The ITO, Ward-2(2), Surat V. Shri Vikas Kejriwal, Surat

ITA 1657/AHD/2011

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 9870 (ITAT-AHMEDABAD)
• Duration Of Justice: 4 year(s) 6 month(s) 26 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 13-01-2016
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 09-12-2015
• Assessment Year: 2004-2005
• Appeal Filed On: 17-06-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: A K PANDAY
• Keywords: Business income

Judgement Text

, IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH, AHMEDABAD BEFORE SHRI SHAILENDRA KUMAR YADAV, JUDICIAL MEMBER AND SHRI RAJESH KUMAR, ACCOUNTANT MEMBER ./ ITA NO. 1657/AHD/2011 / ASSESSMENT YEAR: 2004-05 INCOME-TAX OFFICER, WARD-2(2), SURAT .. APPELLANT VS SHRI VIKAS KEJRIWAL, PROP. M/S. KEJRIWAL FASHIONS, C-1410, 1 ST FLOOR, KOHINOOR MARKET RING ROAD, SURAT .. RESPONDENT PAN : ABGPK 3793 F REVENUE BY : SHRI A.K. PANDAY , SR - DR ASSESSEE(S) BY : SHRI HARDIK VORA, AR / DATE OF HEARING 09/12/2015 /DATE OF PRONOUNCEMENT 13/01/2016 / O R D E R PER SHAILENDRA KUMAR YADAV, JUDICIAL MEMBER: THIS APPEAL FILED BY THE REVENUE IS DIRECTED AGAIN ST THE ORDER OF THE COMMISSIONER OF INCOME-TAX (APPEALS)-I I, SURAT DATED 31.03.2011 FOR ASSESSMENT YEAR 2004-05, ON TH E FOLLOWING GROUNDS:- 1. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN L AW, THE LD. CIT(A) HAS ERRED BY ALLOWING LOSS OF ITA NO. 1657/AHD /2011 ITO VS. SHRI VIKAS KEJRIWAL AY 2004-05 - 2 - RS.13,94,253/- INSPITE OF THE FACT THAT THE ASSESSE E HAD FAILED TO SUBSTANTIATE WITH EVIDENCES THAT THE LOSS HAD INCURRED FROM SALE OF EXCESS STOCK FOUND AT THE TIM E OF SURVEY OPERATION. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LEARNED CIT(A) OUGHT TO HAVE UPHELD THE ORDER OF TH E ASSESSING OFFICER. 3. IT IS, THEREFORE, PRAYED THAT THE ORDER OF THE CIT( A) MAY BE SET-ASIDE AND THAT OF ASSESSING OFFICER MAY BE RESTORED TO THE ABOVE EXTENT. 2. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSE E IS AN INDIVIDUAL, ENGAGED IN THE BUSINESS OF TRADING IN T EXTILE CLOTH IN THE NAME AND STYLE OF KEJRIWAL FASHION AND ALSO DER IVING INCOME FROM OTHER SOURCES. IN THIS CASE, A SURVEY WAS CONDUCTED AT THE BUSINESS PREMISES OF THE ASSESSEE ON 24.11.2003 AND DURING THE COURSE OF SURVEY DISCREPA NCIES IN CASH OF RS. 1,50,000/- AND STOCK OF RS. 67,98,905/- WERE FOUND AND DISCLOSURE OF RS. 68,98,905/- WAS OFFERED FOR TAXATION BY THE ASSESSEE. THE ASSESSES HAD FILED RE TURN OF INCOME FOR THE UNDER CONSIDERATION ON 29.10.2014, D ECLARING TOTAL INCOME AT RS. 49,68,250/-. GROSS PROFIT ADDI TION OF RS.28,83,218/- MADE BY THE ASSESSING OFFICER DURING THE COURSE OF ORIGINAL ASSESSMENT WAS DELETED BY THE LD , CIT(A). ITA NO. 1657/AHD /2011 ITO VS. SHRI VIKAS KEJRIWAL AY 2004-05 - 3 - SUBSEQUENTLY, THE HON'BLE ITAT HAS SET ASIDE THE IS SUE FOR RECONSIDERATION AND DIRECTED THE ASSESSING OFFICER TO MAKE FRESH ASSESSMENT ORDER PROVIDING