Vaishnavi Agro, Deoghar V. ITO, Deoghar

ITA 65/RAN/2013

• Counselvise Citation: [2015] 134 COUNSELVISE.COM (IT) 0389 (ITAT-RANCHI)
• Duration Of Justice: 2 year(s) 4 month(s) 22 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 04-11-2015
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: DB
• Assessment Year: 2004-2005
• Appeal Filed On: 12-06-2013
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: CHOUDHARY ORAON
• Assessee Lawyers: K N PRASAD
• Section: 80IB; 133(6)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL RANCHI CIRCUIT BENCH, RANCHI BEFORE SHRI N.S. SAINI, HONBLE ACCOUNTANT MEMBER AND SHRI GEORGE MATHAN, HONBLE JUDICIAL MEMBER ITA NO. 65 & 66/RAN/2013 (ASST. YEAR : 2009-10) VAISHNAVI AGRO, VILL BANDHA, DIST. DEOGHAR. VS. ITO, WARD-3(1), DEOGHAR. PAN NO. AAAEFV 0289 J (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI K.N. PRASAD ADV. DEPARTMENT BY : SHRI CHOUDHARY ORAON - DR DATE OF HEARING : 04/11/2015. DATE OF PRONOUNCEMENT : 04/11/2015. O R D E R PER N.S. SAINI, ACCOUNTANT MEMBER THESE ARE THE APPEALS FILED BY THE ASSESSEE AGAINS T THE CONSOLIDATED ORDER OF COMMISSIONER OF INCOME TAX (A PPEALS), DHANBAD, DATED 14/03/2013 FOR THE ASSESSMENT YEARS 2004-05 & 2005-06. 2. THE SOLE GROUND OF APPEAL TAKEN BY THE ASSESSEE I N BOTH THESE APPEALS IS THAT THE COMMISSIONER OF INCOME TAX (APP EALS) ERRED IN CONFIRMING THE ACTION OF THE ASSESSING OFFICER IN T REATING THE SALES OF RS.11,04,165/- AS BOGUS AND TREATING THE PROFIT EAR NED OF RS.2,57,824/- AS INCOME FROM OTHER SOURCES IN THE ASSESSMENT YEAR 2004-05. SIMILARLY, IN THE ASSESSMENT YEAR 2005-06, COMMISSI ONER OF INCOME TAX (APPEALS) ERRED IN TREATING THE SALES OF RS.10, 37,820/- AS BOGUS SALES AND TREATING THE PROFIT EARNED THEREON AMOUNT ING TO RS. 2,71,909/- AS INCOME FROM OTHER SOURCES. 2 ITA NOS. 65 & 66/RAN/2013 3 . WE HAVE HEARD RIVAL SUBMISSIONS AND PERUSED THE O RDERS OF THE LOWER AUTHORITIES AND THE MATERIALS AVAILABLE ON RE CORD. IN THE INSTANT CASE, THE ASSESSING OFFICER OBSERVED THAT THE ASSES SEE HAS SET UP A UNIT FOR PRODUCTION OF POULTRY FEED, WHICH IS ELIGIBLE F OR 100% DEDUCTION UNDER SECTION 80IB OF THE ACT. THE ASSESSEE DISCLO SED NET PROFIT OF RS.67,47,700/- @ 24.14% IN ASSESSMENT YEAR 2004-05 AND RS.80,77,154/- @ 23.15% IN ASSESSMENT YEAR 2005-06. THE ASSESSING OFFICER OBTAINED ADDRESSES OF PERSONS TO WHOM SALES WERE SHOWN AND IT WAS FOUND THAT