The ACIT, Circle-7, Ahmedabad V. Smt. Rupal M.Shah, Ahmedabad

ITA 1054/AHD/2011

• Counselvise Citation: [2011] 140 COUNSELVISE.COM (IT) 51047 (ITAT-AHMEDABAD)
• Duration Of Justice: 8 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 16-12-2011
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 16-12-2011
• Assessment Year: 2005-2006
• Appeal Filed On: 08-04-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: MOTHIVANAN SRDR
• Assessee Lawyers: ASTHA GOYAL
• Section: 133A; 260A; 246; 263

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AT AHMEDABAD AHMEDABAD A BENCH BEFORE SHRI G.C.GUPTA, VICE-PRESIDENT (AZ) AND SHRI B.P. JAIN, ACCOUNTANT MEMBER ITA NO.1054/AHD/2011 & C.O.NO.139/AHD/2011 (ARISING OUT ITA NO.1054/AHD/2011) ASSESSMENT YEAR:2005-06 ACIT, CIRCLE-7, AHMEDABAD SMT. RUPAL M SHAH PROP. MANGALAM, OPP. JAIN DDERASAR, KRISHNA NAGAR, NAVA WADAJ, AHMEDABAD / V/S . / V/S . SMT. RUPAL M SHAH PROP OF M/S. MANGLAM FASHION, OPP. JAIN DERASAR, KRISHNA NAGAR, NAVA VADAJ, AHMEDABAD PAN NO.AVAPS1247J ACIT CIRCLE-7, 2 ND FLOOR, NAVJIVAN TRUST BUILDING, OFF ASHRAM ROAD, AHMEDABAD / APPELLANT .. / RESPONDENT ITA NO.1055/AHD/2011 & C.O.NO.140/AHD/2 011 (ARISING OUT ITA NO.1055/AHD/2011) ASSESSMENT YEAR:2005-06 ACIT, CIRCLE-7, AHMEDABAD SHRI. RUPESH K SHAH HUF, PROP. MANGALAM FASHION, OPP. JAIN DDERASAR, KRISHNA NAGAR, NAVA WADAJ, AHMEDABAD / V/S . / V/S . SHRI RUPESH K SHAH, HUF PROP OF M/S. MANGLAM FASHION, OPP. JAIN DERASAR, KRISHNA NAGAR, NAVA VADAJ, AHMEDABAD PAN NO.AAMHS0647B ACIT CIRCLE-7, 2 ND FLOOR, NAVJIVAN TRUST BUILDING, OFF ASHRAM ROAD, AHMEDABAD ITA NO.1054-56/AHD/2011 & CO 139-41/A/11 A.Y. 2005-06 ACIT CIR-7, ABD V. SHAH HUF GROUP PAGE 2 / APPELLANT .. / RESPONDENT ITA NO.1056/AHD/2011 & C.O.NO.141/AHD/20 11 (ARISING OUT ITA NO.1056/AHD/2011) ASSESSMENT YEAR:2005-06 ACIT, CIRCLE-7, AHMEDABAD SHRI DINESH K SHAH PROP. MANGALAM SILK PALACE, OPP. JAIN DDERASAR, KRISHNA NAGAR, NAVA WADAJ, AHMEDABAD / V/S . / V/S . SHRI DINESH K SHAH PROP OF M/S. MANGLAM SILK PALACE, OPP. JAIN DERASAR, KRISHNA NAGAR, NAVA VADAJ, AHMEDABAD PAN NO.ABTPS0254N ACIT CIRCLE-7, 2 ND FLOOR, NAVJIVAN TRUST BUILDING, OFF ASHRAM ROAD, AHMEDABAD / APPELLANT .. / RESPONDENT ASSESSEE BY ASTHA GOYAL AR REVENUE BY SHRI MOTHIVANAN SR-DR / DATE OF HEARING 16-12-2001 / DATE OF PRONOUNCEMENT 16-12-2001 ! ! ! ! / / / / ORDER PER B.P. JAIN, ACCOUNTANT MEMBER:- THESE THREE APPEALS OF THE REVENUE ARISES FROM THR EE DIFFERENT ORDERS OF LD. COMMISSIONER OF INCOME-TAX (APPEALS)-XIV, AHMEDABAD EACH FOR THE ASSESSMENT YEAR 2005-06 AS PER DETAILS BELOW:- ITA