Mardia Copper Industries, Ahmedabad V. The Income tax Officer,Ward-10(3), Ahmedabad

ITA 1353/AHD/2009

• Counselvise Citation: [2009] 114 COUNSELVISE.COM (IT) 9092 (ITAT-AHMEDABAD)
• Duration Of Justice: 4 month(s) 14 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 11-09-2009
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 27-08-2009
• Assessment Year: 1990-1991
• Appeal Filed On: 27-04-2009
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: GOVIND SINGHAL
• Assessee Lawyers: P D SHAH
• Keywords: Unexplained investment; Question of law
• Section: 69B; 201; 192; 69

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD BENCH A BEFORE SHRI T.K.SHARMA, JUDICIAL MEMBER AND SHRI N.S. SAINI, ACCOUNTANT MEMBER DATE OF HEARING : 27.08.2009 DRAFTED ON:31.08.2 009 ITA NO.1353& 1354/AHD/2009 ASSESSMENT YEAR :1991-92 & 1993-94 MARDIA COPPER INDUSTRIES, MEHTA LODHA & CO. 1 ST FLOOR, SAKAR-1, 105, OFF GANDHI GRAM RAILWAY STATION, ASHRAM ROAD, AHMEDABAD-380009 VS. THE ITO, WARD-10(3), AHMEDABAD PAN/GIR NO. : AACPM9310R (APPELLANT) .. (RESPONDENT) APPELLANT BY : SHRI P.D.SHAH RESPONDENT BY: SHRI GOVIND SINGHAL CIT DR. O R D E R PER N.S.SAINI , ACCOUNTANT MEMBER :- THESE ARE THE APPEALS FILED BY THE ASSESSEE AGAIN ST THE ORDER OF THE LD. CIT(APPEALS) XVI, DATED 20.02.2009. 2. THE SOLE GROUND OF APPEAL TAKEN BY THE ASSESSEE IN BOTH THE APPEALS IS THAT THE LEARNED COMMISSIONER OF INCOME TAX(APPEALS) HEARD IN LAW AND IN FACTS IN CONFIRMING IN ADDITION OF RS .8,00,736/- IN ASSESSMENT YEAR 1990-91 AND RS.15,48,913/- IN ASSES SMENT YEAR 1993- ITA NO ITA NO.1353& 1354/AHD/2009 . M/S. MEDIA COPPER INDUSTRIES VS. THE ITO, WARD-10(3), AHMEDABAD A SST.YEAR - 1991-92 & 1993-94 - 2 - 94 ON ACCOUNT OF DIFFERENCE BETWEEN THE VALUE OF ST OCK AS PER BANK AND BOOKS OF ACCOUNT. 3. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSI NG OFFICER HAS OBSERVED THAT WHILE COMPLETING THE ASSESSMENT FOR A SSESSMENT YEAR 1990-91 AND 1993-94 DISALLOWANCE OF A SUM OF RS.8,0 0,736/- WAS MADE IN ASSESSMENT YEAR 1990-91 AND RS.15,48,913/- IN AS SESSMENT YEAR 1993-94 ON ACCOUNT OF DIFFERENCE BETWEEN THE VALUE OF STOCK AS PER BANK AND BOOKS OF ACCOUNT. DURING THE COURSE OF ASS ESSMENT, THE LEARNED ASSESSING OFFICER FOUND THAT STOCK OF HYPOT HECATED GOODS WAS SHOWN BY THE ASSESSEE TO THE BANK AT RS.20,23,250/- IN ASSESSMENT YEAR 1990-91 AND THE STOCKS AS PER BOOKS RS.12,22,540/-. THE DIFFERENCE OF RS.8,00,736/- COULD NOT BE SATISFACTORILY EXPLAINED BY THE ASSESSEE AND THEREFORE, ADDITION