IN ASSESSMENT YEAR 2004-05, TWO CUST OMERS NAMELY M/S. S.M. ENTERPRISES, DHANBAD AND M/S. SHYAM AGRO (P) LTD, HAZIPUR STATED THAT THEY DID NOT HAVE ANY TRANSACTIONS WITH THE ASSESSEE IN ASSESSMENT YEAR 2004-05. SIMILARLY, IN ASSESSMENT YEAR 2005-06, NOTICES UNDER SECTION 133(6) OF THE ACT ISSUED TO T WO PERSONS NAMELY M/S. KUNDAN ENTERPRISES, JHARIA AND M/S. UDAI POULT RY FEED, SULTANGANJ RETURNED BACK UN-SERVED WITH THE REMARKS NOT KNOWN AND NO TRACE. ON BEING ASKED TO SHOW-CAUSE WHY THE CORRESPONDING SALES SHOULD NOT BE TREATED AS BOGUS SALES, THE ASSESSEE SUBMITTED I N ASSESSMENT YEAR 2004-05 THAT IT DID NOT KNOW THE REASONS WHY THE PA RTIES WERE DENYING THE TRANSACTIONS. IN ASSESSMENT YEAR 2005-06, ITS REPLY WAS THAT THE ENQUIRY WAS BEING CONDUCTED AFTER TWO YEARS AND THI S MIGHT BE THE REASON THAT THESE PARTIES ARE UNTRACEABLE. THEREFO RE, ASSESSING OFFICER TREATED IT AS BOGUS SALES AND THE PROFIT EARNED THE REON OF RS.2,57,824/- IN THE ASSESSMENT YEAR 2004-05 AND RS. 2,71,909/- I N THE ASSESSMENT YEAR 2005-06 AS INCOME FROM OTHER SOURCES. 4. ON APPEAL, COMMISSIONER OF INCOME TAX (APPEALS) OB SERVED THAT THE PAYMENTS FROM THE PURPORTED SALES HAVE BEEN SHO WN IN CASH IN AMOUNTS NOT EXCEEDING RS. 20,000/- OR THE SAME HAVE BEEN SHOWN BY DEMAND DRAFTS WHICH HAVE BEEN PURCHASED BEARING CON SECUTIVE SERIAL NUMBERS OF AMOUNTS LESS THAN RS. 50,000/- WHICH IS THE MAXIMUM PERMISSIBLE AMOUNT FOR ISSUING DEMAND DRAFT AGAINST CASH. THIS FURTHER 3 ITA NOS. 65 & 66/RAN/2013 FORTIFIES THE FINDING THAT THE ASSESSEE HAS FABRICA TED SALES AND THE ABOVE DEMAND DRAFTS HAVE BEEN PURCHASED AGAINST CASH BY I TS OWN EMPLOYEES TO INTRODUCE UNACCOUNTED CASH AS BOGUS SALES AND TH US INFLATE NET PROFIT TO A UNREALISTIC 24.14% IN ASSESSMENT YEAR 2004-05 AND 23.15% IN ASSESSMENT YEAR 2005-06, SO THAT EXCESSIVE DEDUCTIO N @ 100% UNDER SECTION 80IB OF THE ACT CAN BE CLAIMED IN THESE TWO ASSESSMENT YEARS. THEREFORE, HE CONFIRMED THE ACTION OF THE ASSESSING OFFICER. 5. BEFORE US, THE ASSESSING OFFICER REITERATED THE SU BMISSIONS MADE BEFORE THE LOWER AUTHORITIES. 6 . DEPARTMENTAL REPRESENTATIVE SUPPORTED THE ORDERS OF THE LOWER AUTHORITIES. 