEE STAND DISMISSED. 8. THE ORDER WAS PRONOUNCED IN THE COURT ON 23/12/2 011. SD/- SD/- (N. S. SAINI) (GEORGE MATHAN) ACCOUNTANT MEMBER JUDICIAL MEMBER CHENNAI, DATED THE 23 RD DECEMBER, 2011. H. COPY TO: ASSESSEE/AO/CIT (A)/CIT/D.R./GUARD FILE