Income Tax Officer-3(4), Lucknow V. M/s Jai Jagdamba Scrap Suppliers Ltd., Lucknow

ITA 802/LKW/2014

• Counselvise Citation: 80223714 RSA 2014
• Duration Of Justice: 10 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 23-09-2015
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 21-08-2015
• Assessment Year: 2010-2011
• Appeal Filed On: 30-10-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: R K RAM
• Assessee Lawyers: ANIL ANAND
• Keywords: Additional evidence; Fair market value
• Section: 37

Judgement Text

1 IN THE INCOME TAX APPELLATE TRIBUNAL LUCKNOW BENCH B, LUCKNOW BEFORE SHRI SUNIL KUMAR YADAV, JUDICIAL MEMBER AND SHRI A.K. GARODIA, ACCOUNTANT MEMBER ITA NO.802/LKW/2014 ASSESSMENT YEAR: 2010 11 ITO, WARD 3 (4), RANGE 3, LUCKNOW VS. M/S JAI JAGDAMBA SCRAP SUPPLIERS LTD. WATER WORK ROAD, AISHBAGH, LUCKNOW PAN:AAACJ9816C (APPELLANT) (RESPONDENT) ASSESSEE BY SHRI ANIL ANAND, ADVOCATE REVENUE BY SHRI R. K. RAM, SR. DR DATE OF HEARING 27/08/2015 DATE OF PRONOUNCEMENT 2 3 /09/2015 O R D E R PER A. K. GARODIA, A.M. THIS IS REVENUES APPEAL DIRECTED AGAINST THE ORDER OF LD CIT (A) I, LUCKNOW DATED 06.08.2014 FOR A.Y. 2010 11. 2. AS PER GROUND NO. 1 & 2, THE ONLY GRIEVANCE OF THE REVENUE IS REGARDING DELETION OF THE ADDITION OF RS. 975,400/ - MADE BY THE A.O. ON ACCOUNT OF FORFEITURE OF EARNEST MONEY DEPOSIT BY RAILWAYS. 3. LEARNED DR OF THE REVENUE SUPPORTED THE ASSESSMENT ORDER AND LEARNED AR OF THE ASSESSEE SUPPORTED THE ORDER OF CIT (A). 4. WE HAVE CONSID ERED THE RIVAL SUBMISSIONS AND GONE THROUGH THE ORDERS OF THE LOWER AUTHORITIES BELOW. WE FIND THAT THE A.O. HAS MADE 2 ADDITION BY INVOKING THE PROVISIONS OF EXPLANATION TO SECTION 37 OF I. T. ACT BY HOLDING THAT IT IS A PENALTY. A CLEAR FINDING IS GIVEN BY THE LEARNED CIT (A) THAT THE FORFEITURE OF EARNEST MONEY BY RAILWAYS WAS ON ACCOUNT OF FAILURE ON THE PART OF THE ASSESSEE TO DEPOSIT BALANCE AMOUNT. HE HAS ALSO GIVEN A FINDING THAT THE MATERIAL WHICH WAS TO BE PURCHASED AS PER THE AUCTION WAS FOR STOCK IN TRADE AND THEREFORE, IT WAS A LOSS IN NORMAL COURSE OF BUSINESS. THESE FINDINGS OF LEARNED CIT (A) COULD NOT BE CONTROVERTED BY THE LEARNED DR OF THE REVENUE AND IN OUR CONSIDERED OPINION, UNDER THESE FACTS, THE PROVISIONS OF EXPLANATION TO SECTION 37 O F I. T. ACT ARE NOT APPLICABLE. HENCE, WE DECLINE TO INTERFERE IN THE ORDER OF THE LEARNED CIT (A) ON THIS ISSUE. THESE GROUNDS ARE REJECTED. 