M/s Mohan Jewellers, New Delhi V. DCIT, New Delhi

CO 383/DEL/2010

• Counselvise Citation: [2011] 122 COUNSELVISE.COM (IT) 5929 (ITAT-DELHI)
• Duration Of Justice: 5 month(s) 7 day(s)
• Appeal Type: Cross Objection
• Pronouncement Date: 06-05-2011
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: E
• Next Hearing Date: 02-05-2011
• Assessment Year: 2006-2007
• Appeal Filed On: 29-11-2010
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: R P BASIA
• Assessee Lawyers: KISHORE B
• Section: 133A

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH: E NEW DELHI BEFORE SHRI RAJPAL YADAV, JUDICIAL MEMBER AND SHRI SHAMIM YAHYA ACCOUNTANT MEMBER I.T.A NO. 2966/DEL/10 ASSTT. YEAR 2006-07 DCIT, CIRCLE 33(1) NEW DELHI. VS. MOHAN JEWELLERS, 3324, BANK STREET, KAROL BAGH, NEW DELHI AAIFM4878J (APPELLANT) (RESPONDENT) CO. NO. 383/D/10 ASSTT. YEAR 2006-07 MOHAN JEWELLERS, 3324, BANK STREET, KAROL BAGH, NEW DELHI AAIFM4878J VS. DCIT, CIRCLE 33(1), NEW DELHI. (APPELLANT) (RESPONDENT) APPELLANT BY: SHRI KISHORE B, SR. DR RESPONDENT BY: SHRI R.P. BASIA, CA ORDER PER RAJPAL YADAV, JM: THE REVENUE IS IN APPEAL BEFORE US AGAINST THE ORD ER OF LD. CIT(A) DATED 30 TH MARCH, 2010 PASSED FOR ASSTT. YEAR 2006-07. ON REC EIPT OF ITA NO. 2966/DEL/10 & CO. NO. 383/DEL/10 ASSTT. YEAR 2006-07 2 NOTICE IN THE REVENUES APPEAL, ASSESSEE HAS FILED CROSS OBJECTION BEARING NO. 383/D/2010. THE SOLITARY GRIEVANCE OF T HE REVENUE IN ITS APPEAL IS THAT LD. CIT(A) HAS ERRED IN DELETING THE ADDITION OF ` 13,44,950/-. 2. THE BRIEF FACTS OF THE CASE ARE THAT ASSESSEE FI RM HAS FILED ITS RETURN OF INCOME ON 31 ST OCTOBER, 2008 DECLARING AN INCOME OF ` 81,88,441/-. THE ASSESSEE FIRM AT THE RELEVANT TIME WAS IN THE BUSINESS OF MANUFACTURING AND TRADING OF GOLD JEWELLERY. IT HAS DISCONTINUED ITS BUSINESS FROM 28 TH FEBRUARY, 2006. THERE WERE TWO PARTNERS IN THE FIR M NAMELY SHRI MURARI LAL S/O SHRI VIKRAM SINGH AND SH RI MUKESH SONI. THE BUSINESS OF THE ASSESSEE FIRM WAS TAKEN OVER BY A COMPANY NAMELY MOHAN GEMS AND JEWELLERS PVT. LTD.. THE SURVEY U/S 133A WAS CONDUCTED AT THE PREMISES OF THE COMPANY ON 28 TH AUGUST, 2006. DURING THE COURSE OF SURVEY, STATEMENT OF SHRI MURARI LAL S/O SHRI VIKRAM SINGH WAS RECORDED. HE WAS THE PARTNER OF THE ASSESSEE FI RM AND A DIRECTOR IN THE NEW COMPANY. IN THIS STATEMENT, HE ADMITTED EXC ESS STOCK OF 9 KG OF GOLD. THE VALUE OF THE STOCK ON THE DATE OF SURVEY WAS WORKED OUT AT ` 85,08,950/-. IT WAS WORKED AT THE RATE OF ` 9,454/- PER 10 GMS. THE DISPUTE BETWEEN THE ASSESSEE AND THE REVENUE IN THI S APPEAL IS THAT ITA NO. 2966/DEL/10 & CO. NO. 383/DEL/10 ASSTT. YEAR 2006-07 3 ASSESSEE WHILE FILING THE RETURNS HAS DISCLOSED THE VALUE OF THE GOLD AT ` 71,64,000/- WHEREAS AO IS OF THE OPINION THAT ASSES SEE SHOULD HAVE DISCLOSED VALUE OF THE GOLD AT ` 85,08,950/-. ON THE STRENGTH OF THE PARTNERS STATEMENT, HE CONFIRMED THE ADDITION OF T HE DIFFERENCE I.E. ` 13,44,950/-. 