WAS MADE TO THE INCOME OF ASSES SEE. IN ASSESSMENT YEAR 1993-94, THE LEARNED ASSESSING OFFICER FOUND T HAT CLOSING STOCKS OF COPPER TUBES WAS SHOWN AT 9,387.35 KG. IN THE STOCK STATEMENT FILED WITH THE BANK WHICH WAS NOT SHOWN IN THE CLOSING ST OCK SHOWN IN THE PROFIT AND LOSS ACCOUNT OF THE ASSESSEE. THE LEARNE D ASSESSING OFFICER VALUED THE SAME AT THE RATE OF RS.165/- KG AND MADE ADDITION OF RS.15,48,913/- TO THE INCOME OF ASSESSEE. 4. IN APPEAL BEFORE THE LEARNED COMMISSIONER OF INC OME TAX (APPEALS), THE ASSESSEE SUBMITTED THAT SINCE THE OF FICE PREMISES OF THE ASSESSEE IS CLOSED, THE ASSESSEE COULD NOT GET THE STOCK STATEMENT FROM THE BANK. THE LEARNED COMMISSIONER OF INCOME TAX(AP PEALS) OBSERVED ITA NO ITA NO.1353& 1354/AHD/2009 . M/S. MEDIA COPPER INDUSTRIES VS. THE ITO, WARD-10(3), AHMEDABAD A SST.YEAR - 1991-92 & 1993-94 - 3 - THAT NOWHERE IN THE SUBMISSION, THE ASSESSEE HAS BE EN ABLE TO PROVE THAT THE STOCK STATEMENT GIVEN TO THE BANK TALLIES WITH THE STOCK STATEMENT AS PER BOOKS IN QUANTITATIVE DETAILS. THE LEARNED COMMISSIONER OF INCOME TAX(APPEALS) ALSO NOTED THAT THIS ISSUE WAS RAISED FOR THE FIRST TIME BEFORE THE LEARNED ASSESS ING OFFICER AS EARLY AS IN 1993 BUT THE CONTENTION OF THE ASSESSEE IS THAT THE STOCK STATEMENT IS NOT AVAILABLE WITH THE ASSESSEE OR HE COULD NOT GET THE SAME FROM BANK. THE LEARNED COMMISSIONER OF INCOME TAX(APPEALS) ALS O OBSERVED THAT MORE THAN 15 YEARS TIME IS SUFFICIENT TO GET THE ST OCK STATEMENT FROM THE BANK. FURTHER MORE THAN 14 OPPORTUNITIES HAVE B EEN GIVEN BY HIS OFFICE AND SUBSTANTIAL TIME WAS ALSO GIVEN BY THE L EARNED ASSESSING OFFICER TO FURNISH THE SAME. BUT THE ASSESSEE FAILE D TO FURNISH THE SAME. AS THE ASSESSEE IS FAILED TO PROVE THAT THE QUANTIT ATIVE DETAILS OF STOCK STATEMENT GIVEN TO THE BANK TALLIES WITH THE STOCK STATEMENT AS PER THE BOOKS OF ACCOUNT OF ASSESSEE QUANTITY WISE, HE CONF IRMED THE ACTION OF THE LEARNED ASSESSING OFFICER MAKING ADDITION ON AC COUNT OF INVESTMENT IN UNDISCLOSED STOCK BY THE ASSESSEE. 5. THE LEARNED AUTHORISED REPRESENTATIVE OF THE ASS ESSEE HAS REITERATED THE SUBMISSIONS MADE BEFORE THE LEARNED COMMISSIONER OF INCOME TAX(APPEALS). HE ALSO SUBMITTED THAT NO DIFF ERENCE IN QUANTITY OF STOCK AS PER STOCK STATEMENT SUBMITTED TO THE BA NK AND AS PER BOOKS OF ACCOUNT OF ASSESSEE WAS POINTED OUT BY THE LEARN ED ASSESSING OFFICER. THE DIFFERENCE WAS ON ACCOUNT OF OVER VALU ATION OF STOCK SUBMITTED TO THE BANK. HENCE, NO ADDITION CAN BE MA DE IN THE HANDS