M/s J.M.Agarwal Tobacco Co.(, Farrukhabad V. ACIT, Circle 2(1), Aligarh

ITA 92/AGR/2008

• Counselvise Citation: [2019] 117 COUNSELVISE.COM (IT) 0330 (ITAT-AGRA)
• Duration Of Justice: 11 year(s) 2 month(s) 12 day(s)
• Appeal Type: Cross Objection
• Pronouncement Date: 16-05-2019
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: DB
• Next Hearing Date: 28-01-2013
• Assessment Year: 2003-2004
• Appeal Filed On: 04-03-2008
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Keywords: Difference of opinion; Set aside

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, AGRA BENCH, AGRA BEFORE : SHRI BHAVNESH SAINI, JUDICIAL MEMBER AND SHRI A.L. GEHLOT, ACCOUNTANT MEMBER ITA NO. 92/AGR./2008 ASSESSMENT YEAR : 2003-04 J.M. AGARWAL TOBACCO CO., VS. ASSTT. C.I.T., CIRC LE 2(1), NONIUMGANJ, KAIMGANJ, FARRUKHABAD. DISTT. FARRUKHABAD. (PAN : AAAJE 5566 G) ITA NO. 93/AGR./2008 ASSESSMENT YEAR : 2003-04 J.M. AGARWAL TOBACCO CO. (P) LTD., VS. ASSTT. C.I. T., CIRCLE 2(1), NONIUMGANJ, KAIMGANJ, FARRUKHABAD. DISTT. FARRUKHABAD. (PAN : AAACJ 3028 L) (APPELLANTS) (RESPONDENT) APPELLANTS BY : SHRI PANKAJ GARGH, ADVOCATE RESPONDENT BY : SHRI WASEEM ARSHAD, SR. D.R. DATE OF HEARING : 28.01.2013 DATE OR PRONOUNCEMENT OF ORDER: 28.01.2013 ORDER PER BHAVNESH SAINI, J.M. : DUE TO DIFFERENCE OF OPINION BETWEEN THE MEMBERS OF THE AGRA BENCH, THE HONBLE PRESIDENT NOMINATED SHRI G.D. AGARWAL, LD. VICE-PRESIDENT, DELHI ZONE AS A THIRD MEMBER U/S. 255(4) OF THE INC OME-TAX ACT. FOLLOWING QUESTIONS ARE REFERRED TO THE THIRD MEMBER. ITA NO. 92 & 93/AGR./2008 2 1. WHETHER, IN THE GIVEN FACTS AND CIRCUMSTANCES O F THE CASE, WHEN THE AO HAS NOT DISTURBED THE TRADING RESULTS, AND THE ASSESSEE HAS EXPLAINED CERTAIN INCRIMINATING EVIDEN CES FOUND BY THE CENTRAL EXCISE DEPARTMENT, PARTICULARLY WHEN TH E PURCHASES AND SALES ARE FOUND FULLY VOUCHED AND VERIFIABLE, T HE ENTIRE INVESTMENT CAN BE TREATED AS EXCESS SALE AND BE ADD ED TO THE TOTAL INCOME OF THE ASSESSEE OR NOT ? 2. WHETHER, IN A CASE OF A COMPANY THE TELEPHONE AN D CAR RUNNING EXPENSES CAN BE DISALLOWED AND ADDED IN THE HANDS OF THE COMPANY ON ACCOUNT OF PERSONAL USER OF TELEPHON E/CAR BY ITS DIRECTOR (S) OR NOT ? 3. WHETHER, WHEN THE ASSESSEES TRADING ACCOUNT HAS BEEN ACCEPTED IN TOTO, AND THE GRS WERE EXPLAINED WITH R EFERENCE TO BOOKS OF ACCOUNTS, THE NON-PRODUCTION OF COPIES OF GRS CAN LEAD TO ADDITION, AS HAS BEEN DONE IN THIS CASE OR NOT ? 