SHRI BASANT R. CHHEDA, V. THE DEPUTY CIT, CIRCLE -1,

ITA 1964/AHD/2003

• Counselvise Citation: [2010] 136 COUNSELVISE.COM (IT) 8837 (ITAT-AHMEDABAD)
• Duration Of Justice: 6 year(s) 9 month(s) 30 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 05-03-2010
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 03-03-2010
• Assessment Year: 1998-1999
• Appeal Filed On: 06-05-2003
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: V C MODI
• Keywords: Difference of opinion; Condonation of delay; Change of opinion
• Section: 133A; 205; 69; 6

Judgement Text

- 1 - IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD BENCH B AHMEDABAD BEFORE S/SHRI MAHAVIR SINGH, JM AND D.C.AGRAWAL, AM SHRI VASANT R. CHHEDA, BEENA PARK APARTMENT, OPP. YASH KAMAL, TITHAL ROAD, VALSAD- 396001. V/S . DEPUTY COMMISSIONER OF INCOME-TAX, CIRCLE-1, VALSAD. (APPELLANT) .. (RESPONDENT) APPELLANT BY :- SMT. URVASHI SHODHAN, AR RESPONDENT BY:- SHRI V.C. MODI, ADDL.CIT, DR O R D E R PER D.C.AGRAWAL, ACCOUNTANT MEMBER. THESE ARE APPEALS FILED BY THE ASSESSEE AGAINST TW O DIFFERENT ORDERS OF CIT(A) FOR ASST. YEAR 1998-99. ITA NO.1964/AHD/2003 ASST. YEAR 1998-99 2. THIS APPEAL IS DELAYED BY 16 DAYS. AN APPLICATIO N FOR CONDONATION OF DELAY HAS BEEN FILED. IT WAS EXPLAINED THAT SHRI VASANT R. CHHEDA WAS SICK AND COULD NOT ATTEND THE ITA MATTERS. A MEDICA L CERTIFICATE HAS BEEN FILED. ITA NO.1964/AHD/2003 ITA NO.2352/AHD/2006 ASST. YEAR :1998-99 2 3. AFTER HEARING THE LD. DR WE CONDONE THE DELAY AN D ADMIT THE APPEAL FOR ADJUDICATION. FOLLOWING GROUND HAS BEEN RAISED IN THIS APPEAL:- 1. THE ADDITION U/S 69 FOR RS.3,02,002/- MAY BE DEL ETED. THE LD. VIT(A) ERRED IN CONFIRMING THE ADDITIONS M ADE BY THE LD. DCIT, CIRCLE-1, VALSAD FOR RS.3,02,002/- U/S 69 OF THE I.T. ACT, 1961 CONSIDERING THE SAME AS AN UNACCOUNTED EXCESS STOCK WITHOUT APPRECIATING (I) THE FACTS PLACES, (II) THE DETAILE D EXPLANATION FURNISHED AND (III) THE RECONCILIATION OF STOCK SUB MITTED BY THE APPELLANT. 4. THE FACTS OF THE CASE ARE THAT THE ASSESSEE IS A PROPRIETOR OF M/S JUPITER ENTERPRISES. IT IS MANUFACTURING VARIOUS KI NDS OF ELECTRICAL ITEMS. IT IS ALSO RUNNING ANOTHER PROPRIETOR CONCERN BY TH E NAME M/S RONAK PLASTICS WHERE CERTAIN PLASTIC ITEMS ARE MANUFACTUR ED. A SURVEY UNDER SECTION 133A WAS CARRIED OUT ON 9.1.1998 AT THE BUS INESS PREMISES OF M/S JUPITER ENTERPRISES. DURING THE