JAI KUMAR GOLANI, Jaipur V. ITO, Jaipur

ITA 133/JPR/2014

• Counselvise Citation: [2016] 132 COUNSELVISE.COM (IT) 5242 (ITAT-JAIPUR)
• Duration Of Justice: 2 year(s) 3 month(s) 4 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-05-2016
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: A
• Assessment Year: 2006-2007
• Appeal Filed On: 24-02-2014
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: ROSHANTA MEENA JCIT DHK
• Assessee Lawyers: S L PODDAR
• Keywords: Unexplained investment
• Section: 133A

Judgement Text

VK;DJ VIHYH; VF/KDJ.K] T;IQJ U;K;IHB] T;IQJ IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCHE S, JAIPUR JH DQY HKKJR] U;KF;D LNL; ,OA JH FOE FLAG ;KNO] YS [KK LNL; DS LE{K BEFORE: SHRI KUL BHARAT, JM & SHRI VIKRAM SINGH YAD AV, AM VK;DJ VIHY LA-@ ITA NO. 133/JP/14 FU/KZKJ.K O'K Z@ ASSESSMENT YEAR : 2006-07 SHRI JAI KUMAR GOLANI, PROP. KALA FASHIONS, 116-117 BAPU BAZAR, JAIPUR . CUKE VS. THE DY. CIT, CIRCLE-1, JAIPUR LFKK;H YS[KK LA-@THVKBZVKJ LA-@ PAN NO. ABDPG 1352 M VIHYKFKHZ@ APPELLANT IZR;FKHZ@ RESPONDENT FU/KZKFJRH DH VKSJ LS@ ASSESSEE BY : SHRI S.L. PODDAR (ADV.) JKTLO DH VKSJ LS@ REVENUE BY : SMT. ROSHANTA MEENA (JCIT) LQUOKBZ DH RKJH[K@ DATE OF HEARING : 03.05.2016 ?KKS'K .KK DH RKJH[K @ DATE OF PRONOUNCEMENT : 31/05/2016. VKNS'K@ ORDER PER SHRI VIKRAM SINGH YADAV, A.M. THIS IS AN APPEAL FILED BY THE ASSESSEE AGAINST THE ORDER OF LD.CIT(A) DATED 17.12.2013 WHEREIN THE ASSESSEE HAS TAKEN THE FOLLOWING GROUND OF APPEAL: THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF THE C ASE THE LD. CIT(A) IS WRONG, UNJUST AND HAS ERRED IN LAW IN CONFIRMING PE NALTY OF RS. 5,36,020/- IMPOSED BY THE AO U/S 271(1)(C) OF THE I .T. ACT. 1961. 2. THE ASSESSEE IS AN INDIVIDUAL AND PROPRIETOR OF M/S KALA FASHION WHICH IN ENGAGED IN THE BUSINESS OF WHOLESALE, RETAIL SALE O F LADIES SUITS AND DRESS MATERIALS. A SURVEY U/S 133A OF THE IT ACT WAS COND UCTED ON 01.02.2006 AT THE BUSINESS PREMISES OF THE ASSESSEE. THE LD. AO HAS M ADE AN ADDITION OF ITA NO.133/JP/2014 SHRI JAI KUMAR GOLANI, JAIPUR VS. DCIT, CIRCLE-1, J AIPUR 2 RS.49,97,061/- ON ACCOUNT OF EXCESS STOCK ON THE BA SIS OF SURRENDER MADE BY HIM DURING THE COURSE OF SURVEY. THE LD. CIT(A) HA S RESTRICTED THE ADDITION TO RS. 15,80,480/- BY REDUCING THE ADDITION OF RS.34,1 6,581/- BY POINTING OUT VARIOUS DISCREPANCIES IN THE STOCK STATEMENT AND ST OCK VALUATION PREPARED BY THE REVENUE AUTHORITIES. IN FURTHER APPEAL THE COO RDINATE BENCH OF ITAT HAS FURTHER REDUCED THE ADDITION TO RS. 8,53,720/- IN I TA NO.461/JP/2011 VIDE ITS ORDER DATED 09.01.2015. MEANWHILE THE AO HAS IMPOS ED THE PENALTY OF RS. 5,36,579/- ON THE BASIS OF ADDITION SUSTAINED BY TH E LD. CIT(A) ON TOTAL ADDITION OF RS. 15,80,481/-. 