Shri Girja Shankar Bansal, Firozabad V. ACIT, Firozabad

ITA 517/AGR/1998

• Counselvise Citation: [2010] 136 COUNSELVISE.COM (IT) 6723 (ITAT-AGRA)
• Duration Of Justice: 11 year(s) 11 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 23-07-2010
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: DB
• Next Hearing Date: 24-05-2010
• Assessment Year: 1994-1995
• Appeal Filed On: 31-07-1998
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: R C SHARMA

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AGRA BENCH, AGRA BEFORE SHRI R.K. GUPTA, JUDICIAL MEMBER AND SHRI P.K. BANSAL, ACCOUNTANT MEMBER ITA NO.517/AGR/1998 ASST. YEAR: 1994-95 SHRI GIRJA SHANKER BANSAL, VS. A.C.I.T., CENTRAL CIRCLE, AGRA. PROP., M/S. NEW BANSAL GLASS WORKS, 43, PURANI MANDI, FIROZABAD. (PAN : NOT MENTIONED) ITA NO.546/AGR/1998 ASST. YEAR: 1994-95 A.C.I.T., CENTRAL CIRCLE, AGRA. VS. SHRI GIRJA SHA NKER BANSAL, PROP., M/S. NEW BANSAL GLASS WORKS, 43, PAURANI MANDI, FIROZABAD. (PAN : NOT MENTIONED) (APPELLANTS) (RESPONDENTS) ASSESSEE BY : SHRI PANKAJ GARGH, ADVOCATE REVENUE BY : SHRI R.C. SHARMA, JR. D.R. ORDER PER P.K. BANSAL, A.M.: THESE CROSS APPEALS HAVE BEEN FILED AGAINST THE ORD ER OF THE LD. CIT(A) DATED 25.05.1998. THESE APPEALS WERE HEARD TOGETHER AND ARE BEING DIS POSED OF, FOR THE SAKE OF CONVENIENCE, BY THIS COMMON ORDER. 2. GROUND NOS.5 & 6 IN THE APPEAL FIELD BY THE ASSE SSEE WERE NOT PRESSED. THE SAME ARE DISMISSED, AS NOT PRESSED. 2 3. GROUND NOS.1 TO 3 IN ASSESSEES APPEAL AND GROUN D NO.1 IN REVENUES APPEAL RELATING TO THE ISSUE OF ADDITION MADE BY REJECTING THE BOOKS U NDER SECTION 145(1) OF THE I.T. ACT, 1961 AND APPLYING THE GP RATE @ 20.12%, WHICH WAS REDUCED BY THE LD. CIT(A) @ 14% WHILE THE ASSESSEE HAS DISCLOSED GP RATE AT 13.13%. 4. THE LD. D.R. RELIED ON THE ORDER OF THE LD. CIT( A). THE LD. A.R. SUBMITTED BEFORE US A CHART SHOWING THE GP RATE SHOWING THE ISSUE FOR ASS ESSMENT YEAS 1992-93 TO 1997-98 MADE BY THE ASSESSING OFFICER. REFERRING TO THE ASSESSMENT YEARS 1990-91 TO 1993-94 IT WAS POINTED OUT THAT THE LD. CIT(A) HAS REDUCED THE GP RATE IN BOTH THE CASES AT 12.5% AND 13%. THE DEPARTMENT HAS NOT FILED ANY APPEAL DISPUTING THE GP RATE ALTH OUGH THE APPEAL HAS BEEN FILED ON OTHER GROUNDS. THUS, IT WAS CONTENDED THAT THE GP RATE A S REDUCED BY THE LD. CIT(A) HAS BECOME FINAL. 5. WE HAVE AHEAD THE RIVAL SUBMISSIONS AND CAREFULL Y CONSIDERED THE SAME. WE HAVE GONE THROUGH THE ORDERS OF THE TAX AUTHORITIES. WE FIND THAT THE ASSESSEE HAS SHOWN THE GP @ 13.14% WHILE THE LD. CIT(A) HAS REDUCED THE GP @ 14%, AS D ETAILED IN HIS ORDER. 