Feedback   New User   Login      
Tax Management India. Com TMI - Tax Management India. Com
Acts / Rules Notifications Circulars Tariff/ ITC HSN Forms Case Laws Manuals Short Notes Articles SMS News Highlights
        Home        
Extracts
Home List
← Previous Next →

Shri M.L. Krupal, Prop: Prime Commodities Versus The Income Tax Officer And Vice-Versa

2016 (5) TMI 1172 - ITAT BANGALORE

Suppression of sales - Held that:- When the assessee had filed annual return showing higher turnover and paid the amount of CST on the basis of CST sales reported in annual return and this is not shown to us that any rectification request was made before sales tax authority or that any refund was received or claimed from the sales tax authority on account of higher amount of CST sales reported in annual return by mistake, this is not acceptable that there is a mistake in the amount of CST sales .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

rn because the annual returns are filed after proper verification and generally, we find that there may be mistake in the monthly return and not in the annual return. Mere comparison with the monthly return is not sufficient, particularly when there is no rectification application filed before the sales tax authority, asking for rectification in annual return and asking for refund of excess sales tax paid on the basis of mistake in the annual return. Hence, we find that no merit in this contenti .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

r stock statement given to Canara Bank as on 31-03-2005 is ₹ 51.70 lakhs. The closing stock as per the stock statement submitted to Canara Bank as on 31-03-2004 was of ₹ 35,74,910/- and the AO made the addition of difference amount only of ₹ 15,95,091/-. This is in line with the Tribunal order in assessee’s own case for the assessment year 2004-05 - Decided against assessee

Addition of bogus creditors - Held that:- The addition in dispute as per this ground of ₹ .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

s and the AO allowed the benefit to the extent of credit amount confirmed by these creditors. There is nothing brought on record before any of the authorities below or before us that why these parties confirmed only part of the amount of the credit when they appeared before the AO. Therefore, on the basis of these confirmation letter submitted before us as additional evidence, no relief can be allowed to the assessee in view of the fact that these parties appeared before the AO and confirmed onl .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

the present year over such opening stock. It means that the entire amount of opening stock has been considered as part of the closing stock of the present year and therefore, such opening stock cannot be available for explaining cash deposit in the bank because, even if it is held that opening stock was sold and the sale price was used for purchasing different items which were available in closing stock then also, G.P addition has to be made in respect of such sales out of opening stock. Under .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

on

Validity of assessment - period of limitation - Held that:- We find that as per the provisions of sub-sec.2A of sec. 153 of the IT Act, 1961, the AO had to pass a consequential assessment order after setting aside of the matter to his file by the Tribunal as per its order u/s 254 of the IT Act. The present assessment order had been passed by the AO after passing of the order by the Tribunal u/s 254(2) of the IT Act as per which, the scope of the original Tribunal order was enlarged .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ssessee. - ITA No. 380(Bang) 2012, ITA No. 1051(Bang)/2013, ITA No.382(Bang)/2012, ITA No.1061(B)/2013 - Dated:- 6-5-2016 - Shri Sunil Kumar Yadav, Judicial Member And Shri A. K. Garodia, Accountant Member For the Assessee : Shri K.Y Ningoji Rao, CA For the Revenue : Shri Sunil Kumar Agarwala, JCIT ORDER Per Bench These are four appeals out of which two are filed by the assesee and two are filed by the revenue for two assessment years i.e. 2005-06 & 2006-07. All these appeals have been heard .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

learned AR of the assesee that a copy of the written submission dated 22-07-2009 filed before the CIT(A) is available at page Nos.1 to 21 of the paper book and in particular, our attention was drawn to page no.8 of the paper book and it was pointed out that as per the details given in para-21 of the written submission, the figure of sale as per books is tallying with the details, as per monthly returns in form no.3, but by mistake, in the annual return in form no.4, a higher amount of sale was .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

He has also drawn our attention to page no.151 to 154 of the paper book on which there is copy of annual return of turnover filed with CST authority for the year ending 31-03-2005 and he pointed out that as per the same, the CST turnover was reported at higher figure of 1035.28 lakhs and the addition was made by the AO on the basis of this figure of CST sales in annual return. He submitted that since the figure as per monthly sales tax return is tallying with the books of accounts, no addition i .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

to sales reported by the assessee in the P&L account. Therefore, if it is found that the figure of CST sales as per annual return filed before the sales tax authorities is correct then, the addition made by the AO is justified. While examining the correctness of the figure of sales reported in annual return in form no.4 filed with CST authorities as available at pages 151 to 154 of paper book, it is seen that in the annual return, it is reported that the amount of sales tax payable on CST s .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

