M/S BASHIR OIL MILL, V. ITO, WARD-1, Chandrapur

ITA 106/NAG/2013

• Counselvise Citation: [2016] 132 COUNSELVISE.COM (IT) 2151 (ITAT-NAGPUR)
• Duration Of Justice: 3 year(s) 3 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 19-07-2016
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: SMC
• Assessment Year: 2009-2010
• Appeal Filed On: 26-03-2013
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: A R NINAWE
• Assessee Lawyers: S C THAKAR; C J THAKAR
• Keywords: Unexplained investment
• Section: 133A; 69

Judgement Text

1 ITA NO. 106/NAG/2013 IN THE INCOME TAX APPELLATE TRIBUNAL, NAGPUR BENCH, NAGPUR BEFORE SHRI SHAMIM YAHYA, ACCOUNTANT MEMBER. (S.M.C.) I.T.A. NO. 1 06 /NAG/201 3 . ASSESSMENT YEAR : 2009 - 10. M/S BASHIR OIL MILL, THE INCOME - TAX PFFICER, WAROA, DIST. CHANDRAPUR. VS. WARD - 1, CHANDRAPUR. PAN AABFB1967E. APPELLANT. RESPONDENT. APPELLANT BY : S HRI C.J. THAKAR AND SHRI S.C. THAKAR. RESPONDENT BY : SHRI A.R. NINAWE. DATE OF HEARING : 19 - 07 - 2016 DATE OF PRONOUNCEMENT : 19 TH JULY, 2016 O R D E R THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER OF LE A RNED CIT(APPEALS) - II, NAGPUR DATED 24 - 01 - 2013 AND PERTAINS TO ASSESSMENT YEAR 2009 - 10. THE GROUNDS OF APPEAL READ AS UNDER : 1. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND LAW APPLICABLE THEORY, THE LEARNED CIT(A) ERRED IN CONFIRMING THE ADDITION OF RS.35,71,2 64/ - ON THE ASSUMED GROUND OF UNEXPLAINED STOCK OF 2772 QUINTALS OF COTTON SEED OUTSIDE THE BOOKS. 2. LEARNED CIT(A) SHOULD HAVE BEEN AND APPRECIATED THAT (I) THERE WAS NO PHYSICAL STOCK TAKING DONE BY SURVEY PARTY; AND (II) IN FACT IT WAS IMPOSSIBLE TO WEI GH ALLEGED QUANTITY OF 31768 QUINTALS OF COTTON SEED IN A DAY; AND (III) HENCE THE ASSUMPTION THAT AS AGAINST BOOK QUANTITY OF 29046 QUINTALS THERE EXISTED 31768 QUINTALS WAS ERRONEOUS, IMPOSSIBLE AND CONTRARY TO EVIDENCE AND MATERIAL ON RECORD. 3. LEARNED C IT(A) FAILED TO SEE THAT THE ASSESSEE HAD BEEN REGULARLY MAINTAINING DAY TO DAY STOCK ACCOUNT AND NO DEFECT OR INFIRMITY WAS FOUND THEREIN. THERE WS THUS NO BASIS FOR ASSUMING ANY STOCK OUTSIDE THE BOOKS OF ACCOUNT. 2 ITA NO. 106/NAG/2013 4. LEARNED CIT(A) FAILED TO SEE THAT FOR M AKING AN ADDITION U/S 69 ON ACCOUNT OF UNEXPLAINED INVESTMENT BURDEN HEAVILY LIES NON THE DEPARTMENT AND NO ADDITION CAN BE MADE MERELY ON THE BASIS OF ASSUMED ADMISSION. 