ITO, New Delhi V. Sh. Rajinder Prasad Gupta, New Delhi

ITA 1998/DEL/2012

• Counselvise Citation: 199820114 RSA 2012
• Duration Of Justice: 1 year(s) 11 month(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 11-04-2014
• Appeal Filed By: Department
• Order Result: Partly Allowed
• Bench Allotted: F
• Next Hearing Date: 09-10-2013
• Assessment Year: 2008-2009
• Appeal Filed On: 30-04-2012
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: SAMEER SHARMA

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH F: NEW DELHI BEFORE SHRI S.V. MEHROTRA, ACCOUNTANT MEMBER AND SHRI A.D. JAIN, JUDICIAL MEMBER ITA NO. 1998/DEL/2012 ASSESSMENT YEAR: 2008-09 ITO, WARD 29(4), DRUM SHAPED BLDG., 1, NEW DELHI. VS. RAJINDER PRASAD GUPTA, 1054, 1 ST FLOOR, KASTURI MARKET, KUCHA NATWA, CHANDNI CHOWK, NEW DELHI. AAFPG4699E (APPELLANT) (RESPONDENT) APPELLANT BY: SH. SAMEER SHARMA, DR RESPONDENT BY: SH. SURESH KUMAR GUPTA, CA O R D E R PER S.V. MEHROTRA, A.M. THIS APPEAL FILED BY THE REVENUE IS DIRECTED AGAIN ST THE ORDER OF LD. CIT(A)-XXV, NEW DELHI, DATED 24/02/2012 FOR A.Y. 20 08-09. 2. THE ASSESSEE HAD FILED HIS RETURN OF INCOME DECL ARING INCOME OF RS. 2,40,660/-. THE ASSESSEE, IN THE RELEVANT ASSESSME NT YEAR, CARRIED ON THE BUSINESS AS PROPRIETOR OF THE CONCERN, M/S VANDANA TEXTILES WHICH WAS ENGAGED IN THE BUSINESS OF WHOLESALE CLOTH MERCHANT AS IN EARLIER YEARS. THE AO NOTICED THAT THE ASSESSEES SALE FOR THE MON TH OF AUGUST, 2007 WAS RS. 46,05,342/-, WHEREAS THE STOCK, AS PER DETAILS SUBMITTED BY THE ASSESSEE WAS RS. 39,20,694/- THEREBY SHOWING A MINU S FIGURE OF RS. ITA NO. 1998/D/2012 2 6,84,648/- IN STOCK. THE AO CONCLUDED THAT THE DIF FERENCE IN SALES WAS MADE BY THE ASSESSEE OUT OF BOOKS AND, THEREFORE, A DDED THE SAME TO ASSESSEES TOTAL INCOME. FURTHER HE NOTICED THAT A SSESSEE HAD TAKEN UNSECURED LOAN OF RS. 5 LAKH FROM SMT. ANITA JINDAL . FROM THE BANK STATEMENT OF SMT. ANITA JINDAL FILED BY THE ASSESSE E, THE AO NOTED THAT THE ASSESSEE HAD RECEIVED A SUM ONLY ON 10/04/2008 WHIC H DID NOT PERTAIN TO THE YEAR UNDER ASSESSMENT, WHEREAS THE LOAN HAD BEE N SHOWN OUTSTANDING AS ON 31/03/2008. THEREFORE, HE MADE AN ADDITION O F RS. 5 LAKH ALSO TO THE TOTAL INCOME OF THE ASSESSEE. LD. CIT(A) DELETED B OTH THE ADDITIONS. 3. BEING AGGRIEVED WITH THE ORDER OF LD. CIT(A), TH E DEPARTMENT IS IN APPEAL BEFORE US AND HAS TAKEN FOLLOWING GROUNDS OF APPEAL: 1. ON THE FACTS AND IN CIRCUMSTANCES OF THE CASE, TH E LD. CIT(A)-XXV, NEW DELHI HAS ERRED IN DELETING THE ADDITION OF RS. 6,8 4,648/- MADE BY AO ON ACCOUNT OF NEGATIVE STOCK BY ACCEPTING FRESH EVIDEN CE IN VIOLATION OF RULE 46A. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE T HE LD. CIT(A)XXV HAS ERRED IN ACCEPTING THE FRESH EVIDENCE AND THEREBY DELETED THE ADDITION OF RS. 5 LAKH MADE BY THE AO ON ACCOUNT OF UNEXPLAINED LOAN. 4. APROPOS THE ADDITION OF RS. 6,84,648/-, IT WAS S UBMITTED BEFORE LD. CIT(A) THAT ASSESSEE HAD NEVER SUBMITTED ANY DETAIL OF THE STOCK TO THE AO AND IT WAS NOT KNOWN AS TO HOW THE AO HAD WORKED TH E VALUE OF THE STOCK. IT WAS FURTHER SUBMITTED THAT ASSESSEE