FashionFabrics, Salem V. DCIT, Salem

ITA 782/CHNY/2015

• Counselvise Citation: 78221714 RSA 2015
• Duration Of Justice: 3 month(s) 26 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 06-08-2015
• Appeal Filed By: Assessee
• Bench Allotted: B
• Next Hearing Date: 08-07-2015
• Assessment Year: 2007-2008
• Appeal Filed On: 10-04-2015
• Court: TRIBUNAL
• Department Lawyers: DR B NISCHAL
• Assessee Lawyers: S SRIDHAR
• Section: 133A; 132

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH : CHENNAI . . . , . !' , # $ % [ BEFORE SHRI N.R.S. GANESAN, JUDICIAL MEMBER AND SHRI A. MOHAN ALANKAMONY, ACCOUNTANT MEMBER ] ./ I.T.A.NO.781/MDS/2015 / ASSESSMENT YEAR : 2011-12 M/S SREE GOPALAKRISHNA WASHING CENTRE 1, SANYASI GUNDU ROAD SALEM 636 015 VS. THE DY. COMMISSIONER OF INCOME-TAX CENTRAL CIRCLE SALEM [PAN AAXFS 6608 R] ( &' / APPELLANT) ( ()&' /RESPONDENT) ./ I.T.A.NOS.776, 782 & 783/MDS/2015 / ASSESSMENT YEARS : 2006-07,2007-08 & 2011-12 M/S FASHION FABRICS F64, PULIKUTHI MAIN ROAD GUHAI, SALEM 6 VS. THE DY. COMMISSIONER OF INCOME-TAX CENTRAL CIRCLE SALEM [PAN AAAFF 5719 M] ( &' / APPELLANT) ( ()&' /RESPONDENT) / APPELLANT BY : SHRI S. SRIDHAR, ADVOCATE /RESPONDENT BY : DR. B. NISCHAL, JCIT / DATE OF HEARING : 08 - 0 7 - 2015 ! / DATE OF PRONOUNCEMENT : 06 - 08 - 2015 ITA NO.781/15 776,782 & 783/15 :- 2 -: / O R D E R PER N.R.S.GANESAN, JUDICIAL MEMBER THESE APPEALS OF TWO INDEPENDENT ASSESSEES ARE DI RECTED AGAINST THE RESPECTIVE ORDERS OF THE COMMISSIONER O F INCOME-TAX (APPEALS)-18, CHENNAI, FOR ASSESSMENT YEARS 2006-07 , 2007-08 AND 2011-12. SINCE COMMON ISSUE ARISE FOR CONSIDERATIO N IN ALL THE APPEALS, WE HEARD THEM TOGETHER AND DISPOSE OF THE SAME BY THIS COMMON ORDER. 2. SHRI S. SRIDHAR, LD. COUNSEL FOR THE ASSESSEE SUBMI TTED THAT THERE WAS A SEARCH OPERATION IN THE BUSINESS PREMIS ES OF THE ASSESSEE ON 28.12.2010. DURING THE COURSE OF SEARCH OPERATI ON, ACCORDING TO THE LD. COUNSEL, NO MATERIAL WAS FOUND AND SEIZED. HOWEVER, ON THE BASIS OF THE STATEMENT RECORDED DURING THE COURSE O F SEARCH OPERATION FROM ONE OF THE PARTNERS OF THE ASSESSEE-FIRM, THE ADDITION WAS MADE. ACCORDING TO THE LD. COUNSEL, IN THE ABSENCE OF ANY MATERIAL FOUND DURING THE COURSE OF SEARCH OPERATION, THERE CANNOT BE ANY ADDITION U/S 153C OF THE ACT. 3. ON THE CONTRARY, DR. B. NISCHAL, LD. DEPARTMENTAL REPRESENTATIVE SUBMITTED THAT INITIALLY A SURVEY WA S CONDUCTED U/S 133A OF THE ACT ON 9.12.2010 IN THE BUSINESS PREMIS ES OF THE ASSESSEE-FIRM. ON THE BASIS OF INCRIMINATING MATE RIAL FOUND INDICTING ITA NO.781/15 776,782 & 783/15 :- 3 -: SUPPRESSION OF ACTUAL SALES AND EXPENDITURE, THE