ITO, BANSWARA V. Shri Sanwarmal Sharma, BANSWARA

ITA 1/JODH/2007

• Counselvise Citation: [2011] 140 COUNSELVISE.COM (IT) 54322 (ITAT-JODHPUR)
• Duration Of Justice: 4 year(s) 7 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 26-08-2011
• Appeal Filed By: Department
• Order Result: Partly Allowed
• Bench Allotted: DB
• Next Hearing Date: 22-07-2011
• Assessment Year: 2003-2004
• Appeal Filed On: 02-01-2007
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: G R KOKANI
• Keywords: Unexplained cash credit; Income from undisclosed sources; Loose papers; Opportunity of being heard; Assessment record
• Section: 133A; 133(6)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL [ JODHPUR BENCH, JODHPUR ] BEFORE SHRI RAJPAL YADAV, JM AND SHRI K. D. RAN JAN, AM I. T. APPEAL NO. 01 (JODH.) OF 2007. ASSESSMENT YEAR : 200304. THE INCOME-TAX OFFICER, VS. SHRI SANWARMAL SHARMA, PROP. SUNIL TIMBER & FURNITURE SUPPLIERS, B A N S W A R A. RATLAM ROAD, B A N S W A R A. P A N / G I R NO. ABP PS 7463 R. ( APPELLANT ) ( RESPONDENT ) ASSESSEE BY : SHRI AMIT KOTHARI, A. R.; DEPARTMENT BY : SHRI G. R. KOKANI, D. R.; O R D E R. PER K. D. RANJAN, AM : THIS APPEAL FILED BY THE REVENUE FOR ASSESSMENT YEA R 2003-04 ARISES OUT OF THE ORDER OF THE LD. CIT (APPEALS), UDAIPUR. 2. THE GROUNDS OF APPEAL RAISED BY THE REVENUE ARE AS FOLLOWS:- ON THE FACTS AND IN THE PRESENT CIRCUMSTANCE S OF THE CASE, THE LD. CIT (APPEALS) HAS ERRED IN :- 1. DELETING ADDITION OF RS.40,667/- MADE ON ACCOUNT OF UN-EXPLAINED CASH CREDIT ON THE BASIS OF DENIAL BY THE CREDITOR; 2 I. T. APPEAL NO. 01 (JODH.) OF 2007. 2. DELETING TRADING ADDITION OF RS.50,000/- MADE BY TH E ASSESSING OFFICER BY INVOKING PROVISIONS OF SECTION 145(3) OF THE I. T. ACT; 3. DELETING ADDITION OF RS.14,47,951/- MADE BY THE ASS ESSING OFFICER ON ACCOUNT OF EXCESS STOCK FOUND WHICH WAS ALSO SURRENDERED BY THE ASSESSEE DURING THE COURSE OF SURVEY UNDER SECTION 133-A AT THE BUSINES S PREMISES OF THE ASSESSEE. 3.1 THE FIRST ISSUE FOR OUR CONSIDERATION RELATES T O DELETING THE ADDITION OF RS.40,667/- MADE ON ACCOUNT OF UNEXPLAINED CASH CREDIT ON THE BASIS OF DENIAL BY THE CREDITOR. DURING THE COURSE OF ASSESSMENT PROCEEDINGS THE ASSESSING OFFICER NOTED THAT THE ASSESSEE HAD SHOWN SUNDRY CREDITORS NAMELY, M/S. KATKA MOTORS, BANSWARA FOR RS.20,224/- AND SHRI P. K. JOY, BANSWARA FOR RS.40,667/-. WHEN VERIFIED FROM THE INCOME-TAX RET URN AS WELL AS THE AUDITED ACCOUNTS FILED FOR AY 2003-04 BY M/S. KATKA MOTORS AND SHRI P. K. JOY AND AS PER INFORMATION CALLED FOR FROM THESE PARTIES UNDER SECTION 133(6) OF THE ACT IT WA S FOUND THAT NO AMOUNT WAS DUE TO THE ASSESSEE. AS PER THE COPY OF ACCOUNT OF SHRI P. K. JOY MAINTAINED IN THE ASSESSEES BOOKS REVEALED THAT THE ASSESSEE HAD SHOWN DEBIT BALANCE OF RS.91,332/- AND SHOWN PAYMENTS RECEIVED FROM P. K. JOY AT RS.18,000/- ON 31 ST MARCH, 2002, RS.35,000/- ON 3/06/2002, RS.14,000/- ON 12/06/2002, RS.18,000/- ON 11/09/2002, RS.19,000/- ON 13/09/2002, RS.18,000/- ON 26/09/2002 AND RS.10,000/- ON 30/09/2002 AND FINALLY SHOWN CRE DIT BALANCE OF RS.40,667/-, BUT THERE WAS NO PROOF OF SUCH PAYMENT RECEIVED BY THE ASSESSEE FROM SHRI P. K. JOY. SHRI P. K. JOY WAS NOT PRODUCED FOR VERIFICATION. THE ASSESSING OFFICER I SSUED LETTER TO SHRI P. K. JOY, WHO VIDE HIS LETTER DATED 16/08/2005 STATED THAT THERE WAS NO BA LANCE DUE. THEREFORE, THEY HAVE NOT SHOWN M/S. SUNIL TIMBER AND FURNITURE SUPPLIERS AS DEBTOR IN ASSESSMENT YEAR 2003-04. SINCE THE CREDITOR HAD DENIED TO HAVE ANY AMOUNT DUE FROM THE ASSESSEE, THE AO ADDED THE AMOUNT OF RS.40,667/- AS INCOME FROM UNDISCLOSED SOURCES. 