THE ACIT, 2(1), Ujjain V. M/S. A.M. Tradelink, Ujjain

ITA 1040/IND/2016

• Counselvise Citation: [2018] 126 COUNSELVISE.COM (IT) 2322 (ITAT-INDORE)
• Duration Of Justice: 1 year(s) 4 month(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 09-02-2018
• Appeal Filed By: Department
• Order Result: Partly Allowed
• Bench Allotted: DB
• Assessment Year: 2012-2013
• Appeal Filed On: 06-10-2016
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: V J BORICHA
• Assessee Lawyers: S S DESH
• Section: 143(3); 133A

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL INDORE BENCH, INDORE BEFORE SHRI KUL BHARAT, JUDICIAL MEMBER AND SHRI MANISH BORAD, ACCOUNTANT MEMBER ITA NO.1040/IND/2016 ASSESSMENT YEAR: 2012-13 ACIT - 2(1) , AAYAKAR BHAWAN UJJAIN / VS. M/S. A.M. TRADELINK 61 - 62A INDUSTRIAL AREA MAXI ROAD UJJAIN ( APPELLANT ) ( REVENUE ) P.A. NO. AAGCA0024R REVENUE BY SHRI V.J BORICHA SR. DR RESPONDENT BY SHRI S.S . DESHPANDE CA DATE OF HEARING: 05.02.2018 DATE OF PRONOUNCEMENT: 09.02.2018 / O R D E R PER KUL BHARAT, J.M: THIS APPEAL BY THE REVENUE IS DIRECTED AGAINST THE ORDER OF LD. COMMISSIONER OF INCOME TAX (APPEALS), UJJAIN, (IN S HORT CIT(A)), DATED 05.07.2016 PERTAINING TO A.Y. 2012-13. THE RE VENUE HAS RAISED SOLITARY GROUNDS THAT READS AS UNDER: ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE THE LD. CIT(A) HAS ERRED IN DELETION OF THE ADDITION OF RS.53,52,8 67/-, BY HOLDING THAT VALUATION OF STOCK ADOPTED BY THE SURV EY PARTY A.M. TRADELINK 2 DURING THE SURVEY PROCEEDINGS U/S 133A WAS WRONG WI TH REFERENCE TO THE MATERIAL ON RECORD WHICH IS WITHOU T APPRECIATING THAT SAID AMOUNT WAS SURRENDERED BY ASSESSEE BASE O N FINDING OF SURVEY & FACTS ON RECORD . 2. THE FACTS GIVING RISE TO THE PRESENT APPEAL ARE THAT CASE OF THE ASSESSEE PICKED UP FOR SCRUTINY ASSESSMENT AND THE ASSESSMENT U/S 143(3) OF THE ACT (HEREINAFTER CALLED REFERRED AS THE ACT) WAS FRAMED VIDE ORDER DATED 23 RD JANUARY 2015. A SURVEY ACTION WAS CONDUCTED AS BUSINESS PREMISES OF THE ASSESSEE ON 1 2.07.2011. IT WAS NOTICED BY THE AO THAT DURING THE SURVEY PROCEE DINGS THE VALUE OF PHYSICAL STOCK AS FOUND WAS OF RS.2,33,83,498/-, WHEREAS, AS PER BOOKS OF ACCOUNT THE VALUE OF STOCK WAS CALCULATED AT RS.93,20,660/-. THEREFORE, THERE WAS A SHORTAGE OF STOCK TO THE TUNE OF RS.1,40,62,838/-. IT WAS FURTHER OBSERVED THAT O N THE DATE OF SURVEY ON PHYSICAL VERIFICATION CASH OF RS. 12,04,1 71/- WAS FOUND AT THE BUSINESS PREMISE OF THE ASSESSEE. HOWEVER, A S PER THE CASH BOOK AS ON 12.07.2011 CASH BALANCE WAS OF RS.2,64,1 59/-. HENCE THE ASSESSEE MADE SURRENDER OF RS.1,50,02,850/- ON THE DATE OF SURVEY. DURING THE COURSE OF ASSESSMENT PROCEEDINGS THE AO ISSUED SHOW CAUSE TO THE ASSESSEE CALLING UPON TO EXPLAIN WHY AN AMOUNT OF RS.53,52,867/- ON ACCOUNT OF STOCK MAY NOT BE MA DE. THE AO FINDING EXPLANATION UNACCEPTABLE MADE ADDITION OF T HIS AMOUNT. FURTHER, THE AO MADE ADDITION OF RS.5,02,354/- BY E STIMATING THE PROFIT. 