CST on the basis of CST sales reported in annual return and this is not shown to us that any rectification request was made before sales tax authority or that any refund was received or claimed from the sales tax authority on account of higher amount of CST sales reported in annual return by mistake, this is not acceptable that there is a mistake in the amount of CST sales as per the annual return filed before the sales tax authority. Monthly returns are filed earlier after each month and there .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

onthly return and not in the annual return. We do not want to say that there cannot be any mistake in the annual return but then the assessee has to establish that there is mistake in the annual return by bringing cogent material on record and simply saying that since the annual return is not tallying with monthly return, there is mistake in Annual return is not sufficient because mistake may be in monthly returns also. Mere comparison with the monthly return is not sufficient, particularly when .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ence between the value of stocks falsely declared to Canara Bank as at 31-03-2004 and 31-03- 2005 with complete disregard to the facts of the case and as such the impugned addition is liable to set aside . It was fairly conceded by the learned AR of the assessee that this issue is covered against the assessee by the Tribunal order in assessee s own case for the assessment year 2004-05 in ITA No.1234(B)/2001 dated 31-08-2012. He submitted a copy of the Tribunal order. In that year, the closing st .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

pening stock as on 01-04-2004 and therefore, only increase in the closing stock as on 31-03-2005 may be added. 6. The learned DR of the revenue supported the orders of the authorities below. 7. We have considered the rival submissions. We find that as per the Tribunal s order in assessee s own case for assessment year 2004-05 wherein it was held that closing stock as on 31-03-2004 should be considered as opening stock on 01-04-2004 relevant for the assessment year 2005-06. In the present year, t .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ent Officer erred in treating the creditors to the extent of ₹ 7,24,000/- as bogus credits in an arbitrary manner with complete disregard top the facts of the case and as such he impugned addition is liable to set aside . It was submitted by the learned AR of the assessee that copy of the confirmatory letter dated 09-11-2012 given by three creditors in respect of ₹ 2.98 lakhs, ₹ 3.60 lakhs and ₹ 5.30 lakhs are available on pages 338 to 340 of the paper book. He submitted .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

long with the confirmation and in reply, the assessee filed a letter stating that there was a balance of ₹ 42,36,272/- which was cleared subsequently out of amounts received from sundry debtors, but details called for were not furnished. When the AO asked again for filing the details, the assessee filed names and address without any confirmation letters and account extracts. The AO addressed letters to these creditors to appear along with various details and in response, only three persons .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

340 of the paper book but this is not a case where confirmation was not available earlier. In fact, these three creditors filed confirmation before the AO also and they appeared before the AO and confirmed only part amount of the credits and the AO allowed the benefit to the extent of credit amount confirmed by these creditors. There is nothing brought on record before any of the authorities below or before us that why these parties confirmed only part of the amount of the credit when they appea .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

also rejected. 9.1 Ground no.5 is as under; 5. That the Respondent Officer erred in treating the creditors to the extent of ₹ 11,88,000/- as bogus credits in an arbitrary manner with complete disregard to the facts of the case and as such the impugned addition is liable to set aside . Regarding this ground also, it was submitted by the learned AR of the assessee that the assessee could not furnish confirmation of the parties, but the credits are genuine and therefore, the addition should b .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

sh these credits by bringing the confirmation and any documents in support of identify of the creditors and their credit worthiness. Therefore, we find no reason to interfere with the order of the ld.CIT(A) on this issue. Accordingly, ground no.5 is also rejected. 13. Ground no.6 & 7 are as under; 6. That the Respondent Officer erred in making an addition on account of the alleged unexplained cash deposit in to the overdraft account no.1147 with the Canara Bank with complete disregard to the .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

part of the amount of addition, whereas he should have deleted the entire amount of addition. 14. The learned DR of the revenue supported the AO s order. 15. We have considered the rival submissions. We find that regarding this issue, on page 4 & 5 of his order, it is stated by the ld.CIT(A) that it would be more appropriate to work out the peak of the credits to arrive at the unaccounted money deposited for the purpose of these transactions and directed the AO to work out these purchases an .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

losing stock of earlier year has been considered by the AO as opening stock of the present year and the additions was made by the AO to the extent of excess of closing stock of the present year over such opening stock. It means that the entire amount of opening stock has been considered as part of the closing stock of the present year and therefore, such opening stock cannot be available for explaining cash deposit in the bank because, even if it is held that opening stock was sold and the sale .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

