Sri Valli Vilas Gold Mart, Pondicherry V. ACIT, Pondicherry

ITA 116/CHNY/2015

• Counselvise Citation: [2015] 120 COUNSELVISE.COM (IT) 9879 (ITAT-CHENNAI)
• Duration Of Justice: 3 month(s) 25 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 08-05-2015
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: D
• Assessment Year: 2007-2008
• Appeal Filed On: 14-01-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: N MADHAVAN
• Assessee Lawyers: T VASUDEVAN
• Keywords: Reopening of assessment; Business income
• Section: 133A; 147

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL D BENCH, CHENNAI . . . , . !'# ! , % !& BEFORE SHRI N.R.S. GANESAN, JUDICIAL MEMBER AND SHRI A. MOHAN ALANKAMONY, ACCOUNTANT MEMBER ./ ITA NO.116/MDS/2015 ( )( / ASSESSMENT YEAR : 2007-08 M/S SRI VALLI VILAS GOLD MART, NO.243, KOSAKADAI STREET, PUDUCHERRY 605 001. PAN : ABCFS 6769 H V. THE ASSISTANT COMMISSIONER OF INCOME TAX, CIRCLE I, PUDUCHERRY. (+,/ APPELLANT) (-.+,/ RESPONDENT) +, / 0 / APPELLANT BY : SHRI T. VASUDEVAN, ADVOCATE -.+, / 0 / RESPONDENT BY : SHRI N. MADHAVAN, JCIT 1 / 2% / DATE OF HEARING : 23.04.2015 3') / 2% / DATE OF PRONOUNCEMENT : 08.05.2015 / O R D E R PER N.R.S. GANESAN, JUDICIAL MEMBER: THIS APPEAL OF THE ASSESSEE IS DIRECTED AGAINST T HE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS)-VI, CHENNA I, DATED 12.11.2014 AND PERTAINS TO ASSESSMENT YEAR 2007-08. 2 I.T.A. NO.116/MDS/15 2. THE FIRST ISSUE ARISES FOR CONSIDERATION IS WITH REGARD TO REOPENING OF ASSESSMENT UNDER SECTION 147 OF THE IN COME-TAX ACT, 1961 (IN SHORT 'THE ACT). EVEN THOUGH THE ASSESSE E HAS RAISED THIS ISSUE IN GROUND NO.2 IN THE GROUNDS OF APPEAL, NO A RGUMENT WAS ADVANCED BY THE ASSESSEE BEFORE THIS TRIBUNAL. FRO M THE ORDERS OF THE LOWER AUTHORITIES IT APPEARS THAT THE ASSESSEE HAS NOT RAISED THIS ISSUE BEFORE THEM. THEREFORE, THE LOWER AUTHORITIE S HAD NO OCCASION TO CONSIDER THE ISSUE OF REOPENING. MOREOVER, FROM THE ORDER OF THE ASSESSING OFFICER IT APPEARS THAT THERE WAS A SURVE Y UNDER SECTION 133A OF THE ACT ON 01.06.2010. DURING THE COURSE O F SURVEY OPERATION, A HARD DISC WAS FOUND WHICH DISCLOSED TH E SALES TO THE EXTENT OF ` 5,57,37,319/- AS AGAINST THE SALE SHOWN IN THE RETU RN OF INCOME TO THE EXTENT OF ` 5,43,65,526/-. THEREFORE, THE ASSESSING AUTHORITY FOUND THAT THERE WAS A DIFFERENCE IN SALE S TO THE EXTENT OF ` 13,71,793/-. IN THOSE CIRCUMSTANCES, THE ASSESSING OFFICER CAME TO A CONCLUSION THERE WAS ESCAPEMENT OF INCOME WHIC H IS OTHERWISE ASSESSABLE TO TAX. THIS TRIBUNAL IS OF THE CONSIDE RED OPINION THAT THE ASSESSING OFFICER RIGHTLY REOPENED THE ASSESSME NT UNDER SECTION 147 OF THE ACT. ACCORDINGLY, REOPENING OF THE ASSESSMENT IS CONFIRMED. 3 I.T.A. NO.116/MDS/15 3. THE NEXT ISSUE ARISES FOR CONSIDERATION IS WITH REGARD TO ADDITION OF ` 13,71,793/-. 