Shri Ravi Chordiya, Indore V. The ITO 2(1), Indore

ITA 735/IND/2013

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 5636 (ITAT-INDORE)
• Duration Of Justice: 2 year(s) 3 month(s) 14 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-03-2016
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: DB
• Next Hearing Date: 31-03-2016
• Assessment Year: 2009-2010
• Appeal Filed On: 17-12-2013
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: RAJKUMAR BHATIYA
• Assessee Lawyers: ARPIT GARG CAS
• Keywords: Unexplained investment
• Section: 143(3); 133(6); 69

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, INDORE BENCH, INDORE BEFORE SHRI D.T. GARASIA, JUDICIAL MEMBER AND SHRI B.C.MEENA, ACCOUNTANT MEMBER I.T.A.NO.735/IND/2013 A.Y. : 2009-10 SHRI RAVI CHORDIYA, ITO, PROP. M/S. AKASH ENTERPRISES, VS 2(1), INDORE. INDORE. APPELLANT RESPONDENT I.T.A.NO.32/IND/2014 A.Y. : 2009-10 ITO, SHRI RAVI CHORDIYA, 2(1), INDORE. VS PROP. M/S. AKASH ENTERPRISES, INDORE. APPELLANT RESPONDENT PAN NO. ABMPC4815G ASSESSEE BY : SHRI ANIL KUMAR GARG AND SHRI ARPIT GARG, CAS DEPARTMENT BY : SHRI RAJKUMAR BHATIYA, DR DATE OF HEARING : 31. 0 3 .2016 DATE OF PRONOUNCEMENT : 31.03 .2016 SHRI RAVI CHORDIYA, INDORE VS. ITO 2(1), INDORE AND ITO VS. SH RAVI CHORDIYA, INDROE 735/IND/2013 AND 32/IND/2014 A.Y. 2009-10 2 2 O R D E R PER D.T.GARASIA, J.M. THESE CROSS APPEALS ARE DIRECTED AGAINST THE ORDER OF CIT(A)-I, INDORE, DATED 21.10.2013 FOR ASSESSMENT YEAR 2009- 10. I.T.A.NO. 735/IND/2013 (ASSESSEES APPEAL ) 2. THE ASSESSEE HAS TAKEN THE FOLLOWING GROUNDS :- 1. THAT, ON THE FACTS AND IN LAW, THE LD. CIT(A) GROSS LY ERRED, IN CONFIRMING THE ADDITION TO THE EXTENT OF RS. 5,00,000/- OUT OF THE AD HOC ADDITION OF RS.9,40,367/- MADE BY THE LD. AO ON ACCOUNT OF FREIGHT & CARTAGE EXPENSES, MERELY ON GUESS WORK, CONJECTURES AND SURMISES. 2. THAT, ON THE FACTS AND IN LAW, THE LD. CIT(A) GROSS LY ERRED, IN CONFIRMING THE ADDITION TO THE EXTENT OF RS. 67,598/- MADE BY THE LD. AO ON ACCOUNT OF ALLEGED LOW HOUSE HOLD WITHDRAWALS OF THE APPELLANT. GROUND NO.1 : 3. THE SHORT FACTS OF THE CASE ARE AS UNDER :- SHRI RAVI CHORDIYA, INDORE VS. ITO 2(1), INDORE AND ITO VS. SH RAVI CHORDIYA, INDROE 735/IND/2013 AND 32/IND/2014 A.Y. 2009-10 3 3 4. THE ASSESSEE IS AN INDIVIDUAL PRESENTLY AGED 46 YEA RS OF AGE, REGULARLY ASSESSED TO INCOME-TAX FOR THE LA ST MANY YEARS. THE ASSESSEE RUNS THE BUSINESS OF WHOLESALE T RADING IN GRAINS & OIL SEEDS AND ACTING AS COMMISSION AGENT U NDER THE NAME & STYLE OF M/S. AKASH ENTERPRISES, INDORE. DUR ING THE RELEVANT PREVIOUS YEAR, THE ASSESSEE HAS MAINLY CAR RIED OUT THE BUSINESS OF PROCUREMENT OF RAW MATERIAL I.E. SOYABEA N FOR A COMPANY NAMED AS 'M/S. KRITI INDUSTRIES (I) LTD. ON COMMISSION BASIS. THE AO PASSED THE ASSESSMENT ORDE R ON 29-12-2011, U/S. 143(3) OF THE ACT, BY DETERMINING THE TOTAL INCOME OF THE ASSESSEE AT RS.60,86,718/- AS AGAINST THE RETURNED INCOME OF RS.8,81,000/- THEREBY MAKING THE ADDITIONS OF RS.52,05,718/-. BEING AGGRIEVED WITH TH E ADDITIONS MADE BY THE AO, THE ASSESSEE PREFERRED A N APPEAL BEFORE THE LEARNED CIT(A). 