Appeal details
Counselvise Citation
156520114 RSA 2012
Assessee PAN
Bench
Appeal Number
Duration Of Justice
2 year(s) 6 month(s) 27 day(s)
Appellant
Respondent
Appeal Type
Income Tax Appeal
Pronouncement Date
31-10-2014
Appeal Filed By
Department
Order Result
Dismissed
Bench Allotted
G
Next Hearing Date
15-09-2014
Assessment Year
2007-2008
Appeal Filed On
03-04-2012
Judgement Text
IN THE INCOME TAX APPELLATE TRIBUNAL (DELHI BENCH G, NEW DELHI) BEFORE SHRI I. C. SUDHIR, JUDICIAL MEMBER AND SHRI T.S. KAPOOR, ACCOUNTANT MEMBER I.T.A. NO. 1565/DEL/2012 ASSESSMENT YEAR : 2007-08 DCIT, CC-23, VS. SH. SUMER CHAND VERMA & SONS NEW DELHI AE-106, SHALIMAR BAGH, NEW DELHI. GIR / PAN:AAIHS3982D (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI BRR KUMAR, SR. DR RESPONDENT BY : SHRI PIYUSH KAUSHIK, ADV. ORDER PER T.S. KAPOOR, AM: THIS IS APPEAL FILED BY REVENUE AGAINST THE ORDER OF LD. CIT(A) DATED 12.01.2012. THE REVENUE IS AGGRIEVED WITH THE ACTI ON OF LD. CIT(A) BY WHICH HE HAD DELETED THE ADDITION OF RS.87,86,604/- MADE BY THE A.O. ON ACCOUNT OF DIFFERENCE IN VALUE OF STOCK SUBMITTED T O BANK IN THE FORM OF STOCK STATEMENT AND THE STOCK AS PER BOOKS OF ACCOU NT OF THE ASSESSEE. 2. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSE E IS ENGAGED IN THE BUSINESS OF MANUFACTURING AND TRADING OF JEWELLERY, BULLION. THE RETURN OF THE ASSESSEE WAS SELECTED FOR SCRUTINY. DURING ASS ESSMENT PROCEEDINGS, THE A.O. OBSERVED THAT THE ASSESSEE WAS AVAILING A CASH CREDIT FACILITY FORM INDIAN OVERSEAS BANK AND, THEREFORE, HE ISSUED SUMM ONS U/S 131 OF THE I. T. ACT, 1961 TO MANAGER, INDIAN OVERSEAS BANK, REQUIRI NG HIM TO FILE A COPY OF STOCK STATEMENT AS ON 31.03.2006 AND 31.03.2007. D URING THE COURSE OF ITA NO.1565/DEL/2012 2 ASSESSMENT PROCEEDINGS THE ASSESSEE HAD ALSO FURNIS HED VALUATION DETAILS OF CLOSING STOCK AS ON 31.03.2007. THE A.O. OBSERVED THAT THERE WAS DIFFERENCE IN VALUE AND QUANTITY IN RESPECT OF CERTAIN ITEMS O F JEWELLERY AS ALSO THERE WAS DIFFERENCE IN VALUE OF TWO STOCK STATEMENTS I.E . ONE SUBMITTED TO THE BANK AND ANOTHER AS PER BOOKS OF ACCOUNT OF THE ASS ESSEE. THEREFORE, ASSESSEE WAS SHOW CAUSED TO EXPLAIN THE DIFFERENCE BETWEEN THE TWO STOCK STATEMENTS. IN RESPONSE TO THE QUERY, THE ASSESSEE SUBMITTED THAT WITH A VIEW TO AVAIL EXTRA CREDIT FACILITY FROM THE BANK A DIFF ERENT STOCK STATEMENT WAS FURNISHED TO THE BANK WHEREAS IN FACT THE STOCK AS REFLECTED IN THE BOOKS OF ACCOUNT WAS TRUE AND CORRECT AS ALL THE SALES AND P URCHASES WERE DULY SUPPORTED BY VOUCHERS. THE A.O. HOWEVER WAS NOT SA TISFIED WITH THE SUBMISSION OF THE ASSESSEE AND, THEREFORE, HE MADE ADDITION OF RS.87,86,604/ BEING THE DIFFERENCE BETWEEN THE TWO ITEMS OF GOLD JEWELLERY REPRESENTING 78% GOLD JEWELLERY AND 83% GOLD JEWELLERY. AGGRIEV ED, THE ASSESSEE FILED APPEAL BEFORE LD. CIT(A) AND SUBMITTED VARIOUS CONT