Shri Vasantlal A.Doriwala, Surat V. The ACIT.,Circle-5, Surat

ITA 776/AHD/2010

• Counselvise Citation: [2013] 140 COUNSELVISE.COM (IT) 67559 (ITAT-AHMEDABAD)
• Duration Of Justice: 3 year(s) 5 month(s) 2 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 14-08-2013
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 31-07-2013
• Assessment Year: 2006-2007
• Appeal Filed On: 12-03-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: M K PATEL
• Keywords: Income from undisclosed sources; Competent authority

Judgement Text

, , , , , , , , IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH, AHMEDABAD . , ! ' ' ' ' # $%, ! BEFORE SHRI A.MOHAN ALANKAMONY,ACCOUNTANT MEMBER AND SHRI KUL BHARAT, JUDICIAL MEMBER ./ I.T.A. NO.776/AHD/2010 ( ' '(' ' '(' ' '(' ' '(' / / / / ASSESSMENT YEAR : 2006-07) SHRI VASANTLAL A DORIWALA 8, HAJOORI CHAMBERS ZAMPA BAZAR, SURAT / VS. ASSTT.CIT CIRCLE-5 SURAT !) ./*+ ./ PAN/GIR NO. : ACCPD 6390 C ( ), / // / APPELLANT ) .. ( -.), / RESPONDENT ) ), / / APPELLANT BY : SHRI M.K.PATEL, A.R. -.), 0 / / RESPONDENT BY : SHRI SUBHASH BAINS CIT-DR #'1 0 %2 / / / / DATE OF HEARING : 31/7/2013 3( 0 %2 / DATE OF PRONOUNCEMENT : 14/08/2013 4 / O R D E R PER SHRI KUL BHARAT, JUDICIAL MEMBER : THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER OF THE LD.COMMISSIONER OF INCOME TAX(APPEALS)-IV, SURAT (CIT(A) FOR SHORT) DATED 24.11.2009 PERTAINING TO ASSESSMENT YEAR (AY) 2006-07. THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS OF APPEA L:- 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE C ASE AS WELL AS LAW ON THE SUBJECT, THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) HAS ERRED CONFIRMING THE ACTION OF THE ASSESSING OFFICE R IN MAKING ADDITION OF RS.38,33,830/- ON ACCOUNT OF SUPPRESSION OF SALE RECEIPTS. ITA NO.776 /AHD /2010 SHRI VASANTLAL A DORIWALA VS. ASST.CIT ASST.YEAR 2006-07 - 2 - 2. APPELLANT CRAVES LEAVE TO ADD, ALTER OR DELETE ANY GROUND(S) EITHER BEFORE OR IN THE COURSE OF THE HEARING OF THE APPEA L. 2. THE ONLY EFFECTIVE GROUND IS AGAINST THE CONFI RMATION OF ADDITION OF RS.38,33,830/- MADE IN RESPECT OF SUPPRESSION OF SA LE RECEIPTS. THE FACTS RELATED TO THIS ISSUE IS RECORDED BY THE LD.CIT(A) IN HIS ORDER WHICH READS AS UNDER:- THE APPELLANT IS IN BUSINESS OF YARN TRADING. DUR ING THE YEAR THE APPELLANT PURCHASED THE YARN FROM CHINA. DURING TH E ASSESSMENT PROCEEDINGS, BOOKS OF ACCOUNTS WERE EXAMINED VIS-- VIS SALE BILLS. A DETAILED CHART WAS GOT MADE WITH DETAILS LIKE DAT E OF SALE BILLS, NAME OF THE PARTY, TYPE OF YARN, RATE QUANTITY AND AMOUNT. THE CHART REVEALED A PATTERN INDICATING THE FACT TH AT THE ASSESSEE SOLD THE SAME TYPE OF YARN TO DIFFERENT PARTIES AT DIFFERENT RATES ON THE SAME DATE. THE DIFFERENCE IN RATES WAS SUBSTAN TIAL. THIS LED THE A.O. TO BELIEVE SUPPRESSION OF SALES. THE MODU S OPERANDI ACCORDING TO THE A.O., WAS THAT THE GOODS WERE IMPO RTED BY UNDER BILLING AND THE DIFFERENTIAL PAYMENT WAS THROUGH HA WALA. SINCE THE GOODS WERE OSTENSIBLY