M/s. Ajanta Brick Field, Malda V. ITO, Ward - 1, Malda, Malda

ITA 1754/KOL/2011

• Counselvise Citation: [2012] 140 COUNSELVISE.COM (IT) 59614 (ITAT-KOLKATA)
• Duration Of Justice: 2 month(s) 9 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-02-2012
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: SMC
• Assessment Year: 1999-2000
• Appeal Filed On: 20-12-2011
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: B HAZRA
• Assessee Lawyers: A K CHAKRABORTY; S N SANYAL
• Section: 133A

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH: KOL KATA () BEFORE . . , ! '# '# '# '# /AND ' # , ! ) [BEFORE SHRI S. V. MEHROTRA, AM & SRI MAHAVIR SINGH , JM] #$ #$ #$ #$ / I.T.A NO. 1754/KOL/2011 %& ''( %& ''( %& ''( %& ''(/ // / ASSESSMENT YEAR: 1999-2000 M/S. AJANTA BRICK FIELD VS. INCOME-TAX OFFICER, WD-1, MALDA (PAN: AAEFA 5377 J) (*+ /APPELLANT ) (,-*+/ RESPONDENT ) DATE OF HEARING: 23.01.2012 DATE OF PRONOUNCEMENT: 29.02.2012 FOR THE APPELLANT: S/SHRI A. K. CHAKRABORTY & S. N. SANYAL FOR THE RESPONDENT: SHRI B. HAZRA . / ORDER PER MAHAVIR SINGH, JM ( ' # ' # ' # ' #, , , , ! ! ! ! ) THIS APPEAL BY ASSESSEE IS ARISING OUT OF ORDER OF CIT(A), JALPAIGURI IN APPEAL NO.268/MLD/CIT(A)/JAL/08-09 DATED 10.10.2011. ASSES SMENT WAS FRAMED BY ITO, WARD-1, MALDA U/S. 254/143(3) OF THE INCOME-TAX ACT, 1961 (HEREINAFTER REFERRED T O AS THE ACT) VIDE HIS ORDER DATED 04.09.2008. 2. THE ONLY ISSUE IN THIS APPEAL OF ASSESSEE IS AGA INST THE ORDER OF CIT(A) CONFIRMING THE ADDITION OF EXCESS STOCK FOUND DURING THE COURSE OF SURVEY I.E. 4 LAC PIECES OF EXCESS BRICKS FOUND BY SURVEY PARTY ON 30.03.1999. FOR THIS, ASS ESSEE HAS RAISED FOLLOWING FOUR REVISED GROUNDS: 1. FOR THAT, ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN VIEW OF THE PRODUCTION RECORDS DULY MAINTAINED BY THE APPELLANT IN PURSUANCE TO AN AGREEMENT WITH THE LABOUR CONTRACTOR SUPPORTED BY AFFIDAVIT, THE L D. CIT(A) HAS ERRED IN SUSTAINING THE ADDITION OF THE ALLEGED VALUE OF 3,12926 PIECES OF BRICKS WHICH WERE ACTUALLY OBTAINED AS FINISHED BRICKS AFTER BURNING FROM THE KILN DURING THE ACCOUNTING YEAR ENDED 31/3/2000 RELEVANT TO ASSTT. YEAR 2000-2001 I.E. IMMEDIATELY THE SUCCEEDING YEAR AND DULY RECORDED IN THE BOOKS OF ACCOUNTS AND ASSESSMENT WAS MADE AC CORDINGLY. 