ENTIONS. LD. CIT(A), AFTER GOING THROUGH THE SUBMISSIONS OF THE ASSESSEE , DELETED THE ADDITION BY HOLDING AS UNDER: I HAVE CAREFULLY CONSIDERED THE SUBMISSIONS MADE BY THE APPELLANT AND VIEWS OF THE ASSESSING OFFICER AS CONTAINED IN THE ASSESSMENT ORDER ON THIS ISSUE. FROM THE RECORDS, I FIND THAT THE VALUATION OF CLOSING STOCK AS GIVEN TO BANK AND AS PER BOOKS OF ACCOUNTS OF THE APPELLANT IS AS UNDER: STOCK STATEMENT AS ON 31.03.2007 (GIVEN TO BANK) PARTICULARS OF STOCK QUANTITY VALUE ALLOY & MIXING L3,214.375 13,214.36 UNDER PROCESS (GOLD BAR) - - 78% GOLD JEWELLERY 3,818.750 2,902,250.00 83% GOLD JEWELLERY 18,288.302 L3,789,434.82 92% GOLD JEWELLERY 9,173.742 8,258,387.80 75% GOLD JEWELLERY 115.615 84,388.95 ITA NO.1565/DEL/2012 3 MOUNTING 75% GOLD JEWELLERY 7,883.744 5,740,533.12 TOTAL (ROUNDED OFF) 3,07,66,198 STOCK STATEMENT AS ON 31.03.2007 (AS PER BOOKS OF A CCOUNTS) ITEM QUANTITY VALUE 24 CT. GOLD BAR 0.000 - 75% NEW GOLD CHAIN & JEW. 7863.744 5721063.00 78% NEW GOLD CHAIN & JEW. 118.483 90225.0 0 83% NEW GOLD CHAIN & JEW. 9330.433 7794855.00 92% NEW GOLD CHAIN & JEW. 19411.212 18148887.00 ALLOYS & MIXING L3214.375 378.00 MOUNTING 75% 115.615 83711.00 TOTAL (ROUNDED OFF) 3,18,41,119.00 FROM THE ABOVE DETAILS, I FIND THAT THE VALUE OF CL OSING STOCK IS MORE BY RS.10,74,921/- AS PER BOOKS THAN THAT GIVEN TO T HE BANK. THE A.O. HAS MERELY CHERRY PICKED TWO ITEMS WHERE STOCK SHOW N TO THE BANK WAS MORE THAN THE STOCK SHOWN IN THE BOOKS OF ACCOU NTS, NAMELY 78% AND 83% JEWELLERY. THE A.O. HAS IGNORED THE ITEMS LIKE 92% JEWELLERY WHERE STOCKS SHOWN IN THE BOOKS OF ACCOUN TS IS MUCH MORE THAN THE STOCK SHOWN TO THE BANK. IT IS TRITE LAW T HAT THE WHOLE DOCUMENT HAS TO BE READ TOGETHER, AND THE AO CANNOT MERELY RELY ON THE PORTION) CONVENIENT TO HIM. IN THE PRESENT APP EAL, THE IMPUGNED STOCK WAS HYPOTHECATED, AND NOT PLEDGED WITH THE BA NK. FURTHER, THE APPELLANT HAD SHOWN MORE STOCK VALUE-WISE IN ITS BO OKS OF ACCOUNTS, COMPARED TO STOCK SHOWN TO THE BANK. FURTHER, I FIN D THAT THE ASSESSING OFFICER HAS NOT ADJUSTED THE OPENING STOC K OF THE SUBSEQUENT YEAR BY AN EQUIVALENT AMOUNT. IT IS FURTHER NOTICED THAT THE HON'BLE SUPREME COURT HAS DISMISSED SLP BY REVENUE AGAINST THE ORDER OF THE GUJARAT HIGH COURT IN THE CASE OF CIT V. VEERDIP RO LLERS P.LTD. (2010) 323 ITR 341 (GUJ.). IN THIS CASE APPEAL BY R EVENUE WAS DISMISSED BY THE GUJARAT HIGH COURT WHERE TRIBUNAL HAD DELETED THE ADDITION UNDER SECTION 69B ON ACCOUNT OF DIFFERENCE BETWEEN THE CLOSING STOCK FURNISHED TO THE BANK FOR AVAILING OF CREDIT FACILITY AND THAT DISCLOSED IN THE BOOKS OF ACCOUNT FURNISHED BE FORE THE INCOME- TAX AUTHORITIES. IN THE FACTS AND CIRCUMSTANCES OF THE CASE, I HOLD THAT ITA NO.1565/DEL/2012 4 THE ASSESSING OFFICER WAS NOT JUSTIFIED IN MAKING T HE SAID ADDITION OF RS.87,86,604/-, AND THEREFORE, GROUND NO.2 IS ALLOW ED. 3. AGGRIEVED, THE