5. DURING THE COURSE OF THE APPELLATE PROCEEDINGS, THE ASSESSEE FILED HIS DETAILED WRITTEN SUBMISSION ALONG WITH VARIOUS DOCUMENTARY EVIDENCES. THE WRITTEN SUBMISSIO N FURNISHED BY THE ASSESSEE BEFORE THE LEARNED CIT(A) IS PLACED SHRI RAVI CHORDIYA, INDORE VS. ITO 2(1), INDORE AND ITO VS. SH RAVI CHORDIYA, INDROE 735/IND/2013 AND 32/IND/2014 A.Y. 2009-10 4 4 AT PAGE NO. 1 TO 10 OF OUR COMPILATION. THE AO MADE HIS REMAND REPORT ON 29-08-2013 WHICH IS PLACED AT PAGE NO. 104 TO 106 OF THE PAPER BOOK. OUR COUNTER COMMENTS ON T HE AOS REPORT ARE PLACED AT PAGE NO. 107 TO 111 OF THE COM PILATION. THE CIT(A) AFTER CONSIDERING THE AOS ORDER, ASSESS EES SUBMISSION, DOCUMENTARY EVIDENCES, ADDITIONAL EVIDE NCES, AOS REMAND REPORT AND ASSESSEES COUNTER COMMENTS THEREON, DELETED VARIOUS ADDITIONS MADE BY THE AO A ND AT THE SAME TIME, ALSO CONFIRMED CERTAIN ADDITIONS MADE BY THE AO GIVEN IN THE TABLE ABOVE. AGAINST THE ADDITIONS DEL ETED BY THE LEARNED CIT(A), THE REVENUE IS IN APPEAL BEFORE THI S HONBLE BENCH AND AS AGAINST THE ADDITIONS CONFIRMED, THE A SSESSEE IS IN APPEAL BEFORE THIS HONBLE BENCH. 6. THE MATTER CARRIED TO THE LD. CIT(A) AND THE LD. CI T(A) CONFIRMED THE ADDITION OF RS. 5 LAKH AND DELETED TH E BALANCE ADDITION OF RS. 4,40,367/- BY OBSERVING AS UNDER :- 4. I HAVE SEEN THE ASSESSMENT ORDER, THE GROUNDS OF APPEAL AND THE SUBMISSION OF THE APPELLANT. SHRI RAVI CHORDIYA, INDORE VS. ITO 2(1), INDORE AND ITO VS. SH RAVI CHORDIYA, INDROE 735/IND/2013 AND 32/IND/2014 A.Y. 2009-10 5 5 5.ON THE ISSUE OF DISALLOWANCE OF RS. 9,40,367/- O UT OF FREIGHT AND CARTAGE EXPENSE, THE AO HAS MADE SUCH DISALLOWANCE ONLY ON THE BASIS THAT SUCH EXPENSES WERE HIGHEST IN THIS YEAR AND LOWER IN THE EARLIER AND LATER YEARS. AO HAS HIMSELF WRITTEN IN ASSESSMENT ORDER THAT APPELLANT HAS PRODUCED BILLS & VOUCHERS RELATED TO SUCH EXPENSES BEFORE AO. AO DID NOT FIND ANY DEFECT IN SUCH VOUCHERS. AO ALSO OVERLOOKED APPELLANTS CONTENTION THAT FREIGHT AND CARTAGE EXPENSE DEPEND ON THE DISTANCE OF PARTIES TRANSACTED WITH, WHICH CAN VARY FROM YEAR TO YEAR. HOWEVER, CONSIDERING THAT IN THIS YEAR FREIGHT AN D CARTAGE EXPENSE ARE SUBSTANTIALLY HIGHER THAN EARLIER YEAR, FOR WHICH CHANGE OF DISTANCES ALONE FROM YEAR TO YEAR CANNOT BE SATISFACTORY EXPLANATIO N, HENCE I HOLD THAT A DISALLOWANCE OF RS. . 5 LAKH ON THIS HEAD WILL MEET THE END OF JUSTICE. AS A RESULT ADDITION OF RS. . 5 LAKH IS CONFIRMED AND BALANCE SHRI RAVI CHORDIYA, INDORE VS. ITO 2(1), INDORE AND ITO VS. SH RAVI CHORDIYA, INDROE 735/IND/2013 AND 32/IND/2014 A.Y. 2009-10 6 6 ADDITION OF RS. 4,40,367/- IS DELETED. THIS GROUND IS PARTLY ALLOWED. 7. THE LD.AUTHORIZED REPRESENTATIVE FOR THE ASSESSEE SUBMITTED THE WRITTEN SUBMISSION, WHICH READS AS UNDE R :- THE ASSESSEE HAS CLAIMED EXPENDITURE ON ACCOUNT OF FREIGHT & CARTAGE AT RS.18,48,901/- IN H IS AUDITED TRADING ACCOUNT. THE ASSESSEE HAS MAINTAINED COMPLETE DETAILS IN RESPECT OF THE FREIG HT & CARTAGE EXPENSES SO INCURRED AND THE SAME WERE ALSO SUPPORTED BY THE NECESSARY DOCUMENTARY EVIDENCES. THE LEARNED AO, WITHOUT APPRECIATING THE GENUINENESS OF THE EXPENDITURE AND WITHOUT CONSIDERING THE MATERIAL FACT THAT THE ENTIRE EXPENDITURE SO CLAIMED BY THE ASSESSEE WERE INCURRED BY HIM ON BEHALF OF M/S. KRITI INDUSTRIES (I) LTD. AND THE SAME WERE DULY RECOVERED BY HIM SUBSEQUENTLY, MADE THE IMPUGNED ADDITION MERELY ON AD-HOC