ACIT, New Delhi V. Sh. Mittal Hardware Store, New Delhi

ITA 1008/DEL/2012

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 90890 (ITAT-DELHI)
• Duration Of Justice: 3 year(s) 1 month(s) 1 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 01-04-2015
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: E
• Next Hearing Date: 11-03-2015
• Assessment Year: 2008-2009
• Appeal Filed On: 29-02-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: P DAM KANUNJHA
• Assessee Lawyers: DR ANTHWAL
• Keywords: Bad and doubtful debts; Retraction
• Section: 133A

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL IN THE INCOME TAX APPELLATE TRIBUNAL IN THE INCOME TAX APPELLATE TRIBUNAL IN THE INCOME TAX APPELLATE TRIBUNAL DELHI DELHI DELHI DELHI BENCH BENCH BENCH BENCH E EE E : NEW DELHI : NEW DELHI : NEW DELHI : NEW DELHI BEFORE SHRI G.C. GUPTA BEFORE SHRI G.C. GUPTA BEFORE SHRI G.C. GUPTA BEFORE SHRI G.C. GUPTA, VICE , VICE , VICE , VICE PRESIDENT AND PRESIDENT AND PRESIDENT AND PRESIDENT AND SHRI SHRI SHRI SHRI T.S. KAPOOR T.S. KAPOOR T.S. KAPOOR T.S. KAPOOR, , , , ACCOUNTANT ACCOUNTANT ACCOUNTANT ACCOUNTANT MEMBER MEMBER MEMBER MEMBER ITA NO ITA NO ITA NO ITA NO. .. .1008/DEL/2012 1008/DEL/2012 1008/DEL/2012 1008/DEL/2012 ASSESSMENT YEAR ASSESSMENT YEAR ASSESSMENT YEAR ASSESSMENT YEAR : : : : 2008 2008 2008 2008- -- -09 0909 09 ASSISTANT COMMISSIONER OF ASSISTANT COMMISSIONER OF ASSISTANT COMMISSIONER OF ASSISTANT COMMISSIONER OF INCOME TAX, INCOME TAX, INCOME TAX, INCOME TAX, CIRCLE CIRCLE CIRCLE CIRCLE- -- -32(1), 32(1), 32(1), 32(1), NEW D NEW D NEW D NEW DELHI. ELHI. ELHI. ELHI. VS. VS. VS. VS. M/S MITTAL HARDWARE STORE, M/S MITTAL HARDWARE STORE, M/S MITTAL HARDWARE STORE, M/S MITTAL HARDWARE STORE, D DD D- -- -8/1, GURUDWARA ROAD, 8/1, GURUDWARA ROAD, 8/1, GURUDWARA ROAD, 8/1, GURUDWARA ROAD, KOTLA MUBARAKPUR, KOTLA MUBARAKPUR, KOTLA MUBARAKPUR, KOTLA MUBARAKPUR, NEW DELHI. NEW DELHI. NEW DELHI. NEW DELHI. PAN : PAN : PAN : PAN : AAAFM7744B. AAAFM7744B. AAAFM7744B. AAAFM7744B. (RESPONDENT) APPELLANT BY : SHRI P. DAM KANUNJHA, SR.DR. RESPONDENT BY : SHRI D.R. ANTHWAL, ADVOCATE. DATE OF HEARING : 11.03.2015 11.03.2015 11.03.2015 11.03.2015 DATE OF PRONOUNCEMENT : 01.04.2015 01.04.2015 01.04.2015 01.04.2015 ORDER ORDER ORDER ORDER PER G.C. GUPTA PER G.C. GUPTA PER G.C. GUPTA PER G.C. GUPTA, VP , VP , VP , VP : :: : THIS APPEAL BY THE REVENUE FOR THE ASSESSMENT YEAR 2008-09 IS DIRECTED AGAINST THE ORDER OF LEARNED CIT(A)-XXVI, NEW DELHI DATED 22 ND DECEMBER, 2011. 2. GROUND NOS.1 TO 3 OF THE REVENUES APPEAL ARE AS UNDER:- 1. WHETHER LD.CIT(A) WAS JUSTIFIED IN DELETING ADD ITION OF RS.27,86,788/- ON A/C OF EXCESS STOCK WHEN THE ASSESSEE HAD HIMSELF ACCEPTED THE UNDISCLOSED INCOM E IN THE STATEMENT ON OATH RECORDED DURING THE COURSE OF SURVEY OPERATION. 