M/s Khapre Shutters, Hubbali V. The Income Tax Officer Ward-1(4), Hubli

ITA 1722/BANG/2018

• Counselvise Citation: [2019] 117 COUNSELVISE.COM (IT) 5982 (ITAT-BANGALORE)
• Duration Of Justice: 11 month(s) 9 day(s)
• Appeal Type: Income Tax (Transfer Pricing) Appeal
• Pronouncement Date: 01-05-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2014-2015
• Appeal Filed On: 22-05-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: TSHERING ONGDA
• Assessee Lawyers: H N KHINCHA
• Section: 271(1)(c); 133A; 234B

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL SMC-A BENCH : BANGALORE BEFORE SHRI SUNIL KUMAR YADAV, JUDICIAL MEMBER AND SHRI ARUN KUMAR GARODIA, ACCOUNTANT MEMBER ITA NO. 1722 / BANG/201 8 ASSESSMENT YEAR : 2014 - 15 M/S. KHAPARE SHUTTERS, B-29, INDUSTRIAL ESTATE, GOKUL ROAD, HUBLI 580 030. PAN: AACFK0396H VS. THE INCOME TAX OFFICER, WARD 1 (4), HUBLI. APPELLANT RESPONDENT APPELLANT BY : SHRI H.N. KHINCHA, CA RESPONDENT BY : SHRI TSHERING ONGDA , JCIT DATE OF HEARING : 26 .0 6 .2018 DATE OF PRONOUNCEMENT : 28 .0 6 .2018 O R D E R PER SHRI A.K. GARODIA, ACCOUNTANT MEMBER THIS APPEAL IS FILED BY THE ASSESSEE AND THE SAME I S DIRECTED AGAINST THE ORDER OF LD. CIT(A), HUBBALLI DATED 19.03.2018 FOR ASSESS MENT YEAR 2014-15. 2. THE GROUNDS RAISED BY THE ASSESSEE ARE AS UNDER. 1. THE LEARNED ASSESSING OFFICER HAD ERRED IN PASSI NG THE ORDER IN THE MANNER PASSED BY HIM AND THE LEARNED COMMISSION ER OF INCOME TAX (APPEALS) HAS ERRED IN PARTIALLY CONFIRMING THE SAME. THE IMPUGNED ORDER TO THE EXTENT CONFIRMED BY THE CIT(A ) BEING BAD IN LAW IS REQUIRED TO BE QUASHED. 2.1 IN ANY CASE AND WITHOUT FURTHER PREJUDICE THE A SSESSING OFFICER HAD ERRED IN ADDING AN AMOUNT OF RS.1,82,527/- CASH DIFFERENCE FOUND DURING THE COURSE OF SURVEY AS INCOME. 2.2 THE AUTHORITIES BELOW HAVE ERRED IN HOLDING THA T THE SHORTAGE OF CASH WHICH COULD NOT BE EXPLAINED ON THE DA OF SURV EY TO BE THE APPELLANTS INCOME. 2.3 DURING THE COURSE OF HEARING, THE AUTHORIZED RE PRESENTATIVE HAD REQUESTED FOR TELESCOPING THE SHORTAGE OF CASH TO E XCESS STOCK FOUND WHICH WAS NOT AGREED BY THE AUTHORITIES BELOW. 2.4 IN ANY CASE, THE ADDITION MADE IS WITHOUT BASIS AND IS CONFIRMED ON THE GROUND THAT IT IS A AFTERTHOUGHT. 3. THE APPELLANT DENIES THE LIABILITY TO PAY INTERE ST U/S 234B & C OF ITA NO. 1722/BANG/2018 PAGE 2 OF 4 THE IT ACT. THE INTEREST HAVING BEEN LEVIED ERRONEO USLY IS TO BE DELETED. 