The Income Tax Offficer, Ward -1 (1), Bathinda V. M/S S.M. Builders and Developer, Bathinda

ITA 164/ASR/2014

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 8874 (ITAT-AMRITSAR)
• Duration Of Justice: 1 year(s) 10 month(s) 24 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 05-02-2016
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Next Hearing Date: 22-12-2015
• Assessment Year: 2010-2011
• Appeal Filed On: 11-03-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: R K SHARDA
• Assessee Lawyers: P N ARORA

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, AMRITSAR BENCH; AMRITSAR BEFORE SH. A.D. JAIN, JUDICIAL MEMBER AND SH. T.S. KAPOOR, ACCOUNTANT MEMBER ITA NO.164(ASR)/2014 ASSESSMENT YEAR:2010-11 PAN: ABCFS952K INCOME TAX OFFICER, VS. M/S. S.M. BUILDERS & DEVEL OPERS, WARD 1(1), BATHINDA. URBAN ESTATE, PHASE-II, BATHINDA. (APPELLANT) (RESPONDENT) APPELLANT BY:SH.R.K.SHARDA, DR RESPONDENT BY: SH. P.N.ARORA, ADVOCATE DATE OF HEARING: 23/12/2015 DATE OF PRONOUNCEMENT: 05/02/2016 ORDER PER T.S. KAPOOR, AM; THIS IS AN APPEAL FILED BY THE REVENUE AGAINST THE ORDER OF THE CIT(A), BATHINDA, DATED 31.12.2013, RELATING TO ASS ESSMENT YEAR 2010- 11. THOUGH, THE REVENUE HAS TAKEN THREE GROUNDS OF APPEAL, BUT THE GRIEVANCE OF THE REVENUE IS AGAINST THE ACTION OF THE LD. CIT(A) BY WHICH HE HAD DELETED AN AMOUNT OF RS.84,10,600/-, WHICH THE AO HAD MADE ON ACCOUNT OF DIFFERENCE IN FIGURES OF CLOSING STOC K SUBMITTED TO THE BANK AND BALANCE SHEET SUBMITTED TO THE DEPARTMENT. 2. AT THE OUTSET, THE LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE ABOVE ISSUE IS NOW COVERED IN FAVOUR OF THE ASSESS EE BY THE CONSOLIDATED ORDER, DATED 26.03.2015 OF THE ITAT, AMRITSAR BENCH . THE LD. COUNSEL ITA NO.164(ASR)/2014 AY: 2010-11 2 FURTHER SUBMITTED THAT THE BUNCH OF APPEALS WAS DEC IDED BY THIS ORDER AND THE COMMON ISSUE IN ALL THESE APPEALS WAS AS TO WHETHER THE ADDITION COULD BE MADE ON THE BASIS OF DIFFERENCE I N VALUATION OF STOCK, AS SUBMITTED TO THE BANK AND AS PER THE BALANCE SHE ET SUBMITTED TO THE DEPARTMENT. THE LD. COUNSEL IN THIS RESPECT SUBMITT ED THAT WHILE DECIDING THE BUNCH OF APPEALS, THE ITAT, AMRITSAR BENCH, HA D TAKEN APPEAL IN ITA NO.198(ASR)/2013, AS THE LEAD CASE AND IN THIS RESPECT, HE INVITED OUR ATTENTION TO THE FINDINGS OF THE TRIBUNAL, AS CONTAINED ON PAGE 71. 