Deputy Commissioner of Income Tax, Circle-Agartala, Agartala V. M/s. Sayak Enterprise, Agartala

ITA 147/GTY/2019

• Counselvise Citation: [2020] 110 COUNSELVISE.COM (IT) 9032 (ITAT-GUWAHATI)
• Duration Of Justice: 1 year(s) 3 month(s) 21 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-07-2020
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Assessment Year: 2015-2016
• Appeal Filed On: 09-04-2019
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ROCKCIN SAIKIA
• Assessee Lawyers: KISHORE JAIN
• Keywords: Assessment record
• Section: 131; 143(3); 133A; 22

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL GAUHATI ECOURT, AT KOLKATA BEFORE SHRI A. T. VARKEY, JM &DR. A.L.SAINI, AM ./ITA NO.147/GAU/2019 ( / ASSESSMENT YEAR:2015-16) DCIT, CIRCLE, AGARTALA VS. M/S. SAYAK ENTERPRISE C/O. ALAK KUMAR SAHA, ANJALI APARTMENT, SHANTIPARA, P.O. AGARTALA, TRIPURA 799001. ./ ./PAN/GIR NO.: ACCFS 7762 D (APPELLANT) .. (RESPONDENT) APPELLANT BY : SHRI ROCKCIN SAIKIA, JCIT, SR. DR RESPONDENT BY : SHRI KISHORE JAIN, FCA / DATE OF HEARING : 10/06/2020 /DATE OF PRONOUNCEMENT : 31/07/2020 / O R D E R PER DR. A. L. SAINI: THE CAPTIONED APPEAL FILED BY THE REVENUE PERTAI NING TO ASSESSMENT YEAR 2015-16, IS DIRECTED AGAINST THE ORDER PASSED BY TH E COMMISSIONER OF INCOME TAX (APPEAL), SHILLONG, IN APPEAL NO. CIT(A)/SHG/10173/ 2016-17, DATED 25.01.2019WHICH IN TURN ARISES OUT OF AN ASSESSMENT ORDER PASSED BY THE ASSESSING OFFICER U/S 153CR.W. S. 143(3) OF THE IN COME TAX ACT, 1961 (IN SHORT THE ACT). 2. GROUNDS OF APPEAL RAISED BY THE REVENUE ARE AS F OLLOWS: M/S. SAYAK ENTERPRISE. ITA NO.147/GAU/2019 ASSESSMENT YEAR:2015-16 PAGE | PAGE | PAGE | PAGE | 2 22 2 (I) FOR THAT THE LD. CIT(A) ERRED IN ALLOWING THE I NCOME DISCLOSED IN THE AUDITED P/L ACCOUNT AS SUFFICIENT TO COVER THE PROFIT OUT O F SALES. (II) FOR THAT THE APPELLANT CRAVES LEAVE TO ADD, AL TER AND AMEND ANY/ALL OF THE GROUNDS OF APPEAL BEFORE OR DURING THE COURSE OF HE ARING OF APPEAL. 3. BRIEF FACTS QUA THE ISSUE ARE THAT DURING THE AS SESSMENT PROCEEDINGS, THE ASSESSING OFFICER SCRUTINIZED THE ASSESSMENT RECORD S, RETURN OF INCOME, SEIZED MATERIALS ALONG WITH BANK ACCOUNTS OF THE ASSESSEE. THE ASSESSEE WAS ASKED TO EXPLAIN THAT WHY IT HAS SHOWN, OUT OF BOOKS, RS. 2, 87,28,563/- AS SUPPRESSED VALUE OF STOCK-IN-TRADE? IN RESPONSE, THE ASSESSEE SUBMIT TED THE FOLLOWING WRITTEN SUBMISSIONS BEFORE THE ASSESSING OFFICER: THAT SIR, DURING THE SOURCE OF SURVEY U/S 133A IN THE