MANIKA INDIA, V. ITO WD 12(2)(1),

MA 720/MUM/2012

• Counselvise Citation: [2013] 124 COUNSELVISE.COM (IT) 0985 (ITAT-MUMBAI)
• Duration Of Justice: 8 month(s) 14 day(s)
• Appeal Type: Miscellaneous Application
• Pronouncement Date: 14-08-2013
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: F
• Assessment Year: 1996-1997
• Appeal Filed On: 30-11-2012
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Assessee Lawyers: S P GOYAL IZRFKHZ DH LS

Judgement Text

M/S MONIKA INDIA - 1 - VK;DJ VIHYH; VF/KDJ.K ,Q U;K;IHB EQACBZ ESAA IN THE INCOME TAX APPELLATE TRIBUNAL F BENCH, MUM BAI JH VKJ JH VKJ JH VKJ JH VKJ- -- - DS DS DS DS- -- - XQIRK U;KF;D LNL; ,OA XQIRK U;KF;D LNL; ,OA XQIRK U;KF;D LNL; ,OA XQIRK U;KF;D LNL; ,OA JH JKTSUNZ FLAG YS[KK LNL; DS LE{K JH JKTSUNZ FLAG YS[KK LNL; DS LE{K JH JKTSUNZ FLAG YS[KK LNL; DS LE{K JH JKTSUNZ FLAG YS[KK LNL; DS LE{K BEFORE SHRI R.K. GUPTA, JUDICIAL MEMBER AND SHRI RA JENDRA SING ACCOUNTANT MEMBER FOFO/K VKOSNU LA[;K /MA NO.720/MUM/2012 ARISING OUT OF ITA;- 3148/MUM/2007 FU/KKZJ.K O'KZ @ ASSESSMENT YEAR 1996-97 M/S MONIKA INDIA, 109, CHURCHGATE CHAMBERS, 5, NEW MARINE LINES, MUMBAI 400 020. CUKE@ VS. THE INCOME TAX OFFICER, WARD-12 (1), AAYKAR BHAVAN, MUMBAI 400 020 PAN:- AABFM6640M VIHYKFKHZ@ APPELLANT IZR;FKHZ@ RESPONDENT VIHYKFKHZ DH VKSJ LS @ APPELLANT BY SHRI S. P. GOYAL IZR;FKHZ DH VKSJ LS @ RESPONDENT BY SHRI MOHIT JAIN VKNS'K@ VKNS'K@ VKNS'K@ VKNS'K@ ORDER PER RAJENDRA SINGH, AM THIS MISCELLANEOUS APPLICATION HAS BEEN FILED BY TH E ASSESSEE REQUESTING FOR RECALL/AMENDMENT OF THE ORDER DATED 26.3.2010 OF TH E TRIBUNAL IN ITA NO. 3148/MUM/2007 ON THE GROUND OF SOME APPARENT MISTAK ES. 2. THE FACTS IN BRIEF ARE THAT THE ASSESSEE IN THE ASSESSMENT YEAR 1996-97 HAD CLAIMED LOSS OF RS. 43,45,978/- ON PURCHASES OF RAW WOOL OF RS. 2,02,00,392/-. THE AO NOTED THAT THE ASSESSEE HAD PURCHASED RAW WOOL A T THE RATE OF RS. 203 TO RS. 251/- PER KG AND THE SAME WAS SOLD AT THE RATE OF R S. 127/- TO 143/- PER KG AS STATED BY THE ASSESSEE VIDE LETTER DATED 30/4/1998. THE AO ALSO NOTED THAT THE PURCHASES LQUOKBZ DH RKJH[K@ DATE OF HEARING 19-7-2013 ?KKS'K.KK DH RKJH[K@ DATE OF PRONOUNCEMENT 14-8-2013 M/S MONIKA INDIA - 2 - FROM SUVIDHA WOOLEN MILLS WERE MADE AT RS. 210/- PE R KG ON 15.3.2006 AND AT THE SAME TIME THE ASSESSEE HAD SOLD