M/s Savitri Electronic Corp, Vijayawada V. The ITO, Ward-2(1)., Vijayawada

ITA 132/VIZ/2006

• Counselvise Citation: [2010] 136 COUNSELVISE.COM (IT) 0642 (ITAT-VISAKHAPATNAM)
• Duration Of Justice: 4 year(s) 3 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-06-2010
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: Not Allotted
• Next Hearing Date: 17-05-2010
• Assessment Year: 2003-2004
• Appeal Filed On: 22-03-2006
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: G S S GOPINATH
• Keywords: Revised return; Set aside
• Section: 133A

Judgement Text

1 IN THE INCOME TAX APPELLATE TRIBUNAL VISAKHAPATNAM BENCH: VISAKHAPATNAM BEFORE: SRI SUNIL KUMAR YADAV, JUDICIAL MEMBER AND SRI B.R. BASKARAN, ACCOUNTANT MEMBER I.T.A. NO.132/VIZAG/2006 ASSESSMENT YEARS : 2003-04 SAVITHRI ELECTRONIC CORPORATION VIJAYAWADA VS. ITO, WARD-2(1) VIJAYAWADA (APPELLANT) (RESPONDENT) PAN NO.AATFS 8007L APPELLANT BY : SHRI C. SUBRAHMANYAM, CA RESPONDENT BY : SHRI G.S.S. GOPINATH, DR O R D E R PER SHRI B.R. BASKARAN, ACCOUNTANT MEMBER : THE APPEAL OF THE ASSESSEE IS DIRECTED AGAINST THE ORDER DATED 31.1.2006 PASSED BY LD. CIT(A), VIJAYAWADA AND IT RELATES TO THE ASSESSMENT YEAR 2003-04. IN THIS APPEAL THE ASSESSEE IS QUESTIONING THE METH ODOLOGY ADOPTED BY THE LD. CIT(A) IN DETERMINING THE INCOME OF THE ASSESSEE. 2. THE FACTS OF THE CASE ARE STATED IN BRIEF. THE DEPARTMENT CARRIED OUT SURVEY OPERATION U/S 133A OF THE ACT IN THE BUSINES S PREMISES OF THE ASSESSEE ON 30.9.2002. DURING THE COURSE OF SURVEY THE DEPARTM ENT DETECTED EXCESS STOCK OF RS.3,29,170/- AND ALSO EXCESS CASH OF RS.1,07,650/- . THE ASSESSEE OFFERED THE SAME AS ITS INCOME AND ACCORDINGLY FILED THE REVISE D RETURN OF INCOME. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, IT WAS NOTICE D THAT THE SALES TAX DEPARTMENT HAD ALSO CARRIED OUT INSPECTION AT THE B USINESS PREMISES OF THE ASSESSEE ON 22.4.2002 AND DURING THE COURSE OF THAT INSPECTION, SUPPRESSED TURNOVER TO THE TUNE OF 10.76 LAKHS WAS NOTICED BY THAT DEPARTMENT. HOWEVER, IN 2 THE SALES TAX ORDER, THE SUPPRESSED TURN OVER WAS D ETERMINED AT RS.6,84,206/-. THE ASSESSING OFFICER PROPOSED TO ADD THE SAID DIFF ERENCE OF RS.6,84,206/- TO THE TOTAL INCOME. HOWEVER, AFTER CONSIDERING THE EXPLA NATIONS OF THE ASSESSEE THE ASSESSING OFFICER GAVE SET OFF OF EXCESS STOCK, EXC ESS CASH THAT WERE DECLARED BY THE ASSESSEE IN THE REVISED RETURN OF INCOME AND AL SO GROSS PROFIT ON THE EXCESS STOCK CALCULATED AT THE RATE OF 14%. THUS A SUM OF RS.2,01,303/- WAS ADDED TO THE TOTAL INCOME RETURNED BY THE ASSESSEE. IN THE APPELLATE PROCEEDINGS, THE LD. CIT(A) WAS NOT CONVINCED WITH THE METHODOLOGY ADOPT ED BY THE ASSESSING OFFICER. ACCORDINGLY, THE