The Rice Company of India (P) Ltd, New Delhi V. ITO, New Delhi

ITA 7092/DEL/2014

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 7156 (ITAT-DELHI)
• Duration Of Justice: 1 year(s) 8 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 16-09-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC 2
• Next Hearing Date: 01-09-2016
• Assessment Year: 2007-2008
• Appeal Filed On: 31-12-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: S K JAIN
• Assessee Lawyers: ISHAN GUPTA S; A M RASTOGI
• Keywords: Additional evidence

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH : SMC-II, NEW DELHI BEFORE SHRI SUNIL KUMAR YADAV, JUDICIAL MEMBER ITA NO.7092/DEL/2014 ASSESSMENT YEAR : 2007-08 THE RICE COMPANY OF INDIA PVT. LTD., 204-206, SIDDHARTH CHAMBERS, HAUZ KHAS, NEAR IIT, NEW DELHI 110 016. PAN: AAACO 4163F VS. THE INCOME TAX OFFICER, WARD 16(2), NEW DELHI. APPELLANT RESPONDENT APPELLANT BY : S/SHRI A.M. RASTOGI & ISHAN GUPTA, ADVOCATES RESPONDENT BY : SHRI S.K. JAIN, SR. DR DATE OF HEARING : 14.09.2016 DATE OF PRONOUNCEMENT : 16.09.2016 O R D E R THIS APPEAL IS PREFERRED BY THE ASSESSEE AGAINST THE ORDER OF CIT(APPEALS)-19, NEW DELHI DATED 20.10.2014 INTER ALIA ON VARIOUS GROUNDS, WHICH ARE AS UNDER:- 1. THAT THE COMMISSIONER OF INCOME TAX (APPEALS) - XIX, NEW DELHI HAS GROSSLY ERRED ON FACTS AND IN THE CIR CUMSTANCES OF THE CASE AND IN LAW IN CONFIRMING THE ADDITION OF R S.31.07,990/ - AS SALES FROM UNEXPLAINED SOURCES. 2. THAT THE COMMISSIONER OF INCOME TAX (APPEALS) - XIX, NEW DELHI HAS GROSSLY ERRED ON FACTS AND IN THE CIR CUMSTANCES OF THE CASE AND IN LAW IN CONFIRMING THE ADDITION OF RS.31,07,990/- AS SALES FROM UNEXPLAINED SOURCES FA ILING TO ITA NO.7092/DEL/2014 PAGE 2 OF 5 APPRECIATE AN INADVERTENT/BONA-FIDE ERROR IN PRESEN TATION OF FINANCIAL ACCOUNTS AND IGNORING THE CORROBORATING E VIDENCE ON RECORD IN THE FORM OF PURCHASE CONTRACT FOR IMPORTS OF 115 METRIC TONS OF CHINESE SPECKLED KIDNEY BEANS ON CIF TERMS, IMPORT BILL OF LADING, IMPORT INVOICE, PARTY LEDGER ACCOUN T OF PURCHASE AND BANK STATEMENT ETC. 3. THAT THE COMMISSIONER OF INCOME TAX (APPEALS) - XIX, NEW DELHI HAS GROSSLY ERRED ON FACTS AND IN THE CIR CUMSTANCES OF THE CASE AND IN LAW IN SEEKING REMAND REPORT WITHOU T RECORDING ANY FACT OF FURNISHING OF ADDITIONAL EVIDENCE ON TH E SUBJECT OR DISALLOWANCE OR SALES FROM UNEXPLAINED SOURCES AND FURTHER THEREFORE GROSSLY ERRED IN FORMING A FRESH VIEW CON TRARY TO THE VIEW HELD BY HIS PREDECESSOR UPON PERUSAL OR INITIA L EVIDENCE FILED BY THE APPELLANT DURING ASSESSMENT PROCEEDING S. 4. THAT THE COMMISSIONER OF INCOME TAX (APPEALS) - XIX, NEW DELHI HAS GROSSLY ERRED ON FACTS AND IN THE CIR CUMSTANCES OF THE CASE AND IN LAW IN CONFIRMING THE ADDITION OF R S.31 ,07,990/- AS SALES FROM UNEXPLAINED SOURCES AND FAILING TO AP PRECIATE THAT GOODS CAN BE SOLD EVEN IN TRANSIT BEFORE PHYSICAL O R ACTUAL RECEIPT OF GOODS. 