Shri Prashant Kumar Bajla, Deoghar V. DCIT, Deoghar

ITA 177/RAN/2015

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 2175 (ITAT-RANCHI)
• Duration Of Justice: 2 month(s) 18 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 10-03-2016
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: SMC
• Assessment Year: 2010-2011
• Appeal Filed On: 22-12-2015
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Assessee Lawyers: S K PODDAR

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, RANCHI SMC BENCH, RANCHI BEFORE SHRI SHAMIM YAHYA, ACCOUNTANT MEMBER ITA NO. 177/RAN/2015 ASSESSMENT YEAR: 2010-11 SH. PRASHANT KUMAR BAJLA, PROP: M/S. MULTI METALS, JHOUSAGARHI, DEOGHAR VS. DCIT,CIRCLE-3, DEOGHAR PAN/GIR NO. : AGYPB1406D (APPELLANT ) .. (RESPONDENT) APPELLANT BY : SH. S.K. PODDAR, ADV. RESPONDENT BY : SH. ARVIND KUMAR, DR DATE OF HEARING : 03.03.2016 DATE OF PRONOUNCEMENT : 10.03.2016 O R D E R THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST TH E ORDER OF LD. CIT(A) DATED 13.10.2015 AND PERTAINS TO THE ASSESSMENT YEA R 2010-11. THE GROUNDS OF APPEAL RAISED IN THIS REGARD READ AS UNDER: 1. FOR THAT A SURVEY WAS CONDUCTED AT THE PLACE OF THE APPELLANT ON 11.03.2010. IT IS SAID THAT DURING SURVEY STOCK OF CEMENT WAS FOUND QUANTITY-WISE AT 29,480 BAGS. LD. ASSESSING OFFICER CONCLUDED THAT THE APPELLANT COULD ONLY EXPLAIN STOCK OF CEMENT AS PER BOOKS OF ACCOUNT FOR 29008 BAGS, AS SUCH, THERE WAS A SHORTAGE OF ST OCK OF 472 BAGS FOR WHICH ADDITION OF RS. 1,19,888/- WAS MADE. 2. FOR THAT IT WAS HUMANLY NOT POSSIBLE TO CALCULATE I N ONE HOURS TIME THE QUANTITY OF 29480/- BAGS. APPELLANTS PURCHASES ARE FULLY VERIFIABLE SO ARE THE SALES. THE DIFFERENCE IN THE STOCK IS SA ID TO BE AROUND 1.5% OF THE TOTAL STOCK. THE ADDITION MADE FOR THE EXCES S STOCK FOUND IS UNJUSTIFIED, ILLEGAL AND INCORRECT. 2 ITA NO. 177/RAN/2015 AY: 2010-11 3. FOR THAT THE APPELLANT ALSO DEALS IN IRON STEEL. IT IS SAID THAT IN COURSE OF SURVEY 291.65 MT OF STOCK WAS FOUND AGAINST THE BOOKS STOCK OF 290.27 MT, AS SUCH, ADDITION OF RS. 2,76,114/- WAS MADE. HERE AGAIN, NO WEIGHMENT WAS TAKEN AND AN ESTIMATE MADE BY SURV EY TEAM. THE DIFFERENCE OF 1.40 MT WHICH IS ALMOST 0.5% IS NEGLI GIBLE DIFFERENCE, AS SUCH, NO ADDITION SHOULD HAVE BEEN MADE. 4. FOR THE THAT THE LD. ASSESSING OFFICER ACCEPTED THE BOOKS OF ACCOUNTS, BOOK RESULTS, CLOSING STOCK DISCLOSED. AC COUNTS OF THE APPELLANT WERE AUDITED AND NO DISCREPANCY WAS FOUND . LD. CIT(A) WAS NOT JUSTIFIED IN CONFIRMING THE ADDITION MADE BY LD . ASSESSING OFFICER FOR RS. 1,19,888/- AND RS. 2,76,114/- ON THE GROUND OF EXCESS STOCK FOUND DURING SURVEY. 