LD. CIT(A) ISSUED THE NO TICE OF ENHANCEMENT TO THE ASSESSEE AND DETERMINED THE TOTAL INCOME AT RS.7,49 ,500/-. THUS THE LD. CIT(A) INCREASED THE TOTAL INCOME FROM RS.6,54,890/- TO RS .7,49,500/-. NOW THE ASSESSEE IS IN APPEAL BEFORE US. 3. THE LD. A.R. SUBMITTED THAT THE SALES TAX DEPART MENT AND THE INCOME TAX DEPARTMENT HAVE CARRIED OUT SURVEY OPERATIONS ON TW O DIFFERENT DATES I.E. ON 22.4.2002 AND 30.9.2002 RESPECTIVELY. LD. A.R. FUR THER SUBMITTED THAT THE STOCK IN HAND AS WELL AS THE CASH IN HAND DOES NOT REMAIN CONSTANT AND THEY FLUCTUATE ON A DAY TO DAY BASIS DEPENDING UPON THE TRANSACTIO NS OF PURCHASES, SALES AND OTHER TRANSACTION. WITHOUT TAKING INTO THESE FACTU AL ASPECTS, THE LD. CIT(A) HAS TAKEN INTO ACCOUNT THE EXCESS STOCK FOUND AT THE TI ME OF BOTH THE SURVEYS TOGETHER AND HAS DETERMINED THE TOTAL INCOME, WHICH ACCORDING TO THE LD. A.R. WILL NOT GIVE TRUE PICTURE OF THE INCOME OF THE ASS ESSEE. ACCORDINGLY, LD. A.R. PLEADED THAT THE CASE MAY BE SET ASIDE TO THE FILE OF THE ASSESSING OFFICER FOR FRESH EXAMINATION. LD. D.R. ALSO AGREED TO THE PLE A MADE BY THE LD. A.R. 4. WE ALSO NOTICE THAT THE ASSESSING OFFICER HAS TA KEN INTO CONSIDERATION THE NET SUPPRESSION OF SALES DETERMINED AS PER THE SALE S TAX ASSESSMENT ORDER. HOWEVER, THE LD. CIT(A) HAS NOTICED THAT THERE WAS EXCESS STOCK OF CO-AXIAL WIRE TO THE TUNE OF RS.5,39,597/- AND THERE WAS A DEFICI T STOCK IN OTHER ELECTRONIC GOODS TO THE TUNE OF RS.3,84,390/- AND CONSIDERED T HESE ASPECTS FOR DETERMINING THE INCOME. THESE FACTS NOTICED BY THE LD. CIT(A) DO NOT FIND PLACE IN THE 3 ASSESSMENT ORDER. FURTHER, AS SUBMITTED BY LD. A.R . THE METHODOLOGY ADOPTED BY LD. CIT(A) IS CONFUSING AS THE LD. CIT(A) HAS TA KEN INTO ACCOUNT THE STOCK DIFFERENCE THAT WAS NOTICED ON TWO DIFFERENT DATES, WHICH DO NOT STAND ON THE SAME PLATFORM. IN THESE CIRCUMSTANCES, WE FIND MER IT IN THE PLEA OF THE ASSESSEE THAT THE ISSUE REQUIRES FRESH EXAMINATION. ACCORDI NGLY, WE SET ASIDE THE ORDER OF LD. CIT(A) AND RESTORE THE ISSUE BACK TO THE FILE O F THE ASSESSING OFFICER FOR FRESH EXAMINATION AFTER AFFORDING NECESSARY OPPORTUNITY O F BEING HEARD TO THE ASSESSEE. 5. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS TRE ATED AS ALLOWED. PRONOUNCED ACCORDINGLY ON 29.6.2010. SD/- SD/- (SUNIL KUMAR YADAV) (B.R. BASKARAN) JUDICIAL MEMBER ACCOUNTANT MEMBER VISAKHAPATNAM DATE : 29 TH JUNE, 2010 A COPY OF THIS ORDER IS FORWARDED TO : 01 SURESH SIVA & CO., CA, SF-10, 2 ND FLOOR, CHITTURI COMPLEX, 11-40-1, PULIPATIVARI STREET, VIJAYAWADA 02 ITO WARD-2(1), VIJAYAWADA 03 THE CIT, VIJAYAWADA 04 THE CIT (A), VIJAYAWADA 05 THE DR, ITAT, VISAKHAPATNAM 06 GUARD FILE. BY ORDER SENIOR PRIVATE SECRETARY ITAT, VISAKHAPATNAM BENCH