PRAKASH SANCHETI (HUF), MUMBAI v. DCIT 14(2), MUMBAI

ITA 37/MUM/2009 | 2004-2005
Pronouncement Date: 31-05-2010 | Result: Allowed

Appeal Details

RSA Number 3719914 RSA 2009
Assessee PAN AAAHS1496J
Bench Mumbai
Appeal Number ITA 37/MUM/2009
Duration Of Justice 1 year(s) 4 month(s) 28 day(s)
Appellant PRAKASH SANCHETI (HUF), MUMBAI
Respondent DCIT 14(2), MUMBAI
Appeal Type Income Tax Appeal
Pronouncement Date 31-05-2010
Appeal Filed By Assessee
Order Result Allowed
Bench Allotted C
Tribunal Order Date 31-05-2010
Date Of Final Hearing 19-05-2010
Next Hearing Date 19-05-2010
Assessment Year 2004-2005
Appeal Filed On 02-01-2009
Judgment Text
ITA NO. 37/MUM/2009 ASSESSMENT YEAR : 2004-05 PAGE 1 OF 6 IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI C BENCH MUMBAI BEFORE SHRI PRAMOD KUMAR (ACCOUNTANT MEMBER) AND SHRI R S PADVEKAR (JUDICIAL MEMBER) ITA NO. 37/MUM/2009 ASSESSMENT YEAR 2004-05 DATE OF HEARING : 19.5.2010 PRAKASH SANCHETI (HUF) ...... APPELLANT PROP. MOONLIGHT TEXTILES JASRAJ BHAVAN 4 TH FLOOR 64 A OLD HANUMAN LANE KALBADEVI MUMBAI 400 002 PAN AAAHS1496J VS. DY. COMMISSIONER OF INCOME TAX 14(2) .. RESPONDENT EARNEST HOUSE NARIMAN POINT MUMBAI 400 021 APPELLANT BY : SHRI PRAKASH JHUNJHUNWALA RESPONDENT BY : SHRI S.M. KESHKAMAT O R D E R PER PRAMOD KUMAR: THIS IS AN APPEAL FILED BY THE ASSESSEE AND IS DIRE CTED AGAINST LD. CIT(A)S ORDER DATED 7 TH NOVEMBER 2008 FOR THE ASSESSMENT YEAR 2004-05 ITA NO. 37/MUM/2009 ASSESSMENT YEAR : 2004-05 PAGE 2 OF 6 2. IN THE FIRST GROUND OF APPEAL THE ASSESSEE HAS RAI SED THE FOLLOWING GRIEVANCE:- 1.0 ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW LD. CIT(A) ERRED IN CONFIRMING AN ADDITION OF RS.9 67 406/- BE ING AN EXPENDITURE ALLEGED TO HAVE BEEN INCURRED TOWARDS INWARD FRIGH T EXPENSES OUT OF BOOKS OF ACCOUNT. 3. THE ASSESSEE IS ENGAGED IN THE BUSINESS OF DEALING IN BLEACHED AND DYED COTTON FABRICS. DURING THE COURSE OF ASSESSMEN T PROCEEDINGS THE ASSESSING OFFICER NOTICED THAT THE ASSESSEE IS MAKI NG PURCHASES FROM BHIWADI AND MUMBAI AND SELLING FOODS AT JODHPUR BU T AS AGAINST PURCHASES OF RS.483.70 LACS THE ASSESSEE HAD CLAIMED FREIGHT INWARDS OF ONLY RS.804. THE ASSESSING OFFICER NOTED THAT THE ASSESSEE IS RE CEIVING GOODS AT JODHPUR AND SHOWING CLOSING STOCK AT JODHPUR BUT FREIGHT F ROM MUMBAI / BHIWADI TO JODHPUR IS NOT ACCOUNTED FOR IN THE BOOKS. ON THESE FACTS HE INFERRED THAT THE ASSESSEE HAS INCURRED TRANSPORTATION EXPENSES OUT O F BOOKS OF ACCOUNT AND HE ESTIMATED THE SAME @ 2% OF GROSS PURCHASES. ACCO RDINGLY AN ADDITION FOR RS.9 