The ITO, Ward-2(3), Ahmedabad V. Shri Sujitkumar J. Choradia, Ahmedabad

ITA 1593/AHD/2009

• Counselvise Citation: [2009] 114 COUNSELVISE.COM (IT) 7739 (ITAT-AHMEDABAD)
• Duration Of Justice: 2 month(s) 6 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 24-07-2009
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: 2003-2004
• Appeal Filed On: 18-05-2009
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: D S CHAUDHARY
• Assessee Lawyers: KEDAR LADDHA
• Keywords: Revised return
• Section: 271(1)(c); 264

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AT AHMEDABAD AHMEDABAD B BENCH (BEFORE S/SHRI T.K. SHARMA, JUDICIAL MEMBER AND D.C.AGRAWAL, ACCOUNTANT MEMBER ) ITA.NO.1593/AHD/2009 [ASSTT.YEAR : 2003-2004] ITO, WARD-2(3) AHMEDABAD. VS. SHRI SUJITKUMAR J. CHORADIA PROP: M/S.JEMMINI COMPUTER B-2, BHAVANA SOCIETY OPP: TERAPANTH BHAVAN, SHAHIBAUG AHMEDABAD-4. REVENUE BY : SHRI D.S.CHAUDHARY ASSESSEE BY : SHRI KEDAR LADDHA O R D E R PER D.C.AGRAWAL, ACCOUNTANT MEMBER : THIS APPEAL IS FILED BY THE REVENUE AGAINST THE ORDER OF COMMISSIONER OF IN COME-TAX(APPEALS)-VII, AHMEDABAD DATED 16-3-2009, WHEREIN THE CIT(A) HAS C ANCELLED PENALTY LEVIED BY THE AO UNDER SECTION 271(1)(C) OF THE INCOME-TAX ACT, 1961. 2. FACTS IN BRIEF ARE THAT ACTION UNDER SECTION 133 A WAS CARRIED OUT IN THE PREMISES OF THE ASSESSEE ON 10-1-2003. DURING THE COURSE OF SURVEY, INVENTORY OF STOCK WAS PREPARED. THE TOTAL VALUE OF GOODS WE RE WORKED OUT AT RS.47,12,663/- WHEREAS BOOK STOCK WAS WORKED AT RS. 26,58,387/-. OUT OF THIS, A SUM OF RS.7,62,500/- WAS REDUCED ON ACCOUNT OF LO SS BY THEFT. THUS, ACTUAL PHYSICAL STOCK WAS CALCULATED AT RS.18,95,887/- WHI CH WAS REDUCED FROM STOCK PHYSICALLY FOUND IN THE SURVEY AT RS.47,12,663/- RE SULTING IN EXCESS STOCK OF RS.28,16,776/-, WHICH THE AO SOUGHT TO ADD IN THE T OTAL INCOME. IT WAS EXPLAINED BY THE ASSESSEE TO AO THAT IT HAS PAID AD VANCE TAX ON EXCESS STOCK, TAKEN THEM INTO BOOKS OF ACCOUNTS AND SALES WERE EF FECTED OUT OF THEM. AFTER AFTER TAKING INTO ACCOUNT THESE EXCESS STOCK, TRADI NG ACCOUNT WAS PREPARED AND RETURN OF INCOME WAS FILED AT RS.18,45,644/-. THE AO HOWEVER DID NOT AGREE AND ADDED THIS SUM AS UNDISCLOSED INVESTMENT UNDER SECTION 69. THE LEARNED CIT(A) CONFIRMED THE SAME, BUT THE TRIBUNAL VIDE IT S ORDER IN ITA ITA.NO.1593/AHD/2009 -2- NO.2166/AHD/2006 DELETED THE SAME BY HOLDING THAT T HE ASSESSEE HAS INCORPORATED THE STOCK IN THE TRADING ACCOUNT. IN THE TRADING ACCOUNT PREPARED AS ON 31-3-2002, THE STOCK WAS DECLARED AT RS.11,97 ,177/- AND AS ON 10-1-2003, IT WAS AT RS.26,58,387/-. THE TRIBUNAL IN ITS ORDE R REPRODUCED THE TRADING ACCOUNT OF THE ASSESSEE FOR TWO PERIODS 1-4-2002 TO 10-1-2003 AND 10-1-2003 TO 31-3-2003. THE OPENING STOCK AS ON 10-1-2003 HA S BEEN TAKEN AT RS.47,12,663/- AS AGAINST CLOSING SHOWN AS PER THE BOOKS AT RS.26,58,387/- . THUS, THE TRIBUNAL HELD THAT EXCESS STOCK HAS BEEN INCORPORATED IN THE STOCK REGISTER AND SALES ARE MADE OUT OF THIS EXCESS STOC K RECORDED IN THE BOOKS. THE ASSESSEE HAS ALSO REFLECTED THE STOCK WHICH WAS LEF T OUT AT THE CLOSE OF THE YEAR AS CLOSING IN THE TRADING ACCOUNT AS ON 31-3-2003. ONCE THE TRIBUNAL HAS DELETED THE ADDITION, THE QUESTION OF LEVY OF PENAL TY THEREON DOES NOT SURVIVE. 3. THE LEARNED AR HAS RELIED ON THE DECISION OF HON BLE GUJARAT HIGH COURT IN THE CASE OF CIT VS. SHANKERLAL NEBHUMAL UT TAMCHANDANI, 311 ITR 327 (GUJ) WHEREIN IT IS HELD THAT WHERE THE ASSESSE E HAS FILED REVISED RETURN, SURRENDERING AMOUNT STANDING IN NAMES OF FAMILY MEM BERS, PENALTY COULD NOT BE LEVIED. FURTHER RELIANCE WAS PLACED ON THE DECI SION OF HONBLE PUNJAB AND HARYANA HIGH COURT IN THE CASE OF CIT VS. PUNJAB KE SARI HOSIERY FACTORY, 304 ITR 247 (P&H) AND CIT VS. COSMOS TRADING CORPORATIO N, 264 ITR 640 FOR THE PROPOSITION THAT WHERE ENTIRE ADDITION HAS BEEN DELETED, IMPOSITION OF PENALTY UNDER SECTION 271(1)(C) OF THE ACT IS NOT E XIGIBLE. IN VIEW OF THIS SETTLED PROPOSITION OF LAW, WE DISMISS THIS GROUND OF THE REVENUE. 4. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWED . ORDER PRONOUNCED IN OPEN COURT ON 24 TH JULY, 2009. SD/- SD/- (T.K. SHARMA) JUDICIAL MEMBER (D.C. AGRAWAL) ACCOUNTANT MEMBER PLACE : AHMEDABAD DATE : 24 -07-2009 ITA.NO.1593/AHD/2009 -3- COPY OF THE ORDER FORWARDED TO: 1) : ASSESSEE 2) : RESPONDENT 3) : CIT(A) 4) : CIT CONCERNED 5) : DR, ITAT. BY ORDER DR, ITAT, AHMEDABAD