5. AS PER GROUND NO. 3, THE GRIEVANCE OF THE REVENUE IS REGARDING DELETION OF THE ADDITION OF RS. 606,104/ - OUT O F RS. 636,354/ - MADE BY THE A.O. U/S 40A (3) AND THIS IS ALSO A GRIEVANCE IN THIS REGARD THAT THERE IS VIOLATION OF RULE 46A. 6. LEARNED DR OF THE REVENUE SUPPORTED THE ASSESSMENT ORDER. HE ALSO SUBMITTED THAT AS CAN BE SEEN ON PAGE 4 OF THE ASSESSMENT OR DER, THERE ARE SEVERAL PAYMENTS IN EXCESS OF RS. 20,000/ - ON ONE DAY BUT CIT (A) SAYS THAT THERE IS ONLY ONE SUCH PAYMENT. LEARNED AR OF THE ASSESSEE SUPPORTED THE ORDER OF CIT (A). HE ALSO DRAWN OUR ATTENTION TO PAGES 15 TO 17 OF THE PAPER BOOK AND SUBMIT TED THAT THOSE OTHER PAYMENTS IN EXCESS OF RS. 20,000/ - IS NOT TO ONE PARTY AND DATE WISE PARTY WISE PAYMENT IN EXCESS OF RS. 20,000/ - IS ONLY ONE FOR WHICH DISALLOWANCE IS UPHELD BY CIT (A). 7. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND GONE THROUGH TH E ORDERS OF THE LOWER AUTHORITIES BELOW. WE FIND THAT THE LEARNED DR OF THE REVENUE COULD NOT POINT OUT AS TO WHAT WAS THE ADDITIONAL EVIDENCE ADMITTED BY CIT (A) IN VIOLATION OF RULE 46A AND HENCE, ON THIS ASPECT, WE FIND NO INFIRMITY IN THE ORDER OF CIT (A). ON MERIT, WE FIND THAT AS PER THE 3 CHART AVAILABLE ON PAGES 15 AND 16 OF THE PAPER BOOK, THERE IS A PAYMENT OF RS. 30,250/ - ON 18.04.2009 BUT FOR THIS THE DISALLOWANCE IS ALREADY UPHELD BY THE CIT (A). ON SEVERAL OTHER DATES, THE TOTAL PAYMENT IS EXC EEDING THIS AMOUNT OF RS. 20,000/ - BUT PARTY WISE PAYMENTS ARE BELOW RS. 20,000/ - AND HENCE SECTION 40A (3) CANNOT BE INVOKED FOR SUCH PAYMENTS. THEREFORE, WE FIND NO REASON TO INTERFERE IN THE ORDER OF CIT (A) ON THIS ISSUE ALSO. GROUND NO. 3 IS ALSO REJE CTED. 8. AS PER GROUND NO. 4, THE GRIEVANCE OF THE REVENUE IS REGARDING DELETION OF THE ADDITION OF RS. 10,34,946/ - MADE BY THE A.O. U/S 40A (2) (B) AND THIS IS ALSO A GRIEVANCE IN THIS REGARD THAT THERE IS VIOLATION OF RULE 46A. 9. LEARNED DR OF THE REV ENUE SUPPORTED THE ASSESSMENT ORDER. LEARNED AR OF THE ASSESSEE SUPPORTED THE ORDER OF CIT (A). HE ALSO DRAWN OUR ATTENTION TO PAGES 137, 137A AND 138 OF THE PAPER BOOK AND SUBMITTED THAT A.O. ALSO ACCEPTS ON PAGE 6 OF THE ASSESSMENT ORDER THAT THE PURCHAS ES FROM SHERANWALI STEEL PVT. LTD. APPEARS TO BE REASONABLE. HE ALSO SUBMITTED THAT THE A.O. HAS COMPARED THE RATES CHARGED BY ASHOKA STEELS AND SHERANWALI STEEL PVT. LTD. BUT MISSED ONE IMPORTANT POINT THAT THE RATES CHARGED BY ASHOKA STEEL IS INCLUSIVE O F EXCISE DUTY AND CESS BUT SHERANWALI STEEL PVT. LTD. HAD CHARGES EXCISE DUTY AND CESS SEPARATELY. HE ALSO SUBMITTED THAT IF THE RATE OF SHERANWALI STEEL PVT. LTD. IS ALSO MADE INCLUSIVE OF EXCISE DUTY AND CESS, THE RATES ARE COMPARABLE. 