BASIS. REGULAR BOOKS OF ACCOUNT SHRI RAVI CHORDIYA, INDORE VS. ITO 2(1), INDORE AND ITO VS. SH RAVI CHORDIYA, INDROE 735/IND/2013 AND 32/IND/2014 A.Y. 2009-10 7 7 MAINTAINED, ALL THE TRANSACTIONS ARE FULLY AND TRUL Y RECORDED AND THEY ARE ALSO VOUCHED AND OPEN TO VERIFICATION. THE BOOKS OF ACCOUNT AUDITED BY AN INDEPENDENT FIRM OF QUALIFIED CHARTERED ACCOUNTANTS , UNDER THE PROVISIONS OF SECTION 44AB OF THE INCOME- TAX ACT, 1961. DURING THE COURSE OF THE ASSESSMENT PROCEEDINGS, THE ASSESSEE HAD PRODUCED ALL THE BOOKS OF ACCOUNT ALONG WITH BANK STATEMENTS, BILLS, VOUCHERS, RECEIPTS, REGISTERS AND OTHER RELEVANT RECORDS BEFORE THE LEARNED AO. THE LEARNED AO HAS NOT PIN-POINTED ANY PARTICULAR INSTANCE OF EXPENDITURE WHICH, IN HIS OPINION, REMAINED UNSUPPORTED BY ANY VOUCHER. YOUR HONOURS, THE ASSESSEE HAS INCURRED THE ENTIRE FREIGHT EXPENDITUR E OF RS.18,48,901/- ON BEHALF OF HIS PRINCIPLE M/S. K RITI INDUSTRIES (I) LTD. ONLY AND SUBSEQUENTLY THE ENTIR E EXPENDITURE GOT RECOVERED BY ADDING THE COST OF FREIGHT SO INCURRED IN THE INVOICES RAISED UPON M/S . KRITI INDUSTRIES (I) LTD. ON A PERUSAL OF THE GENER AL SHRI RAVI CHORDIYA, INDORE VS. ITO 2(1), INDORE AND ITO VS. SH RAVI CHORDIYA, INDROE 735/IND/2013 AND 32/IND/2014 A.Y. 2009-10 8 8 TRADING ACCOUNT AND PROFIT AND LOSS ACCOUNT OF THE APPELLANT FOR THE RELEVANT PREVIOUS YEAR, AS PLACED AT PAGE NO. 32 OF OUR PAPER BOOK, IT SHALL BE OBSERVED BY YOUR HONOURS THAT THE APPELLANT HAS SHOWN GROSS PROFIT, IN RESPECT OF MATERIAL PROCUREMENT AND SUPP LY TRANSACTIONS WITH M/S. KRITI INDUSTRIES (I) LTD., A T RS.1,00,63,665/- IN HIS ACCOUNTS. THE DETAILS OF TH E ABOVE SAID GROSS PROFIT ARE GIVEN IN FORM OF A SEPARATE TRADING ACCOUNT IN RESPECT OF 'KRITI' AS PLACED AT PAGE NO. 34 OF PAPER BOOK. IT IS SUBMITTE D THAT THE SUBJECT AMOUNT OF FREIGHT IS DULY INCLUDED IN THE AMOUNT OF SALES AND COMMISSION SHOWN IN SUCH TRADING ACCOUNT AT RS.18,48,71,392/-. IN OTHER WORDS, THE ENTIRE AMOUNT OF FREIGHT HAS ALREADY BEE N RECOVERED BY THE APPELLANT WITH THE RESULT THAT NO FREIGHT EXPENSES, ACTUALLY, BORNE AND CLAIMED BY TH E APPELLANT AND THEREFORE, ANY DISALLOWANCE OUT OF SUCH FREIGHT EXPENSES IS NOT WARRANTED. YOUR HONOURS, THE AO HAS MADE THE IMPUGNED SHRI RAVI CHORDIYA, INDORE VS. ITO 2(1), INDORE AND ITO VS. SH RAVI CHORDIYA, INDROE 735/IND/2013 AND 32/IND/2014 A.Y. 2009-10 9 9 DISALLOWANCE MERELY ON A COMPARISON OF THE FREIGHT EXPENSES INCURRED DURING THE RELEVANT PREVIOUS YEAR WITH THAT INCURRED IN A PRECEDING YEAR AND IN A SUCCEEDING YEAR WITHOUT CONSIDERING AND APPRECIATING THE MATERIAL FACT THAT FREIGHT PAYMENT S HAVE NO DIRECT NEXUS OR LINK WITH THE AMOUNT OF PURCHASES. YOUR HONOURS, THE ASSESSEE HAS MAINTAINED COMPLETE DETAILS IN RESPECT OF EACH AND EVERY EXPENDITURE INCURRED BY HIM IN RESPECT OF FREIGHT & CARTAGE. A COPY OF ACCOUNT OF THE RELEVAN T EXPENDITURE IN THE BOOKS OF THE ASSESSEE IS PLACED AT PAGE NO. 56 TO 68 OF OUR PAPER BOOK. YOUR HONOURS, THE LEARNED CIT(A) DELETED THE ADDITION TO THE EXTE NT OF RS.4,40,367/- AND CONFIRMED RS.5,00,000/- BY MERELY HOLDING THAT THE EXPENSES ARE SUBSTANTIALLY HIGHER THAN THE EARLIER YEAR. IN VIEW OF THE ABOVE FACTS AND CIRCUMSTANCES OF THE CASE, THE AD-HOC ADDITION OF RS.9,40,367/- SO MADE BY THE LEARNED AO AND RS.5,00,000/- CONFIRMED BY THE LEARNED CIT(A) SHRI RAVI CHORDIYA, INDORE VS. ITO 2(1), INDORE AND ITO VS. SH RAVI CHORDIYA, INDROE 735/IND/2013 AND 32/IND/2014 A.Y. 2009-10 10 10 ON ACCOUNT OF DISALLOWANCE OUT OF FREIGHT & CARTAGE EXPENSES DESERVES TO BE DELETED IN TOTO. 8. THE LD. DR RELIED UPON THE ORDER OF THE LD. CIT(A) . 