9911796707
TMI Blog2012 (9) TMI 953X X X X Extracts X X X X X X X X Extracts X X X X ..... case are that the assessee deals in trading of coal, coke, lignite and commission agent. There was a survey conducted u/s 133A of the Income tax Act, 1961 on 26.09.2007 and in the course of this survey, it was noted by the department that for lignite, the assessee had paid the costs in advance to GMDC and, therefore, the liability shown by the assessee in the balance sheet as on 31.03.2003, 31.03.2004 and 31.03.2005 on account of lignite freight to the extent of ₹ 165.51 lacs ₹ 175.76 lacs and ₹ 302.59 lacs respectively are fictitious and / or not correctly shown. The A.O. has also noted on page 6 of the assessment order that in reply to question 9, it was stated by the assessee that he is only a link between the prospective purchasers and sellers of lignite. He also submitted that he used to raise debit notes for lignite payment, truck freight, octroi and service charges. A copy of debit note was also produced. He also submitted that method of accounting of the debit note is that the customer account is debited with the aggregate value of services provided and corresponding credit is made to unpaid freight account towards freight charges and octroi shown in the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed to please delete the entire addition of ₹ 12,66,045/-." 2.2.1 These grounds are also interconnected with ground No.1 because ground No.2 is regarding making addition of ₹ 12,27,096/- on account of G.P. addition by applying the G.P. rate of 17% and hence, if rejection of books of accounts is not found to be correct than GP addition cannot survive. Ground No.3 is also connected because the main basis of rejection of books of account is this that the assessee is showing very high amount of freight liability which the assessee could not substantiate as per the A.O. and the addition of ₹ 24,.93,141/- was made by the A.O. on this basis that 20% of freight liability is bogus. The A.O. came to the conclusion that G.P. addition confirmed by him ofRs.12,27,096/- should be reduced from this addition out of freight liability of ₹ 24,93,141/- and hence, he confirmed balance addition on this account of ₹ 12,66,045/-. Now, the assessee has raised these grounds in its appeal. 2.2.2 It was submitted by the Ld. A.R. before us that separate registers are maintained for party wise details in respect of freight liability and in the facts of the present case, neither t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s also held that if no such finding is given then income chargeable under the head profits & gains of business has to be computed in accordance with the books of accounts regularly maintained by the assessee and method of accounting regularly employed by the assessee. 2.2.3 As against his, Ld. D.R. submitted that the rejection of books is proper because freight charges is not a balance sheet item as has been taken by the assessee. He drew our attention to para 14 on page 10 of the assessment order where it is noted by the A.O. that outstanding freight liability shown by the assessee has increased to ₹ 302.59 lacs in the present year as against ₹ 177.76 lacs in assessment year 2004-05 and ₹ 156.51 in assessment year 2003-04. He submitted that liability shown in assessment year 2005-06 is almost double to the liability shown in the assessment year 2003-04 and, therefore, the A.O. was right in coming to the conclusion that the part of liability must have been bogus and the same is income form undisclosed sources. He also pointed out that in that case, the survey took place on 31.08.2007 and the assessee made disclosure of ₹ 66,11,451/- and the freight liabilit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the considered opinion that in the facts of the present case, this objection is not correct. The assessee has duly submitted copies of debit notes to the survey team and also explained the basis of passing entries in the books of accounts. It was submitted that the debit note is raised which includes lignite payment, truck freight, octroi and service charges. It was pointed out that the total amount is debited to the customers and the cost of lignite is credited to GMDC, truck freight and octroi is credited to outstanding freight liability and service charges is considered as income which is taken to P & L account. No defect is pointed out by the A.O. in assessment order in this submission of the assessee. It is not the case of the A.O. that the entries are not made in the books of accounts. If entries are shown in the books of accounts then it cannot be said that the books of accounts are not correct and complete. There may be some other methods of accounting also but this method of accounting cannot be said to be defective in our opinion. Generally, when a person is acting as organizer and taking care of payments to suppliers, payment to truck operators and octroi payment also a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... GNSP paid, G.P. in the present year is 17.02% and for charcoal it is 20.84% and in both these items, G.P. in the present year is better than the preceding year. There is no G.P. declared in lignite because the assessee is not dealing in lignite but acting as commission agent only for lignite. ON the basis of the objection regarding some inconsistency in accounting of freight liability, GP addition cannot be made for other items without pointing out any defect in respect of those items particularly when lignite is not an item in which assessee is trading because the assessee is only commission agent for lignite. 