DCIT 6, Kanpur V. M/s R.R. Perfumers Pvt. Ltd., Kanpur

ITA 559/LKW/2011

• Counselvise Citation: [2012] 119 COUNSELVISE.COM (IT) 8174 (ITAT-LUCKNOW)
• Duration Of Justice: 10 month(s) 29 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 22-08-2012
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 02-07-2012
• Assessment Year: misc
• Appeal Filed On: 23-09-2011
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: JAGDISH
• Assessee Lawyers: ASHOK MEHROTRA
• Section: 133A; 69

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL LUCKNOW BENCH B , LUCKNOW BEFORE SHRI S UNIL KUMAR YADAV , JUDICIAL MEMBER AND SHRI MEHAR SI NGH , ACCOUNTANT MEMBER ITA NO. 559/LKW/2011 ASSESSMENT YEAR: 2005 - 06 DCIT - 6 KANPUR V. M/S R.R. PERFUMERS PVT. LTD. 24/10 7A, BIRHANA ROAD, KANPUR PAN: AAACR6838C (APPELLANT) (RESPONDENT) APPELLANT BY: SHRI. JAGDISH, CIT (DR) RESPONDENT BY: SHRI. ASHOK MEHROTRA, ADVOCATE DATE OF HEARING: 02.07.2012 DATE OF PRONOUNCEMENT: 22.08.2012 O R D E R PER S UNIL KUMAR YADAV : THIS APPEAL IS PREFERRED BY THE REVENUE AGAINST THE ORDER OF THE LD. CIT(A) ON VARIOUS GROUNDS, WHICH ARE AS UNDER: - 1 . THAT THE ORDER OF LD. CIT(A) II, KANPUR IS ERRONEOUS IN LAW AND ON FACTS WITHOUT APPRECIATING THE FACTS THAT SHRI ASHISH KAPOOR, PROPRIETOR OF M/S. NATUREL AROMA EXPORT, HAD NOT CLAIMED THE OWNERSHIP OF THE INVENTORIES DURING THE COURSE OF SURVEY AND LATER ON CLAIMED THE OWNERSHIP WITHOUT ANY DOCUMENTARY EVIDENCE, WHICH IS LIABLE TO BE REJECTED. 2 . THE LD. CIT (APPEALS) - II, KANPUR HAS ERRED IN LAW A ND ON FACTS BY IGNORING THE FACTS AND FINDINGS OF THE ASSESSING OFFICER WHICH IS : - 2 - : SUPPORTED BY SECTION 292 (C) O F THE INCOME TAX ACT 1961 . 3 . THAT THE ORDER OF LD. COMMISSIONER OF INCOME TAX (A) - I , KANPUR BEING ERRONEOUS IN LAW AND ON THE FACTS DESERVES TO BE VACATED AND THAT THE ORDER OF THE ASSESSING OFFICER BE RESTORED. 2 . THROUGH THESE GROUNDS, THE REVENUE HAS ASSAILED THE ORDER OF THE LD. CIT(A) ON THE GROUND THAT THE LD. CIT(A) HAS DELETED THE ADDITION OF ` 1,0 8 , 65,067 WITHOUT APPRECIATING THE FACT THAT DURIN G THE COURSE OF SURVEY THE PROPRIETOR OF M/S NATURAL AROMA EXPORT H AS ACCEPTED THAT THE EXCESS STOCK FOUND BELONGS TO THE ASSESSEE - COMPANY . 