HAD RECEIVED TH E MATERIALS AS PER CHALLAN AND THE SAME WERE ENTERED IN THE STOCK REGI STER AND THE BILLS WERE RECEIVED AFTERWARDS AND THE SAME WERE ACCOUNTED FOR SUBSEQUENTLY. IT WAS ITA NO. 1998/D/2012 3 FURTHER SUBMITTED THAT THE AO HAD NOT CONSIDERED TH E JOB WORK CHARGES WHICH WERE DIRECT EXPENSES FOR THE PURPOSE OF PURCHASES W HEN WORKING OUT THE CLOSING STOCK. THUS, IT WAS SUBMITTED THAT AO HAD ESTIMATED THE CLOSING STOCK ON THE BASIS OF PURCHASES AND SALES FIGURES A ND AFTER WORKING OUT THE GP AND MADE ESTIMATED ADDITION. IT WAS FURTHER POI NTED OUT THAT THE BUSINESS OF THE ASSESSEE HAD BEEN CLOSED AFTER AUGU ST, 2008. 5. LD. CIT(A) DELETED THE ADDITION, INTER-ALIA, OBS ERVING THAT AO HAD NOT RECORDED ANY FACTUAL FINDING OF PURCHASE, SALE OR C LOSING STOCK TO WORK OUT THE NEGATIVE STOCK. 5.1 IN THE GROUND OF APPEAL, THE DEPARTMENT HAS TA KEN A PLEA THAT LD. CIT(A) HAD ACCEPTED FRESH EVIDENCE IN VIOLATION OF RULE 46A. 6. LD. SR. DR HAS FILED BEFORE US THE COMMENTS OBTA INED FROM ITO, WARD IV, NEW DELHI DATED 4 TH OCTOBER, 2013, IN WHICH AO HAS POINTED OUT THAT BEFORE THE CIT(A) ASSESSEE HAD SUBMITTED THAT HE HA D RECEIVED THE MATERIALS AS PER CHALLAN AND THE SAME WERE ENTERED IN THE STOCK REGISTER AND THE BILLS WERE RECEIVED AFTERWARDS AND THE SAME WER E ACCOUNTED FOR SUBSEQUENTLY. THIS SUBMISSION WAS NEVER MADE BY TH E ASSESSEE BEFORE THE AO. THE AO HAS ALSO POINTED OUT FROM THE AUDITORS REPORT WHO HAS CERTIFIED AS UNDER: WE WERE INFORMED THAT THE NATURE OF BUSINESS OF THE ASSESSEE IS SUCH I.E. IMPRACTICABLE TO MAINTAIN A STOCK RECORDS IN VIEW O F THE VERY LARGE NUMBER OF ITEMS TRADED. ITA NO. 1998/D/2012 4 7. THE AO, THEREFORE, HAS POINTED OUT THAT THE SUBM ISSION OF THE ASSESSEE BEFORE THE LD. CIT(A) THAT THE STOCKS WERE ENTERED IN THE STOCK REGISTER AFTER RECEIPT OF CHALLANS WAS BASELESS AND AFTERTHOUGHT. 8. LD. COUNSEL POINTED OUT THAT NO FRESH EVIDENCE W AS FILED BEFORE LD. CIT(A) AND ONLY MODUS OPERANDI REGARDING ENTRIES MA DE IN THE STOCK REGISTER WAS EXPLAINED. 8.1 WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND HA VE PERUSED THE RECORD OF THE CASE. 9. ADMITTEDLY, NO SPECIFIC CHALLANS/BILLS WERE FILE D BEFORE LD. CIT(A) AND ONLY ASSESSEE HAD EXPLAINED THE MODUS OPERANDI OF M AKING ENTRIES IN THE STOCK REGISTER AND ALSO OF MAKING PAYMENTS SUBSEQUE NTLY. 10. LD. CIT(A) HAS DELETED THE ADDITION AS AO HAD N OT CARRIED OUT THE COMPUTATION OF STOCK WITH REFERENCE TO PURCHASE, SA LE AND CLOSING STOCK TO WORK OUT THE NEGATIVE STOCK. THE AO HAD MERELY CAL CULATED THE NEGATIVE STOCK ON THE BASIS OF STOCK AND SALES FOR THE MONTH OF AUGUST, 2007. THE ASSESSEES EXPLANATION WAS QUITE PLAUSIBLE INASMUCH AS THERE CANNOT BE ANY DISPUTE THAT IF THE STOCK IS RECEIVED THROUGH C HALLANS, THE SAME COULD BE SOLD BY ASSESSEE AND THE PAYMENTS COULD BE MADE SUB SEQUENTLY. THE AO HAD NOT COMPUTED THE STOCK FOR THE ENTIRE PERIOD BU T ONLY WITH REFERENCE TO ONE MONTH. IN ANY VIEW OF THE MATTER, HE HAD NOT T AKEN INTO CONSIDERATION ANY FRESH EVIDENCE BUT ONLY CONSIDERED THE MODUS OP ERANDI OF THE ASSESSEE. THE AO HAS REFERRED TO THE