AN OPPORTUNITY TO THE ASSESSEE. THEREAFTER, THE ASSESSING OFFICER HAS CO MPLETED THE SET ASIDE ASSESSMENT AFTER CONSIDERING THE EXCESS S TOCK OF RS.67,48,905/- FOUND DURING THE COURSE OF SURVEY PR OCEEDINGS AND COMPUTED THE TOTAL INCOME AT RS.65,60,800/-. AGGRIEVED BY THE AFORESAID ORDER OF THE ASSESSING OFFICER, TH E ASSESSEE CARRIED THE MATTER IN APPEAL BEFORE CIT(A) WHO AFTE R CONSIDERING THE SUBMISSIONS OF THE ASSESSEE GRANTED RELIEF OF RS.13,94,253/- ON ACCOUNT OF LOSS ON STOCK BEING VA LUE OF THE EXCESS STOCK FOUND DURING THE COURSE OF SURVEY PROC EEDINGS. 3. AGGRIEVED BY THE AFORESAID ORDER OF THE CIT(A), THE REVENUE IS NOW IN APPEAL BEFORE US. THE LD. DEPART MENTAL REPRESENTATIVE SUPPORTED THE ORDER OF THE ASSESSING OFFICER AND REQUESTED TO SET ASIDE THE ORDER OF THE CIT(A). ON THE OTHER HAND, LD. AUTHORIZED REPRESENTATIVE SUPPORTED THE O RDER OF THE CIT(A). 4. AFTER GOING THROUGH THE RIVAL CONTENTIONS AND MA TERIAL AVAILABLE ON RECORD, WE FIND THAT THE ONLY ISSUE BE FORE US IS ITA NO. 1657/AHD /2011 ITO VS. SHRI VIKAS KEJRIWAL AY 2004-05 - 4 - REGARDING THE ACTION OF ASSESSING OFFICER IN NOT AL LOWING LOSS AMOUNTING TO RS.13,94,253/- ON ACCOUNT OF SALE PRIC E REALIZED OF RS.53,54,652/- FROM SALE OF EXCESS STOCK VALUED AT RS.67,48,905/- AT THE TIME OF SURVEY. THE ASSESSIN G OFFICER HAS NOT ALLOWED THE SAME ON THE GROUND THAT THE ADD ITION OF RS.67,48,905/-, ON ACCOUNT OF VALUE OF EXCESS STOCK DISCLOSED BY THE ASSESSEE DURING THE COURSE OF SURVEY, HAS BE EN CONFIRMED BY THE ITAT. HOWEVER, THE BENCH HAS NOT I SSUED ANY DIRECTION TO EXAMINE CLAIM OF THE ASSESSEE RELATING TO THE LOSS ARISING IN THE POST SURVEY PERIOD AND ON ACCOUNT OF SALE OF EXCESS STOCK FOUND AT THE TIME OF SURVEY. IN FACT, THE ASSESSING OFFICER WAS ASKED TO PROVIDE DUE OPPORTUNITY TO THE ASSESSEE TO PRODUCE THE BOOKS OF ACCOUNTS OR OTHER EVIDENCES IN SUPPORT OF CORRECTNESS OF ITS BOOKS OF ACCOUNTS FOR A PERIOD U PTO THE DATE OF SURVEY AS WELL AS THE POST SURVEY PERIOD. THE A SSESSING OFFICER ALSO ASKED THE ASSESSEE TO SUBSTANTIATE HIS CLAIM WITH DOCUMENTARY EVIDENCES THAT THE REALIZABLE VALUE OF THE EXCESS STOCK FOUND AT THE TIME OF SURVEY WAS LESS THAN THE VALUE DETERMINED OF RS.67,48,905/-. THE ASSESSING OFFIC ER HAS GIVEN CATEGORICAL FINDING THAT THE EXPLANATION THA T THE ASSESSEE HAS SOLD GOODS AT 10% LOWER THAN THE MARKE T RATE WAS EXAMINED AND THE EVIDENCES PLACED WERE VERIFIED. T HE AMOUNT ITA NO. 1657/AHD /2011 ITO VS. SHRI VIKAS KEJRIWAL AY 2004-05 - 5 - OF RS.67,48,905/- DISCLOSED DURING THE COURSE OF SU RVEY WAS NOT RECORDED IN THE BOOKS OF ACCOUNTS AND NO BILLS WERE AVAILABLE AND THEREFORE, THE ASSESSEES EXPLANATION THAT THE CENTRAL EXCISE IS NOT PAID ON SUCH PURCHASES IS FOU ND TO BE CORRECT. THUS, WHILE ASSESSING OFFICER HAS FOLLOWE D THE DIRECTIONS OF THE TRIBUNAL, HE HAS ONLY CONSIDERED THE THREE STEPS AS PER PARAGRAPH 12 OF THE TRIBUNALS ORDER. THE CIT(A) IN HIS ORDER