3 . THE FACTS IN BRIEF BORNE OUT FROM THE RECORD ARE THAT THE ASSESSEE WAS ENGAGED IN DISTILLATION OF SANDAL WOOD ON JOB WORK BASIS AND SALE OF REFUSED BURADA COLLECTED AS WASTE MATERIAL. A SURVEY OPERATION UNDER SECTION 133A OF THE INCOME - TAX ACT, 1961 (HEREINAFTER CALLED IN SHORT THE ACT') WAS CONDUCTED ON 5.8.2004 IN THE PREMISES OF THE ASSESSEE WHERE STOCK OF VARIOUS ITEMS (MATERIALS) WAS FOUND. STOCK INVENTORY WAS PREPARED DURING THE COURSE OF SURVEY WHICH WAS SIGNED BY THE DIRECTOR OF THE ASSESSEE - COMPANY AND PROPRIETOR OF M/S NATURAL AROMA EXPORT ADMITTING THAT THE STOCK MENTIONED IN THE STOCK INVENTORY BELONGS TO THE ASSESSEE - COMPANY. WITHIN FEW DAY S A PETITION WAS MOVED BEFORE THE SURVEY TEAM ON BEHALF OF THE ASSESSEE - COMPANY AND THE PROPRIETOR OF M/S NATURAL AROMA EXPORT, SHRI. ASHISH KAPOOR THAT THE ASSESSEE - COMPANY WAS ENGAGED ONLY IN JOB WORK AND THE INVENTOR Y OF THE STOCK FOUND IN THE PREMISES OF THE ASSESSEE WAS STATED BY MISTAKE TO BE THE STOCK BELONGING TO THE ASSESSEE - COMPANY WHEREAS IN FACT IT BELONGS TO M/S NATURAL AROMA EXPORT . THE ASSESSING OFFICER CALLED UPON THE ASSESSEE TO PRODUCE THE STOCK REGIST ER OF M/S NATURAL AROMA EXPORT TO SUBSTANTIATE ITS CASE. THE ASSESSEE HAS FURNISHED VARIOUS REPLIES REITERATING THE FACT THAT THE ASSESSEE - COMPANY WAS ENGAGED ONLY IN JOB WORK AND THE STOCK FOUND : - 3 - : DURING THE COURSE OF SURVEY BELONGS TO OTHER CONCERN. THE EXPLANATIONS FURNISHED ON BEHALF OF THE ASSESSEE - COMPANY WERE NOT ACCEPTED BY THE ASSESSING OFFICER AND HE TREATED THE ENTIRE STOCK INVENTORISED DURING THE COURSE OF SURVEY AS OF THE ASSESSEE AND MADE AN ADDITION OF ` 1,08,6 5 ,067 UNDER SECTION 69 OF THE ACT . 4 . THE ASSESSEE PREFERRED AN APPEAL BEFORE THE LD. CIT(A) AND REITERATED ITS CONTENTIONS. TO FORTIFY ITS CASE , AFFIDAVITS OF SHRI. ASHISH KAPOOR, PROPRIETOR OF M/S NATURAL AROMA EXPORT AND SHRI. KRISHNA NARAIN KAPOOR, FATHER OF SHRI. ASHISH KAPOOR AND D IREC TOR OF THE ASSESSEE - COMPANY REITERAT ING THE FACTS THEREIN WERE FILED BEFORE THE LD. CIT(A). IT WAS ALSO CONTENDED THROUGH THESE AFFIDAVITS THAT IN TRADE TAX ORDER IT WAS ACCEPTED THAT THE ASSESSEE - COMPANY DOES THE BUSINESS OF DISTILLATION OF SANDAL WOOD O N JOB WORK BASIS. THER E FORE, THE STOCKS AVAILABLE AT ITS PREMISES DURING THE COURSE OF SURVEY DID NOT BELONG TO THE ASSESSEE - COMPANY. BEING CONVINCED WITH THE EXPLANATIONS O F THE ASSESSEE, THE LD. CIT(A) DELETED THE ADDITION AFTER HOLDING THAT THE STOCK AVAILABLE AT THE PREMISES OF THE ASSESSEE - COMPANY DOES NOT BELONG TO IT. 5 . NOW THE REVENUE HAS PREFERRED AN APPEAL BEFORE THE TRIBUNAL AND INVITED OUR ATTENTION TO THE ORDER OF THE ASSESSING OFFICER WITH THE SUBMISSIONS THAT ONE OF THE