The ITO, Ward-1(2), Vijayawada V. Sri Ch Damodara Rao (Indl), Vijayawada

ITA 196/VIZ/2005

• Counselvise Citation: [2010] 136 COUNSELVISE.COM (IT) 0673 (ITAT-VISAKHAPATNAM)
• Duration Of Justice: 5 year(s) 2 month(s) 17 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 24-06-2010
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: DB
• Next Hearing Date: 29-04-2010
• Assessment Year: 2001-2002
• Appeal Filed On: 06-04-2005
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: G S S GOPINATH
• Keywords: Set aside

Judgement Text

1 IN THE INCOME TAX APPELLATE TRIBUNAL VISAKHAPATNAM BENCH: VISAKHAPATNAM BEFORE: SRI SUNIL KUMAR YADAV, JUDICIAL MEMBER AND SRI B.R. BASKARAN, ACCOUNTANT MEMBER I.T.A. NO.192/VIZAG/2005 ASSESSMENT YEAR : 2001-02 ITO WARD-1(2) VIJAYAWADA VS. SRI CHINTALAPUDI DAMODARA RAO(HUF) PROP: DIVYA SILKS, VIJAYAWADA (APPELLANT) (RESPONDENT) GIR NO.C-214 I.T.A. NO.196/VIZAG/2005 ASSESSMENT YEAR : 2001-02 SRI CHINTALAPUDI DAMODARA RAO, PROP. DIVYA TEXTILES, VIJAYAWAD A VS. ITO WARD-1(2) VIJAYAWADA (APPELLANT) (RESPONDENT) GIR NO.D-765 APPELLANT BY : SHRI G.S.S. GOPINATH, DR RESPONDENT BY : SHRI C. SUBRAHMANYAM, CA O R D E R PER SHRI B.R. BASKARAN, ACCOUNTANT MEMBER : THESE TWO APPEALS FILED BY THE REVENUE ARE DIRECTE D AGAINST THE ORDERS PASSED BY LD CIT(A), VIJAYAWADA AND THEY RELATE TO THE ASSESSMENT YEAR 2001- 02. SINCE THE ISSUES AGITATED IN BOTH THE APPEALS ARE INTERCONNECTED, THEY WERE HEARD TOGETHER AND ARE BEING DISPOSED OF BY THIS CO MMON ORDER. 2. THE ASSESSEE IS CARRYING ON TEXTILE BUSINESS NAMED DIVYA TEXTILES IN HIS INDIVIDUAL CAPACITY. ANOTHER SHOP NAMED DIVYA SILKS IS RUN IN THE STATUS OF HUF BY THE SAME ASSESSEE. THE SHOP NAMED DIVYA SI LKS WAS OPENED IN AUGUST 2000. BOTH THE SHOPS ARE LOCATED NEARBY. THE DEPA RTMENT CARRIED OUT A SURVEY OPERATION ON 4.1.2001 IN BOTH THE SHOPS. IN THE CA SE OF DIVYA TEXTILES THE 2 STOCK WAS FOUND TO BE IN DEFICIT TO THE TUNE OF RS. 17.42 LAKHS WHICH WAS REVISED LATER TO RS.18.05 LAKHS. HOWEVER, IN THE CASE OF DIVYA SILKS, THE STOCK WAS FOUND TO BE IN EXCESS BY RS.16.26 LAKHS. THE AO AD DED THE VALUE OF EXCESS STOCK FOUND IN THE CASE OF DIVYA SILKS IN THE HAN DS OF CH.DAMODARA RAO (HUF). SIMILARLY IN THE HANDS OF CH. DAMADARA RAO (INDIVID UAL), THE PROPRIETOR OF M/S DIVYA TEXTILES, THE DEFICIT STOCK OF RS.18.05 WAS T REATED AS SALES OUTSIDE THE BOOKS AND ACCORDINGLY THE AO ADDED THE SAME TO THE TOTAL INCOME. THE LD CIT(A) DELETED THE ADDITION MADE IN THE HANDS OF BO TH THE ASSESSEES AND HENCE THE REVENUE IS IN APPEAL BEFORE US ASSAILING HIS DE CISION IN BOTH THE CASES. 