3.2 BEFORE THE LD. CIT (APPEALS) IT WAS SUBMITTED THAT THE AO WAS REQUESTED TO CALL FOR SHRI P. K. JOY ALONG WITH HIS BOOKS OF ACCOUNTS AND THE SUPPORTING DOCUMENTS TO CLARIFY THE MATTER, BUT NO OPPORTUNITY WAS PROVIDED TO THE ASSESSEE. T HE LD. CIT (A) NOTED THAT THE AO HAD JUST 3 I. T. APPEAL NO. 01 (JODH.) OF 2007. MENTIONED ABOUT THE LETTER DATED 16/08/2005 OF AR O F SHRI P. K. JOY STATING THAT THERE WAS NO BALANCE DUE TO THE ASSESSEE. THE LD. CIT (A), HOWE VER, NOTED THAT ON GOING THROUGH THE ASSESSMENT RECORD HE FOUND THAT THE AR OF SHRI P. K . JOY HAD FURNISHED THE BALANCE SHEET AS ON 31 ST MARCH, 2003 ONLY AND NOT THE COPY OF ACCOUNT OF TH E ASSESSEE IN HIS BOOKS, WHO COULD PROVE THE FACT. THE BALANCE SHEET DID NOT CONTAIN THE LI ST OF CREDITORS. IN VIEW OF THESE FACTS IT HAS BEEN HELD BY THE LD. CIT(A) THAT THE REAL FACTS COULD NO T BE VERIFIED IN THE ABSENCE OF COPY OF ACCOUNT OF THE ASSESSEE IN THE BOOKS OF SHRI P. K. JOY. TH EREFORE, THE AO HAD NO GROUND TO MAKE THE ADDITION OF RS.40,667/-. THE LD. CIT (A) ACCORDING LY DELETED THE ADDITION. 4. BEFORE US, THE LD. SR. DR SUPPORTED THE ORDER OF THE ASSESSING OFFICER WHEREAS THE LD. AR OF THE ASSESSEE RELIED ON THE ORDER OF THE LD. CIT (APPEALS). 5. WE HAVE HEARD BOTH THE PARTIES AND GONE THROUGH THE MATERIAL AVAILABLE ON RECORD. THE ASSESSING OFFICER HAS RECORDED A FINDING OF FACT TH AT AS PER THE BOOKS OF ACCOUNTS OF THE ASSESSEE IN THE ACCOUNT OF SHRI P. K. JOY, THERE WAS OPENING DEBIT BALANCE OF RS.91,322/- AND PAYMENTS WERE RECEIVED FROM SHRI P. K. JOY DURING THE YEAR U NDER CONSIDERATION. ULTIMATELY, THERE WAS CREDIT BALANCE OF RS.40,667/-. AS PER THE LETTER O F THE AUTHORIZED REPRESENTATIVE OF SHRI P. K. JOY, NO BALANCE WAS DUE FROM THE ASSESSEE. THE LD. CIT (A) HAS NOTED THAT THE LD. AR OF SHRI P. K. JOY HAD FURNISHED THE BALANCE SHEET AS ON 31 ST MARCH, 2003 AND HAD NOT FILED COPY OF ACCOUNT OF THE ASSESSEE IN HIS BOOKS OF ACCOUNTS FROM WHICH TH E FACTS COULD BE ASCERTAINED. THE LD. CIT (A) AT ONE HAND RECORDS A FINDING THAT THE REAL FACTS C OULD NOT BE VERIFIED IN THE ABSENCE OF COPY OF ACCOUNT OF THE ASSESSEE IN THE BOOKS OF SHRI P. K. JOY. ON THE OTHER HAND, HE DELETES THE ADDITION OF RS.40,667/- FOUND RECORDED AS CREDIT ENTRY AT TH E END OF THE YEAR. IF THE CONTENTION OF SHRI P. K. JOY IS FOUND TO BE CORRECT, THEN NO AMOUNT WAS D UE FROM THE ASSESSEE AS ON 31 ST MARCH, 2003. HOWEVER, BALANCE OF RS.40,667/- HAS BEEN SHOWN BY T HE ASSESSEE IN THE NAME OF SHRI P. K. JOY. SINCE REAL FACT CANNOT BE ASCERTAINED WHETHER THERE WAS ANY AMOUNT DUE FROM THE ASSESSEE, WE FEEL IT PROPER TO SET ASIDE THE MATTER TO THE FILE OF THE AO WITH THE DIRECTION TO OBTAIN THE BOOKS OF ACCOUNTS OF P. K. JOY FOR THE RELEVANT PERIOD AND E XAMINE WHETHER ANY AMOUNT WAS PAYABLE BY 4 I. T. APPEAL NO. 01 (JODH.) OF 2007. THE ASSESSEE TO P. K. JOY. THE AO WILL SUMMON THE BOOKS OF SHRI P. K. JOY AND VERIFY THE TRUE FACTS AND DECIDE THE ISSUE AFTER AFFORDING THE ASSE SSEE A REASONABLE OPPORTUNITY OF BEING HEARD. 