RAW WOOL AT THE RAT E OF RS. 127/- PER KG, RS. 137/- AND RS. 165/- PER KG ON OR AROUND THE SAME PERIOD. THE ASSESSEE SUBMITTED THAT IT HAD AGREED SOMEWHERE IN NOVEMBER, 1995 TO PURCHASE 12,624 KGS OF WOOL FROM SUVIDHA WOOLEN MILLS AT RS. 230/- PER KG TO BE DELI VERED IN DECEMBER, 1995 AND 1,631 KGS AT RS. 210/- PER KG TO BE DELIVERED IN JA NUARY 1996. THUS THE PURCHASE OF RS. 210/- PER KG WAS PRE AGREED WHICH HAD BEEN SOLD AT LOWER RATE IN FUTURE IN THE FALLING MARKET. THE ASSESSEE PRODUCED CERTIFICATE F ROM SUVIDHA WOOLEN MILLS. THE AO, HOWEVER, NOTED DISCREPANCIES WITH RESPECT TO THE RE PLY BY THE ASSESSEE GIVEN EARLIER WHICH CONTRADICTED THE CLAIM OF ANY PRIOR AGREEMENT FOR SUPPLY OF RAW WOOL. THE AO ALSO NOTED THAT THE ASSESSEE HAD CLAIMED THAT AN AM OUNT OF RS. 7,535/- HAS BEEN CHARGED AS CARTAGE REGARDING SUPPLY FROM M/S SUVIDH A WOOLEN MILLS ON 10.3.1996. BUT ON PERUSAL OF INVOICES, IT WAS FOUND THAT THE A MOUNT CLAIMED AS CARTAGE WAS ACTUALLY SALES TAX @ RS. 2.20%. THE AO ALSO REFERRE D TO THE STATEMENT OF MR. MAHINDRA SINGH, CHARTERED ACCOUNTANT, MANAGER (FINA NCE) OF SUVIDHA WOOLEN MILLS RECORDED ON 15.3.1999 IN WHICH IT WAS CLEARLY STATE D THAT THE COMMODITIES SOLD TO THE ASSESSEE DID NOT FLUCTUATE VERY MUCH DURING THE PER IOD1.12.1995 TO 31.3.1996. THE AO ALSO OBSERVED THAT THE CLAIM OF THE ASSESSEE THA T THERE WAS AN ORAL AGREEMENT WITH SUVIDHA WOOLEN MILLS TO SUPPLY THE GOODS AT AN AGREED PRICE DID NOT STAND THE TEST OF COMMON SENSE AS THE QUANTITIES INVOLVED WER E VERY SPECIFIC AND ODD QUANTITIES SUCH AS 12,624 KGS AND 1,631 KGS. EVEN THE CERTIFIC ATE FILED BY SUVIDHA WOOLEN MILLS DID NOT SAY ANYTHING ABOUT ANY ORAL AGREEMENT, EXCE PT MENTIONING THE FACT OF SALES. THE AO, THEREFORE, CONCLUDED THAT LOSS CLAIMED BY T HE ASSESSEE WAS NOT GENUINE AND ACCORDINGLY DISALLOWED THE SAME, WHICH HAS BEEN CON FIRMED BY THE CIT(A). 3. THE TRIBUNAL IN THE ORDER DATED 26.3.2010 OBSERV ED THAT GENUINENESS OF CLAIM OF LOSS HAD TO BE DECIDED AFTER TAKING INTO ACCOUNT SURROUNDING CIRCUMSTANCES AND THE TEST OF HUMAN PROBABILITIES. THE TRIBUNAL PLACED RE LIANCE ON THE JUDGMENT OF HONBLE SUPREME COURT IN CASE OF DURGA PRASAD MORE (82 ITR 540) AND ON THE JUDGMENT OF HONBLE SUPREME COURT IN CASE OF SUMATI DAYAL (214 ITR 801). FOLLOWING THESE JUDGMENTS, THE TRIBUNAL OBSERVED THAT IT