2.1 AGGRIEVED WITH THE ORDER OF THE LD. AO THE ASSE SSEE PREFERRED APPEAL BEFORE THE LEARNED CIT(A) WHO HAS ALSO CONFIRMED TH E PENALTY ORDER AND THE RELEVANT FINDINGS ARE AS UNDER: (4) I HAVE CONSIDERED THE SUBMISSIONS OF THE APPEL LANT AND HAVE ALSO GONE THROUGH THE ORDER PASSED BY THE AO. IT IS NOT ED THAT A SURVEY U/S 133A WAS CARRIED OUT AT THE BUSINESS PREMISES O F THE APPELLANT DURING WHICH AN INVENTORY OF STOCK WAS PREPARED WIT H THE HELP OF THE APPELLANT AND OTHER PERSONS ATTENDING THE SHOP. THE VALUE OF THE ITEM WAS RECORDED AT COST PRICE WHICH WAS DULY ADMITTED BY THE APPELLANT. ON THE BASIS OF UN-RECORDED EXCESS STOCK FOUND IN THE COURSE OF SURVEY, AN ADDITION OF RS. 49,97,061/ - WAS MADE WHICH WAS REDUCED TO RS/. 15,80,480-/- BY THE CIT(A ) (4.1) IT IS NOTED THAT THE APPELLANT NOT BEEN ABLE TO EXPLAIN THE SOURCE OF UNEXPLAINED INVESTMENT IN THE STOCK. THE MERE FACT THAT THERE WAS NO ADMISSION BY THE APPELLANT WOULD NOT MAKE THE CA SE OF THE APPELLANT ANY LESS AMENABLE TO PENALTY. IT IS SEEN THAT THE VALUE OF THE ITEMS IN THE STOCK INVENTORY WAS RECORDED ON CO ST PRICE WHICH WAS DULY ADMITTED BY THE APPELLANT IN HIS STATEMEN T. THE CLAIM THAT HE HAD NO KNOWLEDGE OF INVENTORY LIST AND STAT EMENTS RECORDED AT THE TIME OF FILING THE RETURN IS ALSO N OT ACCEPTABLE AS IT WAS SIGNED BY THE APPELLANT ALSO. EVEN OTHERWISE, IT IS THE DUTY OF THE PERSON CARRYING ON THE BUSINESS TO RECORD THE P URCHASES AND SALES AS WELL AS THE STOCK OF THE GOODS IN A CORRE CT MANNER. IT ITA NO.133/JP/2014 SHRI JAI KUMAR GOLANI, JAIPUR VS. DCIT, CIRCLE-1, J AIPUR 3 THEREFORE, CANNOT BE SAID THAT WAS MERELY BECAUSE T HE ADDITION HAS BEEN MADE ON THE BASIS OF SOME ESTIMATION, THE PENALTY CANNOT BE LEVIED. AS HELD BY THE HONBLE ALLAHABAD HIGH COURT, IT CANNOT BE SAID THAT PENALTY U/S 271(1)(C) CANNOT BE IMPOSED IN ALL CIRCUMSTANCES WHENEVER THE INCOME IS ASSESSED ON ES TIMATE BASIS (232 ITR 588). (4.2) SO FAR AS THE APPELLANTS CLAIM THAT THE PROC EEDINGS FOR PENALTY SHOULD BE INDEPENDENT FROM THE ASSESSMENT IS CONCER NED, SUFFICE IT IS TO SAY THAT ALTHOUGH THE PROCEEDINGS ARE DIFF ERENT, THE AO CAN ALWAYS DERIVE SUPPORT FROM THE FINDINGS AVAILABLE WITH HIM IN THE COURSE OF ASSESSMENT PROCEEDINGS. IT IS CLEAR FROM THE STATEMENTS MADE IN THE COURSE OF SURVEY PROCEEDINGS THAT THERE WAS UNEXPLAINED STOCK FOUND AND THE MERE FACT THAT SOME RELIEF WAS GRANTED BY THE