M/s Vijay Chauhan & Co., Kangra V. ITO, Hamirpur

ITA 682/CHANDI/2012

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 77125 (ITAT-CHANDIGARH)
• Duration Of Justice: 1 year(s) 11 month(s) 10 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-05-2014
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: A
• Next Hearing Date: 11-03-2014
• Assessment Year: 2007-2008
• Appeal Filed On: 19-06-2012
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: RAJINDER SINGH
• Keywords: Business income; Wrong claim
• Section: 133(6); 131

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL CHANDIGARH BENCH A CHANDIGARH BEFORE SHRI T.R.SOOD ACCOUNTANT MEMBER AND MS. SUSHMA CHOWLA, JUDICIAL MEMBER ITA NO.682/CHD/2012 ASSESSMENT YEAR : 2007-08 M/S VIJAY CHAUHAN & CO., VS THE INCOME TAX OFF ICER, WINE CONTRACTOR, HAMIRPUR, C/O RAVINDER SOOD, ADVOCATE, ( H.P.). PALAMPUR, DISTT. KANGRA (H.P.). PAN : AAGFV0535K (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI ASHWANI KUMAR RESPONDENT BY : SHRI RAJINDER SINGH, DR DATE OF HEARING : 15.05.2014 DATE OF PRONOUNCEMENT : 29.05.2014 O R D E R PER SUSHMA CHOWLA, JM THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS), SHIMLA D ATED 31.01.2012 RELATING TO ASSESSMENT YEAR 2007-08 AGAI NST THE ORDER PASSED UNDER SECTION 144/145(3) OF THE ACT. 2. THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL : 1. THAT THE ORDER OF LEARNED INCOME TAX OFFICER IS AGAINST LAW AND FACTS ON THE FILE. 2. THAT THE CIT (APPEAL) IS NOT JUSTIFIED IN UPHOLDING THE ADDITION OF RS.20,14,657/- ON A CCOUNT OF PAYMENTS MADE TO M/S KEHAR WINE AGENCY, HAMIRPUR. T HE APPELLANT HAS MADE THESE PAYMENTS ON DIFFERENT DATE S TO M/S KEHAR WINE AGENCY, HAMIRPUR AND THE ACTION OF THE ASSESSING OFFICER ADDING BACK THE PAYMENT TO THE IN COME OF APPELLANT FIRM IS UNCALLED FOR AND NOT TENABLE IN T HE EYE OF LAW. 2 3. THAT THE APPELLANT PRAY THAT THE ADDITION OF RS. 20,14,657/- MADE BY THE ASSESSING OFFICE BE QUASHED IN THE INTEREST OF JUSTICE. 3. THE ONLY ISSUE RAISED BY THE ASSESSEE IN THE PRE SENT APPEAL IS AGAINST THE ADDITION OF RS. 20,14,657/- ON ACCOU NT OF PAYMENTS MADE TO M/S KEHAR WINE AGENCY. 4. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSE E WAS A WINE CONTRACTOR AND DURING THE YEAR UNDER CONSIDERATION, HAD SHOWN TOTAL SALES OF RS. 24.91 CR AND GROSS PROFIT OF RS. 15.96 CR, DECLARING GP RATE OF 64.07%. THE NET PROFIT DECLAR ED BY THE ASSESSEE WAS AT RS. 1,02,186/-. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE ASSESSING OFFICER CALLED FOR INFOR MATION UNDER SECTION 133(6) OF THE ACT FROM VARIOUS PARTIES INCL UDING THE ACET HAMIRPUR FOR LICENCE FEE PAID BY THE FIRM. THE ASS ESSING OFFICER NOTED THAT IN THE ACCOUNT OF SEVERAL PARTIES, THERE WAS A DIFFERENCE IN THE BALANCE SHOWN BY THE ASSESSEE IN ITS BOOKS O F ACCOUNT AND BALANCE AS SHOWN IN THE COPY OF ACCOUNT RECEIVED UN DER SECTION 133(6) OF THE ACT. THE EXPLANATION OF THE ASSESSEE TO THE SAME WAS THAT THE DIFFERENCE IN ALL THE ACCOUNTS WAS DUE TO THE REBATE AND DISCOUNT TO BE ALLOWED TO THE ASSESSEE FOR WHI CH DISPUTE HAD ARISEN. THE ASSESSEE CLAIMED THAT IT