2. THE LD. THIRD MEMBER (V.P.) HAS GIVEN HIS OPINIO N IN HIS ORDER DATED 18.01.2013 AND AGREED WITH THE PROPOSED ORDER OF LD . JUDICIAL MEMBER. THEREFORE, THE MATTER WAS TAKEN UP FOR PASSING THE ORDER IN CONFORMITY WITH THE MAJORITY VIEW. 3. THE QUESTIONS NOS. 1 & 3 PERTAIN TO BOTH THE ASS ESSEES. THE LD. JUDICIAL MEMBER ON THESE QUESTIONS HELD THAT THE ADDITION ON ACCOUNT OF PROFIT COULD BE MADE AS AGAINST ADDITION MADE OF THE SALES. IN I TA NO. 93/AGR./2008 IN THE CASE OF THE COMPANY, THE LD. JUDICIAL MEMBER SUSTAI NED THE ADDITION OF RS.9,792/- AND IN THE CASE OF FIRM IN ITA NO. 92/AG R./2008, SIMILAR ORDER HAS BEEN PASSED TO ESTIMATE THE ADDITION BY APPLYING NE T PROFIT RATE OF 3.19% AGAINST THE ADDITION SUSTAINED OF UNRECORDED SALES OF RS.3,23,851/-. THUS, THE ADDITION WOULD COME TO RS.10,330/-. THE LD. THIRD M EMBER (V.P.) SINCE AGREED WITH THE ORDER OF LD. JUDICIAL MEMBER ON THI S ISSUE, THEREFORE, IT IS ITA NO. 92 & 93/AGR./2008 3 DIRECTED THAT ADDITION OF RS.9,792/- IN THE CASE OF THE COMPANY (ITA NO. 93/AGR./2008) AND ADDITION OF RS.10,330/- IN CASE O F THE FIRM (ITA NO. 92/AGR./2008) BE SUSTAINED FINALLY. THESE GROUNDS I N BOTH THE APPEALS ABOVE ARE, THEREFORE, PARTLY ALLOWED. 4. QUESTION NO. 2 ABOVE REFERS TO THE COMPANY IN IT A NO. 93/AGR./2008, IN WHICH THE LD. JUDICIAL MEMBER DELETED BOTH THE A DDITIONS ON ACCOUNT OF DISALLOWANCE OUT OF MOBILE PHONE EXPENSES AND VEHIC LE RUNNING EXPENSES. SINCE, THE LD. THIRD MEMBER AGREED WITH THE FINDING S OF THE LD. JUDICIAL MEMBER IN DELETING BOTH THE ABOVE, ADDITIONS, THERE FORE, BOTH THESE ADDITIONS STAND DELETED IN THE CASE OF THE COMPANY (ITA NO. 9 3/AGR./2008). ACCORDINGLY, GROUNDS NO. 3 & 4 OF THE APPEAL OF THE ASSESSEE ARE ALLOWED. 5. IN THE RESULT, BOTH THE APPEALS OF THE ASSESSEE ARE PARTLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 28.01.2013. SD/- SD/- (A.L. GEHLOT) (BHAVNESH SAINI) ACCOUNTANT MEMBER JUDICIAL MEMBER *AKS/- COPY OF THE ORDER FORWARDED TO : 1. APPELLANT 2. RESPONDENT 3. CIT(A), CONCERNED BY ORDER 4. CIT, CONCERNED 5. DR, ITAT, AGRA 6. GUARD FILE SR. PRIVATE SECRETARY TRUE COPY ITA NO. 92 & 93/AGR./2008 4 IN THE INCOME TAX APPELLATE TRIBUNAL, AGRA BENCH, AGRA BEFORE SHRI G.D. AGRAWAL, VICE PRESIDENT (AS THIRD MEMBER) ITA NO. 92/AGR./2008 ASSESSMENT YEAR : 2003-04 J.M. AGARWAL TOBACCO CO., VS. ASSTT. C.I.T., CIRC LE 2(1), NONIUMGANJ, KAIMGANJ, FARRUKHABAD. DISTT. FARRUKHABAD. (PAN : AAAJE 5566 G) ITA NO. 93/AGR./2008 ASSESSMENT YEAR : 2003-04 J.M. AGARWAL TOBACCO CO. (P) LTD., VS. ASSTT. C.I. T., CIRCLE 2(1), NONIUMGANJ, KAIMGANJ, FARRUKHABAD. DISTT. FARRUKHABAD. (PAN : AAACJ 3028 L) (APPELLANTS) (RESPONDENT) APPELLANTS BY : SHRI PANKAJ GARGH, ADVOCATE RESPONDENT BY : SHRI WASEEM ARSHAD, SR. D.R. ORDER DUE TO DIFFERENCE OF OPINION BETWEEN THE MEMBERS O F THE AGRA BENCH, THE HONBLE PRESIDENT NOMINATED ME AS A THIRD MEMBE R U/S. 255(4) OF THE INCOME-TAX ACT. FOLLOWING QUESTIONS ARE REFERRED TO ME AS A THIRD MEMBER. 