The ITO, Wad-6(1), Ahmedabad V. M/s. Ghanshyam Rachhodlal & Co., Ahmedabad

ITA 1362/AHD/2005

• Counselvise Citation: [2009] 114 COUNSELVISE.COM (IT) 9054 (ITAT-AHMEDABAD)
• Duration Of Justice: 4 year(s) 4 month(s) 2 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 11-09-2009
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 26-08-2009
• Assessment Year: 2001-2002
• Appeal Filed On: 09-05-2005
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: RAJEEV AGRAWAL
• Assessee Lawyers: S N DIVATIA

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD BENCH A BEFORE SHRI T.K. SHARMA, JUDICIAL MEMBER & SHRI N.S.SAINI, ACCOUNTANT MEMBER ITA NO. 1362/AHD/2005 ASSESSMENT YEAR : 2001-02 ITO, WARD 6(1), VS M/S GHANSHYAM RANCHIHODIAL & COMPANY., AHMEDABAD AHMEDABAD PAN NO./GIR NO. AADFG3153H (APPELLANT) (RESPONDENT) APPELLANT BY : SH RAJEEV AGRAWAL, CIT DR RESPONDENT BY : SH S.N. DIVATIA ORDER PER T.K.SHARMA, J.M. THIS APPEAL IS BY THE REVENUE AGAINST THE ORDER DAT ED 11.02.2005 OF CIT(A)-XII, AHMEDABAD FOR THE ASSESSM ENT YEAR 2001-02. 2. THE GROUNDS RAISED IN THIS APPEAL ARE AS UNDER: - 1. THE LEARNED CIT(A) AHMEDABAD HAS ERRED IN LAW AN D ON FACTS IN DELETING THE ADDITION OF RS. 8,66,064/- 2. THE LEARNED CIT(A) XII AHMEDABAD HAS FURTHER ER RED IN LAW AND ON FACTS IN NOT APPRECIATING THE FACT THAT CERTIFICATE ISSUED BY THE BANK WAS DATED 26.8.2003 WHEREIN THE STOCK PLEDGED AS ON 31.3.2001 HAD BEEN SHOWN AS 240 BALES AND THE ASSESSEE DID NOT PRODUCE ANY CLARIFICATION ON REVISED STATEMENT FROM THE BAN K AT THIS STAGE. 2 3. THE FACTS IN BRIEF ARE THAT ASSESSEE IS A PARTN ERSHIP FIRM ENGAGED IN GINNING AND PRESSING OF KAPAS AND TRADING OF COTTON AND COTTON SEEDS. IN THE PREVIOUS YEAR RELEVANT TO THE ASSESSMENT YEAR IN AP PEAL, IT HAD AVAILED CASH CREDIT FACILITY ON PLEDGE OF STOCK FROM PEOPLES CO -OP BANK, DHOLKA. IN THE ASSESSMENT YEAR, THE ASSESSING OFFICER HAS STATED T HAT AS PER CERTIFICATE DATED 26.8.2003 ISSUED BY PEOPLES CO-OP BANK, DHOK LA, THE ASSESSEE WAS HAVING STOCK OF 240 BALES VALUED AT RS. 21,62,000/- IN PLEDGE ACCOUNT NO. 1016 AS ON 31.3.2001 WHEREAS IT HAS DECLARED THE ST OCK OF COTTON AT RS.13,99,532/- IN THE BALANCE SHEET FILED WITH THE RETURN OF INCOME. ASSESSING OFFICER ACCORDINGLY NOTED THAT THERE WAS A DIFFERENCE OF STOCK AT RS. 7,62,468/- AND THAT TO THIS EXT4ENT THE ASSESSE E HAS SHOWN LESS STOCK IN THE BOOKS OF ACCOUNT. 