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Income Tax Appellate Tribunal, JAIPUR BENCHES (SMC
Before: SHRI BHAGCHANDvk;dj vihy la-@ITA No. 502/JP/2012
per his own sweet will thus observation of the Ld. CIT (A) deserves to be ignored and excluded.
The Ld. AO mentioned in the remand report that there was contradiction in the statement of Gulzar Ahmed and Praveen Chippi in respect of the place from where sarees were lifted by Praveen Chippi for printing. It is humbly submitted that there may be minor contradiction for the reason that the statement were based on human memory which has its own limitation and the matter under consideration is four to five years old when enquiries were made from both of them. However, the place of lifting of sarees for printing job work is not at all relevant for the issue under consideration. The assessee takes services of various tempowalas for transportation of goods and is not solely dependent on Gulzar Ahmed. Hence, the number of trips made by Gulzar Ahmed, per day trip, capacity of the tempo etc. are not relevant at all in respect of the issue under consideration.
As regards to statement recorded in case of Shri Praveen Chippi it is submitted that statement were recorded on oath by the Ld. AO and however only first three pages were signed by her and on last page, signatures of the Ld. AO is not there and signature of one “Lachi Singh” appears at the end page (APB 135) who is neither the person who is recording the statement on oath nor the person whose statement are recorded. In case of recording of statement on oath the signature of both the parties are required. Hence the statement recorded are doubtful, bad in law and cannot be relied upon.
ITA 502/JP/2012, 441 & 422/JP/2015_ 16 Sumit Kumar Shah Vs. ITO
In reply to question 30 (APB 129) Shri Praveen Chippi also accepted the fact that stock of sarees were damaged due to rain.
For packing of sarees in jute bags, it is submitted that Praveen Chippi categorically said in reply to question No. 47 (APB 133) that he had not used any packing material for sarees. Hence, it can be inferred that sarees were not packed in jute bags.
The Ld. AO had mentioned in the remand report that sarees were washable with normal water whereas Praveen Kumar Chippi has no were stated that the sarees were washable.
For variation in the month of delivery of goods, it is submitted that the event occurred four to five years ago and human memory is limited. Shri Praveen Chippi was under extreme mental pressure when statements were recorded as he stated in reply to Q.No. 32 (APB 129-130) that he received goods in the month of May, 2007, and the returned them in March, 2008, whereas the goods were lying with him for three months. These three things cannot happen simultaneously. He does not remember all things and was under mental pressure and such minor and irrelevant variations could not be made basis to made such a huge disallowance.
It is further submitted that the Ld. CIT (A) has sustained the addition
merely on the basis of statement of Praveen Chippi recorded in the
remand proceedings, however the error and omissions in his statements
has already been explained above. Further, Praveen Chippi in his
ITA 502/JP/2012, 441 & 422/JP/2015_ 17 Sumit Kumar Shah Vs. ITO
affidavit accepted that goods were damaged at his premises due to rain.
In this regard reliance is placed on following case laws:-
Right to cross-examination
Kind attention of your honour is invited to the judgment of Hon’ble
Supreme Court in the case of CCE Vs. Andaman Timber Industries
reported in 2015 (324) ELT 641 wherein it
“6 According to us, not allowing the assessee to cross-examine the witnesses by the Adjudicating Authority though the statements of those witnesses were made the basis of the impugned order is a serious flaw which makes the order nullity inasmuch as it amounted to violation of principles of natural justice because of which the assessee was adversely affected. It is to be borne in mind that the order of the Commissioner was based upon the statements given by the aforesaid two witnesses. Even when the assessee disvuted the correctness of the statements and wanted to cross-examine, the Adjudicating Authority did not grant this opportunity to the assessee. It would be pertinent to note that in the impugned order passed by the Adjudicating Authority he has specifically mentioned that such an opportunity was sought by the assessee. However, no such opportunity was granted and the aforesaid plea is not even dealt with by the Adjudicating Authority. As far as the Tribunal is concerned, we find that rejection of this plea is totally untenable. The Tribunal has simply stated that cross-examination of the said dealers could not have brought out any material which would not be in possession of the appellant themselves to explain as to why their ex-factory prices remain static. It was not for the Tribunal to have guess work as to for what purposes the appellant wanted to cross-examine those dealers and what extraction the appellant wanted from them.
As mentioned above, the appellant had contested the truthfulness of the statements of these two witnesses and wanted to discredit their testimony for which purpose it wanted to avail the opportunity of cross-examination. That apart, the Adjudicating Authority simply relied upon the price list as maintained at the depot to determine the price for the purpose of levy of excise duty. Whether the goods were, in fact, sold to the said dealers/witnesses at the price which is mentioned in the price list itself could be the subject matter of cross-examination. Therefore, it was not for the Adjudicating Authority to presuppose as to what could be the subject matter of the cross-examination and make the remarks as mentioned above. ”
ITA 502/JP/2012, 441 & 422/JP/2015_ 18 Sumit Kumar Shah Vs. ITO
Further, reliance is placed on the judgment of Hon’ble Allahabad High Court in the case of CCE Vs. Shyam Traders reported in 2016 (333) ELT 389 wherein, the above mentioned judgment of Supreme Court in Andaman Timber Industries was followed and the requirement of allowing cross-examination of witnesses was held as indispensible for adjudication.
39 TW 21 4 CIT Vs. Bhanwar Lai Murwatiya (Raj. High Court, Jodhpur)
Whether addition can be made on the basis of statements in a case wherein no opportunity of cross examination was allowed to the assessee ? - Held No.
Laxmanbhai S. Patel Vs. CIT [ITR No. 41 of 1997, Dated 22-07-2008] (Guj.)
