ITO, Ward - 4/Nadia, Nadia V. Shri Chinmoy Bhowmik, Nadia

ITA 1668/KOL/2009

• Counselvise Citation: [2011] 140 COUNSELVISE.COM (IT) 54499 (ITAT-KOLKATA)
• Duration Of Justice: 1 year(s) 10 month(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 12-08-2011
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: C
• Assessment Year: 2004-2005
• Appeal Filed On: 23-09-2009
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: S K ROY
• Assessee Lawyers: S M SURANA
• Section: 143(3); 133(6)

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH: KOL KATA () BEFORE . . , ! '# '# '# '# /AND ' # , ! ) [BEFORE HONBLE SHRI S. V. MEHROTRA, AM & HONBLE S RI MAHAVIR SINGH, JM] #$ #$ #$ #$ / I.T.A NO. 1668/KOL/2009 %& ''( %& ''( %& ''( %& ''(/ // / ASSESSMENT YEAR: 2004-05 INCOME-TAX OFFICER, WARD-4, NADIA VS. SHRI CHINM OY BHOWMIK (PAN-ADEPB 3027 D) (*+ /APPELLANT ) (,-*+/ RESPONDENT ) FOR THE APPELLANT: SHRI S. K. ROY FOR THE RESPONDENT: SHRI S. M. SURANA . / ORDER PER MAHAVIR SINGH, JM ( ' # ' # ' # ' #, , , , ! ! ! ! ) THIS APPEAL BY REVENUE IS ARISING OUT OF THE ORDER OF CIT(A)-XXXVI, KOLKATA IN APPEAL NO.229/CIT(A)-XXXVI/KOL/NADIA/06-07 DATED 18.05.200 9. ASSESSMENT WAS FRAMED BY ITO, WARD-4, NADIA U/S. 145(3)/143(3) OF THE INCOME-TAX ACT, 1961 (HEREINAFTER REFERRED T O AS THE ACT) VIDE HIS ORDER DATED 28.12.2006. 2. THESE INTER CONNECTED ISSUES IN THIS APPEAL OF T HE REVENUE IS AGAINST THE ORDER OF CIT(A) DELETING THE ADDITION ON ACCOUNT OF UNEXPLAINED CLO SING STOCK BEING DIFFERENCE IN STOCK STATEMENT SUBMITTED TO BANK AND STOCK AS PER BOOKS. ANOTHER ISSUE IS REGARDING DELETION BEING DIFFERENCE IN BALANCE OF SUNDRY DEBTORS APPEARING I N ASSESSEES BOOK AND STATEMENT FILED WITH BANK. FOR THIS, REVENUE HAS RAISED FOLLOWING TWO GROUNDS: 1) THAT ON THE FACTS AND CIRCUMSTANCES OF THE CASE THE CIT(A) ERRED IN DELETING ADDITION OF RS.10,39,341/- MADE BY THE A.O. ON ACCOUNT OF UN EXPLAINED CLOSING STOCK. 2) THAT ON THE FACTS AND CIRCUMSTANCES OF THE CASE THE CIT(A) ERRED IN DELETING ADDITION OF RS.4,47,158/- BEING DIFFERENCE OF BALANCE OF SUN DRY DEBTORS APPEARING IN THE ASSESSEES BOOKS AND STATEMENT FILED BEFORE BANK IN COURSE OF TAKING LOAN. 3. BRIEF FACTS ARE THAT THE ASSESSEE IS A WHOLESALE R OF FISH AND FILED HIS RETURN OF INCOME FOR RELEVANT ASSESSMENT YEAR 2004-05, WHICH WAS ASSESSE D U/S. 143(3) R.W.S. 145(3) OF THE ACT BY MAKING ADDITIONS BY WAY OF (I) UNEXPLAINED CLOSING STOCK BEING DIFFERENCE IN VALUE OF STOCK SUBMITTED TO BANK AND VALUE OF STOCK IN THE BOOKS A T RS.10,39,341/- AND (II) EXCESS SUNDRY DEBTORS TO THE