Manoj S. Patil, Jalgaon V. Deputy Commissioner of Income-tax, Central Circle -2, Jalgaon

ITA 1548/PUN/2019

• Counselvise Citation: [2020] 110 COUNSELVISE.COM (IT) 2243 (ITAT-PUNE)
• Duration Of Justice: 1 year(s) 2 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 03-12-2020
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 2012-2013
• Appeal Filed On: 03-10-2019
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: S P WALIMBE
• Keywords: Retraction; Set aside
• Section: 69C; 143(3); 133A; 201; 13

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL SMC BENCH, PUNE (THROUGH VIRTUAL COURT) BEFORE SHRI P.M. JAGTAP , V ICE P RESIDENT(KZ) . / ITA NO. 1 548 /PUN/20 19 / ASSESSMENT YEAR : 201 2 - 1 3 MANOJ SHANTARAM PATIL NIRMAL BUNGLOW, VIVEKANAND NAGAR PACHORA, JALGAON 424201 PAN : A ASPP7163K ....... / APPELLANT / V/S. THE DY. COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE 2, JALGAON / RESPONDENT ASSESSEE BY : SHRI PRAMOD SHINGTE REVENUE BY : SHRI S.P. WALIMBE / DATE OF HEARING : 0 2 .12.2020 / DATE OF PRONOUNCEMENT : 03 .12.2020 / ORDER PER P.M. JAGTAP, VP : THIS A PPEAL FILED BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER OF LD.CIT(A) - 2 , NASHIK , DATED 3 0.0 7 .201 9 AND THE SOLITARY ISSUE INVOLVED THEREIN RELATES TO THE ADDITION OF RS.15,48,088/ - MADE BY THE ASSESSING OFFICER AND CONFIRMED BY LD. CIT(A) ON ACCOUNT OF ALL EGED EXCESS STOCK FOUND DURING THE COURSE OF SURVEY . 2. THE ASSESSEE IN THE PRESENT CASE IS AN INDIVIDUAL WHO IS ENGAGED IN THE BUSINESS OF TRADING IN BATTERIES IN THE NAME OF M/S. SAMARTH AND SELLING OF BRICKS IN THE NAME OF M/S. NIRMAL CONCRETE PRODUCT. A SURVEY U/S 133A OF THE INCOME - TAX ACT, 1961 (HEREINAFTER ITA NO . 1548 /PUN/ 20 1 9 2 REFERRED TO AS THE ACT) WAS CARRIED OUT IN THE PREMISES OF THE ASSESSEE ON 03 - 04 - 2012. DURING THE COURSE OF SURVEY , STOCK LYING IN THE FACTORY PREMISES OF M/S. NIRMALA CONCRETE PRODUCTS WAS PH YSICALLY VERIFIED AND VALUED AT RS.25,23,842/ - . SINCE THE CLOSING STOCK AS DISCLOSED BY THE ASSESSEE AS ON 31 - 03 - 2010 IN THE LAST RETURN OF INCOME FILED FOR A.Y. 2010 - 11 WAS ONLY RS.1,65,754/ - , THE ASSESSEE WAS REQUIRED TO EXPLAIN THE INCREASE IN CLOSING STOCK FROM RS.1,65,754/ - TO RS.25,23,842/ - . IN THIS REGARD, IT WAS EXPLAINED BY THE ASSESSEE THAT THE STOCK LYING IN THE FACTORY PREMISES OF NIRMALA CONCRETE PRODUCTS TO THE EXTENT OF RS.8,10,000/ - BELONGED TO M/S. S.S. PATIL TRACTORS & POWER TILLERS PACH ORA. AS REGARDS THE BALANCE EXCESS STOCK OF RS.15,48,088/ - , THE ASSESSEE