Shri Kantilal S. Jain, v. Asstt. CIT Cir. 3(1) Dhule,

ITA 324/PUN/2007 | 2001-2002
Pronouncement Date: 29-10-2010 | Result: Dismissed

Appeal Details

RSA Number 32424514 RSA 2007
Assessee PAN ABDPJ9287L
Bench Pune
Appeal Number ITA 324/PUN/2007
Duration Of Justice 3 year(s) 7 month(s) 2 day(s)
Appellant Shri Kantilal S. Jain,
Respondent Asstt. CIT Cir. 3(1) Dhule,
Appeal Type Income Tax Appeal
Pronouncement Date 29-10-2010
Appeal Filed By Assessee
Order Result Dismissed
Bench Allotted A
Tribunal Order Date 29-10-2010
Assessment Year 2001-2002
Appeal Filed On 27-03-2007
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCHES A PUNE BEFORE SHRI SHAILENDRA KUMAR YADAV JM AND SHRI B. RAMAKOTAIAH AM I.T.A. NO. 437/PN/2007 : A.Y. 2001-02 ASSTT. CIT CIR. 3(1) DHULE APPELLANT VS. SHRI KANTILAL S. JAIN PROP. SUNIL TRADING CO. LANE NO. 4 1527 DHULE PAN ABDPJ 9287 L RESPONDENT I.T.A. NO. 324/PN/2007 : A.Y. 2001-02 SHRI KANTILAL S. JAIN PROP. SUNIL TRADING CO. LANE NO. 4 1527 DHULE PAN ABDPJ 9287 L APPELLANT VS. ASSTT. CIT CIR. 3(1) DHULE RESPONDENT ASSESSEE BY : SMT. DEEPA KHARE DEPARTMENT BY: SHRI ABHAY DAMLE ORDER PER B. RAMAKOTAIAH AM THESE ARE CROSS APPEALS BY THE ASSESSEE AND REVENU E AGAINST THE ORDER OF CIT(A)-I NASIK DATED 31-01-2007. THE ASSE SSEE IS CONTESTING THE ISSUE OF REOPENING U/S 147 AND CONFIRMATION OF ADDI TION AT 7% OF TRANSPORT CONTRACT BY CIT(A) WHEREAS THE REVENUE IS CONTESTING THE RELIEF OF RS. 28 89 401/- GRANTED BY THE CIT(A) WHILE REDU CING THE ADDITION OF RS. 36 64 841/- MADE BY A.O ON EXPENSES TO G.P ADDI TION. 2. BRIEFLY STATED THE ASSESSEE PROPRIETOR OF M/S. S UNIL TRADING CO. IS IN THE BUSINESS OF SUGAR TRADING AND TRANSPORT CONT RACT FOR GOVERNMENT OF MAHARASHTRA. THE ASSESSEE FILED RETURN OF INCOM E ON 31-10-2001 DECLARING AN INCOME OF RS. 5 52 770/- AND CLAIMING REFUND OF TDS MADE. ITA NO. 437 AND 324/PN/09 KANTILAL JAIN A.Y. 2001-02 2 THE A.O WHILE ISSUING THE REFUND NOTICED THAT THE T OTAL RECEIPTS ON THE BASIS OF TDS WAS MORE THAN THE TRANSPORTATION RECEI PTS SHOWN IN TRADING ACCOUNT AT RS. 9 40 592/- AND ACCORDINGLY ISSUED NO TICE U/S 148 AFTER REOPENING THE ASSESSMENT BY RECORDING THE REASONS. THE ASSESSEE DID NOT ATTEND ON MANY OCCASIONS AND SO AO ISSUED SHOW CAUSE WHY TRANSPORTATION PROFIT SHOULD NOT BE ESTIMATED AT 8% . THE ASSESSEE FURNISHED A TRANSPORTATION LEDGER COPY BUT DID NOT PRODUCE THE VOUCHERS OF EXPENSES. THE A.O NOTICED THAT MANY VOUCHERS WE RE SELF MADE AND DO NOT CONTAIN ANY DETAILS AND POSTED FURTHER HEARING ON 28-3-2005. SINCE THE ASSESSEE DID NOT RESPOND THE A.O AFTER SHOW CA USE ON 29-3-2005 SERVED BY AFFIXURE WITH THE HELP OF POLICE COMPLETE D ASSESSMENT BY DISALLOWING RS. 36 44 841/ OUT OF THE TRANSPORT EXP ENSES AS FICTITIOUS PAYMENTS. 