4. IN VIEW OF THE ABOVE AND OTHER GROUNDS TO BE ADD UCED AT THE TIME OF HEARING, IT IS REQUESTED THAT THE IMPUGNED ORDER BE QUASHED OR AT LEAST THE ADDITION AS MADE/CONFIRMED BY TREATING THE SHOR TAGE OF CASH AS INCOME BE DELETED AND INTEREST LEVIED ALSO BE DELET ED. 3. IT WAS SUBMITTED BY LD. AR OF ASSESSEE THAT IN P ARA NO. 5 ON PAGE NOS. 2 & 3 OF THE ASSESSMENT ORDER, IT IS NOTED BY THE AO THAT TH E SURVEY WAS CONDUCTED U/S. 133A OF IT ACT ON THE ASSESSEES PREMISES ON 19.12. 2013 AND DURING THE COURSE OF SURVEY PROCEEDINGS, IT WAS NOTED THAT CAS H BALANCE AS PER BOOKS OF ACCOUNTS ON THE DATE OF SURVEY WAS FOUND RS. 1,82,5 27/- WHEREAS NO CASH WAS FOUND ON THE DATE OF SURVEY. HE SUBMITTED THAT AO HAS MADE ADDITION OF THIS SHORT CASH FOUND ON THE DATE OF SURVEY WHICH IS NOT JUSTIFIED AND THEREFORE, IT SHOULD BE DELETED. THE LD. DR OF REVENUE SUPPORTED THE ORDERS OF AUTHORITIES BELOW. 4. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS. FIRST OF ALL, WE REPRODUCE PARAS 5 AND 5.1 FROM THE ASSESSMENT ORDER WHICH ARE AS UNDE R. SURVEY PROCEEDINGS U/S. 133A OF THE I T ACT, 1961 5. SURVEY U/S. 133A OF THE INCOME TAX ACT, 1961 WAS CARRIED OUT IN THE CASE OF THE ASSESSEE FIRM M/S. KHAPARE SHUTTERS B-2 9, 1 ST GATE, INDUSTRIAL ESTATE, GOKUL ROAD, HUBBALLI ON 19.12.20 13. DURING THE COURSE OF SURVEY PROCEEDINGS, STOCK VERIFICATIO N WAS CARRIED OUT AT THE BUSINESS PREMISE WHEREIN, THE PHYSICAL STOCK IN VENTORISED WAS AT RS. 57,63,631/- WHEREAS THE VALUE OF STOCK AS PER B OOKS WAS RS. 33,52,763/- RESULTING IN AN EXCESS STOCK OF RS. 24, 10,868/-. IN ADDITION TO THIS, CASH BALANCE AS PER BOOKS OF ACCOUNT AS ON THE DATE OF SURVEY WAS FOUND TO BE RS. 1,82,527/- WHEREAS, NO CASH WAS FOUND ON THE DATE OF SURVEY. WHEN CONFRONTED, THE ASSESSEE STATE D THAT THE DIFFERENCE WOULD BE RECONCILED AFTER CONSULTING WIT H OTHER PARTNER. AS THERE WAS NO RESPONSE FROM THE ASSESSEE, STATEMENT OF SHRI. RAVI KRISHNAJI KHAPARE BROTHER OF SHRI. SHRIKANT K KHAPA RE PARTNER - M/S. KHAPARE SHUTTERS WAS RECORDED ON 24.12.2013, WHEREI N HE HAD ADMITTED THAT HE IS UNABLE TO EXPLAIN THE DIFFERENC E IN CASH OF RS. 1,82,527/- AND THEREFORE, HE HAS VOLUNTARILY DECLAR ED A SUM OF RS. 1,82,527/- AS ADDITIONAL INCOME OVER AND ABOVE THE NORMAL INCOME OF THE ASSESSEE FIRM FOR THE FINANCIAL YEAR 2013-14 RE LEVANT TO THE ASSESSMENT YEAR 2014-15. FURTHER, WITH REGARD TO TH E EXCESS STOCK NOTICED, HE HAS STATED THAT ONE PURCHASE BILL FOR R S. 9,52,000/-WAS NOT ACCOUNTED FOR ON THE DATE OF SURVEY. HOWEVER, TO AV OID PROTRACTED LITIGATION AND CO-OPERATE WITH THE DEPARTMENT, I OF FER THE DIFFERENCE OF RS. 24,10,868/- AS ADDITIONAL STOCK OF THE FIRM APA RT FROM THE NORMAL INCOME OF THE FIRM FOR THE F Y 2013-14 RELEVANT TO THE ASSESSMENT YEAR ITA NO. 1722/BANG/2018 PAGE 3 OF 4 2014-15. 