I.T.O, Ward-1(4), Hooghly., Hooghly V. Sri Manik Mukherjee, Hooghly

ITA 1033/KOL/2013

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 78345 (ITAT-KOLKATA)
• Duration Of Justice: 1 year(s) 1 month(s) 25 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-06-2014
• Appeal Filed By: Department
• Bench Allotted: C
• Assessment Year: 2009-2010
• Appeal Filed On: 02-05-2013
• Court: TRIBUNAL
• Department Lawyers: USMANI
• Keywords: Onus to prove

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, BENCH C , KOLKATA [BEFORE HONBLE SRI SHAMIM YAHYA, AM & HONBLE SR I GEORGE MATHAN, JM] ITA NO.1033/KOL/2013 ASSESSMENT YEAR : 2009-10 ( APPELLANT ) (RESPONDENT) I.T.O., WARD-1(4), -VS- SRI MANIK MUKHERJEE, HOOGHLY HOOGHLY (PAN: AEHPM 7752 A) FOR THE APPELLANT SHRI S.H.USMANI, JCIT, SR.DR FOR THE RESPONDENT SHRI SOMNATH GHOSH, ADVOCATE DATE OF HEARING : 26.06.2014 DATE OF PRONOUNCEMENT : 27. 06.2014 ORDER PER SHRI SHAMIM YAHYA, AM THIS APPEAL FILED BY THE REVENUE IS DIRECTED AGAINS T ORDER OF LD. C.I.T.(A)- XXXVI, KOLKATA DATED 22.02.2013 FOR ASSESSMENT YEAR 2009-10. 2. THE ISSUE RAISED BY THE REVENUE IN THIS APPEAL PERTAINS TO THE DELETION OF ADDITION ON ACCOUNT OF DIFFERENCE IN STOCK AS SUBMI TTED TO THE BANK AND THAT AS PER BOOKS OF ACCOUNT. 3. ON THIS ISSUE THE AO NOTED THAT THE ASSESSEE HA S SUBMITTED TO THE BANK A STOCK STATEMENT OF HIS BUSINESS AS ON 31.03.2009 VALUED A T RS.57,31,968/- BUT THE VALUE OF THE SAME STATED IN HIS BOOKS SUBMITTED TO THE INCOM E TAX AUTHORITY WAS RS.26,27,120/-. ACCORDING TO THE AO THE STOCK STATEMENT FILED WITH THE BANK BY THE ASSESSEE INDICATES PRODUCT WISE QUANTITATIVE DETAILS SIGNED AND VERIFI ED BY THE ASSESSEE AND THE ASSESSEE FAILED TO DISCHARGE HIS PRIMARY ONUS TO PROVE THAT THE STATEMENT SUBMITTED TO THE BANK WAS NOT CORRECT. ACCORDINGLY THE AO TREATED A SUM O F RS.30,64,848/- AS UNDISCLOSED STOCK AND ADDED THE SAME TO THE ASSESSEES INCOME. ITA.NO.1033/KOL/2013 SHRI MANIK MUKHERJEE A.YR.2009-10 2 4. UPON ASSESSEES APPEAL THE LD. CIT(A) DELETED TH E ADDITION HOLDING AS UNDER :- 8.6. IN THE LIGHT OF THE DISCUSSIONS MADE ABOVE, E VIDENCE ON RECORD AND RESPECTFULLY FOLLOWING THE JUDICIAL PRONOUNCEMENTS REFERRED TO, I AM OF THE OPINION THAT MERELY BECAUSE THERE WAS A DIFFERENCE IN THE VALUE OF CLOS ING STOCK AS OBTAINED FROM THE BANK AND THE VALUE OF SUCH STOCK SHOWN IN THE BOOKS OF A CCOUNTS, THE