BUSINESS PREMISES OF M/S. SAYAK ENTERPRISES, PHYSICAL INVENTORY OF STOCK WAS TAKEN AND VALUED AT RS. 5,00,16,728/- ON 27.03.2015. HOWEVER AS PER EXT RACT SA-I, TOTAL STOCK AMOUNT WAS VALUED AT RS.7,87,45,291/-. THAT SIR, TH E DIFFERENCE IN PHYSICAL STOCK WAS BECAUSE WE DID NOT TAKE INTO CONSIDERATIO N STOCK AT UDAIPUR BRANCH AND AT GODOWN. HOWEVERSIR, AS PER AUDITED ST ATEMENT FILED BEFORE YOU FOR F.Y. 2014-15 THE TOTAL STOCK DISCLOSED IS RS. 8 ,51,32,422.00 WHICH IS MORE THAN, WHAT IS FOUND OR VALUED BY THE SEARCH PARTY A S PER EXTRACT SHEET, AS SUCH THERE IS NO DIFFERENCE IN STOCK FOUND AS PER PHYSIC AL VERIFICATION AND AS PER OUR ACCOUNTS. 4. HOWEVER, THE ASSESSING OFFICER REJECTED THE CONT ENTION OF THE ASSESSEE AND HELD THAT SINCE THE ASSESSEE HAS NOT PROVIDED ANY EXPLAN ATION REGARDING THE STOCK VALUATION METHOD AS WAS ASKED FOR IN THE QUESTIONNA IRE AND THE ASSESSEE HAS NOT PROVIDED ANY LEDGER COPY OF THE STOCK INVENTORY TO SUPPORT HIS CLAIM THAT THERE IS NO DIFFERENCE IN THE STOCK VALUE FOUND DURING SEARC H AND THAT OF THE BOOKS OF THE ASSESSEE. THUS, IN ABSENCE OF ANY DOCUMENTARY PROOF AND SUPPORTING BOOKS OF ACCOUNTS SUCH AS LEDGERS OR BILLS/VOUCHERS OF THE I NVENTORY AS ON DATE OF SEARCH, THE ABOVE-MENTIONED CLAIM OF THE ASSESSEE WAS NOT ACCEP TED BY ASSESSING OFFICER. THE ASSESSING OFFICER ALSO HELD THAT SINCE SUPPRESSED V ALUE OF STOCK WHICH WAS FOUND DURING SEARCH AND WHICH WAS ADMITTED AS UNDISCLOSED INCOME BY SHRI ALAK KUMAR SAHA, PARTNER OF THE ASSESSEE FIRM IN HIS STATEMENT U/S 131 OF THE ACT ON M/S. SAYAK ENTERPRISE. ITA NO.147/GAU/2019 ASSESSMENT YEAR:2015-16 PAGE | PAGE | PAGE | PAGE | 3 33 3 17.07.2015. THEREFORE, ASSESSING OFFICER MADE ADDIT ION OF RS. 2,87,28,563/- AS INCOME FROM BUSINESS OF THE ASSESSEE. 5. AGGRIEVED BY THE ORDER OF THE ASSESSING OFFICER, THE ASSESSEE CARRIED THE MATTER IN APPEAL BEFORE THE LD. CIT(A) WHO HAS DELETED THE ADDITION MADE BY THE ASSESSING OFFICER. AGGRIEVED BY THE ORDER OF THE LD . CIT(A), THE REVENUE IS IN APPEAL BEFORE US. 6. WE HEARD BOTH THE PARTIES AND CAREFULLY GONE THR OUGH THE SUBMISSION PUT FORTH ON BEHALF OF THE ASSESSEE ALONG WITH THE DOCUMENTS FURNISHED AND THE CASE LAWS RELIED UPON, AND PERUSED THE FACT OF THE CASE INCLU DING THE FINDINGS OF THE LD CIT(A) AND OTHER MATERIALS BROUGHT ON RECORD. BEFOR E US, LD DR FOR THE REVENUE HAS REITERATED THE STAND TAKEN BY THE ASSESSING OFF ICER, WHICH WE HAVE ALREADY NOTED IN OUR EARLIER PARA AND THE SAME IS NOT BEING REPEATED