2. WHETHER THE LD.CIT(A) WAS JUSTIFIED IN DELETING ADDITION OF RS.27,86,788/- ON A/C OF EXCESS STOCK W HEN IT WAS ADMITTED BY THE PARTNER OF THE FIRM THAT GOO DS WERE PURCHASED FROM THE VARIOUS PARTIES MAINLY SITUATED IN CHAWRI BAZAAR, DELHI. HOWEVER, TO JUST IFY ITA-1008/DEL/2012 2 THE CLAIM OF REBATE/DISCOUNT AVAILED ON THE PURCHAS E PRICE, ASSESSEE COULD NOT SUBMIT EVEN A SINGLE BILL FROM ANY OF THE PARTIES LOCATED IN CHAWRI BAZAAR RATHER ALL THE PARTIES WERE LOCATED IN THE VICINITY OF THE FIR M. 3. WHETHER LD.CIT(A) WAS JUSTIFIED IN DELETING ADDI TION OF RS.27,86,788/- WHEN BILLS WERE NOT ENTERED IN RE GULAR BOOKS OF A/C TILL THE DATE OF SURVEY AND THE ASSESS EE HAD BEEN DOING BUSINESS OUT OF THE BOOKS FROM WHEREIN UNACCOUNTED CASH AS FOUND DURING THE SURVEY WAS GENERATED AND THIS UNACCOUNTED CASH HAS BEEN ACCEPTED BY THE ASSESSEE FIRM AS ITS ADDITIONAL SOU RCE OF INCOME WHICH HAD ALSO BEEN DULY REFLECTED IN THE RETURN OF INCOME FOR AY 2008-09. 3. LEARNED DR REFERRED TO THE RELEVANT PORTION OF T HE ASSESSMENT ORDER IN SUPPORT OF THE CASE OF THE REVENUE. HE SU BMITTED THAT THE ASSESSEE HIMSELF HAS SURRENDERED THE AMOUNT OF ADDI TION MADE BY THE ASSESSING OFFICER ON ACCOUNT OF EXCESS STOCK FOUND AT THE TIME OF SURVEY UNDER SECTION 133A OF THE ACT. HE SUBMITTED THAT THERE WAS NO VALID REASON TO RETRACT THE SAID SURRENDER MADE BY THE ASSESSEE. HE RELIED ON THE ORDER OF THE ASSESSING OFFICER. 4. LEARNED COUNSEL FOR THE ASSESSEE, ON THE OTHER H AND, SUBMITTED THAT THE RETRACTION WAS MADE WITHIN A VERY SHORT PE RIOD OF TEN DAYS FROM THE SO-CALLED SURRENDER MADE BY THE ASSESSEE. HE SUBMITTED THAT, IN FACT, THE DIFFERENCE IN STOCK WAS WORKED O UT BY THE DEPARTMENT AT THE TIME OF SURVEY ON THE BASIS OF MRP OF THE GO ODS. THE LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED THAT IT HAS AVAI LED 30% TO 50% REBATE ON PURCHASE PRICE OF THE COMPANY AND, THEREF ORE, THE MRP VALUE SHOULD HAVE BEEN REDUCED BY THE AMOUNT OF REB ATE FOR ARRIVING AT THE VALUE OF THE CLOSING STOCK FOUND AT THE TIME OF SURVEY. THE PURCHASES AND SALES WERE FULLY VOUCHED AND WITH REG ARD TO DISPUTED PURCHASES, THEY WERE MADE AGAINST C FORM AND ADVA NCE PAYMENTS WERE MADE BY CHEQUES AND FINAL PAYMENT WAS ALSO MAD E BY CHEQUE. HE RELIED ON THE ORDER OF THE CIT(A). ITA-1008/DEL/2012 3 5. WE HAVE CONSIDERED THE SUBMISSIONS OF BOTH THE S IDES AND PERUSED THE ORDER OF THE ASSESSING OFFICER AND THE CIT(A). WE FIND THAT IN THIS CASE, THE DIFFERENCE IN THE VALUE OF CLOSIN G STOCK AT THE TIME OF SEARCH WAS DUE TO THE FACT THAT THE VALUE BY THE SE ARCH PARTY WAS TAKEN ON THE BASIS OF MRP OF THE GOODS. THE SUBMIS SION OF THE ASSESSEE, THAT IT HAS AVAILED 30% TO 50% REBATE ON THE PURCHASE PRICE OF THE COMPANY, COULD NOT BE CONTROVERTED ON BEHALF OF THE REVENUE. WITH REGARD TO THE DISPUTED PURCHASES, THE CIT(A) H AS RECORDED A FINDING THAT THESE WERE