M/s. SMC Food Ltd., Uttar Pradesh V. ACIT, New Delhi

ITA 120/DEL/2015

• Counselvise Citation: [2020] 110 COUNSELVISE.COM (IT) 7889 (ITAT-DELHI)
• Duration Of Justice: 5 year(s) 7 month(s) 20 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-08-2020
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: G
• Assessment Year: 2012-2013
• Appeal Filed On: 07-01-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: MADHUR AGRAWAL ADVS
• Keywords: Search and seizure
• Section: 142(1); 250; 143(2); 132

Judgement Text

1 ITA NO. 120/DEL/2015 IN THE INCOME TAX APPELLAT E TRIBUNAL DELHI BENCH: G NEW DELHI BEFORE SHRI R. K. PANDA, ACCOUNTANT MEMBE R AND MS SUCHITRA KAMBLE, JUDIC IAL MEMBER ITA NO. 120/DEL/2015 ( A. Y 2012-13) (THROUGH VIDEO CONFEREN CING) SMC FOOD LTD. 2/1425, WHITE HOUSE, DELHI ROAD DISTRICT- SAHARANPUR UTTAR PRADESH AABCS9564R (APPELLANT) VS ACIT CENTRAL CIRCLE-25 NEW DELHI (RESPONDENT) APPELLANT BY SH. SALIL AGARWAL, SH. SHAILESH GUPTA & SH. MADHUR AGRAWAL, ADVS. RESPONDENT BY SH. H. K. CHOUDHARY, CIT(DR) ORDER PER SUCHITRA KAMBLE, JM THIS APPEAL IS FILED BY THE ASSESSEE AGAINST THE OR DER DATED 17/11/2014 PASSED BY CIT (A)-1 NEW DELHI FOR ASSESSMENT YEAR 2 014-15. 2. THE GROUNDS OF APPEAL ARE AS UNDER:- 1. THE ORDER OF THE LEARNED COMMISSIONER OF INCOME TAX (A) IS ARBITRARY, AGAINST LAW AND FACTS ON RECORD. 2. THE LEARNED COMMISSIONER OF INCOME TAX (A) HAS E RRED IN CONFIRMING ADDITION OF R.S 10,66,350/- IN RESPECT OF PROFIT FR OM UNDISCLOSED SALE WITHOUT GOING THROUGH THE FACTS, DETAILS AS WELL AS DOCUMEN TARY EVIDENCE FILED DURING DATE OF HEARING 26.08.2020 DATE OF PRONOUNCEMENT 28.08.2020 2 ITA NO. 120/DEL/2015 THE COURSE OF ASSESSMENT PROCEEDING AND APPELLATE P ROCEEDING. 3. THE LEARNED COMMISSIONER OF INCOME TAX (A) WHILE PASSING THE ORDER HAS ALSO ADMITTED THE FACT THAT NO EVIDENCE HAS BEEN BR OUGHT ON RECORD BY THE ASSESSING OFFICER TO INDICATE OR ESTABLISH THAT THE RE WAS SALE OUTSIDE THE BOOKS OF ACCOUNTS. 4. THE LEARNED COMMISSIONER OF INCOME TAX (A) WHILE PASSING THE ORDER HAS CONFIRMED THE ADDITION OF RS 10,66,350/- ON THE BAS IS OF THE ASSUMPTION AND PRESUMPTION AND WITHOUT ANY COGENT MATERIAL ON RECO RD. 3. A SEARCH AND SEIZURE WAS CARRIED OUT U/S 132 OF THE INCOME TAX ACT, 1961 IN SMC GROUP OF CASES ON 4/8/2011 INCLUDING TH E ASSESSEE. NOTICE U/S 142(1) WAS ISSUED ON 11/4/2013 IN RESPONSE TO WHICH A RETURN DECLARING INCOME OF RS. 3,37,29,450/- WAS FILED ON 31/5/2013. NOTICE U/S 143(2) WAS ISSUED ON 30/10/2013. NOTICES U/S 142 (1) ALONG WI TH QUESTIONNAIRE WAS ISSUED ON 26/4/2013 AND 17/2/2014. THE ASSESSEE FU RNISHED THE RELEVANT RECORDS AND FILED REPLY DATED 20/2/2014. THE ASSES SING OFFICER ASSESSED INCOME AT RS. 4,83,44,860/- AFTER MAKING AN ADDITIO N OF DIFFERENCE OF RS.1,46,15,410/- IN STOCK OF GOODS FOUND AND BOOKS. 4. BEING AGGRIEVED BY THE ASSESSMENT ORDER, THE ASS ESSEE FILED APPEAL BEFORE THE CIT(A). THE CIT(A) PARTLY ALLOWED THE APPEAL OF THE ASSESSEE. 