L.Saraswathi, CHENNAI V. ITO, CHENNAI

ITA 1547/CHNY/2016

• Counselvise Citation: [2017] 130 COUNSELVISE.COM (IT) 7661 (ITAT-CHENNAI)
• Duration Of Justice: 8 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 22-02-2017
• Appeal Filed By: Assessee
• Bench Allotted: B
• Next Hearing Date: 01-02-2017
• Assessment Year: 2010-2011
• Appeal Filed On: 06-06-2016
• Court: TRIBUNAL
• Department Lawyers: K N DHANDA
• Assessee Lawyers: D ANAND

Judgement Text

, B/ SMC , IN THE INCOME TAX APPELLATE TRIBUNAL A/SMC BENCH, CHENNAI . , BEFORE SHRI CHANDRA POOJARI, ACCOUNTANT MEMBER ./ I.T.A.NO.1547 /MDS./2016 ( / ASSESSMENT YEAR :2010-2011) SMT.L.SARASWATHI, 55,GODOWN STREET, CHENNAI 600 001 VS. THE ITO, BUSINESS WARD IX(1), CHENNAI 600 034. PAN AAOPS 2722 F ( / APPELLANT ) ( / RESPONDENT ) ! ' # / APPELLANT BY : MR.D.ANAND, ADVOCATE $% ! ' # / RESPONDENT BY : MR.K N DHANDAPANI,JCIT, D.R & ' ' ( ) / DATE OF HEARING : 01.02.2017 *+ ' ( ) /DATE OF PRONOUNCEMENT : 22.02.2017 / O R D E R PER CHANDRA POOJARI, ACCOUNTANT MEMBER: THIS APPEAL IS FILED BY THE ASSESSEE, AGGRIEVED B Y THE ORDER OF THE LEARNED COMMISSIONER OF INCOME TAX(A)-13, DA TED 10.02.2016 PERTAINING TO ASSESSMENT YEAR 2010-11. ITA NO. 1547/MDS/2016 2 2. THE FIRST GROUND RAISED IN ASSESSEES APPEAL IS THAT THE LD.CIT(A) ERRED IN CONFIRMING THE ADDITION OF ` 4,72,000/- AND ` 5,24,000/-MADE ON ACCOUNT OF EXCESS STOCK MADE BY L D. ASSESSING OFFICER. 3. THE FACTS OF THE CASE ARE THAT DURING THE COURSE OF SURVEY U/S.133A ON 08.03.2010 AT THE BUSINESS PREMISES OF ASSESSEE =, EXCESS STOCK FOUND IN M/S.GANESH SAREES AT ` 4.72 LAKHS AND M/S.GANESH AGENCIES AT ` 5.24 LAKHS. THE SAME WAS MADE ADDITION TOWARDS CERTAIN DISCREPANCIES IN MAINTAINI NG BOOKS OF ACCOUNTS, FOUND BY THE DEPARTMENT DURING THE COUR SE OF SURVEY. HENCE, THE LD. ASSESSING OFFICER TREATED THE EXCESS STOCK AS UNDISCLOSED INCOME OF ASSESSEE. AGGRIEVED WITH THE ORDER OF LD. ASSESSING OFFICER, THE ASSESSEE CARRIED THE APPEAL BEFORE THE LD.CIT(A) WHO CONFIRMED THE ACTION OF THE AO. 4. BEFORE US, THE CONTENTION OF THE LD.A.R IS THAT ONLY ON THE BASIS OF SWORN STATEMENT RECORDED U/S.133A OF THE ACT, TH E ADDITION WAS MADE AND IT CANNOT BE SUSTAINED. ITA NO. 1547/MDS/2016 3 4.1. ON THE OTHER HAND, LD.D.R SUBMITTED THAT AT T HE TIME OF SURVEY, PHYSICAL INVENTORY WAS TAKEN, AND WHEN COMPARED TO THE STOCK FIGURES IN THE BOOKS OF ACCOUNTS, THERE IS DISCREPA NCY, THE SAME WAS CONFRONTED TO THE ASSESSEES SON MR.L.DAYANAND. HE HAS MENTIONED THAT NO PROPER STOCK REGISTER WAS MAINTAINED AND NO QUANTITATIVE PARTICULARS OF STOCK BY DAY-TO DAY VARIETIES OF STO CK WAS MAINTAINED FOR THE LAST TWO YEARS AND ALSO NOT PRODUCING ANY R ECONCILIATION STATEMENT WITH REGARD TO STOCK DIFFERENCE. ACCORDI NG TO LD.D.R, THE SWORN STATEMENT RECORDED FROM MR.L.DAYANAND ON 09.0 3.2010 U/S.131 OF THE ACT, WHERE HE HAD ACCEPTED THE ADDITIONAL INCOME OF ` 20 LAKHS. HOWEVER, THE ASSESSEE NOT OFFERED THE ADDITIONAL IN COME , WHICH WAS SURRENDERED AT THE TIME OF SEARCH AND ASK ED FOR EXPLANATION FOR WHICH THE ASSESSEE HAS NOT GIVEN PR OPER EXPLANATION. 5. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE MATERIAL ON RECORD. IN THIS CASE, THERE WAS A SURVEY U/S.133A OF THE ACT, AND DURING THE COURSE OF SURVEY, STOCK WAS INVENTORIED AND STATEMENT WAS RECORDED FROM ASSESSEES SON MR.L.DAYANAND WHERE H E OFFERED THE ADDITIONAL INCOME OF ` 20 LAKHS. HOWEVER, THE SAME WAS NOT OFFERED IN THE RETURN OF INCOME. HENCE, THE LD. ASSESSING OFFICER PROCEEDED ITA NO. 1547/MDS/2016 4 TO MAKE ADDITION ON THE BASIS OF SURVEY REPORT AND ALSO ON THE BASIS OF PHYSICAL STOCK FOUND DURING THE COURSE OF SEARCH AND COMPARISON WITH BOOKS OF ACCOUNTS OF THE ASSESSEE. THE ASSESS EE BEFORE US, IS NOT ABLE TO SHOW THAT THERE IS NO DISCREPANCIES BET WEEN THE PHYSICAL STOCK AND BOOKS OF ACCOUNTS DURING THE COURSE OF SE ARCH. ON THE OTHER HAND, IT WAS ARGUED THAT THE DEPARTMENT HAS A CCEPTED THE OPEN STOCK, PURCHASE AND SALES AND CLOSING STOCK, A S SUCH THAT CANNOT BE ANY ADDITION TOWARDS EXCESS STOCK. THIS A RGUMENT OF THE ASSESSEES COUNSEL IS HAVING NO MERIT. THERE IS EXC ESS PHYSICAL STOCK FOUND DURING THE SURVEY FOR WHICH THE ASSESSEE HAS NO EXPLANATION AND IT LEADS TO THE CONCLUSION THAT THERE IS AN UNE XPLAINED INVESTMENT IN UNACCOUNTED STOCK WHICH SHOULD BE BROUGHT INTO T AX AND THE SAME IS DONE BY THE LOWER AUTHORITIES AND THE SAME IS CO NFIRMED. THE JUDGEMENT OF SUPREME COURT IN THE CASE OF CIT VS. S .KHADER KHAN SON REPORTED IN (2013) 352 ITR 0480(SC) HAVE NO APP LICATION AS THERE IS EXCESS STOCK FOUND DURING THE COURSE OF SU RVEY. HENCE, THIS GROUND RAISED BY THE ASSESSEE STANDS DISMISSED. 6. THE SECOND GROUND IS WITH REGARD TO DISALLOWANC E OF PAYMENT OF SALARY OF ` 5,81,940/-. THIS PAYMENT OF SALARY WAS NOT ALLOWE D AS ITA NO. 1547/MDS/2016 5 DEDUCTION WHILE COMPUTING THE INCOME OF ASSESSEE AS THE ASSESSEE HAS NOT PLACED NECESSARY EVIDENCE IN THE FORM OF AT TENDANCE REGISTER, SCHEDULE ATTACHED TO P&L ACCOUNT TO WHOM IT WAS P AID. BEFORE US, THE LD.A.R PLEDED TO OFFER ONE MORE OPPORTUNITY TO PRODUCE REQUISITE EVIDENCE AND EXPLAIN THE CLAIM OF ASSESSEE BEFORE THE LOWER AUTHORITIES. ACCORDINGLY, WE REMIT THE ISSUE TO TH E FILE OF LD. ASSESSING OFFICER WITH A DIRECTION TO ASSESSEE TO PLACE NECES SARY EVIDENCE. THIS GROUND STANDS PARTLY ALLOWED FOR STATISTICAL PURPOS ES. 7. THE THIRD GROUND IS WITH REGARD TO DISALLOWANC E OF UNEXPLAINED BANK DEPOSITS OF ` 4 LAKHS. ON THE ISSUE, THE LD.A.R PLEADED FOR AN OPPORTUNITY TO PRODUCE NECESSARY EVIDENCE TO SAY TH AT IT IS NOT AN UNEXPLAINED BANK DEPOSITS AND THERE IS AN EVIDENCE OF SOURCE OF DEPOSIT AND THE ASSESSEE HAS SUBMITTED REQUISITE PR OOF OF INVESTMENT IN FIXED DEPOSIT MATURITY ETC. ACCORDINGLY, WE REM IT THE ISSUE TO THE FILE OF LD. ASSESSING OFFICER WITH A DIRECTION TO A SSESSEE TO PLACE NECESSARY EVIDENCE. THIS GROUND STANDS PARTLY ALLOW ED FOR STATISTICAL PURPOSES. ITA NO. 1547/MDS/2016 6 8. THE LAST GROUND IS WITH REGARD TO DISALLOWANCE OF ` 2,27,233/- TOWARDS MISCELLANEOUS EXPENDITURE ON THE REASON TH AT THE ASSESSEE NOT PRODUCED THE NECESSARY EVIDENCE ON THE PAYMENTS . BEFORE US, THE LD.A.R PLEDED TO OFFER ONE MORE OPPORTUNITY TO PRODUCE REQUISITE EVIDENCE AND EXPLAIN THE CLAIM OF ASSESSEE BEFORE THE LOWER AUTHORITIES. ACCORDINGLY, WE REMIT THE ISSUE TO TH E FILE OF LD. ASSESSING OFFICER WITH A DIRECTION TO ASSESSEE TO PLACE NECES SARY EVIDENCE. THIS GROUND STANDS PARTLY ALLOWED FOR STATISTICAL PURPOS ES. 9. IN THE RESULT, THE APPEAL OF ASSESSEE IS PARTLY ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED ON 22 ND FEBRUARY, 2017 AT CHENNAI. SD/- ( ) ( CHANDRA POOJARI ) /ACCOUNTANT MEMBER CHENNAI, DATED THE 22 ND FEBRUARY, 2017 . K S SUNDARAM. , ' $(-. /.( / COPY TO: 1 . ! / APPELLANT 3. & 0( () / CIT(A) 5. .3 4 $(5 / DR 2. $% ! / RESPONDENT 4. & 0( / CIT 6. 4 6 7 ' / GF