ADDITION AS CONCEIVED CANNOT BE MADE. THE APPELLANT HAS DULY EXPLAINED TH AT THE VALUE OF CLOSING STOCK GIVEN TO THE BANK WAS AS PER AUDITED BALANCE SHEET FILLED WITH THE AUDIT REPORT BEFORE THE REVENUE AND IN RESPECT OF THE STOCK STATEMENT SEPAR ATELY FURNISHED THE BANK OFFICIAL TOOK THE VALUE OF SUCH CLOSING STOCK ON THE BASIS OF EYE ESTIMATION ONLY WHICH ACCORDING TO ME, IS NOT A VALID PROCEDURE OR WHICH CAN BE GIVEN CREDENCE TO. THE APPELLANT HAS ALSO PROVED THAT THE STOCK SHOWN TO THE REVENUE WAS DULY SUPPORTED BY THE CLOSING STOCK STATEMENT AND VERIFIABLE WITH REFERENCE TO THE OPEN ING STOCK, PURCHASE AND SALE OF GOODS DURING THE YEAR. FROM THE ABOVE DISCUSSIONS, IT TRA NSPIRES THAT THE BANK AUTHORITIES DID NOT MAKE ANY PHYSICAL VERIFICATION ABOUT THE CORREC TNESS OF THE VALUE OF STOCK HYPOTHECATED IN RESPECT OF NUMEROUS ITEMS THE APPEL LANT DEALT IN FOLLOWING A CORRECT METHOD ACCEPTED IN COMMON PARLANCE OF THE PRECISE A CCOUNTING PROCEDURE. THAT BEING SO, IN MY CONSIDERED VIEW, THERE WAS NO BASIS TO TR EAT THE ALLEGED DIFFERENCE IN VALUE OF CLOSING STOCK VIS--VIS THE CLOSING STOCK STATEMENT GIVEN TO BANK AS THE APPELLANTS UNDISCLOSED INCOME. THE ADDITION MADE IN THIS REGAR D IN THE SUM OF RS.30,64,848/- IS, THEREFORE, DIRECTED TO BE DELETED. THE GROUNDS RAIS ED IN THIS BEHALF ARE ALLOWED. 4.1. AGAINST THE ABOVE ORDER THE REVENUE IS IN APPE AL BEFORE US. 5. WE HAVE HEARD BOTH THE COUNSEL AND PERUSED THE R ECORDS. WE FIND THAT THE ADDITION HAS BEEN MADE BY THE AO ON ACCOUNT OF THE DIFFERENCE BETWEEN THE STOCK AS APPEARING IN THE BOOKS OF ACCOUNT OF THE ASSESSEE A ND AS SUBMITTED TO THE BANK OFFICIALS. WE FIND THAT IT IS NOT THE CASE OF THE A O THAT ANY DISCREPANCY WAS NOTED IN THE BOOKS OF THE ACCOUNTS OF THE ASSESSEE. SIMILARL Y NO DISCREPANCY HAS BEEN NOTED IN THE STOCK STATEMENT AND THE STOCK BOOKS OF THE ASSE SSEE. BY REFERRING TO THE STOCK STATEMENT TO THE BANK ONLY THE AO HAS CONCLUDED THA T THERE WERE UNDISCLOSED STOCK. FURTHER THE PURCHASES AND SALES WERE SUPPORTED BY V OUCHERS AND THE AO HAS NOT POINTED OUT ANY SUPPRESSION OF SALES OR PURCHASES. THE STATEMENT GIVEN TO THE BANK WAS ON ESTIMATE BASIS WITHOUT THERE BEING ANY ACTUA L VERIFICATION AND THE SAME WAS NOT AS PER THE BOOKS OF ACCOUNTS. WE FURTHER NOTE THAT THE STOCK STATEMENT SUBMITTED TO THE BANK WHICH HAS BEEN SUBMITTED BEFORE US PLACED AT P AGE 44 OF