IN HIS STATEMENT RECORDED DURING THE COURSE OF SURVEY AGREED TO SURRENDER THE SAME AS HIS ADDITIONAL INCOME FOR A.Y. 2012 - 13. THEREAFTER, THE RETURN OF INCOME FOR THE YEAR UNDER CON SIDERATION WAS FILED BY THE ASSESSEE ON 28 - 05 - 2013 DECLARING TOTAL INCOME OF RS.22,73,877/ - . IN THE SAID RETURN, THE ADDITIONAL INCOME OF RS.15,48,088/ - SURRENDERED DURING THE COURSE OF SURVEY , HOWEVER, WAS NOT DISCLOSED BY THE ASSESSEE. IN THIS REGARD, IT WAS EXPLAINED BY THE ASSESSEE THAT THE NET PROFIT OF NIRMALA CONCRETE PRODUCTS IN THE ABSENCE OF BOOKS OF ACCOUNT WAS ESTIMATED AT RS.12,19,529/ - AND SINCE THE SAME WAS DISCLOSED IN THE RETURN OF INCOME FILED FOR THE YEAR UNDER CONSIDERATION, NO SEPARAT E ADDITION ON ACCOUNT OF ALLEGED EXCESS STOCK COULD BE MADE AS THE SAME WAS ALREADY A PART OF NET PROFIT ESTIMATED. THIS EXPLANATION OF THE ASSESSEE WAS NOT FOUND ACCEPTABLE BY THE ASSESSING OFFICER. ACCORDING TO HIM, THE ASSESSEE HAVING ADMITTED THE EXC ESS STOCK OF RS.15,48,088/ - AS FOUND DURING THE COURSE OF SURVEY ON THE BASIS OF PHYSICAL STOCK, RETRACTION OF THE STATEMENT MADE SUBSEQUENTLY AND THE EXPLANATION OFFERED THAT THE EXCESS STOCK WAS A PART OF THE NET PROFIT SEPARATELY ESTIMATED WAS NOTHING B UT AN AFTERTHOUGHT. HE ACCORDINGLY, REJECTED THE EXPLANATION OF ASSESSEE AND PROCEEDED TO MAKE AN ADDITION OF RS.15,48,088/ - ON ACCOUNT OF UNEXPLAINED EXCESS STOCK ALLEGEDLY FOUND DURING THE COURSE OF SURVEY , IN THE ASSESSMENT COMPLETED U/S 143(3) OF THE ACT VIDE AN ORDER DATED 29 - 01 - 2014 . ITA NO . 1548 /PUN/ 20 1 9 3 3. AGAINST THE ORDER PASSED U/S 143(3) OF THE ACT, AN APPEAL WAS PREFERRED BY THE ASSESSEE BEFORE THE LD. CIT(A) AND A DETAILED SUBMISSION WAS MADE ON BEHALF OF THE ASSESSEE IN SUPPORT OF HIS CASE THAT ADDITION OF RS.1 5,48,088/ - MADE BY THE ASSESSING OFFICER ON ACCOUNT OF ALLEGED EXCESS STOCK FOUND DURING THE COURSE OF SURVEY WAS NOT SUSTAINABLE. THE LD. CIT(A) HOWEVER, DID NOT FIND MERIT IN THE SAME AND PROCEEDED TO CONFIRM THE ADDITION MADE BY THE ASSESSING OFFICER O N THIS ISSUE FOR THE FOLLOWING REASONS GIVEN IN PARAGRAPH NO.5.3 OF HIS IMPUGNED ORDER: 5.3 I HAVE CONS I DERED THE FACTS OF THE CASE & RIVAL CONTENTIONS. I DO NOT AGREE WITH THE CONTENTION OF THE APPELLANT ON THE GROUND THAT, THE DISCREPANCY IN STOCK FOU ND AT THE TIME OF SURVEY TO THE . TUNE OF 15,48,088/ - WAS DECLARED AS ADDITIONAL INCOME AND THE DIFFERENCE IN STOCK HAS BEEN FOUND, AFTER PREPARING THE INVENTORY OF STOCK LYING IN THE FACTORY PREMISES AND CLOSING STOCK RECORDED IN THE BOOKS OF