5. THAT THE APPELLANT RESERVES THE RIGHT TO ADD. AL TER OR AMEND ANY OTHER GROUND AT THE TIME OF HEARING. 2. THOUGH VARIOUS GROUNDS ARE RAISED, BUT THEY ALL RELATE TO ADDITION OF RS.31,07,990 AS SALES FROM EXPLAINED SOURCES. 3. THE FACTS IN BRIEF BORNE OUT FROM THE RECORD ARE THAT THE AO HAS NOTICED THAT THE ASSESSEE HAS MADE THE SALE TO THE EXTENT OF RS.31,07,990 WITHOUT PURCHASING THE SAID CONSIGNMENT. THIS ADDI TION WAS CHALLENGED BEFORE THE CIT(APPEALS) AND THE CIT(A) DELETED THE ADDITION, AGAINST WHICH AN APPEAL WAS FILED BY THE REVENUE BEFORE THE TRIBU NAL AND THE TRIBUNAL VIDE ITS ORDER DATED 29.08.2011 REMANDED THE MATTER BACK TO THE CIT(APPEALS) WITH A DIRECTION TO RE-EXAMINE THE CLA IM IN THE LIGHT OF ITA NO.7092/DEL/2014 PAGE 3 OF 5 EVIDENCE TO BE FILED BY THE ASSESSEE. ACCORDINGLY, THE MATTER WAS EXAMINED BY THE CIT(APPEALS). DURING THE COURSE OF EXAMINATION, HE CALLED REMAND REPORT FROM THE AO AND THE AO HAS REITERATED HIS CONTENTIONS THAT WITHOUT PURCHASING THE CONCERNED GOODS I.E., PULSES KIDNEY BEANS (CHINESE SPECKLED KIDNEY BEANS), THE ASSESSEE HAS S HOWN THE SALES IN ITS BOOKS OF ACCOUNTS. THOUGH THE ASSESSEE HAS CONTEND ED THAT THERE WAS TYPOGRAPHICAL ERROR IN THE ACCOUNTS, WHEREAS IT HAS DISCLOSED THE PURCHASES OF THE SAID GOODS IN STOCK AND THEREAFTER IT WAS SO LD. 4. THE CIT(APPEALS) RE-EXAMINED THE CLAIM OF ASSESS EE AND HE HAS NOTICED IN HIS ORDER THAT THE ASSESSEE HAS CLAIMED SALES ON 07.04.2006, WHEREAS THE GOODS ENTERED THE INDIAN TERRITORY ON 2 1.04.2006. THE CIT(A) HAS ALSO RECORDED THE CONTENTION OF THE ASSESSEE TH AT THESE WERE THE GOODS IN TRANSIT AND THE SAME WERE SOLD AND PAYMENT RECEIVED ON 10.4.2006. THE CIT(A) HAS NOTED THAT THE ASSESSEE H AS NOT FILED THE RELEVANT EVIDENCE TO CLAIM THAT THESE GOODS WERE SO LD PRIOR TO THEIR RECEIPT AND THE PAYMENTS WERE REALIZED BEFORE THE GOODS WE RE RECEIVED. 