The legal effect of the statement recorded behind the back of the assessee and without furnishing the copy thereof to the assessee or without giving an opportunity of cross- examination, if the addition is made, the same is required to be deleted on the ground of violation of the principles of natural justice.
It is thus humbly submitted that the meteorological report could not be
solely made basis for denying the legal claim of damage of goods as
relied by the Ld. AO by ignoring the other evidence because the
meteorological report was merely and indicator of average rain fall at a
particular place / city in a particular day and not a exact measure of
rainfall in a part of a city, therefore, addition made by the Ld. AO based
on assumption and presumption and further based on wrong
appreciation of facts deserves to be deleted and the loss of stock
claimed by the assessee deserves to be allowed more particularly when
the assessee has submitted every plausible evidence to support his
ITA 502/JP/2012, 441 & 422/JP/2015_ 19 Sumit Kumar Shah Vs. ITO
claim and loss suffered by the assessee is genuine looking to the facts
and circumstance of case.
On the other hand, the ld Sr. DR has relied on the orders of the
authorities below.
I have heard both the sides on this issue. I have also considered
the various decisions relied upon by both the sides. The assessee is
dealing in business of Bandhej and silk sarees and the assessee was
regularly sending his sarees for dying and printing job work. This was a
regular feature of the assessee’s business. The assessee claimed the
loss on account of damage of stock of sarees due to rain, which was
denied by the revenue. The assessee in support of claim of damage of
goods has submitted confirmation and affidavits from both the job
workers namely Mohammed Shafi Prop. M/s. Mohammed Shafi Dyers
and Shri Praveen Chippa Prop. M/s. Aarti Enterprises. Copies of bills
raised by these job workers were also submitted. The affidavit of
transporter Shri Gulzar Ahmed, who transported the damaged goods
were also submitted. An affidavit of witness namely Shri Shehzad, who
was present during the sale of damaged goods to Shri Ram Ratan Singh
of Kanpur was filed. The identity proof with address of Shehzad was
also filed, which is placed at page No. 46 and 47 of the paper book. The
ITA 502/JP/2012, 441 & 422/JP/2015_ 20 Sumit Kumar Shah Vs. ITO
copy of sale bill placed at page No. 48 of the paper book was also
submitted. Copy of Dainik Jagran newspaper dated 08/09/2011 placed
at page No. 49 of the paper book and copy of the necessary information
published in Khoji Narad on 08/09/2011 is also paced at page No. 50 of
the paper book wherein the assessee has given an advertisement to the
public to give information regarding Shri Ram Ratan Singh of Kanpur to
whom the assessee has sold these goods. Similarly such classified
advertisement were also given in the newspaper namely ‘Rashtriya
Sahara’ on 10/09/2011 to 12/09/2011, which are placed at page No. 53
to 55 of the paper book. Thus the assessee has made necessary efforts
to locate Shri Ram Ratan Singh of Kanpur to whom the goods were sold
to establish his claim. The assessee has also submitted copies of news
papers which has reported regarding rainfall in the month of September
and December, 2007 in Jaipur. The assessee has also submitted
necessary evidences like copy of death certificate of assessee’s mother
and medical certificate for her hospitalization issued by Santokbha
Durlabhji Hospital to establish that during the relevant period, the
assessee was busy in medical treatment of his mother and due to which
he could not lift the goods from the premises of the job workers. All
these facts and circumstances suggest that the assessee has suffered
genuine loss on account of rain by damaging stock of sarees. He had
ITA 502/JP/2012, 441 & 422/JP/2015_ 21 Sumit Kumar Shah Vs. ITO
submitted sufficient evidences to establish the business loss occurred on
account of rain at the premises of the job workers. Therefore, the
disallowance of the loss suffered by the assessee was not justified.
Accordingly, addition of Rs. 26,00,650/- is deleted.
Assessee’s appeal in ITA No. 441/JP/2015 and revenue’s appeal in
ITA No. 422/JP/2015 are with regard to partly sustaining/deleting
penalty U/s 271(1)(c) of the Act.
These are the cross appeals with regard to partly
deleting/sustaining the penalty levied U/s 271(1)(c) of the Act. Since the
assessee’s appeal in quantum, addition has been allowed, therefore, the
appeal of the assessee is allowed and the appeal of the revenue stand
dismissed.
In the result, ITA No. 502/JP/2012 and 441/JP/2015 are allowed
and ITA No. 422/JP/2015 is dismissed.
Order pronounced in the open court on 20/09/2017.
Sd/- ¼Hkkxpan½ (BHAGCHAND) ys[kk lnL;@Accountant Member Tk;iqj@Jaipur fnukad@Dated:- 20th September, 2017
*Ranjan
ITA 502/JP/2012, 441 & 422/JP/2015_ 22 Sumit Kumar Shah Vs. ITO आदेश की प्रतिलिपि अग्रेf’ात@ब्वचल वf जीम वतकमत वितूंतकमक जवरू vihykFkhZ@The Appellants- Shri Sumit Kumar Shah, Jaipur. 1. izR;FkhZ@ The Respondent- The ITO, Ward 4(1), Jaipur. 2. vk;dj vk;qDr@ CIT 3. vk;dj vk;qDr¼vihy½@The CIT(A) 4. विभागीय प्रतिनिधि] आयकर अपीलीय अधिकरण] जयपुर@क्त्ए प्ज्Aज्ए Jंपचनत 5. xkMZ QkbZy@ Guard File (ITA No. 502/JP/2011, 441 & 422/JP/2015) 6. vkns'kkuqlkj@ By order,
सहायक पंजीकार@Aेेज. त्महपेजतंत