Subir Kumar Roy, Kolkata V. ITO, Ward - 55(1), Kolkata, Kolkata

ITA 684/KOL/2018

• Counselvise Citation: [2018] 119 COUNSELVISE.COM (IT) 2224 (ITAT-KOLKATA)
• Duration Of Justice: 7 month(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 16-11-2018
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: SMC
• Assessment Year: 2009-2010
• Appeal Filed On: 12-04-2018
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: ROBIN CHUAUDHURY
• Keywords: Assessment record
• Section: 142(1); 144

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL KOLKATA BENCH SMC KOLKATA BEFORE SHRI S.S, GODARA, JUDICIAL MEMBER ITA NO.684/KOL/2018 ASSESSMENT YEAR:2009-10 SUBIR KUMAR ROY ROY AGENCY 284, D.H. ROAD, BEHALA, KOLKATA-700 034 [ PAN NO.AFPPR 0232M ] / V/S . INCOME TAX OFFICER, WARD-55(1), 54/1, RAFI AHMED KIDWAI ROAD, KOLKATA-16 /APPELLANT .. /RESPONDENT /BY APPELLANT NONE /BY RESPONDENT SHRI ROBIN CHUAUDHURY, ADDL. CIT-DR /DATE OF HEARING 05-11-2018 /DATE OF PRONOUNCEMENT 16-11-2018 /O R D E R THIS ASSESSEES APPEAL FOR ASSESSMENT YEAR 2009-10 , ARISES AGAINST THE COMMISSIONER OF INCOME-TAX (APPEALS)-6, KOLKATAS O RDER DATED 10.11.2015 PASSED IN CASE NO.609/CIT(A)-6/KOL/2011-12 INVOLVING PROCE EDINGS U/S. 144 OF THE INCOME TAX ACT, 1961; IN SHORT THE ACT. CASE CALLED TWICE NONE APPEARS AT ASSESSEES BEHEST . THE REGISTRY HAS ALREADY SENT THE ASSESSEE AN RPD NOTICE DATED 19.07.2018 FO R TODAYS HEARING. WE THEREFORE PROCEED EX PARTE AGAINST THE ASSESSEE. TH E CASE IS NOW TAKEN UP ADJUDICATION ON MERIT. 2. I NOTICE AT THE OUTSET THAT ASSESSEES INSTANT A PPEAL SUFFERS FROM 811 DAYS DELAY IN FILING CONDONATION DELAY PLACED ON RECORD. THE N ECESSARY CONDONATION STATING REASONS THEREOF IN DETAILED TO BE COMMUNICATION GAP AND MISTAKE ON PART OF HIS AUDITOR STATING IN NOT PURSUING THE MATTER WITH DUE DILIGEN CE. THE SAME STANDS UNREBUTTED ITA NO.684/KOL/2018 A.Y. 2009-10 SUBIR KR. ROY VS. ITO WD-55(1), KOL. PAGE 2 DURING THE COURSE OF HEARING BEFORE ME. I THEREFORE HOLD THE IMPUGNED DELAY TO BE NEITHER INTENTIONED NOR DELIBERATE BUT BECAUSE OF C OMMUNICATION GAP BETWEEN ASSESSEE, HIS AUDITOR AND COUNSEL SUPPOSED TO PURS UE HIS INSTANT APPEAL. THE APPEAL IS NOW TAKEN UP FOR ADJUDICATION ON MERITS. 3. THE ASSESSEES SOLE SUBSTANTIVE GROUND RAISED IN THE INSTANT APPEAL SEEKS TO REVERSE THE CIT(A)S FINDINGS PARTLY CONFIRMING THE ASSESSING OFFICERS ACTION DISALLOWING ITS CARRIAGE OUTWARD CHARGES OF 6,61,675/- TO THE TUNE OF 4,61,675/- THEREBY GRANTING RELIEF OF 2 LAC IN LOWER APPELLATE PROCEEDINGS. THE CIT(A)S DISCUSSION TO THIS EFFECT READS AS FOLLOWS:- 4. THE SECOND GROUND OF APPEAL IS AGAINST DISALLOWA NCE OF CARRIAGE OUTWARD OF RS. 6,61,675/-. THE AO HAS DISCUSSED THE ISSUE IN THE A