M/S PUNEET STEELS & ALLOYS PVT. LTD., Alwar V. ITO, Alwar

ITA 558/JPR/2011

• Counselvise Citation: [2011] 140 COUNSELVISE.COM (IT) 54208 (ITAT-JAIPUR)
• Duration Of Justice: 4 month(s) 18 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-10-2011
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 18-10-2011
• Assessment Year: 2005-2006
• Appeal Filed On: 03-06-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: D K MEENA
• Assessee Lawyers: NARINDRA GARG
• Keywords: Loose papers; Question of law; Assessment record
• Section: 133A; 234B

Judgement Text

1 IN THE INCOME TAX APPELLATE TRIBUNAL JAIPUR BENCH A JAIPUR (BEFORE SHRI R.K.GUPTA AND SHRI N.L.KALRA) ITA NO. 558/ JP/2011 ASSESSMENT YEAR 2005-06 PAN: AAACP 0827 F PUNEET STEELS & ALLOYS (P) LTD. V I.T.O. WARD 2 (1), ALWAR S.P 289 A&B RIICO INDUSTRIAL AREA PHASE-I, BHIWADI, ALWAR (APPELLANT ) (RESPONDENT) ASSESSEE BY : SHRI NARINDRA GARG DEPARTMENT BY: SHRI D.K. MEENA DATE OF HEARING: 18-10-2011 DATE OF PRONOUNCEMENT: 21 -10-2011 ORDER PER N.L. KALRA, AM:- THE ASSESSEE HAS FILED AN APPEAL AGAINST THE ORDE R OF THE LD. CIT(A), ALWAR DATED 9.3.2011. 2. THE FIRST GROUND OF APPEAL WAS NOT PRESSED AND T HEREFORE, THE SAME IS DISMISSED. 3. SECOND GROUND OF APPEAL IS THAT THE LD. CIT(A) H AS ERRED IN CONFIRMING THE ACTION OF THE AO VIDE WHICH THE AO H AS MADE ADDITION ON 2 THE BASIS OF UNCORROBORATED PIECE OF EVIDENCE /DOC UMENT FOUND IN THE COURSE OF SEARCH IN THIRD PARTY PREMISES. 4. THIRD GROUND OF APPEAL IS THAT THE LD. CIT(A) HA S ERRED IN LAW BY ALLOWING APPEAL PARTIALLY AND BY NOT REJECTING THE ORDER OF THE AO IN TOTALITY. 5. THE ASSESSEE COMPANY IS ENGAGED IN THE MANUFACTU RING OF STEEL INGOT. SURVEY U/S 133A WAS CONDUCTED AT THE BUSINESS PREMI SES OF SUPREME CYLINDERS (P) LTD. ON 22.11.2004. DURING THE COURS E OF SURVEY, THE DOCUMENTS WERE IMPOUNDED AND THESE DOCUMENTS SUGGES TED THAT SUPREME CYLINDERS HAS RECEIVED CONSIDERATION AND OVER AND A BOVE THE SALE INVOICES IN RESPECT OF SALE OF SCRAP TO THE ASSESSEE. AT PAGE 2 OF THE ASSESSMENT ORDER THE AO MENTIONED THE 6 INVOICES, THEIR NUMBER AND A MOUNT SHOWN IN THE BILLS. THE DOCUMENT SHOWED THAT THE SUPREME CYLIND ERS RECEIVED A SUM OF RS. 548485.05 AGAINST SIX BILLS WHILE THE TOTAL OF THE AMOUNTS MENTIONED IN THE BILLS WAS TO THE EXTENT OF RS. 3,09,493.27. TH IS INFORMATION WAS CONFRONTED TO THE ASSESSEE BUT THE ASSESSEE STATED THAT THE SCRAP WAS PURCHASED AT THE AGREED MARKET PRICE. THERE HAS BE EN NO UNDER INVOICING OF THE PURCHASE BILLS OF THE SCRAP. SUCH PURCHASE ARE RECORDED IN THE EXCISE RECORD AND THESE HAVE BEEN VERIFIED BY THE EXCISE D EPARTMENT. THE PRIMARY RESPONSIBILITY TO EXPLAIN THE DOCUMENT WAS WITH THE PARTY FROM WHOM SUCH 3 DOCUMENTS WERE IMPOUNDED. THE EXPLANATION GIVEN BY THE ASSESSEE, WAS NOT ACCEPTED AND THE AO MADE AN ADDITION OF RS. 2,38,99 0/-. 