6. THE NEXT ISSUE FOR CONSIDERATION RELATES TO DELE TING THE ADDITION OF RS.50,000/- MADE BY THE ASSESSING OFFICER INVOKING THE PROVISIONS OF SE CTION 145(3) OF THE ACT. THE ASSESSING OFFICER DURING THE COURSE OF ASSESSMENT PROCEEDINGS NOTED T HAT THE ASSESSEE HAD SURRENDERED PROFIT OF RS.3,305/- ON ACCOUNT OF UNDISCLOSED SALES. HE ALS O NOTED THAT THE PURCHASES WERE NOT PROPERLY ACCOUNTED FOR AND HAVE BEEN INFLATED ACCORDING TO T HE SWEET-WILL OF THE ASSESSEE. THE ASSESSEE HAD FAILED TO MAINTAIN ANY RECORD SHOWING DAY TO DA Y STOCK QUANTITY-WISE AND QUALITY-WISE AS A RESULT IT WAS DIFFICULT TO VERIFY THE MARGIN OF PRO FIT WITH REFERENCE TO COST PRICE AND CORRESPONDING SALE PRICE. THE AO IN VIEW OF THE ABOVE FACTS REJE CTED THE BOOKS OF ACCOUNTS AND ADDED THE AMOUNT OF RS.50,000/- TOWARDS TRADING ADDITION. 7. BEFORE THE LD. CIT (APPEALS) IT WAS SUBMITTED TH AT THE AO HAS NOT POINTED OUT ANY DEFECT IN EXPLANATION FURNISHED BY THE ASSESSEE. IN RESPE CT OF TRANSPORTATION CHARGES, THE ASSESSEE SUBMITTED THAT THE SAME WERE INCLUDED IN THE PURCHA SE ACCOUNT ITSELF. THE ASSESSEE FURNISHED COPY OF CASH BOOK AND COPY OF LEDGER FOR THE RELEVA NT PERIOD. THE LD. CIT (A) NOTED THAT THE AO HAD ALREADY MADE DISALLOWANCE ON ACCOUNT OF DIFFERE NCE IN M/S. NAPTUNE FOAMS, UDAIPUR AND M/S. KATKA MOTORS, BANSWARA. THE ADDITION ON THE S AME GROUND CANNOT BE MADE AGAIN. MOREOVER, IN THIS CASE THERE WAS SURVEY UNDER SECTI ON 133-A OF THE ACT AND THE DIFFERENCE IN THE STOCK WAS FOUND. NO OTHER DISCREPANCIES IN ANY OF THE AREAS SUCH AS CASH BOOK, CASH, LEDGER, PURCHASE AND SALE OR LOOSE PAPERS ETC. FOUND. THER EFORE, PROVISIONS OF SECTION 145(3) OF THE ACT COULD NOT BE APPLIED. THE PURPOSE OF SURVEY WAS TO FIND THE FACTS THROUGH PHYSICAL VERIFICATION, BUT IN THE CASE OF THE ASSESSEE NOTHING WAS FOUND. THEREFORE, NO TRADING ADDITION COULD BE MADE. 8. BEFORE US THE LD. SR. DR SUPPORTED THE ORDER OF THE ASSESSING OFFICER. ON THE OTHER HAND, THE LD. AR OF THE ASSESSEE SUPPORTED THE ORDER OF T HE LD. CIT (APPEALS). 5 I. T. APPEAL NO. 01 (JODH.) OF 2007. 9. WE HAVE HEARD BOTH THE PARTIES AND GONE THROUGH THE MATERIAL AVAILABLE ON RECORD. THE ASSESSEE HAD SURRENDERED THE PROFIT ON ACCOUNT OF U NDISCLOSED SALES. THE ASSESSING OFFICER HAD NOT POINTED OUT ANY BILL WHEREIN THE PURCHASES HAVE BEEN INFLATED BY THE ASSESSEE. NO DEFECTS IN THE BOOKS OF ACCOUNTS AS POINTED BY THE LD. CIT (AP PEALS) HAVE BEEN POINTED OUT. IN THE ABSENCE OF ANY DISCREPANCY POINTED OUT WHICH WILL MATERIALL Y AFFECT THE ESTIMATION OF PROFIT, THE PROVISIONS OF SECTION 145(3) OF THE ACT CANNOT BE A PPLIED. THEREFORE, THE LD. CIT (APPEALS) IN OUR CONSIDERED OPINION HAS RIGHTLY DELETED THE ADDI TION. 10. THE LAST ISSUE FOR CONSIDERATION RELATES TO DEL ETING THE ADDITION OF RS.14,47,951/- MADE BY THE ASSESSING OFFICER ON ACCOUNT OF EXCESS