TMI Blog2010 (1) TMI 1180X X X X Extracts X X X X X X X X Extracts X X X X ..... sold to the various industries who deals in medicines of animal drugs/injection. It has filed its return of income on 31.10.2001 declaring an income of ₹ 1,02,351. Learned Assessing Officer in order to give logical end to the proceedings issued notices under sec. 143(2) and 142(1) of the Act. On scrutiny of the accounts, he found that assessee had made a sales of ₹ 1,49,35,014 and shown a g.p. of ₹ 29,30,922 in terms of percentage this g.p. is of 19.62% which is better than the g.p. of earlier years shown at 16.96%. After verifying the various claims of assessee he passed an assessment order under sec.143(3) on 26.3.2004 and determined the total taxable income of the assessee at ₹ 1,23,840. 3. Learned Commissioner on perusal of assessment record arrived at a conclusion that order of the Assessing Officer is erroneous and prejudicial to the interest of the revenue because Assessing Officer had accepted certain credits in the assessee s account as genuine without due inquiry. According to the Learned Commissioner, the assessee has not shown any sundry creditors in the balance sheet. It has shown sundry debtors at ₹ 7,46,729.38. The details of the sun ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uiry from the alleged agent of the assessee, whose complete address the assessee shall provide to the Learned Commissioner. Ordered accordingly. The assessee, of course, shall properly assist the fresh adjudication. The learned CIT shall provide due and adequate opportunity to the assessee. 7. In the result, the appeal of the assessee is treated to be allowed for statistical purposes. Order pronounced in the open court on 21 st May, 2008. 4. In pursuance of the ITAT s directions , Learned Commissioner had again issued the notices to the assessee. It is the case of the assessee that it has received advances from various customers for supply of empty glass impulse through Shri MA Khan, who had worked as an agent for the various customers. The assessee had supplied the goods to those concerns and adjusted the advances against the sales. It has filed copy of the ledger account, copy of the sale bills before the Assessing Officer during the assessment proceeding. It was also contended that sales of the assessee are subject to central excise as well as sales-tax. It has duly deducted both these amounts while effecting the sales and return of the sales-tax as well as cen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o present a wrong picture of its finances by not showing advances received by it separately but grouping them with sundry debtors in the return of income filed by it. (ii) On enquiry, the addresses of the 15 persons advancing money to the assessee were found to be bogus and the assessee stated that it was not aware of their correct addresses. It is not understood as to how goods could be supplied in the absence of the relevant addresses? (iii) Significantly, the addresses mentioned in the list Advances from Customers were quite different from the addresses mentioned on the Sale Bills . (iv) No confirmations of the above mentioned persons could be provided. (v) Certain circumstances associated with these advances were found to be highly suspicious viz. (a) All drafts were issued in seriatim on a single bank though the persons advancing money came from different places. (b) All drafts were for denominations below ₹ 50,000/- which did not require the purchaser to disclose his PAN. (vi) The agent through which the assessee operated denied his agency and ultimately the assessee also accepted this position. If there was no agent, how co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... full address of any purchaser in the sale bill otherwise there is no substantial difference. The fourth reason assigned by the Learned Commissioner is that no confirmation of the above mentioned persons can be provided. It was pointed out by the assessee that advances were received through Shri Khan, therefore it has not bothered to verify the credential of the purchasers nor it is required by the law. The assessee has supplied the goods and squared up the accounts. The next reason assigned by the Learned Commissioner is certain circumstances that the associated with these advances were found to be highly suspicious namely all drafts were issued in seriatim, on a single bank though the person advancing money came from different places and all drafts were for denomination below ₹ 50,000/-. The learned counsel for the assessee pointed out that Learned Commissioner failed to construe the hard business realities when a person is working as a freelance agent/middleman between manufacturer and consumer then in the small town such alleged middleman would visit the consumer and collect the money, got prepared the draft and paid the draft to the manufacturer for supply of the goods. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e advances have been accepted by the Assessing Officer. These have been accepted in the sales-tax assessment and in the central excise assessment. The assessee has affected total sales of ₹ 1,49,35,014 during this assessment year. The alleged advance of ₹ 25,14,600 is 1/6th of the total sales no doubt has been raised with regard to the other sales. Taking us through paragraph 5 of the impugned order, he pointed out that the Learned Commissioner in its order dated 30.11.2005 has quoted an example indicating how a business introduced cash in its books of account. In the example, it is observed that a businessman in need of a money introduced cash in his books of account namely of A and shows it as advance against goods to be supplied. Another person B wants to purchase goods but does not want any bill for such purchase. The businessman can be happy to sell the goods and accept cash from B for sale of goods but can issue the bill in the name of A to square up the advance introduced in the name of A . In this manner, no doubt the total turn over is not effected and the businessman can easily introduce unaccounted cash at his sweet will. The ld. counsel for the asse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hout application of mind, such order will fall under the category of erroneous order. (v) Every loss of revenue cannot be treated as prejudicial to the interests of the Revenue and if the A.O has adopted one of the courses permissible under law or where two views are possible and the A.O has taken one view with which the CIT does not agree, it cannot be treated as an erroneous order, unless the view taken by the A.O is unsustainable under law. (vi) If while making the assessment, the A.O examines the accounts, makes enquiries, applies his mind to the facts and circumstances of the case and determine the income, the CIT, while exercising his power under s. 263 is not permitted to substitute his estimate of income in place of the income estimated by the A.O. (vii) The A.O exercises quasi-judicial power vested in his and if he exercises such power in accordance with law and arrives at a conclusion, such conclusion cannot be termed to be erroneous simply because the CIT does not feel satisfied with the conclusion. (viii) The CIT, before exercising his jurisdiction under s. 263 must have material on record to arrive at a satisfaction. (ix) If the A.O has made en ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... because of demolition of its manufacturing unit. It has no contact with the purchaser from the last 7-8 years. It has shifted its business from Meerut to Bangalore. It has produced the alleged agent Shri M.A. Khan before the Learned Commissioner. We have two sets of facts before us. On the one hand, circumstances demonstrated by the assessee i.e. closer of the business at Meerut and shifting it off at Bangalore. Production of Shri M.A. Khan before the Learned Commissioner through whom payments were received and goods were supplied. Acceptance of its sales by the Assessing Officer in the subsequent assessment year, acceptance of sales by the Central Excise Authorities and Sales-tax Authorities. Time gap of 7-8 years to co-relate the details of all the purchasers. On the other hand, the defects pointed out by the Learned Commissioner in the statement of Shri MA Khan and other circumstances discussed by us while taking note of arguments of learned counsel for the assessee. If we weigh both these sets of facts then scale would tilt in favour of the assessee because it is quite difficult for a businessman to trace out its purchasers after 7-8 years of sales made to them particularly in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mmissioner is not sustainable and we direct the Assessing Officer to delete the addition of ₹ 25,14,600. 11. Now, we take ITA No.2127/Del/09. This appeal has arisen from an assessment order made under sec. 147 read with sec.143(3) of the Act. A notice under sec. 148 was issued upon the assessee on 31.3.2006 for reopening of the assessment. The Assessing Officer has observed that after passing order under sec. 263, the learned CIT has informed the Assessing Officer that assessee has taken advances from eight more persons which had wrongly been shown as advances for supply of goods. This letter was written to the Assessing Officer by the learned CIT on 25.1.2006. On the basis of this letter, Assessing Officer formed an opinion that income has escaped assessment and assessment deserves to be reopened by issuance of a notice under sec. 148 of the Income-tax Act, 1961. 12. With the assistance of learned representatives, we have gone through the record carefully. The notice under sec. 148 was issued upon the assessee on 31.3.2006 which undisputedly was served in the month of April 2006 i.e. after expiry of four years from the end of the relevant assessment year. The assessmen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he learned counsel for the assessee reiterated his contentions as were raised before the learned CIT(Appeals) whereas Learned DR relied upon the order of the learned CIT(Appeals). 16. With the assistance of learned representatives, we have gone through the record carefully. In this assessment year, originally there was no 143(3) assessment made by the Assessing Officer. The returns of assessee were processed only under sec. 143(1) of the Act. Thus, the benefit of proviso appended to sec. 147 will not be available to the assessee in this year. The limitation for service of notice under sec. 148 provided in sec. 149(1) contemplates that such notice can be issued up to six years from the end of the relevant assessment year if income chargeable to tax has escaped assessment is likely to amount to ₹ 1 lac or more. It indicates that if the income likely to escape assessment is more than ₹ 1 lac then notice under sec. 148 can be issued up to six years from the end of the relevant assessment year. The relevant assessment year ended on 31.3.2006. Thus notice can be issued up to 31.3.2007. The notice was issued well within the limitation. The information received from the lear ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