PURCHASED AT LOWER PRICE S THE SALE IN TURN HAD TO BE EFFECTED AT LOWER PRICES. THE DIFFE RENCE BETWEEN THE BILL PRICE AND ACTUAL PRICE WAS COLLECTED IN CASH WHICH WAS AGAIN REQUIRED FOR REMITTANCE THROUGH HAWALA. THE DETAIL ED CHART PREPARED BY THE A.O, HAS BEEN ANNEXED TO THE ASSESS MENT ORDER. MEANWHILE THE APPELLANT WAS SHOW CAUSED FOR SUPPRES SION OF SALE AS PER PARA 4.3 OF THE ASSESSMENT ORDER WHEREIN S UMMARY OF CHART WAS CONFRONTED TO THE APPELLANT WHICH HAD WOR KED OUT THE SUPPRESSION OF SALES TO THE TUNE OF RS.38,33,830/-. 3. THE LD.COUNSEL FOR THE ASSESSEE VEHEMENTLY ARGU ED THAT THE ACTION OF THE ASSESSING OFFICER FOR MAKING THE ADDITION ON THE GROUND THAT THE ASSESSEE SOLD SAME YARN WITH DIFFERENT RATES IN A V ERY SHORTEST SPAN OF ITA NO.776 /AHD /2010 SHRI VASANTLAL A DORIWALA VS. ASST.CIT ASST.YEAR 2006-07 - 3 - TIME. HE SUBMITTED THAT THE AO WITH HIS PREJUDICIA L MIND CAME TO THE CONCLUSION THAT THE ASSESSEE IS ALSO ENGAGED IN HAW ALA TRANSACTION. HE SUBMITTED THAT THERE IS NO EVIDENCE THAT THE SALE A T DIFFERENT RATES ON THE SAME DAY WAS ON ACCOUNT OF ANY HAWALA TRANSACTION. HE SUBMITTED THAT IT IS SETTLED LAW THE REVENUE CANNOT DECIDE AT WHAT RATE A BUSINESS MAN SHOULD SALE HIS MATERIAL. HE FURTHER SUBMITTED THA T A PRUDENT BUSINESS- MAN HAS TO CONSIDER VARIOUS ASPECTS IN A BUSINESS T RANSACTION. THE REVENUE HAS NOT PLACED ANY EVIDENCE ON RECORD THAT THE MATERIAL WAS SOLD AT A HIGHER RATE BUT REFLECTED AT A LESSER RATE. I T IS ALSO SUBMITTED BY THE LD.COUNSEL FOR THE ASSESSEE THAT THERE IS NOTHING O N RECORD THAT THE SALE EFFECTED AT A HIGHER RATE AND SHOWN AT A LESSER RAT E DIFFERENCE THEREOF WAS RECEIVED BY THE ASSESSEE. ON THE CONTRARY, LD.CIT- DR STRONGLY SUPPORTED THE ORDERS OF THE AUTHORITIES BELOW. 4. WE HAVE HEARD THE RIVAL SUBMISSIONS, PERUSED THE MATERIAL AVAILABLE ON RECORD AND GONE THROUGH THE ORDERS OF THE AUTHORITIES BELOW. WE FIND THAT THE ASSESSING OFFICER HAD MADE THE ADD ITION ON THE GROUND THAT THERE WAS A DIFFERENCE IN SALE-PRICE FOR THE S AME MATERIAL. THE AO IN HIS ORDER HAS OBSERVED THAT IN ORDER TO VERIFY THE MODUS OPERANDI ADOPTED BY OTHER TRADERS, THE BILLS WERE THOROUGHLY CHECKED AND VERIFIED AND AFTER IN-DEPTH VERIFICATION OF THE LIST SO PREPARED, HE C AME TO THE CONCLUSION THAT THE ASSESSEE ALSO ADOPTED THE MODUS OPERANDI OF GENERATION OF BLACK MONEY OR UNACCOUNTED INCOME. THE CONTENTION OF THE LD.COUNSEL FOR THE ASSESSEE IS THAT THE ENTIRE FINDING IS BASED ON CON JECTURES & SURMISES. THE AO HAS NOT BROUGHT ANYTHING ON RECORD THAT THE AMOUNT RELATING TO SO-CALLED SUPPRESSED SALES WAS RECEIVED BY THE ASSE SSEE FROM THE ITA NO.776 /AHD /2010 SHRI VASANTLAL A DORIWALA VS. ASST.CIT ASST.YEAR 2006-07 - 4 - CONCERNED PARTIES. SO FAR AS THE DECISION OF SELLI NG ANY MATERIAL AT A DIFFERENT RATE OR AT A UNIFORM RATE IS CONCERNED, T HE SAME REMAINS WITH THE BUSINESS MAN EXCEPT IN THE CIRCUMSTANCES WHERE THE PRICES ARE REGULATED BY THE COMPETENT AUTHORITY. IN THE PRESENT CASE, N OTHING IS BROUGHT ON