M/s Pharma Kuries P Ltd, Trichur V. DCIT, Ernakulam

MA 4/COCH/2012

• Counselvise Citation: [2012] 123 COUNSELVISE.COM (IT) 7693 (ITAT-COCHIN)
• Duration Of Justice: 1 month(s) 2 day(s)
• Appeal Type: Miscellaneous Application
• Pronouncement Date: 09-03-2012
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Assessment Year: misc
• Appeal Filed On: 06-02-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: VIJAYAPRABHA
• Assessee Lawyers: CHANDRASEKHARAN K
• Keywords: Tax effect

Judgement Text

1 MA NO.04/COCH/2012 IN THE INCOME TAX APPELLATE TRIBUNAL COCHIN BENCH, COCHIN BEFORE SHRI N.R.S. GANESAN (JM) AND SHRI B.R. BASKARA N(AM) M.A. 04/COCH/2012 (ARISING OUT OF I.T(SS)A NO. 102/COCH/2004) (BLOCK PERIOD 01-04-1988 TO 30-07-1998) M/S PHARMA KURIES (P) LTD VS DY.CIT, CENT.CIR.II PUTHUR BLDG, ERINJERI ANGADI ERNAKULAM TRICHUR PAN : AABCP6259Q (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI CHANDRASEKHARAN K RESPONDENT BY : SMT. VIJAYAPRABHA DATE OF HEARING : 02-03-2012 DATE OF PRONOUNCEMENT : 09-03-2012 O R D E R PER N.R.S. GANESAN (JM) THE ASSESSEE FILED THE MISCELLANEOUS APPLICATION O N THE GROUND THAT THERE IS AN ERROR IN THE ORDER DATED 30-12-2011 PASSED BY T HIS TRIBUNAL. 2. SHRI CHANDRASEKHARAN K, THE LD.REPRESENTATIVE FOR THE ASSESSEE SUBMITTED THAT THIS TRIBUNAL HAS AT PARAGRAPH 32, LINE 8 FROM THE TOP OF THE PARAGRAPH ON PAGE 8 HAS STATED THAT THE SEIZED MATERIAL HAS TO B E TAKEN INTO ACCOUNT IN TOTO OR IT HAS TO BE REJECTED IN TOTO. IN THE NEXT LINE TH IS TRIBUNAL FOUND THAT THE COMMISSIONER HAS TAKEN THE ENTRIES IN THE SEIZED MA TERIAL FOR THE PURPOSE OF 2 MA NO.04/COCH/2012 AVAILABILITY OF FUNDS. HOWEVER, FOR PAYMENTS, HE H AS TAKEN THE FIGURE FROM THE REGULAR BOOKS OF ACCOUNT. ACCORDING TO THE LD.REPRE SENTATIVE, THIS OBSERVATION OF THE BENCH IN THE ORDER IS FACTUALLY INCORRECT. ACC ORDING TO THE LD.REPRESENTATIVE, THE COMMISSIONER (APPEALS), HAS, IN FACT, TAKEN THE ENTRIES ONLY FROM THE SEIZED MATERIAL A-20 AND NOT FROM THE BOOKS OF ACCOUNT. THE REFORE, TO THAT EXTENT, THERE IS AN ERROR IN THE ORDER OF THIS TRIBUNAL. 3. ON THE CONTRARY, MS. VIJAYAPRABHA, THE LD.DR SUB MITTED THAT THE OBSERVATION OF THE TRIBUNAL IS BASED ON THE MATERIA L AVAILABLE ON RECORD. EVEN IF THERE IS AN ERROR, ACCORDING TO THE LD.DR, THERE IS NO TAX EFFECT INVOLVED IN THIS. THEREFORE, THE APPLICATION OF THE ASSESSEE HAS NO M ERIT AT ALL. 4. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS ON EITH ER SIDE AND ALSO PERUSED THE MATERIAL AVAILABLE ON RECORD. WE HAVE ALSO CAR EFULLY GONE THROUGH THE ORDER OF THE COMMISSIONER OF INCOME-TAX(A). FOR THE PURPO SE OF CLARITY AND CONVENIENCE, WE ARE REPRODUCING THE RELEVANT PORTIO N OF THE FINDINGS RECORDED BY THE COMMISSIONER OF INCOME-TAX(A) ON PAGE 9 OF HIS O RDER: AFTER DUE CONSIDERATION OF THE SUBMISSIONS MADE B Y THE APPELLANT I FIND THAT AS PER LEDGER ACCOUNT OF CANV ASSING COMMISSION THE TOTAL AMOUNT PAID IS RS.22,01,844/- AND NOT RS.2 3,76,844/- AS STATED BY THE APPELLANT AGAINST WHICH RS.12,16,407/ - IS AVAILABLE FOR PAYMENTS. SO, THE DIFFERENCE WILL BE RS.90,85,437/ - I.E.