MADE AGAINST C FORM AND A DVANCE PAYMENTS WERE MADE BY CHEQUES AND FINAL PAYMENT WAS ALSO MAD E BY CHEQUE. THE CIT(A) HAS FURTHER RECORDED THAT THE ASSESSING OFFICER HAS NOT POINTED OUT ANY ITEM OUT OF THE CLOSING STOCK OR PU RCHASE BILLS WHICH HAVE NOT BEEN FOUND ENTERED IN THE BOOKS OF ACCOUNT OF THE ASSESSEE AND THAT THE RETRACTION WAS WITH CORROBORATIVE EVID ENCE. IN THESE FACTS, WE ARE OF THE VIEW THAT SINCE THE VERY BASIS OF DETERMINING THE VALUE OF CLOSING STOCK FOUND AT THE TIME OF SURVEY ON THE BASIS OF THE MRP WAS CLEARLY DEFECTIVE AND NOT IN ACCORDANCE WIT H LAW AND THE PURCHASES WERE MADE AGAINST C FORM AND PAYMENTS W ERE MADE BY CHEQUES AND THE ASSESSING OFFICER COULD NOT POINT O UT ANY ITEM OUT OF CLOSING STOCK OR PURCHASE BILLS WHICH HAVE NOT BEEN FOUND ENTERED IN THE BOOKS OF ACCOUNT OF THE ASSESSEE, NO CASE FOR A DDITION ON ACCOUNT OF EXCESS STOCK COULD BE MADE OUT BY THE REVENUE AN D THE CIT(A) WAS JUSTIFIED IN DELETING THE ADDITION MADE ON THIS COU NT AND ACCORDINGLY, THE ORDER OF THE CIT(A) IS CONFIRMED AND GROUND NOS .1 TO 3 ARE DISMISSED. 6. GROUND NO.4 OF THE REVENUES APPEAL IS AS UNDER: - WHETHER LD.CIT(A) WAS JUSTIFIED IN DELETING ADDITI ON OF RS.260325/- ON A/C OF BAD DEBTS DEBITED IN P & L A/ C WHEN THERE WERE NO RECEIPTS OUTSTANDING AGAINST THE ITA-1008/DEL/2012 4 ASSESSEE AT THE END OF THE FINANCIAL YEAR AND THERE FORE, THERE WAS NO QUESTION OF CLAIMING BAD DEBTS. 7. WE HAVE HEARD THE ARGUMENTS OF BOTH THE SIDES. THE ISSUE OF ALLOWABILITY OF BAD DEBTS IS COVERED IN FAVOUR OF T HE ASSESSEE BY THE DECISION OF HON'BLE SUPREME COURT IN THE CASE OF T. R.F. LTD. VS. CIT [2010] 323 ITR 397 (SC) AND, ACCORDINGLY, THE ORDER OF LEARNED CIT(A) IS CONFIRMED ON THIS ISSUE AND GROUND NO.4 OF THE REVE NUES APPEAL IS DISMISSED. 8. IN THE RESULT, THE APPEAL OF THE REVENUE IS DISM ISSED. DECISION PRONOUNCED IN THE OPEN COURT ON 1 ST APRIL, 2015. SD/- SD/- ( (( ( T.S. KAPOOR T.S. KAPOOR T.S. KAPOOR T.S. KAPOOR ) )) ) (G. (G. (G. (G. C. GUPTA C. GUPTA C. GUPTA C. GUPTA ) )) ) ACCOUNTANT ACCOUNTANT ACCOUNTANT ACCOUNTANT MEMBER MEMBER MEMBER MEMBER VICE PRESIDENT VICE PRESIDENT VICE PRESIDENT VICE PRESIDENT VK. COPY FORWARDED TO: - 1. APPELLANT : ASSISTANT COMMISSIONER OF INCOME TAX, ASSISTANT COMMISSIONER OF INCOME TAX, ASSISTANT COMMISSIONER OF INCOME TAX, ASSISTANT COMMISSIONER OF INCOME TAX, CIRCLE CIRCLE CIRCLE CIRCLE- -- -32(1) 32(1) 32(1) 32(1), NEW DELHI. , NEW DELHI. , NEW DELHI. , NEW DELHI. 2. RESPONDENT : M/S MITTAL HARDWARE STORE, M/S MITTAL HARDWARE STORE, M/S MITTAL HARDWARE STORE, M/S MITTAL HARDWARE STORE, D DD D- -- -8/1, GURUDWARA ROAD, KOTLA MUBARAKPUR, 8/1, GURUDWARA ROAD, KOTLA MUBARAKPUR, 8/1, GURUDWARA ROAD, KOTLA MUBARAKPUR, 8/1, GURUDWARA ROAD, KOTLA MUBARAKPUR, NEW DELHI. NEW DELHI. NEW DELHI. NEW DELHI. 3. CIT 4. CIT(A) 5. DR, ITAT ASSISTANT REGISTRAR