NO. DATED NAME OF RESPONDENT 1054/AHD/2011 19-01-2011 RUPAL M SHAH ITA NO.1054-56/AHD/2011 & CO 139-41/A/11 A.Y. 2005-06 ACIT CIR-7, ABD V. SHAH HUF GROUP PAGE 3 1055/AHD/2011 20-01-2011 RUPESH K SHAH 1056/AHD/2011 19-01-2011 DINESH K SHAH ALL THE THREE ASSESSEE HAVE FILED THE CROSS OBJECTI ON (CO) AGAINST THE RESPECTIVE REVENUES APPEAL. IDENTICAL GROUNDS OF APPEAL NO.1 HAS BEEN TAKEN BY REVENUE IN ALL THE APPEALS AS UNDER:- 1. THE LD. COMMISSIONER OF INCOME TAX (A) HAS ERRE D IN LAW AND ON FACTS IN DELETING THE PENALTY OF I) RS.8,02,500/- U/S. 271(1)(C) IN ITA NO.1054/AHD /2011 II) RS.8,29,500/- U/S. 271(1)(C) IN ITA NO.1055/AHD /2011 III) RS.3,30,000/- U/S. 271(1)(C) IN ITA NO.1056/AH D/2011 AS REGARDS GROUND NOS. 2 AND 3 IN EACH OF THE REVEN UES APPEAL, THE SAME ARE GENERAL IN NATURE AND THEREFORE DO NOT REQUIRE ANY ADJUDICATION. 2. SINCE THE ISSUES IN ALL THE REVENUES APPEAL ARE IDENTICAL AND THEREFORE ALL THE APPEALS ARE BEING DECIDED BY THIS CONSOLIDATED ORDE R. THE BRIEF FACTS IN THE REVENUES APPEAL IS THAT THE SURVEY U/S 133A OF THE INCOME-TAX ACT, 1961 WAS CONDUCTED AT THE BUSINESS PREMISES OF THE ASSESSEE ON 18-03-2005. DURING THE SURVEY, PHYSICAL VERIFICATION OF THE STOCK AVAILABL E AT THE BUSINESS PREMISES WAS MADE AND IT WAS FOUND THAT THE STOCK AVAILABLE ON 1 8-03-2005 WAS AMOUNTING TO RS.49,21,905/-. AS PER THE BOOKS OF ACCOUNT, STOCK ON THE DATE OF SURVEY WAS WORKED OUT AT RS.19,18,922/-. THUS, THERE WAS EXCESS STOCK OF RS.30,02,983/- (RS.49,21,905 MINUS RS.19,18,022/-). NEITHER DURING THE COURSE OF SURVEY NOR DURING THE ASSESSMENT PROCEEDINGS, THE ASSESSEE WAS ABLE TO EX PLAIN THE DIFFERENCE IN THE CLOSING STOCK AS PER THE BOOKS OF ACCOUNT AND THE S TOCK WHICH WAS FOUND ON VERIFICATION. THEREFORE, THE ASSESSING OFFICER MADE ADDITION OF RS.30,02,983/- U/S 69B OF THE ACT. THE LD. CIT(A) DELETED THE ADDITION FOR THE REASONS MENTIONED IN HIS ORDER. THE REVENUE HAS FILED THE APPEAL AGAINST THE DECISION OF LD. CIT(A) IN ALL THE MATTERS. THE ITAT AHMEDABAD A BENCH VIDE ITS ORDE R DATED 11-06-2010 HAS SET ASIDE THE MATTER TO THE FILE OF AO BY OBSERVING (TH E RELEVANT PARA-10 OF THE ORDER IS REPRODUCED FOR THE SAKE OF CLARITY) AS UNDER:- 10. FROM THE ABOVE, IT IS EVIDENT THAT WHILE DETER MINING THE CLOSING STOCK, THE ASSESSEE HAS TAKEN INTO ACCOUNT THE EXCESS STOCK FO UND AT THE TIME OF SURVEY. THEREFORE, THE CONTENTION OF THE ASSESSEE THAT A SU M OF RS.30,02,983/- SHOWN AT THE PURCHASE SIDE IS OF SET OFF OF BY THE CLOSIN G STOCK IS CORRECT. HOWEVER, IN ITA NO.1054-56/AHD/2011 & CO 139-41/A/11 A.Y. 2005-06 ACIT