SSESSMENT ORDER AS UNDER:- (B) CARRIAGE OUTWARD: THE ASSESSEE DEBITED RS. 6,61,675/- IN HIS P&L A/C. UNDER THE HEAD ' CARRIAGE OUTWARD '. VIDE QUESTION NO. 14 OF THE QUESTIONNAIRE TO THE NOTICE U/S. 142(1) OF THE ACT DATED 03.03.2011, THE DETAIL OF THE EXPE NDITURE UNDER THE HEAD CARRIAGE OUTWARD WAS ASKED FOR. THE ASSESSEE NEVER FILED THE SAME. NOW, IN ABSENCE OF ANY COMPLIANCE FROM THE END OF THE ASSES SEE, IT IS BETTER TO DISCUSS HOW THIS TRADE, IN WHICH THE ASSESSEE IS ENGAGED, I S CARRIAGE OUT. NORMALLY, A MEDICINE WHOLESALER/ DISTRIBUTOR CATERS TO THE OTHE R WHOLESALES AND RETAILERS OR MEDICINE SHOPS. IT IS NORMAL PRACTICE THAT THE WHOL ESALER ENGAGES A NUMBER OF SALESMEN. THEY BOOKS ORDER FROM THE SHOPS AND AT TH E SAME TIME ALSO DELIVER THE MEDICINES TO THEM, WHICH WERE BOOKED IN THE PRE VIOUS DAY. IT IS A REGULAR PRACTICE. UNLIKE THE CONSUMER DURABLES, GROCERIES O R HOUSEHOLD GOODS, WHERE THE SYSTEM OF BANK DELIVERIES AT REGULAR INTERVALS EXISTS, THE ORDER BOOKING AND SUBSEQUENT DELIVERY OF MEDICINES ARE DONE ON ALMOST DAILY BASIS AND IN SMALL BATCHES. AS THE BOOKING IS MADE ON DAILY BASIS, WHI CH NULLIFIES POSSIBILITIES OF ANY BULK DELIVERY AND THE MEDICINES ARE SMALLER IN SIZE(SIZE OF TABLET OR CAPSULE STRIPS, VIALS, SMALL BOTTLES, AMPOULES ETC. MAY BE CONSIDERED), THERE IS NEVER A NEED FOR DELIVERY BY MEANS OF ANY MOTORIZED VEHICLES (LIKE VAN, MATADOR, LORRY. ETC.) IT IS WELL KNOWN PRACTICE THAT THE SALESMEN CARRY B IG BAGS WITH THEIR CYCLES, PUTTING THE MEDICINES TO BE DELIVERED WITHIN THE BA GS AND VISIT THE MEDICINE SHOPS, WHICH THEY ARE ENTRUSTED TO COVER BY THE WHO LESALER. IT IS TRUE FOR ALL THE WHOLESALERS IRRESPECTIVE OF LOCALITIES EXCEPT THOSE WHO ARE RUNNING THEIR BUSINESS WITHIN THE CENTRAL BUSINESS DISTRICT OF TH E CITY. THE ASSESSEE, HAVING ITS SHOP IN THE FRINGES OF THE CITY IS DEFINITELY N OT FALLING WITHIN THE EXCEPTION GROUP. THE EXISTENCE OF THE ABOVE STATED SYSTEM IN THE CASE OF THE ASSESSEE IS ESTABLISHED WITH THE FACT THAT THE ASSESSEE HAS OVE R THE YEARS SHOWN ' CYCLES ' AS BUSINESS ASSETS, WHICH WE NORMALLY DON'T COME ACROS S IN CASE OF OTHER TRADES. THEREFORE, THERE ARE ACTUALLY NO EXPENSES TO BE ADD ITIONALLY BORNE BY ANY, MEDICINES WHOLESALER. IT IS PERTINENT TO MENTION TH AT THE ASSESSEE DIDN'T CHARGE ANYTHING AS CARRIAGE INWARD. THE ASSESSEE WAS INTIMATED REGARDING THE ABOVE OBSE RVATION AND SPECIFICALLY ASKED TO ESTABLISH WHY THEN THE EXPENDITURE HAD AT ALL BEEN REQUIRED TO BE ITA NO.684/KOL/2018 A.Y. 2009-10 SUBIR KR. ROY VS. ITO WD-55(1), KOL. PAGE 3 INCURRED AS WELL AS HOW THE SAME HAD BEEN EXPENDED VIDE THE SHOW CAUSE LETTER DATED 21.11.2011, WHICH HAS BEEN DULY SERVED UPON HIM ON 22.11.2011. BUT, EVER AFTER PASSING OF A MONTH FROM THE DEADLIN E ALLOWED THEREIN TO RESPOND, NO COMPLIANCE HAS BEEN OBSERVED FROM THE E ND OF THE ASSESSEE. SO, IT CLEARLY IMPLIES THAT THE ASSESSEE HAS NOTHING TO SA Y IN THIS REGARD.' 