ACIT, Circle - 29, Kolkata, Kolkata V. M/s. Vinayak International, Kolkata

ITA 986/KOL/2010

• Counselvise Citation: 98623514 RSA 2010
• Duration Of Justice: 1 year(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 10-06-2011
• Appeal Filed By: Department
• Order Result: Partly Allowed
• Bench Allotted: B
• Next Hearing Date: 26-05-2011
• Assessment Year: 2004-2005
• Appeal Filed On: 13-05-2010
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: V A RAJU
• Section: 133(6)

Judgement Text

, , , , , , ,, , IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH : KOLKATA [ . . . . . . . . , ,, , , ,, , . . . . . .. . ! ! ! ! , ' ' ' ' ] [BEFORE HONBLE SHRI B. R. MITT AL, JM & HONBLE SHRI S.V. MEHROTRA, AM] #$ #$ #$ #$ / I.T.A NO. 986/KOL/2010 %& '() %& '() %& '() %& '()/ // / ASSESSMENT YEAR : 2004-05 ASSTT. COMMISSIONER OF INCOME TAX -V S.- M/S. VINAYAK INTERNATIONAL CIRCLE-29, KOLKATA. KOLKATA. [PAN : AAAFI 8390 P] (,- /APPELLANT ) (/0,-/ RESPONDENT ) ,- / FOR THE APPELLANT : 1 /SHRI V. A. RAJU /0,- / FOR THE RESPONDENT : 1 / SHRI SUBASH AGARWAL 2 /O R D E R [ . . . . . .. . ! ! ! ! , ] PER S.V. MEHROTRA, JM THE DEPARTMENT HAS FILED THIS APPEAL FOR ASSESSMEN T YEAR 2004-05 AGAINST ORDER OF CIT(A)- XVI, KOLKATA DATED 14.01.2008. 2. THE ASSESSEE, IN THE RELEVANT ASSESSMENT YEAR, C ARRIED ON THE BUSINESS AS EXPORTERS AND IMPORTERS OF SILK YARN, FABRICS. THE ASSESSEE FILED ITS RETURN OF INCOME SHOWINY INCOME OF RS.5,65,663/- AND THE ASSESSMENT WAS COMPLETED AT A TOTAL INCOME OF RS.14,86,684/- INTER ALIA MAKING ADDITIONS AS UNDER :- 1) MANGALAM : LESS : : RS.20,41,613/- LESS : : RS.18,36,538/- RS. 2,05,075/- LESS :D.D. RETURNED RS. 1,50,000/- DIFFERENCE : RS. 55,075/- ITA NO. 986/KOL/2010 2 2) SWAGATAM : SALES : RS.31,43,419/- LESS : RS.29,05,595/- DIFFERENCE : RS. 2,38,324/- 3) VINEETH ENTERPRISE : LESS : RS.52,28,893/- LESS : : RS.47,80,078/- DIFFERENCE : RS. 4,48,815/- 4) JYOTI SILK : SALES : RS.47,55,023/- LESS : RS.45,60,624/- DIFFERENCE : RS. 1,94,399/- AND ALSO MAKING DISALLOWANCES FOR EXPENSES AS UNDER :- MANGALAM : RS. 55,075/- SWAGATAM : RS.2,38,324/- VINEETH ENTERPRISE : RS.4,48,815/- SRI JYOTI SILK : RS.1,94,399/- RS.9,36,613/- VANARTS : RS.2,68,526/- DHL EXPRESS (I) PVT. LTD. : RS. 2,311/- RS.2,70,837/- THE LD. CIT(A) PARTLY ALLOWED ASSESSEES APPEAL. 