4. BEFORE THE ASSESSING OFFICER, THE ASSESSEE EXPL AINED THAT THEY HAD GIVEN AS SECURITY 100 BALES OF COTTON TO THE BANK O N 9.1.2001 AND 140 BALES ON 5.2.2001 TOTALLING 240 BASES. OUT OF THIS, ASSE SSEE WITHDRAWN 140 BALES AND AT THE END OF THE YEAR THE CLOSING STOCK OF BAL ES WAS LEFT AT 100 BALES AS SECURITY WITH THE BANK. BEFORE THE ASSESSING OFFIC ER IT WAS SUBMITTED THAT AS THE STOKE OF BALES OF SHANKAR-4 SHOWING IN THE CLOS ING STOCK OF BAILS AT RS.13,99,532/- AND WEIGHING 237 QUINTALS I.E. 148 B ALES, THESE BALES ARE IN EXCESS OF 100 BALES, THERE WAS NO DISCREPANCY. IT WAS ALSO EXPLAINED THAT AS ON 31.3.2001, CREDIT UTILIZED BY THE ASSESSEE FROM THE BANK WAS RS.4,42,453.20 PAISA AND AS THE BANK GRANTED CREDIT @ 70% OF THE VALUE OF STOCK, FOR THIS THEY WERE REQUIRED TO KEEP WITH THE BANK THE STOCK OF RS. 7 LACS ONLY. THE STOCK REMAINING WITH THE BANK AS ON 31. 3.2001 WAS VALUED MORE 3 THAN RS. 7 LACS, THEY WERE ALLOWED THE CREDIT OF RS . 4,42,453.20 AS ON 31.3.2001. IT WAS ALSO SUBMITTED THAT BANK HAS NOT FOLLOWED THE CORRECT PROCEDURE TO DEDUCT THE STOCK FROM THE TOTAL STOCK AT THE TIME OF WITHDRAWAL BECAUSE THE BANK HAS NOT ISSUED D.O. AT THE TIME OF WITHDRAWAL OF STOCK. IT WAS, THEREFORE, EXPLAINED THAT REASON FOR DIFFEREN CE STANDS FULLY EXPLAINED. IN THE ASSESSMENT ORDER, ASSESSING OFFICER DID NOT ACC EPT THE EXPLANATION AND MADE THE ADDITION OF RS.86,80,064/-. 5. BEFORE THE LEARNED CIT(A) IT WAS EXPLAINED THAT CERTAIN GOODS WERE SOLD BEFORE 3.1.3.2001, SALES WERE CREDITED IN THE SALES ACCOUNT BUT ENTER WAS NOT MADE BY THE BANK, THUS THERE WAS NO DIFFERE NCE. THE LEARNED CIT(A) AFTER CONSIDERING THE EXPLANATION OF THE ASSESSEE I N THE IMPUGNED ORDER, DELETED THE ADDITION FOR THE DETAILED REASONS GIVEN IN PARA 3.3 OF HIS ORDER WHICH READS AS UNDER:- I HAVE CAREFULLY CONSIDERED THE CONTENTION OF THE LEARNED COUNSEL FOR THE APPELLANT AND PERUSED RELEV ANT RECORDS. AS PER THE ASSESSING OFFICER, THE BANK CE RTIFICATE MENTIONED ABOVE SHOWED THAT AS ON 31.3.2001, THE APPELLANT HAD PLEDGED WITH THE BANK STOCK OF 240 B ALES OF COTTON VALUED AT RS.21,62,000/-. THIS COTTON WAS O FFERED FOR PLEDGING TO THE BANK BY THE APPELLANT BY SUBMIT TING BAILMENT SLIPS DATED 9.1.2001 AND 5.2.2001. IN THE COPIES OF THE BAILMENT SLIPS, DULY STAMPED BY THE BANK, IT IS SHOWN THAT THE STOCKS WERE PLEDGED IN THE GODOWN AT GANGA DHAR COTTON PRESSING FACTORY. BALE NUMBERS/PRESS NUMBER S ARE ALSO DULY INDICATED IN THESE BAILMENT SLIPS. I N THE BAILMENT SLIP DATED 9.1.2001, 100 BALES ARE OF PRES S NO. 13901 TO 14000 AND 140 BALES PLEDGED VIDE BAILMENT SLIP DATED 5.2.2001 ARE HAVING PRESS NUMBERS 17201 TO 17 300 AND 17401 TO 17440. AS PER THE CLAIM OF THE APPELL ANT, THE APPELLANT WITHDREW 100 BALES FROM THE STOCK AND SOL D THEM 50 BALES EACH TO SHRI GANESH SPINNERS AHMEDABAD AND M/S NAVKAR ENTERPRISES AHMEDABAD. AS PER THE COPIE S OF THE BILL ISSUED TO GANESH SPINNERS AHMEDABAD AND NA VKAR ENTERPRISES BEING BILL NO. 65 DATED 28.3.2001 AND B ILL NO. 66 DATED 30.3.2001, RESPECTIVELY, THE 50 BALES SOLD WERE OF PRESS NO. 17201 TO 17250 AND 178251 TO 17300. THE SE SALES