CIT(A) WOULD NOT MEAN THAT THERE WAS NO EXCESS STOCK AT ALL WITH THE APPELLANT. (4.3) THE CONTENTION THAT THE ADDITION WAS MADE ONL Y ON THE BASIS OF STATEMENTS RECORDED DURING THE SURVEY HAS NO SUBSTA NCE BECAUSE THERE WAS CORROBORATIVE EVIDENCE IN THE FORM OF EXC ESS STOCK FOUND IN THE SURVEY. THE FACT REMAINS THAT THE STOCK FOU ND IN THE COURSE OF SURVEY WAS MORE THAN WHAT WAS SHOWN IN THE BOOKS OF ACCOUNT. THE STATEMENTS GIVEN IN THE COURSE OF SURVEY MAY N OT HAVE AS STRONG EVIDENTIARY VALUE AS THE ONE GIVEN IN THE CO URSE OF SEARCH. HOWEVER, COUPLED WITH THE FACT THAT EXCESS STOCK WA S PHYSICALLY FOUND IN THE COURSE OF SURVEY, IT CARRIES SUFFICIEN T EVIDENTIARY VALUE TO SHOW THAT THE APPELLANT HAD FILED INACCURATE PAR TICULARS OF INCOME, I THEREFORE, DO NOT FIND ANY REASON TO INTE RFERE WITH THE ORDER OF THE AO. 2.2 THE LD. AR SUBMITTED THAT DURING THE COURSE OF SURVEY, INVENTORY OF STOCK WAS PREPARED BY PHYSICAL VERIFICATION ON 01.02.2006 ITSELF. TWO LISTS WERE PREPARED OF STOCK.(I) STOCK AS PER LIST PAGE NO. 1 TO 18 HAVING SR. NO. 1 TO 388. THE STOCK AS PER THIS LIST COMES TO RS.78,61,141/- . (II) ADDITIONAL LIST WAS PREPARED RUNNING FROM PAGE NO. 19 TO 26. THE PAGES IF THIS LIST DOES NOT HAVE ANY SR. NO. DESCRIPTION OF STOCK IS NOT THERE AND T HE VALUATION OF STOCK HAS BEEN DONE IN ROUND FIGURE. THE LIST APPARENTLY DOES NOT APPEAR TO BE GENUINE AND ITA NO.133/JP/2014 SHRI JAI KUMAR GOLANI, JAIPUR VS. DCIT, CIRCLE-1, J AIPUR 4 HAS BEEN PREPARED ON ESTIMATE/GUESS BASIS. ON THE BASIS OF THE ALLEGED STOCK PHYSICALLY FOUND EXCESS STOCK WAS DETERMINED AT RS . 49,97,061/- AND ADDITION WAS MADE ON THE SAME AMOUNT. THE ADDITION MADE BY T HE LD. AO HAS BEEN REDUCED TO RS. 15,80,480/- BY THE LD. CIT(A) AND SU BSEQUENTLY ALSO REDUCED BY THE HONBLE ITAT TO RS. 8,53,720/-. 2.3 IT WAS FURTHER SUBMITTED THAT THE VALUATION OF STOCK WAS MADE PURELY ON GUESS WORK. IN THE ASSESSMENT ORDER THE LD. AO HAS OBSERVED IN PARA 2 ON PAGE 3 THAT VALUATION OF STOCK WAS DONE ON THE BASIS OF RATES AFTER VERIFICATION OF PURCHASE BILLS. LEAVE IT IS STRANGE THERE IS NO R EFERENCE EVEN OF A SINGLE PURCHASE BILL. LEAVE ASIDE THE REFERENCE TO PURCHA SE BILLS THE LEARNED AO HAS NOT MENTIONED HOW EXCESS STOCK HAS BEEN DETERMINED. ON PAGE 3 & 4 HE HAS LAID DOWN THE MANNER OF DETERMINATION OF STOCK IN AN ACADEMIC FASHION. NO FIGURES HAS BEEN GIVEN SUCH AS OPENING STOCK AS PER BOOKS, PURCHASES MADE UPTO THE SURVEY TIME, SALES MADE UPTO THE SURVEY TI ME. THIS ALL SHOWS THAT THE SURVEY TEAM HURRIEDLY CONCLUDED THE VERIFICATION O F STOCK PURELY ON THE BASIS OF GUESS WORK AND THE EXCESS STOCK WAS DETERMINED I N AN ARBITRARY MANNER. THE ENTIRE EXERCISE OF THE SURVEY IS BASED ON GUESS WORK. THEREFORE THE ADDITION SUSTAINED BY THE HONBLE ITAT WAS ALSO ON GUESS WORK AND ESTIMATED BASIS. 