STOCK FO UND WHICH WAS SURRENDERED BY THE ASSESSEE DURING THE COURSE OF 133-A PROCEEDINGS. THE FACTS OF THE CASE RELATING TO THIS GROUND ARE THAT DURING THE COURSE OF SURVEY THE TOTAL STOCK OF RS.3 6,34,189/- WAS FOUND AS AGAINST STOCK AS PER BOOKS OF ACCOUNTS WAS AT RS.19,64,139/-. THUS, THE RE WAS AN EXCESS STOCK OF RS.16,70,050/-. THE ASSESSEE SURRENDERED THE AMOUNT OF RS.16,70,050 /- AT THE TIME OF SURVEY AS HIS UNDISCLOSED INCOME. THE ASSESSEE PAID CHEQUES IN RESPECT OF TA X PAYABLE ON THE AMOUNT SURRENDERED BY THE ASSESSEE. SUBSEQUENTLY, IN THE RETURN OF INCOME FI LED THE ASSESSEE HAD RETRACTED THE SURRENDER ON THE GROUNDS THAT THE SURVEY PARTY HAD ARBITRARILY VALUED THE STOCK. IT WAS ALSO STATED THAT THE SURVEY TEAM HAD INCLUDED THE VALUE OF STOCK BELONGI NG TO ANOTHER CONCERN, M/S. TIRUPATI BALAJI TIMBER & FURNITURE BELONGING TO HIS SON AS PROPRIET OR. ACCORDING TO THE VALUATION MADE BY THE ASSESSEE HIMSELF AFTER THE SURVEY, THE EXCESS STOCK WAS AT RS.12,782/-. THIS VALUATION MADE WAS COMMUNICATED TO THE DEPARTMENT BY THE ASSESSEE JUST A FORTNIGHT AFTER THE DATE OF SURVEY. THIS CONTENTION OF THE ASSESSEE WAS REJECTED BY THE AO O N THE GROUND THAT IN THE STATEMENT SHRI SANWARMAL SHARMA HAD DENIED THE AVAILABILITY OF THE STOCK OF ANY OTHER PERSON. IT WAS ALSO STATED THAT HIS FOUR SONS WERE STUDYING AS ON THE DATE OF SURVEY. HE NEVER DISCLOSED TO THE SURVEY PARTY THAT THE STOCK INCLUDED THE STOCK OF BUSINESS CONCE RN OF HIS SON. THE ASSESSEE, THUS, HIDE THE VITAL INFORMATION FROM THE SURVEY TEAM ABOUT THE BUSINESS OF HIS SON. THE SHOP IN WHICH SONS BUSINESS WAS BEING CARRIED ON BELONGED TO THE ASSES SEE, WHICH WAS STATED TO HAVE BEEN TAKEN ON RENT AT THE RATE OF RS.1,000/- PER MONTH BESIDES GI VING A SUM OF RS. ONE LAKH AS ADVANCE DEPOSIT. THE AMOUNT OF RS. ONE LAKH HAS BEEN SHOWN AS BUSINE SS DEBTOR OF THE ASSESSEE IN HIS BALANCE SHEET. THE AO, THEREFORE, CAME TO THE CONCLUSION T HAT IT WAS A CONCOCTED STORY. THE AO REFERRED 6 I. T. APPEAL NO. 01 (JODH.) OF 2007. TO THE STATEMENT OF THE ASSESSEE TAKEN AT THE TIME OF SURVEY WHEREIN HE HAS STATED TO HAVE TAKEN SHOW-ROOM ON RENT OF RS.1,000/- PER MONTH FOR WHICH DEPOSIT OF RS. ONE LAKH WAS MADE TO DR. DILIP. THE ASSESSEE HAD NOT TAKEN ANY ARGUMENT AT THE TIME OF SURVEY THAT CERTAIN STOCK BELONGED TO THE BUSINESS CONCERN OF HIS SON. SINCE NO SUCH ARGUMENT WAS TAKEN BY THE ASSESSEE BEFORE THE SURVEY TEAM, THE SUBMISSIONS MADE AT THE TIME OF AS SESSMENT WERE TREATED AS CONCOCTED ONE. THE AO FURTHER NOTED THAT AT THE TIME OF SURVEY, A LIST OF GUESTS FOR INAUGURATION FOR M/S. TIRUPATI BALAJI TIMBER & FURNITURE WAS FOUND. HOWEVER, ON V ERIFICATION IT WAS FOUND THAT THERE WERE NO DETAILS OF INAUGURATION OR THE DATE OF INAUGURATION OF M/S. TIRUPATI BALAJI TIMBER & FURNITURE. THEREFORE, SUCH ARGUMENTS MADE BY THE ASSESSEE WERE NOT BASED ON REAL FACTS. THE AO, THEREFORE, ADDED THE AMOUNT OF RS.16,70,050/-. 