1. WHETHER, IN THE GIVEN FACTS AND CIRCUMSTANCES O F THE CASE, WHEN THE AO HAS NOT DISTURBED THE TRADING RESULTS, AND THE ASSESSEE HAS EXPLAINED CERTAIN INCRIMINATING EVIDEN CES FOUND BY THE CENTRAL EXCISE DEPARTMENT, PARTICULARLY WHEN TH E PURCHASES AND SALES ARE FOUND FULLY VOUCHED AND VERIFIABLE, T HE ENTIRE ITA NO. 92 & 93/AGR./2008 5 INVESTMENT CAN BE TREATED AS EXCESS SALE AND BE ADD ED TO THE TOTAL INCOME OF THE ASSESSEE OR NOT ? 2. WHETHER, IN A CASE OF A COMPANY THE TELEPHONE AN D CAR RUNNING EXPENSES CAN BE DISALLOWED AND ADDED IN THE HANDS OF THE COMPANY ON ACCOUNT OF PERSONAL USER OF TELEPHON E/CAR BY ITS DIRECTOR (S) OR NOT ? 3. WHETHER, WHEN THE ASSESSEES TRADING ACCOUNT HAS BEEN ACCEPTED IN TOTO, AND THE GRS WERE EXPLAINED WITH R EFERENCE TO BOOKS OF ACCOUNTS, THE NON-PRODUCTION OF COPIES OF GRS CAN LEAD TO ADDITION, AS HAS BEEN DONE IN THIS CASE OR NOT ? 2. AFTER HEARING BOTH THE PARTIES AND PERUSING THE MATERIAL PLACED BEFORE ME INCLUDING THE DECISIONS OF THE LD. MEMBERS, I FI ND THAT THE QUESTIONS REFERRED TO ME AS THIRD MEMBER DO NOT BRING THE PRO PER CONTROVERSY. THE FACTS IN BOTH THE CASES, NAMELY, IN THE CASE OF J.M . AGARWAL TOBACCO CO. AS WELL AS J.M. AGARWAL TOBACCO CO. (P) LTD. ARE MORE OR LESS IDENTICAL. THEREFORE, I SHALL REFER THE FACTS IN THE CASE OF J .M. AGARWAL TOBACCO CO. (P) LTD. 3. DURING THE ACCOUNTING YEAR RELEVANT TO THE ASSES SMENT YEAR UNDER CONSIDERATION, THERE WAS SEARCH AT THE BUSINESS PRE MISES OF THE ASSESSEE- COMPANY AS WELL AS THE BUYERS OF THE ASSESSEE COMPA NY BY CENTRAL EXCISE DEPARTMENT. ON THE BASIS OF INFORMATION RECEIVED FR OM CENTRAL EXCISE DEPARTMENT, NEW DELHI, IT WAS HELD BY THE ASSESSING OFFICER THAT THE ASSESSEE ITA NO. 92 & 93/AGR./2008 6 MADE SALES OF 6952 KGS. OF TOBACCO VALUED AT RS.3,7 5,987/-, FOR WHICH NO SALE INVOICES WERE ISSUED. THEREFORE, THE ASSESSING OFFI CER MADE THE ADDITION OF RS.3,75,987/- WITH THE FOLLOWING FINDINGS :- SINCE THE ABOVE REPLY OF THE ASSESSEE IS NOT CONVIN CING AND EVEN COPIES OF GRS COULD NOT BE PRODUCED HENCE THE TOTAL QUANTITY OF TOBACCO IN EXCESS SALE WEIGHING 6952 KG S FOUND BY THE CENTRAL EXCISE DEPTT., NEW DELHI, VALUED AT RS. 3,75,987/- REMAINED UNEXPLAINED. ACCORDINGLY, A SUM OF RS.3,75 ,987/- IS BEING ADDED TO THE TOTAL INCOME OF THE ASSESSEE TRE ATING IT TO BE UNEXPLAINED. THE ANNEXURE C-5 IS ENCLOSED AS PART O F THIS ASSESSMENT ORDER. (ADDITION RS.3,75,987/-) ON APPEAL, THE CIT(A) SUSTAINED THE ADDITION. HENCE , THE ASSESSEE WAS IN APPEAL BEFORE THE TRIBUNAL. 