2.4 IT WAS FURTHER SUBMITTED THAT NO DEFECT WAS FOU ND IN THE BOOKS OF ACCOUNTS. IT IS SUBMITTED THAT DURING THE COURSE O F SURVEY NOT A SINGLE VOUCHER OF PURCHASE OR OF SALE WAS FOUND UNACCOUNTED. IT I S ALSO NOT THE CASE OF THE L.D AO THAT THERE WAS UNACCOUNTED CASH. NO DEFECT HAS BEEN POINTED EVEN IN THE MAINTENANCE OF REGULAR BOOKS OF ACCOUNTS. THE BOO KS OF ACCOUNTS OF THE ASSESSEE ARE AUDITED U/S 44AB OF THE INCOME TAX AC T, 1961. THE AUDITORS HAVE ALSO NOT POINTED OUT ANY DEFECT IN THE MAINTEN ANCE OF THE BOOKS. ITA NO.133/JP/2014 SHRI JAI KUMAR GOLANI, JAIPUR VS. DCIT, CIRCLE-1, J AIPUR 5 MAINTENANCE OF BOOK REGISTER IN THE CASE OF THE RET AIL BUSINESS OF DRESS MATERIAL IS IMPOSSIBLE. IN THESE CIRCUMSTANCES WHE N NO PURCHASE OR SALES ARE UNACCOUNTED HOW COULD THERE BE ANY UNACCOUNTED STOC K. THUS THIS ALSO ESTABLISHED THAT THE CONDUCT OF SURVEY WAS NOT BEYO ND DOUBT. THE RESULTS OF SURVEY ARE ALSO NOT BEYOND DOUBT. THE LD. CIT(A) H AS CORRECTLY OBSERVED THAT AT THE SAME TIME THERE IS SOME FORCE IN THE ARGUMENT O F THE AR THAT THE INVENTORY APPEARING FROM PAGE NO.1 TO 18 WITH SR. NO. 388 WAS CONCLUDED. SUBSEQUENT INVENTORY FROM PAGE NO. 19 TO 26 IS WIT HOUT ANY SR.NO. AND VALUE HAS BEEN TAKEN IN ROUND FIGURES. FROM PAGE NO.25 O NWARDS THE NUMBER OF ITEMS AS WELL AS PURCHASE PRICE BOTH ARE IN ROUND F IGURE. THE DESCRIPTION OF GOODS IS ALSO NOT GIVEN. THE DEAD STOCK OF RS. 72 ,100/- IN ALSO INCLUDED IN INVENTORY. ITEMS CONSIDERED IN MORE THAN ONCE COME S TO RS.7,26,760/-. THUS THE INVENTORY LIST STARTING FROM PAGE NO.1 TO 18 GI VING DESCRIPTION OF ITEMS FROM NO.1 TO 388 ALONG SHOULD BE CONSIDERED. THUS THE C IT(A) HAS CORRECTLY OBSERVED THAT THE SURVEY TEAM INDULGED IN UNBECOMI NG ACTIVITY BY PREPARING INVENTORY FROM PAGE 19 TO 26 IN AN ILLEGAL AND UNLA WFUL MANNER. THIS HAS VITIATED THE SURVEY, HENCE NO PENALTY CAN BE IMPOSE D ON THE ADDITION SUSTAINED ONLY ON THE BASIS OF SUCH INVENTORY. 2.5 IT WAS FURTHER SUBMITTED THAT THE ASSESSEE WAS NOT MAINTAINING ANY STOCK REGISTER NOR HE WAS PREPARING ANY STOCK INVENTORY A T THE END OF THE EVERY YEAR. HE JUST APPLIED THE G.P. RATE AND MADE THE VALUATI ON OF CLOSING STOCK ON THE BASIS OF BALANCING FIGURES. THIS WAS THE PRACTICE OF THE ASSESSEE AND WAS ACCEPTED BY THE DEPARTMENT. THE STOCK WAS ACCUMULA TED FROM YEAR TO YEAR AND