CIR-7, ABD V. SHAH HUF GROUP PAGE 4 OUR OPINION, THE INCOME FOR THE EXCESS STOCK FOUND DURING THE SURVEY AND REMAINED UNEXPLAINED IS TO BE DISCLOSED IN THE PROF IT AND LOSS ACCOUNT AND NOT IN THE TRADING ACCOUNT. WE, THEREFORE, ACCEPT THE C ONTENTION OF THE LEARNED DEPARTMENTAL REPRESENTATIVE THAT THE TRADING ACCOUN T OF THE ASSESSEE IS REQUIRED TO BE RECASTED BY EXCLUDING A SUM OF RS.30 ,02,983/-. WHEN THIS AMOUNT OF RS.30,02,983/- CREDITED TO THE TRADING AC COUNT IS EXCLUDED AND CREDITED AS INCOME UNDER SECTION 69B, THE GP DISCLO SED IN THE TRADING ACCOUNT WOULD RESULT IN LOSS OF RS.6,67,279/-. THIS WOULD CERTAINLY REQUIRE VERIFICATION AS TO HOW THERE CAN BE GROSS LOSS IN T HE TRADING OF THE SAREES. IN THE ABOVE CIRCUMSTANCES, WE DEEM IT PROPER TO SET A SIDE THE ORDER OF THE AUTHORITIES BELOW AND RESTORE THE MATTER BACK TO TH E FILE OF AO. WE DIRECT THE AO TO TREAT THE SUM OF RS.30,02,983/- CREDITED BY T HE ASSESSEE IN THE TRADING ACCOUNT AS INCOME DISCLOSED UNDER SECTION 69B AND T HEREFORE NO SEPARATE ADDITION FOR THE ADDITION UNDER SECTION 69B IS REQU IRED TO BE MADE. HOWEVER, THEN THE RESULTING POSITION OF TRADING ACCOUNT WOUL D BE GROSS LOSS OF RS.6,67,279/-. THE ASSESSING OFFICER WILL EXAMINE T HE ASSESSEES TRADING ACCOUNT AND WILL ADJUDICATE WHETHER THE SAID GROSS LOSS DISCLOSED ID THE TRADING ACCOUNT OF THE SAREES IS TO BE ACCEPTED OR THE ROPER INCOME IS TO BE DETERMINED IN THIS REGARD. WITH REGARD TO THE ASSES SEES CLAIM OF OUTDATED STOCK, WE ARE OF THE OPINION THAT IN THE SAREES BUS INESS, POSSIBILITY OF STOCK BEING OUTDATED CANNOT BE RULED OUT. HOWEVER, WHAT I S THE QUANTUM OF SUCH OUTDATED STOCK WOULD REQUIRE VERIFICATION. IT IS ST ATED BY THE LEARNED COUNSEL THAT THE ASSESSEE HAS DETAILS OF OUTDATED STOCK BUT THE SAME WAS NOT FURNISHED BEFORE THE AO BECAUSE HE DID NOT ASK FOR THE DETAILS OF SUCH STOCK. SINCE WE HAVE ALREADY SET ASIDE THE MATTER BACK TO THE FILE OF THE AO FOR DETERMINING THE INCOME/LOSS FROM THE TRADING BUSINE SS, SIN OUR OPINION, IT WOULD MEE4ET ENDS OF JUSTICE IF THE ISSUE OF OUTDAT ED STOCK IS ALSO SET ASIDE TO THE FILE OF THE AO. WE DIRECT HIM TO ALLOW ADEQUATE OPPORTUNITY TO THE ASSESSEE TO PRODUCE ALL THE DETAILS/EXPLANATION IN THIS REGARD AND THEREAFTER RE-ADJUDICATE MATTER. 