(22,01,844 12,16,407). THE ASSESSING OFFICER HAS DISALLOWED R S.12,16,407/- (9,26,987 + 2,89,429), WHICH IS THE SUM AVAILABLE F OR PAYMENT AS PER A-20. THE SAID AMOUNT IS IN THE FORM OF RECEIPTS C REDITED IN A-20 ON ACCOUNT OF KURI CANVASSING COMMISSION. THE DIFFE RENCE IN THE AMOUNT ACTUALLY PAID AND RECEIVED IS RS.22,01,844 12,16,407 = RS.9,85,437/- AND NOT RS.11,60,436/-. THE APPELLANT HAS DECLARED RS.58,00,000/- AS UNDISCLOSED INCOME FOR THE BLOCK PE RIOD IN FORM 3 MA NO.04/COCH/2012 2B FOR WHICH NO SPECIFIC HAD UNDER WHICH THE DECLAR ATION HAS BEEN MADE IS AVAILABLE. SO, IT WILL BE REASONABLE TO GI VE SET OFF FOR ATLEAST 60% OF THIS AMOUNT AS PAID OUT OF INCOME DERIVED BY THE APPELLANT BY WAY OF INFLATING THE EXPENSES SUCH AS TRAVELLING , INTEREST, DAILY CANVASSING COMMISSION ETC. WHICH IS ALREADY TAXED. THUS THE APPELLANT WILL GET RELIEF OF 60% OF RS.12,16,407/- = RS.7,29,844 ON THIS COUNT. FROM THE ABOVE FINDINGS IT IS OBVIOUS THAT THE COMM ISSIONER (APPEALS) HAS TAKEN THE RECEIPTS CREDITED IN THE SEIZED MATERIAL MARKED AS A-20 ON ACCOUNT OF KURI CANVASSING COMMISSION. THE COMMISSIONER OF INCOME-T AX(A) HAS ALSO OBSERVED THAT RS.12,16,407 DISALLOWED BY THE ASSESSING OFFIC ER WAS AVAILABLE FOR PAYMENT AS PER SEIZED DOCUMENT A-20. THEREFORE, THE COMMI SSIONER OF INCOME-TAX(A) HAS, IN FACT, TAKEN THE AMOUNT AVAILABLE AS WELL AS THE PAYMENT ONLY FROM THE SEIZED MATERIAL A-20. AS SUCH, THE OBSERVATION OF THE TRIBUNAL THAT THE COMMISSIONER (APPEALS) HAS TAKEN THE FUNDS AVAILABLE ON THE SEIZED MATERIAL AND IN RESPECT OF PAYMENTS HE HAS TAKEN THE FIGURE FROM THE REGULAR BOOKS OF ACCOUNT IS FACTUALLY INCORRECT. TO THIS EXTENT, THERE IS A N ERROR IN THE ORDER OF THIS TRIBUNAL, WHICH NEEDS TO RECTIFIED. ACCORDINGLY, THE ORDER O F THIS TRIBUNAL DATED 30-12- 2011 IS RECTIFIED AS FOLLOWS: 4.1 THE FOLLOWING SHALL BE DELETED FROM PAGE 8, PAR AGRAPH 21 FROM LINE 12 ONWARDS FROM THE TOP OF THE PARAGRAPH: HOWEVER, IN RESPECT OF PAYMENTS HE HAS TAKEN THE F IGURE FROM THE REGULAR BOOKS OF ACCOUNT. IN OUR OPINION, THE FIGU RE MENTIONED IN THE SEIZED MATERIAL SHOULD BE TAKEN. THEREFORE, THE DI FFERENCE IS RS. 11,60,436 AND NOT RS. 9,85,437. THE EXPENDITURE WI TH REGARD TO TRAVELLING, INTEREST, DAILY COMMISSION WAS ALSO DEL ETED WHICH WAS CONFIRMED BY THIS TRIBUNAL IN THE EARLIER PART OF T HE ORDER. THEREFORE, THE LOGIC OF THE COMMISSIONER OF INCOME-TAX(A) TO G IVE RELIEF TO THE EXTENT OF 60% KURIE