WAS REQUIR ED TO BE SEEN WHETHER DOCUMENTARY EVIDENCE PRODUCED ACCORDED WITH HUMAN P ROBABILITIES AND SURROUNDING CIRCUMSTANCES. TRIBUNAL ALSO OBSERVED THAT CONSISTE NTLY BUYING GOODS AT HIGHER RATES M/S MONIKA INDIA - 3 - AND SELLING THEM AT MUCH LOWER RATES WAS NOT INDICA TIVE OF NORMAL BUSINESS TRANSACTION. TRIBUNAL FURTHER OBSERVED THAT THE ASS ESSEE COULD NOT ESTABLISH WITH EXISTENCE OF PRIOR AGREEMENT WITH SUVIDHA WOOLEN MI LLS BUT EVEN IF THERE WAS SUCH AGREEMENT, THERE WAS NO ACCEPTABLE EXPLANATION AS T O WHY THE ASSESSEE WENT ON PURCHASING RAW WOOL AT HIGHER RATES ONLY TO BE SOLD , AFTER BEING SEPARATED INTO SMALL LOTS, AT MUCH LOWER RATES. IT WAS ALSO QUITE CLEAR THAT THE ASSESSEE HAD NOT INCURRED ANY EXPENDITURE IN SEPARATING THE RAW WOOL INTO SMA LLER LOTS. THE CLAIM OF THE ASSESSEE THAT THERE WAS DEPRESSION AND FALL IN THE MARKET RESULTING IN FALL IN SALE PRICE WAS NOT ONLY NOT SUPPORTED BY ANY EVIDENCE BUT WAS ALSO CONTRARY TO THE FACTS. THE TRIBUNAL, THEREFORE, CONCLUDED THAT THE CLAIM OF LO SS WAS DELIBERATE AND NOT GENUINE AND HAD BEEN MADE ONLY TO SET OFF AGAINST THE SUBST ANTIAL INTEREST INCOME OF RS. 89,39,127/- AND RS. 22,04,415/- IN THE ASSESSMENT Y EAR 1997-98 AND 1998-99 RESPECTIVELY. THE TRIBUNAL ACCORDINGLY CONFIRMED TH E DISALLOWANCE OF LOSS. 4. THE ASSESSEE IN THE MISCELLANEOUS APPLICATION HA S POINTED OUT THAT THE TRIBUNAL WAS WRONG IN STATING THAT THE ASSESSEE COU LD NOT PROVE THE EXISTENCE OF AGREEMENT WITH SUVIDHA WOOLEN MILLS. THE ASSESSEE H AD FILED CONFIRMATION FROM THE SAID COMPANY, A COPY OF WHICH HAS BEEN PLACED AT 2 52 OF THE PAPER BOOK. THE ASSESSEE HAS ALSO MENTIONED THAT THE TRIBUNAL WAS N OT CORRECT IN STATING THAT THERE WAS NO ACCEPTABLE EXPLANATION REGARDING SALE AT LOW ER PRICES. THE TRIBUNAL HAD FAILED TO APPRECIATE THAT THE PURCHASES HAD BEEN MADE IN T HE MONTH OF NOVEMBER AND DECEMBER 1995 AND JANUARY 1996 EXCEPT FOR CONTRACTU AL PURCHASE FROM SUVIDHA WOOLEN MILLS. IN RESPECT OF SUVIDHA WOOLEN MILLS R ATE OF RS. 210/- HAD BEEN FIXED IN NOVEMBER 1995 FOR DELIVERY IN DECEMBER 1995 AND JAN UARY 1996 BUT DELIVERY WAS ACTUALLY DONE IN MARCH 1996 DUE TO BAD MARKET CONDI TIONS. THE ASSESSEE HAD FILED COPIES OF SALE BILLS. IT HAS ALSO BEEN SUBMITTED TH AT THE AO HAD NO POWER TO DISALLOW LOSS ON TRANSACTION AND THAT HE COULD DISALLOW ONLY THE EXPENSES. THERE WERE, THEREFORE, APPARENT MISTAKES IN THE ORDER OF TRIBUN AL WHICH WERE REQUIRED TO BE RECTIFIED AFTER RECALLING THE ORDER. 