3. IN THE MEANTIME, THE ASSESSING OFFICER HAS LEVIE D THE PENALTY VIDE ITS ORDER DATED 23-07-2009 IN EACH CASE, THE LD. CIT(A) CANCE LLED THE PENALTY IN CASE OF SMT. RUPAL M SHAH AND SIMILARLY THE ADDITIONS WERE DELET ED IN OTHER APPEALS, THE RELEVANT PARA-4.1 TO 4.4 OF LD. CIT(A)S ORDER IN CASE OF SM T. RUPAL M SHAH ARE REPRODUCED FOR THE SAKE OF CLARITY AS UNDER:- REGARDING THE FIRST GROUND OF APPEAL CHALLENGING T HE IMPOSITION OF PENALTY OF RS.8,02,500/- (INADVERTENTLY MENTIONED AS RS.8,02,2 30/-), THE AR SUBMITTED THAT THE ADDITION WHICH WAS SUBJECT MATTER OF LEVY OF THIS PENALTY HAS SINCE BEEN DELETED IN FULL BY THE TRIBUNAL, WHILE RECALLI NG THE MATTER IN RESPONSE TO THE MISCELLANEOUS APPLICATION BEARING CO NO.136/AHD/2008 FILED BY THE APPELLANT AND DECIDING THE ISSUE AFRESH. MY ATTENTI ON WAS DRAWN TO THE ORDER OF THE HONBLE INCOME-TAX APPELLATE TRIBUNAL, AHMED ABAD A BENCH, AHMEDABAD (WHICH IS A COMMON ORDER FOR THE APPELLAN T AND THREE OF HIS ASSOCIATES) PASSED ON 11TH JUNE 2010 WHEREIN THE RE LEVANT ADDITION SUBJECT MATTER OF LEVY OF PENALTY HAS EXPRESSLY BEEN DELETE D, WHILE SETTING ASIDE THE CASE FOR SOME OTHER GROUND, WHICH IS NOT RELEVANT W HILE DEALING WITH THE ITA NO.1054-56/AHD/2011 & CO 139-41/A/11 A.Y. 2005-06 ACIT CIR-7, ABD V. SHAH HUF GROUP PAGE 5 PRESENT APPEAL. A COPY OF THE ORDER OF THE TRIBUNAL SO PASSED IS PLACED AT PATE 4 TO 13 OF THE PAPER BOOK. 4.2 I HAVE NOTICED FROM THE ORDER OF TH HONBLE TRI BUNAL THAT EVEN WHILE SETTING ASIDE THE CASE, THE HONBLE TRIBUNAL HAS, AT PARA-1 0 OF THE ORDER, EXPRESSLY MENTIONED AS HERE-BELOW: FROM THE ABOVE, IT IS EVIDENT THAT WHILE DETERMINI NG THE CLOSING STOCK, THE ASSESSEE HAS TAKEN INTO ACCOUNT THE EXCESS STOC K FOUND AT THE TIME OF SURVEY. THEREFORE, THE CONTENTION OF THE ASSESSE E THAT A SUM OF RS.30,02,983/- SHOWN AT THE PURCHASE SIDE IS OF SET OFF OF BY THE CLOSING STOCK IS CORRECT .. WE DIRECT THE AO TO T REAT THE SUM OF RS.30,02,983/- CREDITED BY THE ASSESSEE IN THE TRAD ING ACCOUNT AS INCOME DISCLOSED UNDER SECTION 69B AND THEREFORE NO SEPARATE ADDITION FOR THE ADDITION UNDER SECTION 69B IS REQU IRED TO BE MADE. 4.3 IN VIEW OF THE VERY ADDITION, ON THE BASIS OF W HICH THE PENALTY WAS LEVIED, HAVING ALREADY BEEN DELETED, THE AO IS CLEARLY REQU IRED TO PAS AN ORDER CANCELING THE PENALTY WHICH WAS ORIGINALLY LEVIED B Y HIM U/S. 271(1)(C) OF THE ACT. THIS WILL BE AS PER AND IN ACCORDANCE WITH THE EXPRESS PROVISIONS OF SECTION 275(1A) OF THE ACT, THE RELEVANT PORTION OF WHICH IS REPRODUCED HERE- BELOW: 275(1A) INA CASE WHERE THE RELEVANT ASSESSMENT OR OTHER OR DER IS THE SUBJECT MATTER OF AN APPEAL TO THE COMMISSIONER (AP PEALS) UNDER SECTION 246 OR SECTION 246A OR AN APPEAL TO THE APP ELLANT TRIBUNAL UNDER SECTION 253 OR AN APPEAL TO THE HIGH COURT UN DER SECTION 260A OR AN APPEAL TO THE SUPREME COURT UNDER SECTION 261 OR REVISION UNDER SECTION 263 OR SECTION 264 AND AN