4. THE LD. J.M., AFTER DISCUSSING THE FACTS AT LENG TH, HAS FINALLY OPINED THAT THE ADDITION SHOULD BE LIMITED TO THE PROFIT ELEMEN T ON THE SUPPRESSED SALE OF RS.3,75,987/-. THE RELEVANT PORTION OF HIS ORDER IS REPRODUCED BELOW FOR READY REFERENCE :- IN MY HUMBLE OPINION, THE LD. AO HAS NOT DONE I TS DUTY PROPERLY BY NOT EXAMINING THE ENTIRE RECORDS AND EX PLANATION TENDERED BY THE ASSESSEE-COMPANY. WHEN THE LD. AO HAS NOT DISTURBED THE TRADING RESULTS AND HAS TREATED THESE INVOICES, ALTHOUGH THESE ARE FOUND RECORDED IN THE BOOKS OF A CCOUNT (BEEJAK BAHI), AT BEST, IN THE GIVEN FACTS AND CIRC UMSTANCES OF THE CASE, THE SALE COULD BE CONSIDERED AS NOT RECORDED IN THE BOOKS, BUT NOT AS BEYOND THE TURNOVER OF THE ASSESSEE FOR THIS YEAR. IN THAT VIEW OF THE MATTER, THE G.P. RATE, WHICH IS 7. 68% (OR NP RATE OF 2.07%), AS HAS BEEN SHOWN AND ACCEPTED BY THE LD . AO, CAN BE ITA NO. 92 & 93/AGR./2008 7 APPLIED FOR ESTIMATING THE SUPPRESSED INCOME QUA SU PPRESSED SALES OF RS.3,75,987/. TO MEET THE ENDS OF JUSTICE , I AM OF THE CONSIDERED OPINION THAT ONLY A PROFIT ELEMENT BY AP PLYING G.P. RATE OF 7.69% TO THE SALE OF RS.3,75,987/- CAN BE A DDED IN THE HANDS OF THE ASSESSEE COMPANY BY TREATING THEM SALE S HAVING BEEN SUPPRESSED AS THESE SALES WERE FOUND RECORDED IN THE BOOKS OF THE ASSESSEE. WITH THE ABOVE OBSERVATION, THERE FORE, I PARTLY ALLOW GROUND NO.1 & 2 OF THIS APPEAL BY SUSTAINING ADDITION OF RS.9,791.93 (ROUNDED TO RS.9,792/-) TO THE TOTAL TA XABLE INCOME. 5. IN THIS RESPECT, THE LD. A.M. HELD THAT THE MATT ER SHOULD BE RESTORED BACK TO THE FILE OF THE CIT(A) FOR ADJUDICATION ON THIS ASPECT. THE RELEVANT FINDING OF THE LD. AM IS ALSO REPRODUCED BELOW FOR READY RE FERENCE : 5.5 AS REGARDS GROUND NO.2, THE SAME WAS NOT SPECIFICALLY ARGUED BEFORE US BY THE LD. A.R. FURT HER, WE OBSERVE THAT THE MATTER IS FACTUAL, SO THAT IT WOULD BE NEE D TO BE DECIDED ON CONSIDERATION OF THE FACTS AND FIGURES OF THE CA SE, EVEN AS THERE IS NO FINDING BY THE LD. CIT(A); NO GROUND HA VING RAISED BY THE ASSESSEE IN THIS RESPECT BEFORE HIM. SO HOWEVE R, WE FIND THAT THE ASSESSEE, TO ITS CREDIT, WHILE ARGUING ITS GROU ND NO.3 BEFORE HIM, PER WRITTEN SUBMISSIONS IN RESPECT THEREOF, WH ICH STAND REPRODUCED AT PAGE 4 OF THE IMPUGNED ORDER, SPECIFI CALLY RAISED THIS ISSUE, SO THAT THIS ISSUE STANDS NOT RAISED BY THE ASSESSEE FOR THE FIRST TIME BEFORE THE TRIBUNAL AND, FURTHER, OU GHT TO HAVE BEEN DECIDED BY THE FIRST APPELLATE AUTHORITY. AS SUCH, INASMUCH AS HE DOES NOT DECIDE THE SAME, HIS ORDER CANNOT BE SAID TO BE A COMPLETE DISPOSAL OF THE ASSESSEES CASE AS RAISED BEFORE HIM. UNDER THE CIRCUMSTANCES, THEREFORE, WE ONLY CONSIDE R IT FIT, AND IN THE INTEREST OF JUSTICE, THAT THE ISSUE BE RESTO RED BACK TO THE FILE OF THE LD. CIT(A) FOR AN ADJUDICATION ON MERITS, IN ACCORDANCE WITH LAW AND AFTER AFFORDING A PROPER OPPORTUNITY T O BOTH THE SIDES TO PRESENT THEIR RESPECTIVE CASES BEFORE HIM, AND BY GIVING HIS SPECIFIC FINDING IN THE MATTER. WE DECIDE ACCO RDINGLY. ITA NO. 92 & 93/AGR./2008 8 6. FROM THE PERUSAL OF THE ORDERS OF BOTH THE LD. M EMBERS, IT IS EVIDENT THAT NONE OF THE MEMBERS HAS DELETED THE ADDITION. THEREFORE, IT