TUNE OF RS.4,47,158/- RESPECTIVELY. THE ASSESSEE DISCLOSED CLOSING STOCK OF FISH 2 ITA 1668/K/2009 CHIMOY BHOWMIK A.Y.04-05 IN HIS BOOKS OF ACCOUNT AT RS.4,31,909/- AS AGAINST THE STOCK STATEMENT SUBMITTED TO THE BANK SHOWING CLOSING STOCK OF FISH AT RS.14,71,250/-. S IMILARLY, THE SUNDRY DEBTORS SHOWN IN THE BOOKS OF ACCOUNT WERE AT RS.3,32,842/- AS AGAINST T HE SUNDRY DEBTORS DISCLOSED BEFORE BANK AT RS.9,80,000/-. THIS FACT HAS BEEN CONFIRMED BY BAN K DURING THE COURSE OF ASSESSMENT PROCEEDINGS IN VIEW OF NOTICE ISSUED U/S. 133(6) OF THE ACT. THE ASSESSING OFFICER ADDED THE DIFFERENTIAL AMOUNT OF RS.10,39,346/- BEING EXCESS STOCK AS UNEXPLAINED CLOSING STOCK AND EXCESS SUNDRY DEBTORS TO THE TUNE OF RS.4,47,158/-. AGGRIEVED, ASSESSEE PREFERRED APPEAL BEFORE CIT(A), WHO DELETED BOTH THE ADDITIONS BY GIVING FO LLOWING FINDINGS. I HAVE CAREFULLY CONSIDERED THE ABOVE. 1 HAVE ALS O PERUSED THE DECISIONS OF THE HIGH COURTS AND THE ITAT, KOLKATA BENCH RELIED ON B Y THE AUTHORISED REPRESENTATIVE. THE HONBLE ITAT, C BENCH, KOLKATA IN THE CASE OF M/S. CALCUTTA RADIO SERVICE (P) LTD. IN THE ASSESSMENT YEAR 2003-04 IN ITA NO 389/KOL/2007. DTD.22.05 07; HAS HELD AS FOLLOWS: WE FIND THAT IN THIS CASE, THE AO. HAS NOT POINTED OUT ANY DISCREPANCY IN THE STOCK REGISTER MAINTAINED BY THE ASSESSEE AND THE S ALE AND PURCHASE HAS ALSO NOT BEEN DOUBTED. THE A. 0. HAS ONLY MADE THE ADD ITION ON THE BASIS OF STATEMENT SUBMITTED BY THE ASSESSEE TO THE BANK WIT HOUT BRINGING ANY CORROBORATIVE EVIDENCE, WHICH COULD INDICATE THAT T HE ASSESSEE HAD, IN FACT, EXCESS CLOSING STOCK THAN SHOWN IN THE STOCK REGIST ER MAINTAINED BY IT. SINCE BOOKS ARE AUDITED AND STOCK REGISTER ARE MAIN1INED WHICH HAS BEEN PRODUCED BEFORE THE AO AND NO DEFECTS HAS BEEN POINTED OUT B Y THE A.O IN THE STOCK REGISTER, IN OUR CONSIDERED OPINION, ADDITION MADE BY A. 0 SOLELY ON THE BASIS OF STOCK STATEMENT FURNISHED BEFORE THE BANK CANNOT BE HELD LEGAL AND, THEREFORE, SOME IS DELETED. THE FACTS OF THE CASE UNDER CONSIDERATION ARE ALSO SIMILAR I.E. THE ASSESSING OFFICER HAS NOT POINTED OUT ANY DISCREPANCY IN THE BOOKS OF ACCOUNTS. THERE WAS NO CORROBORATIVE EVIDENCE RELIED ON BY THE ASSESSING O FFICER TO INDICATE THAT CLOSING STOCK DECLARED BEFORE THE BANK WAS CORRECT. THEREFORE, TH E ASSESSING OFFICER HAS NOT CONTROVERTED THE CASE STATED BY THE APPELLANT. IN V IEW OF THE FACTS OF THE CASE, PARTICULARLY IN VIEW OF THE ORDERS OF THE ITAT, K OLKATA BENCH AS MENTIONED ABOVE, THERE IS NO JUSTIFICATION FOR THE ASSESSING OFFICER TO MAKE THE ABOVE ADDITIONS OF RS.10,39,341/- AND