5. FOR THAT LD. ASSESSING OFFICER WAS NOT JUSTIFIED IN CHARGING INTEREST ON THE ASSESSED INCOME. FOLLOWING THE DECISION OF HON' BLE JHARKHAND HIGH COURT, THE INTEREST SHOULD HAVE BEEN CHARGED O N THE RETURNED INCOME. 6. FOR THAT OTHER IN DETAIL WILL BE ARGUED AT THE TIME OF HEARING. 2. APROPOS GROUND RELATING TO ADDITION OF RS. 1,19 ,888/- ON ACCOUNT OF DISCREPANCY NOTICED ON ACCOUNT OF CEMENT BAGS. AS P ER THE UNDISPUTED FACTS OF THE CASE, THERE WAS SURVEY CONDUCTED IN THE PREMISE S OF THE ASSESSEE. BASED ON THE FINDINGS OF SURVEY 472 BAGS OF CEMENT VALUED AT RS. 1,19,888/- WAS FOUND IN EXCESS ON THE DATE OF SURVEY. AGAINST THIS ADDITION , ONLY PLEA OF THE ASSESSEE IS THAT AT THE TIME OF SURVEY, 29,480/- BAGS WERE TO B E COUNTED, HOWEVER, THESE COULD NOT HAVE BEEN COUNTED IN A SHORT PERIOD OF SU RVEY. 3. ADDITION WITH REGARD TO EXCESS STOCK OF IRON & S TEEL FOUND IN STOCK WAS MADE BASED ON THE FINDING OF SURVEY. IN SURVEY, 291 MT OF STOCK WAS FOUND WHILE THE BOOK STOCK WAS 290.27 MT. AGAIN IN THIS R EGARD, THE ASSESSEES PLEA WAS THAT INVENTORY WAS TAKEN BY AN EYE ESTIMATE AND THERE MIGHT BE ERROR IN THIS REGARD. LD. CIT(A) AND AUTHORITIES BELOW AFFIRMED T HE ASSESSING OFFICERS ACTION. THE LD. CIT(A) HAS CONCLUDED IN THIS REGAR D AS UNDER: 5.7 IN THE INSTANT CASE, THE RECORD SHOWED THAT TH E APPELLANT WAS GIVE SUFFICIENT TIME AND OPPORTUNITIES TO EXPLAIN THE DI SCREPANCIES AND THE ASSESSEES ONLY ARGUMENT HAD BEEN THAT ACTUAL WEIGH MENT OF THE STOCK WAS NOT DONE. IF ACCORDING TO THE ASSESSEE, THERE WAS N O DISCREPANCY IN THE STOCK AND THE SURVEY PARTY WAS WORKING OUT DISCREPA NCY ONLY ON THE BASIS 3 ITA NO. 177/RAN/2015 AY: 2010-11 OF ESTIMATE IT WAS INCUMBENT ON THE ASSESSEE TO HAV E INSISTED ON ACTUAL WEIGHMENT OF THE STOCK. MOREOVER, EVEN IF SUCH AN A GREEMENT WAS EXTORTED UNDER THREAT OR COERCION, THE MINIMUM THAT THE ASSE SSEE COULD HAVE DONE WAS TO FILE A PETITION TO THE HIGHER AUTHORITIES IM MEDIATELY SWEARING AFFIDAVITS TO THAT EFFECT AND OFFERING FOR IMMEDIAT E WEIGHMENT OF THE STOCKS. NOTHING OF THIS KIND WAS DONE. IN THIS REGARD, I AM FORTIFIED BY THE ORDER OF THE HON'BLE ITAT IN THE CASE OF ITO VS. B.D. DAL AN D OIL INDUSTRIES 40 ITD 180 (JAIPUR). 