ACIT, Circle-Haldia, Purba Medinipur V. Shri Makhanlal Mayak, Purba Medinipur

ITA 1733/KOL/2013

• Counselvise Citation: [2018] 126 COUNSELVISE.COM (IT) 1393 (ITAT-KOLKATA)
• Duration Of Justice: 4 year(s) 9 month(s) 6 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 09-03-2018
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 23-03-2017
• Assessment Year: 2008-2009
• Appeal Filed On: 03-06-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: S DASGUPTA
• Keywords: Business income
• Section: 40A(3); 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL KOLKATA B BENCH, KOLKATA [BEFORE SRI J. SUDHAKAR REDDY, A CCOUNTANT M EMBER & SRI S.S. VISWANETHRA RAVI, JUDICAL MEMBER ] I.T.A. NO. 1 733 / KOL/201 3 ASSESSMENT YEAR: 2008 - 09 ACIT, CIRCLE - HALDIA . . ... APPELLANT BASUDEVPUR KHANJANCHAK HALDIA PURBA MEDINIPUR - 721602 SHRI MAKHANLAL MAYAK . .. . .. .. RESPONDENT TALGACHARI RAMNAGAR PURBA MEDINIPUR 721 441 [PAN : AEIPN 5176 N ] APPEARANCES BY: SHRI SOMNATH GHOSH, ADVOCATE , APPEAR ED ON BEHALF OF THE ASSESSEE. SHRI S. DASGUPTA , ADDL. CIT , DR APPEARING ON BEHALF OF THE REVENUE. DATE OF CONCLUDING THE HEARING : JANUARY 2 ND , 201 8 DATE OF PRONOUNCING THE ORDER : MARCH 9 TH , 201 8 O R D E R PER J. SUDHAKAR REDDY : - THIS APPEAL FILED BY THE REVENUE IS DIRECTED AGAINST THE ORDER OF THE LD. COMMISSIONER OF INCOME TAX (APPEALS) - XXXIII , KOLKATA , (HEREINAFTER THE LD. CIT (A)), PASSED U/S 250 OF THE INCOME TAX ACT, 1961 (THE ACT), DT. 28 / 0 3 /201 3 . 2. THE ASSESSEE IS AN INDIVIDUAL AND IS ENGAGED IN THE BUSINESS OF MANUFACTURING AND TRADING OF GOLD ORNAMENTS UNDER THE NAME AND STYLE OF M/S. ANANTA GOLD HOUSE. HE FILED HIS RETURN OF INCOME ON 30/09/2008, DECLARING TOTAL INCOME OF RS.23,58,703/ - . A SURVEY HAD TAKEN PLACE IN THE ASSESSEES PREMISES U/S 1 3 3A OF THE ACT. ON 03/03/2008. THEREAFTER THE ASSESSING OFFICER PASSED AN ORDER U/S 143(3) OF THE ACT, MAKING ADDITIONS ON ACCOUNT OF (A) UNDISCLOSED PURCHASES (B) PROFIT ON UNDISCLOSED PURCHASES (C) S UPPRESSED STOCKS (D) PROFIT ON SUPPRESSED STOCK (E) DISALLOWANCE OF EXPENDITURE U/S 40A(3) OF THE ACT. 2 I.T.A. NO. 1733/KOL/2013 ASSESSMENT YEAR: 2008 - 09 SHRI MAKHANLAL MAYAK 2.1. HE COMPLETED THE ASSESSMENT ON 31/12/2010, DETERMINING THE GROSS TOTAL INCOME AT RS.91,56,919/ - . THE ASSESSEE CARRIED THE MATTER IN APPEAL. THE LD. FIRST APPELLATE AUTHORITY GRANTED PART RELIEF. 3. AGGRIEVED THE REVENUE IS IN APPEAL ON THE FOLLOWING GROUNDS: - 1) THAT ON THE FACT AND CIRCUMSTANCES OF THE CASE LD. CIT(A) ERRED IN DELETING THE ADDITION OF RS.38,83,510/ - ON ACCOUNT OF SUPPRESSED STOCK AND AN ADDITION OF RS.2,91 ,263/ - ON ACCOUNT OF G.P. FROM SALE OF SUPPRESSED STOCK OUTSIDE BOOKS. 