OF ITA NO ITA NO.1353& 1354/AHD/2009 . M/S. MEDIA COPPER INDUSTRIES VS. THE ITO, WARD-10(3), AHMEDABAD A SST.YEAR - 1991-92 & 1993-94 - 4 - THE ASSESSEE ON ACCOUNT OF UNDISCLOSED INVESTMENT I N STOCK. THE LEARNED AUTHORISED REPRESENTATIVE OF THE ASSESSEE R ELIED ON COMMISSIONER OF INCOME TAX VS. ANANDHA METAL CORPOR ATION (2005) 273 ITR 262 WHEREIN IT WAS HELD THAT RETURN ACCEPTE D BY THE COMMERCIAL TAX DEPARTMENT UNDER THE TAMIL NADU GENERAL SALES-T AX ACT IS BINDING ON THE IT AUTHORITIES AND THE AO HAS NO JURISDICTIO N TO GO BEYOND THE VALUE OF THE CLOSING STOCK DECLARED BY THE ASSESSEE AND ACCEPTED BY THE COMMERCIAL TAX DEPARTMENT, AND CONSEQUENTLY NO ADDI TION UNDER S. 69 COULD BE MADE IN RESPECT OF UNEXPLAINED DIFFERENCE BETWEEN THE VALUE OF CLOSING STOCK AS FOUND NOTED IN A SEIZED DOCUMEN T AND THE VALUE ADMITTED BY ASSESSEE. IT WAS ALSO SUBMITTED BEFORE THE LEARNED ASSESSING OFFICER THAT THE ASSESSEE WAS DOING JOB W ORK OF OTHERS AND IN ASSESSMENT YEAR 1993-94, THE MATERIAL PENDING WITH THE ASSESSEE OF COPPER TUBES OF 9387.350 KGS. MIGHT BE OF THE PERSO NS WHO HAVE SENT MATERIAL FOR JOB WORK TO THE ASSESSEE AND THE SAID FACT CAN BE VERIFIED FROM THE SAID PARTIES BY ISSUING SUMMONS TO THEM. 6. HE ALSO RELIED ON THE DECISION OF THE TRIBUNAL I N THE CASE OF SAINICO ENTERPRISES VS. INCOME TAX OFFICER, ITAT, (2004) 82 TTJ (ASR) 967, WHEREIN IT WAS HELD THAT LEARNED ASSESSING OFFICER WAS NOT JUSTIFIED IN MAKING ADDITION ON THE DIFFERENCE OF SALE PRICE OF D.G. SETS TO SISTER- CONCERN AND GOVERNMENT DEPARTMENTS, IN VIEW OF DIFF ERENCE IN COMPONENTS AND FACILITIES AND CIT(A) WAS NOT JUSTIF IED IN SUSTAINING PART OF ADDITION ON GROUND OF DIVERSION OF PROFITS TO SI STER-CONCERN BECAUSE BOTH WERE SEPARATE ENTITIES AND ASSESSED AT SAME RA TE. ITA NO ITA NO.1353& 1354/AHD/2009 . M/S. MEDIA COPPER INDUSTRIES VS. THE ITO, WARD-10(3), AHMEDABAD A SST.YEAR - 1991-92 & 1993-94 - 5 - 7. THE LEARNED DEPARTMENTAL REPRESENTATIVE ON THE O THER HAND SUBMITTED THAT THERE WAS DIFFERENCE IN QUANTITY OF STOCK AND NOT ONLY IN THE VALUE OF STOCK. NO EXPLANATION WAS GIVEN BEFORE THE LEARNED ASSESSING OFFICER BY THE ASSESSEE HAD TO SHOW INFLA TED STOCK TO THE BANK. HE RELIED ON THE DECISION IN THE CASE OF DHANSIRAM AGARWALLA VS. COMMISSIONER OF INCOME TAX (1993) 201 ITR 192 (GAU) , WHEREIN IT WAS HELD THAT ASSESSEE HAVING NOT PUT FORWARD ANY EXPLA NATION AS REGARDS DISCREPANCY IN VALUE OF STOCK AS DISCLOSED TO BANK AND AS SHOWN IN BALANCE SHEET, REOPENING UNDER S. 147(A) WAS JUSTIF IED. ASSESSEE HAVING NOT PUT FORWARD ANY EXPLANATION AS REGARDS DISCREPA NCY IN VALUE OF STOCK AS DISCLOSED TO BANK AND AS SHOWN IN BALANCE SHEET, ADDITION UNDER S. 69B WAS JUSTIFIED. 