3. BEING AGGRIEVED, THE DEPARTMENT IS IN APPEAL BEF ORE US. 4. THE FIRST GROUND OF THE DEPARTMENT IS AS UNDER : - THAT ON THE FACTS AND CIRCUMSTANCES OF THE CASE, T HE LD. CIT(A) HAS ERRED IN DELETING RS.9,36,613/- ON ACCOUNT OF DIFFERENCE IN PURCHASE ACCOUNT ARISING OUT OF VERIFICATION MADE U/S. 133(6) OF I.T. ACT. ITA NO. 986/KOL/2010 3 5. BRIEF FACTS OF THE ISSUE ARE THAT ASSESSING OFFI CER ISSUED NOTICE U/S. 133(6) FOR VERIFICATION OF TRANSACTIONS MADE BY THE ASSESSEE FROM VARIOUS P ARTIES. FROM THE REPLIES RECEIVED AND THE STATEMENT OF ACCOUNT FILED BY THE ASSESSEE, HE NOTE D THE FOLLOWING DISCREPANCIES : NAME OF PARTY SALES TO THE ASSESSEE AS PER PARTIES STATEMENT PURCHASES SHOWN BY ASSESSEE MANGALAM RS.20,41,613/- RS.18,36,538/- DIFFERENCE RS. 2,05,075/- LESS : D.D. RETURNED RS. 1,50,000/- NAME OF PARTY SALES TO THE ASSESSEE AS PER PARTIES STATEMENT PURCHASES SHOWN BY ASSESSEE SWAGATAM RS.31,43,419/- RS.29,05,095/- DIFFERENCE : RS. 2,38,324/- NAME OF PARTY SALES TO THE ASSESSEE AS PER PARTIES STATEMENT PURCHASES SHOWN BY ASSESSEE VINEETH ENTERPRISE RS.52,28,893/- RS.47,80,078/- DIFFERENCE RS. 4,48,815/- NAME OF PARTY SALES TO THE ASSESSEE AS PER PARTIES STATEMENT PURCHASES SHOWN BY ASSESSEE JYOTI SALES RS.47,55,023/- RS.45,60,624/- DIFFERENCE RS.1,94,399/- THE ASSESSEE EXPLAINED THAT THE PURCHASES WERE TAKE N IN NEXT FINANCIAL YEAR AS UNDER :- I) MANGALAM : RS. 42,910/- II) SWAGATAM : RS.1,68,462/- III) VINEETH ENTERPRISES : RS.2,34,603/- IV) JYOTI SILK : RS.1,08,717/- THEREFORE, THE ASSESSING OFFICER MADE ADDITIONS OF RS.9,36,630/-. 5. BEFORE THE LD. CIT(A), IT WAS POINTED OUT THAT I T WAS EXPLAINED BEFORE THE ASSESSING OFFICER THAT ASSESSEE HAD PRACTICE OF ACCOUNTING FOR PURCHA SES IN ITS BOOKS OF ACCOUNT ONLY ON RECEIPT OF GOODS AND BILLS. SINCE PURCHASES WERE MADE FROM OUT -STATION PARTIES, IT NORMALLY TOOK 10 TO 15 DAYS FOR THE GOODS TO EACH THE ASSESSEE. THE GOODS AND B ILLS RECEIVED AFTER 31.03.2004 WERE, ACCORDINGLY, ACCOUNTED FOR IN THE PURCHASE ACCOUNT OF THE SUBSEQUENT YEAR AND THE PAYMENTS OF THE SAID BILLS WERE ALSO MADE IN THE SUBSEQUENT FINANCI AL YEAR. THE COPIES OF BILLS OF SUCH PURCHASES RECEIVED AFTER 31.03.2004 WERE PRODUCED BEFORE THE ASSESSING OFFICER. THE SELLING PARTIES HAD ITA NO. 986/KOL/2010 4 RECORDED THESE BILLS IN FINANCIAL YEAR 2003-04. THE REFORE, THE DIFFERENCES AROSE. IT WAS FURTHER POINTED OUT THAT THE ASSESSING OFFICER DID NOT DISP UTE THAT ALL THE PURCHASES WERE RECORDED IN THE BOOKS OF ACCOUNT AS CLAIMED. FURTHER, IT WAS ALSO N OT DISPUTED THAT ASSESSEE HAD MADE PAYMENT FOR THESE PURCHASES BY ACCOUNT PAYEE CHEQUE OR THE BANK DRAFT FROM THE REGULAR BANK ACCOUNT. IT WAS FURTHER CLARIFIED THAT IF ASSESSING OFFICERS CONTE NTION WAS ACCEPTED THEN, CORRESPONDINGLY, CLOSING STOCK WOULD ALSO HAVE INCREASED IN ASSESSMENT YEAR AND, THEREFORE, THERE WOULD HAVE BEEN NO IMPACT ON THE TOTAL INCOME. FURTHER, IT WAS POINTED OUT THAT THERE WAS DIFFERENCE IN PURCHASE ON ACCOUNT OF GOODS RETURNED TO THE PARTIES ALSO, BUT THE SAME WAS IGNORED BY THE ASSESSING OFFICER WHILE CALCULATING THE DIFFERENCE. THE ASSESSEE HAD FURNISHED RECONCILIATION STATEMENT GIVING SPECIFIC DETAILS OF GOODS RETURNED WHICH HAS BEEN R EPRODUCED BY THE LD. CIT(A) IN HIS ORDER AT PAGE-5. AFTER CONSIDERING THE ASSESSEES SUBMISSION , LD. CIT(A) DELETED THE ADDITION. 