DIRECTORS OF THE ASSES SEE - COMPANY, SHRI. ASHISH KAPOOR IS THE PROPRIETOR OF M/S NATURAL AROMA EXPORT. THE OTHER DIRECTOR OF THE ASSESSEE - COMPANY, SHRI. KRISHNA NARAIN KAPOOR IS THE FATHER OF SHRI. ASHISH KAPOOR. THEREFORE , THE BOOKS OF ACCOUNT OF M/S NATURAL AROMA EXPORT COUL D HAVE BEEN PRODUCED BEFORE THE ASSESSING OFFICER TO ESTABLISH THAT THE STOCK FOUND DURING THE COURSE OF SURVEY BELONGS TO M/S NATURAL AROMA EXPORT. EXCEPT THE SUBMISSIONS, NO EVIDENCE WAS PLACED BEFORE THE ASSESSING OFFICER. IT WAS FURTHER CONTENDED THA T THE DIRECTOR OF THE ASSESSEE - COMPANY HAS HIMSELF ADMITTED THAT CERTAIN STOCKS BELONG TO : - 4 - : THE ASSESSEE - COMPANY. IF THE ASSESSEE IS DOING ONLY JOB WORK, THEN HOW THE STOCK AVAILABLE AT ITS PREMISES BELONG TO IT. SINCE THE ITEMS ARE EXCISABLE, THE RE WOULD HAVE BEEN SOME RECORD TO MAINTAIN THE ENTRIES OF RECEIPT AND DISPATCH OF THE PRODUCT. NOTHING WAS PLACED BEFORE THE ASSESSING OFFICER. PRIMARY O NUS LAYS UPON THE ASSESSEE TO ESTABLISH THAT THE STOCK FOUND AT HIS PREMISES DURING THE COURSE OF SUR VEY BELONG S TO SOME OTHER CONCERN, BUT EXCEPT SUBMISSIONS NO EVIDENCE WAS PLACED BEFORE THE ASSESSING OFFICER. BEFORE THE LD. CIT(A), THE ASSESSEE HAS FILED AFFIDAVITS OF SHRI. ASHISH KAPOOR, DIRECTOR OF THE ASSESSEE - COMPANY AND PROPRIETOR OF M/S NATURAL AROMA EXPORT AND OF SHRI. KRISHNA NARAIN KAPOOR, THE OTHER DIRECTOR OF THE ASSESSEE - COMPANY, BUT THESE AFFIDAVITS WERE NEVER CONFRONTED TO THE ASSESSING OFFICER BY THE LD. CIT(A) AND AFTER ADMITTING THE SAME, RELIEF WAS GRANTED TO THE ASSESSEE. THEREFORE, THERE IS A VIOLATION OF PROVISIONS OF RULE 46A OF THE INCOME - TAX RULE. SINCE THE LD. CIT(A) HAS ADJUDICATED THE ISSUE AFTER ADMITTING THESE AFFIDAVITS AS EVIDENCE WITHOUT CONFRONTING THE ASSESSING OFFICER, THE ORDER PASSED BY THE LD. CIT(A) DESERVES TO B E SET ASIDE ON THIS SCORE ONLY. 6 . THE LD. COUNSEL FOR THE ASSESSEE, ON THE OTHER HAND, HAS SUBMITTED THAT DURING THE COURSE OF SURVEY BY MISTAKE INVENTORY PREPARED WERE SIGNED BY THE DIRECTOR OF THE ASSESSEE - COMPANY AND THE PROPRIETOR OF M/S NATURAL AROMA EX PORT, IN WHICH STOCKS FOUND AT THE TIME OF SURVEY WAS INVENTORISED IN THE NAME OF THE ASSESSEE - COMPANY. IMMEDIATELY WHEN THE MISTAKE WAS REALIZED, SURVEY PARTY WAS APPROACHED AND CLARIFICATION WAS GIVEN. THE ASSESSEE HAS FILED ALL THE RELEVANT EVIDENCE T O SUBSTANTIATE ITS CLAIM, BUT THE SAME WAS NOT APPRECIATED BY THE ASSESSING OFFICER. WHILE ADJUDICATING THE APPEAL , THE