Nand Lal Kalra, V. ITO,

ITA 1093/DEL/2009

• Counselvise Citation: [2012] 140 COUNSELVISE.COM (IT) 59008 (ITAT-DELHI)
• Duration Of Justice: 3 year(s) 5 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-03-2012
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: F
• Next Hearing Date: 22-03-2012
• Assessment Year: 2004-2005
• Appeal Filed On: 24-03-2009
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: RENUKA JAIN GUPTA SENIOR
• Assessee Lawyers: ASHWANI TANEJA
• Section: 133A; 69; 28

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL (DELHI BENCH F : NEW DELHI) BEFORE SHRI U.B.S. BEDI, JUDICIAL MEMBER AND SHRI B.C. MEENA, ACCOUNTANT MEMBER ITA NO.1093/DEL./2009 (ASSESSMENT YEAR : 2004-05) SHRI NAND LAL KALRA, VS. INCOME TAX OFFICER, GOLA BAZAR, SRINAGAR. SRINAGAR. (APPELLANT) (RESPONDENT) ASSESSEE BY : S/SHRI ASHWANI TANEJA & TARUN KUMAR, ADVOCATE REVENUE BY : SMT. RENUKA JAIN GUPTA, SENIOR DR ORDER PER B.C. MEENA, ACCOUNTANT MEMBER : THIS APPEAL FILED BY THE ASSESSEE EMANATES FROM THE ORDER OF CIT (APPEALS)-I, DEHRADUN DATED 30.12.2008 FOR THE ASSE SSMENT YEAR 2004-05. THE GROUNDS OF APPEAL READ AS UNDER :- 1. THAT LEARNED COMMISSIONER OF INCOME TAX (APPEAL S)-I. DEHRADUN WAS ERRED IN LAW BY CONFIRMING THE ADDITIO N OF RS.3,96,054/- AS THE ADDITION WAS MADE BY THE LD. A O, U/S 69 IN NO ACCOUNT CASE. 2. THAT THE LEARNED CIT (A)-I, DEHRADUN WAS UNJUSTI FIED FOR NOT CONSIDERING THE DISCREPANCIES POINTED OUT, ON P REPARATION OF STOCK INVENTORY BY THE SURVEY TEAM. 2. THE ASSESSEE IS AM INDIVIDUAL ENGAGED IN THE BUS INESS OF TRADING IN CLOTH ON RETAIL BASIS IN THE NAME AND STYLE OF M/S. GANPATI FASHION GALLERY, ITA NO.1093/DEL./2009 2 GOLA BAZAR, SRINAGAR. THE RETURN OF INCOME WAS FIL ED ON 12.01.2005 DECLARING INCOME AT RS.1,12,000/-. A SURVEY UNDER SECTION 133A WAS CARRIED OUT ON 30.04.2003. DURING THE SURVEY, THE INVENTOR Y WAS MADE OF STOCK AT RS.7,51,054/-. THE ADDITION WAS MADE OF RS.3,96,05 4/- ON THE BASIS THAT AT THE BEGINNING OF SURVEY, ASSESSEE HAS STATED THAT THE STOCK SHALL BE OF RS.3 TO RS.3.25 LACS. CIT (A) CONFIRMED THE ADDITION. 