DATED 31.03.2011 ALSO OBSERVED THAT TH E ASSESSING OFFICER HAS PARTLY ACCEPTED THE ABOVE EXPLANATION O F THE ASSESSEE AND INSTEAD OF GP ADDITION OF RS.8,38,057/ -, BEING GP ADDITION ON STOCK DISCLOSED DURING THE SURVEY, IN T HE ORIGINAL ASSESSMENT, HAS MADE ADDITION OF RS.1,32,278/- ONLY . IT MEANS THE ASSESSING OFFICER HAS ACCEPTED THE ASSESS EES CONTENTION THAT VALUATION OF THE STOCK WITH EXCISE DUTY @10% ON EXCESS STOCK WAS INCORRECT AND THE SAME SHOULD H AVE BEEN WITHOUT TAKING INTO ACCOUNT TO THE SAID EXCISE DUTY RATE. HE SHOULD HAVE, THEREFORE, ON THE BASIS OF HIS OWN FIN DING GIVEN IN THE ORDER, SUO-MOTO, ALLOWED THE AMOUNT OF 10% EXCI SE DUTY INCLUDED IN THE DETERMINATION OF EXCESS STOCK AT RS.67,48,905/- AT THE TIME OF SURVEY. THE ASSESSEE DURING THE COURSE OF APPELLATE PROCEEDINGS HAS ALSO SUBMITTED THAT 'WE ARE IN THE MARKETING OF THE MATERIALS TO EXPORT H OUSES WHERE ITA NO. 1657/AHD /2011 ITO VS. SHRI VIKAS KEJRIWAL AY 2004-05 - 6 - THE PAYMENT TERMS ARE ON SIGHT OF 60 TO 90 DAYS AND HERE WE HAVE SOLD THE MATERIAL IN THE LOCAL MARKET AT CASH SO THAT ALSO AFFECT THE REALIZABLE VALUE OF THE MARKET AT LEAST BY 6%. THE CIT(A) OBSERVED THAT, DURING THE COURSE OF ASSESSME NT PROCEEDINGS, THE CONCERNED ASSESSING OFFICER EXAMIN ED AND VERIFIED ALL SALES BILLS PRODUCED BY THE ASSESSEE. HOWEVER, IN THE ASSESSMENT ORDER, THE ASSESSING OFFICER AFTER E XAMINING AND VERIFYING ALL THE SALES BILLS PRODUCED DURING T HE COURSE OF ASSESSMENT, IN WHICH HE HAS NOT FOUND ANY DISCREPAN CIES, HAS NOT GIVEN ANY FINDING, ON THE ABOVE SUBMISSION / CL AIM RELATING TO LOSS WHICH HE WAS BOUND TO AS PER THE DIRECTIONS OF THE TRIBUNAL. IN VIEW OF ABOVE, CIT(A) HELD THAT AS THE ASSESSING OFFICER HAS NOT FOUND ANY DISCREPANCY IN THE SALE B ILLS PRODUCED AT THE TIME OF ASSESSMENT PROCEEDINGS, THE LOSS OF RS.13,94,253/- , I.E. RS. 67,48,905/- BEING VALUE O F STOCK DURING THE COURSE OF SURVEY LESS RS.53,54,652/- BEI NG THE ACTUAL REALIZED VALUE OF STOCK ON SALE, WAS ALLOWAB LE TO THE ASSESSEE FROM COMPUTATION OF BUSINESS INCOME FOR TH E POST SURVEY PERIOD. THEREFORE, THE CIT(A) HAS RIGHTLY D IRECTED THE ASSESSING OFFICER TO ALLOW THE ABOVE LOSS FROM THE COMPUTATION OF INCOME OF THE POST SURVEY PERIOD AND ACCORDINGLY ASSESSED THE INCOME OF THE ASSESSEE. THESE REASONED FINDING S OF THE ITA NO. 1657/AHD /2011 ITO VS. SHRI VIKAS KEJRIWAL AY 2004-05 - 7 - CIT(A) NEED NO INTERFERENCE FROM OUR SIDE. WE UPHO LD THE SAME. 5. IN THE RESULT, THE APPEAL OF THE REVENUE IS DISM ISSED. ORDER PRONOUNCED IN THE COURT ON 13TH OF JANUARY, 2 016 AT AHMEDABAD. SD/- SD/- ( RAJESH KUMAR ) ACCOUNTANT MEMBER ( S HAILENDRA KUMAR YADAV ) JUDICIAL MEMBER AHMEDABAD; DATED /01/2016 *BT !'# $#! / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. / CONCERNED CIT 4. ( ) / THE CIT(A), 5. !'# $$ , , / DR, ITAT, AHMEDABAD 6. #() / GUARD FILE. / BY ORDER, //TRUE COPY// / (DY./ASSTT.REGISTRAR) , / ITAT, AHMEDABAD