9. WE HAVE HEARD THE RIVAL CONTENTIONS OF BOTH THE PARTIES. WE FIND THAT ON THE ISSUE OF DISALLOWANCE OF RS. 9,40,367/- OUT OF FREIGHT AND CARTAGE EXPENSE, TH E AO HAS MADE DISALLOWANCE ONLY ON THE BASIS THAT SUCH EXPEN SES WERE HIGHEST IN THIS YEAR AND LOWER IN THE EARLIER AND L ATER YEARS. THE LD. AO DID NOT FIND ANY DEFECT IN THE VOUCHERS RELATED TO SUCH EXPENSES, WHICH WERE PRODUCED BY THE ASSESSEE. T HE AO ALSO OVERLOOKED THE CONTENTION OF THE ASSESSEE THAT FREIGHT AND CARTAGE EXPENSE DEPEND ON THE DISTANCE OF PART IES TRANSACTED WITH, WHICH VARIES FROM YEAR TO YEAR. WE U PHOLD THE ACTION OF THE LD. CIT(A) IN CONFIRMING THE ADDITION OF RS. 5 LAKHS AND DELETING THE BALANCE ADDITION OF RS. 4,40 ,367/-. GROUND NO. 1 OF THE ASSESSEE IS REJECTED. SHRI RAVI CHORDIYA, INDORE VS. ITO 2(1), INDORE AND ITO VS. SH RAVI CHORDIYA, INDROE 735/IND/2013 AND 32/IND/2014 A.Y. 2009-10 11 11 GROUND NO. 2 : 10. THE FACTS ARE THAT THE ASSESSEE HAS SHOWN HOUSE HOLD EXPENSES AT RS. 72,402/-. THE ASSESSEES FAMILY CON SISTS OF SELF, HIS WIFE AND TWO CHILDREN, WHO ARE STUDYING IN E IGHT AND ELEVENTH CLASS. THE AO FOUND THAT THE HOUSE HOLD EX PENSES IS LESS LOOKING TO THE DAILY REGULAR EXPENSES SUCH AS KIRANA, VEGETABLE MILK ETC. MARRIAGES AND OTHER CEREMONIES AND PURCHASE OF CLOTHES ETC. THE AO CONSIDERED IT AT RS . 2 LAKHS AND ADDED RS. 1,27,598/- AS DIFFERENCE IN TOTAL INC OME OF THE ASSESSEE. 11. THE MATTER CARRIED TO THE LD. CIT(A) AND THE LD. CI T(A) CONFIRMED THE ADDITION OF RS. 67,598/- AND DELETED THE ADDITION OF RS. 60,000/-. 12. THE LD. AUTHORIZED REPRESENTATIVE SUBMITTED THE WRITTEN SUBMISSION ON GROUND NO.2, WHICH READS AS UND ER :- THE APPELLANT HAS A SMALL FAMILY CONSISTING OF 4 MEMBERS, VIZ. SELF, SPOUSE AND 2 CHILDREN. A COPY O F FAMILY TREE ALONG WITH DETAILS OF HOUSEHOLD EXPENSES AS PL ACED ON THE RECORD OF THE LEARNED AO IS PLACED AT PAGE NO.1 00 OF SHRI RAVI CHORDIYA, INDORE VS. ITO 2(1), INDORE AND ITO VS. SH RAVI CHORDIYA, INDROE 735/IND/2013 AND 32/IND/2014 A.Y. 2009-10 12 12 OUR PAPER BOOK. ON A PERUSAL OF SUCH STATEMENT, IT SHALL BE OBSERVED BY YOUR HONOURS THAT THE APPELLANT AND HIS SPOUSE ARE SEPARATELY ASSESSED TO INCOME-TAX AND TH E TWO CHILDREN OF THE APPELLANT ARE MERELY OF THE AGE 16 YEARS & 13 YEARS. THE SPOUSE OF THE APPELLANT, NAME LY SMT. SUNITA CHORDIYA, IS ALSO HAVING INDEPENDENT SO URCES OF INCOME AND SHE IS ALSO SEPARATELY ASSESSED TO IN COME- TAX UNDER PAN: AFRPC4458G. IN EVIDENCE OF SUCH FACT , A XEROX COPY OF THE ACKNOWLEDGEMENT OF INCOME-TAX RET URN OF SMT. SUNITA CHORDIYA FOR THE ASSESSMENT YEAR 2009-1 0 HAS BEEN PLACED AT PAGE NO. 101 OF OUR PAPER BOOK. THE APPELLANT AND HIS SPOUSE HAVE JOINTLY CONTRIBUTED A SUM OF RS.1,32,402/- TOWARDS HOUSEHOLD EXPENSES DURING THE PREVIOUS YEAR UNDER CONSIDERATION. NO MAJOR EXPEND ITURE SUCH AS HOUSE RENT OR ANY LOAN INSTALLMENT WAS TO B E INCURRED. NO EXPENDITURE