2. FOR THAT, HAVING REGARD TO THE FACTS OF THE CASE , THE LD. CIT (A) HAS NO JUSTIFICATION TO SUSTAIN THE ADDITION OF RS. 2,47,211/- IN RESPECT O F BRICKS OF 4,00,000 PIECES WHICH THE SURVEY PARTY FOUND ON 30/3/99 (ONE DAY BEFORE YEAR CLOSING) ON ABSURD PROPOSITION AS THE 2 ITA 1754/K/2011 M/S. AJANTA BRICK FIELD. A.Y. 99-0 0 BRICKS UNDER PROCESS SINCE IT WAS REQUIRED ABOUT 15 TO 20 DAYS TO HAVE BURNT (FINISHED) BRICKS AND THEREFORE THE SAME CAN NEVER BE PRODUCT OF THE ASSTT. YEAR UNDER CONSIDERATION. 3. FOR THAT, IN VIEW OF THE EVIDENCES PRODUCED AND THE EXPLANATION FURNISHED TO THE LD. AUTHORITIES BELOW SUPPORTED BY DAY TO DAY STOCK BOO K AS MAINTAINED BY THE APPELLANT, THERE WAS NO SCOPE TO DISBELIEF THE PRODUCTION ACCO UNT AND THE LD. CIT (A) MOST ARBITRARILY SUSTAINED THE ADDITION ON THE SO CALLED SHORTAGE OF 312926 PIECES OF BRICKS VALUED AT RS. 2,47,211/- FOR THE ASSTT. YEAR 1999-2 000 THOUGH THE UNPROCESSED BRICKS OF 4,00,000 PIECES WERE THE PRODUCT OF THE NEXT YEAR D ULY RECORDED IN THE STOCK REGISTERED AND SOLD ACCORDINGLY. 4. FOR THAT, IN ANY EVENT, THE LD. AUTHORITIES BELO W MOST ARBITRARILY HELD THAT 312926 PIECES OF BRICKS WERE THE PRODUCT OF THE ASSTT. YEA R UNDER CONSIDERATION THOUGH AS A MATTER OF FACT, THE UNPROCESSED BRICKS CAN NEVER BE TAKEN INTO ACCOUNT UNTIL THE SAME BECOMES THE FINISHED BRICKS I.E. AFTER BURNING AND FURTHER THE ADDITION HAS BEEN SUSTAINED BY THE LD. CIT(A) WITHOUT PROPERLY UNDERSTANDING TH E DIRECTION OF THE LD. I.T.A.T. AT THE OUTSET, IT IS TO BE MENTIONED THAT THIS ISSU E WAS SET ASIDE BY THIS TRIBUNAL VIDE ORDER DATED 22.06.2007 IN ITA NO.67/KOL/2005 VIDE PARA 7 BY GIV ING FOLLOWING DIRECTIONS: 7. WE HAVE EXAMINED THE RIVAL SUBMISSION. WE RES TORE THE MATTER BACK TO THE FILE OF A.O. THE A.O. IS DIRECTED TO VERIFY WHETHER THE AD DITIONAL STOCK SHOWN BY THE ASSESSEE UNDER PROCESS HAS BEEN SHOWN BY THE ASSESSEE IN THE SUBSEQUENT ASSESSMENT YEAR I.E. ASSESSMENT YEAR 2000-01. IF THE A.O. FINDS THAT TH E ASSESSEE HAS SHOWN SALES OF THE STOCK WORTH RS.2,47,211/- IN THE SUBSEQUENT YEAR, HE IS D IRECTED TO DELETE THE ADDITION MADE IN THE YEAR UNDER APPEAL I.E. 1999-2000. HOWEVER, IF HE FINDS THAT THE ASSESSEE HAS NOT SHOWN SALE OF THIS STOCK WORTH RS.2,47,211/- IN THE SUBSEQUENT YEAR THEN ADDITION MAY BE SUSTAINED FOR THE ASSESSMENT YEAR UNDER CONSIDERATI ON. 3. BRIEF FACTS ARE THAT SURVEY OPERATION U/S. 133A WAS CONDUCTED ON THE BUSINESS PREMISES OF THE ASSESSEE ON 30.03.1999. DURING THE COURSE O F