RECORD THAT SALE-PRICE WAS REGULATED BY ANY LAW. THEREFORE, THE ASSESSEE WAS WITHIN THE RIGHTS TO SELL HIS MATERIAL IN ACCO RDANCE WITH HIS OWN WISH. IF THE REVENUE FEELS THAT THE SALE PRICE IS DECLARED BY THE ASSESSEE IS NOT CORRECT, THEN THE REVENUE SHOULD PLACE ON RE CORD AS TO HOW THE SALE-PRICE AS DECLARED BY THE ASSESSEE IS NOT CORRE CT AND IF THERE IS ANY DIFFERENCE IN THE SALE-PRICE AS DECLARED BY THE ASS ESSEE AND THE SALE PRICE ACTUALLY RECEIVED BY THE ASSESSEE, THE REVENUE IS R EQUIRED TO DEMONSTRATE THAT THE DIFFERENCE IN SALE-PRICE DECLARED BY THE A SSESSEE AND THE PRICE CLAIMED BY THE REVENUE BEING THE ACTUAL WAS RECEIVE D BY THE ASSESSEE BY WAY OF UNDECLARED ROUTE. IN THE ABSENCE OF THE MAT ERIAL SUGGESTING THAT THE MONEY WAS ACTUALLY RECEIVED BY THE ASSESSEE AS A SALE-PRICE HIGHER THAN THE PRICE DECLARED BY THE ASSESSEE, WE ARE OF THE CONSIDERED VIEW THAT THE REVENUE IS NOT JUSTIFIED TO MAKE ANY ADDIT ION MERELY ON THE BASIS THAT THE ASSESSEE HAS SOLD THE SAME MATERIAL AT DIF FERENT RATES TO DIFFERENT PARTIES OR THE SAME PARTY IN A SINGLE DAY OR WITHIN A SHORTEST SPAN OF TIME. HENCE, WE FIND THERE IS MERIT IN THE CONTENTION OF THE LD.COUNSEL FOR THE ASSESSEE THAT A BUSINESS MAN CAN HAVE THE RIGHT TO DECIDE THE SALE-PRICE ON HIS MATERIAL. THE REVENUE HAS NO ROLE OR AUTHORITY TO DECIDE THE SALE- PRICE. IN THE LIGHT OF ABOVE DISCUSSION, THE GROUN D RAISED BY THE ASSESSEE IS ALLOWED. ACCORDINGLY, THE AO IS HEREBY DIRECTE D TO DELETE THE ADDITION OF RS.38,33,830/- MADE ON ACCOUNT OF SUPPRESSION OF SALE RECEIPTS. ITA NO.776 /AHD /2010 SHRI VASANTLAL A DORIWALA VS. ASST.CIT ASST.YEAR 2006-07 - 5 - 5. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALL OWED. ORDER PRONOUNCED IN OPEN COURT ON THE DATE MENTIONE D HEREINABOVE SD/- SD/- (. ) (# $%) ! ! ( A. MOHAN ALANKAMONY ) ( KUL BHARAT ) ACCOUNTANT MEMBER JUDICIAL MEMBER AHMEDABAD; DATED 14/ 08 /2013 72.., '.../ T.C. NAIR, SR. PS 4 0 -%8 98(% 4 0 -%8 98(% 4 0 -%8 98(% 4 0 -%8 98(%/ COPY OF THE ORDER FORWARDED TO : 1. ), / THE APPELLANT 2. -.), / THE RESPONDENT. 3. % #: / CONCERNED CIT 4. #:() / THE CIT(A)-IV, SURAT 5. 8'$; -% , , / DR, ITAT, AHMEDABAD 6. ;<' =1 / GUARD FILE. 4# 4# 4# 4# / BY ORDER, .8% -% //TRUE COPY// > >> >/ // / * * * * ( DY./ASSTT.REGISTRAR) , , , , / ITAT, AHMEDABAD 1. DATE OF DICTATION .. 5.8.13(DICTATION-PAD 10 PA GES ATTACHED AT THE END OF THIS FILE) 2. DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE DICTATING MEMBER 5.8.13 3. DATE ON WHICH THE APPROVED DRAFT COMES TO THE SR.P. S./P.S.. 4. DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE THE D ICTATING MEMBER FOR PRONOUNCEMENT 5. DATE ON WHICH FAIR ORDER PLACED BEFORE OTHER MEMBER 6. DATE ON WHICH THE FAIR ORDER COMES BACK TO THE SR.P .S./P.S.14.8.13 7. DATE ON WHICH THE FILE GOES TO THE BENCH CLERK 14.8.13 8. DATE ON WHICH THE FILE GOES TO THE HEAD CLERK ... 9. THE DATE ON WHICH THE FILE GOES TO THE ASSISTANT RE GISTRAR FOR SIGNATURE ON THE ORDER.. 10. DATE OF DESPATCH OF THE ORDER