2) THAT ON THE FACT AND CIRCUMSTANCES OF THE CASE LD. CIT(A) ERRED IN DELETING SUPPRESSED STOCK OF RS.38,83,510/ - AND PROFIT OF SUPPRESSED STOCK OF RS. 2,91,263/ - RELYING ON THE FICTITIOUS TRADING ACCOUNT SUBMITTED BY THE ASSESSEE AND IGNORING THE POINTS GIVEN BY THE AO WITHOUT GIVING AN OPPORTUNITY UNDER RULE 46A OF THE I T RULES. 3) THAT ON THE FACT AND CIRCUMSTANCES OF THE CASE LD. CIT(A) GROSSLY ERRE D IN ACCEPTING THE ACCOUNTS FURNISHED BY THE ASSESSE AS RELIABLE BOOKS OF ACCOUNTS WITHOUT APPRECIATING THE FACT THAT THEY WERE CREATED POST SURVEY TO JUSTIFY THE ASSESSEE'S CLAIM. 4) THE APPELLANT CRAVES LEAVE TO ADD TO, ALTER OR MODIFY ANYONE OR ALL OF THE GROUNDS OF APPEAL MENTIONED ABOVE. 4. AFTER HEARING RIVAL SUBMISSIONS, PERUSING THE PAPERS ON RECORD AND ORDERS OF THE AUTHORITIES BELOW AS WELL AS CASE - LAW CITED, I HOLD AS FOLLOWS: - 4.1. THE LD. FIRST APPELLATE AUTHORITY, AT PARA 5.6 . OF HIS ORDER, HELD AS FOLLOWS: - 5.6. I HAVE CAREFULLY CONSIDERED THE FACTS. IT IS SEEN, THAT AT THE TIME OF SURVEY, BOOK STOCK IN TERMS OF QUANTITY HAD NOT BEEN WORKED OUT. INSTEAD, THE ASSESSING OFFICER COMPUTED SALES IN VALUE TERMS. NO DOUBT FIGURE OF BOOK STOCK WAS NOT READILY AVAILABLE AS NO STOCK REGISTER HAD BEEN FOUND. HOWEVER, QUANTITY OF BOOK STOCK COULD HAVE BEEN ARRIVED AT BY ADDING PURCHASES AND REDUCING SALES FROM THE OPENING STOCK, ALL IN TERMS OF QUANTITY. EVEN AT THE TIME OF ASSESSMENT, NO SUCH ATTEMPT WAS MADE. INSTEAD, THE ASSESSING OFFICER STARTED WITH VALUE OF PHYSICAL STOCK AND MADE ADJUSTMENT FOR SALE AND PURCHASE IN TERMS OF VALUE. THE APPELLANT HAS ALL ALONG CLAIMED THAT THERE WAS NO DISCREPANCY IN TERMS OF QUANTITY. AS PER THE QUAN TITATIVE TRADING ACCOUNT PREPARED FOR PRE - SURVEY AND POST - SURVEY PERIOD, THE STOCK AS ON DATE OF SURVEY WAS OF 3689 GMS WHICH TALLIED WITH THE STOCK FOUND DURING THE SURVEY. THE ASSESSING OFFICER HAS NOT BEEN ABLE TO REFUTE THIS CLAIM. THE ASSESSING OFFICE R HAS 'BASED HIS ADDITION ON FIGURES OF SALES, PURCHASE ETC. IN TERMS OF AMOUNT AND THE PRE - SURVEY AND POST - SURVEY BREAK - UP OF THE SAME TAKEN THEREIN HAVE BEEN VEHEMENTLY DISPUTED BY THE APPELLANT. THERE IS DEFINITELY FORCE IN THE 3 I.T.A. NO. 1733/KOL/2013 ASSESSMENT YEAR: 2008 - 09 SHRI MAKHANLAL MAYAK APPELLANT'S ARGUMENT THAT WHY THE ASSESSING OFFICER HAS TAKEN POST - SURVEY SALE AT RS. 9,78,005/ - ONLY, WHEN THE ACTUAL SALE MADE DURING THE PERIOD WAS OF RS. 33.66 LACS AS PER HIS BOOKS. IT IS NEEDLESS TO SAY THAT FOR POST - SURVEY SALES NO EVIDENCE COULD HAVE BEEN GATHERED DURING T HE SURVEY AND THEREFORE ONE HAS TO GO BY THE APPELLANT'S BOOKS ONLY WHICH WERE SHOWING SALES OF RS. 33.66 LACS. IT APPEARS THAT THE ASSESSING OFFICER HAD A SUSPICION (THOUGH NOT CLEARLY ARTICULATED IN HIS ORDER) THAT THOUGH THE TOTAL SALES SHOWN BY THE APP ELLANT WERE CORRECT (AS THE SAME HAVE' BEEN ACCEPTED BY HIM) THE