10. WE HAVE CONSI DERED THE RIVAL SUBMISSIONS AND GONE THROUGH THE ORDERS OF THE LOWER AUTHORITIES BELOW. WE FIND THAT THE LEARNED DR OF THE REVENUE COULD NOT POINT OUT AS TO WHAT WAS THE ADDITIONAL EVIDENCE ADMITTED BY CIT (A) IN VIOLATION OF RULE 46A AND HENCE, ON THIS AS PECT, WE FIND NO INFIRMITY IN THE ORDER OF CIT (A). ON MERIT, WE FIND THAT AS PER THE CHART AVAILABLE ON PAGE 137A OF THE PAPER BOOK AND BILLS ON PAGES 137 AND 4 138 OF THE PAPER BOOK, ASHOKA STEEL HAS CHARGES RS. 28,000/ - PER MT FOR M. S. ANGLE AND ONLY VAT @ 4% WAS CHARGED AND NO EXCISE DUTY AND CESS IS SEPARATELY CHARGED. IN THE BILL OF SHERANWALI STEEL PVT. LTD., RATE OF M. S. ANGLE IS CHARGED @ RS. 25,800/ - PER MT BUT EXCISE DUTY @ 14% AND CESS @ 3% IS SEPARATELY CHARGED BEFORE CHARGING VAT @ 4%. HENCE, THE RATE HAS TO BE COMPARED BY FIRST ADDING EXCISE DUTY AND CESS IN THE RATE CHARGED BY SHERANWALI STEEL PVT. LTD. WHEN WE DO SO, THE RATE OF SHERANWALI STEEL PVT. LTD. COMES TO RS. 27,925/ - AS COMPARED TO RS. 28,000/ - CHARGED BY ASHOKA STEELS. DIFFERENCE IN BOTH IS LESS THAN 3%. IT IS ALSO NOTED BY CIT (A) AS CAN BE SEEN ON PAGE 137A OF THE PAPER BOOK ALSO THAT ON SOME DATES, RATES CHARGED BY ASHOKA STEELS IS LOWER THAN THE RATES OF SHERANWALI STEEL PVT. LTD. THIS IS ALSO NOTED BY THE CIT (A) THAT BOTH TH ESE PARTIES ARE COVERED U/S 40A (2) (B) AND NO COMPARISON S MADE BY THE A.O. FROM AN INDEPENDENT SOURCE TO FIND OUT THAT THE RATES PAID TO ASHOKA STEELS ARE EXCESSIVE THAN FAIR MARKET VALUE. IT IS ALSO NOTED BY CIT (A) THAT ASHOKA STEELS IS A TRADER AND S HERANWALI STEEL PVT. LTD. IS A MANUFACTURING CONCERN AND THERE IS ALWAYS SOME PRICE DIFFERENCE IN THE PRICES CHARGED BY A MANUFACTURER AND A TRADER. CONSIDERING ALL THESE FACTS, WE FIND NO INFIRMITY IN THE ORDER OF CIT (A) ON THIS ISSUE ALSO. GROUND NO. 4 IS ALSO REJECTED. 11. IN THE RESULT, THE APPEAL OF THE REVENUE IS DISMISSED. (ORDER WAS PRONOUNCED IN THE OPEN COURT ON THE DATE MENTIONED ON THE CAPTION PAGE) SD/. SD/. (SUNIL KUMAR YADAV) ( A. K. GARODIA ) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 2 3 /09/2015 COPY OF THE ORDER FORWARDED TO : 1. THE APPELLANT 2. THE RESPONDENT. 3. CONCERNED CIT 4. THE CIT(A) 5. D.R., I.T.A.T., LUCKNOW ASSTT. REGISTRAR