th some directions. The order of the ld. CITA) is not sustainable and therefore, we set aside his order on this issue and restore the matter back to his file for a fresh decision with a direction that he should decide the issue himself instead of setting aside the matter to the AO and if required, he may obtain a remand report from the AO but he should decide the issue himself. Needless to say, he should provide adequate opportunity of being heard to both sides. Accordingly, ground no.6 & 7 .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ted from the cash flow generated on account of the trading activity of the assessee & hence the addition should be restricted to the peak of the same? Whereas the fact is that no nexus could be established between the cash deposits and the trading activity of the assessee and the so called trading activity is not accounted in the books of account at all. 2. Whether the CIT(A) is right in deleting the addition made on account of excess closing stock worked out after giving due credence to the .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

the assessee. 4. Any other grounds that may be urged at the time of hearing . 18. The learned DR of the revenue supported the order of the AO whereas the learned AR of the assessee supported the order of the ld. CIT(A). 19. We have considered the rival submissions. We find that this issue has been decided by the ld.CIT(A) by making following observations at pages 4 & 5 of his order; However on the issue of deposits in the bank account, I find it is not a case where there were continuous dep .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

in this particular transaction and the periodical deposits would be out of sale proceeds and the withdrawals are for payment of purchases. As seen from the assessment order also, the assessee has explained these transactions on these lines. It would be more appropriate to work out the peak of the credits to arrive at the unaccounted money deposits for the purpose of these transactions. Further, the AO is directed to work out the result of these purchases and sales and make appropriate addition o .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

at the ld.CIT(A) had in fact restored the matter back to the file of the AO for his decision with some directions but the CIT(A) cannot set aside and restore the matter back to the file of the AO. He has to decide the issue himself and if required, he can obtain remand report from the AO. It is also seen that he has held that the opening stock should be considered as available for sale for deposit in bank account and he directed the AO to keep this aspect in consideration while working out peak .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ow the same can be sold and sale proceeds can be deposited in the bank account. Therefore, we feel it proper that this matter should go back to the file of ld.CIT(A) for fresh decision. Learned CIT(A) should decide the issue himself instead of restoring the matter to the file of the AO and for doing so, he may obtain remand report from the AO. Ld. CIT(A) should pass necessary order as paw, as per the above discussion, after providing adequate opportunity of hearing to both sides. Accordingly gro .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

far as the closing stock is concerned, it is already covered in the recasting trading account and the addition mad is also confirmed. Now on the same losing stock making another addition on account of increase in asset would only be a double addition. Elsewhere in this order, based on the transactions in OD account the AO is directed to work out the purchase and sales and the peak credit. In the process, this issue gets covered in both these additions and this separate addition on account of exc .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

file of the ld.CIT(A) for a fresh decision and it was held that ld.CIT(A) should decide the issue himself instead of restoring the matter back to the file of AO. Therefore, on this issue also, we set aside the order of CIT (A) and restore the matter to the ld.CIT(A) should and he should decide the issue himself afresh after deciding the issue in respect of unaccounted purchase and sale and peak credit. Accordingly, ground no. 2 is also allowed for statistical purposes. 21. Regarding ground no.3, .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

y did confirm having agricultural lands. Under these facts, it was held by the ld. CIT(A) that the primary onus of assessee gets discharged. The assessee has submitted English translation of the records of RTC certificate issued by the revenue authorities in respect of land held by creditors which are in Kannada and are available on pages 215 to 247 of the paper book. The identity of the creditors is not doubted by the AO also and the addition was made by him on this basis alone that the genuine .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

, is available at page 207 at paper book as per which, it shows closing balance of ₹ 3,60,000/- from this party in the present year on account of purchases in the present year. Similarly, the ledger account of third party Shri K.M.Jayapakash is available at page 210 of paper book as per which there is fresh purchase of coffee during the present year of 5.30 lakhs. The ledger copy of 4th party Shri K.M.Lokanath is available at page 211 of paper book and in this ledger account also shows an .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

d in respect of the credits on account of fresh purchase of coffee also, the genuineness of the transactions cannot be doubted unless the AO rejects the purchase. The purchase is not doubted by the AO as per the assessment order and therefore, the genuineness of the transaction regarding purchases as appearing in the ledger account cannot be doubted. Regarding the credit worthiness of these parties, the assessee has submitted the evidence regarding land holding of five creditors and this is not .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

is liable to be set aside insofar as it is incorrect 2. The ld.CIT(A) Mysore erred in upholding the addition of ₹ 82,69,825/- made by the AO towards the alleged inflation in purchases and as such the impugned addition of ₹ 82,69,825/- so sustained is liable to set aside. 3. The ld.CIT(A) erred in upholding the impugned addition of ₹ 82,69,825/- made by the AO out of mere suspicion and surmise and with complete disregard to the facts and circumstances of the case. 4. The ld.CIT .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