LD. CIT(A) APPRECIATED THE FACTS AND GRANTED RELIEF TO THE ASSESSEE. THE LD. COUNSEL FOR THE ASSESSEE HAS ALSO PLACED RELIANCE UPON TH E DECISIONS IN THE CASES OF BALDEV KRISHNA KAPOOR V. ACIT, : - 5 - : 65 TTJ (TM) 254; ACIT V. A.T. ASSOCIATES, 99 TTJ (NAG.) 74 AND ACIT V. RAVI AGRICULTURAL INDUSTRIES, 121 TTJ (AGRA) (TM) 903 IN SUPPORT OF HIS CONTENTION THAT ONCE STOCK IS ADMITTED BY SOME OTHER CONCERN, ADDITION SHOULD NOT BE MADE IN THE HANDS OF THE ASSESSEE. 7 . HAVING GONE THROUGH THE ORDERS OF THE LOWER AUTHORITIES AND THE MATERIAL AVAILABLE ON RECORD, WE FIND THAT UNDISPUTEDLY DURING THE COURSE OF SURVEY STOCK WAS INVENTORISED IN THE NAME OF THE ASSESSEE - COMPANY AND THIS INVENTORY WAS SIGNED BY THE DIRECTOR AND PROPRIETOR OF M/S NATURAL AROMA EXPORT ADMITTING THAT THE STOCK BELONG S TO THE ASSESSEE - COM PANY. BUT IMMEDIATELY WITHIN F EW DAYS, SHRI. ASHISH KAPOOR, DIRECTOR OF THE ASSESSEE - COMPANY AND PROPRIETOR OF M/S NATURAL AROMA EXPORT APPROACHED THE SURVEY PARTY WITH A PLEA THAT BY MISTAKE THE STOCK FOUND AT THE PREM I SES OF THE ASSESSEE DURING THE COURSE OF SURVEY WAS STATED TO BE OF THE ASSESSEE BUT IN FACT IT BELONGS TO M/S NATURAL AROMA EXPORT AND THE ASSESSEE - COMPANY IS ENGAGED IN DISTILLATION OF SANDAL WOOD, ETC ONLY ON JOB WORK BASIS. THOUGH THE ASSESSING OFFICER HAS ASKED THE ASSESSEE TO PRODUCE COMPLETE DETAILS AND THE STOCK REGISTER OF M/S NATURAL AROMA EXPORT TO PROVE THAT WHATEVER STOCK WAS FOUND DURING THE COURSE OF SURVEY , IT BELONG S TO M/S NATURAL AROMA EXPORT , BUT BEFORE THE ASSESSING OFFICER THE ASSESSEE AS WELL AS THE PROPRIETOR OF M/S NATURAL AROMA EXPORT FILED VARIOUS LETTERS EXPLAINING THE POSITION BUT STOCK REGISTER WAS NOT PRO DUCED FOR VERIFICATION THAT THE STOCK FOUND DURING THE COURSE OF SURVEY WAS IN FACT BELONG S TO M/S NATURAL AROMA EXPORT. THE ASSESSING OFFICER HAS MADE AN OBSERVATION IN THIS REGARD IN PARA 8 AT PAGE 6 OF HIS ORDER. BUT BEFORE THE LD. CIT(A) , THE ASSESSE E HAS FILED AFFIDAVITS OF SHRI. ASHISH KAPOOR AND SHRI. KRISHNA NARAIN KAPOOR REITERATING THE SAME FACTS THEREIN WITH REGARD TO THE OWNERSHIP OF THE STOCK INVENTORISED DURING THE COURSE OF SURVEY , BUT NOTHING IS CLEAR FROM THE ORDER O F THE LD. CIT(A) WHET HER HE HIMSELF HAS : - 6 - : CROSS - VERIFIED THE INVENTORI S ED STOCK WITH THE STOCK REGISTER OF M/S NATURAL AROMA EXPORT . THE LD. CIT(A) SIMPLY RELYING UPON THE AFFIDAVITS AND OTHER MATERIAL DELETED THE ADDITION. 