3. WHILE PLEADING ON BEHALF OF THE ASSESSEE LD. AR SUBMITTED THAT FIRSTLY THE ASSESSEE WAS A PETTY TRADER AT A SMALL PLACE. THE ASSESSEE IS FILING THE RETURN OF INCOME BY ESTIMATING THE PROFIT U/S 44AF. DURING THE YEAR, THE GROSS SALES WERE ESTIMATED AT RS.16 LACS AND THE NET PROF IT WAS DECLARED IN RETURN OF INCOME @ 7% AT RS.1,12,000/- AND TAXES WERE PAID AC CORDINGLY. AT THE TIME OF SURVEY, THE INVENTORY WAS MADE WHICH DOES NOT RE FLECT HE ACTUAL INVESTMENT OF THE ASSESSEE IN THE STOCK. IT WAS PREPARED ON T HE TAG PRICE WHICH IS 30 35% ABOVE THE COST PRICE. THE LD. AR ALSO PLEADED THAT SOME OF THE GOODS WERE VALUED AT AN INFLATED RATE ON THE ESTIMATED PR ICE. STATEMENT RECORDED DURING THE SURVEY CANNOT BE BASIS FOR ADDITION AS A SSESSEE HAD ROUGHLY STATED THE FIGURE. ASSESSEES ROUGH ESTIMATE OF STOCK AT THE BEGINNING OF SURVEY CANNOT BE MADE A BASIS FOR ADDITION. NO BOOKS OF A CCOUNT ARE MAINTAINED. STOCK INVENTORY WAS NOT ON COST PRICE. THE ASSESSE E WAS FILING THE RETURN U/S 44AF, NO BOOKS OF ACCOUNT WERE MAINTAINED. THEREFO RE, THERE WAS NO UNDISCLOSED STOCK AS WORKED OUT BY THE AO. LD. AR ALSO PLACED RELIANCE ON ITA NO.1093/DEL./2009 3 THE CASE OF DCIT VS. PREM SONS (2010) 130 TTJ (MU MBAI) 159 WHERE IT HAS BEEN HELD THAT THE ADDITION ON THE BASIS OF STATEME NT RECORDED DURING SURVEY AND ADDITIONAL INCOME OFFERED TOWARDS ANY OTHER DI SCREPANCY, NO MENTION IN THE ASSESSMENT ORDER AS TO ANY SUCH DISCREPANCY FOUND AS A RESULT OF SURVEY AND IF NOTHING ON RECORD TO CO-RELATE SUCH ADDITION AL INCOME OFFERED DURING SURVEY, IN THAT CONDITION, THE STATEMENT RECORDED D URING SURVEY DOES NOT HAVE ANY EVIDENTIARY VALUE AND ANY ADMISSION MADE IN THE STATEMENT CANNOT BY ITSELF BE MADE BASIS FOR ADDITION. IN ASSESSEES C ASE, THERE WAS NO DISCREPANCY IN STOCK. ASSESSING OFFICER HAD SIMPLY ADDED THE D IFFERENCE OF AMOUNT ON THE BASIS OF STATEMENT OF ASSESSEE THAT TOO AT THE BEGI NNING OF SURVEY. LD. AR ALSO RELIED ON THE DECISION OF HON'BLE MADRAS HIGH COURT IN THE CASE OF CIT VS. S. KHADER KHAN SON 300 ITR 157 (MAD.) ON THE PROPOSITION THAT ADDITION ON THE BASIS OF STATEMENT RECORDED DURING THE SURVEY U/S 133A CANNOT BE SUSTAINED AS SECTION 133A DOES NOT EMPOWER ANY I T AUTHORITY TO EXAMINE ANY PERSON ON OATH, HENCE, ANY SUCH STATEMENT HAS N O EVIDENTIARY VALUE AND ANY ADMISSION MADE DURING SUCH STATEMENT CANNOT, BY ITSELF, BE MADE THE BASIS FOR ADDITION. LD. AR FURTHER PLEADED THAT TH IS VIEW IS ALSO SUPPORTED BY CBDT CIRCULAR DATED 10 TH MARCH, 2003. LD. AR PLEADED THAT THE CIT (A) WAS NOT JUSTIFIED IN CONFIRMING THE ADDITION MADE OF RS .3,96,054/- U/S 69 OF THE INCOME-TAX ACT. LD. AR ALSO PLEADED THAT CIT (A) W AS NOT JUSTIFIED IN NOT ITA NO.1093/DEL./2009 4 CONSIDERING THE DISCREPANCY POINTED OUT IN PREPARAT ION OF THE STOCK INVENTORY BY THE SURVEY TEAM. 3. ON THE OTHER HAND, LD. DR RELIED ON THE ORDERS O F THE AUTHORITIES BELOW. 