SURVEY PROCEEDINGS, ADMITTED BY BOTH THE SIDES, EXCESS STOCK OF 4 LACS PIECES OF BRICKS WERE FOUND. ASSESSEES CLAIM WAS THAT THESE BRICKS WERE UNFINISHED AND UNDER PROCESSING I.E. TH AT WAS WORK IN PROGRESS. DURING THE COURSE OF SET ASIDE ASSESSMENT PROCEEDINGS TO VERIFY THE S UBSEQUENT YEARS SALE AND ENTRIES OF SALE, AS PER DIRECTIONS OF TRIBUNAL, THE ASSESSING OFFICER I SSUED SHOW CAUSE NOTICE TO VERIFY ADDITIONAL STOCK. THE ASSESSING OFFICER NOTED THAT THE ASSESS ING OFFICER COULD NOT PRODUCE ANY EVIDENCE OR ENTRIES IN ITS BOOKS OF ACCOUNT THAT IT HAS SOLD THE ADDITIONAL STOCK, MAY BE UNPROCESSED BRICKS DURING THE YEAR UNDER CONSIDERATION, WHICH W ERE CONVERTED INTO FINISHED PRODUCTS AFTER THE END OF THE RELEVANT YEAR. ACCORDING TO ASSESSIN G OFFICER, ASSESSEE FIRM WAS PROVIDED SUFFICIENT OPPORTUNITIES TO SHOW PROPER ENTRIES OF SALE OF EXCESS STOCK OF RS.2,47,211/- I.E. 4 LACS BRICKS. THE ASSESSING OFFICER MADE ADDITION B Y HOLDING AS UNDER: IN SL.NO. 1 OF THE REPLY THE PARTNER OF THE ASSESS EE FIRM HAS GIVEN REFERENCE OF TWO CASES U.C0 BANK VS. COMMISSIONER OF INCOME TAX (1999) 24 0 ITR 355(SC) THE JUDGMENT OF THE CASE WAS THOUGH BY VIRTUE OF THE BANKING REGU LATION ACT, 1949, A BANKER MAY BE 3 ITA 1754/K/2011 M/S. AJANTA BRICK FIELD. A.Y. 99-0 0 OBLIGED TO SHOW IN ITS BALANCE-SHEET THE VALUATION OF STOCK-IN-TRADE AT COST, FOR THE PURPOSES OF INCOME-TAX, THE ASSESSEE WAS ENTITLED T O VALUE THE STOCK-IN-TRADE AT COST OR MARKET VALUE, WHICHEVER IS LESS. AND THE SECOND CA SE STATE BANK OF TRAVANCORE VS. CIT(1986) 158 ITR 102(SC)IT WAS HELD BY THE APEX COURT THAT WHERE ALL ACCOUNTS MAINTAINED IN THE MERCANTILE SYSTEM, INTEREST WHICH WAS ACCRUED BUT HAS NOT BEEN RECOVERED AND THE RECOVERY OF WHICH WAS ALSO UNLIKE LY, BUT HAD NOT BEEN WRITTEN OFF, WAS TO BE TREATED AS PART OF THE TAXABLE INCOME OF THE BANKS. IN THIS REGARD THE CASE REFERENCES HAS BEEN GIVEN BY THE A/R OF THE ASSESSE E RELATES ONLY TO MAINTAINING OF ACCOUNTS AND DETERMINING THE VALUE OF STOCK-IN-TRAD E. SL.NO. 2 OF REPLY OF SHOW CAUSE NOTICE , THE ASSESS EE FIRM HAS STATED THAT THE ASSESSEE FILED THE MANUFACTURING, TRADING AND PROFIT & LOSS ACCOUN T SHOWING ALL RELEVANT ENTRIES, FOLLOWED BY PRINCIPLE ACCOUNTS. THERE IS NO PROVISI ON TO SHOW ABOUT ADDITIONAL STOCK AND SALE. IN THIS REGARD THE ASSESSEE FIRM WAS ASKED DU RING THE COURSE OF HEARING TO SHOW THE ENTRIES OF SALES MADE IN THE SUBSEQUENT YEAR FOR RS . 