HAD NOT SHOWN THE ENHANCED LIABILITY WHICH WOULD HAVE AFFECTED THE PROFITS SHO WN BY THE ASSESSEE AND THEREFORE, NO ADVERSE INFERENCE SHOULD BE TAKEN. IN RESPECT OF ONE PARTY M/S KEHAR WINE AGENCY, THE BAL ANCE SHOWN IN THE ASSESSEE'S BOOKS OF ACCOUNT WAS RS. 25,39,4 47/- WHEREAS THE SAID CONCERN HAD SHOWN THE BALANCE DUE TO THE A SSESSEE AT RS.100,53,468/-. THE ASSESSING OFFICER NOTED THAT THE PERUSAL OF REBATE AND DISCOUNT OF RS. 75,14,021/- INCLUDED CAS H PAYMENTS AMOUNTING TO RS. 20,14,657/- ON DIFFERENT DATES WHI CH HAD NOT 3 BEEN SHOWN BY M/S KEHAR WINE AGENCY IN ITS COPY OF ACCOUNT. SHRI KEHAR SINGH PARTNER OF THE FIRM WAS SUMMONED U NDER SECTION 131 OF THE ACT AND HIS STATEMENT WAS RECORDED ON OA TH. IN HIS STATEMENT, HE DENIED TO HAVE RECEIVED ANY SUCH PAYM ENT FROM THE ASSESSEE. THE PARTNER OF THE ASSESSEE FIRM AND THE ACCOUNTANT WERE ASKED BY THE ASSESSING OFFICER TO FURNISH COPI ES OF RECEIPTS FOR HAVING RECEIVED THE PAYMENT BY M/S KEHAR WINE A GENCY. DESPITE SEVERAL OPPORTUNITIES BEING AFFORDED TO THE ASSESSEE, NO SUCH EVIDENCE WAS FILED AND AS THE ASSESSEE COULD N OT JUSTIFY THE PAYMENT OF RS. 20,14,657/- ALLEGED TO HAVE BEEN MAD E IN CASH TO M/S KEHAR WINE AGENCY, THE SAID VERSION OF THE ASSE SSEE WAS REJECTED AND AS THE ASSESSEE WAS FOUND TO HAVE MADE BOGUS ENTRIES IN ITS BOOKS OF ACCOUNT, RS. 20,14,657/- WAS ADDED AS INCOME OF THE ASSESSEE. SIMILARLY, OTHER ADDITIONS IN RESPEC T OF OTHER PARTIES WERE MADE BY THE ASSESSING OFFICER WHICH HAS BEEN D ELETED BY THE COMMISSIONER OF INCOME TAX (APPEALS). 5. THE COMMISSIONER OF INCOME TAX (APPEALS), HOWEVE R CONFIRMED THE ADDITION OF RS. 20,14,657/- HOLDING T O BE A BOGUS CLAIM REGARDING CASH OUTFLOW IN THE NAME OF A PART ICULAR CONCERN WITH WHOM THE ASSESSEE HAD REGULAR BUSINESS DEALING . THE PLEA OF THE ASSESSEE THAT THE PURCHASES HAVE BEEN ACCEPTED BY THE ASSESSING OFFICER AND HENCE, NO ADDITION, WAS NOT A CCEPTED BY THE COMMISSIONER OF INCOME TAX (APPEALS) AND IT WAS HEL D THAT THE ASSESSEE HAD FALSELY RECORDED THE WITHDRAWAL OF CAS H FROM ITS BOOKS OF ACCOUNT. 6. ANOTHER ASPECT NOTED BY THE COMMISSIONER OF INCO ME TAX (APPEALS) WAS THAT THERE WAS DIFFERENCE IN THE AMOU NT OF PURCHASES AS REFLECTED IN THE TRADING ACCOUNT OF TH E ASSESSEE AT 4 RS. 8,45,44,721/- AND THE PURCHASES AS REPORTED BY VARIOUS PARTIES OF RS. 8,46,57,334/-. THE COMMISSIONER OF INCOME T AX (APPEALS) HELD THAT THE FINDING OF THE ASSESSING OFFICER WAS SUFFICIENT TO LEAD TO THE CONCLUSION THAT THE ENTIRE AMOUNT OF CA SH WITHDRAWN STOOD INVESTED BY THE ASSESSEE IN STOCK OUTSIDE THE BOOKS OF ACCOUNT WHICH WERE BEING SOLD THROUGH TRANSACTIONS NOT RECORDED IN THE BOOKS OF ACCOUNT. THE COMMISSIONER OF INCOM E TAX (APPEALS) FURTHER NOTED THAT THE COMPARISON OF THE COPY OF ACCOUNT OF THE SAID PARTY IN THE BOOKS OF ACCOUNT O F THE ASSESSEE AND THE COPY OF ACCOUNT FURNISHED BY THE SAID PARTY REFLECTED THAT THE CASH PAYMENTS WERE TO THE TUNE OF RS. 21,94,657 /- AND NOT RS. 20,14,657/-. THE COMPLETE DETAILS OF THE CASH PAYM ENTS ARE TABULATED BY THE COMMISSIONER OF INCOME TAX (APPEAL S) AT PAGES 7 TO 14 OF THE APPELLATE ORDER. THE COMMISSIONER O F INCOME TAX (APPEALS) THUS, HELD THAT STOCK TO THE EXTENT OF RS . 