INCLUDES OLD AND OUT FASHIONED STOCK WHICH WAS NO VALUE BUT VALUED BY THE DEPARTMENT ON COST PRICE. THEREFORE THE DIFFER ENCE IN VALUATION OF CLOSING SOCK IS ONLY DUE TO TECHNICAL REASONS AND THE ASSES SEE HAS NOT FURNISHED ITA NO.133/JP/2014 SHRI JAI KUMAR GOLANI, JAIPUR VS. DCIT, CIRCLE-1, J AIPUR 6 INACCURATE PARTICULARS OF HIS INCOME NOR CONCEALED BY INCOME. THEREFORE NO PENALTY CAN BE LEVIABLE ON SUCH ADDITION. 2.6 FURTHER, OUR REFERENCE WAS DRAWN TO THE DECISIO N OF AHMEDABAD ITAT IN CASE OF KALA NIKETAN (BOMBAYWALA) VS. ASSESSEE ITA NO. 363/AHD/2007 DT. 07.10.2010 WHEREIN THE RELEVANT FACTS AND FINDINGS ARE AS UNDER: THE PENALTY HAS BEEN IMPOSED WITH REGARD TO EXCESS STOCK FOUND BY THE SURVEY PARTY. THE VALUATION OF THE STOCK WAS MADE I NITIALLY WHICH WAS REDUCED TO CONSIDERABLE AMOUNT AND ULTIMATELY THE ASSESSEE ACCEPTED THE VALUATION OF THE CLOSING STOCK BY RS. 79,15,39 5/- AND IT WAS ALSO DISCLOSED BY INCLUDING THE SAME IN THE CLOSING ST OCK. NO PENALTY HAS BEEN IMPOSED ON THAT AMOUNT. IT WOULD, THEREFORE, P ROVE THAT THE REMAINING ADDITION OF RS.24,05,825/- WAS MADE ON AC COUNT OF INVESTMENT IN EXCESS STOCK. THE EXCESS STOCK WAS F OUND NOT ON THE BASIS OF QUANTITY OF THE CLOSING STOCK BUT IT WAS NOTICE D ONLY ON ACCOUNT OF VALUATION OF CLOSING STOCK. THE ASSESSEE HAS DISCL OSED ALL THE PARTICULARS TO THE REVENUE AUTHORITIES WITH REGARD TO THE CLOSI NG STOCK AT THE STAGE OF SURVEY, ASSESSMENT AND THE REMAINING PROCEEDINGS. PHYSICAL VERIFICATION OF THE INVENTORY WAS PREPARED ON THE BASIS OF SALE PRICE SHOWN ON THE TAG ATTACHED TO EACH ITEM. THE ESTIMATED BENEFIT IS GI VEN TO THE ASSESSEE ON ACCOUNT OF DEFECTIVE GOODS AS WELL AS DISCOUNT GIV EN TO THE CUSTOMERS. IT WOULD THEREFORE, PROVE THAT DESPITE ASSESSEE DISCL OSING EXCESSIVE STOCK AND INCLUDING THE SAME IN THE VALUATION OF THE CLO SING STOCK SOME ESTIMATE WAS MADE WITH REGARD TO THE REDUCTION IN THE COST PRICE OF THE ITEMS IN ORDER TO WORK OUT THE VALUATION OF THE CL OSING STOCK. NO PHYSICAL EXCESS STOCK WAS FOUND DURING THE COURSE OF SURVEY. THUS, ASSESEE DISCLOSED ALL THE PARTICULARS OF VALUATION OF THE C LOSING STOCK TO THE ITA NO.133/JP/2014 SHRI JAI KUMAR GOLANI, JAIPUR VS. DCIT, CIRCLE-1, J AIPUR 7 AUTHORITIES BELOW AND THEREFORE IT IS UNBELIEVABLE THAT THE ASSSSEE, ON SUCH FACTS HAS CONCEALED THE PARTICULARS OF INCOME OR HAS FILED INACCURATE PARTICULARS OF INCOME SHOWING UNDERVALUA TION OF THE STOCK ON THE BASIS OF WHICH PENALTY HAS BEEN IMPOSED. 