5.1 SURVEY DECLARATION : - ON VERIFICATION OF THE RETURN OF INCOME ALONG WITH SCHEDULES FOR THE A Y 2014-15 ALONG WITH PROFIT & LOSS ACCOUNT AND BALANCE SHEET, IT IS NOTICED THAT THE A SSESSEE FIRM HAS DECLARED ADDITIONAL INCOME OF RS. 24,20,000/- IN TH E P & L ACCOUNT WHEREAS, CASH IN HAND OF RS. 1,82,527/- HAS NOT BEE N OFFERED FOR THE A Y 2014-15. THIS WAS PUT FORTH TO THE ASSESSEE'S AUT HORIZED REPRESENTATIVE FOR WHICH THE A/R HAS AGREED VIDE OR DER SHEET ENTRY DATED 21.12.016. [PENALTY PROCEEDINGS INITIATED U/ S. 271(1)(C) FOR CONCEALING THE PARTICULARS OF INCOME]. 5. FROM THE ABOVE PARAS, WE FIND THAT ON THE DATE O F SURVEY, STOCK WAS FOUND IN EXCESS OF BOOK STOCK TO THE EXTENT OF RS. 24,10,868 /- AND THE CASH WAS FOUND SHORT AS COMPARED TO CASH BALANCE AS PER CASH BOOK TO THE EXTENT OF RS. 1,82,527/-. THE AO HAS NOTED THAT THE ASSESSEE FIR M HAS DECLARED ADDITIONAL INCOME OF RS. 24.20 LAKHS IN THE P&L ACCOUNT WHEREA S NO ADDITIONAL INCOME WAS DECLARED IN RESPECT OF SHORT CASH FOUND OF RS. 1,82,527/- AND THEREFORE, THE AO MADE ADDITION OF SHORT CASH FOUND OF RS. 1,82,52 7/-. WE FAIL TO UNDERSTAND THE BASIS OF MAKING THIS ADDITION. IN FACT, IN THE ABSENCE OF ANY OTHER EVIDENCE REGARDING THE USER OF SUCH CASH AVAILABLE AS PER CA SH BOOK BUT NOT FOUND PHYSICALLY AT THE TIME OF SURVEY, THE SAME SHOULD H AVE BEEN CONSIDERED AS UTILIZED FOR PURCHASING GOODS WHICH WAS FOUND IN EX CESS OF BOOK STOCK AND THEREFORE, EVEN IN RESPECT OF EXCESS BOOK STOCK, EX TRA INCOME TO BE DECLARED OR ADDED COULD HAVE BEEN REDUCED TO THE EXTENT OF SHOR T CASH FOUND. BUT IT IS SEEN THAT THE ASSESSEE HAS DECLARED TOTAL AMOUNT OF EXCESS STOCK FOUND AS ADDITIONAL INCOME. BE THAT AS IT MAY BUT IN OUR CO NSIDERED OPINION, NO ADDITION IS CALLED FOR IN RESPECT OF SHORT CASH FOUND AT THE TIME OF SURVEY IN THE FACTS AND CIRCUMSTANCES OF THE PRESENT CASE AND HENCE, WE DEL ETE THE SAME. 6. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON THE DATE MENT IONED ON THE CAPTION PAGE. SD/- SD/- (SUNIL KUMAR YADAV) (ARUN KUMAR GARODIA) JUDICIAL MEMBER ACCOUNTANT MEMBER BANGALORE, DATED, THE 28 TH JUNE, 2018. /MS/ ITA NO. 1722/BANG/2018 PAGE 4 OF 4 COPY TO: 1. APPELLANT 4. CIT(A) 2. RESPONDENT 5. DR, ITAT, BANGALORE 3. CIT 6. GUARD FILE BY ORDER SENIOR PRIVATE SECRETARY, INCOME TAX APPELLATE TRIBUNAL, BANGALORE.