SU RVEY PROCEEDINGS WERE CONVERTED INTO SEARCH AND BOTH THE BUSINESS PR EMISES AND RESIDENCE OF THE PARTNERS OF THE ASSESSEE-FIRM WER E STATED TO BE SEARCHED. DURING THE COURSE OF SEARCH OPERATION, T HE PARTNER OF THE ASSESSEE-FIRM WAS EXAMINED ON THE BASIS OF THE BOOK S OF ACCOUNT FOUND. THE PARTNER OF THE ASSESSEE-FIRM ADMITTED THAT THEY ARE IN THE HABIT OF INFLATING THE WEAVING CHARGES AND STAFF SA LARY TO THE EXTENT OF 20% AND CALENDARING AND WASHING CHARGES TO THE E XTENT OF 10%. ACCORDINGLY, THE ASSESSING OFFICER DISALLOWED 20% O F THE WEAVING CHARGES AND STAFF SALARY AND 10% OF CALENDARING AND WASHING CHARGES. THEREFORE, ACCORDING TO THE LD. COUNSEL, IT CANNOT BE SAID THAT THERE WAS NO MATERIAL FOUND DURING THE COURSE OF SEARCH O PERATION. 4. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS ON EITHER SIDE AND ALSO PERUSED THE MATERIAL AVAILABLE ON RECORD. FRO M THE MATERIAL AVAILABLE ON RECORD, IT APPEARS THAT A SURVEY WAS C ONDUCTED IN THE BUSINESS PREMISES OF THE ASSESSEE ON 9.12.2010. O N THE BASIS OF THE INCRIMINATING MATERIAL FOUND REGARDING SUPPRESSION OF SALES AND INFLATION OF EXPENDITURE, THE SURVEY PROCEEDINGS WE RE CONVERTED INTO SEARCH PROCEEDINGS U/S 132 OF THE ACT AND THE BUSI NESS PREMISES OF THE ASSESSEE AND RESIDENCE OF THE PARTNERS WERE S AID TO BE SEARCHED. ITA NO.781/15 776,782 & 783/15 :- 4 -: 5. FOR THE ASSESSMENT YEAR 2006-07, THE ASSESSEE APPE ARS TO HAVE FILED ITS RETURN OF INCOME IN THE REGULAR COUR SE ON 20.10.2006. SIMILARLY, FOR THE ASSESSMENT YEAR 2007-08, THE RET URN OF INCOME WAS FILED ON 31.10.2007. FOR THE ASSESSMENT YEAR 2011- 12, THE RETURN OF INCOME WAS FILED ON 28.6.2012. THE TIME LIMIT FOR ISSUING NOTICE U/S 143(2) EXPIRED FOR THE ASSESSMENT YEAR 2006-07 ON 3 0.7.2007. FOR THE ASSESSMENT YEAR 2007-08, THE TIME LIMIT FOR ISS UING NOTICE U/S 143(2) EXPIRED ON 30.9.2008. ADMITTEDLY, THE SEARC H WAS CONDUCTED ON 28.12.2010. THEREFORE, THE ASSESSMENT PROCEEDIN GS ON THE BASIS OF THE RETURN FILED U/S 139(1) WAS TERMINATED BY OPER ATION OF LAW. THEREFORE, THE ASSESSING OFFICER HAS TO MAKE ASSESS MENT U/S 153C IN THE CASE OF PERSONS OTHER THAN THE SEARCHED PERSON ON THE BASIS OF THE MATERIAL FOUND DURING THE COURSE OF SEARCH OPERATIO N. IN OTHER WORDS, THE ASSESSMENT PROCEEDINGS ON THE BASIS OF THE RETU RN FILED U/S 139(1) IS NOT PENDING ON THE DATE OF SEARCH, THEREFORE, TH E ASSESSING OFFICER HAS TO CONFINE HIMSELF ONLY TO THE MATERIAL FOUND D URING THE COURSE OF SEARCH OPERATION. IN THE CASE BEFORE US, NO MATERI AL WAS FOUND TO INDICATE THAT THE ASSESSEE EITHER SUPPRESSED THE S ALES OR INFLATED THE EXPENDITURE DURING THE COURSE