6. THE LD. DEPARTMENTAL REPRESENTATIVE SUBMITTED TH AT SINCE NO STOCK REGISTER HAD BEEN MAINTAINED, IT WAS NOT POSSIBLE TO VERIFY THE ASSES SEES CONTENTION AND, THEREFORE, ADDITION WAS MADE. 7. ON THE OTHER HAND, LD. COUNSEL APPEARING ON BEHA LF OF THE ASSESSEE REITERATED THE SAME SUBMISSIONS AS BEFORE THE LD. CIT(A) AND RELIED ON THE ORDER OF THE LD. CIT(A). 8. WE HAVE CONSIDERED THE SUBMISSIONS OF BOTH THE P ARTIES AND HAVE PERUSED THE RECORDS OF THE CASE. THE ASSESSING OFFICER ON THE BASIS OF INFORMA TION RECEIVED U/S. 133(6) NOTICED THAT SINCE SALES MADE AS PER PARTIES ACCOUNT STATEMENT TO ASSESSEE W ERE MORE THAN THE PURCHASES RECORDED BY THE ASSESSEE FROM THE RESPECTIVE PARTIES, THE DETAILS O F WHICH HAVE BEEN NOTED EARLIER. THE ASSESSEES CONTENTION WAS THAT IT HAD RECORDED PURCHASES IN IT S BOOKS OF ACCOUNT ONLY ON RECEIPT OF GOODS AND BILL; THAT THE SELLING PARTY HAD RECORDED THE SAME WHEN IT HAD SOLD THE GOODS TO THE ASSESSEE. THEREFORE, THE PURCHASES MADE AT THE YEAR END WERE RECORDED IN THE BOOKS OF THE ASSESSEE IN SUBSEQUENT FINANCIAL YEAR. THE ASSESSEE HAD PRODUCE D RELEVANT BILLS IN THIS REGARD AND NO ADVERSE NOTING IS THERE ON THIS COUNT IN THE ORDERS OF THE AUTHORITIES BELOW. MERELY BECAUSE THE ASSESSEE WAS NOT MAINTAINING STOCK REGISTER, IT COULD NOT BE INF ERRED THAT THE ASSESSEES CLAIM WAS NOT CORRECT, PARTICULARLY WHEN SPECIFIC DETAILS WERE FURNISHED B EFORE THE ASSESSING OFFICER. THE ASSESSEE HAD ALSO GIVEN THE DETAILS OF GOODS RETURNED WHICH HAD BEEN SPECIFICALLY EXPLAINED AND THE DETAILS OF WHICH HAVE BEEN ENUMERATED BY THE LD. CIT(A). THE A SSESSING OFFICER DID NOT TAKE INTO CONSIDERATION THE GOODS RETURNED WHICH ALSO RESULTE D IN DRAWING WRONG INFERENCE AGAINST THE ITA NO. 986/KOL/2010 5 ASSESSEE. THE DISCREPANCIES HAD BEEN DULY EXPLAINED BEFORE LD. CIT(A) ALSO, WHO HAS RECORDED CATEGORICAL FINDINGS IN THIS REGARD. NOTHING HAS BE EN BROUGHT ON RECORD TO CONTROVERT THE FINDINGS OF THE LD. CIT(A). IN VIEW OF THE ABOVE, WE CONFIRM TH E ORDER OF THE LD. CIT(A) ON THIS ISSUE. THIS GROUND OF THE DEPARTMENT IS DISMISSED. 