8 . IT HAS BEEN EMPHATICALLY ARGUED BEFORE US ON BEHALF OF THE ASSESSEE THAT ONCE THIRD PARTY ADMITTED THE OWNERSHIP OF THE STOCK FOUND DURING THE COURSE OF SURVEY AT THE ASSESSEES PREMISES, NO ADDITION OF THE SAME CAN BE MADE IN THE HANDS OF THE ASSESSEE . B UT IN SUCH A SITUATION , ONUS PRIMARILY LAY S UPON THE ASSESSEE TO ESTABLISH THAT THE STOCK FOUND DURING THE COURSE OF SURVEY BELONG S TO SOME OTHER PERSON/CONCERN AND NOT OF THE ASSESSEE. IN THE INSTANT CASE, VARIOUS REPLIES AND AFFIDAVITS WERE FILED, BUT THE EXERCISE OF VERIFICATION HAS NOT BEEN UNDERTAKEN BY ANY OF THE LOWER AUTHORITIES. MOREOVER, AFFIDAVITS FILED BEFORE THE LD. CIT(A) FOR THE FIRST TIME WERE ALSO TAKEN INTO ACCOUNT AS EVIDENCE WITHOUT FOLLOWING THE PROPER PROCEDURE LAID DOWN UNDER RULE 46A OF THE I.T. RULE . SINCE THE FACT WITH REGARD TO THE OWNERSHIP OF THE STOCK FOUND IN THE PREMISES OF THE ASSESSEE - COMPANY DURING THE COURSE OF SURVEY , HAS NOT BEEN PROPERLY VERIFIED BY MAKING CROSS - VERIFICATION, THE ORDER OF THE LD. CIT(A) DOES NOT STAND ON THE TOUCHSTONE OF VERIFICATION. WE ARE, THEREF ORE, OF THE VIEW THAT IN SUCH A SITUATION, THE MATTER REQUIRES A FRESH VERIFICATION OR ADJUDICATION BY THE ASSESSING OFFICER. WE ACCORDINGLY SET ASIDE THE ORDER OF THE LD. CIT(A) AND RESTORE THE MATTER TO THE FILE OF THE ASSESSING OFFICER FOR RE - ADJUDICAT ION OF THE IMPUGNED ISSUE BY MAKING NECESSARY VERIFICATION OR ENQUIRY IN THIS REGARD. WE ALSO DIRECT TH E ASSESSEE TO PRODUCE THE STOCK REGISTER OF ITS SISTER CONCERN, M/S NATURAL AROMA EXPORT BEFORE THE ASSESSING OFFICER FOR VERIFICATION OF THE FACT THAT THE STOCK FOUND AT THE PREMISES OF THE ASSESSEE - COMPANY DURING THE COURSE OF SURVEY IN FACT BELONG S TO THE ASSESSEE - COMPANY OR NOT . THE ASSESSEE CANNOT TAKE A PLEA THAT THE STOCK REGISTER OF A THIRD PARTY CANNOT BE PRODUCED BEFORE THE : - 7 - : ASSESSING OFFICER , A S THE DIRECTORS OF THE ASSESSEE - COMPANY ARE PROPRIETOR OF M/S NATURAL AROMA EXPORT ARE SAME AND THEY HAVE ALL ACCESS TO THE RECORDS OF M/S NATURAL AROMA EXPORT. ACCORDINGLY, THE MATTER IS RESTORED TO THE FILE OF THE ASSESSING OFFICER FOR RE - ADJUDICATION O F THE ISSUE IN TERMS INDICATED ABOVE . 9 . IN THE RESULT, APPEAL OF THE REVENUE IS ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 22.8.2012. S D/ - S D/ - [ MEHAR SINGH ] [ S UNIL KUMAR Y ADAV ] ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 22.8.2012 JJ: 3107 COPY FORW ARDED TO: 1 . APPELLANT 2 . RESPONDENT 3 . CIT(A) 4 . CIT 5 . DR ASSISTANT REGISTRAR