The ITO, Ward-2, Chirala, Chirala V. Sri Kandula Surya Prakasa Rao, Chirala

CO 22/VIZ/2012

• Counselvise Citation: [2015] 123 COUNSELVISE.COM (IT) 0456 (ITAT-VISAKHAPATNAM)
• Duration Of Justice: 2 year(s) 6 month(s)
• Appeal Type: Cross Objection
• Pronouncement Date: 03-03-2015
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: DB
• Assessment Year: 2007-2008
• Appeal Filed On: 03-09-2012
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: RAJEEV K SINGH
• Keywords: Unexplained investment; Additional evidence
• Section: 133A

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL VISAKHAPATNAM BENCH : VISAKHAPATNAM BEFORE SHRI J. SUDHAKAR REDDY, ACCOUNTANT MEMBER AND SHRI SAKTIJIT DEY, JUDICIAL MEMBER ITA NO.271/VIZAG/2012 ASSESSMENT YEAR 2007-2008 THE INCOME TAX OFFICER, WARD-2, CHIRALA. VS. MR. KONDULA SURYAPRAKASA RAO, CHIRALA. PAN AKXPK2727K (APPELLANT) (RESPONDENT) CROSS OBJECTION NO.22/VIZAG/2012 ARISING OUT OF ITA.NO.271/VIZAG/2012 ASSESSMENT YEAR 2007-2008 MR. KONDULA SURYAPRAKASA RAO, CHIRALA. PAN AKXPK2727K VS. THE INCOME TAX OFFICER, WARD-2, CHIRALA. (CROSS OBJECTOR) (RESPONDENT) FOR REVENUE : MR. RAJEEV K. SINGH FOR ASSESSEE : MR. GVN. HARI DATE OF HEARING : 02.03.2015 DATE OF PRONOUNCEMENT : 03.03.2015 ORDER PER J. SUDHAKAR REDDY, A.M. THIS APPEAL IS FILED BY THE REVENUE AGAINST THE O RDER OF THE LD. CIT(A), GUNTUR DATED 24.04.2012 FOR THE ASSESSMENT YEAR 2007-2008 ON THE FOLLOWING GROUNDS : 1. THE ORDER OF THE LD. CIT(A) IS ERRONEOUS ON FACTS AND IN LAW. 2. THE LD. CIT(A) ERRED IN DELETING THE ADDITION OF RS.49,68,130 MADE TOWARDS UNEXPLAINED INVESTMENT IN EXCESS STOCK. 3. THE LD. CIT(A) OUGHT TO HAVE RECORDED THE REASONS F OR ADMITTING THE ADDITIONAL EVIDENCES BY WAY OF STOCK 2 ITA.NO.271/VIZAG/2012 & C.O.NO.22/VIZAG/2012 MR. KANDULA SURYA PRAKASA RAO, CHIRALA. RECONCILIATION STATEMENT FURNISHED BY THE ASSESSEE DURING THE APPELLATE PROCEEDINGS IN ACCORDANCE WITH RULE 4 6A(2) OF THE INCOME TAX RULES, 1962. 4. THE LD. CIT(A) FAILED TO ALLOW AN OPPORTUNITY TO TH E ASSESSING OFFICER TO EXAMINE THE ADDITIONAL EVIDENC ES ADMITTED DURING THE APPELLATE PROCEEDINGS AND FURNI SH HIS REPORT WHICH IS MANDATORY AS PER RULE 46A(3) OF THE INCOME TAX RULES, 1962. 5. THE LD. CIT(A) OUGHT NOT TO HAVE ACCEPTED THE ASSES SEES CLAIM THAT THE VARIATION IN THE VALUE OF THE STOCKS AS PER THE STATEMENT FURNISHED TO THE BANK AND AS PER THE BOOKS OF ACCOUNT IS ONLY DUE TO VARIATION IN THE RATES AN D NOT IN QUANTITIES WITHOUT SUBJECTING SUCH CLAIM TO THOROUG H EXAMINATION. 6. THE LD. CIT(A) OUGHT TO HAVE PLACE RELIANCE ON THE DECISION OF THE HONBLE MADRAS HIGH COURT IN THE CA SE OF COIMBATORE SPINNING AND WEAVING CO. LTD., VS. CIT 9 5 ITR 375, AND HELD THAT THE ASSESSEES PRACTICE OF I NFLATING THE STOCKS IN THE STATEMENT GIVEN TO THE BANK REPRE SENTS SUBSTANDARD MORALITY WHICH CANNOT BE TAKEN JUDICIAL NOTICE. 7. ANY OTHER GROUND TO BE URGED AT THE TIME OF HEARING . 