2,47,211/- PARTICULARLY FROM THE EXCESS STOCK WHICH WAS FOUND DURING THE COURSE OF S URVEY. HOWEVER, THE AIR OF THE ASSESSEE FIRM SRI. SIBAJI SANYAL, ADVOCATE , COULD NOT PRODUCE ANY SATISFACTORY EVIDENCES WHICH REFLECTS THE SALES OF RS.2,47,2 11 / - (EXCES S STOCK)-IN THE SUBSEQUENT YEAR I.E IN THE A.Y. 2000-01. SL.NO. 3 OF REPLY OF SHOW CAUSE NOTICE, THE ASSESSE E FIRM STATED THAT THE HONBLE MEMBER OF ITAT DIRECTED TO VERIFY THE STATISTICAL PURPOSE ONLY. IN TERMS OF THE ORDER THE ASSESSEE FILED STOCK BOOK AND SALES REGISTER OF THE ACCOUNTI NG YEAR 1999-2000. IN THIS REGARD, HONBLE I.T.A.T.B BENCH, KOLKATA VIDE HIS ORDER N O. 67/KOL/2005, DATED 22.06.2007 DIRECTED TO VERIFY WHETHER THE ADDITIONAL STOCK SHO WN BY THE ASSESSEE IN THE SUBSEQUENT YEAR I.E. ASSESSMENT YEAR 2000-01. KEEPING IN MIND THE HONBL E I.T.A.T.S DIRECTION THE A/R OF THE ASSESSEE FIRM WAS ASKED TO SHOW ENTRIES OF SALES MADE PARTICULARLY FROM STOCK OF BRICKS FOR RS. 2,47,211/ - IN THE SUBSEQUENT YEA R I.E. IN THE A.Y. 2000-01 WHICH WAS FOUND DURING THE COURSE OF SURVEY AS EXCESS STOCK. HOWEVER, THE A/R OF THE ASSESSEE COULD NOT PRODUCE ANY SUCH EVIDENCE WHICH PROVE THA T THE SALES WERE MADE PARTICULARLY FROM EXCESS STOCK AMOUNTING TO RS.2,47,211/- WHICH WAS FOUND DURING THE COURSE OF SURVEY. SL.NO. 4 OF THE REPLY OF SHOW CAUSE NOTICE, THE ASS ESSEE FIRM HAS STATED THAT THE ADDITIONAL STOCK OF BRICK WORTH RS. 2,47,211/- HAS BEEN SOLD I N THE NEXT ACCOUNTING YEAR 1999-00, AN AFFIDAVIT IN THIS REGARD HAS ALSO FILED. IN THIS CO NNECTION, THE ASSESSEE WAS ASKED TO SHOW PARTICULAR ENTRY OF ADDITIONAL STOCK OF RS. 2,47,21 1/- FROM WHICH THE SALES WERE MADE IN THE SUBSEQUENT YEAR. UT THE A/R OF THE ASSESS COULD N PRODUCE ANY EVIDENCE IN THIS REGARD. SL.NO.5 OF THE REPLY OF SHOW CAUSE NOTICE, THE ASSE SSEE FIRM HAS STATED THAT THE ORDER OF HONBLE ITAT WAS PASSED ON THE BASIS OF FACTUAL ASP ECTS AND ALL FACTS STATED IN THE AFFIDAVIT WHICH IS MAINTAINABLE TO PASS THE ORDER I N THIS CASE. IN THIS REGARD, MERE FILING OF AN AFFIDAVIT IS NOT SUFFICIENT TO PROVE THE GENU INENESS OF THE MATTER. THE ASSESSEE FIRM HAS BEEN GIVEN SUFFICIENT OPPORTUNITY TO SHOW PROPE R ENTRY OF SALE OF EXCESS STOCK FOUND DURING THE COURSE OF SURVEY AMOUNTING TO RS.2,47,2 11/-. HOWEVER, THE ASSESSEE COULD NOT PRODUCE ANY AUTHENTIC EVIDENCE OF SALES RS. 2,47,21 