aside the impugned addition of ₹ 82,69,825/- made by the respondent officer. 2. direct deduction of the stock of ₹ 51,70,000/- considered by the AO for AY: 2005-06; and 3. to set aside the impugned levy of interest u/s 234B and 234C of the IT Act . 24. The assessee has also raised additional grounds which are as under; 1. The impugned order of assessment made on 21-12-2011 by the ld. AO u/s 143(3) r.w.s. 254 is null and void and is liable to be annulled in sofar as the same is barre .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

this is consequential. Accordingly, ground no.4 of the assessee is rejected as not pressed and ground no.5 is held to be consequential in nature. 26. Regarding ground no.1, 2 & 3, it was submitted by the ld. AR of the assessee that at pages 127 to 170 of the paper book is copy of URD purchase register for the period 01-04-2005 to 31-08-2005 seized by the ITO at the time of survey on 09-03-2007. It was also submitted that monthly abstract of stock ledgers in respect of Arabica and Robusta Cof .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

is page is having rate of ₹ 43.75 per KG, whereas the remaining eight items are having the rate of ₹ 95.75 per KG. Thereafter, he has drawn our attention to page no.171 & 171A of the paper book continuing monthly summary of Arabica Coffee and Robusta Coffee respectively. At this juncture, it was pointed out by the Bench that as per the total available on page no.134 of the paper book for the month of April, 2005, the total purchase of both coffee is shown as 3,13,450 kgs. whereas .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

he month of April, 2005 available on pages 127 to 134 of the paper book, the total purchase during the month of April 2005 is only 313450 Kgs. Then how this purchase register is correct and moreover it was also pointed out that the quality of coffee is not mentioned in the purchase register. The Bench also wanted to know whether any details of monthly summary available on pages 171 to 171A of the paper book is available to find out from where the separate quantity of purchase of both type of cof .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

e is reproduced below for ready reference; 4.10 I have considered the rival contentions carefully. Even after Hon ble Tribunal set aside the matter to the file of the AO, the assessee could not produce any credible evidence in support of its argument that the purchases of Arabica are recorded as Robusta. If that is to be true, then, corresponding higher value payments should have been reflected in day book which is also not established. As seen from the purchase registers, there are detailed ent .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

that the recorded purchase are less than the returned purchase. The recast accounts are based on presumptions and assumptions which are not supported by any evidences. I do not find strength in the argument of the assessee that the AO should have rejected the books of accounts. The AO only made the addition based on the same books of accounts. It is the assessee who reworked the accounts to suit their argument. Hence, the necessity for rejection of books is not there. However, In view of the rem .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

eal, the assessee could not produce any credible evidence in support of its argument that the purchases of Arabica are recorded as Robusta although in first round also, on this issue, was the argument of the assessee that the purchase of Arabic coffee has been reported as Robusta coffee. Categorical finding has been given by the ld.CIT(A) that even after restoring the matter back by the Tribunal to the file of the AO, the assesee could not produce any credible evidence in support of his argument .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

jected. Now, we decide the additional grounds. It was submitted by the ld.AR of the assessee that the original Tribunal order setting aside the matter to the file of the AO was passed on 26-06-2009 and the consequential assessment order is dated 21-12-2011 passed by the AO u/s 143(3) rws 254 of the IT Act, 1961 and therefore, the assessment order is time barred. As against this, it was submitted by the ld. DR of the revenue that after passing of the Tribunal order on 26-06-2009 which is availabl .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

of sec. 153 of the IT Act, 1961, the AO had to pass a consequential assessment order after setting aside of the matter to his file by the Tribunal as per its order u/s 254 of the IT Act. The present assessment order had been passed by the AO after passing of the order by the Tribunal u/s 254(2) of the IT Act in MP No.96(B)/2009, as per which, the scope of the original Tribunal order was enlarged by the Tribunal and therefore, we find force in the submission of the ld. DR of the revenue that the .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

d. Now take up the appeal for the revenue for the AY: 2005-06 in ITA No.1601(B)/2013. The revenue has raised the following grounds; 1. Whether the CTA) is right in giving relief to the extent of the brought forward stock against the additions made on the findings of inflated purchases. 2. Whether the CIT(A) is right in issuing directions to adopt the closing stock of the year ended 31-03-2005 as the opening stock of the current year relevant to the assessment year in question and to effect neces .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

 

 

 

 

 

Discussion Forum
what is new what is new
 


Share:            

|| Home || About us || Feedback || Contact us || Disclaimer || Terms of Use || Privacy Policy || TMI Database || Members ||

© Taxmanagementindia.com [A unit of MS Knowledge Processing Pvt. Ltd.] All rights reserved.

Go to Mobile Version