IS NOT THE CONTROVERSY WHETHER THE ADDITION OF RS.3,75,987/- M ADE BY THE ASSESSING OFFICER SHOULD BE DELETED OR NOT. NOW, THE LIMITED CONTROVERSY IS WHETHER THE ADDITION SHOULD BE RESTRICTED TO THE GROSS PROFIT O N THE SUPPRESSED SALE OR THE MATTER SHOULD BE SET ASIDE TO THE FILE OF CIT(A) FO R ADJUDICATING THIS ASPECT OF THE MATTER. WHEN THIS POSITION WAS POINTED OUT TO B OTH THE PARTIES AT THE TIME OF HEARING, BOTH OF THEM AGREED THAT THE QUESTION N O. 1 & 3 REFERRED TO THE THIRD MEMBER MAY BE MODIFIED ACCORDINGLY. IN VIEW O F THE ABOVE, QUESTION NOS. 1 & 3 ARE MODIFIED AND REPLACED BY THE FOLLOWI NG QUESTION : WHETHER, ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE ADDITION SHOULD BE RESTRICTED TO THE GROSS PROFIT O N THE PROPOSED SALE OR THE MATTER SHOULD BE SET ASIDE TO THE FILE OF CIT(A) FOR ADJUDICATION ON THIS POINT. 7. APROPOS THIS MODIFIED QUESTION, IT IS STATED BY THE LD. COUNSEL THAT ON THE FACTS OF ASSESSEES CASE, NO ADDITION IS CALLED FOR BECAUSE THERE WAS NO SUPPRESSION OF SALE. HE STATED THAT FIRST OF ALL, T HE GRS WERE NOT FOUND FROM THE ASSESSEES PREMISES, BUT FROM THE PREMISES OF S OME OF THE BUYERS; THAT NO CASE OF EVASION OF EXCISE DUTY HAS BEEN MADE BY THE EXCISE DEPARTMENT AGAINST THE ASSESSEE BECAUSE NO INCRIMINATING DOCUM ENT WAS FOUND FROM THE ASSESSEE; THAT THERE IS NO LEVY OF EXTRA EXCISE DUT Y OR PENALTY UPON THE ITA NO. 92 & 93/AGR./2008 9 ASSESSEE WITH REGARD TO THESE GRS; THAT THE NUMBER OF CARTONS AS PER GRS AND AS PER BILLS ARE IDENTICAL AND THE ONLY DIFFERENCE IS IN THE WEIGHT. HE EXPLAINED THAT DIFFERENCE IN THE WEIGHT IS BECAUSE OF THE WEI GHT OF CONTAINERS, I.E., CARTONS AND OTHER PACKING MATERIAL. IN THE BILLS, T HE ASSESSEE MENTIONED THE WEIGHT OF TOBACCO ONLY WHILE THE TRANSPORT AUTHORIT IES WEIGHED ALL THE CARTONS AND THEN GROSS WEIGHT IS MENTIONED. HE, THEREFORE, SUBMITTED THAT THERE WAS NO SUPPRESSION OF SALE AT ALL. HOWEVER, SINCE THE S MALL AMOUNT WAS INVOLVED, TO END THE LITIGATION, THE ASSESSEE HAS ARGUED THAT THE GROSS PROFIT RATE OR NET PROFIT RATE MAY BE APPLIED, WHICH WAS ACCEPTED BY T HE LD. JM AND THAT IN THE FOLLOWING DECISIONS, HONBLE COURTS HAVE HELD THAT IN THE CASE OF SUPPRESSION OF SALES, NET PROFIT RATE HAS TO BE APPLIED : (I). CIT VS. SAMIR SYNTHETICS MILL, 326 ITR 410 (G UJ.) (II). CIT VS. PRESIDENT INDUSTRIES, 258 ITR 654 (G UJ.) HE FURTHER SUBMITTED THAT THE LD. AM HAS ALSO NOT D ISPUTED THAT THE NET PROFIT RATE SHOULD BE APPLIED ON SUPPRESSED SALE, BUT HIS OBJECTION WAS ONLY TECHNICAL, I.E., THE CIT(A) HAS NOT ADJUDICATED THI S ASPECT, THEREFORE, THE MATTER SHOULD BE ADJUDICATED BY HIM. HE STATED THAT THE MA TTER IS RELATING TO FINANCIAL YEAR 2002-03. MORE THAN A DECADE HAS ALREADY PASSED AND SMALL ADDITION OF RS.3,00,000/- APPROX. IS