3. ON APPEAL, ASSESSEE HAS RAISED A NUMBER OF ARGUM ENTS NAMELY THE SURVEY WAS NOT CONDUCTED AT THE PREMISES OF THE FIRM, STATEMENT RECORDED U/S 133A HAS NO EVIDENTLY VALUE AND ON TH E BASIS OF THIS STATEMENT, ADDITION CAN BE MADE, STATEMENT OF ANY R EPRESENTATIVE OF THE ASSESSEE WAS NOT RECORDED. IT WAS A STATEMENT OF A DIRECTOR OF THE COMPANY AND NOT IN THE CAPACITY OF PARTNER OF AN ER STWHILE FIRM. THE EXCESS STOCK FOUND IN THE PREMISES OF THE COMPANY C ANNOT BE ASSESSED IN THE HANDS OF THE ASSESSEE. LD. FIRST APPELLATE A UTHORITY HAS TAKEN INTO CONSIDERATION ALL THESE OBJECTIONS. SHE PRINCI PALLY AGREED WITH THESE OBJECTIONS BUT THEN DID NOT TAKE COGNIZANCE OF SUC H OBJECTIONS ON THE GROUND THAT ASSESSEE ITSELF HAS ADMITTED THE EXCESS STOCK AVAILABLE IN ITS CLOSING STOCK BY MAKING A DECLARATION AT ` 71,64,000/-. ACCORDING TO THE LD. CIT(A), IT INDICATES THE IMPLIED ADMISSION OF T HE ASSESSEE ABOUT AVAILABILITY OF EXCESS CLOSING STOCK IN ITS ACCOUNT S ON THE DATE WHEN THE ITA NO. 2966/DEL/10 & CO. NO. 383/DEL/10 ASSTT. YEAR 2006-07 4 FIRM WAS DISSOLVED. BUT LD. FIRST APPELLATE AUTHORI TY HAS OBSERVED THAT AO IS NOT JUSTIFIED IN MAKING THE ADDITION. ACCORDI NG TO THE LD. CIT(A), THE QUANTITY OF THE EXCESS STOCK IS NOT IN DISPUTE. THE DISPUTE IS THE VALUATION OF THE STOCK. THE VALUE OF THE STOCK IN THE HANDS OF THE ASSESSEE CAN BE TAKEN ON THE DATE WHEN IT WAS DISSO LVED AND WHEN THE CLOSING STOCK WAS AVAILABLE. THE ENHANCED VALUE OF THE STOCK CONSIDERED BY THE AO CANNOT BE CONSIDERED IN THE HANDS OF THE ASSESSEE BECAUSE ON THE DATE OF SURVEY, THE FIRM WAS NOT EXISTING. IT IS THE COMPANY WHO HAVE TO EXPLAIN IT. 4. LD. DR RELIED UPON THE ORDER OF AO AS WELL AS M ADE A REFERENCE TO THE STATEMENT OF ASSESSEE, WHOSE COPY IS AVAILABLE ON PAGE NO. 169 OF THE PAPER BOOK FILED BY THE ASSESSEE. HE ALSO DREW OUR ATTENTION TOWARDS PAGE 56 OF THE PAPER BOOK AND POINTED OUT T HAT THE ASSESSEE HAS A NEGATIVE BALANCE AS ON 28.2.2006. ON THE STRE NGTH OF THE PARTNERS STATEMENT, HE PLEADED THAT ORDER OF LD. CIT(A) BE S ET ASIDE AND THAT OF AO BE RESTORED. LD. COUNSEL FOR THE ASSESSEE ON THE OTHER HAND, RELIED UPON THE ORDER OF LD. CIT(A). HE MADE A REFERENCE T O THE WRITTEN SUBMISSION FILED BEFORE LD. CIT(A). HIS EMPHASIS WA S THAT NO COGNIGENCE OF THE STATEMENT RECORDED DURING THE COU RSE OF SURVEY BE ITA NO. 2966/DEL/10 & CO. NO. 383/DEL/10 ASSTT. YEAR 2006-07 5 TAKEN WHILE PASSING THE ASSTT. ORDER, BECAUSE NO AU THORITY CAN TAKE A STATEMENT ON OATH IN THE PROCEEDINGS U/S 133A. IF T HE STATEMENT IS NOT ON OATH, THEN IT CARRIES NO EVIDENTARY VALUE. IN SUPPO RT OF ITS CONTENTION, HE RELIED UPON TWO DECISIONS 1) PAUL MATHEW & SONS VS. CIT REPORTED AT 263 ITR 103 AND 2) CIT VS. S. KHADAR KHAN SON 21 4 CTR 589 (MADRAS). 