4. WE HAVE HEARD BOTH THE SIDES. AFTER HEARING, WE HOLD THAT AT THE BEGINNING OF THE SURVEY, THE STATEMENT OF THE ASSES SEE WAS RECORDED WHERE IT WAS STATED THAT STOCK WILL BE AROUND TO RS.3 TO RS. 3.25 LACS. THIS STATEMENT WAS ONLY BASED ON ROUGH ESTIMATE. IT WAS NOT BASED ON BOOKS OF ACCOUNTS OR STOCK REGISTER. IT WAS ONLY ON PURE ESTIMATE. NO BOOKS OF ACCOUNTS ARE MAINTAINED BY ASSESSEE AND TAXABLE INCOME IS ESTIMA TED ON THE BASIS OF TURNOVER. THE INVENTORY OF STOCK WAS PREPARED AND TOTAL VALUATION WAS MADE AT RS.7,51,054/-. WE HAVE PERUSED THE INVENTORY WH ICH IS PLACED AT PAGES 14 TO 24 OF THE PAPER BOOK. THE INVENTORY VALUE WAS B ASED ON TAG PRICE. IT WAS NOT PREPARED ON COST PRICE. HENCE, IT IS NOT REFLE CTING THE ACTUAL INVESTMENT OF ASSESSEE IN STOCK. IN ANNEXURE S-2, THE ESTIMATED FIGURE HAS ALSO BEEN TAKEN FOR THE NUMBER OF CLOTHES AND RATES. IT IS REFLECT ED BY THE FACT THAT NUMBER OF ITEMS AND THEIR PRICE ARE IN ROUND FIGURES, WHICH D OES NOT INSPIRE CONFIDENCE IN TRUTHNESS OF INVENTORY. SINCE THE INVENTORY WAS MADE ON THE TAG PRICE, THE ACTUAL INVESTMENT IN THE STOCK MUST BE MUCH LESS. THE PROVISIONS OF SECTION 44AF ARE SPECIAL PROVISIONS FOR COMPUTING PROFIT AN D GAINS OF RETAIL BUSINESS. THE SECTION STARTS WITH NON-OBSTANTE CLAUSE NOTWIT HSTANDING ANY THING CONTAINED IN SECTIONS 28 TO 43C OF INCOME-TAX ACT. THE PROVISIONS OF THIS ITA NO.1093/DEL./2009 5 SECTION ARE APPLICABLE FOR RETAIL BUSINESS UP TO TH E TURNOVER OF RS.40 LACS. A STATEMENT OF ASSESSEE RECORDED AT THE BEGINNING OF SURVEY IN WHICH A PURE ESTIMATE OF STOCK WAS STATED. IN VIEW OF THE FACTS , WE FIND NO JUSTIFICATION IN THE ADDITION MADE U/S 69 OF THE INCOME-TAX ACT. TH E VARIOUS DECISIONS RELIED UPON BY THE ASSESSEE ALSO SUPPORT THE CASE OF THE A SSESSEE. SINCE THE ASSESSEE IS A SMALL TRADER AND FILING THE RETURN U/S 44AF, W E FIND NO MERITS IN THE ADDITION. ACCORDINGLY, WE SET ASIDE THE ORDERS OF T HE AUTHORITIES BELOW. 5. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED IN OPEN COURT ON THIS 29 TH DAY OF MARCH, 2012. SD/- SD/- (U.B.S. BEDI) (B.C. MEENA) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED THE 29 TH DAY OF MARCH, 2012 TS COPY FORWARDED TO: 1.APPELLANT 2.RESPONDENT 3.CIT 4.CIT(A)-I, DEHRADUN. 5.CIT(ITAT), NEW DELHI AR, ITAT NEW DELHI.