Mamata Katal, Cuttack V. ITO, Ward-2, Balasore, Balasore

ITA 12/CTK/2015

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 7566 (ITAT-CUTTACK)
• Duration Of Justice: 1 year(s) 9 month(s) 22 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-10-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Next Hearing Date: 27-10-2016
• Assessment Year: 2009-2010
• Appeal Filed On: 05-01-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: D K PRADHAN
• Assessee Lawyers: S N SAHU

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL CUTTACK SMC BENCH, CUTTACK BEFORE SHRI N. S SAINI, ACCOUNTANT MEMBER ITA NO.12 /CTK/2015 ASSESSMENT YEAR : 2009 - 2010 SMT. MAMATA KATAL, C/O. GOPAL KRUSHNA KATAL, SEKHBAD, JALESWAR, BALASORE VS. ITO, WARD - 2, BALASORE PAN/GIR NO. ATIPK 7046 P (APPELLANT ) .. ( RESPONDENT ) ASSESSEE BY : SHRI S.N.SAHU REVENUE BY : SHRI D.K.PRADHAN , DR DATE OF HEARING : 2 7 /10 / 2016 DATE OF PRONOUNCEMENT : 27 /10 / 2016 O R D E R THIS I S AN APPEAL FILED BY THE ASSESSEE AGAINST THE ORDER OF CIT(A) - 1, BHUBANESWAR , DATED 11/11/2014 , FOR THE ASSESSMENT YEAR 2009 - 2010 . 2. THE FIRST ISSUE INVOLVED IN THIS APPEAL IS THAT THE LD CIT(A) ERRED IN CONFIRMING THE ACTION OF THE ASSESSING OFFICER IN MAKING ADDITION OF RS.55, 433/ - ON ACCOUNT OF UNDISCLOSED BANK BALANCE. 3. THE ASSESSING OFFICER OBSERVED THAT THE ASSESSEE HAS BEEN MAINTAINING SB ACCOUNT NO.4249 IN KALINGA GRAMYA BANK, RAJPUR BRANCH, BALASORE, 2 ITA NO.12/CTK/2015 ASSESSMENT YEAR :2009 - 2010 WHICH WAS HAVING A CLOSING BALANCE OF RS.55,433/ - AS ON 31.3.2009. SINCE THE BANK ACCOUNT WAS NOT DISCLOSED, THE ASSESSING OFFICER ADDED RS.55,433/ - AS UNDISCLOSED INCOME. 4. ON APPEAL, LD CIT(A) CONFIRMED THE ACTION OF THE ASSESSING OFFICER. 5. BEFORE ME, LD A.R. OF THE ASSESSEE SUBMITTED THAT THE DEPOSIT IN SAVING BANK ACCOUNT NO.4249 MAINTAINED WITH KALINGA GRAMYA BANK WAS THE MATURITY DEPOSIT PROCEEDS OF RECURRING DEPOSIT ACCOUNT WHICH WERE CREDITED ON 23.5.2008 OF RS.38,347/ - AND ON 3.2.2009 OF RS.18,895/ - AGGREGATING TO RS.57,242/ - . HE ALSO FILED BEFORE ME A COPY OF SAVING BANK ACCOUNT DULY CERTIFIED BY THE MANAGER OF THE BANK IN SUPPORT OF THE SAME. 6. ON THE OTHER HAND, LD D.R. SUPPORTED THE ORDERS OF LOWER AUTHORITIES. 7. ` I HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIALS AVAILABLE ON RECORD. IT IS OBSERVED THAT DURING THE COURSE OF ASSESSMENT PROCEEDINGS, A SB ACCOUNT NO.4249 MAINTAINED BY THE ASSESSEE WITH KALINGA GRAMYA BANK, BALASORE WAS FOUND HAVING CLOSING BALANCE OF RS.55,433/ - AS ON 31.3.2009. THE ASSESSEE COULD NOT SATISFACTORILY EX PLAIN THE SOURCE OF DEPOSIT IN THE BANK ACCOUNT BEFORE THE ASSESSING OFFICER. THEREFORE, HE ADDED RS.55,433/ - TO THE INCOME OF THE ASSESSEE. 8. ON APPEAL, LD CIT(A) CONFIRMED THE ACTION OF THE ASSESSING OFFICER. 