ACCOUNT . IN THE ASSESSMENT AS WELL AS APPELLATE PROCEEDINGS, THE APPELLANT HAS ALSO NOT RECONCILED AS TO HOW THE EXCESS STOCK WAS RECORDED IN THE BOOKS OF ACCOUNTS AND ARRIVED AT THE NET PROFIT . THE DISCREPANCY OR EXCESS STOCK OF 15 , 48,088/ - FOUND IN SURVEY ACTION ON 03.04.2012 WAS NOT RECORDED IN THE BOOKS OF ACCOUNTS FOR F.Y. 2011 - 12 RELEVANT TO A.Y.2012 - 13, THEREFORE, THE APPELLANT CANNOT SAY THAT, THE EXCESS STOCK IS INCLUDED IN THE NET PROFIT FOR A.Y.2012 - 13, SINCE THE SURVEY DATE I . E. 03.04.2012 WAS JUST 3 DAY S AFTER 31 . 03.2012. THE AO HAS C L EARLY EXTRACTED THE STATEMENT RECORDED ON OATH AT ANSWER TO QUESTION NO . 5, WHICH INDICATES THAT, THE APPELLANT HAS VOLUNTAR I LY ACCEPTED 15,48,088/ - ON ACCOUNT OF DISCREPANCY/EXCESS STOCK FOUND AT THE TIME OF SURVEY ACTION. THE APPELLANT HAS ALSO NOT RETRACTED IMMEDIATELY AFTER THE SURVEY ACTION BY RECONCILING THE EXCESS STOCK AS ON 31.3.2012. THE APPELLANT HIMSELF HAS CONFIRMED IN HIS STATEMENT THAT, HE HAS NOT BEEN MAINTAINING BOOKS ACCOUNTS, THEN HOW HE WILL PROVE THAT THE APPELLANT HAS TAKEN INTO ACCOUNT THE EXCESS STOCK WHILE ESTIMATING THE NET PROFIT AT 12,19,529/ - . FURTHER, THE APPELLANT DURING THE SURVEY PROCEEDINGS, WILLFULL Y ADMITTED THAT THE ' EXCESS ' STOCK OF 15 , 48,088/ - BELONGS TO HIM, AFTER CAREFULLY VERIFICATION OF INVENTORY MADE BY THE AO. FURTHER, THE APPELLANT HAS NOT BROUGHT ON RECORD ANY CONCRETE EVIDENCE TO SUPPORT THAT THE EXCESS STOCK WAS ALREADY TAKEN INTO ACCOUNT WHILE DISCLOSING THE NET PROFIT. FURTHER, THE CONTENTION OF THE APPELLANT OF DOUBLE TAXATION IS NOT ACCEPTED IN VIEW OF THE ABOVE STATED FACTS. THE CASE LAWS ON WHICH THE RELIANCE WAS PLACED BY THE APPELLANT DIFFERS FROM THE FACTS IN THE PRESENT CASE. IN VIEW OF THE ABOVE DETAILED DISCUSSION, I AM OF THE CONSIDERED VIEW THAT THE AO WAS JUSTIFIED IN MAKING ADDITION OF 15,48,088/ - U/S 69C OF THE ACT, 1961 ON ACCOUNT OF EXCESS STOCK, WHICH REMAINED TO BE OFFERED FOR TAXATION. THE ADDITION MADE BY THE AO IS CONFIRMED AND THE GROUND OF APPEAL IS THEREFORE DISMISSED. AGGRIEVED BY THE ORDER OF LD. CIT(A), THE ASSESSEE HAS PREFERRED THIS APPEAL BEFORE THE TRIBUNAL. ITA NO . 