ARE DULY CREDITED TO THE SALES ACCOUNT OF THE 4 APPELLANT. FROM THESE PRESS NUMBERS IT IS CLEAR TH AT THE 100 BALES SOLD BY THE APPELLANT AS ABOVE ARE OUT OF 140 BALES PLEDGED VIDE BAILMENT SLIP DATED 5.2.2001 MEN TIONED ABOVE. THEREFORE, ONCE THESE BALES ARE SHOWN TO BE SOLD AND THE SALES AMOUNT CREDITED TO THE SALES ACCOUNT BY THE APPELLANT BEFORE 31.3.2001 ITSELF, I AGREE WITH THE LEARNED COUNSEL THAT, THERE IS NO JUSTIFICATION IN CONSIDER ING THE VALUE OF THESE BALES IN THE CLOSING STOCK OF THE AP PELLANT AS ON 31.3.2001. THOUGH THE ASSESSING OFFICER HAS NOT ACCEPTED THE CONTENTION OF THE APPELLANT OBSERVING THAT BY NOT INFORMING THE BANK REGARDING THE SALES OF BALES , THE APPELLANT HAD TRIED TO DECEIVE THE BANK AND THIS IS AGAINST THE PUBLIC POLICY, HOWEVER, THE CONTENTION OF THE APPELLANT THAT THEY DID INFORM THE BANK AND THAT HOWEVER, IT WAS THE BANK WHICH DID NOT MAKE NECESSARY ENTRIES APPEARS T O BE CORRECT. IT IS SO BECAUSE FOR WITHDRAWING THE STOCK THE APPELLANT WAS REQUIRED TO DEPOSIT CERTAIN AMOUNTS I N THE BANK. AS PER THE DETAILS IN THE COPY OF BANK ACCOU NT NO. 106, THE APPELLANT DID DEPOSIT OF RS. 3,50,000/- ON 27.3.2001 AND RS. 2,50,000/- ON 28.3.2001 BEFORE WITHDRAWING 100 BALES ON 28..3.2001 AS CLAIMED. BY DEPOSITING THESE AMOUNT THE APPELLANT COULD VERY WE LL WITHDREW 100 BALES AS CLAIMED. FURTHER, EVEN IF IT IS TAKEN THAT THE APPELLANT DID NOT INFORM THE BANK REGARDIN G THE SALES OF STOCK ETC., THIS IS SOMETHING BETWEEN THE BANK AND THE APPELLANT AND IT COULD NOT BE TAKEN TO NOT TO A SSESS THE CORRECT INC OF THE APPELLANT WHICH IS EVIDENCED FRO M THE ENTIRETY OF THE CIRCUMSTANCES DISCUSSED ABOVE IN TH IS CASE. IN MY OPINION WHEN THE PRESS NUMBERS ARE DULY VERIF IABLE FROM THE SALE BILLS AND THE BAILMENT SLIPS AND FORM THESE BALE NO./PRESS NO. IT COULD CLEARLY BE SEEN THAT TH E 100 BALES SOLD TO M/S GANESH SPINNER AHMEDABAD AND NAVK AR ENTERPRISES WERE OUT OF 240 BALES PLEDGED BY THE AP PELLANT WITH THE PEOPLES CO-OP BANK LTD. , DHOLKA IN THEIR GODOWN AT GANGADHER COTTON PRESSING FACTORY. IF SALES OF PARTICULAR PRESS NUMBER IS SHOWN TO BE MADE AND CRE DITED IN THE BOOKS FOR RELEVANT PREVIOUS YEAR, THE BALES WITH THE SAME PRESS NUMBERS CAN NEVER BE TAKEN TO BE LYING I N THE CLOSING STOCK AS ON 31.3.2001. FURTHER WHEN THE AP PELLANT DID PAY RS. 6 LACS IN THEIR ACCOUNT NO. 1016 WITH T HE PEOPLES CO-OP BANK LTD., DHOLKA BEFORE WITHDRAWING 100 BALES AND WHEN THE OUTSTANDING CREDIT AFTER WITHDRA WING THESE 100 BALES WERE WELL BELOW THE 70% OF THE VALU E OF THE REMAINING VALUE OF 140 BALES, THERE WAS APPAREN TLY NO REASON FOR THE APPELLANT TO WITHDRAW AND SELL THESE 100 BALES WITHOUT INFORMING THE BANK. AS ALREADY MENTIO NED WHAT IS REQUIRED TO BE TAXED IN ANY CASE IS THE COR