INVOLVED, HAVING A TAX EFF ECT OF APPROXIMATELY ONE LAC OF RUPEES.. THEREFORE, IN SUCH SMALL MATTER, TH ERE WAS NO NECESSITY OF ITA NO. 92 & 93/AGR./2008 10 SENDING THE MATTER BACK TO THE FILE OF CIT(A) AND I T SHOULD HAVE BEEN ADJUDICATED BY THE BENCH ITSELF. SINCE THE LD. JM H AS ALREADY ADJUDICATED THE ISSUE AND THE LD. AM HAS NOT DISPUTED THE FINDING O F THE LD. JM ON MERIT, THE ORDER OF THE LD. JM SHOULD BE SUSTAINED. 8. THE LD. DR, ON THE OTHER HAND, RELIED UPON THE O RDER OF THE LD. AM AND HE STATED THAT THOUGH THE ASSESSEE HAS RAISED THIS ASPECT BEFORE THE CIT(A), BUT THE CIT(A) DID NOT GIVE SPECIFIC FINDING ON THIS, T HE LD. AM WAS JUSTIFIED IN SETTING ASIDE THE MATTER TO THE FILE OF CIT(A). THE REFORE, THE ORDER OF THE LD. AM SHOULD BE SUSTAINED. 9. I HAVE CAREFULLY CONSIDERED THE ARGUMENTS OF BOT H THE SIDES AND PERUSED THE MATERIAL BEFORE ME. THE LIMITED CONTROVERSY BEF ORE ME IS WHETHER THE MATTER OUGHT TO HAVE BEEN ADJUDICATED BY THE ITAT O R IT SHOULD BE SET ASIDE TO THE FILE OF CIT(A). THE LD. JM HAS ADJUDICATED THE MATTER. THE LD. AM IS OF THE OPINION THAT IT SHOULD BE SENT BACK TO THE FILE OF CIT(A). THE LD. AM HIMSELF HAS MENTIONED THAT THE ASSESSEE AS PER WRIT TEN SUBMISSIONS, SPECIFICALLY RAISED THIS ISSUE BEFORE THE CIT(A). H OWEVER, THE CIT(A) DID NOT GIVE ANY SPECIFIC FINDING IN THIS REGARD. THUS, IT IS NOT A CASE OF FRESH EVIDENCE OR FRESH ARGUMENTS FOR THE FIRST TIME BEFORE THE TR IBUNAL. MOREOVER, THE ITA NO. 92 & 93/AGR./2008 11 DISPUTED ADDITION IS VERY MEAGER, I.E., RS.3,75,987 /-. THE MATTER IS ALREADY MORE THAN A DECADE OLD. THE LD. AM HAS SET ASIDE TH E MATTER BACK TO THE FILE OF CIT(A) ON THE TECHNICAL GROUND I.E. THE FINDING OF THE CIT(A) ON THIS ASPECT IS NOT AVAILABLE. I FIND THAT THE HONBLE APEX COURT I N THE CASE OF COLLECTOR, LAND ACQUISITION VS. MST. KATIJI AND OTHERS, 167 IT R 471 (SC) HAS CONSIDERED THE ISSUE OF TECHNICAL CONSIDERATION VIS A VIS SUBSTANTIAL JUSTICE AND HELD THAT WHEN SUBSTANTIAL JUSTICE AND TECHNICAL CONSIDERATIO NS ARE PITTED AGAINST EACH OTHER, THE CAUSE OF SUBSTANTIAL JUSTIC E DESERVES TO BE PREFERRED. THOUGH THE ABOVE OBSERVATIONS WERE WITH REGARD TO C ONDONATION OF DELAY, BUT IN THE FACTS OF THE ASSESSEES CASE, GUIDELINES GIV EN BY THEIR LORDSHIP COULD BE SQUARELY APPLICABLE. IN THIS CASE, THE LD. JM HAS ADJUDICATED THE ISSUE ON MERITS WHILE THE LD. AM ONLY ON TECHNICAL REASONS P ROPOSED TO SET ASIDE THE MATTER BACK TO THE FILE OF CIT(A). SINCE THE MATTER IS MORE THAN A DECADE OLD AND THE DISPUTED AMOUNT IS ALSO MEAGER, IN MY OPINI ON, SUBSTANTIAL CAUSE OF JUSTICE SHOULD BE SERVED BY ADJUDICATING THE ISSUE AT THE LEVEL OF ITAT RATHER THAN SETTING ASIDE IT TO THE CIT(A) ON TECHNICAL RE ASONS FOR FURTHER DELAYING THE MATTER. CONSIDERING