5. AGGRIEVED, THE ASSESSEE HAS PREFERRED THE APPEAL BEFORE THE TRIBUNAL. DURING THE COURSE OF HEARING, THE LD. CO UNSEL FOR THE ASSESSEE HAS TRIED TO EMPHASIZE THAT IN FACT THE SALE TRANSA CTION WAS UNDERTAKEN ON HIGH SEAS AND BEFORE THE SALES WERE EFFECTED, THE P URCHASES WERE TAKEN INTO STOCK, THEREFORE THERE IS NO ERROR IN THE MAIN TENANCE OF ACCOUNTS. THE LD. COUNSEL FURTHER SUBMITTED CONTENDED THAT IN THE SALE OF GOODS ACT, THE ITA NO.7092/DEL/2014 PAGE 4 OF 5 HIGH SEAS TRANSACTIONS ARE RECOGNIZED, THEREFORE, T HERE IS NO IRREGULARITY IN THE TRANSACTION IN THE HIGH SEAS. IN THE HIGH SEAS TRANSACTION, MOST OF THE TIMES, THE GOODS ARE SOLD DURING ITS TRANSIT AND IT IS NOT NECESSARY THAT SALES CANNOT BE EFFECTED BEFORE THE GOODS ENTERED IN THE INDIAN TERRITORY. 6. THE LD. DR PLACED RELIANCE UPON THE ORDER OF CIT (APPEALS). 7. HAVING CAREFULLY EXAMINED THE ORDERS OF LOWER AU THORITIES IN THE LIGHT OF RIVAL SUBMISSIONS, I FIND THAT UNDISPUTEDLY THE GOODS WERE SOLD ON HIGH SEAS BEFORE IT ENTERED THE INDIAN TERRITORY. TRANS ACTIONS IN HIGH SEAS ARE POSSIBLE AND IT IS ALSO RECOGNIZED UNDER THE SALE O F GOODS ACT. THEREFORE, THERE IS NO BAR IN THE TRANSACTIONS ON HIGH SEAS. BUT, BEFORE THE SALES ARE TO BE EFFECTED, THE ASSESSEE SHOULD MAKE THE NECESS ARY ENTRIES IN THE BOOKS OF ACCOUNTS WITH REGARD TO PURCHASES ON HIGH SEAS. THOUGH THE ASSESSEE HAS PLEADED EMPHATICALLY, BUT THE RELEVANT EVIDENCE IS NOT PLACED ON RECORD. THEREFORE, I AM OF THE VIEW THAT THE ISS UE REQUIRES ADJUDICATION BY THE CIT(APPEALS), AS THIS ASPECT WAS NEVER EXAMI NED BY THE CIT(APPEALS). HE REJECTED THE CLAIM ON THE PREMISE THAT BEFORE THE ENTRY OF GOODS IN THE INDIAN TERRITORY, IT CANNOT BE SOLD. MOREOVER, THE ASSESSEE HAS OFFERED THE SALES AND PROFIT EARNED ON IT ALSO TO T AX. THOUGH THE AO HAS NOT INVOKED ANY PARTICULAR PROVISIONS, BUT THE GENUINEN ESS OF THE TRANSACTIONS CAN ALSO BE EXAMINED. I AM THEREFORE OF THE VIEW T HAT THIS MATTER BE EXAMINED BY THE CIT(APPEALS) IN LIGHT OF THE EVIDEN CE, AS TO WHETHER BEFORE THE SALES WERE EFFECTED, THE SAME GOODS WERE TAKEN INTO STOCK OF THE ITA NO.7092/DEL/2014 PAGE 5 OF 5 ASSESSEE. ACCORDINGLY, THE ORDER OF CIT(APPEALS) I S SET ASIDE AND THE MATTER IS RESTORED TO HIS FILE WITH A DIRECTION TO READJUDICATE THE CLAIM AFRESH IN THE LIGHT OF ASSESSEES CONTENTION THAT GOODS WE RE SOLD ON HIGH SEAS BEFORE IT WAS RECEIVED BY THE ASSESSEE. IT IS ALSO WORTHWHILE TO MENTION THAT PROPER OPPORTUNITY BE AFFORDED TO THE ASSESSEE TO E STABLISH ITS CLAIM. 8. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALL OWED FOR STATISTICAL PURPOSES. PRONOUNCED IN THE OPEN COURT ON THIS 16 TH DAY OF SEPTEMBER 2016. SD/- (SUNIL KUMAR YADAV ) JUDICIAL MEMBER NEW DELHI, DATED, THE 16 TH SEPTEMBER, 2016. /D S/ COPY TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR, ITAT, NEW DELHI. ASSISTANT REGISTRAR, ITAT, NEW DELHI.