ORDER IMPOSING OR ENHANCING OR REDUCING OR CANCELING PENALTY OR DROPPING THE PROC EEDINGS FOR THE IMPOSITION OF PENALTY IS PASSED BEFORE THE ORDER OF THE COMMISSIONER (APPEALS) OR THE APPELLANT TRIBUNAL OR THE HIGH COU RT OR THE SUPREME COURT IS RECEIVED BY THE CHIEF COMMISSIONER OR THE COMMISSIONER OR THE ORDER OF THE REVISION UNDER SECTION 263 OR SECT ION 264 IS PASSED, AN ORDER IMPOSING OR ENHANCING OR REDUCING OR CANCELIN G PENALTY OR DROPPING THE PROCEEDINGS FOR THE IMPOSITION OF PENA LTY MAY BE PASSED ON THE BASIS OF ASSESSMENT AS REVISED BY GIVING EFF ECT TO SUCH ORDER OF THE COMMISSIONER (APPEALS), OR, THE APPELLANT TRIBU NAL OR THE HIGH COURT OR THE SUPREME COURT OR ORDER OF REVISION UND ER SECTION 263 OR SECTION 264. 4.4 IN VIEW OF WHAT HAS BEEN MENTIONED ABOVE, THE A O IS DIRECTED TO PAS AN ORDER U/S 275(1A) OF THE ACT CANCELING THE PENALTY. IN EFFECT THIS GROUND OF APPEAL IS HEREBY ALLOWED. 4. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE FACTS OF THE CASE, WE CONCUR WITH THE VIEW OF LD. CIT(A) THAT WITH THE EX PRESSION OF PROVISIONS OF SECTION 275(1A) OF THE ACT WHEN THE MATTER HAS BEEN SET ASI DE BY THE ITAT IN ITS ORDER DATED ITA NO.1054-56/AHD/2011 & CO 139-41/A/11 A.Y. 2005-06 ACIT CIR-7, ABD V. SHAH HUF GROUP PAGE 6 11-06-2010 (SUPRA) AND IT HAS BEEN HELD BY THE ITAT THAT NO SEPARATE ADDITION FOR U/S.69B IS REQUIRED TO BE MADE. WHEN NO QUANTUM ADD ITION REMAINS ON THE ASSESSEE, THEN NO PENALTY CAN BE LEVIED. THEREFORE IN THE CIRCUMSTANCES AND FACTS OF THE CASE WE FIND NO INFIRMITY IN THE ORDER OF LD CI T(A) IN ALL THE APPEALS FILED BY THE REVENUE. THUS, ALL THE APPEALS FILED BY THE REVENUE ARE DISMISSED. 5. ALL THE ASSESSEES HAVE FILED THE CO AGAINST THE RESPECTIVE REVENUES APPEAL. THE GROUNDS TAKEN BY ALL THE ASSESSEES ARE IN SUPPO RT OF THE DECISION OF THE LD. CIT(A) AND THEREFORE THE SAME DO NOT REQUIRE ANY AD JUDICATION AND THEREFORE ALL THE COS FILED BY THE ASSESSEES ARE DISMISSED. 6. IN THE RESULT, ALL THE APPEALS FILED BY REVENUE IN ITA NO.1054, 1055 AND 1056/AHD/2011 ARE DISMISSED AND ALL THE CO FILED BY THE ASSESSEE BEARING NO.139, 140 & 141/AHD/2011 ARE ALSO DISMISSED. ' ! #$% 16 / 12 /2011 ) * + , THIS ORDER PRONOUNCED IN OPEN COURT ON 16/12/ 2011 . SD/- SD/- ( G.C.GUPTA ) ( B.P. JAIN ) (VICE PRESIDENT) (ACCOUNTANT MEMBER) #$%- 16/12/2011 . , DKP* ! ! ! ! //0 //0 //0 //0 1 0 1 0 1 0 1 0 / COPY OF ORDER FORWARDED TO:- 1. / APPELLANT 2. / RESPONDENT 3. $$/4 5 / CONCERNED CIT 4. 5- / CIT (A) 5. 08+ ///4, /4, . / DR, ITAT, AHMEDABAD 6. +;< =' / GUARD FILE. BY ORDER/ ! , /TRUE COPY/ >/. $? /4, . ,