RECT INCOME OF AN ASSESSEE. AS IN THE CASE WHEN THE S ALES AMOUNT IN RESPECT OF SALES OF 100 BALES WITH PRESS NO. 17201 TO 17300 IS CREDITED TO THE SALES ACCOUNT CONSIDERING THE VALUE OF THE SAME BALE NOS. IN THE CLOSING STOCK WOULD AMOUNT TO DOUBLE TAXATION OF THIS AMOUN T AND 5 THIS WOULD NOT GIVE THE CORRECT INCOME OF THE APPEL LANT FOR THE RELEVANT ASSESSMENT YEAR. THERE IS NO DISPUTE THAT IF THESE 100 BALES ARE TAKEN TO BE SOLD AS ABOVE, THE CLOSING STOCK OF COTTON IN THE BOOKS OF APPELLANT COMES TO MORE THAN THAT OF 140 BALES CLAIMED TO BE LYING PLEDGED WITH THE BANK AS ON 31.3.2001. IN VIEW OF THE ABOVE DISCUSS ION, THE FINDING OF THE ASSESSING OFFICER THAT THE APPELLANT HAD SOME UNACCOUNTED CLOSING STOCK NOT SHOWN IN THEIR B OOKS OF ACCOUNT CANNOT BE UPHELD. ACCORDINGLY, THE ADDI TION OF RS.8,68,064/- MADE BY THE ASSESSING OFFICER IS NOT SUSTAINABLE. THE ADDITION IS THEREFORE DELETED. 6. AT THE TIME OF HEARING, ON BEHALF OF THE REVENU E, SHRI RAJEEV AGRAWAL CIT DR APPEARED AND CONTENDED THAT THE CERTIFICATE ISSUED BY THE BANK DATED 26.8.2003 WHEREIN THE STOCK WAS PLEDGED AS ON 31.3. 2001 HAS BEEN SHOWN AS 240 BALES AND THE ASSESSEE DID NOT PRODUCE ANY C LARIFICATION ON THE REVISED STATEMENT FROM THE BANK AT ANY STAGE, THERE FORE, LEARNED CIT(A) IS NOT CORRECT IN DELETING THE ADDITION OF RS. 8,68,06 4/- MADE BY THE ASSESSING OFFICER. ON THE OTHER HAND, THE SHRI S.K. DIVTIA LEARNED AR OF THE ASSESSEE APPEARED FOR THE ASSESSEE SUPPORTED THE ORDERS OF THE AUTHORITIES BELOW. HE SUBMITTED THAT WHATEVER THE DISCREPANCY WRITTEN SUB MISSIONS THERE, IT WAS EXPLAINED, THEREFORE, LEARNED CIT(A) IS LEGALLY AN D FACTUALLY CORRECT IN DELETING THE ADDITION OF RS. 8,68,064/- MADE BY THE ASSESSIN G OFFICER. 7. WE HAVE HEARD THE RIVAL SUBMISSIONS AND CAREFULL Y GONE THROUGH THE ORDERS OF THE AUTHORITIES BELOW. IT IS PERTINENT TO NOTE THAT 100 BALES ARE TAKEN TO BE SOLD AS EXPLAINED, THE CLOSING STOCK OF COTTO N IN THE BOOKS OF THE ASSESSEE COME TO MORE THAN THAT OF 140 BALES, CLAI MED TO BE LYING PLEDGED WITH THE BANK AS ON 31.3.2001. IN VIEW OF THIS, IN OUR OPINION, ASSESSEE AS EXPLAINED THE DIFFERENCE WHICH IS EVIDENT FROM THE DETAILS REASONING GIVEN BY THE LEARNED CIT(A) IN PARA 3.3 OF THE IMPUGNED ORDE R AS IS REPRODUCED BY US 6 HEREIN ABOVE. IN VIEW OF THIS, WE DECLINE TO INTE RFERE WITH THE CONCLUSION OF THE LEARNED CIT(A). 8. IN THE RESULT, THE APPEAL OF THE REVENUE IS DISM ISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 11.9.2009 SD/- SD/- (N.S.SAINI) (T.K.SHARMA) ACCOUNTNT MEMBER JUDICIAL MEMBER DATED: 11 TH SEPT 2009 RKK COPY FORWARDED TO :- 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT (A). 4. THE CIT 5. DR 6. GUARD FILE BY ORDER TRUE COPY DY./ASSTT. REGISTRAR, ITAT, AHMEDABAD.