Dilip Kumar Seraogi HUF, Howrah V. ITO, Ward No-48(4), Kolkata, Kolkata

ITA 1959/KOL/2017

• Counselvise Citation: [2018] 126 COUNSELVISE.COM (IT) 1400 (ITAT-KOLKATA)
• Duration Of Justice: 6 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 09-03-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 2011-2012
• Appeal Filed On: 01-09-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ROBIN CHOUDHURY CIT DR REV
• Keywords: Revised return
• Section: 133A; 131

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL KOLKATA SMC BENCH, KOLKATA [BEFORE SRI J. SUDHAKAR REDDY, A CCOUNTANT M EMBER ] I.T.A. NO. 1 959 / KOL/201 7 ASSESSMENT YEAR: 20 10 - 11 SRI DILIP KUMAR SERAOGI HUF .. ... .. .APPELLANT 134, SALKIA SCHOOL ROAD SUKHI SANSOR, BLOCK - E FLAT NO. 218, SALKIA HOWRAH 711 106 [PAN : AHHPD 7072 M ] INCOME TAX OFFICER, WARD NO. - 48(4), KOLKATA.. . . ... RESPONDENT 3, GOVERNMENT PLACE (W) KOLKATA 700 001 APPEARANCES BY: NONE , APPEAR ED ON BEHALF OF THE ASSESSEE. SHRI ROBIN CHOUDHURY , ADDL. CIT , DR APPEARING ON BEHALF OF THE REVENUE. DATE OF CONCLUDING THE HEARING : FEBRUARY 7 TH , 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 ASSESSEE IS DIRECTED AGAINST THE ORDER OF THE LD. COMMISSIONER OF INCOME TAX (APPEALS) - 14 , KOLKATA , (HEREINAFTER THE LD. CIT (A)), PASSED U/S 250 OF THE INCOME TAX ACT, 1961 (THE ACT), DT. 3 1 / 0 5 /2017. 2. NONE APPEARED ON BEHALF OF THE ASSESSEE AT THE TIME OF HEARING. WRITTEN SUBMISSIONS WERE FILED ALONG WITH A PAPER BOOK. A REQUEST WAS MADE TO THE BENCH BY THE PERSON PRESENT ON BEHALF OF THE ASSESSEE THAT THE APPEAL BE DISPOSED OFF BASED ON THE WRITTEN SUB MISSIONS AND THE PAPERS FILED. 3. THE ASSESSEE IS A HUF AND IS IN THE BUSINESS OF WHOLESALE DEALING IN CLOTH ITEMS. HE FILED ITS RETURN OF INCOME ON 20/08/2011, DECLARING TOTAL INCOME AT RS.8,25,828/ - . SUBSEQUENTLY, IT FILED A REVISED RETURN ON 22/08/2011 AND YET ANOTHER REVISED RETURN ON 21/ 1 2/2011. THE LAST REVISED RETURN FILED ON 2 1 / 12 /2011 , WAS PROCESSED U/S 1 4 3(1) OF THE ACT, 2 I.T.A. NO. 1182/KOL/2017 ASSESSMENT YEAR: 2010 - 11 SRI DILIP KUMAR SERAOGI HUF ON 01/02/2012. A SURVEY U/S 133A OF THE ACT, WAS CONDUCTED ON 15/03/2011, IN THE BUSINESS PREMISES OF THE ASSESSEE. DURING THE COURSE OF SURVEY, THE ASSESSING OFFICER ALLEGED THAT THE STOCK WHICH WAS PHYSICALLY FOUND , WAS VALUED AT COST PRICE , WHICH COMES TO RS.98,87,810 / - AND THAT AS PER THE ACCOUNTS OF THE ASSESSEE , AS ON 15/03/2011, THE CLOSING STOCK WAS RS.79,77,805/ - . HENCE, HE HELD THAT THERE WAS UNDER STATEMENT OF CLOSING STOCK TO THE TUNE OF RS.19,10,005/ - (RS.98,87,810 RS. 79,77,805) . A STATEMENT WAS RECORDED FROM SHRI DILIP KUMAR SERAOGI, KARTA OF THE HUF AND AS PER THE ASSESSING OFFICER HE ACCEPTED THE DISCREPANCY IN RE SPONSE TO THE QUESTION NO. 3. THE ASSESSING OFFICER RECORDS THAT HE ALSO EXPRESSED NO OBJECTION REGARDING STOCK TAKING DONE BY THE DEPARTMENT AND AGREED TO DISCLOSE THE EXCESS STOCK AS UNDISCLOSED INCOME. I T IS FOUND THAT IN RESPONSE TO SUMMONS U/S 131, THE ASSESSEE IN REPLY TO THE