5. LEARNED CIT(A) FAILED TO SEE AND APPRECIATE THAT IN THE FOLLOWING YEAR THE OPENING S TOCK IS ACCEPTED AS PER BOOKS BY THE REVENUE. THUS THE ADDITION MADE DURING THE YEAR ON ACCOUNT OF UNEXPLAINED STOCK OR STOCK OUTSIDE THE BOOKS TOWARDS THE END OF THE YEAR IN UNTENABLE. 6. LEARNED CIT(A) FAILED TO SEE AND APPRECIATE THAT THE ACCOUNTS OF THE ASSESSEE HAVE ALWAYS BEEN ACCEPTED. IN VIEW THEREOF THE ADDITION IS UNJUSTIFIED. 2. BRIEF FACTS OF THE CASE ARE AS UNDER : ON 24 - 02 - 2009 A SURVEY U/S 133A OF THE ACT WAS CARRIED OUT AT THE BUSINESS PREMISES OF THE APPELLANT. DURING THE COURSE OF SURVEY, I NVENTORY OF STOCK OF APPELLANT AS ON DATE OF SURVEY WAS TAKEN. DURING THE COURSE OF SURVEY PROCEEDINGS, THE SAME WAS COMPARED VIS - A - VIS THE BOOKS OF ACCOUNT OF THE APPELLANT AND THE CERTAIN DISCREPANCIES WERE NOTICED BY THE SURVEY PARTY. THE DISCREPANCIES ARE MENTIONED IN THE STATEMENT OF THE PARTNERS AND ALSO IN THE ASSESSMENT ORDER. THE SAME ARE AS UNDER : COTTON SEEDS .. .. (+) 2722 QUINTAL (EXCESS) COTTON SEED OIL .. .. ( - ) 24.27 QUINTAL (SHORT) COTTON SEED CAKE .. .. (+) 7.00 QUINTAL (EXCESS). THE VAL UE OF DIFFERENCE IN STOCK WAS WORKED OUT AS UNDER : - COTTON SEED 2722 X 1312 PER QNTL. = RS.35,71,264/ - COTTON SEED OIL 24.27 X 3900 PER QNTL. = RS. 94,853/ - OIL CAKE 7X 1000 PER QNTL. = RS. 7,000/ - . IN EXPLANATION FOR THE ABOVE IT WAS EXPLAINED BY THE APPELLANT THAT THE APPELLANT REGULARLY MAINTAINED STOCK REGISTER WHICH CONTAINS ARRIVAL AND DISPOSAL OF STOCK OF COTTON SEEDS AND THAT THE APPELLANT PURCHASES ARE FROM GENUINE PARTIES ONLY. IT WAS STATED THAT AT THE TIME OF SURVEY REQUESTS WERE MADE TO THE SURVEY TEAM TO WEIGH THE QUANTITY OF STOCK BUT THE APPELLANT WAS NOT ABLE TO PERSUADE THE 3 ITA NO. 106/NAG/2013 SURVEY PARTY AND THAT SURVEY PARTY HAD TAKEN STOCK ON THE BASIS OF BARDANA LYING IN THE GODOWN. IT WAS EXPLAINED THAT AT THE TIME OF UNLOADING OF MA TERIAL FROM THE TRUCK LARGE AMOUNT OF STOCK IS POURED OUT OF THE GUNNY BAGS DUE TO IMPROPER HANDLING OF BAGS BY THE LABOURS AND SUCH S T OCK IS TO BE FI L LED IN SEPARATE GUNNY BAGS WHICH ARE KEPT IN THE SAME GODOWN AND T HAT THE DEPARTMENT WHILE TAKING THE STO CK CONSIDERED THE SAID STOCK AS FULL QUANTITY OF ONE BAG OF 50 KG. E ACH WHICH HAS RESULTED IN THE LARGE DIFFERENCE IN STOCK. THE APPELLANT ALSO SUBMITTED BEFORE THE AO THAT THE APPELLANT HAD NOT MADE ANY DECLARATION AT THE TIME OF SURVEY. HOWEVER, THE AO REJECTED THE SUBMISSIONS. HE HELD THAT THE SURVEY TOOK PLACE IN THE PRESENCE OF ONE OF THE PARTNERS WHO HAS AGREED FOR THE SAME. HENCE THE A O MADE AN ADDITION OF RS.35,71,264/ - . 