APPELLANT HAS REDUCED PRE - SURVEY SALES AND INCREASED POST - SURVEY SALES IN ORDER TO EXPLAIN THE STOCK FOUND AT THE TIME OF SURVEY. HOWEVER, NO EVIDENCE OF ANY SUCH MANIPULATION HAS BEEN BROUGH T ON RECORD BY THE ASSESSING OFFICER. THE APPELLANT HAD, DURING THE ASSESSMENT PROCEEDINGS, PRODUCED ALL THE BILLS AND VOUCHERS ETC. AND NO DISCREPANCY WAS DETECTED BY THE ASSESSING OFFICER THEREIN. THE APPELLANT HAS ALSO FURNISHED TRADING ACCOUNT FOR PRE - SURVEY AND POST SURVEY PERIODS IN TERMS OF QUANTITY AS WELL AS AMOUNT. I FIND NO APPARENT DISCREPANCY THEREIN WITH GROSS PROFIT REMAINING ALMOST SAME IN THE TWO PERIODS. THUS, THE BREAKUP OF TRADING ACCOUNT GIVEN BY THE APPELLANT APPEARS TO BE IN ORDER. AS MENTIONED EARLIER, AS PER THIS BREAKUP, BOOK STOCK AS ON DATE OF SURVEY IS TALLYING WITH THE PHYSICAL STOCK FOUND. FROM THIS IT LOGICALLY FOLLOWS, THAT EVEN AS ON 31.3.2008 THERE WOULD BE NO DISCREPANCY, AS FOR THE POST - SURVEY PERIOD THERE IS NO MATERIAL EVIDENCE TO DIFFER FROM THE ACCOUNTS MAINTAINED BY THE APPELLANT. THUS, THE DISCREPANCY WORKED OUT BY THE ASSESSING OFFICER TURNS OUT TO BE PARTLY ON ACCOUNT OF RATE OF VALUATION AND PARTLY DUE TO COMPUTATIONAL ERRORS. SINCE THERE IS NO DISCREPANCY IN TERM S OF QUANTITY BETWEEN BOOK STOCK AND PHYSICAL STOCK, THE ADDITION FOR INVESTMENT IN STOCK IS DELETED. CONSEQUENTLY, THE ADDITION OF RS.2,91 ,263/ - , BEING ESTIMATED GROSS PROFIT THEREON IS ALSO DELETED. 5. THE LD. D/R, COULD NOT CONTROVERT THIS FACTUAL FIN DING OF THE LD. FIRST APPELLATE AUTHORITY. THERE IS NO DISPUTE THAT THE STOCK REGISTER OR DIARY PRODUCED BEFORE THE ASSESSING OFFICER AND NO ADVERSE INFERENCE WAS DRAWN BY HIM. IT IS ALSO NO T IN DISPUTE THAT THE QUANTITY OF STOCK FOUND IN THE BOOKS WAS THE SAME AS THE QUANTITY OF STOCK FOUND IN THE PREMISES OF THE ASSESSEE AT THE TIME OF SURVEY. UNDER THESE CIRCUMSTANCES, NO ADDITION CAN BE MADE BASED ON VA LUATION DONE BY AN APPROVED VALUER SPECIFICALLY WHEN THE ASSESSEE HAS PRODUCED ALL THE BILLS AND VOUCH ERS RELATING TO THE TRANSACTIONS. THUS, WE UPHOLD THE ORDER OF THE LD. FIRST APPELLATE AUTHORITY AND DISMISS THIS GROUND OF THE REVENUE. 6. IN THE RESULT, THIS APPEAL OF THE REVENUE IS DISMISSED. KOLKATA, THE 9 T H DAY OF MARCH , 201 8 . S D / - S D / - [S.S. VISWANETHRA RAVI] [ J. SUDHAKAR REDDY ] JUDICIAL MEMBER ACCOUNTANT MEMBER DATED : 0 9 . 0 3 .201 8 {SC SPS} 4 I.T.A. NO. 1733/KOL/2013 ASSESSMENT YEAR: 2008 - 09 SHRI MAKHANLAL MAYAK C OPY OF THE ORDER FORWARDED TO: 1. ACIT, CIRCLE - HALDIA BASUDEVPUR KHANJANCHAK HALDIA PURBA MEDINIPUR - 721602 2. SHRI MAKHANLAL MAYAK TALGACHARI RAMNAGAR PURBA MEDINIPUR 721 441 3. CIT(A) - 4. CIT - , 5. CIT(DR), KOLKATA BENCHES, KOLKATA. TRUE COPY BY ORDER SENIOR PRIVATE SECRETARY HEAD OF OFFICE/ D.D.O. ITAT, KOLKATA BENCHES