3 ITA NO.12/CTK/2015 ASSESSMENT YEAR :2009 - 2010 9. BEFORE ME, LD A.R. OF THE ASSESSEE HAS FILED COPY OF SAVING BANK ACCOUNT NO.4249 DULY CERTIFIED BY THE MANAGER OF THE ODISHA GRAMYA BANK, WH ICH CLEARLY SHOWS THAT THERE WERE DEPOSITS BY WAY OF TRANSFER FROM MATURITY RECURRING DEPOSIT ACCOUNT ON 23.5.2008 OF RS.38,347/ - AND MATURITY RECURRING D EPOSIT ACCOUNT ON 3.2.2009 OF RS.18,895/ - AGGREGATING TO RS.57,242/ - . THUS, THE EVIDENCE SHOWS THAT THE CLOSING BALANCE OF RS.55,534/ - WAS THE MATURITY PROCEEDS OF RECURRING DEPOSIT ACCOUNT OF THE ASSESSEE OF EARLIER YEARS. THEREFORE, THE ADDITION MADE B Y THE LOWER AUTHORITIES IS NOT SUSTAINABLE AS THE ASSESSEE HAS SUCCESSFULLY EXPLAINED THE SOURCE OF DEPOSIT IN THE SAVING BANK ACCOUNT. THEREFORE, I SET ASIDE THE ORDERS OF LOWER AUTHORITIES AND DELETE THE ADDITION OF RS.55,433/ - . THIS GROUND IS ACCORDIN GLY, ALLOWED. 10. THE SECOND ISSUE INVOLVED IN THIS APPEAL IS THAT THE LD CIT(A) ERRED IN CONFIRMING THE ORDER OF THE ASSESSING OFFICER IN MAKING THE ADDITION OF RS.19,60,452/ - UNDER THE HEAD UNDISCLOSED STOCK. 11. BRIEF FACTS OF THE CASE ARE THAT DURI NG THE COURSE OF ASSESSMENT PROCEEDINGS , THE ASSESSING OFFICER FOUND THAT AS PER THE CLOSING STOCK 4 ITA NO.12/CTK/2015 ASSESSMENT YEAR :2009 - 2010 FURNISHED BEFORE THE STATE BANK OF INDIA, JALESWAR BRANCH, THE CLOSING STOCK WAS VALUED AT RS.25,20,000/ - WHEREAS THE CLOSING STOCK SHOWN IN THE PROFIT AND L OSS ACCOUNT FILED WITH THE RETURN OF INCOME SHOWS CLOSING STOCK OF RS.5,59,548/ - . THE DIFFERENCE OF RS.19,60,452/ - COULD NOT BE EXPLAINED BY THE ASSESSEE FOR WHICH THE SAME WAS ADDED BY THE ASSESSING OFFICER AS UNDISCLOSED STOCK. 12. THE LD CIT(A) CALLED FOR A REMAND REPORT AND THE ASSESSING OFFICER OBSERVED THAT THE CLOSING STOCK REPORTED TO THE BANK WAS RS.25,20,000/ - , WHICH ONLY RELATES TO ASSESSMENT YEAR 2011 - 12. THE CLOSING STOCK FOR THE A.Y. 2009 - 2010 REPORTED BY THE ASSESSEE TO THE BANK WAS RS.15,59,548/ - . IN VIEW OF THE SAME, THE ASSESSING OFFICER WAS OF THE OPINION THAT ONLY DIFFERENCE AMOUNT OF RS.10 LAKHS IS TO BE ADDED TO THE CLOSING STOCK. 13. BEFORE THE LD CIT(A), THE ASSESSEE SUBMITTED THAT THE CLOSING STOCK REPORTED TO THE BANK WAS FOR RENEWAL OF CASH CREDIT LIMIT AND WAS NOT THE ACTUAL STOCK OF THE ASSESSEE. THE COMMERCIAL TAX OFFICER HAS NOT FOUND ANY DISCREPANCY IN THE STOCK. THE ASSESSING OFFICER ALSO VERIFIED THE STOCK REGISTER, PURCHASE REGISTER AND BILLS. IN VIEW OF THE SAME, THE CLOSING STOCK REPORTED IN THE P&L ACCOUNT FILED BEFORE THE DEPARTMENT IS CORRECT. THE LD CIT(A) DID NOT ACCEPT THE EXPLANATION OF THE ASSESSEE ON THE GROUND THAT THE STOCK STATEMENT FILED BEFORE THE SBI IS NOT A MERE STOCK STATEMENT BUT THE AUDITED ACCOUNTS SIGNED BY THE CHARTERED ACCOUNTANT ON 17.7.2009 5 ITA NO.12/CTK/2015 ASSESSMENT YEAR :2009 - 2010 U/S.44AB. THEREFORE, THE ASSESSEES STATEMENT THAT THE STOCK STATEMENT WAS SUBMITTED BEFORE THE SBI MERELY FOR OBTAINING CC CREDIT LIMIT HAS NO SUBSTANCE. AS PER THE AUDITED ACCOUN TS SINGED BY THE AUDITOR, COPY OF WHICH WAS SUBMITTED TO THE BANK, THE CLOSING STOCK AS ON 31.3.2009 WAS SHOWN AT RS.15,59548/ - . THEREFORE, IN VIEW OF THE ASSESSING OFFICERS FINDINGS IN THE REMAND REPORT, HE RESTRICTED THE ADDITION TO RS.10 LAKHS. 