3. UPON ASSESSEES APPEAL, LEARNED CIT(APPEALS) HELD THAT IN VIEW OF DETAILED INVENTORY TAKEN BY THE SURVEY PARTY AND THE INITIAL AGREEMENT TO THE SAID STOCK TAKING BY THE PARTNERS OF THE APPELLANT FIRM AND THE CLEAR DIFFERENCE IN STOCK AS FOUND BY THE SURVEY PARTY WHICH REMAINED UNEXPLAINED, HE WAS IN AGREEMENT WITH THE FINDINGS O F THE AO. THE ADDITION OF RS.35,71,264/ - MADE BY THE AO WAS THEREFORE UPHELD BY THE LEARNED CIT(APPEALS). 4. AGAINST THE ABOVE ORDER THE ASSESSEE IS IN APPEAL BEFORE THE ITAT. 5. AT THE OUTSET LEARNED COUNSEL OF THE ASSESSEE SUBMITTED THAT THE ASSESSEE HAS OBJECTED TO THE PROCESS OF STOCK TAKING IN THIS CASE BEFORE THE AO. HE SUBMITTED THAT IT IS NOT HUMANLY POSSIBLE TO COUNT AND WEIGH THE HUGE STOCK IN THE SHORT TIME. THE SURVEY TEAM E STIMATED THE INVENTORY . HE SUBMITTED THAT SHORT ADHOC METHOD WAS ADOPTE D. HENCE LEARNED COUNSEL SUBMITTED THAT THIS INVENTORY TAKEN CANNOT BE A BASIS FOR ADDITION. LEARNED COUNSEL FURTHER PLACED RELIANCE UPON THE DECISION OF HONBLE APEX COURT IN THE CASE OF CIT VS. S. KA DAR KHAN SON 352 ITR 480 FOR THE PROPOSITION THAT THE STATEMENT TAKEN DURING THE COURSE OF SURVEY DEHORSE ANY CORROBORATIVE EVIDENCE CANNOT BE A BASIS OF ADDITION. LEARNED COUNSEL FURTHER REFERRED TO STOCK SUBMITTED TO BANK 4 ITA NO. 106/NAG/2013 WHICH HE CLAIMED ALSO AGREED WITH THE BOOK STOCK OF T HE ASSESSEE. IN THE LIGHT OF THE SE SUBMISSIONS, LEARNED COUNSEL SUBMITTED T HAT THE ADDITION SHOULD BE DELETED. 6. PER CONTRA LEARNED D.R. RELIED UPON THE ORDERS OF THE AUTHORITIES BELOW. HE FURTHER SUBMITTED THAT THE ASSESSEE FIRMS PARTNER WAS PRESENT AT THE TIME OF STOCK TAKING AND HE ALSO AGREED AND SIGNED THE INVENTORY TAKEN BY THE SURVEY TEAM. HENCE HE SUBMITTED THAT THE ASSESSEE CANNOT RETRACT FROM THE SAME SUBSEQUENTLY. 7. UPON CAREFUL CONSIDERATION I FIND THAT IN THIS CASE DIFFEREN CE IN STOCK WAS OBSERVED AT THE TIME OF SURVEY. D ETAILS OF STOCK TAKING AT THE TIME OF SURVEY WAS ASKED TO BE PRODUCED BY THE DEPARTMENT. HOWEVER, THE DEPARTMENT COULD PRODUCE ONLY THE SUMMARY SHEET OF THE STOCK TAKEN. THE WORKING SHEET FOR THE INVENTORIES WAS NOT AVAILABLE IN THE ASSESSMENT FOLDER. TH E ENTRY FOR COTTON SEED IN THE SAID INVENTORY SHEET WAS 12000 BAGS OF 45 KG. = 5400 QTL. THE SAME WAS VALUED