6. AFTER CAREFULLY CONSIDERING THE RIVAL SUBMISSION S AND GOING THROUGH THE ORDER OF THE CIT(A) AND THE FACTS OF THE CASE, IN OUR OPINION, N O INTERFERENCE IS CALLED FOR IN THE ORDER OF THE CIT(A). THE CIT(A), IN OUR VIEW, HAS RIGHTLY SUSTA INED THE ADDITION TO THE EXTENT OF RS.1,04,594/-. IN THE ASSESSMENT YEAR 1993-94 ALSO , THE ADDITION WAS SUSTAINED TO THE EXTENT OF RS.1,03,309/-. THE ASSESSEE HAS SHOWN THE GP @ 12. 49% IN ASSESSMENT YEAR 1993-94, WHICH WAS SUSTAINED BY THE LD. CIT(A) @ 13% WHILE DURING THE YEAR THE ASSESSEE HAS SHOWN THE GP @ 13.14% AND THE GP WAS SUSTAINED @ 14%. WE, THEREFO RE, CONFIRM THE ORDER OF THE CIT(A) ON 3 THIS ISSUE. THUS, GROUND NOS.1 TO 3 IN ASSESSEES APPEAL AND GROUND NO.1 IN REVENUES APPEAL STAND DISMISSED. 7. GROUND NO.2 IN REVENUES APPEAL RELATES TO THE D ELETION OF THE PROFIT ESTIMATED ON THE SALE OF COAL DUST. THE A.O. ADDED A SUM OF RS.2,26,187/ - ON ACCOUNT OF PROFIT ON THE DUST SOLD. THIS HAS BEEN WORKED OUT BY THE A.O. BY ESTIMATING THE S ALE PRICE OF THE QUANTITY SOLD AFTER ADDING 10% IN THE COST THEREOF. OUT OF THE FIGURE SO ARRI VED HE REDUCED SALE SHOWN BY THE ASSESSEE. THE DIFFERENCE CAME TO RS.2,26,187/-. THE ASSESSEE WEN T IN APPEAL BEFORE THE CIT(A) AND BEFORE THE CIT(A) THE ASSESSEE HAS GIVEN THE FIGURES FOR THE A .Y. 1993-04 & 1994-95 AND ON THAT BASIS CONTENDED THAT THE SALE OF THE COAL DUST PRICE IS A LWAYS LOWER THAN THE PURCHASE RATE OF THE COAL. COAL DUST IS THE RESIDUE OF COAL WHICH COULD NOT BE CONSUMED IN THE FACTORY AS ONLY THE BIG PIECES CAN BE CONSUMED IN THE ASSESSEES FURNACE. THE FUR NACE IN WHICH COAL IS FIRED AS A JALI FIXED AT A DISTANCE OF THREE INCHES AND THE COAL IS LESS THA N THAT SIZE CANNOT BE FED AND HAS TO BE SOLD AS SUCH. SINCE THE SMALL PIECES AND THE COAL DUST BEI NG RESIDUE AND THE RESIDUE IS ALWAYS SOLD AT LESS PRICE, QUESTION OF ANY PROFIT THEREON DOES NOT ARIS E. IN THE A.Y. 1993-94 NO SUCH ADDITION WAS MADE. THE CIT(A) DELETED THE ADDITION ON THE BASIS OF THE ORDER OF THE SISTER CONCERN IN THE CASE OF M/S. EMPESIL GLASS WORKS (P) LIMITED AND THAT OF M/S BANSAL GLASS WORKS AND M/S. O.K. GLASS INDUSTRIES. 8. WE HAVE HEARD THE RIVAL SUBMISSIONS AND CAREFULL Y CONSIDERED THE SAME. WE NOTED THAT THERE IS NO COGENT MATERIAL OR EVIDENCE BEING BROUG HT ON RECORD WHICH MAY PROVE THAT THE ASSESSEE HAS SOLD COAL DUST AT MORE THAN THE PRICE WHISH HAS BEEN SHOWN BY THE ASSESSEE. THE ASSESSEE HAS GIVEN THE AVERAGE SALE RATE OF THE COA L DUST IN THE CASES OF M/S. EMPESIL GLASS WORKS, M/S O.K. GLASS INDUSTRIES AND M/S. NEW BANSA L GLASS WORKS WHICH