Commissioner Of Income Tax, Jaipur-Ii, Jaipur v. Shri Shiv Kumar Soni

HIGH COURT OF JUDICATURE FOR RAJASTHAN BENCH ATJAIPUR D.B. Income Tax Appeal No. 131 / 2011 Commissioner of Income Tax, Jaipur-II, Jaipur ----Appellant Versus Shri Shiv Kumar Soni, 348, Mangla Marg, Brahmpuri, Jaipur ----Respondent _____________________________________________________ For Appellant(s) : Mr. R.B. Mathur alongwith Ms. Meenal Ghiya For Respondent(s) : Mr. Gunjan Pathak _____________________________________________________ HON'BLE MR. JUSTICE K.S. JHAVERI HON'BLE MR. JUSTICE INDERJEET SINGH Judgment 21/08/2017 1.By way of this appeal, the appellant has challenged thejudgment and order of the tribunal whereby the tribunal hasdismissed the appeal of the department. 2.At the time of admission of the appeal, following questions were framed:- “Whether in the facts and circumstances of thecase the ITAT was justified in confirmingCIT(A)’s order in directing to allow the lossclaimed on trading of gold bullion amount toRs.21036425/- without appreciating the facts ofthe case?” 3.Mr. Mathur, appearing for the appellant contended that the Tribunal and CIT (A) have committed a serious error in observing against the appellant. He pointed out para 5 and 6 of the order of A.O. which reads as under:- “5. On examination of the purchase and salevouchers, the books of accounts and bankstatements etc. it was noticed that most6 of thesales of the assessee in substantial amounts arein cash and there were huge cash deposits in thebank accounts of the assessee, in different citiesof the country, through anywhere banking. Someexamples of such cash deposits in bank accountsof the assessee are given below- HDFC BANK (A/c No.00540460000391) DateAmountCity Where deposted17.8.20051,54,00,000Delhi17.8.200512,66,000Chennai18.8.200586,00,000Delhi60,00,00018.8.200525,00,000Delhi19.8.20051,48,00,000Delhi19.8.200530,00,000Delhi20.8.200580,00,000Delhi20.08.200537,73,000Delhi22.8.200575,07,300Chennai22.8.20051,42,00,000Delhi22.8.200518,00,000Chennai22.8.200519,00,000Bangalore23.08.20052,11,50,000Delhi24.8.20051,00,52,000Chennai25.08.20051,43,00,000Delhi25.08.200584,00,000Delhi25.8.200550,26,700Chennai 25.8.200537,79,000Chennai25.8.20057,00,000Chennai25.8.200512,50,000Bangalore26.8.200571,50,000Delhi26.8.20051,45,00,000Delhi26.8.200550,00,000Bangalore ICICI Bank (A/c No.8314) DateAmountCity Where deposted18.8.200524,50,000Bangalore18.8.20059,99,000GuwahatiChennai19.8.200535,00,000Bangalore23.8.20059,98,000Guwahati23.8.20059,50,000Nagpur23.8.20059,98,000Bangalore27.8.20056,00,000Kolkata PNB, Johari Bazar (A/c No.1511) DateAmountCity Where deposted22.8.200527,00,000Raipur22.8.200524,50,000Indore23.8.200535,00,000Indore23.08.200520,00,000Jabalpur25.08.200518,00,000Indore25.08.200523,50,000Jabalpur25.8.200513,50,000Satna Similar was the position of cash deposits inthese accounts throughout the year. 6. On examination of the sale vouchers of theassessee it was noticed that no sale vouchers toany party of out of Rajasthan was issued. Thesale vouchers also did not contain the completenames and addresses of the persons who madecash purchases from the assessee. The details of some such cash vouchersare given below:- Bill NoName of PurchaserAmount01/17.8.2005R.K. Soni, Jaisalmer 19,32,00002Vijay Kumar Mehta, 9,66,000Barmer03Shri Shyam & Sons 6,44,000Jewellers, Rajgarh Churu04Madan Lal, Jodhpur12,88,00005Jai Chand, Dausa19,32,00006Gopi Ram, Jodhpur19.32,00007Hanuman Prasad, 19,33,500Sawaimadhopur08Amit Jain, Jodhpur19,33,50009R.K. Soori, Udaipur19,32,000010Suresh Jain, Bikaner19,32,600011Vimal Kumar, 19,32,600Sujangarh012Anant Ram, Jodhpur6,44,200013Shiv Soni, 3,22,250Hanumangarh014/18.8.200Rajiv Arora, Jaipur6,25,5005015Himayat 1,01,592International016M.C. Bhama, Churu,6,43,000 The details of some such cash vouchersare given below:- Bill NoName of PurchaserAmount01/17.8.2005R.K. Soni, Jaisalmer 19,32,00002Vijay Kumar Mehta, 9,66,000Barmer03Shri Shyam & Sons 6,44,000Jewellers, Rajgarh Churu04Madan Lal, Jodhpur12,88,00005Jai Chand, Dausa19,32,00006Gopi Ram, Jodhpur19.32,00007Hanuman Prasad, 19,33,500Sawaimadhopur08Amit Jain, Jodhpur19,33,50009R.K. Soori, Udaipur19,32,000010Suresh Jain, Bikaner19,32,600011Vimal Kumar, 19,32,600Sujangarh012Anant Ram, Jodhpur6,44,200013Shiv Soni, 3,22,250Hanumangarh014/18.8.200Rajiv Arora, Jaipur6,25,5005015Himayat 1,01,592International016M.C. Bhama, Churu,6,43,000 Ratangarh017Arun Jain, 19,33,500Jhunjhunu018Mohan Lal, Jodhpur19,32,900019Arvind Jain, 19,28,400Jhunjhun020Raj Kumar, Barmer19,26,000021Rajiv Agarwal, 19,27,500Jaisalmer022Mohan Malpani, 19,33,500Jodhpur023Hanuman Singh, 19,32,500Nagaur024Babu Lal, Pali19,33,500025Moti Lal, Bhilwara19,33,500026Amit Kumar Jain, 19,33,500Jodhpur027Raj Kishore, Jaipur13,240028A.K. Soni, Chomu14,480029Arvind Jain, Nagaur9,67,800030Mohan Jain, Jaipur1,28,840 The same was the position of sale bills for theremaining period of the accounting year. Nocomplete addresses of the customers were thereon the bills and these bills did not have anysignatures of customers etc.” 4.Taking into consideration, he contended that transactions tothe unknown people the assessment was made against theassessee for disallowances of loss of gold to the tune of Rs.2crores. He further contended that CIT (A) has seriously committedan error