5. WE HAVE HEARD BOTH THE PARTIES PERUSED THE RECOR DS AND CONSIDERED THE MATTER CAREFULLY. THE DISPUTE RAISED BEFORE TRIBUNA L WAS REGARDING GENUINENESS OF CLAIM OF LOSS ON ACCOUNT OF SALE OF WOOL. THE ASSES SEE HAD CLAIMED HUGE LOSS FROM M/S MONIKA INDIA - 4 - SALE AND PURCHASE OF RAW WOOL WHICH HAD BEEN SET OF F AGAINST SUBSTANTIAL INTEREST INCOME EARNED BY THE ASSESSEE. THE ASSESSEE HAD EXP LAINED THAT IT HAD PURCHASED RAW WOOL FROM M/S. SUVIDHA WOOLEN MILLS AT PRE AGRE ED PRICE IN NOVEMBER 1995 AT THE RATE OF RS. 230/- PER KG FOR DELIVERY IN DECEMB ER 1995 AND AT THE RATE OF RS. 210/- PER KG FOR DELIVERY IN DECEMBER 1995 AND JANU ARY 1996. THE TRIBUNAL HOWEVER NOTED THAT THERE WAS NO EVIDENCE FOR EXISTENCE OF A NY PRIOR AGREEMENT. THE TRIBUNAL ALSO OBSERVED THAT THERE WAS NO EVIDENCE FOR TRANSP ORTATION OF WOOL FROM M/S SUVIDHA WOOLEN MILLS. THE TRIBUNAL FURTHER OBSERVED THAT EVEN IF THERE WAS PRIOR AGREEMENT THERE WAS NO JUSTIFICATION FOR PURCHASING AT HIGHER RATES ONLY TO BE SOLD, AFTER BEING SEPARATED INTO SMALL LOTS. THERE WAS AL SO NO EVIDENCE FOR EXPENSES INCURRED FOR SEPARATING THE RAW WOOL INTO SMALLER L OTS. THE TRIBUNAL, THEREFORE, AFTER CONSIDERING THE SURROUNDING CIRCUMSTANCES AND APPL YING THE TEST OF HUMAN PROBABILITIES HELD THAT THE CLAIM OF LOSS WAS NOT G ENUINE. THE TRIBUNAL PLACED RELIANCE ON THE JUDGMENT OF HONBLE SUPREME COURT IN CASE OF DURGA PRASAD MORE (SUPRA) AND IN CASE OF SUMATI DAYAL (SUPRA). 5.1 THE ASSESSEE IN THE MISCELLANEOUS APPLICATION H AS MENTIONED THAT THE TRIBUNAL IGNORED THE FACT THAT THE ASSESSEE HAD FILED CONFIR MATIONS FROM M/S SUVIDHA WOOLEN MILLS, REGARDING PRIOR AGREEMENT. HOWEVER WE FIND T HAT THE TRIBUNAL HAD CONSIDERED ALL MATERIALS ON RECORD AND OBSERVED THAT EVEN IF T HERE WAS A PRIOR AGREEMENT, THERE WAS NO JUSTIFICATION FOR PURCHASING RAW WOOL AT HIG HER PRICE AND SELLING AT LOWER PRICES. THE ASSESSEE IN THE MISCELLANEOUS APPLICATI ON HAS ALSO POINTED OUT THAT THE TRIBUNAL OMITTED TO CONSIDER THE FACTS THAT THE PUR CHASES AT HIGHER RATE HAD BEEN MADE FROM M/S SUVIDHA WOOLEN MILLS AS PER PRIOR AGR EEMENT IN NOV 1995. BUT THESE FACTS HAD ALSO BEEN CONSIDERED BY THE