4. AGAINST THE ABOVE ORDER, THE ASSESSEE IS IN APPE AL BEFORE ITAT. 5. I HAVE HEARD BOTH THE COUNSEL AND PERUSED THE RE CORDS. AS FAR AS CONTENTION REGARDING COUNTING OF CEMENT BAGS IS CO NCERNED, I FIND THAT COUNTING OF CEMENT BAGS STACKED IN ROWS IS NOT A VERY DIFFIC ULT JOB AND IT CANNOT BE SAID THAT IT IS NOT HUMANLY PROBABLE TO CALCULATE THE NU MBER OF BAGS BY MULTIPLYING THE BAGS FOUND HORIZONTALLY AND VERTICALLY. HENCE, THE ASSESSEES PLEA REGARDING IMPRACTICALITY OF TAKING STOCK OF CEMENT BAGS IN SH ORT PERIOD IS DEVOID OF COGENCY AND THE SAME IS DISMISSED AS SUCH. 6. AS REGARDS THE STOCK TAKEN AT THE TIME OF SURVE Y OF IRON AND STEEL, I AGREE WITH THE SUBMISSION OF LD. COUNSEL FOR THE ASSESSEE THAT IN A SHORT PERIOD OF TIME, MEASUREMENT OF IRON & STEEL IS NOT POSSIBLE. HENCE, THE ELEMENT OF AN EYE ESTIMATE CANNOT BE RULED OUT. LD. COUNSEL FOR THE A SSESSEE HAS REFERRED TO ITAT DECISIONS WHICH HAVE HELD THAT STOCK TAKEN DURING T HE COURSE OF SURVEY MERELY BY AN EYE ESTIMATE, CANNOT BE A COGENT BASIS OF ADD ITION DE-HORS ANY FINDING REGARDING SHORT-COMINGS IN THE MAINTENANCE OF BOOKS OF ACCOUNTS AND OTHER RELEVANT RECORDS. 7. LD. DEPARTMENTAL REPRESENTATIVE IN THIS REGARD WAS NOT IN A POSITION TO COGENTLY SUPPORT THE PLEA THAT AN EYE ESTIMATE OF I RON AND STEEL CAN REALLY MAKE THE MEASUREMENT OF THE WEIGHT. NO STOCK TAKING SHEE TS AT THE TIME OF SURVEY WAS PRODUCED BEFORE ME FOR VERIFICATION. IN MY CONSIDER ED OPINION, THERE IS CONSIDERABLE COGENCY IN THE SUBMISSIONS OF THE LD. COUNSEL FOR THE ASSESSEE THAT NO ACTUAL WEIGHMENT OF IRON AND STEEL TOOK PLACE, R ATHER IT WAS ONLY BASED UPON 4 ITA NO. 177/RAN/2015 AY: 2010-11 EYE ESTIMATE. HENCE, RESULTANT DIFFERENCE, WHICH IS VERY NEGLIGIBLE, CANNOT BE ADDED TO THE INCOME OF THE ASSESSEE AS UNDISCLOSED INCOME. HENCE, I SET ASIDE THE ORDERS OF THE AUTHORITIES BELOW AND DELETE THE ADDITION ON ACCOUNT OF REPORTED EXCESS STOCK OF IRON & STEEL ON SURVEY. 4. IN THE RESULT, APPEAL FILED BY THE ASSESSEE STA NDS PARTLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 10/3/2016 SD/- (SHAMIM YAHYA) ACCOUNTANT MEMBER RANCHI, DATED 10/03/2016 RAJESH, SR.PS COPY OF THE ORDER FORWARDED TO : 1. THE APPELLANT CONCERNED 2. THE RESPONDENT CONCERNED 3. THE CIT(A) CONCERNED 4. CIT CONCERNED 5. DR, ITAT, RANCHI 6. GUARD FILE. BY ORDER, //TRUE COPY// SR.PS, ITAT, RANCHI