WERE ALSO NOT MORE 4 THAN THE RATE AT WHICH THE ASSESSEE HAS SOLD THE CO AL DUST. THE COAL DUST SALE RATE CANNOT BE COMPARED WITH THE SALE RATE OF COAL. WE DO AGREE T HAT THIS IS THE RESIDUE OF THE COAL AND WHICH CANNOT BE USED IN THE BOILER OF THE ASSESSEE. WE, THEREFORE, DO NOT FIND ANY INFIRMITY OR ILLEGALITY IN THE ORDER OF THE CIT(A) DELETING THE ADDITION MA DE ON ESTIMATE BASIS. THUS, THIS GROUND STANDS DISMISSED. 9. THE NEXT GROUND IN REVENUES APPEAL RELATES TO T HE DELETION OF THE ADDITION MADE IN VIOLATION OF SECTION 40A(2). 10. THE A.O. DISALLOWED SALARY PAID TO SHRI MANOJ B ANSAL AT RS.42,000/- AND RS.39,600/- TO SHRI ASHISH BANSAL. THE ASSESSEE WENT IN APPEAL AN D BEFORE THE CIT(A) THE ASSESSEE CONTENDED THAT THE TOTAL SALARY PAID TO THE STAFF DURING THE YEAR WAS RS.99,000/- AS AGAINST RS.1,10,400/- IN THE PRECEDING YEAR. OUT OF RS.1,10,400/- THE A.O. DISALLOWED SALARY OF RS.74,400/- PAID TO SHRI MANOJ BANSAL AND SHRI ASHISH BANSAL. THE CIT(A) RE STRICTED THE DISALLOWANCE TO RS.12,000/-. THUS, IN THE PRECEDING YEAR THE TOTAL SALARY PAID W AS RS.98,400/- WHILE DURING THE YEAR TOTAL SALARY PAID WAS RS.99,000/- ONLY. THE CIT(A), AFTE R NOTING THAT BOTH SHRI ASHISH BANSAL AND SHRI MANOJ BANSAL HAVING EXPERIENCE IN GLASS INDUST RY ALLOWED THE SALARY NOT BEING EXCESS. 11. THE LD. D.R. BEFORE US RELIED ON THE ORDER OF T HE A.O. BUT COULD NOT ADDUCE ANY EVIDENCE OR COGENT MATERIAL WHICH MAY COMPEL US TO TAKE A DI FFERENT VIEW AGAINST THE ONE TAKEN BY THE CIT(A). IT HAS NOT BEEN DENIED THAT SHRI MANOJ BAN SAL AND SHRI ASHISH BANSAL WERE HAVING EXPERIENCE IN THE GLASS INDUSTRIES. THE SALARY AT THE RATE OF RS.3,500/- PER MONTH TO SAHRI MANOJ BANSAL AND RS.3,300/- PER MONTH TO SHRI ASHISH BANS AL, IN OUR OPINION, CANNOT BE REGARDED TO BE 5 EXCESS SALARY DURING THE YEAR UNDER CONSIDERATION. WE ACCORDINGLY CONFIRM THE ORDER OF THE CIT(A) DELETING THE ADDITION OF RS.81,600/-. 12. THE NEXT GROUND RELATES THE ALLOWING OF SALARY TO THE PARTNERS IN THE HANDS OF THE HUF. 13. THE ASSESSEE HAS RECEIVED SALARY WHICH HE CLAIM ED TO BE THE INCOME OF THE HUF. THE A.O. DID NOT AGREE AND TREATED IT TO BE THE INCOME OF THE INDIVIDUAL AS THE SERVICES HAS BEEN RENDERED BY THE INDIVIDUAL AND NOT BY HUF. WHEN TH E MATTER WENT BEFORE THE CIT(A), THE CIT(A) ON THE BASIS OF THE ORDER FOR THE A.Y. 1992- 93 AND 1993-94 DECIDED THE ISSUE IN FAVOUR OF THE ASSESSEE THAT THE SAID INCOME BELONGED TO THE H UF. 14. WE HAVE HEARD THE RIVAL SUBMISSIONS AND CAREFUL LY CONSIDERED THE SAME. WE NOTED THAT THIS ISSUE IS DULY COVERED IN ASSESSEES FAVOUR AGA INST THE REVENUE