6. THE AO FROM THE DOCUMENTS IMPOUNDED IN THE CASE OF SUPREME CYLINDERS NOTICED THAT THE ASSESSEE HAS PAID 77.21% EXCESS AMOUNT OF THE INVOICES ISSUED. LOOKING TO THE TOTAL PURCHASE FROM UNIVERSAL CYLINDERS, THE AO MADE AN ADDITION OF RS. 5,27,308/- IN RESPECT OF PURCHASES FROM M/S UNIVERSAL CYLINDERS. 7. THE LD. CIT(A) AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE CONFIRMED THE ADDITION TO THE EXTENT OF RS. 2,38,99 0/- AFTER OBSERVING AS UNDER:- I HAVE PERUSED THE ASSESSMENT ORDER AS WELL AS SUB MISSIONS OF THE ASSESSEE AND CASE RELIED UPON, THE AO HAS CATEGORIC ALLY MENTIONED THE DIFFERENCE IN RATES THAT ASSESSEE HAD UNDER INVOICE D THE PURCHASE BY 2,38,990/- ON VERIFICATION OF THE ASSESSMENT OF M/S SUPREME CYLINDERS (P) LTD. THE ASSESSEE HAD MADE DISCLOSURE UNDER THIS HEAD TOTAL RS. 10,67,274/- IN ASSESSMENT YEAR 2005-06. IT IS EVIDENT FROM THE ASSESSMENT RECORD OF THE SELLER THAT THERE WAS A UNDER INVOICE OF PURCHASE OF SCRAP. THEREFORE, ADDITION OF RS. 2,38 ,990/- IS CONFIRMED BUT THE AO HAD TAKEN THIS FIGURE AT RS. 3,09,493/-. THE AO IS DIRECTED TO VERIFY THIS FIGURE AND TAKE CORRECT FIGURE IN AD DITION. IN CASE OF UNIVERSAL CYLINDERS THE AO HAD MADE AN A DDITION ONLY ON PRESUMPTION. THERE IS NO EVIDENCE ON RECORD WHICH SHOWS THAT ASSESSEE HAD CONCEALED THE INCOME BY UNDER INVOICIN G THE PURCHASE AND MAKING PAYMENT OUTSIDE THE BOOKS. THEREFORE, A DDITION OF RS. 5,27,308/- IS DELETED. 8. WE HAVE HEARD BOTH THE PARTIES. THE LD. AR HAS FILED A COPY OF THE DECISION OF HON'BLE JURISDICTIONAL HIGH COURT IN TH E CASE OF CIT, JODHPUR V. 4 SHRI S.C SETHI. THE QUESTION OF LAW RAISED BEFORE THE HON'BLE JURISDICTIONAL HIGH COURT WAS AS UNDER:- WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF T HE CASE AND IN LAW, THE LD TRIBUNAL WAS JUSTIFIED IN UPHOLDING DELETION OF RS. 4,67,200/- FOLLOWING ITS EARLIER ORDER FOR ASSESSMENT YEAR 199 4-95 HOLDING THAT NO ADDITION CAN BE MADE ON THE BASIS OF UNCORROBORATED PIECE OF EVIDENCE/DOCUMENT FOUND IN THE COURSE OF SEARCH IN THIRD PARTY, IGNORING THE FACT THAT THE RECORDS PERTAINING TO TH E ASSESSEE WERE BEING KEPT BY THE PERSON WHERE THE SEARCH WAS CONDU CTED AND THE LOOSE PAPERS FOUND DURING THE COURSE OF SEARCH CLEA RLY INDICATE THAT NOT ONLY THE ASSESSEE WAS GETTING ADDITIONAL QUARTE RLY PAYMENTS AND PERKS OVER AND ABOVE HIS SALARY, BUT THE ASSESSEE W AS ALSO HIMSELF DEALING WITH THOSE PAYMENTS AND PERKS ON BEHALF OF THE EMPLOYER COMPANY? 9. THE HON'BLE JURISDICTIONAL HIGH COURT HAS REFERR ED TO THE FINDING RECORDED BY THE LD. CIT(A) IN WHICH THE LD. CIT(A) HELD THAT THERE WAS PROCEDURAL ERROR BECAUSE THE ASSESSEE WAS NOT GIVEN THE OPPORTUNITY TO CROSS- EXAMINATION BEFORE LOOSE PAPERS SEIZED FROM THE RES IDENCE WERE USED AGAINST HIM. THE HON'BLE JURISDICTIONAL HIGH COURT OBSERVE D THAT THE FINDINGS RECORDED BY THE TRIBUNAL ARE THE FINDINGS OF FACT A ND HENCE THE APPEAL OF THE REVENUE WAS DISMISSED. THE PRESUMPTION U/S 292C OF THE ACT SAYS THAT THE BOOKS OF ACCOUNTS OR DOCUMENTS FOUND