8. HE ALSO RELIED ON THE DECISION IN THE CASE OF CE NTURY FOAMS PVT. LTD. VS. COMMISSIONER OF INCOME TAX (1994) 210 ITR 625 (ALL), WHEREIN IT WAS HELD THAT TRIBUNAL HAVING CONFIRMED THE ADDITIO N ON THE BASIS OF EXPLANATION AND MATERIAL ON RECORD AFTER ASSESSEE F AILED TO EXPLAIN THE DISCREPANCY IN STOCK HYPOTHECATED WITH BANK AND THA T SHOWN IN BOOKS, NO QUESTION OF LAW AROSE. HENCE, IT WAS PRAYED THAT THE ORDER OF THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) SHOULD BE UP HELD. 9. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE ORDERS OF THE LOWER AUTHORITIES AND THE MATERIALS AVAILABLE O N RECORD. IN THE INSTANT CASE, THE LEARNED ASSESSING OFFICER OBSERVE D THAT THE ASSESSEE HAS SHOWN CLOSING STOCK OF RS.12,22,540/- IN THE BA LANCE SHEET WHEREAS ITA NO ITA NO.1353& 1354/AHD/2009 . M/S. MEDIA COPPER INDUSTRIES VS. THE ITO, WARD-10(3), AHMEDABAD A SST.YEAR - 1991-92 & 1993-94 - 6 - THE VALUE OF CLOSING STOCK SHOWN TO THE BANK BY THE ASSESSEE ON SAME DATE WAS RS.20,23,250/-. THUS, VALUE OF STOCK SHOWN IN THE PROFIT AND LOSS ACCOUNT WAS LESSER BY RS.8,00,736/- IN COMPARE TO THE VALUE DECLARED TO THE BANK. THE ASSESSEE EXPLAINED BEFORE THE LEARNED ASSESSING OFFICER THAT THE ABOVE DIFFERENCE WAS ON ACCOUNT OF HIGHER RATE ADOPTED BY THE ASSESSEE FOR SHOWING THE HIGHER VALUE TO THE BANK FOR OBTAINING HIGHER CREDIT LIMIT WHEREAS, IN THE P ROFIT AND LOSS ACCOUNT, THE STOCK WAS VALUED AT ACTUAL COST OR MARKET VALUE WHICH EVER IS LESS. HOWEVER, THE LEARNED ASSESSING OFFICER OBSERVED THA T THE ASSESSEE COULD NOT FILE COPY OF STOCK STATEMENT WHICH WAS FI LED BEFORE THE BANK AND THEREFORE, ADDED THE DIFFERENCE AMOUNT BY ASSUM ING THE SAME AS UNEXPLAINED INVESTMENT MADE BY THE ASSESSEE DURING THE YEAR UNDER CONSIDERATION. THE LEARNED COMMISSIONER OF INCOME T AX(APPEALS) CONFIRMED THE ABOVE ACTION OF THE LEARNED ASSESSING OFFICER. WE FIND THAT THE ASSESSEE HAS FURNISHED A PLAUSIBLE EXPLANA TION BEFORE THE LEARNED ASSESSING OFFICER AND THE LEARNED ASSESSING OFFICER HAS BROUGHT NO MATERIAL ON RECORD TO JUSTIFY THE REJECTION OF T HE SAID PLAUSIBLE EXPLANATION. IN VIEW OF THE PROVISION OF SECTION 69 BEFORE MAKING ANY ADDITION ON ACCOUNT OF UNEXPLAINED INVESTMENT BURDE N LIES UPON THE REVENUE TO BRING SOME MATERIAL ON RECORD TO PROVE T HAT THE ASSESSEE HAD ACTUALLY