RS.4,47,L58/- TOWARDS UNEXPLAINE D CLOSING STOCK AND UNEXPLAINED SUNDRY DEBTORS ACCORDINGLY, HE IS DIRECTED TO DELET E THE ABOVE ADDITIONS I.E. RS.10,39,341/- AND RS.4,47,158/- MADE IN THIS REGAR D. AGGRIEVED, NOW REVENUE IS IN APPEAL BEFORE US. 4. WE HAVE HEARD RIVAL CONTENTIONS AND GONE THROUGH FACTS AND CIRCUMSTANCES OF THE CASE. THE LD. COUNSEL FOR THE ASSESSEE BEFORE US STATED T HAT THE ASSESSEE IS A WHOLESALE DEALER IN FISH AND FOR THAT PURPOSE AVAILED BANK LOAN AND BANK SAN CTIONED THE LIMIT AGAINST HYPOTHECATION OF STOCK OF FISH. ACCORDING TO HIM, WHILE GRANTING FA CILITY TO AVAIL OVERDRAFT LIMIT FROM TIME TO TIME BANK ONLY RELIED ON STATEMENT FURNISHED BY ASS ESSEE AND NEVER CHECKED THE PHYSICAL STOCK. IT IS ALSO ARGUED THAT HYPOTHECATED STOCK ALWAYS RE MAINED IN THE CUSTODY OF THE PARTY AND IT WAS NEVER WITH THE BANK OR NEVER CHECKED BY THE BANK AS FACTS NARRATED. THE LD. COUNSEL FOR THE ASSESSEE DREW OUR ATTENTION TO ASSESSEES PAPER BOO K PAGE 11 WHEREIN STOCK STATEMENT FOR THE 3 ITA 1668/K/2009 CHIMOY BHOWMIK A.Y.04-05 YEAR ENDING 31 ST MARCH, 2004 AS SUBMITTED TO THE BANK IS ENCLOSED A ND FROM THIS HE STATED THAT FIGURES MENTIONED IN STOCK STATEMENT IS ALL IN ROUN D FIGURES, WHETHER IN RESPECT OF STOCK OF FISH OR IN RESPECT OF SUNDRY DEBTORS, WHICH ITSELF INDIC ATES THAT THE ENTIRE FIGURE WAS GIVEN JUST TO COVER UP MINIMUM REQUIREMENTS OF BANK AS THE TOTAL LOAN OBTAINED WAS OVER RS.15 LACS. THE AO EXAMINED THE BOOKS OF ACCOUNT AND ACCEPTED PURCH ASES AS WELL AS SALES AS IT IS AND ALL PURCHASES ARE MADE BY ACCOUNT PAYEE CHEQUES/DRAFTS AND MOREOVER, THE AO HAS NOT DISPUTED THE PURCHASES, THE SALES HENCE, THERE IS NO OCCASIO N FOR ANY UNDISCLOSED STOCK WITH THE ASSESSEE. THE LD. COUNSEL FOR THE ASSESSEE ALSO STATED THAT T HE STOCK STATEMENT SUBMITTED TO THE BANK MAINLY RELATES TO HILSHA FISH AND SEA FISH, WHICH A RE NEVER AVAILABLE IN THE MONTH OF FEBRUARY AND MARCH. ACCORDING TO LD. COUNSEL IN VIEW OF THE SE FACTS THE COMMENTS FROM THE BOOK ON PISCI CULTURE, AS ATTACHED IN THE ASSESSEES PAPER BOOK, IS CLEAR THAT THESE VARIETIES OF FISH IS NOT AVAILABLE IN THE MONTH OF FEBRUARY AND MARCH AND CA NNOT BE IN THE CLOSING STOCK OF THE ASSESSEE. THE LD. COUNSEL FOR THE ASSESSEE FURTHER STATED THAT EVEN THE RATES OF CORPS FISH IS TAKEN AT RS.65 AND RS.55/- PER KG. IN FY 2003-04 WH EREAS THE SALE RATE, AS PER ASSESSEES BOOKS OF ACCOUNT, IS AT RS.40/- TO RS.45/- PER KG. ACCOR DING TO HIM, SIMILARLY SUNDRY FISH IS ALSO SOLD AT RS.25/- TO RS.30/- PER KG. AS AGAINST THE RATE D ISCLOSED AT RS.45/- PER KG. IN VIEW OF THESE ARGUMENTS LD. COUNSEL FOR THE ASSESSEE STATED THAT THE FIGURES SUBMITTED TO BANK IN RESPECT OF CLOSING STOCK AND SUNDRY DEBTORS IS ALL IMAGINARY A ND JUST TO GET BANK OVERDRAFT FACILITY. HENCE, HE URGED THE BENCH TO DELETE THE ADDITION. ON THE OTHER HAND, LD. SR. D.R RELIED ON THE ORDERS OF THE LOWER AUTHORITIES. 