4.1 THE APPELLANT HAS CONTENDED IN THE GROUND OF AP PEAL THAT THE HUGE QUANTITIES OF MEDICINES, INCLUDING MEDICINES IN BOTTLES COULD NOT BE CARRIED ONLY ON BICYCLES AND HAD TO BE TRANSPORTED BY RENTED TEMPOS/VANS ETC. AN D THE CARRIAGE OUTWARD EXPENSES WERE JUSTIFIED BY THE HUGE TURNOVER DECLARED BY THE APPELLANT. IN THE REMAND REPORT, WHILE COMMENTING UPON THE DATE-WISE PAYMENTS CLAIME D BY THE APPELLANT AS HAVING BEEN MADE TO VAN RICKSHAW / PADDLE RICKSHAW/MOTOR R ICKSHAWS ETC, THE AO HAS STATED THAT THE APPELLANT COULD NOT PROVIDE ANY DETAILS OF THE ADDRESSES OF THE PERSONS TO WHOM THE PAYMENTS WERE MADE. IN THE REPLY TO THE RE MAND REPORT. THE APPELLANT STATED AS UNDER : 'THAT IN THE PRESENT SCENARIO IT IS SEEN THAT THE S AID BUSINESS HAS DONE CRORES OF SALE PROCEEDS IN THE RELEVANT YEAR, AND IT HAS NOT COME FROM SITTING INSIDE A SHOP ROOM, THAT IT HAS COME FROM THE CARRIAGE WHICH HAS BEEN DONE BY THE DELIVERY MEN TO THE RESPECTIVE ADDRESSES WHERE THE MEDICINES HAS BEEN TRANSFERRED. NOW IT IS QUESTIONABLE THAT IS IT POSS IBLE TO DONE CRORES OF SALE IN BICYCLES, AS IT IS RELEVANT TO MENTION THAT MEDICIN ES ARE ORDER IN HUGE QUANTITIES AND EVERY MEDICINE IS NOT A CAPSULE OR TABLETS, THE RE ARE ALSO HEAVY BOTTLES WHICH ARE MADE BY GLASSES, THIS CANNOT BE CARRIED B Y ANY BAG, SO NORMALLY THIS ARE CARRIED ON RENTED TEMPOS OR MOTOR VANS. ALSO IT SHOULD BE MADE CLEAR THAT ALL DELIVERY MEN CANNOT RIDE CYCLES WITH HEAVY WEIG HTED BAGS DUE TO THEIR DIFFERENT PROBLEMS, SO NATURALLY THEY ARE PROVIDED WITH RENTS FOR TRAVELLING IN BUSES, RICKSHAW, VANS AND DIFFERENT PUBLIC TRANSPOR TATIONS AND DUE TO VERY FAR DISTANCES OF SOME PLACES THEY HAVE TO CHANGE DIFFER ENT TRANSPORTS TO REACH THAT PARTICULAR PLACE, THEREFORE THEY HAVE TO BE PAID MU CH RENTS. THIS IS A DAILY ROUTINE AND A LARGE NUMBERS OF DELIVERY MAN ARE ENG AGED IN THIS PROCESS, SO IT WILL BE NOT VOID TO SAY THAT THE CARRIAGE IS NIL, I NSTEAD IT CAN BE SEEN THAT A LARGE AMOUNT IS SPENT ON OUT WARDING OF THE CARRIAGES. ' 4.2 I HAVE CONSIDERED THE FACTS OF THE CASE, THE AP PELLANT'S SUBMISSIONS AND THE REMAND REPORT. I HAVE ALSO EXAMINED THE ASSESSMENT RECORD. THE ADDITION OF RS.6,61,675/- WAS MADE AS NO DETAILS WHATSOEVER WER E PRODUCED BY THE APPELLANT DURING THE ASSESSMENT PROCEEDINGS AND THE AO WAS OF THE VIEW THAT THAT IN THE LINE OF THE APPELLANT'S BUSINESS AND CONSIDERING THE NUMBER OF CYCLES OWNED BY THE APPELLANT, WHICH WOULD BE USED BY SALESMEN FOR DELIVERY OF THE MEDICINES TO RETAILS SHOPS, NO EXPENSES ON CARRIAGE OUTWARD WERE