M/s KGR Exports,, Visakhapatnam v. The JCIT, Cent Cir-1., Visakhapatnam

ITA 495/VIZ/2007 | 2000-2001
Pronouncement Date: 25-02-2010 | Result: Partly Allowed

Appeal Details

RSA Number 49525314 RSA 2007
Bench Visakhapatnam
Appeal Number ITA 495/VIZ/2007
Duration Of Justice 2 year(s) 2 month(s) 12 day(s)
Appellant M/s KGR Exports,, Visakhapatnam
Respondent The JCIT, Cent Cir-1., Visakhapatnam
Appeal Type Income Tax Appeal
Pronouncement Date 25-02-2010
Appeal Filed By Assessee
Order Result Partly Allowed
Bench Allotted DB
Tribunal Order Date 25-02-2010
Date Of Final Hearing 10-02-2010
Next Hearing Date 10-02-2010
Assessment Year 2000-2001
Appeal Filed On 13-12-2007
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL VISAKHAPATNAM BENCH VISAKHAPATNAM BEFORE: SHRI SUNIL KUMAR YADAV JUDICIAL MEMBER AND SHRI B.R.BASKARAN ACCOUNTANT MEMBER I.T.A. NO.484 & 521/VIZAG/2007 ASSESSMENT YEAR :2000-01 & 2004-05 A.C.I.T. CENTRAL CIRCLE-1 M/S. K.G.R. EX PORTS VISAKHAPATNAM VS. VISAKHAPATNAM (P.A.N. NO.AADFK9923F) (APPELLANT) (RESPONDENT) I.T.A. NO.495 & 499/VIZAG/2007 ASSESSMENT YEAR :2000-01 & 2004-05 M/S. K.G.R. EXPORTS J.C.I.T. CENTRAL CIRCLE-1 VISAKHAPATNAM VS. VISAKHAPATNAM (P.A.N. NO.AADFK9923F) (APPELLANT) (RESPONDENT) REVENUE BY: SHRI SUBRATA SARKAR CIT(DR) ASSESSEE BY: SHRI C. SUBRAHMANYAM ORDER PER BENCH: THESE CROSS APPEALS ARE DIRECTED AGAINST THE ORDER OF LD CIT(A) HYDERABAD AND THEY RELATE TO THE ASSESSMENT YEARS 2 000-01 AND 2004-05. 2. THE FACTS OF THE CASE ARE STATED IN BRIEF. THE ASSESSEE IS IN THE BUSINESS OF SUPPLYING MARINE GAS OIL (MGO) AND/OR HIGH SPEED DI ESEL (HSD) TO FISHING VESSELS IN THE HIGH SEAS BEYOND 24 NAUTICAL MILES I N THE INTERNATIONAL WATERS. THE OIL IS IMPORTED FROM SINGAPORE AND MALAYSIA AND IS SUPPLIED TO FISHING TRAWLERS ON THE HIGH SEAS. THE GOVERNMENT OF INDIA HAS APPOINTE D BUSINESSMEN AS FACILITATORS WHO CAN IMPORT AND SUPPLY OIL TO THE FISHING TRAWLE RS. THE ASSESSEE HERE IN IS ONE OF THE FACILITATORS. THE TRANSACTIONS OF SALE OF M GO/HSD ARE RECORDED IN THE DOCUMENT CALLED BUNKER DELIVERY RECEIPT (BDR) WHIC H IS SIGNED BY THE MASTER OF THE BUNKER (REPRESENTATIVE OF OIL SUPPLYING COMPANY ) SKIPPER OF THE TRAWLER (CUSTOMER) AND REPRESENTATIVE OF THE FACILITATOR (E MPLOYEE OF THE ASSESSEE). ON THE BASIS OF THE BDR THE ASSESSEE HEREIN COLLECTS ITS DUES FROM THE OWNERS OF THE ITAS 484 521 495 & 499 2 TRAWLERS ON THE SHORE. THE ASSESSEE MAKES REMITTAN CES FROM OUT OF ITS BANK ACCOUNT TO THE FOREIGN SUPPLIER. IN ORDER TO ENABLE THE FISHING INDUSTRY TO COMPETE IN THE INTERNATIONAL MARKET GOVERNMENT OF INDIA HAS EXEMPTED SUCH IMPORT AND SALE OF MGO/HSD AT HIGH SEAS FROM THE PA YMENT OF SALES TAX AND CUSTOMS DUTY. 2.1. SEARCH AND SEIZURE OPERATIONS WERE CARRIED ON UNDER SECTION 132 OF THE INCOME TAX ACT IN THE HANDS OF THE ASSESSEE ON 27.8. 