2.7 IN THE CONTEXT OF QUANTUM PROCEEDINGS IN ASSESS EES OWN CASE FOR A.Y. 2006-07, THE MATTER HAS BEEN EXAMINED AT LENGTH BY THE COORDINATE BENCH IN ITA NO. 451/JP/2011 DATED 9.1.2015. HENCE, IT WOUL D BE RELEVANT TO NOTE THE FINDINGS OF THE COORDINATE BENCH WHICH ARE AS UNDER : WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED TH E MATERIAL AVAILABLE ON RECORD. THE MAIN CONTENTIONS RAISED BY THESE AS SESSES PERTAIN TO THE MISTAKES COMMITTED BY SURVEY TEAM IN THE VALUATION OF CLOSING STOCK ON THE ISSUES LIKE MANNER OF PREPARATION OF STOCK INVE NTORY, OVERVALUATION; NOT CONSIDERING THE DAMAGED AND OBSOLETE STOCK; NO T REFERRING TO ANY PURCHASE BILLS OF THE ASSESSEE AND HOLDING THAT VAL UATION OF PHYSICAL STOCK WAS BASED THEREON ETC. IN OUT CONSIDERED VIE W THAT MISTAKES AS CONSIDERED BY AND ADJUDICATED UPON BY LD. CIT(A) AR E JUSTIFIED AND BASED ON SOUND REASONING . ASSESSES HAVE BEEN ABLE TO DE MONSTRATE THE EXISTENCE OF ABERRATIONS IN THE VALUATION OF STOCK ON VARIOUS COUNTS. IT DOES NOT EMERGE FROM THE AVAILABLE RECORD THAT VALU ATION WAS ADOPTED BY SURVEY TEAM BY COMPARING THE STOCK ITEMS WITH TH E PURCHASE BILLS OF THE ASESSEE. LD. CIT(A) CALLED FOR THE REMAND REPOR T FROM AO WHICH HAS BEEN CONSIDERED ALBEIT GIVING PARTIAL RELIEF. HON BLE SUPREME COURT IN THE CASE OF PULLANGODE RUBBER PRODUCE (SUPRA) HAS H ELD THAT A STATEMENT IS IMPORTANT PIECE OF EVIDENCE BUT IF THE DEPONENT IS ABLE TO DEMONSTRATE THAT THERE ARE FACTUAL AND CALCULATION MISTAKES THE REIN, IN THAT CASE STATEMENT IS TO BE READ ACCORDINGLY. RESPECTFULLY FOLLOWING THIS ITA NO.133/JP/2014 SHRI JAI KUMAR GOLANI, JAIPUR VS. DCIT, CIRCLE-1, J AIPUR 8 JUDGEMENT OF HONBLE SUPREME COURT WE UPHOLD THE ORDER OF LD. CIT(A) QUA THE REVENUE GROUNDS RELATING TO STOCK VALUATIO N WHICH ARE ACCORDINGLY DISMISSED. THE LD. CIT(A)S OBSERVATION CLEARLY INDICATE THAT AN AMOUNT OF RS. 7,26,760/- ON ACCOUNT OF DOUBLE VALUATION WAS TO BE GIVEN, HOWEVER THE REDUCTION REMAINS TO BE GIVEN. IN OUR CONSIDERED VI EW THIS BEING MATHEMATICAL CALCULATION IT SHOULD BE REDUCED FROM RS. 15,80,480/-, CONSEQUENTLY THE FINAL ADDITION AMOUNT COME TO RS. 8,53,720/-. THUS IN OUR CONSIDERED VIEW THAT AFTER THIS CORRECTION THE AMOUNT OF ADDITION ON ACCOUNT OF STOCK IN THE CASE OF JAI KUMAR GOLANI SH OULD COME TO RS. 8,53,720/-. THUS WE HOLD ACCORDINGLY, CONSEQUENTLY THIS GROUND OF REVENUE IS DISMISSED AND THAT OF ASSESSEE IS PARTLY ALLOWED. 2.8 THE LD DR IS HEARD WHO HAS VEHEMENTLY ARGUED TH E MATTER AND RELIED UPON THE DECISION OF THE LOWER AUTHORITIES. 