NECESSARY. IN THE REPLY TO THE REMAND REPORT AS WELL AS THE GROUND OF APPEAL, THE APPELLANT HAS CON TENDED THAT THE EXPENSES WERE ACTUALLY INCURRED ON PAYMENTS TO VANS/RICKSHAWS/TEM POS ETC. FOR CARRYING THE MEDICINES TO THE RETAILERS. HOWEVER, NO SPECIFIC DE TAILS HAVE BEEN PROVIDED AND EVEN IN THE APPELLATE PROCEEDINGS ONLY A VAGUE DATE WISE LIST OF AMOUNTS PAID TO VARIOUS VANS/RICKSHAWS HAS BEEN PROVIDED. THE EXPENSES, TO SAY THE LEAST, ARE NOT ALL VERIFIABLE. DURING THE APPELLATE PROCEEDINGS, THE A PPELLANT WAS SPECIFICALLY ASKED TO APPEAR WITH BOOKS OF ACCOUNT, VOUCHERS/BILLS ETC. T O JUSTIFY THE DISPUTED EXPENSES BUT THERE WAS NO COMPLIANCE. THE APPELLANT HAS MADE ONL Y GENERAL REMARKS WITHOUT FURNISHING ANY COMPARISON WITH EARLIER YEARS OR SIM ILARLY ENGAGED BUSINESSMEN. UNDER THE CIRCUMSTANCE, THE APPELLANT'S CLAIM FOR C ARRIAGE OUTWARDS CANNOT BE ITA NO.684/KOL/2018 A.Y. 2009-10 SUBIR KR. ROY VS. ITO WD-55(1), KOL. PAGE 4 ALLOWED FULLY. HOWEVER, IT CANNOT BE 'DENIED THAT T HE APPELLANT WOULD HAVE INCURRED SOME EXPENSES ON CARRIAGE OUTWARDS TO ACHIEVE HIS T URNOVER OF RS.12,95,05,056/ -. HENCE, IT IS CONSIDERED REASONABLE TO ALLOW A SUM O F RS. 2,00,000/- AS CARRIAGE OUTWARD. THE BALANCE DISALLOWANCE OF RS. 4,61,675/ - IS CONFIRMED . 4. MR. CHOUDHURY VEHEMENTLY CONTENDS DURING THE COU RSE OF HEARING THAT THE ASSESSEE COULD NOT PRODUCE ALL THE RELEVANT DETAILS BEFORE BOTH THE LOWER PROCEEDINGS IN SUPPORT HIS CARRIAGE OUTWARD CLAIM. I FIND THAT BOTH OF THE LOWER AUTHORITIES HAVE NOT DRAWN ANY COMPARISON OF THE IMPUGNED OUTWARD CARRIA GE EXPENDITURE VIS--VIS THOSE IN PRECEDING OR SUCCEEDING ASSESSMENT YEARS. THE FA CT ALSO REMAINS THAT THE ASSESSEE HAS NOT BEEN ABLE TO SUBSTANTIATE HIS CASE EITHER I N ASSESSMENT OR DURING LOWER APPELLATE PROCEEDINGS. I DEEM IT APPROPRIATE IN THI S PECULIAR FACTS AND CIRCUMSTANCES THAT THE ASSESSEES IMPUGNED CLAIM OF 6,61,675/- DESERVES TO BE DISALLOWED TO THE EXTENT 35% AND BALANCE 65% DESERVES TO BE ACCEPTED ON PURE ESTIMATION BASIS. THE ASSESSING OFFICER IS DIRECTED TO FINALIZE NECESSARY COMPUTATION. IT IS MADE CLEAR THAT THE INSTANT ADJUDICATION BASED ON ESTIMATION SHALL NOT BE TREATED AS A PRECEDENT IN ANY PRECEDING OR SUCCEEDING ASSESSMENT YEAR. 5. THIS ASSESSEES APPEAL IS PARTLY ALLOWED IN ABOV E TERMS. ORDER PRONOUNCED IN OPEN COURT ON 16/11/2018 SD/- (S.S. GODARA) JUDICIAL MEMBE R KOLKATA, *DKP/SR.PS - 16/11/2018 / COPY OF ORDER FORWARDED TO:- 1. /APPELLANT-SUBIR KR. ROY PROPRIETOR OF ROY AGENCY, 284, D.H. ROAD, BEHALA, KOLKATA-700 034 2. /RESPONDENT-ITO WARD-55(1), 54/1, RAFI ADHEMD KIDWA I ROAD. KOLKATA-16 3. ' % / CONCERNED CIT 4. % - / CIT (A) 5. & ))' , ' / DR, ITAT, KOLKATA 6. + / GUARD FILE. BY ORDER/ , /TRUE COPY/ / ',