2003. CONSEQUENT TO THE SEARCH THE ASSESSEE FILED ITS RETURN U/S 153A OF T HE ACT ADMITTING A LOSS OF RS.10 29 011/- FOR THE ASSESSMENT YEAR 2000-01. FO R ASSESSMENT YEAR 2004-05 THE ASSESSEE FILED HIS RETURN OF INCOME DECLARING A LOSS OF RS.12 11 817/-. THE ASSESSING OFFICER COMPLETED THE ASSESSMENT FOR ASSE SSMENT YEAR 2000-01 U/S 153A OF THE ACT BY DETERMINING THE TOTAL INCOME AT RS.1 56 47 004/-. FOR ASSESSMENT YEAR 2004-05 THE ASSESSMENT WAS COMPLET ED U/S 143(3) BY DETERMINING THE TOTAL INCOME AT RS.4 22 55 780/-. IN THE APPEAL PREFERRED BY THE ASSESSEE BEFORE LD CIT(A) THE ASSESSEE GOT PAR TIAL RELIEF. HENCE BOTH THE PARTIES ARE IN APPEAL BEFORE US AGAINST THE ORDERS PASSED BY LEARNED CIT(A). THE DETAILS OF ADDITIONS CONTESTED BY BOTH THE PARTIES ARE STATED BELOW:- 3. WE TAKE UP THE APPEALS FILED BY THE ASSESSE E FIRST. (A) ISSUES IN THE APPEAL OF THE ASSESSEE FOR ASSESSMENT YEAR 2000-01:- A) VALIDITY OF ASSESSMENT MADE U/S 1 53A OF THE ACT. (B) ISSUES IN THE APPEAL OF THE ASSESSEE FOR ASSESSMENT YEAR 2004-05:- A) VALIDITY OF ASSESSMENT MA DE U/S 153A OF THE ACT. B) ADDITION SUSTAINED BY LD CIT(A) RS.3 28 865/- 3.1 THE LD AR SUBMITTED DURING THE COURSE OF HE ARING THAT HE IS NOT PRESSING THE SECOND ISSUE URGED IN THE ASSESSMENT YEAR 2004- 05 RELATING TO THE ADDITION OF RS.3 28 865/- AND HENCE THE SAME IS DISMISSED AS WI THDRAWN. AS STATED EARLIER THE ASSESSMENT OF THE ASSESSMENT YEAR 2004-05 HAS B EEN COMPLETED U/S 143(3) AND NOT U/S 153A AS SUBMITTED BEFORE US. HENCE THE QUESTION OF VALIDITY OF THE ITAS 484 521 495 & 499 3 ASSESSMENT U/S 153A FOR THE ASSESSMENT YEAR 2004-05 DOES NOT ARISE AT ALL IN THE ABSENCE OF ANY ASSESSMENT DONE U/S 153A. HENCE THE SAID GROUND IS IRRELEVANT TO THE YEAR UNDER CONSIDERATION AND CONSEQUENTLY THE S AME IS ALSO DISMISSED. 3.2 THE ONLY ISSUE IN THE APPEAL OF THE ASSESSE E FOR THE ASSESSMENT YEAR 2000- 01 RELATES TO THE VALIDITY OF THE ASSESSMENT MADE U /S 153A OF THE ACT. THIS ISSUE HAS BEEN DECIDED AGAINST THE ASSESSEE IN ITS OWN CA SE IN ITA NO.494/V/2007 RELATING TO THE ASSESSMENT YEAR 1999-2000. CONSIST ENT WITH THE VIEW TAKEN THEREIN WE DISMISS THIS GROUND IN THE PRESENT APPE AL ALSO. 4. NOW WE SHALL PROCEED TO ADJUDICATE THE APPEA L FILED BY THE REVENUE:- (A) THE SOLITARY GROUND RAISED IN THE APP EAL OF THE