AT THE RATE OF RS.600./ - PER BAG AMOUNTING TO RS.72,00,000/ - . THE ABOVE HAS BEEN OBJECTED BY THE ASSESSEE. THE ASSESSEE HAS CLAIMED THAT IT WAS N OT HUMANLY POSSIBLE TO WEIGH THE NUMBER OF BAGS IN SUCH A SHORT PERIOD AND IT WAS NOT ACTUALLY DONE. FURTHER MORE THE ASSESSEE HAS URGED THAT DESPITE ASSESSEES REQUEST, THE BAGS WERE NOT WEIGHED INDIVIDUALLY. IT WAS SUBMITTED T HAT DURING LOADING AND UNLOADING SOME OF THE BAGS DO GET SOME SPILL OVER. HENCE THE ENTIRE 12000 BAGS CANNOT HAVE AN UNIFORM W EIGHMENT AS SHOWN IN THE SAID SURVEY 8. UPON CAREFUL CONSIDERATION I FIND THAT THERE IS SOME COGENCY IN THE ABOVE SUBMISSION OF THE LEARNED COUNSEL OF THE ASSESSEE. THE REVENUE HAS FAILED TO PRODUCE THE WORKING SHEET OF THE SURVEY OPERATION. IN THESE CIRCUMSTANCES IN MY CONSIDERED OPINION THE RATIO FROM THE HONBLE APEX COURT IN THE CASE OF S. KADAR KHAN SON ABOVE APPLIES TO THE FACTS OF THE CASE THAT STATEMENT/ADMISSION BY THE ASSESSEE AT THE TIME OF SURVEY DEHORSE PROPER CORROBORATIVE EVIDENCE 5 ITA NO. 106/NAG/2013 CANNOT BE A BASIS FOR ADMISSION. HOWEVER, THE FACTS OF THE CASE DO INDICATE THAT A SURVEY TOOK PLACE AND SOME INVENTORY TAKING PROCESS TO OK PLACE AND SOME DISCREPANCY WAS FOUND T HOUGH THERE IS SOME DOUBT ABOUT THE COGENCY OF DIFFERENCE IDENTIFIED H ENCE IN MY CONSIDERED OPINION , ON THE FACTS AND CIRCUMSTANCES OF THE CASE , THE ADDITION OF RS.7.5 LAKH WOULD MEET THE ENDS OF JUSTICE. LEARNED C OUNSEL OF THE ASSESSEE HAS FAIRLY AGREED TO THIS PROPOSITION. 9. IN THE RESULT, THIS APPEAL FILED BY THE ASSESSEE STANDS PARTLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 19 TH DAY OF JULY,2016. SD/ - ( SHAMIM YAHYA) ACCOUNTANT MEMBER. NAGPUR, DATED: 19 TH JULY, 2016. COPY FORWARDED TO : 1. M/S BASHIR OIL MILL, NEAR RAILWAY SATION, WARORA, DIST. CHANDRAPUR. 2. I.T.O., WARD - 1, CHANDRAPUR. 3. C.I.T. - IV, NAGPUR. 4. CIT(APPEALS), - II, NAGPUR. 5. D.R., ITAT, NAGPUR. 6. GUARD FILE TRUE COPY BY ORDER ASSISTANT REGISTRAR, INCOME TAX APPELLATE TRIBUNAL, NAGPUR BENCH, NAGPUR. WAKODE. 6 ITA NO. 106/NAG/2013 1. DRAFT DICTATED ON 19 - 07 - 2016 2. DRAFT PLACED BEFORE THE AUTHOR 19 - 06 - 2016 3. DRAFT PROPOSED & PLACED BEFORE THE SECOND MEMBER. 4. DRAFT DISCUSSED/APPROVED BY THE SECOND MEMBER. 5. APPROVED DRAFT COMES TO THE SR.P.S. 6. DATE OF PRONOUNCEMENT 7. FILE SENT TO THE BENCH CLERK. 8. DATE ON WHICH FILE GOES TO THE HEAD CLERK. 9. DATE OF DISPATCH OF ORDER.