QUESTION NO. 3 & 4, STATED AS FOLLOWS: - Q.3. AS PER YOUR COMPUTERIZED ACCOUNTING SYSTEM GENERATED FINAL ACCOUNTS AS ON 15/03/2011, I.E. ON THE DATE OF SURVEY U/S.133A, THE CLOSING STOCK OF YOUR BU SINESS STOOD AT RS. 79,77,805/ - BUT, HOWEVER, FROM THE INVENTORY OF CLOSING STOCK TAKEN PHYSICALLY BY THE DEPARTMENTAL OFFICIALS, IT WAS VALUED AT COST PRICE AT RS.98,87,810/ - . THEREFORE, THERE WAS A CLEAR DISCREPANCY OF RS. 19,10,005/ - . PLEASE EXPLAIN ABO UT SUCH DISCREPANCY. ANS. YES, I ACCEPT THIS DISCREPANCY AS UNDERSTATEMENT OF CLOSING STOCK AND OFFER THE SAME FOR TAXATION. Q.4. DO YOU AGREE WITH THE METHOD APPLIED BY THE DEPARTMENTAL OFFICIALS FOR STOCK TAKING? ANS. YES, I AGREE. 3.1. AT THE TI ME OF FILING OF RETURN, THE ASSESSEE DID NOT OFFER THIS ALLEGED UNDISCLOSED STOCK AS INCOME. ON A QUERY MADE BY THE ASSESSING OFFICER, HE STATED AS FOLLOWS: - MOST RESPECTFULLY I WOULD LIKE TO INFORM YOU THAT I RECEIVED YOUR ABOVE LETTER ASKING FOR EXPLANATION REGARDING DIFFERENCE IN CLOSING STOCK. PLEASE NOTE THAT OUR ACCOUNTANT WAS OUT OF STATE AS ON THE DATE OF SURVEY (15/03/2011) AND BOOKS OF A CCOUNTS WERE INCOMPLETE AND THE SAME WAS INFORMED TO SURVEY PERSONS, AN D YOU HAVE TAKEN PRINTOUT ON THE DATE OF SURVEY ON AN ESTIMATE BASIS AS PER YOUR VALUATION OF RS. 79, 77,805/ - FROM MY SYSTEM. BUT THE C L OSIN G STOCK WAS ACTUALLY VALUED FOR RS. 98,07,259.75 AS PER TH E ENTRY ONE MY ACCOUNTANT , A F TER COM P LETION OF THE BOOKS OF ACCOUNTS AS ON THE DATE OF SURVEY. HENCE, VALUATION DONE BY YOUR SURVEY PERSONS ON THE DA TE OF SURVEY ON AN ESTIM A TE BA SIS F OR RS.98,87,810/ - SHOULD NOT BE RELIED UPON AND VALUATION SHOULD BE RELI ED ON ACTUAL FIGURES FOR RS.98,07,259.75. HOPE ABOVE EXPLANATION WILL SATISFY YOU. 3 I.T.A. NO. 1182/KOL/2017 ASSESSMENT YEAR: 2010 - 11 SRI DILIP KUMAR SERAOGI HUF 4. THE ASSESSEE SUBMITTED THE COPIES OF INVOICES, EVIDENCING PURCHASE OF MATERIAL AND EXPLAINED THE DIFFERENCES . THE ASSESSING OFFICER REJECTED THIS EXPLANATION OF THE AS SESSEE AND MADE THE ADDITION BASED ON THE STATEMENT GIVEN ON OATH BY THE ASSESSEE RECORDED U/S 131 OF THE ACT. AGGRIEVED THE ASSESSEE CARRIED THE MATTER IN APPEAL WITHOUT SUCCESS. 5. FURTHER AGGRIEVED, THE ASSESSEE IS BEFORE US. AS ALREADY STATED THE ASSE SSEE HAS FILED WRITTEN SUBMISSIONS BEFORE US. 6. THE LD. D/R SUBMITTED THAT THE ASSESSEE HAD AGREED TO THE PHYSICAL STOCK TAKING BY THE REVENUE OFFICIAL S AND HAS ALSO AGREED THAT THERE IS A VARIATION IN CLOSING STOCK FIGURES DURING THE COURSE OF SURVEY AND UNDER THOSE CIRCUMSTANCES IT IS WRONG ON PART OF THE ASSESSEE TO HAVE RETRACTED THE STATEMENT, WITHOUT ANY BASIS. REFERRING TO THE VARIOUS INVOICES AND RECONCILIATION STATEMENT FILED BY THE ASSESSEE, HE SUBMITTED THAT THE PAYMENTS FOR THESE INVOICES WERE MADE BY WAY OF A COMMON CHEQUE , AND THAT THESE INVOICES CANNOT BE RELIED UPON FOR THIS REASON . ON A QUERY FROM THE BENCH AS TO WHETHER AN ADDITION CAN BE MADE SIMPLY BASED ON A STATEMENT RECORDED DURING SURVEY , ESPECIALLY WHEN THE SAME IS RETRACTED , WITHOU T VERIFYING THE