THE SMALLNESS OF THE AMOUNT AND ALSO THE FACTS OF THE CASE, I.E., ISSUE WAS ALREADY RAISED BEFORE THE CIT (A) AND THE MATTER BEING VERY OLD, IN MY OPINION, THE LD. JM WAS JUSTIFIED I N ADJUDICATING THE MATTER AT ITA NO. 92 & 93/AGR./2008 12 THE LEVEL OF THE TRIBUNAL RATHER THAN SETTING ASIDE THE MATER BACK TO THE FILE OF CIT(A) AS PROPOSED BY THE LD. AM. 10. THE LEARNED COUNSEL FOR THE ASSESSEE HAD ARGUED AT LENGTH TO CLAIM THAT NO ADDITION IS AT ALL CALLED FOR BECAUSE THERE WAS NO SUPPRESSED SALE. HE ALSO REFERRED TO VARIOUS PAGES OF THE PAPER BOOK SO AS T O POINT OUT THAT THE NUMBER OF CARTONS MENTIONED IN THE GR AND THE SALE BILL WE RE SAME. THE DIFFERENCE WAS ONLY IN THE WEIGHT. HE EXPLAINED THAT IN THE S ALE BILL, ACTUAL WEIGHT OF TOBACCO IS MENTIONED WHILE IN THE GR, THE TOTAL WEI GHT OF CARTONS WHICH WAS INCLUSIVE OF THE TOBACCO AND PACKING MATERIAL WAS C ONSIDERED. HE ALSO STATED THAT NO EXTRA EXCISE DUTY WAS LEVIED UPON THE ASSES SEE AND NO PENALTY WAS LEVIED BY THE EXCISE DEPARTMENT DUE TO THIS ALLEGED DIFFERENCE IN THE QUANTITY AS PER THE GR AND THE SALE BILL AS POINTED OUT BY T HE ASSESSING OFFICER. HOWEVER, THE PURPOSE OF NOMINATION OF A THIRD MEMBE R UNDER SECTION 255(4) IS TO DECIDE THE CASE ACCORDING TO THE OPINION OF T HE MAJORITY OF THE MEMBERS. SECTION 255(4) READS AS UNDER:- IF THE MEMBERS OF A BENCH DIFFER IN OPINION ON ANY POINT, THE POINT SHALL BE DECIDED ACCORDING TO THE OPINION OF THE MAJORITY, IF THERE IS A MAJORITY, BUT IF THE MEMBERS ARE EQUA LLY DIVIDED, THEY SHALL STATE THE POINT OR POINTS ON WHICH THEY DIFFER, AND THE CASE SHALL BE REFERRED BY THE PRESIDENT OF THE APPE LLATE TRIBUNAL FOR HEARING ON SUCH POINT OR POINTS BY ONE OR MORE OF ITA NO. 92 & 93/AGR./2008 13 THE OTHER MEMBERS OF THE APPELLATE TRIBUNAL, AND SU CH POINT OR POINTS SHALL BE DECIDED ACCORDING TO THE OPINION OF THE MAJORITY OF THE MEMBERS OF THE APPELLATE TRIBUNAL WHO HAVE H EARD THE CASE, INCLUDING THOSE WHO FIRST HEARD IT. 11. FROM THE ABOVE, IT IS CLEAR THAT A MATTER IS RE FERRED TO A THIRD MEMBER ONLY IF THE MEMBERS CONSTITUTING THE BENCH ARE EQUA LLY DIVIDED. AFTER THE DECISION BY THE THIRD MEMBER, THE APPEAL IS TO BE D ECIDED AS PER THE MAJORITY OF THE MEMBERS. THEREFORE, THE ENDEAVOUR OF THE TH IRD MEMBER SHOULD BE TO AGREE WITH ONE OF THE MEMBERS SO THAT THERE CAN BE A MAJORITY VIEW. IF THE THIRD MEMBER APPOINTED UNDER SECTION 255(4) TAKES A DIFFERENT VIEW THAN THE VIEW TAKEN BY BOTH THE MEMBERS, THEN, THERE WOULD B E NO MAJORITY VIEW BUT THREE DIFFERENT VIEWS. IN VIEW OF THE ABOVE, I DEC LINE TO GIVE ANY FINDING ON THE ASSESSEES CONTENTION THAT NO ADDITION IS CALLE D FOR BECAUSE NONE OF THE MEMBERS HAS GIVEN THE FINDING THAT NO ADDITION IS C ALLED FOR. 12. REVERTING BACK TO THE VIEWS OF BOTH THE