1/- FROM THE PARTICULAR EXCESS STOCK WHICH WAS FOUND DURING THE COURSE OF SURVEY U/S. 13 3A. THE ASSESSEES PLEA TO MODIFY THE ORDER IS NOT ACCEPTABLE. THEREFORE, THE ASSESSE E FIRMS REQUEST IS NOT CONSIDERED. AS THE A/R OF THE ASSESSEE COULD NOT GIVE ANY SATIS FACTORY EXPLANATION REGARDING SALES OF STOCK WORTH RS.2,47,211/- IN THE SUBSEQUENT YEAR. T HE BURDEN IS LIES ON THE ASSESSEE TO EXPLAIN SATISFACTORILY WITH REGARD TO THE SALES OF STOCK WORTH RS.2,47,211/-. KEEPING IN MIND THE DIRECTION OF THE HONBLE I.T.A.T, KOLKATA I HAVE NO OTHER ALTERNATIVE BUT TO ADD RS.2,47,2 11/-ON ACCOUNT OF UNDISCLOSED INCOME (EXC ESS STOCK FOUND DURING THE COURSE OF SURVEY U/S 133A CONDUCTED ON 30.3.1999) TO THE TOTA L INCOME OF THE ASSESSEE. 4 ITA 1754/K/2011 M/S. AJANTA BRICK FIELD. A.Y. 99-0 0 CIT(A) JUST CONFIRMED THE ACTION OF ASSESSING OFFIC ER AS THE ASSESSEE COULD NOT PRODUCE ANYTHING BEFORE HIM ALSO. AGGRIEVED, NOW ASSESSEE IS IN APPEAL BEFORE US. 4. WE HAVE HEARD RIVAL SUBMISSIONS AND GONE THROUGH FACTS AND CIRCUMSTANCES OF THE CASE. BEFORE US, LD. COUNSEL FOR THE ASSESSEE FILED PAPER BOOK CONTAINING PAGES 1 TO 47 IN WHICH HE HAS FILED ORDERS OF LOWER AUTHORITIES, TRIBUNALS O RDER, WRITTEN SUBMISSIONS AND STOCK REGISTER, ACCOUNTS FOR YEAR 1998-99 RELEVANT TO ASSESSMENT YE AR 1999-2000. THE ASSESSEE ALSO FILED COPY OF AGREEMENT WITH ONE LABOUR SARDAR AT PAGE 15 OF ITS PAPER BOOK AND CLAIMED THAT THE SAME WAS FILED BEFORE CIT(A). THE RELEVANT AGREEME NT (ENGLISH TRANSLATION FILED BEFORE US) READS AS UNDER: STAMP RS.2.00 THIS AGREEMENT IS MADE BETWEEN M/S. AJANTA BRICK FI ELD OF ALAMPUR (GHOSHOPARA) P S. GAJOLE, DISTRICT MALDA, THE 1 ST PARTY AND UPENDRA NATH MONDAL, SON OF LATE RAJ DEB MONDAL BY CASTE HINDU BY PROFESSION, DOMESTOREAN VILL. JAGATPUR, P.S. SABOR DIST. BHAGAL PUR AS UNDER: THAT I PROMISE TO WORK AS A LABOUR CONTRACTOR FOR T HE FINANCIAL YEAR 1998-1999 NOV. UNDER YOUR INSTRUCTION IN THE BRICK FIELD. I SHALL GROWN BRICKS AND ALSO MAKE IT FINISHED PRODUCT IN THE BRICK FIELD (ALAMPUR). THE 1 ST PARTY WILL PAY RS.280/- PER 1000 PIECES OF FINISHE D BRICKS. THE 1 ST PARTY WILL ALSO SUPPLY COAL, EARTH, FIRE WOOD AS REQUIRED FOR SUCH MANUFACTURE WORK AT THE BRICK FIELD. BOTH THE PARTIES FURTHER AGREED THAT THEY WILL SHAR E ANY LOSS EQUALLY IF THE BRICKS SPOILED BY EARLY RAINFALL. THE LABOUR CONTRACTOR FURTHER RATIFIED THAT THIS CO NTRACT