RECONCILIATION STATEMENT SUBMITTED BY THE ASSESSEE AND WITHOUT REBUTTING THE VARIOUS DOCUMENTS FILED BY THE ASSESSEE IN SUPPORT OF THE PURCHASES MADE ETC., THE LD. D/R, THOUGH NOT LEAVING HIS GROUND , SUBMITTED THAT IT WOULD HAVE BEEN BETTER IF THE ASSESSING OFFICER DEALT WITH THE CONTENTIONS OF THE ASSESSE E ON MERITS. NEVERTHELESS, HE ARGUED THAT PURCHASES HAVE BEEN MADE PRE - DOMINANTLY FROM ONE FIRM SARADA SAREE CREATIONS, WHICH HAS HUGE OUTSTA NDING PAYABLE FROM THE ASSESSEE AND HENCE THESE PURCHASES ARE DOUBTFUL AND HENCE THE RECONCILIATION SUBMITTED BY THE ASSESSEE IS TO BE REJECTED. 6.1. IN MY VIEW, IT IS WELL SETTLED THAT ADDITION CANNOT BE MADE MEREL Y BASED ON A STATEMENT RECORDED AND WITHOUT ANY CORROBORATING EVIDENCE SPECIFICALLY WHEN THE STATEMENT IS RETRACTED. ADMITTEDLY, THERE WERE NO UP TO DATE BOOKS OF ACCOUNTS FOUND DURING THE COURSE OF SURVEY. THE BOOKS OF ACCOUNT WERE INCOMPLETE. WHILE SO, WE DO NOT UNDERSTAND AS TO HOW THE ASSESSING OFFICER ARRIVED AT THE BOOK VALUE OF THE STOC K WHEN THE BOOK S OF ACCOUNT ITSELF ARE INCOMPLETE. THE CBDT HAS ISSUED CIRCULARS DIRECTING THE ASSESSING OFFICERS TO MAKE ADDITIONS BASED ON 4 I.T.A. NO. 1182/KOL/2017 ASSESSMENT YEAR: 2010 - 11 SRI DILIP KUMAR SERAOGI HUF EVIDENCES FOUND DURING THE COURSE OF SEARCH AND SURVEYS , AND NOT BASED ON STATEMENTS . THIS HAS NOT BEEN DONE IN THI S CASE. 6.2. I AM CONVINCED THAT THE EXPLANATION GIVEN BY THE ASSESSEE . THE RECONCILIATION STATEMENT OF STOCK GIVEN BY THE ASSESSEE HAS NOT BEEN REJECTED OR ADVERSELY VIEWED BY THE ASSESSING OFFICER. THE LD. D/R CANNOT MAKE OUT A NEW CONE AND HAS TO ONLY SUPPORT THE FINDING OF THE ASSESSING OFFICER T HE BOOKS OF THE ASSESSEE HAVE BEEN AUDITED, AND BASED ON THESE AUDITED BOOKS, THERE IS NOT DIFFERENCE IN STOCK VALUATION ON THE DATE OF SURVEY. HENCE I DELETE THE ADDITION MADE ON ACCOUNT OF UNDISCLOSED STOCK AND ALLOW GROUND NO. 1 OF THE ASSESSEE. 7. GROUND NO. 2, IS AGAINST THE ADDITION OF RS.56,042/ - , ON ACCOUNT OF DIFFERENCE IN SUNDRY DEBTORS. 7.1. THE ASSESSEE SUBMITTED A RECONCILIATION STATEMENT WHERE IT IS EXPLAINED THAT THERE WERE GOODS RETURNED IN THE CASE OF THESE PARTIES , THE DIFFERENCE IN ACCOUNT BALANCES WERE EXPLAINED . THE ASSESSING OFFICER SHOULD HAVE EXAMINED THESE STATEMENTS WITH EVIDENCES. ADDITION CANNOT BE MADE WITHOUT SUCH EXAMINATION OR FINDING CONTRARY EVIDENCES. MERE REJECTION OF EXPLANA TION CANNOT BE COUNTENANCED . ACCORDINGLY, I DELETE THIS ADDITION AND ALLOW THIS GROUND OF THE ASSESSEE. 8. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWED. KOLKATA, THE 9 TH DAY OF MARCH , 201 8 . SD/ - [ J. SUDHAKAR REDDY ] ACCOUNTANT MEMBER DATED : 09 . 0 3 .201 8 {SC SPS} 5 I.T.A. NO. 1182/KOL/2017 ASSESSMENT YEAR: 2010 - 11 SRI DILIP KUMAR SERAOGI HUF C OPY OF THE ORDER FORWARDED TO: 1. SRI DILIP KUMAR SERAOGI HUF 134, SALKIA SCHOOL ROAD SUKHI SANSOR, BLOCK - E FLAT NO. 218, SALKIA HOWRAH 711 106 2. INCOME TAX OFFICER, WARD NO. - 48(4), KOLKATA 3, GOVERNMENT PLACE (W) KOLKATA 700 001 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