M/s. Matching Centre, Valsad V. The Income tax Officer,Ward-2, Valsad

ITA 1201/AHD/2013

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 1569 (ITAT-AHMEDABAD)
• Duration Of Justice: 3 year(s) 26 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 25-05-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 24-05-2016
• Assessment Year: 2006-2007
• Appeal Filed On: 29-04-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: NARENDRA SINGH
• Keywords: Income from undisclosed sources
• Section: 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD B BENCH AHMEDABAD , BEFORE SHRI SHAILENDRA KUMAR YADAV, JUDICIAL MEMBER, AND SHRI ANIL CHATURVEDI, ACCOUNTANT MEMBER. ITA. NO.1201/AHD/2013 (ASSESSMENT YEAR:2006-07) M/S. MATCHING CENTRE, JUNA THANA, NR. AMBAJI TEMPLE, VALSAD APPELLANT VS. INCOME TAX OFFICER, WARD-2, VALSAD RESPONDENT PAN: AAHPM7129B /BY APPELLANT : SHRI RAJESH M. UPADHYAY, A.R. /BY RESPONDENT : SHRI NARENDRA SINGH, SR. D. R. /DATE OF HEARING : 24.05.2016 /DATE OF PRONOUNCEMENT : 25.05.2016 ORDER PER SHAILENDRA KUMAR YADAV, J.M: THIS APPEAL HAS BEEN FILED BY ASSESSEE AGAINST THE ORDER OF COMMISSIONER OF INCOME TAX (APPEALS), VALSAD, DA TED 31.12.2012 FOR A.Y. 2006-07 ON FOLLOWING GROUNDS:- ITA NO.1201/AHD/13 A.Y. 06-07 [M/S. MATCHING CENTRE VS. ITO] PAGE 2 (1) ITO HAS ERRED IN LAW AND ON FACTS TO TREAT AN INCOME OF RS.2,04,070/- AS UNACCOUNTED INCOME ON THE BASIS OF SO CALLED DISCLOSURE MADE BY A PARTNER DURING THE COURSE OF SURVEY ON OATH. (2) ANY STATEMENT TAKEN ON OATH OF A PERSON AND S O CALLED DISCLOSURE OF INCOME MADE BY A PARTNER DURING COURSE OF SURVEY DOES NOT BECOME EVIDENCE TO HOLD THAT SUCH INCOME IS UNACCOUNTED INCOME, IN THE LIGHT OF SUPREME COURT OF INDIAS JUDGMENT IN THE CASE OF S. KADAR DHAN & SON (2012) 254 CTR (SC) 228, AND AMOUNT SO ADDED AS INCOME IS NOT UNACCOUNTED INCOME EXIGIBLE TO PENALTY U/S 271(1)(C) OF I.T.ACT, 1961. (3) THOUGH HONOURABLE ITAT C BENCH AHMEDABAD DISMISSED APPELLANTS APPEAL AGAINST ORDER U/S 143(3) BUT WHEN ASSESSMENT PROCEEDINGS AND PENALTY PROCEEDINGS BEING HELD TO DISTINCT, PENALT Y LEVIED MAY BE CANCELLED. (4) PENALTY LEVIED OF RS.68,690/- U/S. 271(1)(C) BE ING NOT JUST AND PROPER BE DELETED. 2. THERE WAS A SURVEY U/S.133A OF THE ACT AT THE BU SINESS PREMISE OF ASSESSEE. DURING COURSE OF SURVEY, INVE NTORY OF PHYSICAL STOCK FOUND WAS TAKEN AND THE STOCK WAS FO UND OF RS.25,60,340/-. HOWEVER, AS PER THE BOOKS, THE STO CK WAS SHOWN AT RS.37,44,127/-. THUS, THE STOCK ON PHYSIC AL VERIFICATION WAS FOUND SHORT BY RS.11,83,187/-. ON BEING CONFRONTED BY THE DISCREPANCY, ASSESSEE HAD DISCLOS ED VOLUNTARILY UNACCOUNTED INCOME OF RS.2,04,070/-, CA LCULATED AS GROSS PROFIT @ 16.03% ON STOCK DIFFERENCE FOUND DURING THE ITA NO.1201/AHD/13 A.Y. 06-07 [M/S. MATCHING CENTRE VS. ITO] PAGE 3 SURVEY, AS ITS ADDITIONAL INCOME OVER AND ABOVE THE REGULAR INCOME OF YEAR. ASSESSEE HAD FILED RETURN OF INCOM E FOR A.Y. 2006-07 SHOWING RS.22,791/- WITHOUT SHOWING ADDITIO NAL INCOME OFFERED DURING THE COURSE OF SURVEY OF RS.2, 04,070/-. ON COMPLETION OF ASSESSMENT PROCEEDINGS, ASSESSING OFFICER LEVIED A PENALTY OF RS.68,690/-, WHICH WAS CONFIRME D BY CIT(A). 