7 . WE FIND THAT ON ENQUIRIES MADE FROM THE PERSONS T O WHOM THE ASSESSEE HAD SHOWN THE SALES FROM THE ASSESSMENT YE AR 2004-05 & 2005-06, THE ASSESSING OFFICER OBSERVED IN THE ASSE SSMENT YEAR 2004- 05, THE TWO PARTIES TO WHOM THE ASSESSEE HAD SHOWN SALES OF RS.11,04,165/- DENIED TO HAVE VARIED INTO ANY TRANS ACTIONS WITH THE ASSESSEE. IN THE ASSESSMENT YEAR 2005-06, THE NOTI CES ISSUED UNDER SECTION 133(6) OF THE ACT TO THE TWO PARTIES WERE R ETURNED BACK BY THE POSTAL AUTHORITIES. ON SHOW-CAUSED, THE ASSESSEE C OULD NOT SUBMIT ANY SATISFACTORY EXPLANATION BEFORE THE ASSESSING OFFIC ER. THEREFORE, THE ASSESSING OFFICER TREATED THE NET PROFIT EARNED ON THESE SALES AMOUNTING TO RS. 2,57,824/- IN THE ASSESSMENT YEAR 2004-05 AN D NET PROFIT OF RS.2,71,909/- IN THE ASSESSMENT YEAR 2005-06 AS INC OME FROM OTHER SOURCES AND DENIED DEDUCTION UNDER SECTION 80IB ON THE SAME. 8 . ON APPEAL, COMMISSIONER OF INCOME TAX (APPEALS) H AS GIVEN A FINDING THAT THE PAYMENTS SHOWN BY THE ASSESSEE ON ACCOUNT OF SALES LESS THAN RS. 20,000/- ARE SHOWN TO HAVE BEEN RECEI VED IN CASH. HE ALSO OBSERVED THAT IN SOME CASES, THE PAYMENTS HAVE BEEN SHOWN AS 4 ITA NOS. 65 & 66/RAN/2013 RECEIVED BY BANK DRAFT OF RS. LESS THAN 50,000/- PU RCHASED IN CASH BY THE EMPLOYEES OF THE ASSESSEE. DURING THE COURSE O F HEARING BEFORE US, THE AUTHORIZED REPRESENTATIVE OF THE ASSESSEE COULD NOT CONTROVERT OF THIS FINDING OF THE COMMISSIONER OF INCOME TAX (APP EALS). THEREFORE, WE DO NOT FIND ANY GOOD REASON TO INTERFERE WITH TH E ORDERS OF THE LOWER AUTHORITIES WHICH ARE CONFIRMED AND THE GROUND OF A PPEAL OF THE ASSESSEE IS DISMISSED. 9. IN THE RESULT, APPEALS OF THE ASSESSEE ARE DISMISSE D FOR BOTH THE YEARS UNDER CONSIDERATION. ORDER PRONOUNCED IN THE COURT AT THE CLOSE OF THE H EARING ON WEDNESDAY, THE 4 TH DAY OF NOVEMBER, 2015 AT RANCHI. SD/- SD/- (GEORGE MATHAN) (N.S.SAINI) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED : 04 TH NOVEMBER, 2015. VR/- COPY TO: 1. THE ASSESSEE. 2. THE REVENUE. 3. THE CIT 4. THE CIT(A) 5. THE D.R. 6. GUARD FILE. BY ORDER ASSISTANT REGISTRAR I.T.A.T., RANCHI 5 ITA NOS. 65 & 66/RAN/2013 DATE INITIAL ORIGINAL DICTATION PAD & DRAFT ARE ENCLOSED IN THE FILE 1. DRAFT DICTATED ON 04/11/2015 SR.PS 2. DRAFT PLACED BEFORE AUTHOR 05/11/2015 SR.PS 3. DRAFT PROPOSED & PLACED BEFORE THE SECOND MEMBER 05/11/2015 JM/AM 4. DRAFT DISCUSSED/APPROVED BY SECOND MEMBER 05/11/2015 JM/AM 5. APPROVED DRAFT COMES TO THE SR.PS/PS 05/11/2015 SR.PS 6. DATE OF PRONOUNCEMENT 04/11/2015 SR.PS 7. FILE SENT TO THE BENCH CLERK 05/11/2015 SR.PS 8. DATE ON WHICH FILE GOES TO THE HEAD CLERK 9. DATE OF DISPATCH OF ORDER