AS PER PARA NOS.9, 10 & 11 OF THE ORDER OF THE ITAT, AGRA BENCH IN THE CASE OF TH E ASSESSEE ITSELF IN ITA NO.3779/DEL/1997 FOR THE A.Y. 1993-94 DATED 29.08.2003 AND THAT OF FOR T HE A.Y. 1995-96 AND 1996-97 IN ITA NOS.704 & 383/AGR/1999, COPY ON RECORD (WHERE THE H ONBLE TRIBUNAL FOLLOWING THE ORDER FOR A.Y. 1993-94 AND AFTER REPRODUCING PARA NOS.9, 10 & 11 OF THAT ORDER UNDER PARA NO.8 CONFIRMED THE ORDER OF THE CIT(A). RELEVANT FINDING OF THE T RIBUNAL IS REPRODUCED AS UNDER :- THE ISSUE INVOLVED IN GROUND NO.2 OF ITA NO.704/AG R/1998 AND THE GROUND NO.3 OF ITA NO.383/AGR/1998 IS AGAIN COMMON AND THE PART IES WERE IN AGREEMENT THAT THESE ISSUES ARE COVERED IN ASSESSEES FAVOUR AND A GAINST THE REVENUE AS PER PARAS-9, 10 & 11 OF THE ORDER OF THE I.T.A.T. AGRA BENCH IN THE CASE OF THE ASSESSEE ITSELF IN ITA NO.3779/DEL/1997 FOR A.Y. 19 93-94 DATED 29.08.2003 (COPY ON RECORD) WHERE THE HONBLE TRIBUNAL HAS HELD THE SALARY FROM M/S IMPESIL GLASS WORKS AS BELONGING TO THE H.U.F. AND NOT TO T HE ASSESSEE IN HIS INDIVIDUAL CAPACITY. THE RELEVANT PART OF THE TRIBUNAL ORDER AS CONTAINED IN PARAS-9, 10 & 11 READ AS UNDER:- 6 WE HAVE HEARD THE PARTIES AND PERUSED THE RECORDS OF THE CASE. THE HONBLE SUPREME COURT IN THE CASE OF RAJ KUMAR SINGH HUKUM CHANDJI ( SUPRA) HAS HELD THUS: IN DETERMINING WHETHER THE REMUNERATION RECEIVED B Y AN INDIVIDUAL IS THE INCOME OF THE INDIVIDUAL TO WHOM IT IS PURPORTED TO HAVE BEEN GIVEN OR THAT OF THE HINDU UNDIVIDED FAMILY OF WHICH HE IS COPARC ENER THE TEST- IS WHETHER THE REMUNERATION RECEIVED BY THE COPARCENER IN DISTANCE THOUGH NOT IN FORM WAS BUT ONE OF THE MODES OF RETURN MADE TO THE FAMILY BECAUSE OF THE INVESTMENT OF THE FAMILY FUNDS IN THE BUSINE SS OR WHETHER IT WAS COMPENSATION MADE FOR THE SERVICES RENDERED BY THE INDIVIDUAL COPARCENER. IF IT IS THE FORMER, IT IS AN INCOME OF THE HINDU UNDIVIDED FAMILY BUT IF IT IS THE LATTER THEN IT IS THE INCOM E OF THE INDIVIDUAL COPARCENER. IF THE INCOME WAS ESSENTIALLY EARNED AS A RESULT OF THE FUNDS INVESTED THE FACT THAT A COPARCENER HAS RENDERED SO ME SERVICE WOULD NOT CHANGE THE CHARACTER OF THE REMUNERATION FOR THE SE RVICES RENDERED BY A COPARCENER, THE CIRCUMSTANCE THAT HIS SERVICES WERE AVAILED OF BECAUSE OF THE REASON THAT HE WAS A MEMBER OF THE FAMILY WHICH HAD INVESTED FUNDS IN THAT BUSINESS OR THAT HE HAD OBTAINED THE QUALIFICA TION SHARES FROM OUT OF THE FAMILY FUNDS WOULD NOT MAKE THE RECEIPTS, THE I NCOME OF THE HINDU UNDIVIDED FAMILY IT IS SEEN THAT THE ASSESSEE BEING KARTA OF THE RE SPECTIVE HUF PURCHASED THE SHARE OF M/S EMPESIL GLASSWORKS (P) LTD. WITH T HE FUND OF HUF AND NO SHARE HAS BEEN PURCHASED BY THE ASSESSEE IN HIS PERSONAL CAPACITY. THE FACT THAT THE OTHER MEMBERS OF FAMILY HAVE PURCHASED SHARES OF TH E SAID COMPANY HAS NO RELEVANCE, AS THE QUESTION IS WHETHER REMUNERATION RECEIVED BY THE ASSESSEE IS THE INCOME OF HUF OR OF THE INDIVIDUAL. THE FACT THAT T HIS REMUNERATION RECEIVED BY THE ASSESSEE HAS ASSESSED IN THE HANDS OF HUF IN TH E PAST HAS NOT DISPUTE. BESIDES, THE ASSESSING OFFICER IN THE CASE OF SHRI OM PRAKASH BANSAL HUF FOR A.Y.1996-97 HAS DISCUSSED AS UNDER: AS PER CLAUSE 6(A) SHRI ONKAR NATH BANSAL IS FIRST AND PERMANENT DIRECTOR OF THE COMPANY. THE ASSESSEE HAS FILED A C OPY OF BALANCE SHEET AS MAINTAINED IN PERSONAL SET OF ACCOUNTS WITH THE RETURN AS WELL AS FURNISHED A COPY OF BANK PASS BOOK FROM WHERE THE AMOUNT HAS BEEN INVESTED IN PURCHASE OF SHARES OF THE COMPANY. THE ASSESSEE HAS PURCHASED SHARES OF M/S EMPESIL GLASS WORKS PVT. LT D. WORTH RS.1,10,000/- IN THE STATUS OF HUF. THEREFORE, IT I S OBVIOUS THAT THE INVESTMENT IS MADE OUT OF THE FUNDS OF HUF. THE REM UNERATION RECEIVED BY THE ASSESSEE FROM M/S EMPESIL GLASS WORKS PVT. LTD. AMOUNTING OF RS.48,000/- TOGETHER WITH BONUS OF RS.4,800/- WILL, THEREFORE, BE ASSESSED IN THE HANDS OF HUF, AS INCOME FROM OTHER SOURCE. 7 THUS, IN VIEW OF THE LAID DOWN BY HONBLE SUPREME COURT IN THE CASE OF RAJ KUMAR SINGH HUKUM CHANDJI (SUPRA) TO DETERMINE AS TO WHETHER THE REMUNERATION RECEIVED BY AN INDIVIDUAL IS THE INCOM E OF THE INDIVIDUAL TO WHOM IT IS PURPORTED TO BE GIVEN OR THAT OF HINDU UNDIVIDED FAMILY OF WHICH IS COPARCENER, WE HOLD THAT REMUNERATION RECEIVED BY T HE ASSESSEE FROM M/S EMPESIL GLASS WORKS (P) LTD. WAS THE INCOME OF THE HUF AND NOT OF THE INDIVIDUAL. THEREFORE, WE UPHOLD THE ORDER PASSED BY CIT(A). AFTER CAREFUL CONSIDERATION OF THE TOTALITY OF THE FACTS AND CIRCUMSTANCES OF THE CASE AND THE ORDER OF THE TRIBUNAL (SUPRA), THE ISSUE INVOLVED IN THIS GROUND IS DECIDED IN FAVOUR OF THE ASSESSEE AND AGAINST THE REVENUE. 15. RESPECTFULLY FOLLOWING THE AFORESAID ORDER, WE DISMISS THE GROUND TAKEN BY THE REVENUE. 16. IN THE RESULT, APPEAL FILED BY THE ASSESSEE AND THAT OF THE REVENUE BOTH STAND DISMISSED. (ORDER PRONOUNCED IN THE OPEN COURT ON 23.07.2010). SD/- SD/- (R.K. GUPTA) (P.K. BANSAL) JUDICIAL MEMBER ACCOUNTANT MEMBER PLACE: AGRA DATE: 23 RD JULY, 2010. PBN/* COPY OF THE ORDER FORWARDED TO: 1. APPELLANT 2. RESPONDENT BY ORDER 3. CIT CONCERNED 4. CIT (APPEALS) CONCERNED 5. DR, ITAT, AGRA BENCH, AGRA 6. GUARD FILE ASSIST ANT REGISTRAR INCOME-TAX APPELLATE TRIBUNAL, AGRA TRUE COPY