YASH FRUIT COMPANY, Kota V. ITO, Kota

ITA 601/JPR/2013

• Counselvise Citation: [2013] 140 COUNSELVISE.COM (IT) 70119 (ITAT-JAIPUR)
• Duration Of Justice: 2 month(s) 1 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 07-08-2013
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: B
• Next Hearing Date: 16-07-2013
• Assessment Year: 2007-2008
• Appeal Filed On: 05-06-2013
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: ANITA RINES H
• Assessee Lawyers: DINESH K UMAR; DEVENDRA KUMAR
• Keywords: Opportunity of being heard

Judgement Text

1 ITA 601-13 IN THE INCOME TAX APPELLATE TRIBUNAL JAIPUR BENCH SMC JAIPUR BEFORE SHRI B.R. JAIN, ACCOUNTANT MEMBER ITA NO. 601/JP/2013 ASSTT. YEAR : 2007-08. YASH FRUIT COMPANY, VS. THE INCOME-TAX OFFICER, B-45 SHRI SAI BABA WHOLE SALE WARD 2(3), MARKET, NEW GRAIN MANDI, KOTA. KOTA. (APPELLANT) (RESPONDENT) APPELLANT BY : S/SHRI DEVENDRA KUMAR & DINES H KUMAR RESPONDENT BY : MS ANITA RINESH DATE OF HEARING : 06.08.2013. DATE OF PRONOUNCEMENT : 07.08.2013. ORDER PER B.R. JAIN, A.M. THIS APPEAL BY ASSESSEE AGAINST THE ORDER DATED 22 .03.2013 OF LD. CIT (APPEALS), KOTA RAISES THE FOLLOWING GROUNDS :- 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E, THE LD. COMMISSIONER OF INCOME TAX (APPEALS) KOTA ERRED IN CONFIRMING THE A CTION OF THE A.O. IN MAKING TRADING ADDITION OF RS. 13,848/- (ON ACCOUNT OF LOWER SALES OF RS. 11,551/- AND LOWER COMMISSION INCOME OF RS. 2,297/- ) WITHOUT REJECTING THE BOOKS OF ACCOUNT ARBITRARILY. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE, THE LD. COMMISSIONER OF INCOME TAX (APPEALS) KOTA ERRED IN CONFIRMING TH E ACTION OF THE A.O. IN CONFIRMING THE DISALLOWANCE OF RS. 2,408/- OUT O F PRINTING & STATIONARY EXPENSE. (@ 10%), RS. 15,000/- OUT OF LEGAL EXPENSE S AND RS. 21,252/- OUT OF INTEREST PAID ARBITRARILY. 2 3. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E, THE LD. COMMISSIONER OF INCOME TAX (APPEALS) KOTA ERRED IN CONFIRMING THE A CTION OF THE A.O. IN MAKING THE ADDITION OF RS. 81,500/- ON ACCOUNT OF CASH CRE DITORS HAVING OPENING BALANCES AND WHICH WERE NOT TAKEN DURING THE YEAR UNDER CONS IDERATION. 2. THE ASSESSEE A PARTNERSHIP FIRM DERIVES INCOME F ROM BUSINESS OF TRADING IN KHAJUR AND COMMISSION AGENCY (ARHAT) IN FRUITS LIKE MANGO ETC. THE ASSESSEE RETURNED INCOME OF RS. 1,39,540/- WHICH STOOD ASSESSED AT AN INCOME OF RS. 2,91,370/- BY MAKING CERTAIN ADDITIONS AND DISALLOWANCES. IN THE FIRST GROUND IN APPEAL, THE ASSESSING OFFICER MADE TRADING ADDITION OF RS. 2297/- FOR RECORDING SHORT COMMISSION INCOME AND RS. 11,551/- FOR SHORT SALES IN THE BOOKS OF ACCOUNT ON THE BASI S OF INFORMATION DATED 29.08.2009 RECEIVED IN HIS OFFICE ON 31.08.2009. BEFORE THE L D. CIT (A), THE ASSESSEE MADE WRITTEN SUBMISSIONS DATED 28.06.2012 AND SOUGHT TO RECONCIL E THE DIFFERENCE IN PAYMENT OF MANDI TAX WHICH RESULTED INTO A DIFFERENCE OF RS. 1 86/- ONLY. THE LD. CIT (A), HOWEVER, BRUSHED ASIDE THE ARGUMENTS EXCEPT FOR DELETING ADD ITION OF RS. 23/- ONLY. 3. HEARD PARTIES WITH REFERENCE TO MATERIAL ON RECO RD. THE ASSESSMENT ORDER WAS MADE BY THE ASSESSING OFFICER ON 27.08.2009 WHEREAS THE INFORMATION SUPPLIED BY THE MANDI COMMITTEE WAS OF DATED 29.08.2009. THE ASSESS ING OFFICER IN HIS ORDER HAD PLACED RELIANCE ON SUCH INFORMATION RECEIVED BY HIM ON 31.8.2009. SUCH INFORMATION WAS, HOWEVER, NOT AVAILABLE BEFORE HIM AT THE TIME WHEN HE PASSED THE ASSESSMENT ORDER ON 27.8.2009. IT, THEREFORE, COULD NOT BE A VALID R EASON OF MAKING ADDITION OF INCOME IN THE ORDER PASSED ON 27.08.2009. I, THEREFORE, SET A SIDE THE ADDITION AND ALLOW THE GROUND RAISED IN APPEAL IN THAT REGARD. 