FOR THE SAKE OF BREVITY. ON THE OTHER HAND, LD COUNSEL FOR THE ASSESSEE HAS DEFENDED THE ORDER PASSED BY THE LD CIT(A). WE NOTE THAT DIFFERENCE IN STOCKS AR ISES MAINLY BECAUSE STOCKS AT UDAIPUR BRANCH AND STOCKS AT GODOWN WERE NOT CONSID ERED BY THE SURVEY TEAM AND ASSESSING OFFICER. FROM ACCOUNTS OF ASSESSEE, I T WAS OBSERVED BY THE LD CIT(A) THAT ASSESSEE INDEED HAD A BRANCH IN UDAIPUR. IN CO URSE OF SURVEY, NO STOCK FROM UDAIPUR BRANCH WAS TAKEN. AS PER AUDITED ACCOUNT, T HE STOCK AS ON 31.03.2015 WAS 8,51,32,422/- WHICH IS FOUR DAYS AFTER SURVEY A T ASSESSEES PREMISES. IT WAS STATED THAT IN THE PERIOD FROM 27.03.2015 I.E. FROM THE DAY SEARCH WAS CONDUCTED IN THE GROUP CASE, TILL 31.03.2015, THERE WAS NO FRESH PURCHASES. THE STOCK AS ON 31.03.2015 WAS MUCH MORE THAN STOCK PER BOOKS AS ON 27.03.2015 WHICH WAS RS. 7,87,45,291/-. ASSESSEES STOCK PER BOOK AS ON 31.0 3.2015 WAS IN EXCESS OF RS. 63,87,131/- COMPARED TO STOCK AS ON 27.03.2015. THE CONTENTION OF THE LD COUNSEL IS THAT IN THE AUDITED PROFIT AND LOSS ACCOUNT, THE DIFFERENCE IN STOCK FOUND IN COURSE OF SURVEY WAS DULY TAKEN CARE OF. IN ADDITIO N TO THIS, LD COUNSEL ALSO MADE ALTERNATIVE ARGUMENT BEFORE THE BENCH THAT ADDITION AL INCOME DISCLOSED AMOUNTING TO RS. 1,10,00,000/- IS SUFFICIENT TO COVER THE POS SIBLE PROFIT OUT OF SUCH SALES, THEREFORE THE CONCLUSIONS ARRIVED AT BY THE CIT(A) ARE CORREC T. M/S. SAYAK ENTERPRISE. ITA NO.147/GAU/2019 ASSESSMENT YEAR:2015-16 PAGE | PAGE | PAGE | PAGE | 4 44 4 7. WE NOTE THAT LD CIT(A) DELETED THE ADDITION OBSERV ING THE FOLLOWING: 6.3 I HAVE CAREFULLY CONSIDERED THE MATTER. IN THE COURSE OF SURVEY PROCEEDING, STOCK SHORTAGE WAS FOUND TO BE 2,87,28, 563/-. APPELLANT HAD STATED THAT STOCKS AT UDAIPUR BRANCH AND GODOWN WER E NOT TAKEN. FROM ACCOUNTS OF ASSESSEE, IT IS SEEN THAT ASSESSEE INDE ED HAD A BRANCH IN UDAIPUR. IN COURSE OF SURVEY, NO STOCK FROM UDAIPUR BRANCH W AS TAKEN. PER AUDITED ACCOUNT, THE STOCK AS ON 31.03.2015 WAS 8,51,32,422 /- WHICH IS FOUR DAYS AFTER SURVEY AT ASSESSEES PREMISES. IT WAS STATED THAT IN THE PERIOD FROM 27.03.2015 I.E. FROM THE DAY SEARCH WAS CONDUCTED I N THE GROUP CASE, TILL 31.03.2015, THERE WAS NO FRESH PURCHASES. THE STOCK AS ON 31.03.2015 WAS MUCH MORE THAN STOCK PER BOOKS AS ON 27.03.2015 WHI CH WAS RS. 7,87,45,291/-. ASSESSEES STOCK PER BOOK AS ON 31.0 3.2015 WAS IN EXCESS OF RS. 63,87,131/- COMPARED TO STOCK AS ON 27.03.2015. ASSESSEES CONTENTION IS THAT IN THE AUDITED P&L ACCOUNT, THE