9. GROUND NO.2 OF THE DEPARTMENT IS AS UNDER :- THAT ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) HAS ERRED IN DELETING RS.2,70,837/- ON ACCOUNT OF DIFFERENCE TO THE ACCOUNT ARISING OUT OF VERIFICATION MADE U/S. 133(6) OF I.T. ACT. THE ASSESSING OFFICER REQUIRED THE ASSESSEE TO PRO DUCE STOCK REGISTER BUT THE ASSESSEE POINTED OUT THAT NO STOCK REGISTER WAS BEING MAINTA INED BY IT. THEREFORE, THE ASSESSING OFFICER DID NOT ACCEPT THE ASSESSEES CONTENTION. THE ASSESSING OFFICER FURTHER NOTICED THE DISCREPANCY IN THE CASE OF FOLLOWING TWO PARTIES :- I) VANARTS : RS.6,79,479/- PURCHASES/JOB WORK DIFFERENCE RS.948,520/- RS.2,68,526/- DHL EXPRESS (INDIA) PVT. LTD. RS.5,66,412 RS.5,64,101/- (AS PER ASSESSEE) RS. 2,311/- SINCE ASSESSEE DID NOT OFFER EXPLANATION IN RESPECT OF ABOVE TWO PARTIES, THE ASSESSING OFFICER MADE THE ADDITION OF RS.2,70,837/-. BEFORE THE LD. CIT(A), IT WAS EXPLAINED THAT THE CASE OF M/S. VANARTS, WAS JUST THE REVERSE FROM THE AFORESAID FO UR CASES. THE ASSESSEE HAD ACCOUNTED FOR PURCHASE OF GOODS AND BILLS OF RS.2,68,527/- RECEIV ED DURING THE FINANCIAL YEAR 2003-04, THE YEAR UNDER APPEAL WHICH WERE ISSUED BY THE PARTY BEFORE 31.03.2003. THEREFORE, THE PARTY WAS NOT SHOWING THE SAME AGAINST THE PURCHASES MADE BY THE ASSESSEE DURING THE FINANCIAL YEAR 2002-03 BY THAT AMOUNT. IN THE CASE OF DHL EXPRESS (I) PVT. LT D., THE DIFFERENCE OF RS.2,311/- WAS ON ACCOUNT OF DEBIT NOTE ISSUED BY THE PARTY, WHICH WAS EXPLAI NED AND RECONCILED BEFORE THE ASSESSING OFFICER BUT THE SAME WAS NOT CONSIDERED BY THE ASSESSING OF FICER. THE LD. CIT(A) EXAMINED THE DOCUMENTS PRODUCED BY THE ASSESSEE AND AFTER CONSID ERING THE SAME FOUND THAT THE EXPLANATION OF THE ASSESSEE WAS CORRECT AND THEREFORE, DELETED THE ADDITION, FOR THE SAME REASON, AS IN CASE OF ABOVE FOUR PARTIES CONSIDERED IN GROUND NO.1. ITA NO. 986/KOL/2010 6 10. WE HAVE CONSIDERED THE SUBMISSIONS OF BOTH THE PARTIES AND HAVE PERUSED THE RECORDS OF THE CASE. NO MATERIAL HAS BEEN BROUGHT ON RECORD TO CON TROVERT THE FINDING OF THE LD. CIT(A). THEREFORE, FOR THE REASONS GIVEN IN GROUND NO.1, WE CONFIRM THE ORDER OF THE LD. CIT(A) ON THIS ISSUE. HENCE, THIS GROUND OF THE DEPARTMENT IS DISM ISSED. 11. GROUND NO.3 OF THE DEPARTMENT IS AS UNDER :- THAT ON THE FACTS AND CIRCUMSTANCES OF THE CASE, T HE LD. CIT(A) HAS ERRED IN DELETING RS.15,731/-, RS.10,157/-. RS.87,101/, RS.9 91/- & RS.5,219/- ON ACCOUNT OF PACKING EXPENSES, STAFF WELFARE EXPENSES, TRAVEL LING EXPENSES, STATIONERY & PRINTING AND STORAGE EXPENSES RESPECTIVELY. 12. BRIEF FACTS OF THIS GROUND ARE THAT THE ASSESSI NG OFFICER DISALLOWED EXPENSES AS UNDER :- I) PACKING CHARGES [RS.1,14,626/-] THE ASSESSING OFFICER NOTICED THAT 50% OF THE CLAI M ON ACCOUNT OF PACKING CHARGES WAS BASED ON SELF-MADE VOUCHERS. HE, THEREFORE, DISALLO WED 1/10 TH OF RS.57,313/-, BEING RS.5,731/- FOR WANT OF PROPER BILLS/VOUCHERS. II) STAFF WELFARE EXPENSES : THE ASSESSING OFFICER DISALLOWED 1/10 TH OF RS.1,01,569/- BEING