4. IN GROUND NO. 2 IN APPEAL, BRIEFLY THE FACTS ARE THAT THE ASSESSING OFFICER MADE DISALLOWANCE OF RS. 2408/- EQUAL TO 10% OF PRINTING AND STATIONARY CHARGES AS THE SAME 3 WERE NOT FULLY VOUCHED. THE ASSESSING OFFICER ALSO MADE DISALLOWANCE OF RS. 15,000/- TOWARDS LEGAL EXPENSES FOR DEFENDING THE ASSESSMENT OF ONE OF THE PARTNERS OF THE FIRM AND A DISALLOWANCE OF RS. 21,252/- OUT OF INTEREST PAYMENT FOR MAKING INTEREST FREE ADVANCE OF RS. 5,00,000/- TO SMT. MAMTA BHATIA WIFE OF SHRI CHANDRA PRAKASH BHATIA, PARTNER, FOR NON BUSINESS PURPOSES. THE LD. CIT (A ) CONFIRMED THE DISALLOWANCES. 5. I HAVE HEARD PARTIES WITH REFERENCE TO MATERIAL ON RECORD. I FIND NO ERROR IN THE ORDER OF LD. CIT (A) IN SUSTAINING THE REASONABLE D ISALLOWANCE OF RS. 2408/- OUT OF PRINTING AND STATIONARY EXPENSES AS THE SAME WERE N OT FULLY VOUCHED. AS REGARDS PAYMENT OF RS. 15,000/- TOWARDS LEGAL EXPENSES AS COUNSELS FEE FOR DEFENDING INCOME-TAX PROCEEDINGS OF ONE OF THE PARTNERS, THE APPELLANT H AS NOT BEEN ABLE TO SHOW AS TO HOW SUCH A PAYMENT IS COMMERCIALLY EXPEDIENT AND FOR THE PUR POSE OF BUSINESS OF THE ASSESSEE. I, THEREFORE, DO NOT FIND ANY ERROR IN SUSTAINING DISA LLOWANCE OF SUCH PAYMENT OF RS. 15,000/- MADE BY THE APPELLANT. IN SO FAR AS THE I NTEREST OF RS. 21,252/-, THE AUTHORITIES BELOW HAVE RECORDED A FINDING THAT APPELLANT HAS MA DE INTEREST FREE ADVANCES AGGREGATING TO RS. 5,00,000/- TO THE WIFE OF ONE OF THE PARTNER S SHRI CHANDRA PRAKASH BHATIA. THE ASSESSEES COUNSEL IN THE APPEAL PROCEEDINGS WAS AS KED TO PROVIDE DETAILS OF THE PERSONS FROM WHOM INTEREST FREE CREDITS ARE STATED TO HAVE BEEN RAISED AND CLAIMED FOR GIVING INTEREST FREE ADVANCE TO SMT. MAMTA BHATIA. HE, HO WEVER, SHOWED HIS INABILITY TO GIVE SUCH PRCISE DETAILS EXCEPT MAKING A BALD STATEMENT THAT AMOUNTS RECEIVED WERE FROM THE CREDITORS. IN THE ABSENCE OF ANY RELIABLE DETAILS AS TO WHETHER THERE WERE ANY SUCH CREDITS WHICH WERE TRADE CREDITORS OR LOAN CREDITORS AND TH E ASSESSEES PLEA REMAINING UNSUBSTANTIATED, IT CANNOT BE ACCEPTED THAT ASSESSE E HAS NOT USED BORROWED FUNDS FROM HIS CASH CREDIT ACCOUNT WITH THE BANK FOR MAKING SUCH I NTEREST FREE ADVANCE. THE MAKING OF 4 ADVANCES WAS THUS FOR NON BUSINESS PURPOSES. IN TH IS VIEW OF THE MATTER THE DISALLOWANCE SO MADE DOES NOT CALL FOR ANY INTERFERENCE. AS A R ESULT, GROUND NO. 2 IN APPEAL STANDS REJECTED. 6. IN GROUND NO. 3 IN APPEAL, THE LD. CIT (A) HAS C ONFIRMED THE ADDITION OF CASH CREDITS OF RS. 81,500/-. 7. I HAVE HEARD PARTIES WITH REFERENCE TO MATERIAL ON RECORD. ASSESSEES PLEA BEFORE THE AUTHORITIES BELOW IS THAT THAT CASH CREDIT OF R S. 81,500/- WERE OPENING BALANCE AS ON 1 ST DAY OF THE YEAR UNDER CONSIDERATION AND THE SAME H AVE BEEN BROUGHT FORWARD FROM EARLIER YEAR. THIS PLEA OF THE ASSESSEE HAS NEITHER BEEN VERIFIED NOR ANY FINDING HAS BEEN RECORDED THEREON BY EITHER OF THE AUTHORITIES BELOW . I, THEREFORE, SET ASIDE THE ADDITION AND REMIT THE MATTER BACK TO THE ASSESSING AUTHORIT Y FOR VERIFYING THE FACTS AND TAKING DECISION AFRESH IN ACCORDANCE WITH LAW AFTER ALLOWI NG REASONABLE AND EFFECTIVE OPPORTUNITY OF BEING HEARD TO THE ASSESSEE. 8. IN THE RESULT, APPEAL STANDS PARTLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 7.8.2013. SD/- ( B.R. JAIN ) ACCOUNTANT MEMBER JAIPUR, DATED : 07/08/2013. D/- COPY FORWARDED TO :- M/S. YASH FRUIT COMPANY, KOTA. THE ITO WARD 2(3), KOTA. THE CIT (A) THE CIT THE D/R GUARD FILE (ITA NO. 601/JP/2013) BY ORDER, AR ITAT JAIPUR. 5