1548 /PUN/ 20 1 9 4 4 . I HAVE HEARD THE ARGUMENTS OF BOTH SIDES AND PERUSED THE MATERIAL AVAILABLE ON RECORD. IT IS OBSERVED THAT EXCESS STOCK ALLEGEDLY FOUND DURING THE COURSE OF SURVEY TO THE EXTENT OF RS.15,48,088/ - WAS ACCE PTED AS UNEXPLAINED BY THE ASSESSEE IN HIS STATEMENT RECORDED DURING THE COURSE OF SURVEY AND HE ALSO AGREED TO SURRENDER THE SAME AS HIS ADDITIONAL INCOME FOR THE YEAR UNDER CONSIDERATION I.E. A.Y. 2012 - 13. IN THE RETURN OF INCOME FILED FOR THE YEAR UNDE R CONSIDERATION AFTER THE SURVEY, ADDITIONAL INCOME ON ACCOUNT OF EXCESS STOCK ALLEGEDLY FOUND DURING THE COURSE OF SURVEY AS SURRENDERED IN HIS STATEMENT HOWEVER WAS NOT DECLARED BY THE ASSESSEE. IN THIS REGARD, AN AFFIDAVIT MADE BY THE ASSESSEE ON 07 - 05 - 2012 WAS FURNISHED BEFORE THE ASSESSING OFFICER RETRACTING THE STATEMENT RECORDED BY HIM DURING THE COURSE OF SURVEY SURRENDERING THE EXCESS STOCK ALLEGEDLY FOUND DURING THE COURSE OF SURVEY AS HIS ADDITIONAL INCOME FOR THE YEAR UNDER CONSIDERATION I.E. A .Y. 2012 - 13. THE QUESTION THAT NOW ARISES FOR CONSIDERATION IS WHETHER THE ASSESSEE HAS SUCCESSFULLY AND SATISFACTORILY RETRACTED THE STATEMENT MADE BY HIM DURING THE COURSE OF SURVEY SURRENDERING THE EXCESS STOCK ALLEGEDLY FOUND AS HIS ADDITIONAL INCOME . IN THIS REGARD, LD. COUNSEL FOR THE ASSESSEE HAS SUBMITTED THAT EVEN THOUGH THE BOOKS OF ACCOUNT OF HIS PROPRIETARY CONCERN M/S. NIRMALA CONCRETE PRODUCTS WERE NOT REGULARLY MAINTAINED BY THE ASSESSEE AS FO UND DURING THE COURSE OF SURVEY, BOOKS OF ACCOUN T OF THE SAID CONCERN FOR THE TWO YEARS I.E. A.YS. 2011 - 12 AND 2012 - 13 WERE PREPARED BY THE ASSESSEE AND IN THE TRADING AND PROFIT & LOSS ACCOUNT PREPARED FOR A.Y. 2012 - 13 , A CLOSING STOCK OF RS.15,55,000/ - AS ON 31 - 03 - 2012 WAS DULY REFLECTED (COPY PLACED AT PAGE 29 OF PAPER BOOK). HE HAS CONTENDED THAT SINCE THE BOOKS OF ACCOUNT SO PREPARED BY THE ASSESSEE WERE NOT REJECTED BY THE ASSESSING OFFICER, THE STOCK AS FOUND DURING THE COURSE OF SURVEY CARRIED OUT ON 03 - 04 - 2012 STOOD DULY EXPLAINED AND THE ADDIT ION MADE ON ACCOUNT OF THE SAID STOCK ALLEGING IT TO BE EXCESS IS NOT SUSTAINABLE. 5. THE LD. DR ON THE OTHER HAND HAS SUBMITTED THAT TH E SUBMISSION NOW BEING MADE BY THE LD. COUNSEL FOR THE ASSESSEE BEFORE THE TRIBUNAL WAS NOT SPECIFICALLY MADE BEFORE ITA NO . 1548 /PUN/ 20 1 9 5 TH E ASSESSING OFFICER DURING THE COURSE OF ASSESSMENT PROCEEDINGS OR EVEN BEFORE THE LD. CIT(A) DURING THE COURSE OF APPELLATE PROCEEDINGS. HE HAS POINTED OUT FROM THE ASSESSMENT ORDER THAT THERE IS NO MENTION ABOUT ANY BOOKS OF ACCOUNT OF M/S. NIRMALA CONC RETE PRODUCTS PREPARED AND PRODUCED BY THE ASSESSEE FOR THE VERIFICATION OF ASSESSING OFFICER AND THERE IS ALSO NO FINDING RECORDED BY THE ASSESSING OFFICER ON VERIFICATION OF SUCH BOOKS OF ACCOUNT. IN REPLY TO A QUERY RAISED BY THE BENCH, HE HOWEVER, HAS ACCEPTED THAT THE COMPARISON BETWEEN STOCK FOUND