DIFFERENCE IN STOCK FOUND IN COURSE OF SURVEY WAS DULY TAKEN CARE OF. BE THAT AS IT MAY, T HE SURVEY HAD DETECTED PHYSICAL SHORTAGE OF STOCK. WHEN THERE IS SUCH SHOR TAGE, THE SAME CAN BE ATTRIBUTED TO SEVERAL REASONS. THERE CAN BE THEFT O R PILFERAGE. THERE CAN BE ACCOUNTING ERRORS. THERE CAN BE UNDISCLOSED SALES. THERE CAN BE OVERSTATEMENT OF STOCK IN ORDER TO AVAIL MORE LOAN FACILITY FROM BANKS. IT IS NOT ASSESSEES CASE THAT THERE WAS LOSS DUE TO THEF T OR PILFERAGE. NOR IS ASSESSEE CONTENDING THAT STOCK WAS INFLATED FOR BAN K PURPOSES. PART OF ASSESSEES ARGUMENT IS THAT STOCK AT GODOWN AND BRA NCH AT UDAIPUR WERE NOT TAKEN. BUT ASSESSEE HAD NOT GIVEN TO THE AO WHAT WA S THE VALUE OF STOCK AT UDAIPUR AND AT THE GODOWN. SO, THE AO CANNOT BE FAU LTED ON THIS COUNT. BUT ASSUMING THAT THE STOCK SHORTAGES WAS CORRECT, THE ASSUMPTION CAN BE THAT THERE WAS UNDISCLOSED SALE. IF THERE WAS UNDISCLOSE D SALE, THE LOGICAL COROLLARY IS TO ESTIMATE PROFIT ON UNDISCLOSED SALE S. IN CASE OF PRESENT ASSESSEE, THEORETICALLY SPEAKING, UNDISCLOSED SALE SHALL BE RS. 2,87,28,563/-. THE AO HAD ADDED THE WHOLE AMOUNT TO THE INCOME. TH IS IS NEITHER LOGICAL NOR CORRECT APPROACH. IN TURN, THE ASSESSEE HAD OFF ERED RS. 1,10,00,000/- AS ADDITIONAL INCOME SEPARATELY OVER AND ABOVE THE INC OME DISCLOSED IN AUDITED P&L. EVEN ASSUMING THAT THERE WAS UNDISCLOSED SALE OF RS. 2,87,28,563/-, ADDITIONAL INCOME DISCLOSED AMOUNTING TO RS. 1,10,0 0,000/- IS SUFFICIENT TO COVER THE POSSIBLE PROFIT OUT OF SUCH SALES. ADDITI ON OF RS. 2,87,28,563/- CANNOT BE SUSTAINED. 8. WE HAVE GONE THROUGH THE ABOVE FINDINGS OF LD CI T(A) AND NOTED THAT THERE IS NO ANY INFIRMITY IN THE ORDER PASSED BY THE LD CIT( A).THAT BEING SO, WE DECLINE TO INTERFERE WITH THE ORDER OF ID. CIT(A) IN DELETING THE AFORESAID ADDITION. HIS ORDER M/S. SAYAK ENTERPRISE. ITA NO.147/GAU/2019 ASSESSMENT YEAR:2015-16 PAGE | PAGE | PAGE | PAGE | 5 55 5 ON THIS ADDITION IS THEREFORE UPHELD AND THE GROUND S OF APPEAL OF THE REVENUE ARE DISMISSED. 9. IN THE RESULT, THE APPEAL OF THE REVENUE IS DISM ISSED. ORDER PRONOUNCED IN THE COURT ON 31.07.2020 SD/- SD/- ( A.T. VARKEY ) (A.L.SAINI) / JUDICIAL MEMBER / ACCOUNTANT MEMBER / DATE: 31/07/2020 ( BISWAJIT, SR.PS ) COPY OF THE ORDER FORWARDED TO: 1. DCIT, CIRCLE, AGARTALA. 2. M/S. SAYAK ENTERPRISE. 3. C.I.T(A)- 4. C.I.T.- GUWAHATI 5. CIT(DR), GAUHATIBENCH, GUWAHATI. 6. GUARD FILE. TRUE COPY BY ORDER SENIOR PRIVATE SECRETARY / DDO / H. O. O ITAT, GAUHA TI BENCH