TRIBUNAL. THE ASSESSEE HAD CLAIMED PURCHASE AT THE RATE OF RS. 210/- PER KG AT PRE AGREED PRICE IN NOVEMBER 1995 FOR DELIVERY IN DECEMBER 1995 AND JANUARY 1996. IT WAS EXPLAINED TH AT DELIVERY HAD BEEN DELAYED TO MARCH 1996. HOWEVER THERE WAS NO EVIDENCE REGARD ING TRANSPORTATION OF RAW WOOL FROM M/S SUVIDHA WOOLEN MILLS. MOREOVER THE ASSESSE E HAD NOT MADE PURCHASE ONLY FROM M/S SUVIDHA WOOLEN MILLS. THE ASSESSEE VIDE LE TTER DATED 30.4.1998 HAD SUBMITTED BEFORE THE AO THAT IT HAD PURCHASED RAW W OOL AT THE RATE OF 203 TO RS. 251/- PER KG AND THE SAME WERE SOLD AT THE RATE OF RS. 127/- TO 143/- PER KG. THE TRIBUNAL, THEREFORE, SAW NO JUSTIFICATIONS FOR PURC HASING RAW WOOL AT HIGHER RATE AND M/S MONIKA INDIA - 5 - SELLING IT AT MUCH LOWER RATE WHEN THE ASSESSEE WAS AWARE THAT THE MARKET CONDITION WAS NOT GOOD. MOREOVER THE MANAGER FINANCE OF M/S S UVIDHA WOOLEN MILLS IN THE STATEMENT DATED 15.3.1999 HAD ALSO CLEARLY STATED T HAT COMMODITIES SOLD TO THE ASSESSEE DID NOT FLUCTUATE VERY MUCH DURING THE PER IOD 1.12.1995 TO 31.3.1996. THUS THE TRIBUNAL HAD DECIDED THE ISSUE BY WAY OF A REAS ONED AND SPEAKING ORDER CONSIDERING THE VARIOUS FACTS AND CIRCUMSTANCES OF THE CASE AND AFTER APPLYING PRINCIPLES LAID DOWN BY THE HONBLE SUPREME COURT. THE ASSESSEE IN THE MISCELLANEOUS APPLICATION HAS ALSO STATED THAT AO H AD NO POWER TO DISALLOW LOSS ON TRANSACTION AND THAT HE COULD DISALLOW ONLY THE EXP ENSES. THE PLEA IS WITHOUT ANY MERIT. THE AO COULD ALSO LOOK INTO THE GENUINENESS OF LOSS AS ENTRIES IN BOOKS OF ACCOUNTS ARE NOT CONCLUSIVE. THE TRIBUNAL HAD DECID ED THE ISSUE AFTER CONSIDERING ALL THE ASPECTS OF CASE. THE TRIBUNAL HAS NO POWER TO R EVIEW ITS OWN DECISION. THE TRIBUNAL CAN AMEND ONLY PATENT AND OBVIOUS MISTAKES . WE, DO NOT FIND ANY SUCH MISTAKE IN THE ORDER AND THE MISCELLANEOUS APPLICAT ION FILED BY ASSESSEE IS THEREFORE REJECTED. IN THE RESULT MISCELLANEOUS APPLICATION FILED BY TH E ASSESSEE IS REJECTED. ORDER PRONOUNCED IN THE COURT TODAY I.E 14-8-2013 SD/- SD/- (R.K. GUPTA) (RAJENDRA SINGH) JUDICIAL MEMBER ACCOUNTANT MEMBER SKS SR. P.S, MUMBAI DATED 14.8.2013 COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CONCERNED CIT(A) 4. THE CONCERNED CIT 5. THE DR, C BENCH, ITAT, MUMBAI BY ORDER ASSISTANT REGISTRAR INCOME TAX APPELLATE TRIBUNAL, MUMBAI BENCHES, MUMBAI