TOWARDS MARRIAGE AND NO OT HER CEREMONIAL FUNCTION WAS ORGANIZED IN THE APPELLANT S FAMILY DURING THE SUBJECT ASSESSMENT YEAR. THE LEAR NED AO ALLEGED THAT AN AMOUNT OF RS.2 LACS IS A BARE MI NIMUM SHRI RAVI CHORDIYA, INDORE VS. ITO 2(1), INDORE AND ITO VS. SH RAVI CHORDIYA, INDROE 735/IND/2013 AND 32/IND/2014 A.Y. 2009-10 13 13 WITHDRAWALS OF ANY FAMILY. YOUR HONOURS, THE LEARNE D CIT(A) DELETED THE ADDITION TO THE EXTENT OF RS.60, 000/- AND CONFIRMED RS.67,598/- BY HOLDING THE WITHDRAWAL MADE BY THE WIFE OF THE ASSESSEE SMT. SUNITA CHORDI YA. IN VIEW OF THE ABOVE FACTS AND CIRCUMSTANCES OF THE CASE, THE ADDITION OF RS.1,27,598/- SO MADE BY THE AO ON ACCOUNT OF LOW HOUSEHOLD WITHDRAWALS DESERVES TO BE DELETED IN TOTO. 13. THE LD. DEPARTMENTAL REPRESENTATIVE RELIED UPON TH E ORDER OF THE CIT(A). 14. WE HAVE HEARD THE RIVAL CONTENTIONS OF BOTH THE PARTIES. WE FIND THAT THE LD. CIT(A) CONSIDERED THA T THE WITHDRAWAL OF RS. 72,402/- SHOWN BY THE ASSESSEE AS TO O LOW, CONSIDERING HIS FAMILY SIZE, BUSINESS AND SOCIAL ST ATUS. THE LD. CIT(A) UPHELD THE ESTIMATE OF RS. 2 LACS FOR SUCH E XPENSES BUT MADE ALLOWANCE FOR WITHDRAWAL BY SMT. SUNITA CHORDIYA WIFE OF THE ASSESSEE AT RS. 60,000/-, WHO WAS SEPARATELY ASSESSED. WE UPHOLD THE ACTION OF THE LD. CIT(A), IN CONFIRMI NG RS. . SHRI RAVI CHORDIYA, INDORE VS. ITO 2(1), INDORE AND ITO VS. SH RAVI CHORDIYA, INDROE 735/IND/2013 AND 32/IND/2014 A.Y. 2009-10 14 14 67,598/- AND DELETING THE ADDITION OF RS. 60,000/-. HENCE, GROUND NO. 2 OF THE ASSESSEES APPEAL IS REJECTED. 15. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS DISMIS SED. DEPARTMENTS APPEAL : 16. THE DEPARTMENT HAS TAKEN THE FOLLOWING GROUNDS OF APPEAL :- ON THE FACTS AND CIRCUMSTANCES OF THE CASE THE LD. CIT(A) :- 1. WAS NOT JUSTIFIED IN DELETING THE ADDITION OF RS. . 21,58,178/- MADE BY THE AO ON ACCOUNT OF DIFFERENCE IN SALES BY HOLDING THAT THE INFORMATION COLLECTED BY THE AO DURING THE COURSE OF ASSESSMENT PROCEEDINGS U/S 133(6) OF THE ACT WAS NOT SUPPLIED TO THE ASSESSEE WHEREAS DURING THE COURSE OF PROCEEDING THE ISSUE WAS DULY DISCUSSED WITH THE AUTHORIZED REPRESENTATIVE. 2. ERRED IN DELETING THE ADDITION OF RS. 21,58,178/- MERELY BECAUSE OF NON-SUPPLY OF INFORMATION GATHERED BY THE AO U/S 133(6) OF THE ACT BECAUSE SHRI RAVI CHORDIYA, INDORE VS. ITO 2(1), INDORE AND ITO VS. SH RAVI CHORDIYA, INDROE 735/IND/2013 AND 32/IND/2014 A.Y. 2009-10 15 15 EVEN IF THE AO DID NOT SUPPLY THE INFORMATION THE L D. CIT(A) COULD HAVE CALLED FOR THE DETAILS AND EXAMIN ED THE CLAIM ON HIS OWN. 3. WAS NOT JUSTIFIED IN DELETING THE ADDITION OF RS. 7,87,597/- AND RS. 11,578/- MADE BY THE AO ON ACCOUNT OF UNEXPLAINED INVESTMENT IN PURCHASE OF SOYA BEAN AND GROSS PROFIT THEREON BY HOLDING THAT THE INFORMATION COLLECTED BY THE AO DURING THE COUR SE OF ASSESSMENT PROCEEDINGS U/S 133(6) OF THE ACT WAS NOT SUPPLIED TO THE ASSESSEE WHEREAS DURING THE COURSE OF PROCEEDING THE ISSUE WAS DULY DISCUSSED WITH THE AUTHORIZED REPRESENTATIVE. GROUND NOS. 1 & 2 : 17. THE FACTS OF THE CASE ARE THAT THE AO HAS MADE THE IMPUGNED ADDITION OF RS.20,40,773/- ON ACCOUNT OF A LLEGED DIFFERENCE IN AMOUNT OF SALES SHOWN BY THE ASSESSEE TO M/S. KRITI INDUSTRIES (I) LTD. ( FOR SHORT KRITI )AND TH E PURCHASES AS SHOWN BY THE 'KRITI' BY INVOKING PROVISIONS OF S. 69 OF THE ACT. ADDITION HAS BEEN MADE MERELY ON THE BASIS OF INFOR MATION SHRI RAVI CHORDIYA, INDORE VS. ITO 2(1), INDORE AND ITO VS. SH RAVI CHORDIYA, INDROE 735/IND/2013 AND 32/IND/2014 A.Y. 2009-10 16 16 CALLED UNDER S.133(6) OF THE INCOME-TAX ACT, 1961,F ROM KRITI ' WITHOUT PROVIDING A COPY OF THE SAME TO THE ASSESS EE FOR REBUTTAL ON INFORMATION SO COLLECTED. 