67 406/- WAS MADE ON ACCOUNT OF UNEXPLAINED EX PENDITURE U/S 69C. AGGRIEVED THE ASSESSEE CARRIED THE MATTER IN APPEA L BEFORE THE LD. CIT(A) BUT WITHOUT ANY SUCCESS. NOT SATISFIED THE ASSESSE E IS IN SECOND APPEAL BEFORE US. 4. HAVING HEARD THE RIVAL CONTENTIONS AND HAVING PERUS ED THE MATERIAL ON RECORD WE FIND NO GOOD REASONS TO SUSTAIN THIS ADD ITION. WE HAVE NOTED THAT AS EVIDENT FROM COPIES OF INVOICES AT PAGES 10 AND 11 OF THE PAPER BOOK WHICH WERE ALSO PLACED BEFORE THE ASSESSING OFFICER THE GOODS WERE DELIVERED AT JODHPUR. WHILE ITA NO. 37/MUM/2009 ASSESSMENT YEAR : 2004-05 PAGE 3 OF 6 THE PURCHASES WAS MADE AT BHIWADI THE DELIVERY WAS GIVEN DIRECTLY FROM SUPPLIERS ADDRESS AT JODHPUR. WE HAVE ALSO NOTED THAT THE ASS ESSEE OFFERED TO FILE CONFIRMATION TO THE EFFECT THAT PRICE OF PURCHASES WAS FOR DELIV ERY AT JODHPUR AND THE FREIGHT WAS BORNE BY THE SELLER BUT THE LD. CIT(A) DECLINED TO ADMIT THE SAID EVIDENCE BY INVOKING RULE 46 A. IN THE PRESENT CASE AS IT WAS A NECESSARY FINDING OF FACT AS TO WHETHER THE FREIGHT WAS BORNE BY THE BUYER OR NOT THE LD. CIT(A) PARTICULARLY IN THE LIGHT OF HONBLE BOMBAY HIGH COURTS JUDGMENT IN TH E CASE OF PRABHAVATI S. SHAH VS CIT 231 ITR 1 OUGHT TO HAVE ADMITTED THE ADDITION AL EVIDENCE IN EXERCISE OF HIS POWERS U/S 250(4). ON THESE FACTS THUS THERE WAS N O GOOD REASON TO ASSUME THAT THE ASSESSEE HAS INCURRED FREIGHT EXPENDITURE AND NOT D ISCLOSED THE SAME IN THE BOOKS OF ACCOUNT. THE VERY FOUNDATION OF IMPUGNED ADDITION I S DEVOID OF LEGALLY SUSTAINABLE BASIS. THAT APART IN ORDER TO MAKE AN ADDITION U/S 69C IT IS NECESSARY FOR THE ASSESSING OFFICER TO BRING MATERIAL ON RECORD TO ES TABLISH THAT AN EXPENDITURE HAS BEEN INCURRED BY THE ASSESSEE WHICH IS NOT REFLECTE D IN THE BOOKS OF ACCOUNT. IN THE CASE BEFORE US THERE IS NO MATERIAL TO ESTABLISH T HAT THE EXPENDITURE HAD ACTUALLY INCURRED FOR ALL THESE REASONS AND BEARING IN MIND ENTIRETY OF THE CASE. WE DEEM IT FIT AND PROPER TO DELETE THE IMPUGNED ADDITION OF R S.9 67 406/- ON ACCOUNT OF ESTIMATED UNACCOUNTED EXPENDITURE ON INWARD FREIGHT . THE ASSESSEE GETS THE RELIEF ACCORDINGLY. 5. GROUND NO.1 IS THUS ALLOWED. 6. IN GROUND NO.2 THE ASSESSEE HAS RAISED THE FOLLOWI NG GRIEVANCE:- 2.0 ON FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW THE LD. CIT(A) ERRED IN CONFIRMING AN ADDITION OF RS.4 55 007/- ON REJECTING APPELLANTS CLAIM OF SHORTAGE / SHRINKAGE OF GOODS. ITA NO. 37/MUM/2009 ASSESSMENT YEAR : 2004-05 PAGE 4 OF 6 7. DURING THE COURSE OF ASSESSMENT PROCEEDINGS THE AS SESSING OFFICER DECLINED THE