3. BEFORE THE CIT(A) THE ASSESSEE CHALLENGED THE R EOPENING ON VARIOUS ISSUES AND ALSO FURNISHED THE COPIES OF VOU CHERS AS EVIDENCE. THE CIT(A) SENT THE ADDITIONAL EVIDENCE ON REMAND. THE A.OS CONTENTIONS WERE THAT THE VOUCHERS ARE BOGUS AND SA ME PERSON SIGNED ON DIFFERENT NAMES WITH SAME PEN AND THE EVIDENCES ARE NOT ACCEPTABLE. THE CIT(A) WHILE UPHOLDING THE REOPENING HOWEVER R EJECTED THE BOOKS OF ACCOUNT AND ESTIMATED THE GROSS PROFIT ON TRANSPORT CONTRACT AT 7% AS AGAINST 3.85% OFFERED BY THE ASSESSEE. THE ASSESSE E IS CONTESTING THE ISSUES OF REOPENING AND ESTIMATION WHEREAS THE REVE NUE IS AGGRIEVED ON REDUCING THE ADDITION MADE. THE GROUNDS ARE RAISED ACCORDINGLY. 4. WE HAVE HEARD THE LEARNED COUNSEL AND LEARNED DR . 5. THE THRUST OF THE ARGUMENTS OF THE LEARNED COUNS EL IS THAT THE REASONING RECORDED BY THE A.O ON TDS IS NOT CORRECT AS THE SAME WAS REFLECTED IN BALANCE SHEET MENTIONED IN AUDIT REPO RT AND SINCE NO ITA NO. 437 AND 324/PN/09 KANTILAL JAIN A.Y. 2001-02 3 ADDITION WAS MADE ON THE ISSUE OF TDS THE ADDITION MADE ON THE BASIS OF CONTRACT RECEIPT WAS NOT CORRECT ON THE PRINCIPLES ESTABLISHED BY THE HONBLE BOMBAY HIGH COURT IN THE CASE OF CIT VS. JET AIRWAYS (I) LTD IN ITA NO. 1714 OF 2009 DATED 12-4-2010. WITH REFEREN CE TO THE MERIT OF GROSS PROFIT ADDITION THE ARGUMENT WAS THAT THERE I S NO NEED FOR G.P ADDITION AND EVEN OTHERWISE THE ADDITION MADE WAS H IGH WHEREAS IN A COMPARABLE CASE THE PROFIT AT 4.3% WAS ACCEPTED BY THE REVENUE. 6. THE LEARNED DR HOWEVER SUBMITTED THAT THE REASO NS ON WHICH THE REOPENING WAS MADE WAS ON NON-DISCLOSURE OF TRANSPO RT CONTRACTS OF MORE THAN 2 CRORES CLAIMED WHERE AS THE ACCOUNT REF LECTED ONLY RS. 9 40 592/- AND SO THE A.O HAS REASON TO BELIEVE. H E HOWEVER CONTESTED THE ORDER OF CIT(A) ON MERITS STATING THAT THE VOUC HERS WERE FICTITIOUS AND CIT(A) SHOULD HAVE CONFIRMED THE ORDER OF A.O ON DI SALLOWANCE SO MADE. 7. WE HAVE EXAMINED THE RECORD AND CONSIDERED THE A RGUMENTS. ON THE ISSUE OF REOPENING U/S 148 THE DETAILED ARGUMEN TS OF THE ASSESSEE ON VARIOUS ISSUES HAVE BEEN ELABORATELY CONSIDERED BY THE CIT(A) AND AFTER EXAMINING THE