COMMISSION PAID IS NOT CORRECT. IN OUR OPINION, THE ENTIRE DIFFERENCE OF RS. 11,60,436 HAS TO BE DISALL OWED. ACCORDINGLY, THE 4 MA NO.04/COCH/2012 ORDERS OF THE COMMISSIONER OF INCOME-TAX(A) IS SET ASIDE IN RESPECT OF KURIE COMMISSION PAYMENT TO THE EXTENT OF RS. 9,26, 978 FOR THE ASSESSMENT YEAR 1995-96 AND RS. 2,89,429 FOR THE AS SESSMENT YEAR 1996-97 AND THE ORDER OF THE ASSESSING OFFICER IS R ESTORED ON THIS ISSUE. INSTEAD , THE FOLLOWING SHALL BE INSERTED AFTER THE LINE, IN THIS CASE, THE COMMISSIONER OF INCOME-TAX(A), FOR THE PURPOSE OF AV AILABILITY OF FUNDS HAS TAKEN THE ENTRIES IN THE SEIZED MATERIAL: THE COMMISSIONER OF INCOME-TAX(A), AFTER REFERRING T O SEIZED MATERIAL A-20 FOUND THAT THE DIFFERENCE OF AMOUNT ACTUALLY PAID IS ONLY RS.9,85,437 AND NOT RS.11,60,436. BY TAKING I NTO CONSIDERATION OF THE AMOUNT DECLARED BY THE ASSESSEE T O THE EXTENT OF RS.58 LAKHS AS UNDISCLOSED INCOME FOR THE BLO CK PERIOD, THE COMMISSIONER OF INCOME-TAX(A) GAVE RELIEF TO THE E XTENT OF 60% OF THE AMOUNT PAID OUT OF THE INCOME DERIVED BY THE ASSESSEE BY WAY OF INFLATING THE EXPENSES AND TRAVELLING EXPE NSES, SUCH AS TRAVELLING, INTEREST, DAILY CANVASSING COMMISSION, ETC. THEREFORE, THE COMMISSIONER OF INCOME-TAX(A) FOUND THAT THE RELI EF TO THE EXTENT OF 60% OF THE DIFFERENCE AMOUNT OF RS.12,16,4 07 WOULD MEET THE ENDS OF JUSTICE. IN VIEW OF THE FACTUAL SITU ATION THAT THE FIGURE OF ACTUAL RECEIPT AND ACTUAL PAYMENT WAS TAKE N FROM THE SEIZED MATERIAL A-20 AND THE COMMISSIONER OF INCOME-TA X(A), AFTER TAKING INTO CONSIDERATION THE INCOME DECLARED BY THE ASSESSEE AND THE EXPENSES INFLATED WHICH WAS ALREADY TAXED , HAS RIGHTLY ESTIMATED THE RELIEF TO THE EXTENT OF 60% WHICH COMES TO NEARLY RS.7,29,844. THEREFORE, THIS TRIBUNAL DO NOT FIND ANY 5 MA NO.04/COCH/2012 INFIRMITY IN THE ORDER OF THE LOWER AUTHORITY. ACC ORDINGLY, HIS ORDER ON THIS ISSUE IS CONFIRMED. 4. FURTHER, THE FOLLOWING WORDS SHALL BE DELETED FR OM PARAGRAPH 23 ON PAGE 9 OF THE ORDER DATED 30 TH DECEMBER, 2011: PARTLY ALLOWED AFTER DELETION OF THE ABOVE WORDS FROM PARAGRAPH 23 ON PAGE 9, PARAGRAPH 23 ON PAGE 9 MAY BE READ AS FOLLOWS: IN THE RESULT, THE APPEAL OF THE REVENUE IS DISMISSED. 5. IN THE RESULT, THE MISCELLANEOUS APPLICATION OF THE ASSESSEE STANDS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 09 TH DAY OF MARCH, 2012. SD/- SD/- (B.R. BASKARAN) (N.R.S. GANESAN) ACCOUNTANT MEMBER JUDICIAL MEMBER COCHIN, DT : 09 TH MARCH, 2012 PK/- COPY TO: 1. M/S PHARMA KURIES (P) LTD, PUTHUR BLDG, ERINJERI ANG ADI, TRICHUR 2. DY.CIT, CENT.CIR.2, ERNAKULAM 3. THE COMMISSIONER OF INCOME-TAX(A)-I, ERNAKULAM 4. THE COMMISSIONER OF INCOME-TAX, CENTRAL ERNAKULAM 5. THE DR (TRUE COPY) BY ORDER ASSTT. REGISTRAR, INCOME-TAX APPELLATE TRIBUNAL, COCHIN BENCH