18. DURING THE COURSE OF THE ASSESSMENT PROCEEDINGS, TH E AO HAD ALSO COLLECTED A COPY OF STATEMENTS OF THE ASSE SSEES INCOME IN THE BOOKS OF ACCOUNT OF 'KRITI' FOR THE R ELEVANT PREVIOUS YEAR. A COPY OF STATEMENT OF ACCOUNT OF TH E ASSESSEE IN THE BOOKS OF 'KRITI' IS PLACED. ON A PERUSAL OF THE ASSESSEES ACCOUNT IN THE BOOKS OF 'KRITI', IT WAS OBSERVED THA T ''KRITI' IS SHOWING CREDIT BALANCE IN THE NAME OF THE ASSESSEE AS ON 31-03-2009 AT RS.39,54,209/- & RS.1,34,548/- RESPEC TIVELY AGGREGATING TO RS.40,88,757/-, AS AGAINST THE DEBIT BALANCE SHOWN BY THE ASSESSEE IN ITS BOOKS OF ACCOUNT AT RS.40,88,757/-, AS ON 31-03-2009, IN THE NAME OF 'K RITI'. THERE IS NO DIFFERENCE IN THE YEAR END BALANCES SHO WN BY THE 'KRITI' AND THE ASSESSEE OF EACH OTHER IN THEIR RES PECTIVE BOOKS OF ACCOUNT. 19. THE MATTER CARRIED TO THE LD. CIT(A) AND THE LD. CI T(A) ALLOWED THE APPEAL OF THE ASSESSEE BY OBSERVING AS UNDER :- SHRI RAVI CHORDIYA, INDORE VS. ITO 2(1), INDORE AND ITO VS. SH RAVI CHORDIYA, INDROE 735/IND/2013 AND 32/IND/2014 A.Y. 2009-10 17 17 6.2 I HAVE SEEN THE ASSESSMENT ORDER DATED 29.12.2011 AND REMAND REPORT DATED 29.08.2013. DURING ASSESSMENT, COPY OF SUCH REPLY OF THAT PARTY WAS NEITHER SHOWN TO APPELLANT NOR A COPY OF THIS WAS SUPPLIED TO THE APPELLANT. EVEN AT THE STAGE OF REMAND REPORT, SUCH REPLY OF THAT PARTY WAS ONLY SHOWN TO APPELLANT, BUT ITS COPY WAS NEVER PROVIDED TO THEM. 6.3 IF A COPY OF SUCH EVIDENCE WHICH IS USED AGAINS T APPELLANT IS NOT PROVIDED TO APPELLANT, THEN ADDITI ON BASED ON SUCH MATERIAL CANNOT BE SUSTAINED. IN VIEW OF THIS FACT, THERE IS FORCE IN APPELLANTS CONTENT ION THAT HAD SUCH DETAILS BEEN PROVIDED TO THEM THEY WOULD HAVE RECONCILED THE ACCOUNTS. IN VIEW OF THE AFORESAID DISCUSSION, AS THE MATERIAL GATHERED AGAINST APPELLANT WAS NOT SUPPLIED TO HIM, HENCE ADDITION OF RS.20,40,773/- AND RS.1,17,405/- CANNOT BE SUSTAINED. AS A RESULT GROUND. NO. 2 OF APPEAL I S ALLOWED. SHRI RAVI CHORDIYA, INDORE VS. ITO 2(1), INDORE AND ITO VS. SH RAVI CHORDIYA, INDROE 735/IND/2013 AND 32/IND/2014 A.Y. 2009-10 18 18 20. THE LD. DEPARTMENTAL REPRESENTATIVE RELIED UPON TH E ORDER OF THE AO. 21. THE LD.AUTHORIZED REPRESENTATIVE FOR THE ASSESSEE SUBMITTED THE WRITTEN SUBMISSIONS, WHICH READS AS UND ER :- YOUR HONOURS, ON A COMPARISON OF THE ACCOUNT OF TH E ASSESSEE IN THE BOOKS OF ACCOUNT OF 'KRITI' AND THA T OF THE 'KRITI' IN THE BOOKS OF ACCOUNT OF THE ASSESSEE, IT SHALL BE OBSERVED BY YOUR HONOURS THAT EACH AND EVERY PURCHA SES REFLECTED IN THE BOOKS OF 'KRITI' IS GETTING CLEARL Y REFLECTED IN THE BOOKS OF ACCOUNT OF THE ASSESSEE AS SALES. YOUR HONOURS, THE AO INSTEAD OF MAKING THE FINANCIA L BOOKS OF 'KRITI' MADE ITS MATERIAL RECEIPTS DETAILS AS THE BASIS FOR COMPARISON WITH THE FINANCIAL BOOKS OF AC COUNT OF THE ASSESSEE. THE LEARNED AO MADE