2.2.5 In view of the above discussion, we are of the considered opinion that in the facts of the present case, even the rejection of books of account is not proper and even if rejection of the books of accounts is accepted, the addition made by the A.O. on account of G.P. addition and disallowance made by the A.O. on account of bogus freight liability cannot be sustained. We, therefore allow all these three grounds of the assessee. 2.3 Grounds No.4, 5, 6 & 7 are interconnected which read as under: "4. Ld. CIT(A) erred in confirming the addition of ₹ 35000/- by holdi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in the present year. He also submitted that Ld. CIT(A) has duly obtained remand report form the A.O. and the position as per remand report is noted by Ld. CIT(A) on pages 12-15 of his order. He further submitted that Ld. CIT(A) has made deletion on the basis of remand report but he has confirmed the addition on account of Deepal Desai (HUF) in respect of ₹ 35,000/- on this basis that creditworthiness and genuineness has not been proved. Similarly, for Tejal Desai also, part addition of ₹ 35,000/- was confirmed on similar basis that creditworthiness could not be established. Regarding J. Lal & Co., it is noted by Ld. CIT(A) that ₹ 33,000/- was not confirmed in the remand proceedings also and A.O.'s information was that the details regarding this party was not furnished in remand proceedings also. He fairly conceded that the addition of ₹ 33,000/- in respect of J Lal & Co. may be confirmed because the assessee could not produce the confirmation of this party but all the remaining additions should be deleted because confirmations are duly furnished form Deepal Desai (HUF) and Tejal Desai (HUF) and these two persons made withdrawal from Bhagwati Aviation by che ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... holding a land in which some crop is also grown, then for this small amount of ₹ 18,000/-, source should be accepted and hence, we delete this addition of ₹ 18,000/- regarding deposit from Tejal Desai (HUF) also. Regarding addition of ₹ 33,000/- in respect of deposit by J. Lal & Co., we uphold the entire addition because no explanation could be furnished with regard to this deposit. Regarding disallowance of interest, we direct the A.O. to allow relief with regard to 2nd loan of ₹ 18,000/- each, which is from Deepal Desai and Tejal Desai (HUF) for which additions are deleted by us. Accordingly, grounds No.4, 5 & 7 are partly allowed whereas ground No.6 is rejected. 2.4 Ground No.8 is as under: "8. Ld. CIT(A) instead of deleting entire addition of ₹ 2,02S840 out of Moor and Jakat expenses erred in upholding addition of ₹ 2,02,840/- considering that 10% out of the said expenses would not be got verified, it is, therefore, requested to please delete the addition of ₹ 2,02,840/-." 2.4.1 Brief facts of this issue are that it is noted by the A.O. on page 12 of the assessment order that the assessee has claimed Noor Jakat of ₹ 20,28,473/- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f deposit needs to be taxed u/s 68. 2. The Id. Commissioner of Income-tax (A)-XV, Ahmedabad has erred in law and on k facts in deleting the addition of interest to the tune of ₹ 3,89,149/- made by the Assessing Officer. 3. The Id. Commissioner of Income-tax (A)-XV, Ahmedabad has erred in law and on facts in deleting the addition of freight 'liability to the tune of ₹ 30,39,725/-made by the Assessing Officer. 4. On the facts and in the circumstances of the case, the Id. Commissioner of | Income-tax (A)-XV, Ahmedabad ought to have upheld the order of the Assessing Officer. 5. It is therefore prayed that the order of the Id. Commissioner of Income-tax (A)-XV, Ahmedabad may be set-aside and that of the Assessing Officer be restored." 3.1 Ld. D.R. supported the assessment order whereas Ld. A.R. supported the order of Ld. CIT(A) for all the issues. 3.1.1 We have considered the rival submissions, perused the material on record and have gone through the orders of authorities below. Regarding the 1stground, we find that the A.O. has made addition regarding total amount of deposit received during the present year of ₹ 47,14,900/- and regarding ground No.2, we find ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... year 2005-06. In that year, we have decided this issue in favour of the assessee and it was held that no addition is justified out of outstanding freight liability and on similar lines, in this year also, we hold that no addition is justified out of outstanding freight liability. Ground No.2 is allowed. 4.2 Regarding ground No.1 also, it was submitted that his issue is similar to ground No.2 raised in assessment year 2005-06. In that year, we have decided this issue in favour of the assessee and accordingly in the present year also, this issue is decided in favour of the assessee. This ground is also allowed. 4.3 In the result, appeal of the assessee is allowed. 5. Now, we take up the revenue's appeal for the assessment year 2006-07 in I.T.A.No. 3025/Ahd/2009. The grounds raised by the revenue are as under: "1) The Ld. CIT(A) has erred in law and on facts in granting relief of ₹ 52,54,781/- out of addition of fictitious liabilities. 2) The Ld. CIT(A) has erred in law and on facts in allowing telescoping of the addition made out of fictitious liability against the addition made by rejecting of books and estimation of gross profit. 3) On the facts and in the circumstances ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