RS.10,569 BY OBSERVING THAT THE ENTIRE EXPENSE WAS ON THE BASIS OF SELF-MADE VO UCHERS. III) TRAVELLING EXPENSES : THE ASSESSING OFFICER NOTICED THAT OUT OF RS.17,42 ,015/-, 50% EXPENSES COMPRISED OF SELF MADE VOUCHERS. THEREFORE, HE DISALLOWED 1/10 TH OF RS.8,71,007/- BEING RS.87,100/- IV) STATIONERY & PRINTING : THE ASSESSING OFFICER OBSERVED THAT THE ENTIRE SUM OF RS.9,912/- CLAIMED UNDER THIS HEAD WAS ON THE BASIS OF SELF-MADE VOUCHERS. HE, THEREFO RE, DISALLOWED 1/10 TH OF THE SAME BEING RS.991/- V) STORAGE EXPENSES : ASSESSING OFFICER DISALLOWED RS.5,219/- BY OBS ERVING THAT THE ENTIRE SUM OF RS.52,185/- WAS CLAIMED ON SELF-MADE VOUCHERS. 12.1 BEFORE THE LD. CIT(A), IT WAS, INTER ALIA, SUB MITTED THAT DURING THE COURSE OF ASSESSMENT PROCEEDINGS, ASSESSING OFFICER HAD NEVER ASKED THE QUESTION ABOUT NON-AVAILABILITY OF PARTICULAR BILLS, VOUCHER AND RECEIPT AND ALL THE BILLS/VOUCHE RS WERE CHECKED BY HIM ALONGWITH THE BOOKS OF ACCOUNT AND DISALLOWANCE WAS MADE WITHOUT GIVING AN Y SINGLE INSTANCE. THE LD. CIT(A) DELETED THE DISALLOWANCE, INTER ALIA, OBSERVING THAT THERE WERE CERTAIN EXPENSES UNDER THE MAIN HEAD OF ITA NO. 986/KOL/2010 7 EXPENDITURE FOR WHICH THERE COULD NOT BE ANY BILLS. HE FURTHER OBSERVED THAT FOR PAYMENTS MADE TO CERTAIN INDIVIDUAL FOR PACKING BILLS AND VOUCHERS, COULD NOT BE THERE. 13. WE HAVE CONSIDERED THE SUBMISSIONS OF BOTH THE PARTIES AND HAVE PERUSED THE RECORDS OF THE CASE. WE FIND THAT THE ASSESSING OFFICER HAS CONSIS TENTLY MADE OBSERVATIONS IN RESPECT OF VARIOUS EXPENSES NOTED ABOVE THAT THE SAME WERE CLAIMED ON THE BASIS OF SELF-MADE VOUCHERS. THE LD. CIT(A) HAS GIVEN ONE INSTANCE REGARDING PACKING BIL LS AND VOUCHERS BUT HE HAS NOT CONSIDERED SEPARATELY EACH AND EVERY ITEM OF EXPENDITURE. PITT ED AGAINST SUCH A SITUATION, WE ARE OF THE OPINION THAT THE DISALLOWANCE UNDER EACH HEAD BE RESTRICTED TO 5% INSTEAD OF 10% AS MADE BY THE ASSESSING OFFICER. THIS GROUND OF THE DEPARTMENT IS PARTLY AL LOWED. 14. IN THE RESULT, THE APPEAL OF THE DEPARTMENT IS PARTLY ALLOWED 2 2 2 2 '3 '3 '3 '3 4 44 4 3% 3% 3% 3% 5 5 5 5 6 6 6 6 ORDER PRONOUNCED IN THE COURT ON 10. 06. 20 11. SD/- SD/- [ . . , ] [ . . ! , ' ] [ B. R. MITTAL ] [ S.V. MEHROTRA ] JUDICIAL MEMBER ACCOUNTANT MEMBER 7' / DATED : 10TH JUNE, 2011. 2 8 /9 :9(; - COPY OF THE ORDER FORWARDED TO: 1. ' /APPLICANT- ASSTT. COMMISSIONER OF INCOME TAX/CIR CLE-29, 2, GARIAHAT ROAD (SOUTH), KOLKATA-7 00 068. 2 /0,- / RESPONDENT : M/S. VINAYAK INTERNATIONAL, 66, SAR AT BOSE ROAD, KOLKATA-25. 3. 2% / CIT 4. 2% ( )/ CIT(A) 5. '5 /% / DR, KOLKATA BENCHES, KOLKATA [ 09 / / TRUE COPY] 2%3 / BY ORDER < / #= /DEPUTY/ASSTT. REGISTRAR . [KKC '>? %@= A' /SR.PS]