11. BEFORE THE LD. CIT (APPEALS) IT WAS SUBMITTED T HAT THE SURRENDER WAS MADE ON ACCOUNT OF PRESSURE OF SURVEY AS WELL AS UNDUE INFLUENCE OF TH E SURVEY TEAM. THE SURVEY TEAM DID NOT PROVIDE COPY OF THE INVENTORY TAKEN BY THEM DURING THE COURSE OF SURVEY. THE ASSESSEE REQUESTED FOR COPY OF INVENTORY VIDE LETTER DATED 11/02/2002, BUT THE AO DID NOT RESPOND TO THE ASSESSEES LETTER. THE COPY OF INVENTORY WAS PROVIDED IN THE MONTH OF JANUARY, 2003. IT WAS ALSO SUBMITTED THAT THE SURVEY TEAM HAD INCLUDED THE STOCK OF M/S . TIRUPATI BALAJI TIMBER & FURNITURE, DAHOD ROAD, BANSWARA, A PROPRIETARY CONCERN OF HIS SON, S HRI SUNIL SHARMA. THE CONCERN WAS INAUGURATED ON 15/10/2002. THE STOCK OF THIS CONCE RN AS ON THE DATE OF SURVEY WAS AT RS.1,78,796/-. THE BILLS FOR PURCHASE OF WOOD AND PLYWOOD WERE AVAILABLE AT THE TIME OF SURVEY. THE COPY OF REGISTRATION CERTIFICATE FROM ASSTT. CO MMISSIONER, COMMERCIAL TAXES, CIRCLE, BANSWARA DATED 15/11/2002 EFFECTIVE FROM 1 ST APRIL, 2002 HAD BEEN FURNISHED. IT WAS ALSO SUBMITTED THAT AT PAGE NO. 3 AND SERIAL NO. 77 OF I NVENTORY OF SHOW-ROOM AT DAHOD ROAD, THE STOCK OF RS.14,47,951/- HAS BEEN INCLUDED, BUT NO L IST OF THIS STOCK WAS GIVEN TO THE ASSESSEE AT THE TIME OF SURVEY AND EVEN LATER ON ALSO TILL THE COMPLETION OF THE ASSESSMENT PROCEEDINGS. THIS FACT IS VERY WELL VERIFIABLE FROM THE MANNER IN WHI CH INVENTORY WAS PREPARED BY THE SURVEY TEAM. THE AO HAS ALSO NOT REPLIED TO THE ASSESSEES OBJEC TION THAT THERE WAS NO GO-DOWN OR AARA MACHINE AT DAHOD ROAD. THE ASSESSEE HAD SHOW ROOM AND AARA MACHINE AT RATLAM ROAD ONLY. THE COPY OF SALE BILL OF M/S. SUNIL TIMBER & FURNIT URE TO M/S. TIRUPATI BALAJI TIMBER & FURNITURE WAS DULY SIGNED BY SHRI P. L. VERMA, THE INSPECTOR AT THE TIME OF SURVEY. THESE ENTRIES 7 I. T. APPEAL NO. 01 (JODH.) OF 2007. WERE ALSO REFLECTED AT PAGE NO. 192 OF THE CASH BOO K OF THE ASSESSEE, WHICH WAS ALSO SIGNED BY SHRI P. L. VERMA, THE INSPECTOR. THE CLOSING BALAN CE OF M/S. TIRUPATI BALAJI TIMBER & FURNITURE OF RS.95,472/- WAS SHOWN AS SUNDRY DEBTOR IN THE BA LANCE SHEET OF THE ASSESSEE. THE LD. AR OF THE ASSESSEE ALSO FURNISHED COPY OF INVITATION CARD DISTRIBUTED IN CONNECTION WITH THE OPENING OF THE SHOW ROOM ON 15/10/2002. SHRI SUNIL SHARMA, PR OPRIETOR OF M/S. TIRUPATI BALAJI TIMBER & FURNITURE HAS FILED HIS RETURN OF INCOME FOR ASSESS MENT YEAR 2003-04 ON 29 TH APRIL, 2004 IN THE OFFICE OF THE INCOME TAX OFFICER, BANSWARA. THE LD . CIT (APPEALS) ON THE BASIS OF THE ABOVE SUBMISSIONS DELETED THE ADDITION BY OBSERVING AS UN DER:- 5.3 DECISION : I HAVE CONSIDERED THE FACTS AND SU BMISSIONS OF THE CASE AND FOUND THAT : (I) THE APPELLANT WAS RUNNING A SHOW ROOM AND AARA MACH INE AT RATLAM ROAD, BANSWARA. HIS SON SHRI SUNIL SHARMA WAS RUNNING PR OPRIETORSHIP CONCERN M/S. TIRUPATI BALAJI TIMBER & FURNITURE AT HIS SHOW ROOM AT DAHOD ROAD, BANSWARA. THE FIRST PURCHASE BY M/S. TIRUPATI BALAJI TIMBER & FURNITURE HAS BEEN MADE ON 20/09/2002 FROM M/S. J. K. SALES CORPORATION, JAIPU R. THE INAUGTATION HAD BEEN DONE ON 15/10/2002 AFTER THE DATE OF SURVEY I.E. 10 /10/2002. THE SALES TAX REGISTRATION OF CONCERN HAS BEEN OBTAINED ON 17/11/ 2002 EFFECTIVE FROM 1 ST APRIL, 2002. THE PARTYS BILLS OF M/S. TIRUPATI BALAJI TI MBER & FURNITURE FROM M/S. J. K. SALES CORPORATION, JAIPUR AND SUNIL TIMBER FURNI TURE WERE AVAILABLE AT THE TIME OF SURVEY AND THE SAME WERE SIGNED BY