Kachchh Veneers P. Ltd., Gandhidham V. The Dy. CIT, Central Circle-1(4), Ahmedabad

ITSSA 417/AHD/2017

• Counselvise Citation: [2020] 111 COUNSELVISE.COM (IT) 9573 (ITAT-AHMEDABAD)
• Duration Of Justice: 2 year(s) 1 month(s) 22 day(s)
• Appeal Type: Income Tax (Search & Seizure) Appeal
• Pronouncement Date: 08-01-2020
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2008-2009
• Appeal Filed On: 16-11-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Corroborative evidences
• Section: 153A; 139(1); 132

Judgement Text

, - IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD BENCH A BEFORE SHRI RAJPAL YADAV, HONBLE JUDICIAL MEMBER AND SHRI WASEEM AHMED HONBLE ACCOUNTANT MEMBER IT(SS)A NO.417, 418 AND 419/AHD/2017 / ASSTT. YEAR: 2008-09, 2009-10 AND 2010-11 KACHCHH VENEERS P LTD 101, GOLDEN ARCADE PLOT NO.141/142, SECTGOR 8 GANDHIDHAM. VS. DCIT, CENT.CIR.1(4) AHMEDABAD CAMP AT RAJKOT. ( APPLICANT ) ( RESPONENT ) ASSESSEE BY : SHRI CHETAN AGRAWAL, AR REVENUE BY : SHRI RITESH PARMAR, CIT - DR / DATE OF HEARING : 07/01/2020 / DATE OF PRONOUNCEMENT: 08 /01/2020 / O R D E R PER RAJPAL YADAV, JUDICIAL MEMBER: PRESENT THREE APPEALS ARE DIRECTED AT THE INSTANCE OF THE ASSESSEE AGAINST SEPARATE ORDERS OF LD.CIT(A)-11, AHMEDABAD DATED 28 .7.2017 PASSED IN THE ASSTT.YEARS 2008-09 TO 2010-11. 2. THE LD.COUNSEL FOR THE ASSESSEE AT THE TIME OF H EARING FILED SYNOPSIS OF ARGUMENTS. THE DETAILS FILED IN SUCH SYNOPSIS INDIC ATE GRIEVANCE OF THE ASSESEEE IN EACH ASSESSMENT YEAR, AND THEREFORE, WE DEEM IT APPROPRIATE TO TAKE NOTE OF SUCH DETAILS SUBMITTED IN TABULAR FORM , WHICH READS AS UNDER: PARTICULARS / AY 2008-09 2009-10 2010-11 IT(SS)A NO.417, 418 AND 419 /AHD/2017 2 HIGH SEAS SALES MADE TO ADITAYA OVERSEAS 66,15,996 1,24,90,374 1,50,05,464 GROSS PROFIT @ 14.75% ESTIMATE BY LD. AO 9,75,859 18,42,330 22,13,305 LESS: GROSS PROFIT ALREADY OFFERED FOR TAXATION 1,22,376 2,22,663 2,14,034 ADDITION MADE BY LD. AO 8,53,483 16,19,667 19,99,271 ADDITION SUSTAIN BY ID. CIT(A) BY ESTIMATING GROSS PROFIT @ 10.00% 5,39,223 10,26,374 12,86,511 3. THUS, SHORT GRIEVANCE OF THE ASSESSEE IS THAT TH E LD.CIT(A) HAS ERRED IN CONFIRMING THE ADDITIONS OF RS.5,39,223, RS.10,26, 374/- AND RS.12,86,511/- IN THE ASSTT.YEARS 2008-09 TO 2010-11 RESPECTIVELY. 