MADE ANY INVESTMENT. THUS, IN OUR CONS IDERED VIEW BURDEN WAS ON THE REVENUE TO SHOW THAT THE ASSESSEE ACTUAL LY POSSESS STOCK OF MORE THAN THE BOOK STOCK. WE FIND THAT THE REVENUE HAS BROUGHT NO COGENT MATERIAL TO DISCHARGE THE ABOVE ONUS WHICH W AS UPON IT UNDER LAW. MERELY BECAUSE OF DIFFERENT METHOD OF VALUATIO N WAS FOLLOWED ITA NO ITA NO.1353& 1354/AHD/2009 . M/S. MEDIA COPPER INDUSTRIES VS. THE ITO, WARD-10(3), AHMEDABAD A SST.YEAR - 1991-92 & 1993-94 - 7 - RESULTING IN DIFFERENT VALUATION OF STOCK FOR BANK AND FOR FINANCIAL STATEMENT DOES NOT EMPOWER THE REVENUE TO TREAT THE DIFFERENCE AMOUNT AS ANY UNEXPLAINED INVESTMENT WAS ACTUALLY M ADE BY THE ASSESSEE. IN VIEW OF THE ABOVE, IN OUR CONSIDERED O PINION, THERE IS NO MATERIAL ON RECORD TO PROVE THAT THE ASSESSEE HAS A CTUALLY MADE ANY UNEXPLAINED INVESTMENT IN THE STOCK. THEREFORE, THE ADDITION MADE IS UNSUSTAINABLE AND ACCORDINGLY WE DELETE THE ADDITIO N OF RS.8,00,736/-. 10. IN RESPECT OF ASSESSMENT YEAR 1993-94, THE LEAR NED ASSESSING OFFICER OBSERVED THAT IN THE STOCK STATEMENT FILED BY THE ASSESSEE BEFORE THE BANK INCLUDED COPPER TUBES, 9387.350 KGS. WHIC H WAS NOT REFLECTED IN THE CLOSING STOCK SHOWN IN THE PROFIT AND LOSS A CCOUNT. THE ASSESSEE EXPLAINED BEFORE THE LEARNED ASSESSING OFFICER THAT THE SAID STOCK OF 9387.350 KGS. BELONG TO THE PERSONS WHO HAVE SENT M ATERIAL FOR JOB WORK. AS THESE MATERIALS WERE LYING WITH THE ASSESS EE FOR JOB WORK, THE ASSESSEE INCLUDED THE SAME IN THE VALUE OF STOCK SH OWN TO THE BANK. HOWEVER, IN THE INCOME TAX RETURN, AS ONLY THE STOC K WHICH WERE OWNED BY THE ASSESSEE WAS ONLY SHOWN AND THEREFORE, THE S AME WAS NOT REFLECTED THEREIN. THE ASSESSEE ALSO REQUESTED THE LEARNED ASSESSING OFFICER TO VERIFY THE FACT DIRECTLY FROM THOSE PART IES WHO SUPPLIED THE MATERIAL TO THE ASSESSEE FOR THE JOB WORK. THE LEAR NED ASSESSING OFFICER WAS OF THE OPINION THAT THE ABOVE EXPLANATION OF TH E ASSESSEE WAS A SELF SERVING STATEMENT AND THEREFORE, REJECTED THE SAME AND BY ESTIMATING THE VALUE OF COPPER TUBES AT THE RATE OF RS.165/- P ER KGS. CALCULATED THE VALUE OF 9387.350 KGS. OF COPPER TUBES AT RS.15,48 ,913/- AND ADDED THE ITA NO ITA NO.1353& 1354/AHD/2009 . M/S. MEDIA COPPER INDUSTRIES VS. THE ITO, WARD-10(3), AHMEDABAD A SST.YEAR - 1991-92 & 1993-94 - 8 - SAME TO THE INCOME OF ASSESSEE. THE LEARNED COMMISS IONER OF INCOME TAX(APPEALS) ALSO CONFIRMED THE ABOVE ADDITION. WE FIND THAT THE ASSESSEE HAS GIVEN A PLAUSIBLE EXPLANATION OF THE D IFFERENCE POINTED OUT