OF SEARCH OPERATION. ONLY ON THE BASIS OF STATEMENT RECORDED FROM THE PARTNER OF THE ASSE SSEE-FIRM ON THE BASIS OF THE BOOKS OF ACCOUNT, THE ADDITION WAS MAD E. THEREFORE, THIS TRIBUNAL IS OF THE CONSIDERED OPINION THAT IN THE A BSENCE OF ANY ITA NO.781/15 776,782 & 783/15 :- 5 -: MATERIAL TO INDICATE THE INFLATION OF EXPENDITURE, THERE CANNOT BE ANY ADDITION ON THE BASIS OF THE STATEMENT ALONE. ACCO RDINGLY, THIS TRIBUNAL IS UNABLE TO UPHOLD THE ORDERS OF THE LOWE R AUTHORITIES FOR ASSESSMENT YEARS 2006-07 AND 2007-08. THEREFORE, T HE ORDERS OF THE LOWER AUTHORITIES FOR THE ASSESSMENT YEARS 2006-07 AND 2007-08 ARE SET ASIDE AND THE ADDITION MADE BY THE ASSESSING OF FICER IS DELETED. 6. NOW COMING TO THE ASSESSMENT YEAR 2011-12, FROM THE ORDERS OF THE LOWER AUTHORITIES IT APPEARS THAT NO RETURN OF INCOME WAS FILED U/S 139. THE RETURN WAS FILED ONLY CONSEQUE NT TO THE NOTICE ISSUED U/S 153C OF THE ACT. THEREFORE, THIS TRIB UNAL IS OF THE CONSIDERED OPINION THAT EVEN THOUGH THERE WAS NO SE ARCH MATERIAL AND THE PROCEEDINGS WERE NOT PENDING ON THE BASIS OF TH E RETURN FILED, THE ASSESSING OFFICER HAS TO PASS A COMPOSITE ORDER FOR THE UNDISCLOSED INCOME AND THE NORMAL INCOME. IN OTHER WORDS, ONE O RDER HAS TO BE PASSED FOR THE BLOCK PERIOD COMPUTING THE TAXABLE I NCOME INCLUDING THE UNDISCLOSED INCOME. THEREFORE, THE ASSESSING OFFICER HAS TO COMPUTE THE TOTAL TAXABLE INCOME ON THE BASIS OF T HE MATERIAL AVAILABLE ON RECORD. SINCE THE ASSESSEE ITSELF A DMITTED THAT THE WEAVING CHARGES AND STAFF SALARY WERE INFLATED TO T HE EXTENT OF 20% AND CALENDARING AND WASHING CHARGES TO THE EXTENT OF 10%, THIS TRIBUNAL IS OF THE CONSIDERED OPINION THAT THE ASSE SSING OFFICER HAS RIGHTLY MADE THE ADDITION FOR THE ASSESSMENT YEAR 2 011-12. THE ITA NO.781/15 776,782 & 783/15 :- 6 -: CIT(A), ON THE BASIS OF THE ADMISSION MADE BY THE P ARTNER OF THE ASSESSEE-FIRM, HAS RIGHTLY CONFIRMED THE ADDITION. THIS TRIBUNAL DO NOT FIND ANY INFIRMITY IN THE ORDER OF THE CIT(A) FOR T HE ASSESSMENT YEAR 2011-12. ACCORDINGLY, THE SAME IS CONFIRMED. 7. IN THE RESULT, THE APPEALS OF THE ASSESSEE IN I.T .A.NO.776 & 782/MDS/2015 FOR ASSESSMENT YEARS 2006-07 AND 2007- 08 ARE ALLOWED. HOWEVER, I.T.A.NOS.783/MDS/2015 AND 781/MDS/2015 FO R ASSESSMENT YEAR 2011-12 ARE DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 06 TH OF AUGUST, 2015, AT CHENNAI. SD/- SD/- ( . !' ) (A. MOHAN ALANKAMONY) # / ACCOUNTANT MEMBER ( . . . ' ) (N.R.S. GANESAN) / JUDICIAL MEMBER #$ / CHENNAI %& / DATED: 06 TH AUGUST, 2015 RD &' ()*) / COPY TO: 1 . / APPELLANT 4. + / CIT 2. / RESPONDENT 5. ),- . / DR 3. +/' / CIT(A) 6. -01 / GF