4. WITH THE ASSISTANCE OF THE LD.REPRESETNATIVES, W E HAVE GONE THROUGH THE RECORD CAREFULLY. IT EMERGES OUT FROM THE RECORD T HAT THE ASSESSEE AT THE RELEVANT TIME WAS ENGAGED IN TRADING OF TIMBER AS W ELL AS MANUFACTURING OF VENEER, SAWN WOOD AND WOODEN PLATES. A SEARCH UNDE R SECTION 132 OF THE INCOME TAX ACT WAS CARRIED OUT AT THE BUSINESS PREM ISES OF THE ASSESSEE ON16.5.2012, HENCE, NOTICE UNDER SECTION 153A WERE ISSUED UPON THE ASSESSEE IN EACH ASSESSMENT YEAR. THE ASSESSEE HAS ORIGINAL LY FILED ITS RETURN OF INCOME UNDER SECTION 139(1) OF THE ACT IN THE ASSTT.YEAR 2 008-09 ELECTRONICALLY DECLARING TOTAL INCOME AT RS.15,29,630/-. IN RESPO NSE TO THE NOTICE UNDER SECTION 153A, IT HAS AGAIN REITERATED THIS RETURN F ILED UNDER SECTION 139(1). IN THE ASSTT.YEAR 2009-10, IT HAS FILED RETURN UNDER S ECTION 139(1) ON 24.9.2009 ELECTRONICALLY DECLARING TOTAL INCOME AT RS.10,38,2 40/-. IN RESPONSE TO THE NOTICE UNDER SECTION 153A, IT HAS REITERATED THIS V ERY RETURN. SIMILARLY, IN THE ASSTT.YEAR 2010-11, IT HAS FILED RETURN UNDER SECTI ON 139(1) ON 6.9.2010 DECLARING TOTAL INCOME AT RS.12,57,960/-. THE CASE OF THE ASSESSEE IN ALL THESE THREE YEARS WAS THAT DURING THE COURSE OF SEARCH CA RRIED OUT AT THE PREMISES OF IT(SS)A NO.417, 418 AND 419 /AHD/2017 3 ADITYA OVERSEAS IT REVEALED THAT TIMBER MERCHANTS U SED TO PAY CASH TO PROPRIETOR OF ADITYA OVERASEAS I.E. SHRI ASHISH R. DHOLAKIA. THESE CONCERNS WOULD DEPOSIT SUCH CASH IN THE BANK ACCOUNT OF ADIT YA OVERSEAS, AND THEREAFTER TIMBER MERCHANTS WOULD SHOW SALE OF TIMB ER AT HIGH SEAS SALES. THE CASH ALREADY GIVEN TO HIM WOULD BE RETURNED TO THES E MERCHANTS IN THE SHAPE OF SALES AT HIGH SEA. THESE SALES SHOWN BY THE ASS ESSEE AT HIGH SEA WAS DISBELIEVED. THE AO WAS OF THE VIEW THAT THE SALES MADE AT HIGH SEA TO ADITYA OVERSEAS MUST HAVE BEEN SOLD TO SOME INDEPEN DENT PARTIES, AND THE ASSESSEE MUST HAVE EARNED HIGHER RATE OF PROFIT ON SUCH SALES. ACCORDINGLY, HE REJECTED BOOK RESULTS, AND ESTIMATED GP AT 14.75 % IN EACH ASSESSMENT YEAR. THIS PROFIT HAS BEEN SCALED DOWN BY THE LD.CIT(A) T O 10% AS EXHIBITED IN THE DETAILS REPRODUCED ABOVE. THE LD.COUNSEL FOR THE A SSESSEE AT THE VERY OUTSET SUBMITTED THAT THE ISSUE IN DISPUTE IS SQUARELY COV ERED BY ORDER OF THE ITAT IN THE CASE OF RATANWOOD P.LTD. VS. ACIT. HE PLACED O N RECORD COPY OF THE TRIBUNALS ORDER IN ITA NO.65/RJT/2018. HE FURTHER CONTENDED THAT THE DISCUSSION MADE BY THE AO IN