5. WE HAVE DULY CONSIDERED THE RIVAL CONTENTION AND GONE THROUGH THE RECORD CAREFULLY. ADMITTEDLY, THE ASSESSEE FIRM WAS DISCONTINUED ON 28 TH FEBRUARY, 2006. THE ERSTWHILE PARTNER IN THE CAPAC ITY OF THE DIRECTOR HAS ADMITTED IN A STATEMENT RECORDED DURING THE COU RSE OF SURVEY ABOUT AVAILABILITY OF 9 KG OF GOLD PERTAINING TO THE ERST WHILE FIRM. THIS STATEMENT MAY NOT BE CONCLUSIVE PROOF FOR CHARGING THE ASSESS EE WITH THE LIABILITY TO TAX, BUT IT IS A CORROBORATIVE INFORMATION FOR S TARTING THE INVESTIGATION. HAD ASSESSEE NOT INCLUDED THE VALUE OF THE GOLD IN ITS INCOME TAX RETURN THEN ISSUE COULD BE INVESTIGATED AND OTHER MATERIAL WOULD BE PRESSED INTO SERVICE. THE STATEMENT WAS GIVEN AFTER CONSULT ATION WITH THE CHARTERED ACCOUNTANT WHO WAS AVAILABLE ON THE SPOT. THUS, IT CANNOT BE SAID THAT THIS STATEMENT WAS TAKEN UNDER FORCE. WE FIND THAT LD. FIRST APPELLATE AUTHORITY HAS APPRECIATED THE FACTS AND C IRCUMSTANCES IN RIGHT ITA NO. 2966/DEL/10 & CO. NO. 383/DEL/10 ASSTT. YEAR 2006-07 6 PERSPECTIVE. IN A WAY ASSESSEE HAS ADMITTED, AVAIL ABILITY OF THE GOLD IN THE HANDS OF THE FIRM BY DISCLOSING ITS VALUE IN TH E RETURN OF INCOME. THE QUESTION DISPUTED BEFORE US IS HOW TO WORK OUT TH E VALUE OF THE GOLD IN THE HANDS OF THE FIRM I..E WHETHER ITS VALUE HAS TO BE TAKEN AS ON 28 TH FEBRUARY, 2006 OR 8 TH AUGUST, 2006. THE FIRM HAS LOOSES ITS IDENTITY AF TER 28 TH FEBRUARY, 2006. IT HAS FILED ITS RETURN UPTO THIS ACCOUNTING PERIOD. THUS THE MARKET VALUE OF THE GOLD ON THIS DATE IS T O BE ASSESSED IN ITS HAND AND LD. CIT(A) HAS TAKEN THAT VALUE IN THE H ANDS OF THE ASSESSEE. THE ASSESSEE ITSELF HAS ALSO DISCLOSED THE VALUE OF THE STOCK ON 28 TH FEBRUARY, 2006. IT HAS BEEN DEMONSTRATED ON THE REC ORDS WITH THE HELP OF NEWSPAPER CUTTING THAT RATE OF THE GOLD ON 28 TH FEBRUARY, 2006 WAS RS. 7,960/- PER 10 GMS. LD. CIT(A) HAS DELETED THE DIFFERENCE WORKED OUT BY THE AO. AFTER TAKING INTO CONSIDERATION THE DETAILED FINDING OF LD. CIT(A), WE DO NOT FIND ANY ERROR IN THE IMPUGNED OR DER AND APPEAL OF THE REVENUE IS DEVOID OF ANY MERIT. ACCORDINGLY, IT IS REJECTED. 6. AS FAR AS THE CROSS OBJECTIONS ARE CONCERNED, TH E ASSESSEE HAS NOT CLAIMED ANY INDEPENDENT RELIEF IN THE CROSS OBJ ECTION. THE GROUNDS ARE RAISED IN THE SHAPE OF ARGUMENTS WHICH ARE IN S UPPORT OF LD. CIT(A)S ORDER. SUB SECTION 4 OF SECTION 253 OF THE INCOME TAX PROVIDE ITA NO. 2966/DEL/10 & CO. NO. 383/DEL/10 ASSTT. YEAR 2006-07 7 THAT RESPONDENTS, ON RECEIPT OF THE NOTICE IN AN AP PEAL MAY FILE CROSS OBJECTION AGAINST ANY PART OF THE ORDER OF LD. CIT( A). THE ASSESSEE HAS NOT POINTED OUT AGAINST WHICH PART OF LD. CIT(A)S ORDER IT IS AGGRIEVED. HENCE, ITS CROSS OBJECTIONS ARE NOT MAINTAINABLE. C ONSEQUENTLY THE APPEAL AS WELL AS CROSS OBJECTION ARE DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 6.5.2011. SD/- SD/- [SHAMIM YAHYA] [RAJPAL YADAV] ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 6.5.2011 VEENA COPY FORWARDED TO: - 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT (A) 5. DR, ITAT TRUE COPY BY ORDER, DEPUTY REGISTRAR, ITAT