REVENUE FOR ASSESSMENT YEAR 2000-01 READS AS UNDER:- THE HONBLE CIT(A) ERRED IN ACCEPTING THE ASSESS EES ARGUMENT THAT THE FOREIGN SUPPLIER COMPANIES HAVE SINCE INDEPENDE NTLY CONFIRMED THE PURCHASES EVEN THOUGH THEY HAVE ALREADY DENIED IN COMPLIANCE TO THE AOS LETTERS. (B) ISSUES IN THE APPEAL OF THE REVENUE FOR ASSES SMENT YEAR 2004-05:- A) PURCHASE OUTSIDE BOOKS FROM THE TRANSACTI ONS WITH M/S SIN SOON HOCK - R S.1 72 74 537/- B) UNACCOUNTED FOREIGN REMITTANCES IN THE TRANSACTIONS WITH M/S SIN SO ON HOCK - RS.1 58 70 660/- C) FALSE CLAIM OF PURCHASES FROM M/S WINGRO - RS.1 03 22 400/- 4.1 IT MAY BE PERTINENT TO NOTE THAT THE ASSESS ING OFFICER HAS FRAMED THE ASSESSMENT ORDER ON THE BASIS OF DOCUMENTS OBTAINED FROM SINGAPORE AND MALAYSIAN TAX AUTHORITIES THROUGH THE FOREIGN TAX D IVISION OF THE INCOME TAX DEPARTMENT. IT IS ALSO TO BE NOTED THAT THE ASSESSI NG OFFICER HAS NOT FURNISHED THE COPIES OF THOSE DOCUMENTS TO THE ASSESSEE FOR HIS R EBUTTAL. IN OTHER YEARS ALSO THE AO FRAMED ASSESSMENT ON THE BASIS OF THE DOCUM ENTS WHICH WERE NOT CONFRONTED WITH THE ASSESSEE. IN THE ORDER DATED 1 2-12-2008 PASSED BY US IN THE ASSESSEES OWN CASE IN ITA NO.485 & 496/VIZAG/2007 RELATING TO THE ASSESSMENT YEAR 2001-02 IT WAS OBSERVED AS UNDER: ITAS 484 521 495 & 499 4 AT THE APPELLATE STAGE ALSO THE DEPARTMENT C HOSE NOT TO FURNISH THE DOCUMENTS RELIED UPON BY THEM TO DRAW ADVERSE CONCL USIONS AGAINST THE ASSESSEE. ON THE CONTRARY THE ASSESSEE HAS INDEPENDENTLY OB TAINED THE CONFIRMATION LETTERS FROM THE SUPPLIERS WHICH WERE NOT DISPROVED BY THE ASSESSING OFFICER. THE ASSESSEE HAS PLACED A COPY OF ORDER PASSED BY THIS BENCH IN ITS OWN HAND FOR ASSESSMENT YEAR 2001-02. IN THAT ORDER WHICH IS NU MBERED AS ITA NOS.485 & 496 IT HAS BEEN OBSERVED AS UNDER:- 12. .THE ASSESSING OFFICER HAS RELIED UPON TH E CERTAIN MATERIALS COLLECTED FROM THE SINGAPORE AND MALAYSIA N TAX AUTHORITIES TO DRAW ADVERSE CONCLUSIONS AGAINST THE ASSESSEE. THE ASSESSING OFFICER FOR THE REASONS BEST KNOWN TO HIM CHOSE NOT TO FURNISH THE INFORMATION SO COLLECTED TO THE ASSESSEE FOR HIS RE BUTTAL. LEARNED CIT(A) HAS CONSIDERED THIS ASPECT AND HELD THAT THE ALLEGED THIRD PARTY DENIAL IS NOT ONLY NOT SUPPORTED BY ANY INDEP ENDENT OR CIRCUMSTANTIAL EVIDENCES BUT WERE NOT PRODUCED TO T HE ASSESSEE FOR EXPLANATION OR REBUTTAL HENCE THE SAME CANNOT BE R ELIED UPON. 12.2 .. IN VIEW OF THE CATEGORICAL OBSERVATIONS OF LD CIT(A) CITED ABOVE WE ARE OF THE OPINION THAT THE DEPARTM ENT CANNOT PLACE ITS RELIANCE ON THE MATERIALS COLLECTED BEHIND THE BACK OF THE ASSESSEE