REASONS HE HAS GIVEN A FINDING THAT T HE REOPENING IS CORRECT ACCORDING TO THE LAW. THE ORDER OF CIT(A) IN PARA 6.5 IS AS UNDER: THE FIRST AND SECOND GROUNDS OF APPEALS OF THE AP PELLANT ARE RELATED TO THE ISSUE OF VALIDITY OF THE REOPENING O F THE ASSESSMENT U/D 147. THE APPELLANT DID NOT FILE TRADING ACCOUNT IN RESPECT OF TRANSPORTATION BUSINESS ALONG WITH RETURN OF INCOME . THE DEFECT IN RETURN WAS THEREFORE COVERED BY PROVISIONS OF EXPLANATION (D) TO SUB-SECTION (9) OF SECTION 139 AS CLAIMED BY THE APPELLANT. HOWEVE R THE CONTENTION OF THE A.O IS ALSO CORRECT AS THE APPELLANT IN THE PR OFIT AND LOSS ACCOUNT IN TAX AUDIT REPORT FILED WITH RETURN HAS SHOWN TRANSP ORTATION RS. 9 40 592/- ON CREDIT SIDE UNDER THE GROSS PROFIT OF SUGAR TRADING APPEARING ON THE CREDIT SIDE OF THE PROFIT AND LOSS ACCOUNT. FURTHER FROM THE TDS CERTIFICATES FILED WITH RETURN THE A.O NOTI CED THAT THE TRANSPORTATION RECEIPTS ON WHICH THE TAX WAS DEDUCT ED AT SOURCE OF THE APPELLANTS BUSINESS IS MUCH MORE THAN THE TRANSPORT ATION RS. 9 40 592/- CREDITED TO PROFIT AND LOSS ACCOUNT. FR OM THE MATERIAL AVAILABLE WITH THE RETURN THE A.O WAS NOT IN A POSI TION TO KNOW THAT THE SAID DISCREPANCY IS ATTRIBUTABLE TO NON FILING OF T RADING ACCOUNT OF TRANSPORTATION BUSINESS. IN VIEW OF THESE FACTS TH E A. CERTAINLY HAS ITA NO. 437 AND 324/PN/09 KANTILAL JAIN A.Y. 2001-02 4 REASON TO BELIEVE THAT THE INCOME OF TRANSPORTATION RECEIPT APPEARING IN THE TDS CERTIFICATES IN EXCESS OF RS. 9 40 592/- AP PEARING IN THE PROFIT AND LOSS ACCOUNT FILED BY THE APPELLANT ESCAPED ASS ESSMENT. IN VIEW OF THE ABOVE FACTS I AM OF THE CONSIDERED VIEW THAT T HE A.O HAD REASON TO BELIEVE THAT THE INCOME ESCAPED ASSESSMENT AS REQUI RED BY THE PROVISIONS OF SECTION 147. THE VALIDITY OF THE REO PENING OF THE ASSESSMENT IS UPHELD. THE FIRST AND SECOND GROUNDS OF APPEAL OF THE APPELLANT ARE THEREFORE DISMISSED. 7.1 AS RIGHTLY PUT UP BY DR THE ISSUE FOR REOPENING WAS NON-DISCLOSURE OF TRANSPORT CONTRACT RECEIPTS OF OVER RS. 2 CRORES IN THE AUDIT REPORT ENCLOSED TO THE RETURN OF INCOME WHEREAS THE STATEM ENT INDICATED ONLY RS. 9 40 592/- AS RECEIPT. IN FACT THE RELEVANT SO CALLED LEDGER COPY WAS FURNISHED ONLY DURING THE REASSESSMENT PROCEEDINGS WHICH WAS THE BASIS FOR SUBSEQUENT EXAMINATION AND ADDITION. IN VIEW O F THIS WE ARE OF THE OPINION THAT THE A.O HAS JURISDICTION TO REOPEN THE ASSESSMENT AND THE RELIANCE ON THE JUDGMENT OF HONBLE BOMBAY HIGH COURT IN THE CASE OF JET AIRWAYS I. LTD. (SUPRA) WAS MISPLACED. ACCORDI NGLY THE GROUNDS ON REOPENING RAISED BY THE ASSESSEE ARE REJECTED. 