AUDITORS NOTE WHICH IS WITH REFERENCE TO ITA NO. 1998/D/2012 5 MAINTENANCE OF STOCK RECORDS KEEPING IN VIEW LARGE NUMBER OF ITEMS TRADED BUT THAT DOES NOT IMPLY THAT ASSESSEE DID NOT ENTER THE STOCKS IN THE REGISTER. ITEM WISE DETAILS MIGHT NOT BE AVAILABLE BUT OVERAL L STOCK COULD BE COMPUTED. HOWEVER, IN ANY VIEW OF THE MATTER, WE ARE OF THE O PINION THAT UNLESS THE AO DEMONSTRATED OVERALL NEGATIVE STOCK DURING THE YEAR , NO ADDITION WAS CALLED FOR. WE, THEREFORE, CONFIRM THE ORDER OF LD. CIT(A ) ON THIS ISSUE. 11. APROPOS SECOND ADDITION BRIEF FACTS ARE THAT TH E ADDITION WAS MADE BECAUSE ASSESSEE HAD RECEIVED THE SUM OF RS. 5 LAKH ON 10/04/2008, WHEREAS THE LOAN HAD BEEN SHOWN AS OUTSTANDING ON 3 1/03/2008. BEFORE LD. CIT(A) THE ASSESSE HAD SUBMITTED THAT THE AO HAD MA DE THE ADDITION ON THE BASIS OF WRONG FACTS RELYING ON THE BANK STATEMENT OF THE CREDITOR SMT. ANITA JINDAL. IT WAS SUBMITTED THAT THE ASSESSEE HAD TAK EN THE LOAN OF RS. 5 LAKH FROM SMT. ANITA JINDAL ON 5 TH OCTOBER,2007 AND THE SAME WAS OUTSTANDING AS ON 31/03/2008 AND THE LOAN HAD BEEN REPAID ON 05/04 /2008. IT WAS FURTHER POINTED OUT THAT THE AO HAD TAKEN THE AMOUNT OF RS. 5 LAKH AS ON 10/04/2008 AS PER THE BANK STATEMENT OF SMT. ANITA JINDAL WHICH RELATES TO SOME OTHER TRANSACTION AND THIS TRANSACTION DOES NO T PERTAIN TO THE ASSESSEE. LD. CIT(A) DELETED THE ADDITION, INTER-A LIA, OBSERVING THAT ASSESSEE HAD NOT TAKEN ANY LOAN ON 10/04/2008. IN THE REPORT FILED BY ITO, IT IS POINTED OUT THAT DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE ASSESSEE HAD FILED BANK STATEMENT OF MS. ANITA JIND AL FROM 29/02/2008 TO 07/05/2008 ONLY. THE ASSESSEE HAD NOT FILED BANK S TATEMENT OF SMT. ANITA ITA NO. 1998/D/2012 6 JINDAL PERTAINING TO THE DATE OF LOAN WHICH SHOWS T HAT THE ASSESSEE HAD ACTUALLY RECEIVED THE LOAN ON 5 TH OCTOBER, 2007. 12. HAVING HEARD BOTH THE PARTIES, WE FIND THAT LD. CIT(A) HAS NOT POINTED OUT WHETHER THE BANK STATEMENT OF ANITA JINDAL AND THE FACTS AS SUBMITTED BY ASSESSEE HAD DULY BEEN EXAMINED BY HIM OR NOT. HE HAS SIMPLY ACCEPTED THE ASSESSEES CONTENTION. THE AO SPECIFICALLY POI NTS OUT THAT THE RELEVANT BANK STATEMENT OF 05/10/2007 WAS NOT BEFORE HIM. U NDER SUCH CIRCUMSTANCES, IT WOULD BE IN THE INTEREST OF JUSTI CE THAT THIS ISSUE IS RESTORED TO THE FILE OF AO FOR THE SPECIFIC PURPOSE OF EXAMI NING THE BANK STATEMENT OF MS. ANITA JINDAL FOR 5 TH OCTOBER, 2007, TO FIND OUT WHETHER THE ASSESSEES PLEA IS CORRECT OR NOT. THE AO WILL ALSO EXAMINE W HETHER THE 10/04/2008 TRANSACTION WAS DIFFERENT FROM THE EARLIER LOAN AS CLAIMED BY ASSESSEE. IN CASE THE ASSESSEES CONTENTION IS FOUND TO BE CORRE CT THEN NO ADDITION IS CALLED FOR. IN THE RESULT, THIS GROUND IS ALLOWED FOR STATISTIC AL PURPOSES. 13. IN THE RESULT, THE DEPARTMENTS APPEAL IS PARTL Y ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 11/04/2014 SD/- SD/- (A.D. JAIN) JUDICIAL MEMBER (S.V. MEHROTRA) ACCOUNTANT MEMBER DATED: 11/04/2014 *KAVITA ITA NO. 1998/D/2012 7 COPY TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR, ITAT, NEW DELHI. TRUE COPY BY ORDER ASSISTANT REGISTRAR