3. THE LD. DR, THOUGH SUPPORTED THE ORDER OF THE AO BUT CONCEDED THAT THE MATTER WAS COVERED IN FAVOUR OF THE ASSESS EE. 4. WE HAVE HEARD THE RIVAL PARTIES AND HAVE GONE TH ROUGH THE MATERIAL PLACED ON RECORD. WE FIND THAT THE AO IN T HIS CASE HAD MADE AN ADDITION OF RS.84,10,600/- BEING DIFFERENCE IN VALU E OF STOCK AS PER BANK STATEMENT AND AS PER THE BALANCE SHEET FURNISHED TO THE DEPARTMENT. WE FURTHER FIND THAT THE LD. CIT(A) HAS ALLOWED THE RE LIEF TO THE ASSESSEE BY HOLDING AS UNDER: 6.11. AS FAR AS THE ACTION OF THE AO OF MAKING ADDITION OF RS.84,10,600/- U/S 69 ON ACCOUNT OF THE FACT THAT C LOSING STOCK IN THE BALANCE SHEET AS ON 31.03.2010 IS NIL AND CLOSI NG STOCK IN THE STOCK STATEMENT DATED 31.03.2010 IS RS.84,10,600/-, THE SAME IS NOT JUSTIFIED KEEPING IN VIEW THE FOLLOWING FACTS: I) THE CASH CREDIT LIMIT HAS BEEN AVAILED BY THE AP PELLANT AGAINST HYPOTHECATION OF STOCK AND NOT AGAINST PLED GE OF STOCK. IN THE CASE OF HYPOTHECATION OF STOCK THE CO NTROL AND POSSESSION REMAINS WITH THE BORROWER AND NOT WITH T HE BANK. ITA NO.164(ASR)/2014 AY: 2010-11 3 II) THE AO HAS NOT BEEN ABLE TO REBUT THE CONTENTIO N OF THE A/R OF THE APPELLANT RAISED CONSISTENTLY DURING THE COURSE OF ASSESSMENT AS WELL AS APPELLATE PROCEEDINGS THAT TH E STOCK AS PER STOCK STATEMENT WAS INFLATED TO CONTINUE THE CA SH CREDIT LIMIT. THE AO HAS ALSO NOT BEEN ABLE TO REBUT THE C ONTENTION OF THE A/R OF THE APPELLANT THAT THE STOCK WAS NOT PHY SICALLY VERIFIED BY THE BANK AND EVEN THE STOCK STATEMENT D ATED 31.03.2010 WAS BELATED. THESE FACTS ARE A MATTER O F RECORD IN VIEW OF THE STATEMENT OF SH. KUNDAN SINGH BANK MANA GER RECORDED BY THE AO ON 09.03.2013 IN WHICH HE HAS NO T BEEN ABLE TO STATE ANYTHING ABOUT THE PHYSICAL VERIFICAT ION OF STOCK BECAUSE HE JOINED THE BANK ON 07.06.2010. IN THE CR OSS EXAMINATION BY THE A/R OF THE APPELLANT HE ACCEPTED THAT THE PENALTY OF RS.4335.11 WAS IMPOSED FOR BELATED STOCK STATEMENT DATED 31.03.2010 AND FURTHER THAT NO DATE OF RECEIPT HAS BEEN MENTIONED ON THE STOCK STATEMENT D ATED 31.03.2010. III) THE FILING OF TWO PROFIT & LOSS ACCOUNT AND BA LANCE SHEETS BY THE ASSESSEE ALSO DOES NOT JUSTIFY THE ACTION OF TH E AO TO MAKE THE ADDITION ON ACCOUNT OF DIFFERENCE IN STOCK. THE PERUSAL OF COMPARATIVE FIGURES OF INCOME AND EXPENDITURE OF BO TH THE BALANCE SHEET AND PROFIT & LOSS ACCOUNT (COPIES ON RECORD) PROVES THAT THE APPELLANT DECLARED HIGHER RECEIPTS OF RS.1,01,19,694/- AND NET PROFIT OF RS.150940/- IN T HE BALANCE SHEETS BEFORE THE DEPARTMENT AS COMPARED TO RS.56,9 0,940/- AND NET PROFIT OF RS.14,820/- IN THE BALANCE SHEET BEFORE THE BANK. A PERUSAL OF THE LIABILITIES SIDE REFLECTED I N THE BALANCE SHEETS CLARIFIES THAT THE TOTAL OF SAME AS PER BALA NCE SHEET FILED BEFORE THE BANK IS RS.5883946/- AND RS.52860 84/- IN THE BALANCE FILED WITH THE DEPARTMENT. SIMILARLY A PERUSAL OF ASSETS SIDE OF BALANCE SHEETS CLARIFIES THAT THE T OTAL OF THE ASSETS SIDE AS