COURSE OF SURVEY ST OCK INVENTORY OF RAW MATERIAL AND FINISHED GOODS WAS DRAWN. TOTAL PHYSIC AL STOCK WAS WORKED OUT AT RS.91,56,272/-. STOCK AS PER BOOKS WAS DETER MINED AT RS.55,48,702/-. THE AO ALLOWED MARGIN OF STOCK OF M /S PILOT PLASTICS FOR RS.12,51,307/-. ACCORDINGLY EXCESS STOCK WAS WORKED OUT AT RS.23,56,263/- AS UNDER :- STOCK AS PER INVENTORY RS.91,56,272/- LESS: STOCK OF M/S PILOT PLASTICS RS.12,51,307/- RS.79,04,965/- LESS: STOCK AS PER BOOKS RS.55,48,702/- EXCESS STOCK RS.23,56,263/- THE ASSESSEE SUPPORTED THE CLAIM OF GOODS RECEIVED FROM M/S PILOT PLASTICS BY FOLLOWING BILLS :- BILL NO. & DATE DESCRIPTION OF GOODS AMOUNT (RS.) RM.1 5.9.97 BRASS PARTS ETC. 7,22,324/- 3 EF.1 5.9.97 ELECTRICAL FITTING PARTS 5,34,447/- TOTAL 12,56,771/- THE AO ALSO ACCEPTED THE CONTENTIONS OF THE ASSESSE E THAT IT HAS RECEIVED RAW MATERIAL PRIOR TO THE DATE OF SURVEY BUT BILLS WERE NOT RECEIVED WHOSE TOTAL VALUE WAS RS.23,73,594/-. BUT LATER DURING TH E COURSE OF ASSESSMENT PROCEEDINGS AO ACCEPTED ALL THE CONTENTIONS OF THE ASSESSEE EXCEPT THE VALUE OF THE GOODS RECEIVED FROM M/S PILOT PLASTICS . ACCORDING TO HIM THE VALUE OF GOODS FROM M/S PILOT PLASTICS IS ONLY RS.9 ,31,974/- AS UNDER :- BILL NO. & DATE DESCRIPTION OF GOODS AMOUNT (RS.) RM.1 5.9.97 INNER/OUTER 3,66,972/- RM.2 5.9.97 BRASS PARTS 3,90,954/- RM.3 5.9.97 LABEL STICKER 36,165/- RM.4 5.9.97 ELECTRICAL FITTING PARTS 1,37,883/- TOTAL 9,31,974/- HE ACCORDINGLY DETERMINED EXCESS STOCK AT RS.3,02,0 02/- AS UNDER :- STOCK AS PER INVENTORY RS.91,56,272/- LESS: STOCK OF M/S PILOT PLASTICS 9,31,974/- RS.82,24,298/- LESS: STOCK AS PER BOOKS OF ACCOUNTS RS.55,48,702/- RS.26,75,596/- LESS: RAW MATERIAL RECEIVED PRIOR TO SURVEY BUT NOT ACCOUNTED FOR FROM 13 PARTIES AS DISCUSSED ABOVE RS.23,73,594/- EXCESS STOCK RS.3,02,002/- 4 REJECTING THE EXPLANATION OF THE ASSESSEE AO MADE T HE ADDITION OF RS.3,02,002/- WHICH WAS ALSO CONFIRMED BY LD. CIT(A ). 5. WE HAVE HEARD THE PARTIES. IN OUR CONSIDERED VIE W THERE IS NO CASE FOR ANY ADDITION. THE AO ACCEPTED IN PRINCIPLE THAT ASSESSEE HAS RECEIVED GOODS FROM M/S PILOT PLASTICS WHOSE VALUE WAS ORIGI NALLY TAKEN AT RS.12,56,771/- BUT IT WAS LATER THAT ITS VALUE WAS TAKEN AT RS.9,31,974/- WHICH WAS FINALLY ADDED BY THE AO. ONCE THERE IS N O CHANGE IN QUANTITIES OF STOCK WHICH IS ACCEPTED IN PRINCIPLE TO HAVE BEEN RECEIVED FROM M/S PILOT PLASTICS THEN NO