5. THE LD. AR SUBMITTED THAT THE CLOSING STOCK OF F INISHED GOODS AS PER THE STOCK OF THE COMPANY WAS RS. 11,46,15,410/-. HOWEV ER, AT THE TIME OF PHYSICAL VERIFICATION OF STOCK DURING THE SEARCH, I T WAS FOUND THAT RS. 10,21,21,080/- FOR WHICH THE ASSESSEE HAS GIVEN EXP LANATION THAT THE STOCK LYING AT OUTSIDE FACTORY PREMISES AND COLD STORAGE WAS NOT TAKEN INTO ACCOUNT AT THE TIME OF PHYSICAL VERIFICATION BY THE ASSESSI NG OFFICER. THE LD. AR SUBMITTED THAT BEFORE THE ASSESSING OFFICER RE-CONC ILIATION OF STOCK FOUND WITH STOCK AS PER STOCK REGISTER WAS PRODUCED. THE AMOU NT OF STOCK IN THE BOOKS OF ACCOUNTS IS MORE BY RS.1,46,15,410/-. AS SUCH THE C OMPANY HAS SHOWN MORE 3 ITA NO. 120/DEL/2015 PROFIT IN THE BOOKS OF ACCOUNT AND AS SUCH THIS ISS UE NEEDS NO ADVERSE INFERENCE. THE LD. AR FURTHER SUBMITTED THAT THE B OOKS WERE NOT AT ALL REJECTED BY THE ASSESSING OFFICER AND THE ASSESSING OFFICER HAS NOT TAKEN INTO ACCOUNT, THE STOCK LYING OUTSIDE FACTORY PREMISES A ND COLD STORAGES. THE LD. AR THROUGH AN EXAMPLE HAS POINTED OUT THE GP RATE S HOWN BY THE ASSESSEE IS MORE IF THE ASSESSING OFFICERS VERSION IS CONSIDER ED. THE SAID ILLUSTRATION IS AS UNDER:- AMOUNT (RS) (AMOUNT RS.) OPENING STOCK 100 SALE 150 PURCHASE 100 CLOSING STOCK 90 GROSS PROFIT 40 240 240 AMOUNT (RS) (AMOUNT RS.) OPENING STOCK 100 SALE 150 PURCHASE 100 CLOSING STOCK 100 (BY SHOWING HIGHER CLOSING RATE) GROSS PROFIT 50 250 250 THUS, THE LD. AR SUBMITTED THAT THE ASSESSING OFFIC ER AS WELL AS THE CIT(A) HAS NOT TAKEN INTO ACCOUNT THE RELEVANT MATERIAL PR ODUCED BEFORE BOTH THE AUTHORITIES BY THE ASSESSEE. 6. THE LD. DR RELIED UPON THE ASSESSMENT ORDER AND THE ORDER OF THE CIT(A). 7. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE M ATERIAL AVAILABLE ON RECORD. THE BOOKS OF ACCOUNTS AT ANY POINT OF TIME WERE NOT REJECTED BY THE ASSESSING OFFICER. THERE WAS NO DENIAL BY THE ASSE SSING OFFICER THAT STOCK WAS LYING OUTSIDE FACTORY PREMISES AND COLD STORAGES. THE ASSESSING OFFICER HAS NOT POINTED OUT ANY DEFECT IN THE RECONCILED STOCK. THE CIT(A) HAS ALSO NOT TAKEN THE COGNIZANCE OF PROPER GP RATE APPLIED BY T HE CIT(A). THEREFORE, THE ASSESSING OFFICER AS WELL AS THE CIT(A) HAS NOT CON SIDERED THE ACTUAL MATERIAL IN CONSONANCE WITH THE PHYSICAL STOCK. THE ASSESSE E HAD JUSTIFIED ITS DIFFERENCE THROUGH THE DOCUMENTS WHICH WAS AT NO PO INT OF TIME DOUBTED BY ANY OF THE REVENUE AUTHORITIES. THEREFORE, CIT(A) WAS NOT JUSTIFIED IN DIRECTING 4 ITA NO. 120/DEL/2015 THE ASSESSING OFFICER FOR MAKING AN ADDITION ON AC COUNT OF DIFFERENCE IN STOCK FOR SUSTAINING THE SAME FOR RS. 10,66,350/-. THE A PPEAL OF THE ASSESSEE IS ALLOWED. 8. IN RESULT, THE APPEAL OF THE ASSESSEE IS ALLOWED . ORDER PRONOUNCED IN THE OPEN COURT ON THIS 28 DAY OF AUGUST, 2020 . SD/- SD/- (R. K. PANDA) (SUCHITRA KAMBLE) ACCOUNTANT MEMBER JUDICIAL M EMBER DATED: 28/08/2020 R. NAHEED COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(APPEALS) 5. DR: ITAT ASSISTANT REGISTRAR ITAT NEW DELHI