THE COMPARISON WITH THE TOTAL OF THE MATERIAL RECEIPTS SHOWN BY 'KRITI' IN ITS MATER IAL RECEIPT DETAILS. A COPY OF SUCH DETAILS, NOW DIRECTLY PROCU RED BY THE ASSESSEE FROM 'KRITI' IS PLACED AT PAGE NO. 82 TO 90 OF OUR PAPER BOOK. SHRI RAVI CHORDIYA, INDORE VS. ITO 2(1), INDORE AND ITO VS. SH RAVI CHORDIYA, INDROE 735/IND/2013 AND 32/IND/2014 A.Y. 2009-10 19 19 YOUR HONOURS, THE AO HAS TAKEN THE TOTAL OF SUCH MATERIAL RECEIPTS I.E. OF RS.19,45,96,882/- AS THE TOTAL PURCHASES BY 'KRITI' WITHOUT CONSIDERING THE FACT T HAT THE MATERIAL RECEIPTS ARE PREPARED BY 'KRITI' WITH MORE ORIENTATION AND CONCENTRATION ON QUANTITIES RATHER THAN AMOUNT AND IT IS THEREFORE, THE CLERK PREPARING SUC H DETAILS COMMITTED CERTAIN ERRORS WHILE PUNCHING THE DATAS F OR MATERIAL RECEIPTS. IT SHALL BE APPRECIATED THAT CONSIDERING, SOME OF THESE ERRORS, THE LEARNED AO HIMSELF HAS GIVEN CREDIT FOR A DIFFERENCE OF RS.26,17,524/- IN RESPECT OF FIVE BIL LS IN THE BODY OF THE ASSESSMENT ORDER ITSELF. RECONCILIATION STATEMENT OF SALES AND QUALITY CLAI M IN RESPECT OF SALES MADE BY ASSESSEE TO 'KRITI' IS PLA CED AT PB PAGE NO. 91 TO 99. ON A PERUSAL OF SUCH STATEMENT, IT SHALL BE OBSERVE D THAT THE TOTAL AMOUNT OF SALES AND COMMISSION AS PE R THE STATEMENT WORKS OUT AT RS.18,48,71,392/- WHICH PERF ECTLY SHRI RAVI CHORDIYA, INDORE VS. ITO 2(1), INDORE AND ITO VS. SH RAVI CHORDIYA, INDROE 735/IND/2013 AND 32/IND/2014 A.Y. 2009-10 20 20 TALLIED WITH THE AMOUNT OF SALES SHOWN BY THE ASSES SEE IN HIS BOOKS OF ACCOUNT. THE AMOUNT OF PURCHASES BY 'KRITI', WHICH IN ITS T URN HAS BEEN TAKEN FROM THE AMOUNT SHOWN IN THE FINANCI AL BOOKS OF 'KRITI', TALLIES WITH THE AMOUNT OF SALES SHOWN BY THE ASSESSEE TO 'KRITI' WITHOUT ANY VARIATION OF EV EN A SINGLE PENNY. IN NUTSHELL, ON A COMPARISON OF THE FINANCIAL ACCO UNTS OF THE ASSESSEE WITH THAT OF 'KRITI' THERE IS NO VARI ATION AND AS SUCH THERE CANNOT BE ANY CASE OF SUPPRESSION OF THE SALES, ESPECIALLY IN A CIRCUMSTANCE WHEN THE ENTIRE PAYMENTS HAVE BEEN RECEIVED BY THE ASSESSEE THROUGH CHEQUES ONLY, AS ALLEGED BY THE AO. SINCE THERE IS NO SUPPRESSION OF SALES, THE QUESTIO N OF ANY ESTIMATION OF G.P. ON AD-HOC BASIS ALSO DOES NO T ARISE. CONSEQUENTLY, THE ADDITION SO MADE BY THE LEARNED A O AT RS.1,17,405/- ALSO DESERVES TO BE DELETED. IN VIEW OF THE ABOVE FACTS AND CIRCUMSTANCES OF THE CASE, THE TOTAL ADDITIONS OF RS.21,58,178/- SO DELE TED BY SHRI RAVI CHORDIYA, INDORE VS. ITO 2(1), INDORE AND ITO VS. SH RAVI CHORDIYA, INDROE 735/IND/2013 AND 32/IND/2014 A.Y. 2009-10 21 21 THE LEARNED CIT(A) DESERVES TO BE MAINTAINED AND TH IS GROUND OF THE REVENUE BE DISMISSED. 22. WE HAVE HEARD THE RIVAL CONTENTIONS OF BOTH THE P ARTIES. WE CONCUR WITH THE VIEW OF THE LD. CIT(A) AND UPHOLD HIS ACTION. OUR INTERFERENCE IS NOT REQUIRED. CONSEQUEN TLY, GROUND NOS. 1 AND 2 OF REVENUES APPEAL ARE DISMISS ED. 23. NEXT GROUND RELATES TO DELETION OF THE ADDITION OF RS. 7,87,597/- AND RS. 11,578/-BY THE LD. CIT(A) MADE BY THE AO ON ACCOUNT OF UNEXPLAINED INVESTMENT. 24. THE AO MADE THE ADDITION OF RS. 7,87,597/- ON ACCOU NT OF ALLEGED UNEXPLAINED INVESTMENT IN PURCHASES OF S OYABEAN FROM MANDI AND ADDITION OF GROSS PROFIT ON THIS AMO UNT OF RS. 11,578/-. THIS DIFFERENCE IS DULY RECONCILED BY THE ASSESSEE IN PAPER BOOK. 25. THE MATTER CARRIED TO THE LD. CIT(A) AND THE LD. CI T(A) DELETED BOTH THE ADDITIONS OF RS. 7,87,597/- AND RS . . 