DURING THE COURSE OF SURVEY AS ON 03 - 04 - 2012 CANNOT BE MADE WITH THE CLOSING STOCK AS ON 31 - 03 - 2010 AS DONE BY THE ASSESSING OFFICER AND THE PROPRIETARY CONCERN OF THE ASSESSEE M/S. NIRMALA CONCRETE PRODUCT S HAVING CARRIED ON THE BUSINESS DURING TWO PREVIOUS YEARS RELATING TO A.YS. 2011 - 12 AND 2012 - 13 AND OFFERED TO TAX SUBSTANTIAL AMOUNT OF PROFIT, THE RESULTANT VARIATION IN THE STOCK LEVEL FROM 31 - 03 - 2010 TO 03 - 04 - 2012 SHOULD BE TAKEN INTO CONSIDERATION WH ILE COMPUTING THE EXCESS STOCK, IF ANY, AS FOUND DURING THE COURSE OF SURVEY. IN THIS REGARD, IT IS OBSERVED THAT A LTHOUGH THE ASSESSEE DID NOT REGULARLY MAINTAIN THE BOOKS OF ACCOUNT FOR THE SAID TWO YEARS AS FOUND DURING THE COURSE OF SURVEY, HE HAS PREPARED SUCH ACCOUNTS SUBSEQUENTLY AS SUBMITTED BY THE LD. COUNSEL FOR THE ASSESSEE. SINCE NO SPECIFIC FINDING HAS BEEN RECORDED BY THE ASSESSING OFFICER ON VERIFIC ATION OF THE SAID BOOKS OF ACCOUNT, THE LD. DR HAS SUBMITTED THAT THE MATTER MAY BE SENT BACK TO THE ASSESSING OFFICER FOR SUCH VERIFICATION WHICH IS RELEVANT TO DECIDE THE ISSUE INVOLVED IN THE PRESENT CASE RELATING TO THE EXCESS STOCK ALLEGEDLY FOUND DUR ING THE COURSE OF SURVEY. EVEN THE LD. COUNSEL FOR THE ASSESSEE HAS NOT RAISED ANY OBJECTION FOR SENDING THE MATTER BACK TO THE ASSESSING OFFICER FOR SUCH VERIFICATION. I ACCORDINGLY, SET ASIDE THE IMPUGNED ORDER PASSED BY THE LD. CIT(A) ON THIS ISSUE AN D RESTORE THE MATTER TO THE FILE OF ASSESSING OFFICER FOR DECIDING THE SAME AFRESH AFTER VERIFYING THE CLAIM OF ASSESSEE AS REGARDS THE CLOSING STOCK AS ON 31 - 03 - 2012 FROM THE BOOKS OF ACCOUNT S TATED TO BE PREPARED BY THE ASSESSEE. THE ASSESSEE IS DIRECTE D TO PRODUCE THE SAID BOOKS OF ACCOUNT ALONG WITH SUPPORTING DOCUMENTARY EVIDENCE FOR VERIFICATION OF THE ASSESSING OFFICER. ITA NO . 1548 /PUN/ 20 1 9 6 THE ASSESSING OFFICER IS ALSO DIRECTED TO VERIFY ANOTHER CONTENTION RAISED BY THE LD. COUNSEL FOR THE ASSESSEE THAT THE STOCK DURI NG THE COURSE OF SURVEY WAS WRONGLY VALUED AT SELLING PRICE INSTEAD OF COST PRICE. 6 . IN THE RESULT, THE APPEAL OF ASSESSEE IS TREATED AS ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE O PEN COURT ON 3 RD DECE MBER , 2020 SD/ - ( P.M. JAGTAP ) VICE PRESIDENT / PUNE; / DATED : 3 RD DECEMBER, 2020. GCVSR / COPY OF THE ORDER IS FORWARDED TO : 1. / THE APPELLANT; 2. / THE RESPONDENT; 3. THE CIT (A) - 2 , NASHIK 4 . 5. THE PR. CIT - 2 , NASHIK , , / DR, ITAT, SMC PUNE 6 . / GUARD FILE / BY ORDER, / / TRUE COPY // SENIOR PRIVATE SECRETARY , / ITAT, PUNE