ADDITION ON THAT AC COUNT CAN BE MADE. IT IS BECAUSE WHILE WORKING OUT PHYSICAL STOCK VALUED AT RS.91,56,272/- AO MUST HAVE ADOPTED CERTAIN VALUE OF GOODS RECEIVED F ROM M/S PILOT PLASTICS AND APPARENTLY THAT VALUE WAS RS.12,56,771 /- WHICH WAS LATER REDUCED. IT WAS ONLY SUBSEQUENTLY THAT AO CHANGED V ALUATION OF RS.9,31,974/-. IF IT IS SO THEN WHICH COMPUTING VAL UE OF PHYSICAL STOCK THE AO SHOULD TAKE THE SAME REDUCED VALUE. THE VARIATIO N WAS EXPLAINED BY THE ASSESSEE THAT IT HAD BARGAINED WITH THE PARTY T O GIVE DISCOUNT. THE AO OUGHT TO HAVE CONSIDERED THAT IN THE ORIGINAL COMPU TATION OF PHYSICAL STOCK THE VALUE ADOPTED WAS UNDISCOUNTED WHEREAS SU BSEQUENTLY HE HAS TAKEN DISCOUNTED VALUE FOR GIVING REDUCTION FOR THE SAME STOCK. THEREFORE, WHEN THERE BEING NO CHANGE IN QUANTITY AS TAKEN IN THE PHYSICAL STOCK AND AS REDUCED SUBSEQUENTLY BY ACCEPTING THE EXPLANATIO N OF THE ASSESSEE, NO ADDITION ON THAT ACCOUNT CAN BE MADE. THIS GROUND O F THE APPEAL IS ALLOWED. ITA NO.2352/AHD/2006 ASST. YEAR 1998-99 6. THIS APPEAL HAS BEEN FILED BY THE ASSESSEE AGAIN ST THE ORDER OF LD. CIT(A) WHEREIN HE HAS CONFIRMED THE REOPENING OF TH E ASSESSMENT. 5 7. THE FACTS OF THE CASE ARE SIMILAR TO THE FACTS N ARRATED IN ITA NO.1964/AHD/2003 ABOVE. AS A RESULT OF SURVEY CERTA IN STOCK DIFFERENCE WAS FOUND WHICH WAS WORKED OUT BY THE AO ORIGINALLY AT RS.23,56,263/-. HE ACCEPTED EXPLANATION THAT ASSESSEE HAD RAW MATER IAL RECEIVED PRIOR TO DATE OF SURVEY FOR A SUM OF RS.23,73,594/- AND ACCO RDINGLY GAVE MARGIN TO THIS SUM. HE ALSO ACCEPTED EXPLANATION OF THE AS SESSEE THAT IT HAS RECEIVED GOODS FROM M/S PILOT PLASTICS WHOSE VALUE WAS ORIGINALLY TAKEN AT RS.12,56,771/- WHICH WAS LATER CHANGED TO RS.9,3 1,974/-. HE HAD ACCORDINGLY REDUCED THAT SUM FROM THE DIFFERENCE BE TWEEN THE STOCK PHYSICALLY FOUND AND STOCK AS PER BOOKS WHOSE CALCU LATION ARE GIVEN IN ITA NO.1964/AHD/2003. 8. THE AO SUBSEQUENTLY ON 28.2.2005 I.E. AFTER EXPI RY OF 4 YEARS FROM THE END OF THE ASST. YEAR RESORTED TO TAX SUM OF RS .9,31,974/- ON THE GROUND THAT ALL THE DETAILS RELATING TO THE DISCOUN TED STOCK CLAIMED TO BE RECEIVED FROM M/S PILOT PLASTICS WERE NOT FURNISHED . AFTER GIVING OPPORTUNITY TO THE ASSESSEE THE AO MADE THE ADDITIO N OF RS.9,31,974/- BEING THE GOODS RECEIVED FROM M/S PILOT PLASTICS WH OSE DISCOUNT WAS GIVEN IN THE ORIGINAL ASSESSMENT ORDER. LD. CIT(A) CONFIRMED THE REOPENING. 