WILL INFORCE FOR THE YEAR AS STATED ABOVE VIZ., 19998-1999 (NOVEMBER). DRAFTED READ OVER THE CONTAINS. WITNESS SD/- AIL KUMAR ROY 1. SD/- GOPAL CHANDRA ROY SHIBAJINAGAR, MALDA VILLAGE & POST GAJOLE DT. 1.11.98 DISTRICT MALDA 5. DURING THE COURSE OF SURVEY TOTAL BRICKS FOUND W AS AT 8,61,300 PIECES AND THE CLAIM OF THE ASSESSEE WAS THAT OUT OF WHICH 4 LACS PIECES WE RE UNDER PROCESSED BUT IN THE BOOKS OF ACCOUNT IT IS RECORDED AT 5,48,375 PIECES OF BRICKS AND THEREBY DIFFERENCE OF 3,12,925 PIECES OF BRICKS. ACCORDING TO ASSESSEE, OUT OF THIS STOCK O F 8,61,300 PIECES, 4 LACS PIECES WERE UNDER PROCESS AND OUT OF THE SAME 3,12,925 PIECES WERE SO LD IN THE NEXT YEAR I.E. ASSESSMENT YEAR 2000-01 RELEVANT TO FY 1999-2000. FIRST OF ALL, WE ARE OF THE VIEW THAT EVEN THOUGH THERE IS WORK IN PROGRESS THE SAME IS TO BE INCLUDED IN THE BOOKS OF ACCOUNT AND ASSESSEE COULD NOT PRODUCE BOOKS OF ACCOUNT OR OTHER DOCUMENTS TO PROV E THAT THESE 4 LACS PIECES OF BRICKS MAY BE UNDER PROGRESS OR PROCESSING, HAVE TO BE RECORDED B UT IT IS NOT THE CASE. EVEN THE ASSESSEE COULD NOT SHOW ANY DETAILS FROM THE BOOKS OF ACCOUNT FOR IMMEDIATELY NEXT YEAR WHICH PROVES THAT THE ASSESSEE HAS SOLD THE ALLEGED STOCK. EVEN THOUGH T HERE WAS DIRECTION OF TRIBUNAL, WE FIND THAT 5 ITA 1754/K/2011 M/S. AJANTA BRICK FIELD. A.Y. 99-0 0 THE ASSESSEE IS UNABLE TO PROVE THAT SALE PROCEEDS OF THE EXCESS STOCK WHICH IS CLAIMED TO BE INCLUDED IN THE TOTAL SALE PROCEEDS OF SUBSEQUENT A SSESSMENT YEAR. WE FIND THAT FROM THE ABOVE AGREEMENT WITH LABOUR SARDAR SHRI UPENDRA NATH MOND AL, WHICH NOWHERE PROVES THAT THESE WERE SOLD SUBSEQUENTLY. IN VIEW OF THE ABOVE FACTS AND CIRCUMSTANCES, WE ARE OF THE VIEW THAT CIT(A) HAS RIGHTLY CONFIRMED THE ADDITION. APPEAL OF ASSESSEE IS DISMISSED. 6. IN THE RESULT, THE APPEAL OF ASSESSEE IS DISMISS ED. 7. ORDER PRONOUNCED IN OPEN COURT ON 29.02.2012 SD/- SD/- . . , ! ' '' ' # # # # , ! (S. V. MEHROTRA (MAHAVIR SINGH) ACCOUNTANT MEMBER JUDICIAL MEMBER ( / / / /) )) ) DATED : 29TH FEBRUARY, 2012 '01 %23 4' JD.(SR.P.S.) . 5 ,6 76'8- COPY OF THE ORDER FORWARDED TO: 1 . *+ / APPELLANT M/S. AJANTA BRICK FIELD, C/O ALOK KUNDU , ALAMPUR, P.O. SIBAJINAGAR, MALDA. 2 . ,-*+ / RESPONDENT, ITO, MALDA . 3 . .% ( )/ THE CIT(A), JALPAIGURI 4. .% / CIT, JALPAIGURI 5 . '> ,% / DR, KOLKATA BENCHES, KOLKATA -6 ,/ TRUE COPY, .%?/ BY ORDER, #3 /ASSTT. REGISTRAR .