PER BALANCE SHEET FILED WITH THE BAN K IS RS.5883496/- BUT IT IS 5276084/- AS PER BALANCE SHE ET FILED WITH THE DEPARTMENT. THUS, THE CONTENTION OF THE AP PELLANT THAT THE BALANCE SHEET WAS FILED BEFORE THE BANK ON LY FOR THE PURPOSE AVAILING CASH CREDIT LIMIT IS JUSTIFIED PA RTICULARLY KEEPING IN VIEW THE FACT THAT THERE IS NO REBUTTAL BY THE AO ON THIS ISSUE EITHER DURING THE COURSE OF ASSESSMENT P ROCEEDINGS OR APPELLATE PROCEEDINGS. 6.10. THE LAW AS LAID DOWN BY THE JUDGMENTS OF HON BLE P & H HIGH COURT, ITAT AMRITSAR BENCH DISCUSSED SUPRA IN DETAI L DOES NOT ALLOW THE AO TO MAKE THE ADDITION ON ACCOUNT OF DIFFERENC E IN STOCK AS PER STOCK STATEMENT AND AS PER BALANCE SHEET ON THE STO CK STATEMENT PARTICULARLY WHEN THE STOCK HAS NOT BEEN PHYSICALLY VERIFIED BY THE ITA NO.164(ASR)/2014 AY: 2010-11 4 BANK. IN THE PRESENT CASE THE AO HAS FAILED TO PRO VE THAT THE STOCK STATEMENT DATED 31.03.2010 WAS FILED ON WHICH DATE WITH THE BANK WHICH FURTHER PROVES THAT THE STOCK AS ON 31.03.201 0 WERE NEVER PHYSICALLY VERIFIED. AS DISCUSSED SUPRA, THE JUDGME NT OF THE HONBLE P & H HIGH COURT IN THE CASE OF DEVGON RICE & GENE RAL MILLS VS. CIT, 263 ITR 391 IS DISTINGUISHABLE ON FACTS. HENCE , THE AO IS DIRECTED TO DELETE THE ADDITION OF RS.84,10,600/- M ADE U/S 69 OF THE ACT. THE RELEVANT GROUNDS OF APPEAL IS TREATED AS A LLOWED. 5. WE FIND THAT THE ABOVE ISSUE IS SQUARELY COVERED AGAINST THE REVENUE AND IN FAVOUR OF THE ASSESSEE BY THE CONSOL IDATED ORDER DATED 26.03.2015 OF THE ITAT, AMRITSAR BENCH, IN A BUNCH OF APPEALS IN WHICH ITA NO.198(ASR)/2013, IN THE CASE OF DY. COMMR. OF INCOME TAX, CIRCLE- 1, BATHINDA VS. ISHAR INFRASTRUCTURE DEVELOPER (P ) LTD; BATHINDA, HAS BEEN TAKEN AS THE LEAD CASE. THE RELEVANT PORTION O F THE FINDINGS OF THE TRIBUNAL ARE REPRODUCED AS UNDER: 31. IN VIEW OF THE ABOVE DISCUSSION, THE DECISION OF SMT. SHAKUNTLA THUKRAL (SUPRA) AS RELIED UPON BY THE LD. DR IS NOT APPLICABLE TO THE FACTS AND CIRCUMSTANCES OF THE PR ESENT CASE. 32. THE DECISIONS RELIED UPON BY THE LD. CIT(A) OF THE HONBLE PUNJAB & HARYANA HIGH COURT, IN THE CASES OF M/S.SA NTOSH BOX FACTORY, M/S. SIDHU RICE MILLS AND IN THE CASE OF M/S. DEVI DAYAL RICE MILLS ARE SQUARELY APPLICABLE TO THE F ACTS OF THE PRESENT CASE AS THE REVENUE AS THE REVENUE HAS NOT BROUGHT ON RECORD DURING THE ASSESSMENT PROCEEDINGS OR BEFORE THE LD. CIT(A) OR EVEN BEFORE US THAT PHYSICAL VERIFICATION OF THE STOCK HAS ACTUALLY BEEN DONE AND ACCORDINGLY STOCK STATEMENTS SO SUBMITTED BEFORE THE BANK AUTHORITIES AND DP REGISTER CANNOT BE RELIED U PON. 33. IN THE CASE OF CIT VS. VEERDIP ROLLER (P) LTD. (2010) 323 ITR 341 (GUJ), THE FACTS