4. SHRI T. VASUDEVAN, THE LD. COUNSEL FOR THE ASSES SEE, SUBMITTED THAT THERE WAS A DIFFERENCE BETWEEN THE S ALES SHOWN IN THE RETURN OF INCOME AND IN THE HARD DISC FOUND DUR ING THE COURSE OF SURVEY OPERATION TO THE EXTENT OF ` 13,71,793/-. ACCORDING TO THE LD. COUNSEL, THE DIFFERENCE OF ` 13,71,793/- WAS DUE TO CANCELLATION OF THE BILLS ON UNACCOUNTED SALES. EVEN OTHERWISE, AC CORDING TO THE LD. COUNSEL, ONLY THE NET PROFIT EMBEDDED IN THE UN ACCOUNTED SALES COULD BE SUBJECT TO TAX AND NOT ON ENTIRE UNACCOUNT ED SALES. THE LD. COUNSEL FURTHER SUBMITTED THAT THE ASSESSEE HAS EXPLAINED THE NATURE AND REASON FOR CANCELLATION OF THE BILLS AND THE DIFFERENCE BETWEEN THE MANUAL RECORD AND COMPUTER MAINTAINED R ECORD CANNOT BE A BASIS FOR MAKING ANY ADDITION TOWARDS UNACCOUN TED SALES. THE LD. COUNSEL FURTHER SUBMITTED THAT THE ASSESSING OF FICER ACCEPTED THE STOCK AS PER THE BOOKS OF ACCOUNTS AND ALSO THE SALES. THE STOCK AND SALES WERE ALSO VERIFIED BY THE SALES TAX AUTHORITIES. IN THOSE CIRCUMSTANCES, THE ADDITION MADE BY THE ASSES SING OFFICER IS NOT JUSTIFIED. REFERRING TO THE ORDER OF THE CIT(A PPEALS), THE LD. COUNSEL SUBMITTED THAT ALL THE PURCHASES WERE ACCOU NTED IN THE BOOKS OF ACCOUNTS AND THERE WAS NO MATERIAL FOUND D URING THE 4 I.T.A. NO.116/MDS/15 COURSE OF SURVEY OPERATION TOWARDS UNACCOUNTED PURC HASES. SINCE THE PURCHASES WERE RECORDED IN THE BOOKS OF ACCOUNT S, ACCORDING TO THE LD. COUNSEL, THE ENTIRE UNRECORDED SALES CANNOT BE TAKEN AS INCOME OF THE ASSESSEE. THE LD. COUNSEL PLACED HIS RELIANCE ON AN UNREPORTED JUDGEMENT OF THE BOMBAY HIGH COURT IN IN I.T.A. NO.313 OF 2013 DATED 04.02.2015, A COPY O F WHICH HAS BEEN FILED BY THE ASSESSEE. THE LD. COUNSEL ALSO P LACED RELIANCE ON THE JUDGEMENT OF THE GUJARAT HIGH COURT IN CIT VS. SAMIR SYNTHETICS MILL [2010] 326 ITR 410. 5. ON THE CONTRARY, SHRI N. MADHAVAN, THE LD. DEPAR TMENTAL REPRESENTATIVE, SUBMITTED THAT DURING THE COURSE OF SURVEY OPERATION, THE REVENUE AUTHORITIES FOUND THE TOTAL SALES OF ` 5,57,37,319/-. HOWEVER, THE ASSESSEE HAS DISCLOSED IN THE RETURN OF INCOME ONLY TO THE EXTENT OF ` 5,43,65,526/-. THE ASSESSEE CLAIMED BEFORE THE ASSESSING OFFICER THAT THE DIFFE RENCE OF ` 13,71,793/- WAS DUE TO CANCELLATION OF BILLS. HOWE VER, THE ASSESSEE HAS NOT PRODUCED ANY EVIDENCE TO SHOW THAT ANY OF THE BILLS RAISED WAS CANCELLED. IN FACT, THE CIT(APPEA LS) CALLED FOR THE CANCELLED BILLS FOR VERIFICATION. INSPITE OF SPECI FIC DIRECTION OF THE CIT(APPEALS), THE ASSESSEE COULD NOT PRODUCE ANY EV IDENCE TO SHOW THAT BILLS WERE CANCELLED. SINCE THE ASSESSEE COULD NOT 5 I.T.A. NO.116/MDS/15 RECONCILE THE DIFFERENCE BETWEEN THE SALES FOUND IN THE COMPUTER AND SALES DISCLOSED IN THE RETURN, ACCORDING TO THE LD. D.R., THE CIT(APPEALS) HAS RIGHTLY CONFIRMED THE ADDITION MAD E BY THE ASSESSING OFFICER. 6. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS ON EITH ER SIDE AND PERUSED THE RELEVANT MATERIAL ON RECORD. ADMITTEDL Y, THERE WAS A DIFFERENCE OF SALES DISCLOSED IN THE RETURN OF INCO ME AND THE SALES RECORDED IN THE COMPUTER TO THE EXTENT OF ` 13,71,793/-. THOUGH THE ASSESSEE CLAIMS THAT THE DIFFERENCE WAS DUE TO CANC ELLATION OF BILLS AND NO UNACCOUNTED SALES, THE ASSESSEE COULD NOT PR ODUCE EVEN AN IOTA OF EVIDENCE TO SHOW ANY OF THE BILLS RAISED WE RE CANCELLED. IN THOSE CIRCUMSTANCES, THE CLAIM OF THE ASSESSEE THAT THE DIFFERENCE WAS DUE TO CANCELLATION OF BILLS IS NOT JUSTIFIED. 7. THE ALTERNATIVE CONTENTION OF THE ASSESSEE IS TH AT ONLY THE PROFIT ELEMENT EMBEDDED IN THE UNACCOUNTED SALES HA S TO BE ASSESSED FOR TAXATION. NO DOUBT, UNDER THE SCHEME OF INCOME-TAX ACT, ONLY THE PROFIT EARNED BY THE ASSESSEE CAN BE SUBJECT TO TAXATION. IN THE CASE BEFORE US, THE CIT(APPEALS) WHILE RECORDING HIS FINDINGS THAT THE DIFFERENCE OF ` 13,71,793/- WAS DUE TO UNACCOUNTED SALES OF JEWELLERY, HE ALSO FOUND THAT ALL THE PURCHASES WERE FAIRLY ACCOUNTED IN THE BOOKS OF ACCOUNTS. HO WEVER, THE 6 I.T.A. NO.116/MDS/15 ASSESSING OFFICER HAS NOT EXAMINED WHETHER ALL THE PURCHASES WERE RECORDED IN THE BOOKS OF ACCOUNTS. THE DETAILS OF OPENING STOCK AND THE PURCHASES MADE BY THE ASSESSEE DURING THE Y EAR UNDER CONSIDERATION ARE NOT AVAILABLE ON RECORD. UNLESS THE DETAILS REGARDING THE OPENING STOCK, THE PURCHASES AND SALE S MADE DURING THE YEAR UNDER CONSIDERATION ARE FILED BY THE ASSES SEE, IT MAY NOT BE POSSIBLE TO DECIDE WHETHER ALL THE PURCHASES WER E RECORDED IN THE BOOKS OF ACCOUNTS OR NOT. IN THE ABSENCE OF AN Y MATERIAL ON RECORD, THIS TRIBUNAL IS OF THE CONSIDERED OPINION THAT THE MATTER NEEDS TO BE CONSIDERED BY THE ASSESSING OFFICER AFT ER CONSIDERING THE OPENING STOCK AND THE TOTAL PURCHASES THAT WERE MADE DURING THE YEAR UNDER CONSIDERATION. ACCORDINGLY, THE ORD ERS OF THE LOWER AUTHORITIES ARE SET ASIDE AND THE ISSUE IS REMITTED BACK TO THE FILE OF THE ASSESSING OFFICER TO RECONSIDER THE ISSUE AFTER CONSIDERING OPENING STOCK FOR THE YEAR UNDER CONSIDERATION AND THE TOTAL PURCHASES MADE DURING THE YEAR AND DECIDE THE ISSUE AFRESH IN ACCORDANCE WITH LAW AFTER GIVING REASONABLE OPPORTU NITY TO THE ASSESSEE. 8. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALL OWED FOR STATISTICAL PURPOSES. 7 I.T.A. NO.116/MDS/15 ORDER PRONOUNCED ON 8 TH OF MAY, 2015 AT CHENNAI. SD/- SD/- (A. MOHAN ALANKAMONY) (N.R.S. GANESAN) (. !'# ! ) ( . . . ) % / ACCOUNTANT MEMBER /JUDICIAL MEMBER /CHENNAI, 5 /DATED, THE 8 TH MAY, 2015. KRI. / -267 87)2 /COPY TO: 1. +, /APPELLANT 2. -.+, /RESPONDENT 3. 1 92 () /CIT(A)-VI, CHENNAI-34 4. 1 92 /CIT, PONDICHERRY 5. 7: -2 /DR 6. ( ; /GF.