MEMBERS , I HAVE ALREADY STATED THAT THE LEARNED ACCOUNTANT MEMBER HAS ONLY SET ASI DE THE MATTER TO THE FILE OF THE LEARNED CIT(A), WITH WHICH, I AM UNABLE TO A GREE FOR THE DETAILED DISCUSSION IN PARAGRAPH 9 ABOVE. THE LEARNED JUDIC IAL MEMBER HAS SUSTAINED THE ADDITION OF THE GROSS PROFIT ON THE ALLEGED SUP PRESSED SALE. THE LEARNED COUNSEL FOR THE ASSESSEE HAS RELIED UPON TWO DECISI ONS OF HONBLE GUJARAT ITA NO. 92 & 93/AGR./2008 14 HIGH COURT IN THE CASE OF SAMIR SYNTHETICS MILL (SUPRA) AND PRESIDENT INDUSTRIES (SUPRA). THESE DECISIONS SUPPORT THE FINDING OF T HE LEARNED JUDICIAL MEMBER. NO CONTRARY DECISION IS POINTED OUT BY THE LEARNED DR. IN VIEW OF TOTALITY OF ABOVE FACTS, I AGREE WITH THE LEARNED J UDICIAL MEMBER WITH REGARD TO MODIFIED QUESTION NO.1. 13. THE FACTS IN THE CASE OF J.M. AGARWAL TOBACCO C O. ARE ALSO IDENTICAL EXCEPT THE VARIATION IN THE AMOUNT OF THE ADDITION. THE TOTAL ADDITION IN THE CASE OF J.M. AGARWAL TOBACCO CO. IS RS.3,23,851/- A S AGAINST THE ADDITION OF RS.3,75,987/- IN THE CASE OF J.M. AGARWAL TOBACCO C O.(P) LTD. IN VIEW OF THE ABOVE, MY FINDING IN THE CASE OF J.M. AGARWAL TOBAC CO CO.(P) LTD. WOULD BE SQUARELY APPLICABLE IN THE CASE OF J.M. AGARWAL TOB ACCO CO. THEREFORE, I AGREE WITH THE LEARNED JUDICIAL MEMBER IN THE CASE OF J.M. AGARWAL TOBACCO CO. ALSO. 14. THE SECOND QUESTION REFERRED TO ME IS WITH REGA RD TO DISALLOWANCE OF EXPENSES IN THE HANDS OF A COMPANY ON ACCOUNT OF PE RSONAL USER OF TELEPHONE / CAR BY THE DIRECTORS. I FIND THAT THIS ISSUE IS S QUARELY COVERED IN FAVOUR OF THE ASSESSEE BY THE DECISION OF HONBLE GUJARAT HIGH CO URT IN THE CASE OF SAYAJI IRON & ENGINEERING CO. VS. CIT, 253 ITR 749 (GUJ.). THE LD. JM HAS ALSO ITA NO. 92 & 93/AGR./2008 15 RELIED UPON THE ABOVE DECISION. THOUGH THE LD. AM H AS DISCUSSED THIS ISSUE AT GREAT LENGTH, HOWEVER, I FIND THAT NO CONTRARY DECI SION DIRECTLY ON THIS ISSUE IS REFERRED BY THE LD. AM. THE LD. AM HAS REFERRED TO VARIOUS OTHER ISSUES RELATING TO POWER OF THE ASSESSING OFFICER, BURDEN OF THE ASSESSEE TO PROVE THE EXPENDITURE FOR THE PURPOSE OF BUSINESS. HOWEVER, I F THE TELEPHONE IS USED BY THE DIRECTOR, WHETHER IT CAN BE SAID TO BE THE PERS ONAL USE BY THE COMPANY, WHICH IS THE ASSESSEE, THE SAME IS COVERED BY THE D ECISION OF HONBLE GUJARAT HIGH COURT IN THE CASE OF SAYAJI IRON & ENGINEERING CO. (SUPRA). ON THIS SPECIFIC ISSUE, NO CONTRARY DECISION IS POINTED OUT BY THE LD. AM. THEREFORE, I AM OF THE OPINION THAT THE LD. JM WAS JUSTIFIED IN DELETING THE DISALLOWANCE RELYING UPON THE DECISION OF HONBLE GUJARAT HIGH C OURT IN THE CASE OF SAYAJI IRON & ENGINEERING CO. (SUPRA). I, THEREFORE, AGREE WITH THE LD. JM WITH REGARD TO QUESTION NO. 2 ALSO. SD/- (G.D. AGRAWAL) VICE PRESIDENT DATED : 18 TH JANUARY, 2013 *AKS/-