14. BEF ORE ME, LD A.R. OF THE ASSESSEE FILED COPY OF THE AUDITED BALANCE SHEET AS ON 31.3.2009. IT IS OBSERVED THAT THE CLOSING STOCK SHOWN THEREON IS RS.5,59,548/ - . IT IS NOT IN DISPUTE THAT THE CLOSING STOCK SHOWN BY THE ASSESSEE TO THE BANK WAS RS.15,59,548. THUS, THERE WAS DIFFERENCE OF RS.10 LAKHS IN THE STOCK DISCLOSED TO THE BANK AND THAT SHOWN IN THE AUDITED ACCOUNTS OF THE ASSESSEE. THE EXPLANATION OF THE ASSESSEE IS THAT THE EXCESS S TOCK WAS SHOWN TO THE BANK FOR OBTAINING CC LIMIT FROM SBI. LD A.R. OF THE ASSESSEE HAS ALSO ARGUED THAT THE DIFFERENCE IN STOCK WAS ONLY ON ACCOUNT OF UNDER VALUATION OF STOCK AND NO DIFFERENCE WAS THERE IN THE QUANTITY OF THE STOCK. THEREFORE, NO ADDITION CAN BE MADE UNDER THE HEAD UNDISCLOSED STOCK IN THE HANDS OF T HE ASSESSEE OF R S.10 LAKHS. FOR THIS CONTENTION, HE RELIED ON THE DECISION OF HONBLE GUJARAT HIGH COURT IN THE CASE OF CIT VS. VEERDIP ROLLERS PVT LTD., 323 ITR 341 (GUJ), WHEREIN, IT WAS HELD AS UNDER: THE ADDITION WAS MADE U/S.68 OF THE ACT ON ACCOUNT OF DIFFERENCE BETWEEN THE CLOSING STOCK FURNISHED IN A STATEMENT TO THE BANK FOR AVAILING OF CREDIT FACILITY AND THAT SHOWN IN THE BOOKS OF ACCOUNT FURNISHED BEFORE THE INCOME TAX AUTHORITIES. 6 ITA NO.12/CTK/2015 ASSESSMENT YEAR :2009 - 2010 THE TRIBUNA L DELETED THE ADDITION ON THE GROUND THAT THE STATEMENT SUBMITTED BY THE ASSESSEE TO THE BANK WAS ON ESTIMATE BASIS AND THE VALUE OF THE STOCK WAS INFLATED TO AVAIL OF GREATER CREDIT FROM THE BANK AND THAT THERE WAS NO JUSTIFICATION FOR MAKING ANY ADDITION ON THE ALLEGATION OF INFLATED STOCK SHOWN TO BANK. 15. LD A.R. OF THE ASSESSEE SUBMITTED THAT THE SLP FILED BY THE DEPARTMENT AGAINST THE SAID JUDGMENT OF HONBLE GUJARAT HIGH COURT HAS BEEN DISMISSED BY THE HONBLE SUPREME COURT REPORTED IN 307 (ST) 3. 16. LD D.R. RELIED ON THE ORDERS OF LOWER AUTHORITIES. 17. I FIND THAT THE FACTS IN THE PRESENT CASE ARE IDENTICAL TO THE FACTS THAT WERE BEFORE THE HONBLE GUJARAT HIGH COURT IN THE CASE OF VEERDIP ROLLERS PVT LTD. (SUPRA). RESPECTFULLY FOLLOWING THE DE CISION OF HONBLE GUJARAT HIGH COURT, I SET ASIDE THE ORDERS OF LOWER AUTHORITIES AND DELETE THE DISALLOWANCE OF RS.10 LAKHS SUSTAINED BY THE LD CIT(A) ON ACCOUNT OF UNDISCLOSED STOCK AND ALLOW THIS GROUND OF APPEAL. 18. IN THE RESULT, APPEAL FILED BY THE ASSESSEE IS ALLOWED. ORDER PRONOUNCE D IN THE OPEN COURT ON 27 /10 /2016 IN THE PRESENCE OF PARTIES. S D / - ( N. S SAINI ) A CCOUNTANT MEMBER CUTTACK; DATED 27 /10 /2016 7 ITA NO.12/CTK/2015 ASSESSMENT YEAR :2009 - 2010 B.K.PARIDA, SPS COPY OF THE ORDER FORWARDED TO : BY ORDER, ASST.REGISTRAR, ITAT, CUTTACK 1. THE APPELLANT : SMT. MAMATA KATAL, C/O. GOPAL KRUSHNA KATAL, SEKHBAD, JALESWAR, BALASORE 2. THE RESPONDENT. 3. THE CIT(A) - 1, BHUBANESWAR 4. CIT , CUTTACK 5. DR, ITAT, CUTTACK 6. GUARD FILE. //TRUE COPY//