THE IMPUGNED ASSESSMEN T ORDER IS COPY-PASTE OF THE OUTCOME OF THE ASSESSMENT ORDER IN THE CASE OF ADITYA OVERSEAS. NO MATERIAL WAS SUPPLIED TO THE ASSESSEE. HE SPECIFICALLY TOOK US THROUGH THE SUBMISSIONS OF THE ASSESSEE NOTICED BY TH E LD.CIT(A) IN PARA-4 , WHICH READS AS UNDER: 4.5 THE AR OF THE APPELLANT SUBMITTED THAT THE FIN DING OF THE AO WAS BASED ON THE STATEMENT OF SHRI ASHISH R. DHOLAKIA. THE AUTHORIZE D OFFICER DID NOT FIND A SINGLE PIECE OF EVIDENCE IN THE COURSE OF SEARCH OR POST S EARCH ENQUIRIES OR IN THE ASSESSMENT PROCEEDINGS TO SUBSTANTIATE AND SUPPORT THE ALLEGATIONS OF ASHISH R. DHOLAKIA THAT THE ASSESSEE MADE CASH DEPOSITS IN HI S BANK ACCOUNT AND NO SALES WERE MADE TO ADITYA OVERSEAS. THE STATEMENT OF SHRI ASHISH R. DHOLAKIA COULD BE TREATED AS INFORMATION FOR THE PURPOSE OF MAKING FU RTHER INVESTIGATION TO FIND OUT THE VERACITY OF THE ALLEGATION, HOWEVER NO ADDITION COU LD BE MADE ON THE BASIS OF A MERE STATEMENT WITHOUT ANY SUPPORTING EVIDENCE. THE AO DID NOT BRING ON RECORD ANY EVIDENCE BY CONDUCTING INDEPENDENT VERIFICATION TO SUBSTANTIATE HIS ALLEGATION. COPY OF THE STATEMENTS OF SHRI ASHISH R . DHOLAKIA WAS NOT PROVIDED TO THE APPELLANT FOR EFFECTIVE CROSS EXAMINATION. I N THE ASSESSMENT PROCEEDINGS IT WAS SPECIFICALLY SUBMITTED THAT THE SALES TO ADI TYA OVERSEAS WERE GENUINE AND NO SALES WERE MADE OUT OF BOOK ACCOUNTS TO THE LOCAL PARTIES AND THE ASSESSEE DID NOT DEPOSIT ANY CASH IN THE BANK ACCOU NTS OF ADITYA OVERSEAS, THE PROFIT EARNED ON THE HIGH SEAS SALES WAS DULY R EFLECTED IN THE BOOKS OF IT(SS)A NO.417, 418 AND 419 /AHD/2017 4 ACCOUNTS. THE AO SIMPLY REJECTED BOOKS OF ACCOUNTS WITHOUT POINTING, OUT ANY SPECIFIC DEFECTS IN THEM OR IN THE METHOD OF ACCOUN TING EMPLOYED. 5. ON THE OTHER HAND, THE LD.CIT-DR RELIED UPON ORD ERS OF THE AO. 6. WE HAVE DULY CONSIDERED RIVAL SUBMISSIONS AND GO NE THROUGH THE RECORD CAREFULLY. IN THE CASE OF RATANWOOD P.LTD. (SUPRA), WE HAVE CONSIDERED AN IDENTICAL ISSUE. THE FINDING RECORDE D BY THE TRIBUNAL READS AS UNDER: 5. ON DUE CONSIDERATION OF THE ABOVE FACTS, WE ARE OF THE VIEW THAT THE AO HAS TO ESTABLISH THAT SALES WERE NOT MADE TO M/S.ADITYA OVERSEAS RATHER ONLY BILLS WERE TAKEN AND TRANSACTI ONS WERE ROOTED THROUGH BANK. IN THIS CONNECTION, HE MADE REFERENC E TO CERTAIN INFORMATION COLLECTED DURING THE COURSE OF SEARCH C ARRIED OUT