SUPER TRADERS, MUMBAI V. ITO 22(2)3, MUMBAI

ITA 6495/MUM/2014

• Counselvise Citation: 649519914 RSA 2014
• Duration Of Justice: 9 month(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 10-08-2015
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 2008-2009
• Appeal Filed On: 22-10-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL

Judgement Text

, - IN THE INCOME TAX APPELLATE TRIBUNAL SMC BENCH, MUMBAI BEFORE S/SHRI B.R.BASKARAN (ACCOUNTANT MEMBER ) . . , ./ I.T.A. NO . 6495 / MUM/20 14 ( / ASSESSMENT YEAR : 20 0 8 - 09 ) M/S SUPER TRADERS, STALL NO.11, SHREE PADAM PRABHU, CO - O P. HOUSING SOCIETY LTD., SHREYAS CINEMA, LBS MARG, GHATKOPAR (W), MUMBAI - 400086 / VS. INCOME TAX OFFICER 22(2) (3), MUMBAI ( / APPELLANT ) .. ( / RESPONDENT ) ./ ./PAN/GIR NO. : AAQFS3085F / APPELLANT BY SHRI LAL PRIBHDAS HIRANANDANI / RSPONDENT BY SHRI MAURYA PRATAP / DATE OF HEARING : 10.8. 201 5 / DATE OF PRONOUNCEMENT : 10. 8. 201 5 / O R D E R PER B ENCH: THE ASSESSEE HAS FILED THIS APPEAL CHALLENGING THE ORDER DATED 27.6.2014 PASSED BY THE LD.CIT(A) - 7 , MUMBAI , CONFIRMING THE DISALLOWANCE OF PU RCHASES TO THE TUNE OF RS.4,27,283/ - . 2. I HEARD THE PARTIES AND PERUSED THE RECORD. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE AO NOTICED THAT THE FOLLOWING PURCHASE S WERE MADE BY THE ASSESSEE WERE RELATED TO THE IMMEDIATELY PRECEDING YEAR , SINCE THE DATES SHOWN IN THE PURCHASE BILLS PERTAINED TO THE PRECEDING YEAR. : ITA NO. 6495 / MUM/20 14 2 A) KOLHAPUR SUGAR MILLS LTD RS.2,32,577/ - DATED 30/3/2007 AND B) DEOKAR DISTRILLERIES RS.194,806/ - DATED 31/3/2007 HENCE THE AO TOOK THE VIEW THAT , UNDER MERCANTILE SY STEM OF ACCOUNTING , THESE PURCHASES SHOULD HAVE BEEN ACCOUNTED FOR IN THE IMMEDIATELY PRECEDING YEAR. ACCORDINGLY HE HELD THAT THESE PURCHASES CANNOT BE TAKEN AS THE PURCHASES PERTAINING TO THE YEAR UNDER CONSIDERATION AND ACCORDINGLY DISALLOWED THE SAME. 3. THE LD. CIT(A) ALSO TOOK THE VIEW THAT , UNDER THE MERCANTILE SYSTEM OF ACCOUNTING , THE EXPENDITURE RELATING TO A PARTICULAR YEAR ALONE CAN BE ALLOWED IN THAT YEAR. ACCO RDINGLY, HE CONFIRMED THE DISALLOW ANCE MADE BY THE AO . 4 . THE LD. AR SUBMITTED T HAT , THOUGH THE PURCHASE BILLS WERE D AT ED AS 30.3.2007 AND 31.3.2007, THE ASSESSEE HAS RECEIVED THE GOODS ONLY ON 1.4.2007 AND 2.4.2007 RESPECTIVELY AND THESE PURCHASE S HAVE BEEN ACCOUNTED FOR IN THE MONTH OF APRIL 2007. THE LD. AR FURTHER SUBMITTED THAT T HE ASSESSEE COULD NOT ACCOUNT FOR THESE BILLS WITHOUT RECEIPT OF GOODS PHYSICALLY IN THE MONTH OF MARCH 2007. ACCORDINGLY , THE LD. AR FURTHER SUBMITTED THAT THE SE PURCHASES SHOULD BE CONSIDERED AS THE EXPENDITURE OF THE YEAR UNDER CONSIDERATION SINCE THE ASSESSEE HAS RECEIVED THE GOODS ONLY DURING THE INSTANT YEAR. HE FURTHER SUBMITTED THAT THE PROCEDURE FOLLOWED BY THE ASSESSEE FOR ACCOUNTING THE PURCHASES IS IN ACCORDANCE WITH THE MERCANTILE SYSTEM OF ACCOUNT. ACCORDINGLY, HE SUBMITTED THAT THESE PURCH ASE S COULD NOT BE TAKEN AS EXPENDITURE RELATED TO THE EARLIER YEAR. 5 . ON THE CONTRARY, THE LD DR SUPPORTED THE ORDER OF T HE LD. CIT(A). ITA NO. 6495 / MUM/20 14 3 6 . HAVING HEARD THE RIVAL CONTENTIONS OF THE PARTIES , I AGREE WITH THE CONTENTION S OF THE LD. AR THA T THE PROCEDURE FOLLOWED BY THE ASSESSEE TO ACCOUNT FOR THE BILLS , ONLY AFTER RECEIPT OF GOODS PHYSICALLY CA NNO T BE FOUND FAULT WITH . I N MY VIEW ALSO, THE SAID PROCEDURE IS IN ACCORDANCE WITH MERCANTILE SYSTEM OF ACCOUNTING. IF THE VIEW TAKEN BY THE TAX AUTHORITIES IS ACCEPTED FOR A MOMENT, THE ACCOUNTING OF PURCHASE BILLS WITHOUT RECEIVING GOODS WOULD CREATE AN ANOMALY, SINCE THE CORRESPONDING GOODS WILL NOT BE PHYSICALLY AVAILABLE AND HENCE STOCK BOOKS CANNOT BE UPDATED. IN THAT CASE, THE QUANTITY DETAILS AS PER PURC HASE REGISTER AND STOCK REGISTER WOULD NOT TALLY AND THE SAME WOULD CREATE GREAT ANOMALY. SINCE, THE ASSESSEE HAS RECEIVED THE GOODS IN THE MONTH OF APRIL 2007 , I N VIEW , THE ASSESSEE IS JUSTIFIED IN ACCOUNTING FOR THE RELEVANT BILLS IN THE MONTH OF APRIL , 2007. IN VIEW OF THE ABOVE , I AM NOT IN AGREE MENT WITH THE VIEW EXPRESSED BY LD.CIT(A) . A CCORDINGLY I SET ASIDE THE ORDER OF THE LD. CIT(A) ON THIS ISSUE AND DIRECT THE AO TO DELETE THE IMPUGNED ADDITION. 7 . IN THE RESULT , THE APPEAL OF THE ASSESS EE IS ALLOWED. PRONOUNCED ACCORDINGLY ON 10 TH AUGUST 2015. 10 TH AUGUST, 2015 SD ( . . / B.R. BASKARAN) / ACCOUNTANT MEMBER MUMBAI: 10TH AUG , 2015 . . . ./ SRL , SR. PS / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. ITA NO. 6495 / MUM/20 14 4 3. ( ) / THE CIT(A) - CONCERNED 4. / CIT CONCERNED 5. , , / DR, ITAT, MUMBAI CONCERNED 6. / GUARD FILE. / BY ORDER, TRUE COPY (ASSTT . REGISTRAR) , /ITAT, MUMBAI