ITO, Ludhiana V. Sh. Bharat Bhusan Suri (HUF), Ludhiana

ITA 143/CHANDI/2010

• Counselvise Citation: [2010] 136 COUNSELVISE.COM (IT) 5071 (ITAT-CHANDIGARH)
• Duration Of Justice: 4 month(s) 26 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-06-2010
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Assessment Year: 2006-2007
• Appeal Filed On: 03-02-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: INOSHI SHARMA
• Assessee Lawyers: SSHRI
• Section: 143(2)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL CHANDIGARH BENCHES (A) BEFORE SHRI G.S.PANNU, ACCOUNTANT MEMBER AND MS.SUSHMA CHOWLA, JUDICIAL MEMBER ITA-143/CHD/2010 ASSESSMENT YEAR : 2006-07 I.T.O., WARD-1 (3), V SHRI BHARAT BHUSHAN SURI,HUF LUDHIANA. LUDHIANA. PAN : AABHS-7113P & C.O.NO. 9/CHD/2010 IN ITA NO. 143/CHD/2010 SHBHARAT BHUSHAN SURI, HUF V I.T.O., WARD-1(3), LUDHIANA. LUDHIANA. (APPELLANT) (RESPONDENT) APPELLANT BY : SMT. INOSHI SHARMA RESPONDENT BY: S/SHRI PANKAJ JAIN/D.K.GOYAL ORDER PER G.S.PANNU, AM THIS APPEAL BY THE REVENUE AND CROSS OBJECTION BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER OF THE CIT(A PPEALS) DATED 17.11.2009 PERTAINING TO THE ASSESSMENT YEAR 2006-0 7. THE ONLY GROUND RAISED BY THE REVENUE RELATES TO THE ACTION OF THE CIT(APPEALS) IN DELETING THE ADDITION OF RS.30,86,8 55/- MADE BY THE ASSESSING OFFICER ON ACCOUNT OF DIFFERENCE IN THE V ALUE OF CLOSING STOCK AS DECLARED IN THE BALANCE SHEET AND AS REPOR TED TO THE BANK. 2. IN THIS REGARD, IN BRIEF THE FACTS ARE THAT THE ASSESSEE IS ENGAGED IN THE BUSINESS OF MANUFACTURE AND SALE OF CYCLE PARTS. IT FILED ITS RETURN OF INCOME FOR THE ASSESSMENT YEAR 2006-07 DECLARING 2 INCOME OF RS.1,70,240/-. IN THE COURSE OF ASSESSMEN T PROCEEDINGS, THE ASSESSING OFFICER NOTED THAT THE CLOSING STOCK DECLARED IN THE BALANCE SHEET WAS AT RS.41,78,915/-. THE ASSESSEE WAS MAINTAINING A CASH CREDIT ACCOUNT WITH BANK OF BARO DA, SSI BRANCH, FOCAL POINT, LUDHIANA. ENQUIRIES WERE MADE BY THE ASSESSING OFFICER FROM THE BANK AND IT WAS FOUND THAT THE ASS ESSEE WAS ENJOYING A CC LIMIT OF RS.65,00,000/- AGAINST HYPOT HECATION OF STOCKS AND BOOK-DEBTS. THE STOCK AS ON 31.3.2006 R EPORTED TO THE BANK WAS RS.72,65,770/-. THE ASSESSING OFFICER REQ UIRED THE ASSESSEE TO EXPLAIN THE DIFFERENCE IN CLOSING STOCK REPORTED IN THE BALANCE SHEET AT RS.41,78,915/- AND TO THE BANK AT RS.72,65,770/-. AFTER CONSIDERING THE EXPLANATION FURNISHED, THE AS SESSING OFFICER HELD THAT THE CLOSING STOCK REPORTED TO THE BANK WA S THE ACTUAL STOCK AND THE DIFFERENCE OF RS.30,86,855/- WAS ASSESSED A S INCOME OF THE ASSESSEE FROM UNDISCLOSED SOURCES. 3. IN APPEAL BEFORE THE CIT(APPEALS), ASSESSEE CONT ENDED THAT THE ADDITION HAS BEEN MADE ARBITRARILY WITHOUT POIN TING ANY DEFECT IN THE ACCOUNT BOOKS AND THE VOUCHERS MAINTAINED BY TH E ASSESSEE. THE ASSESSEE SUBMITTED THAT THERE WAS NO EVIDENCE O N RECORD TO SAY THAT THE ASSESSEE HAD MORE THAN THE STOCK DECLARED IN THE BALANCE SHEET AND STOCKS WITH THE BANK WERE MERELY HYPOTHEC ATED AND NOT PLEDGED. IN THIS CONNECTION, RELIANCE WAS PLACED O N THE JUDGEMENT OF THE HON'BLE PUNJAB & HARYANA HIGH COURT IN THE C ASE OF CIT V SIDHU RICE & GENERAL MILLS, 281 ITR 428 (P&H). THE CIT(APPEALS) HAS SINCE DELETED THE ADDITION FOLLOWING THE JUDGEM ENT OF THE HON'BLE PUNJAB & HARYANA HIGH COURT IN THE CASE OF SIDHU RICE & GENERAL MILLS (SUPRA). 