ASSESSEES CLAIM OF SHRINKAGE OF CLOTH ON THE G ROUND THAT THE ASSESSEE IS MERELY A DEALER IN CLOTHS AND NO JOB WORK IS BEING DONE BY T HE ASSESSEE. THE AMOUNT OF RS.4 55 007/- BEING VALUE OF SHRINKAGE AT THE AVER AGE RATE OF RS.15.94 PER METER WAS THUS ADDED TO THE INCOME. AGGRIEVED THE ASSESS EE CARRIED THE MATTER IN APPEAL BEFORE THE LD. CIT(A) BUT WITHOUT ANY SUCCESS. NOT SATISFIED THE ASSESSEE IS IN SECOND APPEAL BEFORE US. 8. WE HAVE HEARD THE RIVAL CONTENTIONS PERUSED THE MA TERIAL ON RECORD AND DULY CONSIDERED FACTUAL MATRIX OF THE CASE AS ALSO THE APPLICABLE LEGAL POSITION. 9. WE HAVE NOTED THAT AS SET OUT IN THE STATEMENT OF FACTS BEFORE THE LD. CIT(A) WHILE JOB WORK OF DYING AND BLEACHING IS DONE OUTSI DE THE SHRINKAGE AND LOSSES IN SUCH PROCESS ARE TO THE ACCOUNT OF THE ASSESSEE. WE HAVE ALSO NOTED THAT SIMILAR SHRINKAGE LOSS HAS ALSO BEEN ALLOWED IN OTHER ASSES SMENT YEAR AS EVIDENT FROM CHART SHOWING SHRINKAGE LOSSES IN VARIOUS YEARS AT PAGE-29 OF THE PAPER BOOK. THESE FACTS HAVE NOT BEEN CONTROVERTED BY ANY OF THE AUTH ORITIES BELOW OR EVEN BY THE LEARNED DEPARTMENTAL REPRESENTATIVE. IN VIEW OF THE SE DISCUSSIONS AND BEARING IN MIND THE ENTIRETY OF THE CASE WE DEEM IT FIT AND P ROPER TO DIRECT THE ASSESSING OFFICER TO DELETE THIS IMPUGNED ADDITION OF RS.4 55 007/- AS WELL. THE ASSESSEE GETS RELIEF ON THIS COUNT AS WELL. 10. GROUND NO.2 IS ALSO THUS ALLOWED. ITA NO. 37/MUM/2009 ASSESSMENT YEAR : 2004-05 PAGE 5 OF 6 11. IN THE RESULT ASSESSEES APPEAL IS ALLOWED. PRONOU NCED IN THE OPEN COURT TODAY ON 31 ST DAY OF MAY 2010. SD/XX SD/XX (R S PADVEKAR) (PRAMOD KUMAR) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI; 31 ST DAY OF MAY 2010. COPY FORWARDED TO : 1. THE APPELLANT 2. THE RESPONDENT 3. DIRECTOR OF INCOME TAX (INTERNATIONAL TAXATION) MUMBAI 4. COMMISSIONER (APPEALS) MUMBAI 5. DEPARTMENTAL REPRESENTATIVE C BENCH ITAT MUMB AI 6. GUARD FILE TRUE COPY BY ORDER ASSISTANT REGISTRAR INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES MUMBAI PRADEEP J. CHOWDHURY SR. PRIVATE SECRETARY ITA NO. 37/MUM/2009 ASSESSMENT YEAR : 2004-05 PAGE 6 OF 6 DATE INITIAL 1. DRAFT DICTATED ON 26.5.2010 SR.PS 2. DRAFT PLACED BEFORE AUTHOR 28.5.2010 SR.PS 3. DRAFT PROPOSED & PLACED BEFORE THE SECOND MEMBER 28.5.2010 JM/AM 4. DRAFT DISCUSSED/APPROVED BY SECOND MEMBER 28.5.2010 JM/AM 5. APPROVED DRAFT COMES TO THE SR.PS/PS 28.5.2010 SR.PS/PS 6. DATE OF PRONOUNCEMENT 31.5.2010 SR.PS 7. FILE SENT TO THE BENCH CLERK 31.5.2010 SR.PS 8. DATE ON WHICH FILE GOES TO THE HEAD CLERK 9. DATE OF DISPATCH OF ORDER