5. WE FIND FROM THE ABOVE FACTS AND CIRCUMSTANCES N ARRATED BY LD. COUNSEL FOR THE ASSESSEE THAT THE DETAILS OF STOCK STATEMENT AND SU NDRY DEBTORS IS IN ALL ROUND SUM IN RESPECT OF STOCK OF FISH AND SUNDRY DEBTORS. EVEN IT IS ALSO A FACT THAT THE ASSESSEE IN STOCK STATEMENT AS ON 31 ST MARCH, 2004 HAS DISCLOSED THE FIGURES OF FISH IN R OUND SUM AND THAT ALSO HILSHA FISH, CORPS FISH AND SEA FISH, WHICH ARE NEVER AVAILABLE FROM J ANUARY TO MARCH AND HOW THESE CAN BE IN THE CLOSING STOCK OF THE ASSESSEE IN VIEW OF PERISHABLE NATURE OF COMMODITY. IT IS ALSO A FACT THAT THE STATEMENT SUBMITTED TO BANK CANNOT BE RELIED UP ON AS THE RATE OF CROP FISH IS TAKEN AT RS.55/- TO RS.65/- PER KG. AS AGAINST SALE RATE AT RS.40/- TO RS.45/- IN FY 2003-04. SIMILARLY, THE RATE OF HILSHA FISH IS TAKEN AT RS.55/- TO RS.75/- PER K G. AS AGAINST THE SALE RATE DISCLOSED IN ASSESSEES BOOKS OF ACCOUNT AT RS.45/- TO RS.55/- P ER KG. IN VIEW OF THE ABOVE FACTS AND FIGURES, WE ARE OF THE VIEW THAT THE STATEMENT SUBM ITTED TO BANK IN RESPECT OF CLOSING STOCK AND SUNDRY DEBTORS IS JUST TO AVAIL CREDIT FACILITY AND THAT IS NOT THE REAL STOCK AVAILABLE WITH THE ASSESSEE. EVEN REVENUE COULD NOT POINT OUT THAT TH E PURCHASE AND SALES ARE DISPUTED AFTER EXAMINATION OF BOOKS OF ACCOUNT. EVEN ALL PURCHASE S ARE MADE BY ACCOUNT PAYEE 4 ITA 1668/K/2009 CHIMOY BHOWMIK A.Y.04-05 CHEQUES/DRAFTS, IN OUR VIEW, IN THESE FACTS, THERE IS NO OCCASION OF ANY UNDISCLOSED CLOSING STOCK AND THE FIGURES TO THE BANK SEEMS FAR FROM REALITY AND WAS GIVEN JUST TO AVAIL BANK OVERDRAFT. ACCORDINGLY, WE UPHOLD THE ORDER OF CIT(A) DELETING THE ADDITIONS MADE BY LOWER AUTHORITIES. 6. IN THE RESULT, THE APPEAL OF THE REVENUE IS DISM ISSED. 7. ORDER PRONOUNCED IN OPEN COURT ON 12.8.2011 SD/- SD/- . . , ! ' '' ' # # # # , ! (S. V. MEHROTRA) (MAHAVIR SINGH) ACCOUNTANT MEMBER JUDICIAL MEMBER ( / / / /) )) ) DATED 12TH AUGUST, 2011 '01 %23 4' JD.(SR.P.S.) . 5 ,6 76'8- COPY OF THE ORDER FORWARDED TO: 1 . *+ / APPELLANT ITO, WARD-4, NADIA. 2 ,-*+ / RESPONDENT, SHRI CHINMOY BHOWMIK, VILL. GOSWAMI B AZAR, P.O. NABADWIP, DIST. NADIA. 3 . .% ( )/ THE CIT(A), KOLKATA 4. .% / CIT, KOLKATA 5 . '> ,% / DR, KOLKATA BENCHES, KOLKATA -6 ,/ TRUE COPY, .%?/ BY ORDER, #3 /ASSTT. REGISTRAR .