11,578/- BY OBSERVING AS UNDER :- SHRI RAVI CHORDIYA, INDORE VS. ITO 2(1), INDORE AND ITO VS. SH RAVI CHORDIYA, INDROE 735/IND/2013 AND 32/IND/2014 A.Y. 2009-10 22 22 THIS DIFFERENCE IS DULY RECONCILED BY APPELLANT I N PAPER BOOK FILED IN THIS OFFICE AT PAGE 101-102, WH ICH WAS DULY SENT TO AO FOR HIS COMMENTS. THE DIFFERENC E IS ONLY BECAUSE WHILE MANDI BILLS SHOW AMOUNT OF SALES OF APPELLANT ALONGWITH VAT AMOUNT, APPELLANT HAS SHOWN ONLY PURCHASE AMOUNT & JVAT IS SEPARATELY SHOWN IN BOOKS. THE AO HAS MADE NO COMMENTS EITHER ON THE RECONCILIATION STATEMENT OR ON SUCH EXPLANATION OF APPELLANT IN REMAND REPORT DATE D 29.08.2013. THE EXPLANATION OF APPELLANT SEEMS JUSTIFIED AND AS A RESULT ADDITION OF BOTH RS. . 7,87,597/- AND RS. 11,578/- MADE UNDER THIS HEAD ARE HEREBY DELETED. 26. THE LD. DEPARTMENTAL REPRESENTATIVE RELIED UPON TH E ORDER OF AO. 27. THE LD.AUTHORIZED REPRESENTATIVE FOR THE ASSESSEE SUBMITTED WRITTEN SUBMISSION, WHICH READS AS UNDER :- THE AO HAS MADE IMPUGNED ADDITION OF RS.7,87,597/- ON ACCOUNT OF DIFFERENCE IN AMOUNT OF PURCHASES OF SOYABEAN AS SHOWN BY THE ASSESSEE IN SHRI RAVI CHORDIYA, INDORE VS. ITO 2(1), INDORE AND ITO VS. SH RAVI CHORDIYA, INDROE 735/IND/2013 AND 32/IND/2014 A.Y. 2009-10 23 23 THE BOOKS OF ACCOUNT OF HIS FIRM AND THE PURCHASE PARTICULARS AS APPEARING IN THE RETURNS SUBMITTED T O THE KRISHI UPAJ MANDI SAMITI FOR THE RELEVANT PREVI OUS YEAR. THERE IS NO UNRECORDED PURCHASES IN THE BOOKS OF ACCOUNT OF THE ASSESSEE FIRM. THE ENTIRE DIFFERENCE OF RS.7,87,597/- IS FULLY EXPLAINABLE. A RECONCILIATIO N STATEMENT, SHOWING THE REASON FOR THE IMPUGNED DIFFERENCE IS PLACED AT PAGE NO. 102 & 103 OF OUR PAPER BOOK. ON A PERUSAL OF SUCH STATEMENT, IT SHAL L BE OBSERVED THAT THE MAIN REASON FOR THE DIFFERENCE IS THAT, THE APPELLANT HAS RECORDED THE PURCHASES AND VAT SEPARATELY IN HIS BOOKS OF ACCOUNT WHEREAS IN SOME OF THE RETURNS, DUE TO INADVERTENT MISTAKE, TH E AMOUNT OF PURCHASES HAS GOT SHOWN ALONG WITH THE AMOUNT OF VAT. SINCE THE ASSESSEE DID NOT MAKE ANY UNACCOUNTED PURCHASES ANY ADDITION ON THIS COUNT OR ON THE ESTIMATED PROFIT ON SUCH PURCHASES DOES NOT ARISE. IN VIEW OF THE ABOVE FACTS AND CIRCUMSTANCES OF THE CASE, THE ADDITIONS OF RS.7,99,175/- [RS.7,87,597/- + RS.11,578/-] RIGHTLY DELETED BY TH E LEARNED CIT(A) ON ACCOUNT OF ALLEGED UNEXPLAINED IN PURCHASES AND GROSS PROFIT THEREOF DESERVE TO BE SHRI RAVI CHORDIYA, INDORE VS. ITO 2(1), INDORE AND ITO VS. SH RAVI CHORDIYA, INDROE 735/IND/2013 AND 32/IND/2014 A.Y. 2009-10 24 24 MAINTAINED AND CONSEQUENTLY, THIS GROUND OF APPEAL OF THE DEPARTMENT DESERVES TO BE DISMISSED. 28. WE HAVE HEARD THE RIVAL CONTENTIONS OF BOTH THE P ARTIES. WE UPHOLD THE ACTION OF THE LD. CIT(A) IN DELETING BOTH THE ADDITIONS OF RS.7,87,597/- AND RS.11,578/-. OUR INT ERFERENCE IS NOT CALLED. 29. IN THE RESULT, THE APPEAL OF THE ASSESSEE AND THE A PPEAL OF THE REVENUE BOTH ARE DISMISSED. THIS ORDER HAS BEEN PRONOUNCED IN THE OPEN COURT ON 31 ST MARCH, 2016. SD/- (B.C.MEENA) ACCOUNTANT MEMBER SD/- ( D.T.GARASIA) JUDICIAL MEMBER DATED : 31 ST MARCH, 2016. CPU* 134