7.2 COMING TO THE ISSUE ON MERITS BOTH THE PARTIES ARE CONTESTING THIS IN THE RESPECTIVE GROUNDS. AS ALREADY NOTED THE AS SESSING OFFICER DISALLOWED THE EXPENDITURE CLAIMED IN THE LEDGER CO PY AS THE ASSESSEE HAS NOT FURNISHED THE DETAILS BEFORE THE A.O. THE EVIDENCE FURNISHED BY THE ASSESSEE WERE EXAMINED BY THE A.O AND EXPRESSED HIS RESERVATIONS ON THE GENUINENESS OF THE VOUCHERS. THE CIT(A) AFT ER CONSIDERING THE SAME HAS REJECTED THE BOOKS OF ACCOUNT KEEPING IN MI ND THE NATURE OF BUSINESS OF TRANSPORTATION AND VOUCHERS MAINTAINED AND THE AVERAGE RATE RECEIVED AS PER THE COMPARATIVE RATES FURNISHE D BY THE ASSESSEE. HE ACCORDINGLY ESTIMATED THE GROSS PROFIT AT 7% WHERE AS THE ASSESSEE IS AGREEING TO AN AMOUNT OF 4.3% ON THE BASIS OF COMP ARABLE CASE. DURING THE COURSE OF ARGUMENTS THE ITAT ORDER IN THE CASE OF M/S. N.A. SOMJI VS. ACIT IN ITA NO. 3/PN/1993 DATED 1-07-2000 WAS F ILED WHEREIN THE ITA NO. 437 AND 324/PN/09 KANTILAL JAIN A.Y. 2001-02 5 ITAT DETERMINED THE ESTIMATION AT 4.5% ON THE BASIS OF PAST HISTORY. WE DO NOT HAVE THE BENEFIT OF HISTORY OF ASSESSEE ON R ECORD TO EXAMINE THE GP RATIOS DECLARED IN EARLIER YEARS OR IN LATER YEA RS. WE ALSO NOTICE THAT THE ASSESSEE HAS ACCEPTED THE REVISED RECEIPTS FROM THE TRANSPORTATION CONTRACT AT RS. 2 43 71 881/- AS AGAINST RS. 2 29 7 5 930/- DISCLOSED IN THE LEDGER COPY WHICH WAS ALSO THE BASIS FOR CIT(A) S ADOPTION OF 7%. CONSIDERING THE NATURE OF DISALLOWANCE MADE BY THE A.O AND REASONING OF CIT(A) ON G.P ADDITION WE ARE OF THE OPINION TH AT AN AMOUNT OF RS. 4 00 000/- OF ADDITION WOULD MEET THE ENDS OF JUSTIC E ON THE FACTS OF THE CASE. ACCORDINGLY THE ORDER OF CIT(A) IS MODIFIED AND ASSESSEES GROUND ON MERIT (GROUND NO. 2) IS PARTLY ALLOWED. THE REV ENUES GROUNDS ON MERITS ARE CONSEQUENTLY REJECTED. 8. IN THE RESULT THE ASSESSEES APPEAL IS PARTLY AL LOWED AND THE APPEAL BY THE REVENUE IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 29TH DAY OF OCTOBE R 2010. SD/- SD/- (SHAILENDRA KUMAR YADAV) (B. RAMAKOTAIAH) JUDICIAL MEMBER ACCOUNTANT MEMBER PUNE DATED THE 29TH OCTOBER 2010 ANKAM COPY FORWARDED TO: (1) ASSESSEE (2) DEPARTMENT (3) CIT (A) I NASIK (4) CIT I NASIK (5) THE D.R. ITAT 'A' PUNE BENCH PUNE (6) GUARD FILE BY ORDER ASSISTANT REGISTRAR INCOME-TAX APPELLATE TRIBUNAL PUNE BENCHES PUNE