ARE THAT THE AO MADE ADDITION ON ACCOUNT OF DIFFERENCE IN THE VALUE OF CLOSING STOCK FURNISHED TO THE BANK AND THE VALUE OF THE STOCK FOUND IN THE BOOKS OF ACCOUN T FURNISHED TO THE INCOME TAX AUTHORITIES INFLATED STOCK WAS HYP OTHETICAL AND NOT PLEDGED AND THE BANK OFFICIALS HAD NOT VERIFIED THE STATEMENT SHOWING INFLATED STOCK SO PRODUCED BY THE ASSESSEE . THE ADDITION ON ACCOUNT OF DIFFERENCE FURNISHED TO THE BANK AS P ER BOOKS OF ACCOUNT U/S 69B OF THE ACT CAN NOT BE SUSTAINED. CO NSEQUENTLY, THE APPEAL WAS DISMISSED BY THE HONBLE GUJRAT HIGH COURT AGAINST THE SAID DECISION, THE REVENUE WENT IN APPEAL BEFOR E THE HONBLE ITA NO.164(ASR)/2014 AY: 2010-11 5 SUPREME COURT AND THE HONBLE SUPREME COURT VIDE IT S ORDER DATED 13.12.2008 DISMISSED THE SLP FILED BY THE DE PARTMENT. 34. SIMILAR DECISIONS HAVE BEEN MADE BY VARIOUS CO URTS OF LAW REFERRED TO HEREINABOVE: I) CIT VS. SIDHU RICE & GENERAL MILLS REPORTED IN 2 81 ITR 428 (P&H) II) CIT VS. SANTOSH BOX FACTORY (P) LTD.., 44 IT RE PS. 472 (P&H) III) CIT VS. N. SWAMY REPORTEDE IN 241 ITR 363 (MAD RAS) I) ITO VS. DEVI DAYAL RICE MILLS REPORTED IN 75 TTJ 24 (ITAT, AMRITSAR BENCH. II) CIT VS. SIROHI STEEL ROLLING MILLS, REPORTED IN 200 CTR 595 (ALL.) III) ASHOK KUMAR VS. ITO, REPORTED IN 201 CTR 178 ( J & K) IV) CIT VS. DAS INDUSTRIES, REPORTED IN 303 ITR 199 (AL L.) V) CIT VS. SRI PADMAVATHI COTTON MILLS, REPORTED IN 23 6 ITR 340 (MAD.) VI) JAI SHARDA RICE MILLS. VS ITO REPORTED IN 36 ITD 25 4 (ITAT, ASR.) VII) CIT VS. RIDDHI STEEL AND TUBES (P) LTD. REPORTED I N 220 TAXMAN 148 (GUJ.) VIII) CIT VS. APCOM COMPUTERS P. LTD. REPORTED IN (2007) 292 ITR 630 (MAD.). 35. IN THE FACTS AND CIRCUMSTANCES, THE ARGUMENTS M ADE BY THE LD. DR IN HIS WRITTEN SUBMISSIONS AND COUNTER SUBMI SSIONS CANNOT HELP THE REVENUE AND ACCORDINGLY, WE FIND NO INFIRMITY IN THE ORDER OF THE LD. CIT(A) IN THE CASE OF M/S. ISH AR INFRASTRUCTURE DEVELOPERS (P LTD. IN ITA NO.198(ASR)/2013 IN THE I MPUGNED YEAR. 6. KEEPING IN VIEW THE ABOVE DISCUSSION, WE DO NOT FIND ANY INFIRMITY IN THE ORDER OF THE LD. CIT(A) AND THE SAME IS UPHE LD. 7. IN THE RESULT, THE APPEAL OF THE REVENUE IS DISM ISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 05/02/2016 SD/- SD/- (A.D. JAIN) (T.S. KAPOOR) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 05/02/2016 /SKR/ COPY OF ORDER FORWARDED TO: 1. THE ASSESSEE:M/S. S.M. BUILDERS & DEVELOPERS, BA THINDA. ITA NO.164(ASR)/2014 AY: 2010-11 6 2. THE ITO WARD 1(1), BATHINDA 3. THE CIT(A), BATHINDA 4. THE CIT, BATHINDA. 5. THE SR. DR, ITAT, ASR. TRUE COPY BY ORDER (ASSISTANT REGISTRAR) INCOME TAX APPELLATE TRIBUNAL AMRITSAR BENCH: AMRITSAR.