2.9 WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE MATERIAL AVAILABLE ON RECORD. FIRSTLY, THE PENALTY OF RS. 5,36,579/- H AS BEEN IMPOSED ON THE ADDITION OF RS. 15,80,481/-SUSTAINED BY THE LD. CIT (A). THE ADDITION HAS SUBSEQUENTLY BEEN REDUCED TO RS 8,53,720 BY THE COO RDINATE BENCH VIDE ITS ORDER DATED 9.1.2015. HENCE, TO THE EXTENT OF ADDI TION OF RS 7,26,760 WHICH HAS BEEN DELETED IN THE QUANTUM PROCEEDINGS, LEVY OF CONSEQUENT PENALTY DOESNT SURVIVE AND THE SAME IS HEREBY DELETED. 2.10 NOW COMING TO THE LEVY OF PENALTY ON ADDITIONS OF RS 8,53,720 WHICH HAS BEEN CONFIRMED BY THE COORDINATE BENCH. IT IS NOTE D THAT THE COORDINATE BENCH HAS EXAMINED ALL THE CONTENTIONS RAISED BY TH E ASSESSEE RELATING TO THE ITA NO.133/JP/2014 SHRI JAI KUMAR GOLANI, JAIPUR VS. DCIT, CIRCLE-1, J AIPUR 9 MISTAKES COMMITTED BY SURVEY TEAM IN THE VALUATION OF CLOSING STOCK ON THE ISSUES LIKE MANNER OF PREPARATION OF STOCK INVENTOR Y, OVERVALUATION; NOT CONSIDERING THE DAMAGED AND OBSOLETE STOCK; NOT REF ERRING TO ANY PURCHASE BILLS OF THE ASSESSEE AND HOLDING THAT VALUATION OF PHYSICAL STOCK WAS BASED THEREON ETC. AND AFTER SUCH EXAMINATION, THE COORDI NATE BENCH HAS CONFIRMED THE VALUATION OF EXCESS STOCK WAS BASED ON SOUND RE ASONING AND CONFIRMED THE FINDINGS OF THE LD CIT(A) EXCEPT FOR A DOUBLE ADDIT ION OF STOCK WORTH RS 7,26,760. WE THEREFORE DO NOT AGREE WITH THE CONTEN TIONS OF LD AR THAT THE ADDITIONS SUSTAINED BY THE HONBLE ITAT WAS ON GUESS WORK AND ESTIMATED BASIS. HAVING SAID THAT AND THE FACT THAT THE APPE LLANT HAS NOT CHALLENGED THE FINDINGS OF THE COORDINATE BENCH, THE ISSUE REGARDI NG VALUATION OF STOCK HAS ATTAINED FINALITY. 2.11 NOW, THE QUESTION THAT ARISES IS WHERE THE VAL UATION OF THE STOCK HAS BEEN ACCEPTED, WHETHER THERE IS ANY FINDING THAT EX CESS PHYSICAL STOCK WAS FOUND DURING THE COURSE OF SURVEY AND WHICH WAS NOT RECORDED IN THE BOOKS OF ACCOUNTS AND WHICH HAS FINALLY BEEN BROUGHT TO TAX. IF THE ANSWER TO THE SAME IS IN AFFIRMATIVE, IT IS CLEARLY A CASE WHERE THE A PPELLANT HAS CONCEALED THE PARTICULARS OF INCOME OR HAS FILED INACCURATE PARTI CULARS OF INCOME. ON PERUSAL OF THE RECORDS, IT IS FOUND THAT DURING THE COURSE OF SURVEY, BESIDES THE STATEMENT OF SH JAI KUMAR GOLANI, THE APPELLANT WHO HAD ADMITTED TO THE EXCESS STOCK AND SURRENDERED THE SAME, EXCESS STOCK WAS PHYSICALLY WORKED OUT BY COUNTING OF STOCK, INVENTORY WAS PREPARED AN D VALUATION WAS DONE AND THEREAFTER COMPARISON WAS MADE WITH STOCK AS PER BO OKS AND EXCESS STOCK WAS THEREAFTER WORKED OUT. IT IS THUS CLEAR THAT EXCESS STOCK WAS PHYSICALLY FOUND DURING THE COURSE OF SURVEY. SUBSEQUENTLY, THE APP ELLANT HAD AN OPPORTUNITY TO DISCLOSE THE