AND WHICH IS NOT PUT TO IT FOR ITS REBUTTA L. AT THIS STAGE ALSO THE DEPARTMENT CHOSE NOT TO FURNISH THE DOCUM ENTS RELIED UPON BY THEM TO DRAW ADVERSE CONCLUSIONS AGAINST TH E ASSESSEE. THE SAID INFORMATION IS SAID TO HAVE BEEN OBTAINED FROM THE SINGAPORE TAX AUTHORITIES AND NOT DIRECTLY FROM THE SUPPLIER. ON THE OTHER HAND THE ASSESSEE HAS FURNISHED CONFIRMATION LETTERS OBTAINED FROM THE SUPPLIER WHICH WAS NOT DISPROVED BY THE D EPARTMENT. IT HAS ALSO BEEN STATED BY THE ASSESSEE THAT THE SUPPL IER IS NOT AWARE OF SUPPLY OF DOCUMENTS TO THE DEPARTMENT. HENCE WE AGREE WITH THE DECISION OF LEARNED CIT(A) THAT THE ADDITION MA DE BY THE ASSESSING OFFICER ON THE BASIS OF DOCUMENTS WHICH W ERE NOT PUT TO THE ASSESSEE ARE LIABLE TO BE DELETED. 4.2 THE GROUND RAISED IN THE ASSESSMENT YEAR 200 0-01 AND THE ADDITIONS RELATING TO THE TRANSACTIONS WITH M/S SIN SOON HOCK IN THE ASSESSMENT YEAR 2004- 05 HAVE BEEN MADE BY THE AO PERTAIN TO THE VALIDITY OF RELYING ON THE DOCUMENTS COLLECTED BEHIND THE BACK OF THE ASSESSEE AND WHICH WERE NOT CONFRONTED WITH THE ASSESSEE FOR HIS REBUTTAL. THE DEPARTMENT FOR THE REASONS BEST KNOWN TO THEM IS NOT READY TO FURNISH THE COPIES OF THE DOCUMENTS TO THE ASSESSEE. IN THE CASE OF THE ASSESSEE IN OTHER YEARS THE TRIBUNAL HAS AL READY TAKEN A VIEW THAT REVENUE CANNOT PLACE THEIR RELIANCE ON THE DOCUMENTS WHICH THEY ARE NOT READY TO FURNISH ITAS 484 521 495 & 499 5 TO THE ASSESSEE. THE DECISION RENDERED BY THE LD C IT(A) IS LINE WITH THE DECISION TAKEN BY THE TRIBUNAL IN THE ASSESSEES OWN CASE CI TED ABOVE. DURING THE COURSE OF THE HEARING BOTH THE PARTIES ALSO AGREED THAT T HE ISSUES AGITATED IN THESE TWO APPEALS ARE COVERED BY THE ORDER PASSED BY THIS TRI BUNAL IN THE ASSESSEES OWN CASE AND WHICH IS REFERRED SUPRA. IN VIEW OF THE F OREGOING WE AFFIRM THE ORDER OF LD CIT(A) ON THE ABOVE SAID ISSUES. 4.3 IN THE ASSESSMENT YEAR 2004-05 THE ASSESSEE HAS PASSED A PROVISION ENTRY FOR THE PURCHASES MADE FROM M/S WINGRO INTERNATIONAL FOR AN AMOUNT OF RS.1 03 22 400/-. THE AO DISALLOWED THE SAME FOR W ANT OF PROOF OF PURCHASES. BEFORE LD CIT(A) THE ASSESSEE FILED A COPY OF THE SAID PURCHASE INVOICE WITH A PETITION TO ADMIT THE SAME UNDER RULE 46A OF THE AC T. THE LD CIT(A) INSTEAD OF MAKING ADDITION ON INDIVIDUAL TRANSACTIONS HOWEVER CHOSE TO MAKE ADDITION TOWARDS THE DIFFERENCE IN THE GROSS PROFIT I.E. TH E ASSESSEE HAD SHOWN A GROSS PROFIT RATE OF 11.25% AND THE LD CIT(A) CALCULATED THE GROSS PROFIT BY APPLYING THE GP RATE OF 12.5% AND THE DIFFERENCE OF RS.3 28 865/- WAS ADDED. AGAINST THE