2.1 THE STAND OF ASSESSEE HAS BEEN THAT ASSESSING O FFICER MADE ADDITION AMOUNTING TO RS. 2,04,070/-, WHICH WA S DISCLOSED BY ASSESSEE DURING COURSE OF SURVEY ACTIO N. ACCORDING TO ASSESSEE, ASSESSING OFFICER IN ACCOUNT AT REMARK OF THE AUDITOR STATED THAT ASSESSEE HAS NOT MAINTAI NED DAY TO DAY STOCK REGISTER AS ON 31.03.2006. THE PARTNER O F THE FIRM HAS TAKEN PHYSICAL STOCK SO CLOSING STOCK HAS BEEN VALUED AND CERTIFIED BY THE PARTNERS. STOCK TAKEN AS PER A UDITED STATEMENT OF ACCOUNT OF RS. 32,75,715/- WHEN ACCEPT ED BECAUSE THERE WAS NO ADDITION OF GROSS PROFIT BUT A DDITION OF RS. 2,04,070/- ON THE BASIS OF DISCLOSURE OF INCOME MADE ON THE DATE OF SURVEY. ACCORDING TO ASSESSEE, HE BROU GHT TO THE NOTICE OF ASSESSING OFFICER THAT THERE WERE MISTAKE S COMMITTED IN PREPARING INVENTORY OF STOCK ON THE DA TE OF ITA NO.1201/AHD/13 A.Y. 06-07 [M/S. MATCHING CENTRE VS. ITO] PAGE 4 SURVEY. SUCH INVENTORY INCLUDED STOCK WORTH RS. 4,2 2,193/-, WHICH WAS NOT AS PER INVOICES BUT AS PER CHALLANS/D .OS. STOCK AS PER CHALANS AND AS PER INVOICES BOTH WERE INCLUDED. BESIDES THIS, SISTER CONCERN'S INVOICE WAS ALSO CLA IMED TO BE INCLUDED IN STOCK. ACCORDING TO ASSESSEE, HE FINAL IZED TRADING AND PROFIT & LOSS ACCOUNT ON THE BASIS OF CLOSING S TOCK COMPUTED AFTER ADJUSTING EXCESS STOCK OF RS. 4,22,1 93/-. ONCE GROSS PROFIT AND BOOK RESULT WERE ACCEPTED, IT WAS NOT JUSTIFIED IN LEVYING THE CHARGES OF CONCEALING PART ICULARS OF INCOME. THE SUM AND SUBSTANCE OF STATEMENT OF ASSE SSEE THAT INVENTORIED STOCK NOT PROPER, SO WITHOUT PREJU DICE TO THE MERIT OF ADDITION, HE SUBMITTED THAT PENALTY IS NOT JUSTIFIED AND SAME SHOULD BE DELETED. ON THE OTHER HAND, LD. D.R. SUPPORTED THE ORDER OF CIT(A). 2.2 AFTER GOING THROUGH RIVAL SUBMISSIONS AND MATER IAL ON RECORD, WE FIND THAT ADDITION IN QUESTION, WHICH IS THE BASIS OF PENALTY, IS DISCREPANCY IN STOCK. ACCORDING TO ASS ESSEE, THERE IS A DEFECT IN PREPARATION OF THE INVENTORY WHILE V ALUING STOCK ON THE DATE OF SURVEY. PENALTY IS NOT JUSTIFIED ON LY ON THE BASIS OF ADDITION IN QUANTUM. BOTH QUANTUM AND PEN ALTY ARE BEING DECIDED ON THE FACTS AND CIRCUMSTANCES. THE BASIS OF ITA NO.1201/AHD/13 A.Y. 06-07 [M/S. MATCHING CENTRE VS. ITO] PAGE 5 THE ADDITION WHICH IS BASIS OF PENALTY IS DISCREPAN CY IN THE STOCK. THOUGH, ASSESSEE HAS TRIED TO UNSUCCESSFULL Y TRIED RECONCILE THE SITUATION OF ASSESSMENT ORDER. ACCOR DING TO US, THERE MAY BE VARIOUS FACTORS FOR NON RECONCILIATION OF THE STOCK AS ON THE DATE OF SURVEY. THE DISCLOSURE IS NOT SOUND BASIS FOR LEVYING PENALTY. TAKING ALL FACTS AND CI RCUMSTANCES INTO CONSIDERATION, PENALTY IN QUESTION IS DIRECTED TO BE DELETED. 3. IN THE RESULT, THE APPEAL OF ASSESSEE IS ALLOWED . PRONOUNCED IN THE OPEN COURT ON THIS THE 25 TH DAY OF MAY, 2016. SD/- SD/- (ANIL CHATURVEDI) (SHAILENDRA KUMAR Y ADAV) ACCOUNTANT MEMBER JUDICIAL MEMBER AHMEDABAD: DATED 25/05/2016 TRUE COPY S.K.SINHA / COPY OF ORDER FORWARDED TO:- / REVENUE 2 / ASSESSEE $ %&%'( ) / CONCERNED CIT 4 )- / CIT (A) ,-./00'(1 '( 123& / DR, ITAT, AHMEDABAD 4/5678 / GUARD FILE. BY ORDER / 1 / 2% '( 123&