2. THE FACTS ARE BROUGHT OUT AT PARA-2 OF THE LD. CIT(A) ORDER WHICH IS EXTRACTED FOR READY REFERENCE : BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE CAR RYING ON BUSINESS IN HANDLOOM CLOTH. A SURVEY UNDER SECTI ON 133A WAS CONDUCTED IN THIS CASE ON 10.08.2007 AND SOME DISCR EPANCIES WERE NOTICED BY THE DEPARTMENT. THE ASSESSEE FILED HIS RETURN OF INCOME FOR THE ASSESSMENT YEAR 2007-08 ON 2.11.2007 DECLARING TOTAL INCOME AT RS.2,05,420. THE RETURN WAS PROCESS ED UNDER SECTION 143(1) AND SUBSEQUENTLY, A NOTICE U/S.148 W AS ISSUED AS IT WAS NOTICED THAT IN THIS CASE FOR THE ASSESSMENT YEAR 2008-09, A SUM OF RS.85,973 PERTAINING TO THE FINANCIAL YEAR 2006-07 RELEVANT TO THE ASSESSMENT YEAR 2007-08, HAD ESCAPE D ASSESSMENT. THE ASSESSING OFFICER HAS COMPLETED THE ASSESSMENT 3 ITA.NO.271/VIZAG/2012 & C.O.NO.22/VIZAG/2012 MR. KANDULA SURYA PRAKASA RAO, CHIRALA. U/S.143(3) BY DETERMINING THE TOTAL INCOME AT RS.52 ,56,294 BY MAKING CERTAIN ADDITIONS AS UNDER : (I) AN AMOUNT OF RS.28,333 WHICH WAS CHARGED ON THE LOAN OF RS. 20 LAKHS DRAWN FROM THE OD A/C OF THE BUSINESS AND UTILIZED FOR PERSONAL USE WAS DISALLOWED, AS THE ASSESSEE HAS DIVERTED BUSINESS FUNDS AND NOT OFFERED INTEREST ON THE SAME. (II) AN AMOUNT OF RS.54,411 IS DISALLOWED U/S.40A(3) ON ACCOUNT OF PAYMENT MADE IN CASH. (III) ADDITION OF RS.49,68,130 ON ACCOUNT OF EXCESS STOCK AVAILABLE AS ON 31.03.2007, 3. ON APPEAL, THE FIRST APPELLATE AUTHORITY AT PAR AS NO. 5.4.1 TO 5.4.3 STATED THE REASONS FOR GRANTING RELI EF TO THE ASSESSEE. AGGRIEVED, REVENUE IS IN APPEAL BEFORE TH E TRIBUNAL AND HAS RAISED 7 GROUNDS EXTRACTED HEREINABOVE. 4. DURING THE COURSE OF HEARING MR. RAJEEV K. SING H SUBMITTED THAT THE RECONCILIATION STATEMENTS WERE F ILED BY THE ASSESSEE BEFORE THE LD. CIT(A) AND THE LD. CIT(A) W ITHOUT GIVING AN OPPORTUNITY TO THE ASSESSING OFFICER, ADMITTED T HESE DOCUMENTS AND GRANTED RELIEF. HE CONTENDED THAT THE RE WERE VARIATIONS IN STOCK AS HELD BY THE ASSESSEE AND THE STOCK STATEMENTS GIVEN BY THE ASSESSEE TO THE BANK. THE A SSESSING OFFICER RELYING ON THE DECISION OF HONBLE MADRAS H IGH COURT IN THE CASE OF COIMBATORE SPINNING AND WEAVING COMPANY LIMITED VS. CIT (1974) 95 ITR 375 (MAD.) (H.C.) MADE THE AD DITION ON THE GROUND OF SUB-STANDARD MORALITY. HE PLEADED THAT TH E MATTER SHOULD BE REMANDED BACK TO THE FILE OF ASSESSING OF FICER, FOR VERIFYING THE RECONCILIATION STATEMENTS FILED BY TH E ASSESSEE AND THEREAFTER, DISPOSE OF THE CASE AFRESH, IN ACCORDAN CE WITH THE LAW. ALTERNATIVELY, HE SUBMITTED THAT THE ISSUE MAY BE S ET ASIDE TO THE 4 ITA.NO.271/VIZAG/2012 & C.O.NO.22/VIZAG/2012 MR. KANDULA SURYA PRAKASA RAO, CHIRALA. FILE OF LD. CIT(A) WHO SHOULD BE DIRECTED TO CALL F OR THE REMAND REPORT AND THEN ADJUDICATE THE MATTER AFRESH. 5. THE LEARNED COUNSEL FOR THE ASSESSEE MR. GVN. H ARI ON THE OTHER HAND HAS OPPOSED THE CONTENTION OF THE LEARNED D.R. AND SUBMITTED THAT DURING THE COURSE OF SURVEY, NO DISCREPANCIES OF QUANTITATIVE DETAILS FOR STOCK WHATSOEVER WAS FO UND. HE FURTHER SUBMITTED THAT THE ASSESSING OFFICER COMMITTED A MI STAKE IN ASSUMING THAT THE LD. CIT(A), WHILE DISPOSING OF TH E CASE FOR THE ASSESSMENT YEAR 2008-09 HAD GIVEN A DIRECTION THAT THE ADDITION IN QUESTION SHOULD BE MADE FOR THE ASSESSMENT YEAR 2007-08. HE POINTED OUT THAT THE LD. CIT(A) HAS RIGHTLY RECORDE D