THE PAPER BOOK,ONLY MENTIONS EIGHT SERIAL NUMBERS IN WHICH A HOST OF IT EMS WERE INCLUDED. FOR A NUMBER OF THE ITEMS, QUANTITIES WERE NOT MENTIONED. IN OUR CONSIDERED OPINION BY NO STRETCH OF IMAGINATION THE SAME CAN BE SAID TO BE A RESULT OF PROPER PHYSICAL VERIFICATION OF THE ITA.NO.1033/KOL/2013 SHRI MANIK MUKHERJEE A.YR.2009-10 3 STOCK. ON THE OTHER HAND, ITEMS THAT ARE DEALT BY T HE ASSESSEE ARE NUMEROUS AND ASSESSEES STOCK STATEMENT IS SUBMITTED AT PAGES 14 1 TO 145 RUNS INTO 6 PAGES AND REFER TO 252 ITEMS. HERE IN OUR CONSIDERED OPINION ADDITION SOLELY BASED UPON THE SAID STOCK STATEMENT SUBMITTED TO BANK IS NOT AT ALL JUS TIFIED. AS EXPOUNDED BY THE HONBLE MADRAS HIGH COURT IN THE CASE OF CIT VS N.SWAMY 24 1 ITR 363 (MAD) THE ASSESSEES INCOME IS TO BE ASSESSED BY THE INCOME-TAX OFFICER ON THE BASIS OF THE MATERIAL WHICH IS REQUIRED TO BE CONSIDERED FOR THE PURPOSE OF ASS ESSMENT AND ORDINARILY NOT ON THE BASIS OF THE STATEMENT WHICH THE ASSESSEE MAY HAVE GIVEN TO A THIRD PARTY UNLESS THERE IS MATERIAL TO CORROBORATE THAT STATEMENT OF THE AS SESSEE GIVEN TO A THIRD PARTY, EVEN IF IT BE A BANK. THE MERE FACT THAT THE ASSESSEE HAD M ADE SUCH A STATEMENT BY ITSELF CANNOT BE TREATED AS HAVING RESULTED IN AN IRREBUTT ABLE PRESUMPTION AGAINST THE ASSESSEE. THE BURDEN OF SHOWING THAT THE ASSESSEE H AD UNDISCLOSED INCOME IS ON THE REVENUE. THAT BURDEN CANNOT BE SAID TO BE DISCHARGE D BY MERELY REFERRING TO THE STATEMENT GIVEN BY THE ASSESSEE TO A THIRD PARTY IN CONNECTION WITH A TRANSACTION WHICH WAS NOT DIRECTLY RELATED TO THE ASSESSMENT AND MAKI NG THAT THE SOLE FOUNDATION FOR A FINDING THAT THE ASSESSEE HAD DELIBERATELY SUPPRESS ED HIS INCOME. THE BURDEN IS ON THE REVENUE TO PROVE THAT THE INCOME SOUGHT TO BE TAXED IS WITHIN THE TAXING PROVISIONS AND THERE WAS IN FACT INCOME. 5.1. SIMILARLY THE HONBLE MADRAS HIGH COURT IN THE CASE OF CIT VS APCOM COMPUTERS P.LTD. 292 ITR 630(MAD) HAS HELD AS UNDER :- DISMISSING THE APPEAL, THAT ANY ADDITION ON ACCOUN T OF DIFFERENCE IN STOCK CAN BE MADE ONLY AN ADEQUATE MATERIALS, BUT NOT ARBITRARILY. AD MITTEDLY, THERE WAS A DIFFERENCE BETWEEN THE VALUE OF CLOSING STOCK DECLARED TO THE BANK AND TO THE INCOME-TAX AUTHORITIES. THERE WAS NO DISPUTE THAT THE ASSESSEE WAS MAINTAINING BOOKS OF ACCOUNT ON DAY-TO-DAY PRODUCTION. THE ASSESSEE, IN THE PRESENT CASE, HAD TAKEN THE ACTUAL PHYSICAL STOCK