THE INSP ECTOR, SHRI P. L. VERMA. THE SALES WERE SHOWN IN THE CASH BOOK OF THE APPELLANT. M/S. TIRUPATI BALAJI TIMBER & FUHRNITURE HAS HBEEN SHOWN AS DEBTOR ALSO FOR RS. 95,472/- IN THE BALANCE SHEET OF THE APPELLANT. AS PER SALES TAX ACT, 1994 THE R EGISTRATION COULD BE OBTAINED AT ANY TIME WITHIN ONE YEAR OF THE START OF THE BUSINE SS ACTIVITY, WHICH M/S. TIRUPATI BALAJI TIMBER & FURNITURE HAS FOLLOWED AND COMPLIED . THE INVENTORY OF STOCK OF RS. RS.1,78,796/- AT SHOW ROOM, DAHOD ROAD, BANSWAR A, BELONGS TO M/S. TIRUPATI BALAJI TIMBER & FURNITURE AND NOT TO THE APPELLANT; (II) AS FAR AS THE STOCK OF RS.14,47,951/- WAS CONCERNED THERE WAS NO INVENTORY AVAILABLE ON RECORD. SURVEY FOLDER AND ASSESSMENT FOLDER FOR THE APPELLANT FOR 8 I. T. APPEAL NO. 01 (JODH.) OF 2007. CONSIDERATION WERE CALLED FOR BY THE ITO, BANSWARA TO FIND OUT THE FACT. I HAVE GONE THROUGH THE ABOVE TWO FOLDERS AND FOUND THAT T HERE IS NO INVENTORY OF RS.14,47,951/- AVAILABLE IN THE SURVEY FOLDER OR IN ASSESSMENT FOLDER. IT IS JUST WRITTEN THAT AT SERIAL NO. 77; PAGE NO. 3 OF INVENT ORY AT SHOW ROOM, DAHOD ROAD, BANSWARA, THAT STOCK OF RS.14,47,951/- WAS FOUND. FURTHER IT IS ALSO THE FACT THAT THE APPELLANT HAD REQUESTED FOR THE COPY OF THE INV ENTORY OF STOCK OF RS.14,47,951/- ON 17/10/2002 AND AT THE TIME OF ASS ESSMENT PROCEEDINGS ALSO, BUT THE AO NEITHER PROVIDED THE COPY OF THE INVENTORY N OR REPLIED TO THE REQUEST OF THE APPELLANT. THEREFORE, THE FACT OF BEING NO INVENTO RY OF RS.14,47,951/- IS ESTABLISHED. THE STOCK OF RS.14,47,951/- HAS BEEN INCLUDED IN THE TOTAL STOCK WITHOUT ANY BASIS AND ANY MATERIAL AVAILABLE AT THE TIME OF SURVEY AND FOR THE PURPOSE OF FORCING THE APPELLANT TO SURRENDER THE I NCOME TO THAT EXTENT AND PAY THE TAX. THEREFORE, ADDITION MADE BY THE ASSESSING OFFICER ON ACCOUNT OF UNDISCLOSED STOCK OF RS.14,47,951/- IS DELETED AND THE APPEAL IS ALLOWED. 12. BEFORE US THE LD. SR. DR SUBMITTED THAT THE ASS ESSEE IN HIS STATEMENT RECORDED AT THE TIME OF SURVEY HAD ACCEPTED THE EXCESS STOCK. THEREFORE , HE CANNOT GO BACK ON THE STATEMENT AND AMOUNT SURRENDERED BY HIM AT THE TIME OF SURVEY. H E PLACED RELIANCE ON THE DECISION OF THE ITAT IN THE CASE OF ACIT VS. SHRI DULI CHAND JAIN I N I.T.A. NO. 278 /JU/2002 DATED 23 RD JUNE, 2006. ON THE OTHER HAND, THE LD. AR OF THE ASSESSE E REITERATED THE SIMILAR ARGUMENTS AS MADE BEFORE LOWER AUTHORITIES. 13. WE HAVE HEARD BOTH THE PARTIES AND GONE THROUGH THE STOCK INVENTORY MADE AT THE TIME OF SURVEY, STATEMENT OF SHRI SANWARMAL SHARMA AND OTHE R MATERIAL ON RECORD. IN THIS CASE SURVEY UNDER SECTION 133A WAS CONDUCTED AT THE BUSINESS PR EMISES OF M/S. SUNIL TIMBER & SUPPLIERS, PROP. SHRI SANWARMAL SHARMA, THE ASSESSEE. IN HIS STATEMENT RECORDED ON OATH ON 10/10/2002 IN REPLY TO QUESTION NO.8 GIVING DETAILS OF MOVABLE AN D IMMOVABLE PROPERTIES IN HIS NAME AND FAMILY MEMBERS STATED THAT HE HAD AN ANCESTRAL HOUS E EXCEPT THAT NONE OF THE FAMILY MEMBERS HAD ANY HOUSE OR LAND. THE SHOP WAS ALSO ANCESTRAL ONE. HE ALSO STATED THAT HE HAD TAKEN A SHOW 9 I. T. APPEAL NO. 01 (JODH.) OF 2007. ROOM ABOUT A MONTH BACK AT DAHOD ROAD. IN RESPONSE TO QUESTION NO. 