REVENUE IS IN APPEAL BEFORE US. 4. AT THE OUTSET, LD. D.R. READ PARA 2.4 AND 2.5 OF THE ASSESSMENT ORDER AND SUBMITTED THAT THE CONTENTION OF THE ASSESSEE T HAT DIFFERENT STOCK STATEMENTS WERE GIVEN TO BANK FOR AVAILING MORE CR EDIT FACILITY, IS NOT CORRECT AS IN FACT, THERE WAS EXCESS STOCK AS PER B OOKS OF ACCOUNT OF THE ASSESSEE AS COMPARED TO THE BANK STATEMENTS. HE FU RTHER ARGUED THAT ON A PARTICULAR DATE, HOW THE TWO STATEMENTS CAN HAVE DI FFERENT QUANTITIES OF VARIOUS KINDS OF JEWELLERY. IT WAS SUBMITTED THAT LD. CIT(A) HAD WRONGLY DECIDED THE ISSUE IN FAVOUR OF THE ASSESSEE AND REL IED UPON THE CASE LAW AS RELIED UPON BY THE A.O. LD. D.R. HEAVILY RELIED UP ON THE ASSESSMENT ORDER. 5. LD. A.R. ON THE OTHER HAND SUBMITTED THAT THE VA LUE OF STOCK AS PER BOOKS OF ACCOUNT OF THE ASSESSEE IN FACT WAS MORE T HAN THE VALUE OF STOCK AS PER BANK STATEMENT. THE ASSESSEE HAS TAKEN THE VAL UE AS PER BOOKS OF ACCOUNT IN ITS TRADING ACCOUNT AND, THEREFORE, THER E WAS NO LOSS TO THE REVENUE AS IN THE TRADING ACCOUNT, HIGHER FIGURE WAS TAKEN. IT WAS FURTHER SUBMITTED THAT THE A.O. PICKED UP ONLY TWO ITEMS OF JEWELLERY FOR COMPARISON WHICH IS NOT CORRECT AS EITHER THE WHOLE OF THE STATEMENT WA S TO BE CONSIDERED AND AS PER LAW, THE A.O. WAS NOT ENTITLED TO CHERRY-PICK T HE ITEMS AS PER HIS CONVENIENCE. IN VIEW OF THE ABOVE, IT WAS SUBMITTE D THAT LD. CIT(A) HAS RIGHTLY DELETED THE ADDITION. 6. WE HAVE HEARD RIVAL PARTIES AND HAVE GONE THROUG H THE MATERIAL PLACED ON RECORD. WE FIND THAT THE STOCK STATEMENT AS PER BOOKS OF ACCOUNT CARRIED MORE VALUE THAN STOCK STATEMENT SUBMITTED TO BANK A ND DIFFERENCE WAS TO THE TUNE OF RS.10,74,921/-. THEREFORE, THERE IS NO LOS S TO THE REVENUE AS THE ITA NO.1565/DEL/2012 5 ASSESSEE HAS TAKEN IN THE TRADING ACCOUNT HIGHER FI GURES FOR THE PURPOSE OF CALCULATION OF PROFITS. LD. CIT(A) HAS PASSED A VE RY REASONED AND SPEAKING ORDER ON WHICH WE DO NOT INTEND TO INTERFERE. 7. IN VIEW OF THE ABOVE, APPEAL FILED BY THE REVENU E IS DISMISSED. 8. ORDER PRONOUNCED IN THE OPEN COURT ON 31 ST OCT., OCT., 2014. SD./- SD./- ( I. C. SUDHIR) (T.S. KAPOOR) JUDICIAL MEMBER ACCOUNTANT MEMBER DATE: 31 ST OCT., 2014 SP COPY FORWARDED TO:- 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT 4. THE CIT (A)-, NEW DELHI. 5. THE DR, ITAT, LOKNAYAK BHAWAN, KHAN MARKET, NEW DEL HI. TRUE COPY. BY ORDER (ITAT, NEW DELHI). S.NO. DETAILS DATE INITIALS DESIGNATION 1 DRAFT DICTATED ON SR. PS/PS 2 DRAFT PLACED BEFORE AUTHOR SR. PS/PS 3 DRAFT PROPOSED & PLACED BEFORE THE SECOND MEMBER JM/AM 4 DRAFT DISCUSSED/APPROVED BY SECOND MEMBER AM/AM 5 APPROVED DRAFT COMES TO THE SR. PS/PS SR. PS/PS 6 KEPT FOR PRONOUNCEMENT SR. PS/PS 7 FILE SENT TO BENCH CLERK 31/10/2014 SR. PS/PS 8 DATE ON WHICH THE FILE GOES TO HEAD CLERK 9 DATE ON WHICH FILE GOES TO A.R. 10 DATE OF DISPATCH OF ORDER ITA NO.1565/DEL/2012 6
Mehul