3 4. AGAINST SUCH A DECISION, REVENUE IS IN APPEAL BE FORE US. BEFORE US, LEARNED DR HAS PRIMARILY RELIED UPON THE ORDER OF THE ASSESSING OFFICER IN SUPPORT OF THE CASE OF THE REV ENUE. IT IS POINTED OUT THAT THE ASSESSING OFFICER FOUND A DIFF ERENCE BETWEEN THE STOCK REPORTED IN THE BALANCE SHEET AND AS REPO RTED TO THE BANK AND UNDER THESE CIRCUMSTANCES, THE ASSESSING OFFICE R WAS JUSTIFIED IN MAKING THE IMPUGNED ADDITION. 5. ON THE OTHER HAND, LEARNED COUNSEL FOR THE RESPO NDENT ASSESSEE HAS REITERATED THE SUBMISSIONS MADE BEFORE THE CIT(APPEALS), WHICH HAVE BEEN REPRODUCED IN THE IMP UGNED ORDER ITSELF, AND SUBMITTED THAT THERE WAS NO EVIDENCE OF ASSESSEE OWNING STOCKS MORE THAN THOSE REPORTED IN THE BALANCE SHEE T. 6. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS CAREFUL LY. IN THIS CASE, IT IS EVIDENT FROM THE ORDER OF THE ASSESSING OFFICER THAT THE ADDITION OF RS.30,86,855/- HAS BEEN MADE MERELY ON ACCOUNT OF DIFFERENCE IN THE STOCK AS REPORTED IN THE BALANCE SHEET AND TO THE BANK. IT IS ALSO CLEAR THAT OVER-DRAFT FACILITY IN THE BANK HAS BEEN OBTAINED AGAINST HYPOTHECATION OF STOCK STATEMENT F URNISHED. THE CLAIM OF THE ASSESSEE IS THAT THERE IS NO DIFFERENC E IN STOCK POSITION IN AS MUCH AS THE STOCK STATEMENT FURNISHED TO THE BANK IS OF A HIGHER VALUE TO AVAIL MAXIMUM OVER-DRAFT FACILITY. ON THE CONTRARY, THE SALES AND PURCHASES OF THE ASSESSEE ARE VERIFIA BLE FROM THE BOOKS OF ACCOUNT AND AS POINTED OUT BEFORE THE CIT( APPEALS), THE SAME HAVE BEEN ACCEPTED BY THE SALES TAX DEPARTMENT WITH WHOM MONTHLY VAT RETURNS ARE BEING FILED. NO DOUBT, THE RE IS A DIFFERENCE BETWEEN STOCK REPORTED IN THE BALANCE SHEET AND THA T COMMUNICATED TO THE BANK. SO HOWEVER, BY ITSELF THIS WOULD NOT LEAD TO A CONCLUSION THAT THE ASSESSEE HAS CERTAIN UNDISCLOSE D STOCK UNLESS IT 4 IS SHOWN THAT THE DIFFERENCE IS IN QUANTITATIVE TER MS. THE CIT(APPEALS), IN OUR VIEW, CORRECTLY FOLLOWED THE J UDGEMENT OF THE HON'BLE JURISDICTIONAL HIGH COURT IN THE CASE OF SI DHU RICE & GENERAL MILLS (SUPRA) TO DELETE THE ADDITION. IN FACT, THE FINDING OF THE CIT(APPEALS) IS THAT THERE IS NO MATERIAL ON RECORD TO SHOW THAT THE ASSESSEE WAS, IN FACT IN POSSESSION OF HIGHER QUANT ITY OF STOCK THAN THOSE DECLARED IN THE BALANCE SHEET. THIS FINDING HAS NOT BEEN CONTROVERTED BY THE REVENUE BEFORE US IN ANY MANNER AND THEREFORE, WE HEREBY AFFIRM THE CONCLUSION OF THE CIT(APPEALS) . ACCORDINGLY, THE APPEAL OF THE REVENUE IS DISMISSED. 7. NOW, WE MAY REFER TO THE CROSS OBJECTION PREFERR ED BY THE ASSESSEE WHEREIN THE ONLY PLEA RAISED IS THAT THE A SSESSMENT ITSELF IS NULLITY BECAUSE THE NOTICE U/S 143(2) HAS BEEN I SSUED BEYOND THE STATUTORY PERIOD PRESCRIBED UNDER THE ACT. SINCE, THE APPEAL OF THE REVENUE HAS BEEN DISMISSED, THE AFORESAID CROSS OBJ ECTION IS RENDERED ACADEMIC AND THEREFORE, WE DO NOT ADJUDICA TE THE SAME FOR THE PRESENT. 8. IN THE RESULT, THE APPEAL OF THE REVENUE AS WELL AS CROSS OBJECTION OF THE ASSESSEE ARE DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 30.06.2010. SD/- SD/- (SUSHMA CHOWLA) ( G.S.PANNU) JUDICIAL MEMBER ACCOUNTANT MEMBE R DATED : 30 TH JUNE, 2010. POONAM COPY TO : THE APPELLANT/THE RESPONDENT/THE CIT (A)/ THE CIT/THE DR.