12, ASKING THE NAMES OF FAMILY MEMBERS AND THEIR BUSINESS/PROFESSION, IT WA S STATED BY THE ASSESSEE THAT HIS FAMILY CONSISTED OF SELF AND HIS WIFE AND FOUR SONS. TWO SONS WERE STUDYING IN COLLEGE AND TWO IN SCHOOL. IN RESPONSE TO QUESTION NO. 18 GIVING DETA ILS OF PERSONS WORKING IN SHOP, IT WAS STATED THAT HIS SONS, ANIL AND SUNIL ALSO WORKED IN THE SH OP TO WHOM HE WAS PAYING RS.1,500/-. AS REGARDS THE WORK DONE AT AARA MACHINE IT WAS STATED THAT OTHER THAN HIS SHOP WORK, A SMALL OUTSIDE WORK WAS ALSO CARRIED OUT. IN RESPONSE TO QUESTION NO. 22 IT WAS STATED THAT HE HAD TAKEN SHOW ROOM AT DAHOD ROAD FROM DR. DILIP, SON OF SHRI BANSI LAL, AT THE RATE OF RS.1,000/- PER MONTH AND HAS DEPOSITED RS. ONE LAKH. AS REGARDS T HE DIFFERENCE IN STOCK OF RS.16,70,050/-, THE ASSESSEE EXPRESSED HIS INABILITY TO EXPLAIN THE EXC ESS STOCK. HOWEVER, HE HAD SURRENDERED THE AMOUNT TO BUY PEACE OF MIND. THE SURVEY TEAM AGAIN ASKED QUESTION NO. 25 IN RESPECT OF EXCESS STOCK. THE ASSESSEE AGAIN EXPRESSED ITS INABILITY TO EXPLAIN AND SURRENDERED THE AMOUNT OF RS.16,70,050/- TO BUY PEACE. THE ASSESSEE HAD PAID FOUR CHEQUES TOWARDS PAYMENT OF TAX OF RS.5,00,000/- BY WAY OF ADVANCE TAX. IN THE STATEM ENT RECORDED DURING THE COURSE OF SURVEY NOWHERE IT WAS STATED BY THE ASSESSEE THAT THE SHOW ROOM AT DAHOD ROAD BELONGED TO HIS SON. WE HAVE ALSO GONE THROUGH THE STOCK INVENTORY PREPA RED AT SHOW ROOM AT DAHOD ROAD, BANSWARA AND AT RATLAM ROAD, BANSWARA. THE DETAILS OF INVEN TORY MADE AT DAHOD ROAD, BANSWARA, GIVES THE DETAILS OF PLYWOOD STOCK, SAGWAAN WOOD CUT-PIEC ES OF DIFFERENT SIZES, LEGS OF CENTRAL TABLE, DIWAN, BED ETC. IT ALSO CONTAINED ONE SHOW CASE WO ODEN, TWO CENTRAL TABLES. AT SERIAL NO. 77, THE STOCK AVAILABLE AT AARA MACHINE/GO-DOWN WHICH C ONSISTED OF WOODEN SLABS OF SAAL, SEESHAM, TEAK, BABOOL, VALUED AT RS.14,47,951/-. THERE IS N O MENTION OF ANY SEPARATE INVENTORY FOR THE STOCK OF RS.14,47,951/- FOUND AT AARA MACHINE WHICH IS INSTALLED AT RATLAM ROAD/GO-DOWN. THIS STOCK INVENTORY HAS BEEN SIGNED BY THE ASSESSEE. IN THE STATEMENT RECORDED ON 10/10/2002 THE ASSESSEE HAD NOWHERE STATED THAT THE SHOW ROOM TAKE N ON RENT FROM DR. DILIP WAS TAKEN FOR THE PURPOSE OF BUSINESS TO BE CARRIED ON BY HIS SON, SH RI SUNIL. THE ASSESSEE IN THE STATEMENT HAS NOWHERE STATED THAT HIS SON HAD PURCHASED GOODS IN THE NAME OF M/S. TIRUPATI BALAJI TIMBER & FURNITURE. THE ASSESSEE HAD PLACED RELIANCE ON THE FACT THAT M/S. TIRUPATI BALAJI TIMBER & FURNITURE HAD PURCHASED TIMBER PRIOR TO THE DATE OF SURVEY IN THE NAME OF M/S. TIRUPATI BALAJI TIMBER & FURNITURE, DAHOD ROAD, BANSWARA. WE FIND THAT SUNIL TIMBER & FURNITURE SUPPLIER, PROPRIETORSHIP CONCERN OF THE ASSESSEE HAD ISSUED B ILL NO. 315 FOR RS.30,197/- AND ANOTHER BILL NO 314 DATED 7/10/2002 FOR RS.23,898/-. THESE BILL S HAVE BEEN ISSUED BY THE ASSESSEE HIMSELF. 