holding as under:- “2.2 Challenging the said view of assessingofficer Sh. Mundra has made following submissions and he has also producd copy of suitfiled in March, 2009 against MMTC Ltd. fromwhom the silver bullion was purchased: The ground No. (2) of appeal relates to objectingthe action of the Ld. A.O. in disallowing the silverrefining expenses of Rs. 13,10,469/- which isreceivable from MMTC Ltd. In this connection it is submitted thatassessee agreed with MMTC to purchase puresilver (99.9% purity) but MMTC supplied silverwith 92% to 94% purity. The MMTC through MOUagreed to charge rate of sale as per purity ofsilver and also assured to make payment ofrefining charges of silver to make its purity to99.9% as in market Bullion Silver of 99.9% issaleable. However despite repeated requestneither they delivered the MOU duly signed byauthorized officers of MMTC nor confirmed inwriting the said verbal assurances. The assesseeraised demand of Rs.13,10,469/- towardsrefining charges as well as a sum ofRs.8,75,58+/- which it retained which wererefundable on account of rate difference due toless purity of silver. The assessee written variousletters to MMTC for making said payment butexcept verbally avoiding the issue they did not atall responded. Thus the said claim of refiningcharges made by assessee was neveracknowledged as payable by MMTC. It is settledlaw that an amount of income accrues only ifassessee has enforceable right to receive it. Inthis case assessee has no document and prayerhas not acknowledged the claim as its liability,the impugned amount has not been accrued atall during the year. The assessee after long waitand desperation has filed a law suit in March, 09with competent court claiming the said amountwhich is pending. In view of these facts there was no accrual ofrefining charges claimed as receivable fromMMTC and, therefore, Ld. A.O. is wrong indisallowing a sum of Rs.13,10,489/- out of silverrefining expenses. 2.3 I have considered facts of the case andarguments taken by Sh. Mundra quite carefully.It is undisputed fact that the appellant has paidsilver refining charges of Rs.14,24,428/- and thisfact has also not been disputed by the assessingofficer in the findings given by him in para 13 ofthe assessment order. The only ground for thedisallowance of this claim to the extent ofRs.13,10,469/- is that said amount was received In view of these facts there was no accrual ofrefining charges claimed as receivable fromMMTC and, therefore, Ld. A.O. is wrong indisallowing a sum of Rs.13,10,489/- out of silverrefining expenses. 2.3 I have considered facts of the case andarguments taken by Sh. Mundra quite carefully.It is undisputed fact that the appellant has paidsilver refining charges of Rs.14,24,428/- and thisfact has also not been disputed by the assessingofficer in the findings given by him in para 13 ofthe assessment order. The only ground for thedisallowance of this claim to the extent ofRs.13,10,469/- is that said amount was received from MMTC Ltd, and since, the appellant wasfollowing mercantile system of accountingtherefore, the aforesaid amount should havebeen shown as income in the trading account.However, after analyzing the sequence of theevents it can be appreciated that the MMTCagreed to charge rate of sale as per purity ofsilver and assured to make payment of refiningcharges of the silver to make it’s purity to 99.9%after it has been supplied by MMTC with 92 to94% purity. However, neither the payment ofsaid silver refining charges to the extent ofRs.13,10,469/- was made nor the copy of theMOU duly signed by authorized officers of MMTCwas provided to the appellant. When as perdocuments or as per any evidence it is notestablished that the appelalnt was entitled toreceive the said claim from MMTC therefore,unless it is received or the claim is acknowledgedby MMTC or claim is enforceable as per any MOUor as per any other document how such amountreceivable can be considered as income of theappellant even if it is following merchantilesystem of accounting. It is a fact that only on30.3.2009 the appellant has filed a suit in Districtand Session Court of Jaipur City and before thatthere are no document/evidence on the basis ofwhich it can be held that the said amount wasreceivable by the appellant from MMTC which hasto be accounted for as amount receivable as apart of income under mercantile system ofaccounting. With this discussion the saiddisallowance of refining charges to the extent ofRs.13,10,469/- is hereby deleted by allowingrelevant ground of appeal.” 5.However, counsel for the respondent contended that in view of the observations made by the Tribunal in para 9 and 10 whichreads as under:- 6.There is concurrent finding of both the authorities and theappeal is liable to be dismissed. 7. We have heard the learned counsel for the parties. 8.Taking into consideration, the payment was made to theGovt. Corporation MMTC and loss which is incurred was due toGovt. Corporation MMTC and loss which is incurred was due to fluctuation of gold price which has been observed by both theparties, we see no reason to interfere in the order of the Tribunal. 9.The issues are answered in favour of the assessee againstthe department. 10.The appeal stands dismissed. (INDERJEET SINGH),J. (K.S. JHAVERI),J. Jyoti Item NO.75