EXCESS STOCK IN HIS RETURN OF INCOM E WHICH WAS FILED ON ITA NO.133/JP/2014 SHRI JAI KUMAR GOLANI, JAIPUR VS. DCIT, CIRCLE-1, J AIPUR 10 31.10.2006 AFTER THE DATE OF SURVEY WHICH HAPPENED ON 1.2.2006. HOWEVER, THE APPELLANT CHOSE TO REMAIN SILENT AND DIDNT OFF ER THE SAME. IT IS THUS A CLEAR CASE WHERE THE APPELLANT CHOOSES TO REMAIN SI LENT AND DIDNT OFFER THE EXCESS STOCK IN HIS RETURN OF INCOME WHICH WILL RES ULT IN CONCEALING THE PARTICULARS OF INCOME. IN ANY CASE, THE SAID SURVE Y FINDINGS WHICH HAVE FORMED THE BASIS OF ASSESSMENT HAVE FINALLY BEEN CONFIRMED BY THE COORDINATE BENCH. 2.12 NOW COMING TO THE RULING OF THE COORDINATE BEN CH IN CASE OF KALA NIKETAN (SUPRA), IT IS NOTED THAT IN THAT CASE, THE EXCESS STOCK WAS FOUND NOT ON THE BASIS OF QUANTITY OF THE CLOSING STOCK BUT I T WAS NOTICED ONLY ON ACCOUNT OF VALUATION OF CLOSING STOCK. IN THAT CASE, THE A SSESSEE HAS DISCLOSED ALL THE PARTICULARS TO THE REVENUE AUTHORITIES WITH REGARD TO THE CLOSING STOCK AT THE STAGE OF SURVEY, FILING OF RETURN OF INCOME, AND AS SESSMENT PROCEEDINGS. NO PHYSICAL EXCESS STOCK WAS FOUND DURING THE COURSE O F SURVEY. ON APPRECIATION OF SAID FACTS WHERE THE DISPUTE WAS LIMITED TO VALU ATION AND NOT IN RESPECT OF PHYSICAL STOCK, THE COORDINATE BENCH HAS GRANTED TH E RELIEF FROM LEVY OF PENALTY. IN THE INSTANT CASE, THE DISPUTE RELATES TO EXCESS PHYSICAL STOCK FOUND DURING THE COURSE OF SURVEY AND THE SAME BEING CONF IRMED IN THE QUANTUM PROCEEDINGS. THE SAID DECISION THEREFORE DOESNT SU PPORT THE CASE OF THE APPELLANT. 2.13 IN THE ENTIRETY OF FACTS AND CIRCUMSTANCES OF THE CASE, WE THEREFORE THE CONFIRM THE LEVY OF PENALTY ON ADDITION OF RS 8,53, 720 TOWARDS EXCESS PHYSICAL STOCK NOT RECORDED IN THE BOOKS OF ACCOUNTS. AS F AR AS ADDITION OF RS 7,26,760 WHICH HAS BEEN DELETED IN THE QUANTUM PROCEEDINGS, LEVY OF CONSEQUENT PENALTY DOESNT SURVIVE AND THE SAME IS HEREBY DELE TED. ITA NO.133/JP/2014 SHRI JAI KUMAR GOLANI, JAIPUR VS. DCIT, CIRCLE-1, J AIPUR 11 IN THE RESULT THE APPEAL FILED BY THE ASSESSEE IS P ARTLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 31/0 5/2016. SD/- SD/- ( KUL BHARAT ) (VIKRAM SINGH YADAV) U;KF;D LNL;@ JUDICIAL MEMBER YS[KK LNL;@ ACCOUNTANT MEMBER JAIPUR DATED:- 31/ 05/2016 PILLAI VKNS'K DH IZFRFYFI VXZSF'KR@ COPY OF THE ORDER FORWARDED TO: 1. THE APPELLANT- SHRI JAI KUMAR GOLANI, JAIPUR 2. THE RESPONDENT- THE DCIT, CIRCLE-1, JAIPUR 3. THE CIT(A) I, JAIPUR 4. THE CIT-I, JAIPUR 5. THE DR, ITAT, JAIPUR 6. GUARD FILE (ITA NO. 133 /JP/14 ) VKNS'KKUQLKJ@ BY ORDER, LGK;D IATHDKJ@ ASSISTANT. REGISTRAR