10 I. T. APPEAL NO. 01 (JODH.) OF 2007. THE ASSESSEE HAD FILED COPY OF COMMERCIAL SALES TAX REGISTRATION DATED 15/11/2002 IN THE NAME OF M/S. TIRUPATI BALAJI TIMBER & FURNITURE. AS PER REGISTRATION CERTIFICATE IN THE NAME OF SUNIL TIMBER & FURNITURE SUPPLIERS, THE GO-DOWN IS SITUAT ED AT RATLAM ROAD, BANSWARA. THE INVITATION CARD FOR INAUGURATION OF M/S. TIRUPATI B ALAJI TIMBER & FURNITURE ON 15/10/2002 HAS TAKEN PLACE AFTER THE DATE OF SURVEY. IF THE CONTE NTION OF THE ASSESSEE WAS CORRECT THAT SHRI SUNIL SHARMA WAS PROPRIETOR OF M/S. TIRUPATI BALAJI TIMBE R & FURNITURE, THE ASSESSEE WOULD HAVE DEFINITELY STATED IN HIS STATEMENT RECORDED ON 10/1 0/2002 WHEREIN HE HAD SPECIFICALLY STATED THAT TWO OF HIS SONS WERE STUDYING IN COLLEGE AND THE OT HER TWO IN SCHOOL. ANOTHER IMPORTANT POINT TO BE NOTED IS THAT THE ASSESSEE HAD GO-DOWN AT RATLAM ROAD WHERE AARA MACHINE WAS ALSO INSTALLED. DURING THE COURSE OF SURVEY, THE SURVEY PARTY HAS INCLUDED THE CLOSING STOCK FOUND AT SHOW ROOM OF M/S. SUNIL TIMBERS & FURNITURE SUPPLIE RS, RATLAM ROAD, IN THE STOCK INVENTORY OF SHOW ROOM AT DAHOD ROAD, AND NO SEPARATE STOCK WAS TAKEN FOR THE STOCK LYING AT GODOWN AND AARA MACHINE AT RATLAM ROAD. THEREFORE, THE STOCK OF RS.14,47,951/- SHOWN AT SERIAL NO. 77 ON PAGE 3 AT THE SECOND SHOW ROOM AT DAHOD ROAD IS IN RESPECT OF WOODEN SLABS OF SAAL, SEESHAM, SAGWAAN AND BABOOL LYING AT AARA MACHINE/GODOWN AT RATLAM RD, THE VALUE THEREOF WAS ESTIMATED AT RS.14,47,951/-. AS MENTIONED ABOVE TH AT STATEMENT CONTAINING THE STOCK HAS BEEN SIGNED BY THE ASSESSEE HIMSELF AND HAS NOT RAISED A NY OBJECTION ABOUT THE VALUATION DONE BY THE SURVEY TEAM AT THE TIME OF SURVEY. AGAINST SERIAL N O. 77 OF THE INVENTORY, IT IS NOT MENTIONED THAT A SEPARATE INVENTORY WAS MADE, COPY THEREOF WAS NOT SUPPLIED TO THE ASSESSEE. WHEN NO SEPARATE INVENTORY WAS MADE, QUESTION OF SUPPLYING THE SAME WOULD NOT ARISE. THEREFORE, THE CONTENTION OF THE ASSESSEE THAT STOCK INVENTORY IN RESPECT OF STOCK VALUING RS. 14,47,951/- WAS NOT SUPPLIED IS NOTHING, BUT AN AFTER-THOUGHT. THE ASSESSEE HAD HIMSELF HAD ISSUED SOME OF THE VOUCHERS TO SHOW THAT THE BUSINESS OF M/S. TIRUPATI BALAJI TIMB ER & FURNITURE HAD STARTED. WHEN INAUGURATION WAS DUE ON 15/10/2010, IT IS NOT UNDER STOOD AS TO HOW THE BUSINESS WAS SET UP PRIOR TO INAUGURATION PARTICULARLY IN VIEW OF THE FACT TH AT NO SUCH INDICATION WAS GIVEN BY THE ASSESSEE AT THE TIME OF SURVEY TO THIS EFFECT. THE LD. CIT ( A) HAS DELETED THE ADDITION MERELY ON THE GROUND THAT THE STOCK INVENTORY IN RESPECT OF SAAL, SEESHA M, SAGWAAN AND BABOOL WOODEN SLABS FOUND AT AARA MACHINE/GO-DOWN WAS NOT SUPPLIED. THIS IN OUR CONSIDERED OPINION IS NOT BASED ON FACTS ON RECORD. THEREFORE, IN OUR CONSIDERED OPINION, THE RE-TRACTION MADE BY THE ASSESSEE IN RESPECT OF EXCESS STOCK IS NOTHING, BUT AN AFTER-THOUGHT. WE, THEREFORE, 11 I. T. APPEAL NO. 01 (JODH.) OF 2007. SET ASIDE THE ORDER OF THE LD. CIT (APPEALS) AND RE STORE THE ORDER OF THE ASSESSING OFFICER ON THIS ISSUE. 14. IN THE RESULT, THE APPEAL FILED BY THE REVENUE IS PARTLY ALLOWED, FOR STATISTICAL PURPOSES. THE ORDER PRONOUNCED IN THE OPEN COURT ON : 26 TH AUGUST, 2011. SD/- SD/- [ RAJPAL YADAV ] [ K. D. RANJAN ] JUDICIAL MEMBER ACCOUNTANT MEMBER AT NEW DELHI . DATED : 26 TH AUGUST, 2011. * MEHTA * COPY OF THE ORDER FORWARDED TO : - 1. APPELLANT. 2. RESPONDENT. 3. CIT, 4. CIT (APPEALS), 5. DR, ITAT, NEW DELHI. TRUE COPY. BY ORDER. ASSISTANT REGISTRAR, ITAT.