SAID DECISION BOTH THE PARTIES ARE IN APPEAL BEFOR E US. HOWEVER THE GROUND RAISED BY THE ASSESSEE WAS DISMISSED SINCE THE LD A R DID NOT PRESS THE SAME. HOWEVER IN OTHER YEARS THE TRIBUNAL REVERSED THE O RDER OF LD CIT(A) IN REJECTING THE BOOKS OF ACCOUNT AND ESTIMATING THE PROFIT SINC E THE ASSESSEE WAS MAINTAINING THE BOOKS OF ACCOUNT AND THE QUANTITY OF PURCHASES AND SALES WERE RECONCILED. BEFORE US ALSO THE LD AR CONTENDED THAT THERE NO D ENIAL OF FACT OF RECEIPT OF IMPUGNED GOODS AND ITS CONSEQUENT SALES AND THE SA ID RECEIPT AND SALES WERE INCLUDED IN THE PROFIT AND LOSS ACCOUNT AND ALSO IN THE QUANTITY STATEMENT. IT WAS FURTHER CONTENDED THAT WHEN THE SALES IS ACCEPTED THE ASSESSEE HAS TO PROVIDE FOR THE CORRESPONDING PURCHASES AND ACCORDINGLY THE ASSESSEE HAS PASSED THE JOURNAL ENTRY. WE AGREE WITH THE CONTENTIONS OF TH E ASSESSEE. HENCE CONSISTENT WITH THE VIEW TAKEN IN OTHER YEARS WE REVERSE THE ORDER OF LD CIT(A) RELATING TO THE ESTIMATION OF DIFFERENCE GROSS PROFIT OF RS.3 2 8 865/-. HOWEVER WE NOTICE FROM THE RECORD THAT THE ASSESSEE HAS PROVIDED FOR 680 MT OF OIL AT THE RATE OF USD 224400. THE EXCHANGE RATE WAS TAKEN AT RS.46/- PER USD. HOWEVER FROM THE INVOICE NO.WINPL/KGR/012 DATED 18-07-2003 WHICH IS PLACED AT PAGE NO.34 OF THE PAPER BOOK COMPILED BY THE ASSESSEE WE NOTI CE THAT THE COST OF PURCHASE IS USD 210800/- ONLY AS AGAINST THE PROVISION OF US D224400/- MADE BY THE ITAS 484 521 495 & 499 6 ASSESSEE. HENCE THE PROVISION MADE BY THE ASSESSEE IS IN EXCESS BY USD 13600/- WHICH IS EQUIVALENT TO RS.6 25 600/-. THE AO IS DI RECTED TO ADD THE SAME IN THE PLACE OF RS.1 03 22 400/-. 5. IN THE RESULT BOTH THE APPEALS OF THE ASSESSEE AND THE APPEAL OF THE REVENUE FOR THE ASSESSMENT YEAR 2000-01 ARE DISMISS ED. THE APPEAL OF THE REVENUE FOR THE ASSESSMENT YEAR 2004-05 IS PARTLY A LLOWED. PRONOUNCED ACCORDINGLY ON 25-02-2010. SD/- SD/- (SUNIL KUMAR YADAV) (B.R. BASKARAN) JUDICIAL MEMBER ACCOUNTANT MEMBER PVV/SPS VISAKHAPATNAM DATE: 25 TH FEBRUARY 2010 COPY TO 1. A.C.I.T. CENTRAL CIRCLE-1 VISAKHAPATNAM 2..J. C.I.T. CENTRAL CIRCLE-1 VISAKHAPATNAM 3. M/S. KGR EXPORTS FLAT NO.23 VBC COMPOUND FISH ING HARBOUR VISAKHAPATNAM 4. M/S. KGR EXPORTS C/O. C. SUBRAHMANYAM CHARTERE D ACCOUNTANTS 102 LAKSHMI APARTMENTS FACOR LAYOUT WALTAIR UPLAN DS VISAKHAPATNAM 5. THE COMMISSIONER OF INCOME TAX (CENTRAL) HYDERA BAD 6. THE COMMISSIONER OF INCOME TAX (APPEALS)-I HYDER ABAD 7. THE DEPARTMENTAL REPRESENTATIVE I.T.A.T. VISAKH APATNAM. 8. GUARD FILE BY ORDER PRIVATE SECRETARY INCOME TAX APPELLATE TRIBUNAL VISAKHAPATNAM