M/S. M.S. TRADERS, SRINAGAR V. INCOME TAX OFFICEER WARD-3(1), SRINAGAR

ITA 179/ASR/2019

• Counselvise Citation: [2022] 106 COUNSELVISE.COM (IT) 8257 (ITAT-AMRITSAR)
• Duration Of Justice: 3 year(s) 4 month(s) 30 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 11-08-2022
• Appeal Filed By: Assessee
• Order Result: PartlyAllowed
• Bench Allotted: DB
• Assessment Year: 2015-2016
• Appeal Filed On: 12-03-2019
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Condonation of delay
• Section: 144; 143(3); 142(1); 207

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AMRITSAR BENCH, AMRITSAR. BEFORE DR. M. L. MEENA, ACCOUNTANT MEMBER AND SH. ANIKESH BANERJEE, JUDICIAL MEMBER I.T.A. No. 179/Asr/2019 Assessment Year: 2015-16 M/s M.S. Traders C/o Bhat Durani& Associates 207 1 st Floor Yatri Bhawan II Durga Nag Dalgate Srinagar 90001 [PAN:AANFM2220M] (Appellant) Vs. ITO, Ward-3(1), Srinagar. (Respendent) Appellant by Sh. Upender Bhat,CA. Respondent by Sh.S.M. Surendranath, Sr. DR. Date of Hearing 08.08.2022 Date of Pronouncement 12.08.2022 ORDER Per:Anikesh Banerjee, JM: The instant appeal was filed by the assessee against the order of the ld. Commissioner of Income Tax(Appeals)-2, Ludhiana, [in brevity the CIT(A)] bearing appeal no. 216/ROT/IT/CIT(A)-2/LDH/2018-19, date of order 12.12.2018, the order passed u/s 250(6) of the IT Act 1961, [in brevity the Act] for A.Y.2015- 16. The impugned order was originated from the order of the ld. ITO-Ward-2 I.T.A. No. 179/Asr/2019 2 Srinagar (in brevity the AO), order passed u/s 143(3) of the Act date of order 27.12.2017. 2. The assessee has raised the following ground which as follows: “1. That the Ld. CIT(A) has erred in law and on Facts of the cases in not deleting the addition of Rs.955500/- made by the Ld.A.O terming the same as unexplained Cash Deposit 2. That the Ld. CIT(A) has erred in law and on facts of the cases in not deleting the addition of Rs.2752327/- made by the Ld. A.O terming the same as unsubstantiated Stock Loss as the insurance Company compensated the loss for Rs 1138662/= only 3. That the Ld CIT(A) has erred in law and on facts of the case in not deleting the addition of Rs. 16025/- made by the Ld A.O terming the same as undisclosed interest 4. That the appellant craves leave to add, alter, amend or delete any of the grounds of appeal at the time of hearing and all above grounds are without prejudice to each other.” 2.1. The assessee has filed the appeal with delay of 7days. The assessee had posted the petition in time from Srinagar, Kashmir. Delay was due to delivery through postal service. The petition for condonation of delay was filed by assessee. The 7 days delay is condoned accordingly. I.T.A. No. 179/Asr/2019 3 3. The brief fact of the case is that the assessee is a firm trader of branded Tea items. The assessee is super stockist of M/s Marble Tea Pvt Ltd. During the financial year 2014-15 the assessee suffered huge loss of stock in trade infloodat Srinagar and loss his stock amount to Rs.41,28,490/-. During the assessment proceeding the ld. AO only allow the loss of stock in trade amount of Rs.11,38,662/- out of total damage of stock amount of Rs.41,28,490/-, the balance amountof Rs.24,70,636/- was added back with the total income of the assessee. Also the cash deposits in the bank in three different dates total amount of Rs.9,55,500/- was added back and unexplained cash deposit. The amount of Rs.16025/- added back as undisclosed amount related to refund and interest. The assessee filed an appeal before the ld. CIT(A) for judicious consideration. The ld. CIT(A) upheld the order of the ld. AO. 4. Being aggrieved the assessee filed an appeal before us. 5. The ld. Counsel for the assessee vehemently argued and first mentioned that the circular of the CBDT related to IT Assessment for taking lenient view due to devasted flood in Kashmir Valley during the assessment proceeding. The extract CBDT Circular is as follows: I.T.A. No. 179/Asr/2019 4 “In cases, where an assesses-in ongoing scrutiny proceedings claims that he/she is unable to ensure compliance with the requisition made by the assessing officer under 142(1) of record, documents and books of accounts etc, in the recent floods, the assessing officer may ascertain from the district administration whether area in which the business premises of the assessee concerned is located and where the books of accounts, documents etc, are claimed to have been kept was affected by the recent floods or not,” it reads adding; “If difficulties conveyed by the assessees are found to be genuine and beyond his control, thus rendering him unable to produce the requisitioned books