IN THE POSSESS ION OR CONTROL OF ANY PERSON IS TO BE CONSIDERED AS BELONG OR BELONGING T O SUCH PERSON. THE CONTENTS OF SUCH BOOKS OF ACCOUNTS AND DOCUMENTS AR E TO BE CONSIDERED AS TRUE. THUS THIS PRESUMPTION IS IN RESPECT OF THE A SSESSEE IN WHOSE POSSESSION SUCH DOCUMENTS HAVE BEEN FOUND. THE HON 'BLE JURISDICTIONAL 5 HIGH COURT IN THE CASE OF CIT V. SMS INVESTMENT COR PORATION (P) LTD., 207 ITR 364 (RAJ) HELD THAT PRESUMPTION U/S 132(4A) (PROVISION SIMILAR TO SECTION 292C) IS REBUTABLE. THE ASSESSEE CATEGORIC ALLY STATED THAT IT HAS NOT PAID CONSIDERATION OVER AND ABOVE THE INVOICE PRICE . THE ADDITION COULD NOT HAVE BEEN MADE WITHOUT CONFRONTING THE ASSESSEE ABO UT THE EVIDENCES AND ALLOWING HIM TO CROSS-EXAMINE THE PERSON WHO HAS MA DE ENTRIES IN THE DOCUMENTS IN THE CASE OF SUPREME CYLINDERS. THERE H AS BEEN NO CORROBORATIVE EVIDENCE IN RESPECT OF THE PAYMENT BY THE ASSESSEE TO SUPREME CYLINDERS. 10. HON'BLE APEX COURT IN THE CASE OF STATE OF KERA LA V. K.T. SHADULI YUSSUF, 1977 S.C.R (3) 233 HELD THAT THE ASSESSMEN T AS VITIATED IN THE CASE THE ACCOUNTS OF THE ASSESSEE ARE REJECTED ON THE B ASIS OF ENTRIES IN THIRD PARTY ACCOUNTS. THE ADMISSION OF ANOTHER CANNOT BE READ AS EVIDENCE AGAINST THIRD PARTY UNLESS THERE IS CORROBORATIVE EVIDENCE ON RECORD. UNDER SIMILAR CIRCUMSTANCES, THE ADDITION WAS DELETED BY HON'BLE GUJARAT HIGH COURT IN THE CASE OF KRISHNA TEXTILES V CIT, 220 CTR 568. I N THE CASE BEFORE HON'BLE GUJARAT HIGH COURT, THERE WERE ENTRIES IN T HE NAME OF ASSESSEE IN THE REGULAR BOOKS OF GMDC. ASSESSEE DENIED TO HAVE REM ITTED ANY SUCH AMOUNT TO GMDC. THE HON'BLE HIGH COURT HELD THAT THE BURD EN LIES ON THE DEPARTMENT TO ESTABLISH THAT AMOUNT CREDITED BELONG ED TO THE ASSESSEE. THE HON'BLE GUJARAT HIGH COURT HAS ALSO REFERRED TO THE DECISION OF HON'BLE APEX COURT IN THE CASE OF KISHAN CHAND CHELLARAM V. CIT, 125 ITR 713. IN THIS CASE THE HON'BLE APEX COURT HELD THAT THE O NUS WAS ON THE REVENUE TO ESTABLISH BELONGED TO THE ASSESSEE BY BRINGING PROP ER EVIDENCE ON RECORD. 6 THE ASSESSEE CANNOT BE EXPECTED TO CALL THE PERSONS TO HELP THE DEPARTMENT TO DISCHARGE THE BURDEN. WE, THEREFORE, FEEL THAT THE LD. CIT(A) WAS NOT JUSTIFIED IN CONFIRMING THE ADDITION OF RS. 2,38,99 0/-. THE ADDITION CONFIRMED BY THE LD. CIT(A) IS DELETED. 11. THE LAST GROUND OF APPEAL IS THAT THE AO HAS ER RED IN LEVYING INTEREST U/S 234B & 234C OF THE ACT. 12. THE CHARGEABILITY OF INTEREST IS MANDATORY AND THE ASSESSEE WILL GET THE CONSEQUENTIAL RELIEF. 13. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS AL LOWED. THE ORDER IS PRONOUNCED IN THE OPEN COURT ON 21 -10-2011 SD/- SD/- (R.K. GUPTA) (N.L. KALRA) JUDICIAL MEMBER ACCOUNTANT MEMBER JAIPUR DATED: 21 /10/2011 SURESH COPY FORWARDED TO :- 1 M/S PUNEET STEELS & ALLOYS (P) LTD. 2 I.T.O. WARD 2(1), ALWAR 3 THE LD. CIT 4 THE LD. CIT(A) 5 THE LD.DR 6 THE GUARD FILE (ITA NO.39/JP /11) A.R, ITAT, JAIPUR 7 8 9 10 11 12