Sh. Lalit Cloth House, Jalandhar V. The Income Tax Office III (4), Jalandhar

ITA 185/ASR/2016

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 9568 (ITAT-AMRITSAR)
• Duration Of Justice: 5 month(s) 9 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 15-09-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 2009-2010
• Appeal Filed On: 05-04-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: BHAWANI SHANKAR
• Assessee Lawyers: P K ANAND
• Section: 133A

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AMRITSAR BENCH; AMRITSAR (CAMP AT JALANDHAR) BEFORE SH. A.D.JAIN, JUDICIAL MEMBER AND SH. T.S. KAPOOR, ACCOUNTANT MEMBER I.T.A NO. 185 (ASR)/2016 ASSESSMENT YEAR: 2009-10 LALIT CLOTH HOUSE BAZAR SHEIKHAN JALANDHAR. PAN: AAAFL2876M VS. ITO, III(4) JALANDHAR. (APPELLANT) (RESPONDENT) APPELLANT BY: SH. P.K.ANAND, CA. RESPONDENT BY: SH. BHAWANI SHANKAR (DR) DATE OF HEARING: 28.06.2016 DATE OF PRONO UNCEMENT: 15.09.2016 ORDER PER T. S. KAPOOR (AM): THIS IS AN APPEAL FILED BY ASSESSEE AGAINST THE ORD ER OF LEARNED CIT(A), JALANDHAR DATED 28.01.2016 FOR ASST. YEAR: 2009-10. 2. THE ONLY GRIEVANCE RAISED BY ASSESSEE IN THIS AP PEAL IS THE ACTION OF LEARNED CIT(A), BY WHICH HE HAS UPHELD THE ADDITION MADE BY ASSESSING OFFICER ON ACCOUNT OF ALLEGED DIFFERENCE BETWEEN TH E VALUE OF STOCK ARRIVED AT BY SURVEY TEAM AND THAT OF VALUE CALCULATED BY A SSESSEE ON THE BASIS OF TRADING ACCOUNT AS ON THE DATE OF SURVEY BY APPL YING G.P. RATE OF PREVIOUS YEAR. 3. AT THE OUTSET, THE LEARNED AR SUBMITTED THAT A S URVEY U/S 133A WAS CARRIED OUT ON 4.9.2008 AND A LIST OF STOCKS HE LD ON THE DATE OF ITA NO.18 5 (ASR)/2016 ASST. YEA R: 2009-10 2 SURVEY WAS PREPARED. IT WAS VALUED AT PRICES MENTIO NED ON SLIPS ATTACHED TO RELATED GARMENTS AND ON WHICH THREE RAT ES WERE MENTIONED. THE SURVEY TEAM APPLIED HIGHEST RATE AND ARRIVED AT THE VALUATION OF STOCK AT RS.7060020/-. THE ASSESSEE WAS ASKED TO CA LCULATE THE VALUE OF STOCK BY PREPARING TRADING ACCOUNT FROM 01.04.2008 TO THE DATE OF SURVEY BY ADOPTING A G.P. RATE OF 18.46% WHICH WAS DECLARE D IN THE PRECEDING YEAR. THE LEARNED AR SUBMITTED THAT THE VALUE OF ST OCK AS PER TRADING ACCOUNT CAME OUT TO BE RS.67,96,273/- AND THEREFORE , ASSESSING OFFICER MADE THE ADDITION OF RS.2,59,420/- HOLDING THAT THE SUCH STOCK WERE EXCESS STOCKS HELD BY ASSESSEE. THE LEARNED AR SUBM ITTED THAT THE HONBLE PUNJAB & HARYANA HIGH COURT IN THE CASE OF CIT VS. BHALLA BROS. REPORTED 10 TLR 45 HAS HELD THAT ASSUMPTION OF UNIFORM GROSS PROFIT R ATE IN THE CASE OF ALL SALES IN EACH AND EVERY MONTH WA S ARBITRARY AND THE DISCREPANCIES IN THE STOCK WORKED ON SUCH ASSUMPTIO N IS NOT ACCEPTABLE. IT WAS SUBMITTED THAT THIS DECISION HAS BEEN FOLLOW ED BY THE CHANDIGARH BENCH OF ITAT IN THE CASE OF SAQI BROTHERS VS. ITO REPORTED AS 54 TTJ 306 . THE LEARNED AR FURTHER SUBMITTED THAT THE ASSESSI NG OFFICER WAS ALSO APPRISED OF THE FACT THAT G.P RATE DECLARED BY THE ASSESSEE WAS FAVORABLY COMPARED WITH ITS