of accounts documents records etc, the pending assessments may be completed on the basis of materials information available on record.” The advisory further adds; “In cases of non-production of books of accounts, documents, records etc, as requisitioned u/s 143(2) / 142(1) of the Act, the assessing officers, even if invoking the provisions of section 144 of the Act, should arrive at the best judgment based on estimate which is fair and should avoid framing a high-pitched assessment order merely on ground of non-production of requisite details by the accesses the concerned.” “Post-assessment, action on recovery of outstanding demand should be decided by the Assessing Officer on case-to-case basis and after taking into consideration the assessee's financial condition in the aftermath of floods,” the advisory reads. It further states that Income Tax Authorities shall expeditiously take all necessary steps with adequate sensitivity to resolve grievances and difficulties by the taxpayers.” 5.1 The ld.Cunsel informed that the amount of closing stock was insured by insurer amount of Rs.15 lac out of that 11,38,662/- was settled for loss of stock. The ld. Counsel also filed a paper book which is contained from pages 1 to 30 which is kept in record. I.T.A. No. 179/Asr/2019 5 5.2 As per the assessee’s paper book page no. 27 to 30 the balance sheet is annexed. In page 28 the Trading and P & L A/c is annexed. The Trading account is extracted as follows:- “M/s M.S. Traders, Dood Ganga Road Karannagar Srinagar Kashmir Trading Cum Profit and loss account for the year ended 31 st March 2015. Particulars Amount Particulars Amount To Opening Stock 38,23,202.00 By Sales 2,42,16,086.00 Purchases 3,27,09,627.00 Closing Stock 91,66,151.00 Direct Expenses 1,53,240.00 Damaged Stock 41,28,490.00 Gross Profit 8,24,658.00 Total 3,75,10,727.00 Total 3,75,10,727.00 “ 6. As per this Trading and P & L A/c the assessee has opening balance of stock amount to Rs. 38,23,202/- and during the flood the damaged stock amount to Rs.41,28,490/- which is reflected in the books of account. 6.1 The assessee further argued about the deposit of cash which was reconciled in the bank statement which is annexed in page 29. The cash was deposited from his source of business. All the submissions are placed before the ld. CIT(A) by the ld. Council of the assessee. I.T.A. No. 179/Asr/2019 6 7. The ld. DR relied on the order of the ld. CIT(A) and the ld. AO. The ld. DR has not taken any contrary view and has not able to file any submission against the submission of the assessee. 8. We heard the rival submission and relied on the documents available in the record. The CBDT has specific guideline related to the assessment proceeding in Srinagar for devasted flood during the financial year. The ld. AO added back the amount of balance damage stock amount of Rs.27,52,237/- which was notcovered under the insurance claim. But in the books of accounts & Balance Sheet of the assessee the opening stock and purchase had made clear indication about enough stock was present during the flood. But there is no such any contrary view against the books of account or in AuditedBalance sheet of the assessee was taken by the revenue authorities. Further the revenue authorities did not take any proper view related to bank reconciliation for deposit of cash Rs.9,55,500/-. The assessee has a turnover amount of Rs.2,42,16,086/- for the financial year. The cash was deposited from books of account as per the submission of the ld. Counsel. As per the paper book page no. 1 to 3 the assessee submitted documents related to damage of stock declared before the State VAT Authority. The submission was made before the ld. CIT(A). But the ld. CIT(A) only took the linear view with the ld. AO. I.T.A. No. 179/Asr/2019 7 The addition of Rs.16025/- related to undisclosed refund and interest is not proper method of addition. The refund amount will not be charged as tax. Only the interest part will be taxable. It is to be directed that ld. AO should verify amount of Rs.16025/- related to refund and interest and calculated interest part should be taxed in the hand of the assessee. In the result, the ground no. 1 and 2 are allowed and ground no. 3 is setting aside to ld. AO & allowed for statistical purposes. The ground no. 4 is general in nature. 9. In the result, the appeal of the assessee is partly allowed. Order pronounced in the open court on 12.08.2022 Sd/- Sd/- (Dr. M. L. Meena) (ANIKESH BANERJEE) Accountant Member Judicial Member AKV Copy of the order forwarded to: (1)The Appellant (2) The Respondent (3) The CIT (4) The CIT (Appeals) (5) The DR, I.T.A.T. True Copy By Order