3. AGGRIEVED BY THIS THE ASSESSEE PREFERRED AN APPE AL BEFORE THE LD. CIT(A) WHO AFTER CONSIDERING THE SUBMISSION PARTLY ALLOWED THE APPEAL. WHILE PARTLY ALLOWING THE APPEAL, THE LD. C IT(A) DELETED THE A.M. TRADELINK 3 ADDITION OF RS.53,52,867/- AND CONFIRMED THE ADDITI ON OF RS.5,02,354/-. NOW THE REVENUE IS IN APPEAL AGAINST THIS ORDER. 4. THE ONLY GROUND IS AGAINST DELETING THE ADDITION OF RS.53,52,867/-. THE LD. DR VEHEMENTLY SUPPORTED THE ORDER OF THE AO AND SUBMITTED THAT THE LD. CIT(A) WAS NOT JUSTIFIED IN DELETING ADDITION. PER CONTRA LD. COUNSEL FOR THE ASSESSEE SUPPORTED T HE ORDER OF THE LD. CIT(A) AND REITERATED THE SUBMISSIONS AS MA DE IN THE WRITTEN SUBMISSIONS. LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE AO COMPUTED THE VALUE OF UNRECORDED STOCK BY APPLYING WRONG FOR MULA. IT IS SUBMITTED THAT HISTORIC FORMULA FOR CONVERTING PAPE R ROLLS ON PIPE INTO THE VOLUME CONSIDERING ITS WIDTH IS = IT IS SUBMITTED THAT WHERE V STANDS FOR VOLUME, = 3.14, R= RADIUS AND H STANDS FOR HEIGHT. 5. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED RELEVANT MATERIAL AVAILABLE ON RECORD GOING THROUGH ORDERS O F THE AUTHORITIES BELOW. IT IS CONTENTION OF THE ASSESSEE THAT THE AO APPLIED WRONG FORMULA. WE FIND THAT LD. CIT(A) AFTER CONSIDERING THE FORMULA HAS GIVEN ON FINDING ON FACTS IN PARA 5.2 OF HIS ORDER AND CAME TO THE CONCLUSION THAT VALUE OF STOCK ADOPTED BY THE SURVE Y PARTY DURING THE PROCEEDINGS U/S 133A WAS WRONG WITH REFERENCE T O THE MATERIAL ON RECORD. FOR THE SAKE OF CLARITY FINDING OF LD. C IT(A) IS REPRODUCED HEREIN BELOW: THE APPELLANT ESTABLISHED THAT VALUATION OF STOCK ADOPTED BY THE SURVEY PARTY DURING SURVEY PROCEEDINGS U/S 133A WAS A.M. TRADELINK 4 WRONG WITH REFERENCE TO THE MATERIAL ON RECORD. MER ELY BECAUSE SOME DIFFERENCES WERE FOUND IN STOCK DID NOT MEAN T HAT THERE WOULD BE AN AUTOMATIC ADDITION ON ACCOUNT OF DIFFER ENCES. SUCH DIFFERENCES ARE ALWAYS SUBJECT FOR EXPLANATION AND RECONCILIATION. THE APPELLANT HAD RECONCILED THE DI FFERENCES WITH REASONS AND AO DID NOT POINT OUT ANYTHING CONTRARY THAT HOW THE RECONCILIATION DONE BY THE APPELLANT WAS INCORR ECT. THEREFORE, THE AO IS NOT JUSTIFIED IN MAKING THE AD DITION OF RS.53,52,867/-. THEREFORE, THE ADDITION MADE BY THE AO AMOUNTING TO RS.53,52,867/- IS DELETED. THE APPEAL ON THIS GROUND IS ALLOWED. 6. THE REVENUE HAS NOT REBUTTED THIS FINDING BY GI VING ANY CONTRARY MATERIAL, WE, THEREFORE, DO NOT SEE ANY REASON TO I NTERFERE IN THE FINDING OF THE LD. CIT(A), SAME IS HEREBY AFFIRMED. THUS, THE GROUND OF REVENUE IS DISMISSED. 7. IN THE RESULT, THE APPEAL OF THE REVENUE IS DISMIS SED. ORDER WAS PRONOUNCED IN THE OPEN COURT ON 09 .02.2 018. SD/- (MANISH BORAD) SD/- (KUL BHARAT) A CCOUNTANT MEMBER JUDICIALMEMBER INDORE; DATED : 09/ 02/2018 CTX? P.S/. . . COPY TO: ASSESSEE/AO/PR. CIT/ CIT (A)/ITAT (DR)/GUA RD FILE. BY ORDER PRIVATE SECRETARY/DDO, INDORE