THAT NO SUCH DIRECTION WAS GIVEN BY HIM IN EARLIER ASSESSMENT YE AR. HE STRONGLY OPPOSED REMITTING THE MATTER EITHER TO THE ASSESSING OFFICER AND LD. CIT(A) AND SUBMITTED THAT ON LEGAL GROUNDS ITSELF THE ADDITION HAS TO BE DELETED AS THE JURISDICTIONA L HIGH COURT IN THE CASE OF CIT-IV, HYDERABAD VS. M/S. SRI TARAKA JEWELLERS IN ITTA.NO.274 OF 2013 ORDER DATED 12 TH JULY, 2013 HAS UPHELD THE ORDER OF THE TRIBUNAL, BY HOLDING THAT THERE CANNOT BE AN ADDITION OF DIFFERENCE IN STOCK STATEMENT FURNISHED TO BANK AND THE ONE SHOWN IN THE BOOKS OF ACCOUNTS. 6. AFTER HEARING THE RIVAL CONTENTIONS, WE FIND TH AT THE FIRST APPELLATE AUTHORITY AT PARA NO. 5.4.1 OF HIS ORDER HAS CLEARLY STATED THAT HE HAD NOT GIVEN ANY DIRECTION WHATSOEV ER TO THE ASSESSING OFFICER, TO MAKE THE ABOVE SAID ADDITION FOR THE ASSESSMENT YEAR 2007-08, WHILE DISPOSING OF ASSESSE ES APPEAL FOR THE ASSESSMENT YEAR 2008-09. WHILE SO, THE ENTI RE ADDITION IS MADE BY THE ASSESSING OFFICER ON AN ASSUMPTION THAT THE LD. CIT(A) HAS GIVEN SUCH DIRECTION. 5 ITA.NO.271/VIZAG/2012 & C.O.NO.22/VIZAG/2012 MR. KANDULA SURYA PRAKASA RAO, CHIRALA. 7. BE IT AS IT MAY, THE HONBLE JURISDICTIONAL HIGH COURT IN THE CASE OF M/S. SRI TARAKA JEWELLERS (SUPRA) HA S HELD AS FOLLOWS : . IT IS SETTLED POSITION OF LAW BY VIRTUE OF DECI SION OF BOTH THE TRIBUNAL AND THE HIGH COURT THAT THERE CANNOT B E ANY ADDITION OF DIFFERENCE IN THE STOCK STATEMENT FURNI SHED TO THE BANK AND THE ONE SHOWN IN THE BOOKS OF ACCOUNT. IN THIS CASE, DURING SURVEY, NOTHING IS FOUND OR BROUGHT ON RECORD TO SHOW THAT ON PHYSICAL VERIFICATION, THE STOCK FOUND WAS IN EXCESS OF THE STOCK RECORDED IN THE BOOKS OF ACCOUN T. IT WAS EXPLAINED BY THE ASSESSEE THAT THE STOCK STATEMENT FURNISHED TO THE BANK WAS ON ESTIMATE BASIS BUT THE STOCK SHOWN IN THE ASSESSMENT PROCEEDINGS WAS BASED ON AC TUAL PHYSICAL VERIFICATION. AS SUCH, THERE WAS NO REASON TO REJECT THE BOOKS OF ACCOUNT OF THE ASSESSEE AND NO ADDITIO N IS CALLED FOR SOLELY ON ACCOUNT OF THE DIFFERENCE IN V ALUE OF THE STOCK SUBMITTED TO THE BANK AND THE VALUE OF THE ST OCK SHOWN IN THE ACCOUNTS PRESENTED FOR ASSESSMENT. 8. RESPECTFULLY FOLLOWING THE DECISION OF THE JURISDICTIONAL HIGH COURT WHICH HAS BINDING EFFECT ON THE TRIBUNAL , WE DISMISS THE GROUNDS RAISED BY THE REVENUE. C.O.NO.22/VIZAG/2012 A.Y. 2007-08 : 9. THE CROSS OBJECTION FILED BY THE ASSESSEE IS DI SMISSED AS IT MERELY SUPPORTS THE ORDER OF THE FIRST APPELL ATE AUTHORITY. 10. IN THE RESULT, APPEAL OF THE REVENUE IS DISMI SSED AND CROSS OBJECTION OF THE ASSESSEE IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 03.03.20 15. SD/- SD/- (SAKTIJIT DEY) (J. SUDHAKAR REDDY) JUDICIAL MEMBER ACCOUNTANT MEMBER VISAKHAPATNAM, DATED 03 RD MARCH, 2015. VBP/- 6 ITA.NO.271/VIZAG/2012 & C.O.NO.22/VIZAG/2012 MR. KANDULA SURYA PRAKASA RAO, CHIRALA. COPY TO 1. THE INCOME TAX OFFICER, WARD 1, 9-1-69, CHURCH R OAD, CHIRALA. 2. MR. KANDULA SURYAPRAKASA RAO, D.NO.11-1-34, SANKAVARI STREET, PERALA, CHIRALA. 3. CIT(A), GUNTUR. 4. CIT, GUNTUR 5. D.R. ITAT, VISAKHAPATNAM BENCH, VISAKHAPATNAM. 6. GUARD FILE //BY ORDER // ASST. REGISTRAR ITAT, VISAKHAPATNAM.