3. THE LD DR INVITED OUR ATTENTION TO THE STATEMEN T RECORDED ON 12.1.2001, I.E. EIGHT DAYS AFTER THE DATE OF SURVEY, WHEREIN THE AS SESSEE HAD STATED THAT THE REASONS FOR THE DIFFERENCE IN THE STOCKS IS NOT EXP LAINABLE. ACCORDINGLY THE LD DR VEHEMENTLY CONTENDED THAT THE CLAIM OF ALLEGED TRAN SFER OF STOCK BETWEEN BOTH THE SHOPS IS AN AFTER THOUGHT AND THE CLAIM CAN NOT BE ADMITTED WITHOUT MAKING DUE VERIFICATION, PARTICULARLY IN VIEW OF THE FACT THAT BOTH THE ASSESSEES ARE NOT MAINTAINING ANY STOCK REGISTER. ON THE CONTRARY, T HE LD AR SUBMITTED THAT THE CONCERN NAMED DIVYA SILKS IS SELLING ONLY PURE SI LK SAREES WHOSE SELLING PRICE IS VERY MUCH HIGHER THAN THE WITH SYNTHETIC SILK SAREE S, WHICH ARE SOLD IN THE SHOP NAMED DIVYA TEXTILES. LD AR INVITED OUR ATTENTIO N TO PAGES 59 TO 63 OF THE ASSESSEES PAPER BOOK AND SUBMITTED THAT THE TRANSF ER OF STOCK BETWEEN BOTH THE SHOPS ARE PROVED BY THE INSTANCES OF SALE OF LOW CO ST SYNTHETIC SAREES IN THE SHOP NAMED DIVYA SILKS. 4. WE HAVE HEARD THE PARTIES AND CAREFULLY PERUS ED THE RECORD. THE FACT REMAINS THAT BOTH THE ASSESSEES DID NOT MAINTAIN ST OCK REGISTER. BOTH THE ASSESSEES ARE NOT FOLLOWING ANY OTHER SYSTEM FOR SY STEMATIC TRANSFER OF SAREES FROM DIVYA TEXTILES TO DIVYA SILKS. THOUGH THE ASS ESSEE HAS PLACED A COMPILATION OF SALES INSTANCES OF LOW COST ITEMS IN DIVYA SILK S, IT IS NOT KNOWN WHERE THE CORRESPONDING PURCHASES HAVE BEEN ACCOUNTED FOR. I T IS ALSO PERTINENT TO NOTE THAT THE ASSESSEE, IN HIS STATEMENT RECORDED AFTER EIGHT DAYS FROM THE DATE OF SEARCH, COULD NOT EXPLAIN THE REASONS FOR THE DEFIC IT/EXCESS STOCK. AT THE SAME TIME, IN VIEW OF THE EVIDENCES FOUND WITH REGARD TO SALE OF LOW COST ITEMS IN 3 DIVYA SILKS, THE POSSIBILITY OF TRANSFERRING THE STOCK FROM DIVYA TEXTILES TO DIVYA SILKS IN ORDER TO ACCOMMODATE THE CUSTOMER, CANNOT BE RULED OUT. HOWEVER, IT IS THE RESPONSIBILITY OF THE ASSESSEE T O PROVE HIS CLAIM. WE NOTICE THAT THE LD CIT(A) HAS GONE BY THE PROBABILITIES TO GIVE RELIEF, WHICH IN OUR OPINION IS NOT APPROPRIATE. IN OUR OPINION, WHOLE ISSUE NEEDS REEXAMINATION ON THE BASIS OF AVAILABLE RECORDS. ACCORDINGLY WE SET ASIDE THE ORDERS OF LD CIT(A) IN BOTH THE CASES AND RESTORE THE ISSUES BACK TO TH E FILE OF THE AO IN BOTH THE CASES WITH A DIRECTION TO EXAMINE THE ISSUE AFRESH AFTER CONSIDERING THE EXPLANATIONS OF THE ASSESSEE SUCH AS TRANSFER OF ST OCK ETC. AND ADJUDICATE THE ISSUE IN ACCORDANCE WITH LAW. 5. IN THE RESULT, BOTH THE APPEALS FILED BY THE REVENUE ARE TREATED AS ALLOWED FOR STATISTICAL PURPOSES. PRONOUNCED ACCORDINGLY ON 24 TH JUNE, 2010. SD/- SD/- (SUNIL KUMAR YADAV) (B.R. BASKARAN) JUDICIAL MEMBER ACCOUNTANT MEMBER PVV/SPS VISAKHAPATNAM DATE : 24-06-2010 A COPY OF THIS ORDER IS FORWARDED TO : 01 ITO, WARD-1(2), CENTRAL REVENUES BUILDING, M.G. ROAD, VIJAYAWADA 02 SRI CHINTALAPUDI DAMODARA RAO (HUF), PROP. DIVYA SILKS, SHOP NO.174 & 175, VASTRALATHA, VIJAYAWADA 03 SRI CHINTALAPUDI DAMODARA RAO (INDL), PROP: DIVY A TEXTILES, SHOP NO.124A, VASTRALATHA, VIJAYAWADA 0 4 THE CIT (A), VIJAYAWADA 05 THE CIT, VIJAYAWADA 06 THE DR, ITAT, VISAKHAPAATNAM 07 GUARD FILE. BY ORDER SENIOR PRIVATE SECRETARY INCOME TAX APPELLATE TRIBUNAL VISAKHAPATNAM BENCH