FOR THE PURPOSE OF DECLARING CLOSING STOCK TO THE INCOME TAX AUTHORITIES. FURTHER THE PURCHASES AND SALES WERE SUPPORTED BY VOUCHERS AND THE ASSESSING OFFICER HAD NOT POINTED OUT ANY SUPPRESSION OF SALES OR PURCHASES. THERE WAS A FINDING BY THE AUTHORITIES BELOW THAT THE STATEMENT GIVEN TO THE B ANK WAS ON ESTIMATE BASIS WITHOUT ANY PHYSICAL VERIFICATION AND THE SAME WAS NOT SUPPORTE D BY BOOKS OF ACCOUNT. THE COMMISSIONER (APPEALS) AND THE TRIBUNAL HAD GIVEN A CONCURRENT FINDING THAT THE ASSESSEE DECLARED CLOSING STOCK FOR ASSESSMENT PURP OSES WHICH WAS BASED ON ACTUAL PHYSICAL VERIFICATION. THERE WAS ENOUGH MATERIAL AV AILABLE ON RECORD AND THE CONCLUSION REACHED BY THE TRIBUNAL WAS BASED ON VAL ID MATERIALS AND EVIDENCE. IN VIEW OF THE SAME, THERE WAS NO BASIS TO TREAT THE DIFFER ENCE IN VALUE AS THE ASSESSEES UNDER VALUATION OF STOCK OR UNDISCLOSED INCOME. ITA.NO.1033/KOL/2013 SHRI MANIK MUKHERJEE A.YR.2009-10 4 5.2. WE FURTHER NOTE THAT THE HONBLE JURISDICTIONA L HIGH COURT IN THE CASE OF CIT VS M/S. NEO CARBONS PVT. LTD. IN ITAT NO.191 OF 201 3 G.A.NO.3286 OF 2013 VIDE ORDER DATED 4 TH MARCH, 2014 HAS UPHELD THE ORDER OF THE TRIBUNAL W HEREIN THE AO HAS PROCEEDED TO MAKE THE ADDITION ON THE BASIS OF THE VALUATION FURNISHED BY THE ASSESSEE TO HIS BANKER. THE CIT(APPEAL) HELD THAT SUCH VALUA TION IS NOT MATERIAL FOR THE PURPOSES OF THE INCOME TAX ACT. THE REVENUES APPEA L BEFORE ITAT WAS DISMISSED. UPON THE REVENUES APPEAL THE HONBLE JURISDICTIONA L HIGH COURT HELD THAT THEY ARE SATISFIED THAT THE ISSUES RAISED ARE ESSENTIALLY QU ESTIONS OF FACT AND THEREFORE THE HONBLE JURISDICTIONAL HIGH COURT REFUSED TO ADMIT THE CASE.. 5.3. IN THE BACKGROUND OF THE ABOVE DISCUSSIONS AND PRECEDENT WE DO NOT FIND ANY INFIRMITY IN THE ORDER OF THE LD. CIT(A) AND ACCORD INGLY WE UPHOLD THE SAME. 6. IN THE RESULT THE APPEAL OF THE REVENUE STANDS D ISMISSED. ORDER PRONOUNCED IN THE COURT ON 27.06.2014. SD/- SD/- [ GEORGE MATHAN ] [SHAMIM YAHYA] JUDICIAL MEMBER ACCOUNTANT MEMBER DATE: 27.06.2014. R.G.(.P.S.) COPY OF THE ORDER FORWARDED TO: 1. SHRI MANIK MUKHERJEE, VILL. & P.O., ARAMBAGH, DIST. HOOGHLY, PIN-712 601. 2 I.T.O., WARD-1)4), HOOGHLY. 3 . CIT(A)-XXXVI, KOLKATA 4. CIT - KOLKATA. 5. CIT-DR, KOLKATA BENCHES, KOLKATA TRUE COPY, BY ORDER, DEPUTY /ASST. REGISTRAR , ITAT, KOLKATA BENCHES ITA.NO.1033/KOL/2013 SHRI MANIK MUKHERJEE A.YR.2009-10 5