9. BEFORE US, LD. AR FOR THE ASSESSEE SUBMITTED THA T IT IS MERELY A CASE OF CHANGE OF OPINION AND NOT A CASE OF NON-DISCLOSU RE OF MATERIAL FACT BY THE ASSESSEE. ALL THE BILLS WERE ORIGINALLY SUBMITT ED TO THE AO WHO HAD CHANGED THE VALUE FROM RS.12,56,771/- TO RS.9,31,97 4/-. HE HAD DULY VERIFIED THE BILLS AND THE STOCK AND HAD ACCORDINGL Y ALLOWED DISCOUNT FROM THE EXCESS STOCK WORKED OUT ON THE BASIS OF SU RVEY. 6 10. LD. DR ON THE OTHER HAND SUPPORTED THE ORDERS O F AUTHORITIES BELOW. 11. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND PE RUSED THE MATERIAL ON RECORD. IN OUR CONSIDERED VIEW THERE IS NO JUSTI FICATION FOR REOPENING OF THE ASSESSMENT. IT IS BECAUSE ALL THE FACTS ARE AVAILABLE ON THE RECORD. THERE IS NO ALLEGATION AS TO WHAT ASSESSEE HAS NOT DISCLOSED. THE AO HAD ALREADY APPLIED HIS MIND DURING THE ORIGINAL ASSESS MENT PROCEEDINGS. HE HAD ORIGINALLY TAKEN THE VALUE AT RS.12,56,771/- AS HAVING BEEN RECEIVED FROM M/S PILOT PLASTICS BUT LATER CHANGED TO RS.9,3 1,974/- AND HENCE HE HAD CONSIDERED THE DETAILS AND CAME TO THE CONCLUSI ON THAT M/S PILOT PLASTICS HAD SENT GOODS WORTH RS.9,31,974/-. WHAT T HE AO NOW AFTER FOUR YEARS DOING IS ONLY CHANGE OF OPINION ON THE SAME S ET OF FACTS. ONCE THERE IS NO ALLEGATION THAT THERE IS ANY OMISSION OR FAIL URE ON THE PART OF THE ASSESSEE TO DISCLOSE ANY MATERIAL FACT NECESSARY FO R THE ASSESSMENT WHICH WAS ORIGINALLY DISCLOSED BY THE ASSESSEE, THEN REOP ENING AFTER FOUR YEARS CANNOT BE JUSTIFIED. OUR VIEW IS SUPPORTED BY FOLLO WING DECISIONS:- (1) M/S BHAVESH DEVELOPERS, MANSAROVAR BUILDING, KA NDIVELI, MUMBAI VS. CIT WRIT PETITION NO.2508 OF 2009 PRONO UNCED ON 12 TH JANUARY, 2010, BOMBAY HIGH COURT. (2) CIT VS. JAY MICA SUPPLY CO. (P) LTD. (1994) 205 ITR 387 (CAL) (3) ITO VS. LAKHMANI MEWALDAS (1976) 103 ITR 437 (S C) (4) DHANRAJ SINGH AND CO. VS. CIT (1996) 218 ITR 3 12 (PATNA) (5) CIT VS. CHANDBALL RICE MILL (P) LTD. (1993) 203 ITR 368 (CAL) 7 12. IN THE RESULT, APPEALS FILED BY THE ASSESSEE AR E ALLOWED. SD/- SD/- (MAHAVIR SINGH) (D.C.AGRAWAL) JUDICIAL MEMBER ACCOUNTANT MEMBER AHMEDABAD, DATED : 5/2/2010 MAHATA/- COPY OF THE ORDER FORWARDED TO :- 1. THE APPELLANT. 2. THE RESPONDENT. 3. THE CIT(APPEALS)- 4. THE CIT CONCERNS. 5. THE DR, ITAT, AHMEDABAD 6. GUARD FILE. BY ORDER, DEPUTY / ASSTT.REGISTRAR ITAT, AHMEDABAD ORDER PRONOUNCED IN OPEN COURT ON 5/3/2010