21,94,657/- WAS AVAILABLE TO THE ASSESSEE FOR SALES OUTSIDE THE BOOKS OF ACCOUNT AND AS THE ASSESSEE HAS SHOWN GP RATE OF 64 .07%, THE SAID GP RATE WAS APPLIED TO DETERMINE THE GROSS PROFIT A T RS. 14,06,117/- EARNED OUTSIDE THE BOOKS OF ACCOUNT. T HE SAME WAS ADDED TO THE INCOME OF THE ASSESSEE AGAINST WHICH T HE ASSESSEE IS IN APPEAL BEFORE US. 7. THE LD. AR FOR THE ASSESSEE STATED THAT ADDITION HAS BEEN MADE IN THE HANDS OF THE ASSESSEE BY THE ASSESSING OFFICER ON A DIFFERENT ACCOUNT WHICH HAS BEEN UPHELD BY THE COMM ISSIONER OF INCOME TAX (APPEALS) ON ANOTHER ACCOUNT. HOWEVER, DURING THE COURSE OF HEARING, LD. AR FOR THE ASSESSEE WAS ASKE D TO EXPLAIN DISCREPANCY IN THE COPY OF ACCOUNT OF M/S KEHAR WIN E AGENCY AS APPEARING IN ITS BOOKS OF ACCOUNT AND AS COMPARED T O THE COPY OF 5 ACCOUNT FILED BY SAID CONCERN AND WHY THE PRESUMPTI ON SHOULD NOT BE TAKEN AGAINST THE ASSESSEE THAT IT HAD INDULGED IN UNACCOUNTED PURCHASES WHICH HAD RESULTED IN UNACCOUNTED STOCK B EING SOLD BY THE ASSESSEE OUTSIDE BOOKS OF ACCOUNT. THE LD. AR FOR THE ASSESSEE WAS UNABLE TO EXPLAIN THE SAME. HOWEVER, HE FAIRLY AGREED TO AN ADDITION OF RS. 10,00,000/-. THE LD. D R FOR THE REVENUE, HOWEVER PLACED RELIANCE ON THE ORDERS OF T HE AUTHORITIES BELOW. 8. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE RECORD. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE AS SESSING OFFICER COLLECTED CERTAIN INFORMATION UNDER SECTION 133(6) OF THE ACT AND FOUND THAT THE ASSESSEE IN ITS BOOKS OF ACC OUNT HAD SHOWN CERTAIN CASH PAYMENTS WHICH IN-TURN WERE NOT SHOWN IN THE COPY OF ACCOUNT OF THE ASSESSEE APPEARING IN THE BOOKS O F ACCOUNT OF THE SAID CONCERNS. THE ASSESSEE WAS CONFRONTED WIT H THE SAME AND WAS ALSO ASKED TO PRODUCE THE RECEIPTS OF CASH PAYM ENT BUT NO EXPLANATION OR ANY EVIDENCE WAS FILED BEFORE THE AS SESSING OFFICER. THE COMMISSIONER OF INCOME TAX (APPEALS) HELD THAT THE MODUS-OPERANDI ADOPTED BY THE ASSESSEE REFLECTS THA T THE SAID CASH PAYMENTS MADE BY THE ASSESSEE WHICH WERE REFLECTED IN THE COPY OF ACCOUNT OF M/S KEHAR WINE AGENCY WHICH WERE UTIL IZED TO MAKE PURCHASES OUTSIDE THE BOOKS OF ACCOUNT WHICH I N-TURN WERE SOLD OUTSIDE THE BOOKS OF ACCOUNT RESULTING IN PROF ITS OUTSIDE THE BOOKS OF ACCOUNT. THE ASSESSEE HAS FAILED TO RECON CILE THE DISCREPANCIES AND HENCE, ADDITION IS WARRANTED IN T HE HANDS OF THE ASSESSEE. HOWEVER, IN ORDER TO MEET THE INTEREST O F JUSTICE, WE RESTRICT THE ADDITION TO RS. 10,00,000/- WHICH HAS BEEN ADMITTED BY THE LD. AR FOR THE ASSESSEE DURING THE COURSE OF HEARING. 6 ACCORDINGLY, WE RESTRICT THE ADDITION IN THE HANDS OF THE ASSESSEE TO RS. 10,00,000/-. THE GROUNDS OF APPEAL RAISED BY THE ASSESSEE ARE THUS, PARTLY ALLOWED. 9. IN THE RESULT, APPEAL OF THE ASSESSEE IS PARTLY ALLOWED. . ORDER PRONOUNCED IN THE OPEN COURT ON 29 TH MAY,2014. SD/- SD/- ( T.R.SOOD) (SUSHMA CHO WLA) ACCOUNTANT MEMBER JUDICIAL ME MBER DATED: 29 TH MAY,2014 POONAM COPY TO: THE APPELLANT, THE RESPONDENT, THE CIT(A), THE CIT, DR ASSISTANT REGISTRAR ITAT,CHD.