IN VARIOUS TIMBER MERCHANTS/TRADERS OF GANDHIDHAM. BU T, NOWHERE, HE HAS SPECIFIED THAT INFORMATION. IT IS JUST A HEAR- SAY. HE HAS NOT REFERRED TO ANY LETTER TRANSMITTED TO HIM BY SEARCH WING OR ANY STATEMENT OF PROPRIETOR OF M/S.ADITYA OVERSEAS. TH AT STATEMENT HAS NEVER BEEN SUBJECT TO CROSS-EXAMINATION BY THE ASSE SSEE IN THE ASSESSMENT PROCEEDINGS. THUS, THERE IS NO EVIDENCE WITH THE DEPARTMENT TO SAY THAT THE ASSESSEE HAS NOT MADE HI GH SEAS SALES, RATHER SUCH GOODS WERE SOLD TO SOME OTHER PARTIES E ARNING HIGHER PROFIT. IT IS JUST AN ALLEGATION WITHOUT ANY CORRO BORATION. THEREFORE, WE ARE OF THE VIEW THAT ADDITION CONFIRMED BY THE C IT(A) IS NOT SUSTAINABLE, WHICH WE DELETE, AND GROUND OF APPEAL OF THE ASSESSEE STANDS ALLOWED. 7. WE FIND THAT IDENTICAL CIRCUMSTANCES ARE AVAILAB LE IN THE PRESENT CASE. A PERUSAL OF THE ASSESSMENT ORDER FOR THE ASSTT.YEA R 2008-09 WOULD INDICATE THAT THE LD.AO HAS HIGHLIGHTED FINDING OF PRE-SEARC H INVESTIGATION OF ADITYA OVERSEAS FROM PARAGRAPH NO.5. HE THEREAFTER REFERR ED TO THE FINDING OF THE ASSESSMENT PROCEEDINGS IN THE CASE OF ASHISH R. DHO LAKIA I.E. PROPRIETOR OF ADITYA OVERASEAS. IN FIRST GLANCE, IT APPEARS THAT THESE THINGS HAVE BEEN COLLECTED DURING THE COURSE OF ASSESSMENT PROCEEDIN GS OF THE ASSESSEE. IT ALSO IT(SS)A NO.417, 418 AND 419 /AHD/2017 5 APPEARS THAT STATEMENT OF SHRI DHOLAKIA WAS RECORDE D DURING THE ASSESSMENT PROCEEDINGS OF THE ASSESSEE. HE HAS SIMPLY TAKEN T HIS PARAGRAPH FROM THE ASSESSMENT ORDER OF SHRI ASHISH DHOLAKIA; WITNESS H AS NOT BEEN CALLED FOR IN THE CASE OF THE ASSESSEE NOR HIS STATEMENT WAS SUPP LIED TO THE ASSESSEE. THIS FACT HAS BEEN PLEADED BY THE ASSESSEE IN ITS APPEAL BEFORE THE LD.CIT(A). CROSS-EXAMINATION OF ASHISH DOLAKIA COULD BE UNDERT AKEN BY THE DIRECTOR OF THE ASSESSEE, HAD A COPY OF STATEMENT RECORDED BY T HE SEARCH PARTY AS WELL AS BY THE AO OF ADITYA OVERSEAS BEEN PROVIDED TO THE A SSESSEE IN ADVANCE. NO SUCH STEPS WERE TAKEN BY THE AO. THEREFORE, THE AD DITION MADE BY THE AO AND PARTLY CONFIRMED BY THE LD.CIT(A) ARE NOT SUSTA INABLE. ACCORDINGLY, ALL THESE APPEALS ARE ALLOWED AND THE IMPUGNED ADDITION S ARE DELETED. 8. IN THE RESULT, APPEALS OF THE ASSESSEE ARE ALLOW ED. ORDER PRONOUNCED IN THE COURT ON 8 TH JANUARY, 2020 AT AHMEDABAD. SD/- SD/- (WASEEM AHMED ) ACCOUNTANT MEMBER (RAJPAL YADAV) JUDICIAL MEMBER