COMPETITORS. THE LEARNE D AR ALSO RELIED UPON THE DECISION OF KOLKATA HIGH COURT IN THE CASE OF LAXMI BUSINESS CEMENT CO. PVT. LTD. VS. CIT REPORTED AT 56 DTR 0108 , FOR THE PROPOSITION THAT IF THE ASSESSEE FURNISHES DETAILS OF CONCERNS IN THE S AME LINE OF BUSINESS, THE FACTS OF THOSE MUST BE CONSIDERED BY THE ASSESS ING OFFICER BEFORE ITA NO.18 5 (ASR)/2016 ASST. YEA R: 2009-10 3 ESTIMATING GROSS PROFIT RATE IN ANY CASE. IT WAS FU RTHER SUBMITTED THAT SURVEY TEAM DID NOT FIND ANY DISCREPANCIES IN CASH HOLDING OR ANY OTHER INCRIMINATING DOCUMENT DURING SURVEY AND ALSO DID N OT FIND ANY DEFECT IN THE ACCOUNTS MAINTAINED BY THE ASSESSEE DURING ASSE SSMENT PROCEEDINGS. IT WAS SUBMITED THAT BOOKS OF ACCOUNT S WERE NOT REJECTED AND THEREFORE, IN ACCORDANCE WITH HONBLE PUNJAB & HARYANA HIGH COURT DECISION IN THE CASE OF CIT VS. K.S. BHATIA REPORTED AT 269 ITR 577 NO ADDIION WAS WARRANTED. 4. THE LEARNED DR, ON THE OTHER HAND, HEAVILY PLACE D HIS RELIANCE ON THE ORDER OF AUTHORITIES BELOW. 5. WE HAVE HEARD THE RIVAL PARTIES AND HAVE GONE TH ROUGH THE MATERIAL PLACED ON RECORD. WE FIND THAT ASSESSEE I S IN THE BUSINESS OF CLOTH AND GARMENTS AND ITS QUALITIES ARE NUMEROUS A ND IT IS ALSO A FACT THAT THE PRICES MENTIONED ON THE SLIPS ATTACHED ON SUCH CLOTHS DOES NOT NECESSARILY REALIZE THE SAME VALUE AS DURING BARGAI NING THE BUSINESS MAN HAS TO GIVE SOME DISCOUNT, THEREFORE, THE VALUA TION BY SURVEY TEAM AT HIGHEST PRICES WAS NOT JUSTIFIED. MOREOVER, THE ASSESSING OFFICER HAS NOT MADE OUT A CASE THAT ASSESSEE HAD NOT BEEN VALU ING ITS STOCK AT SALE PRICES AS NORMALLY THE STOCKS ARE VALUED AT COST PR ICES OR MARKET PRICES WHICHEVER IS LESS. THEREFORE, VALUATION OF INVENTOR Y AT THE TIME OF SURVEY AT SALE PRICES IS NOT AT ALL JUSTIFIED. THE ASSESSE E VIDE ITS LETTER DATED 22.11.2011 PLACED AT (PB 6 TO 10) HAD SUBMITTED THA T THE GROSS PROFIT ITA NO.18 5 (ASR)/2016 ASST. YEA R: 2009-10 4 RATIO EARNED BY IT FOR THE LAST FIVE YEARS AS IS AP PARENT FROM (PB-9) AND HAS ALSO FILED THE GROSS PROFIT EARNED BY ASSESSEE IN THE SAME TRADE BY ITS COMPETITORS AND HAD REQUESTED THE ASSESSING OFFICER TO CONSIDER THE GROSS PROFITS OF THESE FIRMS ALSO BUT ASSESSING OFF ICER DID NOT CONSIDER THE SUBMISSIONS AND NEITHER REBUTTED ANY OF THE SUB MISSIONS MADE BY ASSESSEE. THEREFORE, THE ADDITION MADE BY ASSESSING OFFICER AND FURTHER UPHELD BY LEARNED CIT(A) IS NOT JUSTIFIED SPECIFICA LLY IN VIEW OF THE FACT THAT THEY DID NOT FIND ANY DISCREPANCY IN THE BOOKS OF ACCOUNT NOR THE BOOKS OF ACCOUNT WERE REJECTED. IN VIEW OF THE ABOV E, THE GRIEVANCE OF THE ASSESSEE IS JUSTIFIED AND WE DELETE THE ADDITION. 6. IN VIEW OF THE ABOVE, THE APPEAL FILED BY THE AS SESSEE IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 15 .09.2016. SD/- SD/- (A.D. JAIN) ( T. S. KAPOOR) JUDICIAL MEMBER ACCOUNTAN T MEMBER DATED:15.09.2016. /PK/PS. COPY OF THE ORDER FORWARDED TO: (1) THE ASSESSEE: (2) THE (3) THE CIT(A), (4) THE CIT, (5) THE SR DR, I.T.A.T., TRUE COPY BY ORDER