BY THE LEARNED ASSESSING OFFICER IN THE STOCK DECLA RED IN THE RETURN OF INCOME VIS--VIS STOCK DISCLOSED TO THE BANK BY THE ASSESSEE. THE ASSESSEE EXPLAINED THAT THE STOCK OF 9387.350 KGS. OF COPPER TUBES WHICH WAS INCLUDED IN THE STOCK STATEMENT FILED WIT H THE BANK WAS STOCK BELONGING TO THE PERSONS WHO HAVE SENT MATERIAL FOR JOB WORK. IT IS OBSERVED THAT THE ASSESSEES NATURE OF BUSINESS IS RE-DRAWING CF COPPER, COPPER ALLOYS, TUBES AND TRADING THEREOF. T HE LEARNED ASSESSING OFFICER HAS NOT BROUGHT ANY MATERIAL ON R ECORD TO SHOW THAT THE ASSESSEE COULD NOT HAVE RECEIVED THE STOCK IN Q UESTION FOR JOB WORK. THE ASSESSEE MADE A SPECIFIC PRAYER BEFORE THE LEAR NED ASSESSING OFFICER TO VERIFY THE RECEIPT OF STOCK BY EXAMINING THE PARTIES FROM WHOM HE CLAIMED TO HAVE RECEIVED THE STOCK. HOWEVER , THE PARTIES WERE NOT EXAMINED BY THE LEARNED ASSESSING OFFICER. IN T HE INSTANT CASE, THE STOCK WAS HYPOTHECATED TO THE BANK AND STOCK WAS NO T LYING UNDER THE LOCK AND KEY OF THE BANK. IN OUR CONSIDERED OPINION , A PLAUSIBLE EXPLANATION GIVEN BY THE ASSESSEE CANNOT BE REJECTE D BY THE REVENUE WITHOUT BRINGING ON RECORD ANY MATERIAL TO SHOW THA T THE EXPLANATION WAS NOT GENUINE. MOREOVER, WE FIND THAT AS PER THE PROVISION OF SECTION 69, BURDEN WAS UPON THE REVENUE BEFORE MAKING ANY A DDITION AS UNEXPLAINED INVESTMENT TO SHOW THAT IN FACT AN INVE STMENT WAS MADE BY THE ASSESSEE. WE FIND THAT IN THE INSTANT CASE, NO POSITIVE MATERIAL WAS BROUGHT ON RECORD BY THE REVENUE TO SHOW THAT IN FA CT ASSESSEE HAD ITA NO ITA NO.1353& 1354/AHD/2009 . M/S. MEDIA COPPER INDUSTRIES VS. THE ITO, WARD-10(3), AHMEDABAD A SST.YEAR - 1991-92 & 1993-94 - 9 - MADE ANY INVESTMENT FOR A ACQUIRING THE STOCK IN QU ESTION OF COPPER TUBES OF 9387.350 KGS.. IN THE ABOVE FACTS AND CIR CUMSTANCES OF THE CASE, IN OUR CONSIDERED OPINION, THE ADDITION MADE CANNOT BE SUSTAINED. WE THEREFORE, DELETE THE ADDITION OF RS.15,48,913/- . THEREFORE, THE GROUND OF APPEAL OF THE ASSESSEE IN BOTH THE YEARS UNDER CONSIDERATION IS ALLOWED. 11. IN THE RESULT, THE APPEALS OF THE ASSESSEE ARE ALLOWED. ORDER SIGNED, DATED AND PRONOUNCED IN THE COURT ON 11.09.2009. SD/- SD/- ( T.K. SHARMA ) ( N.S. SAINI ) JUDICIAL MEMBER A CCOUNTANT MEMBER AHMEDABAD; DATED 11/09/2009 PARAS# COPY OF THE ORDER FORWARDED TO : 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT CONCERNED 4. THE LD. CIT(APPEALS)XVI, AHMEDABAD 5. THE DR, AHMEDABAD BENCH 6. THE GUARD FILE. BY ORDER, //TRUE COPY// (DY./ASSTT.REGISTRAR), ITAT, AHMEDABAD