DCIT, New Delhi V. M/s. Hindustan Refrigeration Stores, New Delhi

ITA 2070/DEL/2012

• Counselvise Citation: 207020114 RSA 2012
• Duration Of Justice: 7 month(s) 18 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-12-2012
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: C
• Next Hearing Date: 13-12-2012
• Assessment Year: 2008-2009
• Appeal Filed On: 03-05-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SATPAL SINGH
• Keywords: Unexplained investment

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCHES : C NEW DELHI BEFORE SHRI I.C.SUDHIR, JM AND SHRI J.SUDHAKAR REDDY, AM ITA NO. 2070/DEL/2012 ASSESSMENT YEAR : 2008-09 DCIT, CIRCLE 30(1) VS. HINDUSTAN REFRIGERATION STO RES NEW DELHI 2, 4 & 5, NETAJI SUBHASH MARG DARYA GANJ NEW DELHI 2. PAN: AAAFH4633 E (APPELLANT) (RESPONDENT) APPELLANT BY:- SH.SATPAL SINGH, SR.D.R. RESPONDENT BY:- SH.VINOD BINDAL, C.A. O R D E R PER J.SUDHAKAR REDDY, AM THIS IS AN APPEAL FILED BY THE REVENUE DIRECTED AGA INST THE ORDER DT. 15.02.2012 OF THE COMMISSIONER OF INCOME TAX ( APPEALS)-XXV, NEW DELHI FOR THE ASSESSMENT YEAR 2008-09 ON THE FOLLOW ING GROUNDS. 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE C ASE, THE LD.CIT(A)-XXV, NEW DELHI HAS ERRED IN DELETING THE ADDITION OF RS.15,67,804/- MADE BY THE ASSESSING OFFICER ON ACC OUNT OF DIFFERENCE IN THE VALUATION OF STOCK SHOWN IN THE B OOKS OF ACCOUNTS AND VALUATION SHOWN TO BANK FOR OBTAINING CC LIMIT. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE, THE LD.CIT(A)- XXV, NEW DELHI HAS ERRED IN IGNORING THE RATIO DECI DED IN THE FOLLOWING JUDGEMENTS:- I. RECON MACHINE TOOLS P.LTD. VS CIT 286 ITR 637 II. V.RAJAN VS CIT (1974) 96 ITR 64 (MAD.) III. SWADESHI COTTON MILLS LTD. VS CIT 180 ITR 651 (ALL. ) ITA NO. 2070/DEL/2 012 PAGE 2 OF 4 ASSESSMENT YEAR 2008-09 M/S HINDUSTAN REFRIGERATION STORES 3. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE, THE LD.CIT(A) HAS ERRED IN DELETING THE ADDITION OF RS. 5,21,181/- MADE BY THE ASSESSING OFFICER UNDER SECTION 40(2)/4 0(A)(IA) OF THE INCOME TAX ACT, 1961. 3. WE HAVE HEARD MR.SATPAL SINGH, SR.D.R. ON BEHALF OF THE REVENUE AND SHRI VINOD BINDAL, C.A. THE LD.COUNSEL FOR THE ASSESSEE. 4. THE ASSESSEE IS A DEALER OF VARIOUS REFRIGERATIO N ITEMS, RANGING FROM NUTS-BOLTS TO AIR CONDITIONERS, REFRIGERATORS, DEEP FREEZERS, WATER HEATERS ETC. IT FILED ITS RETURN OF INCOME ON 3.10 .2008 DECLARING TOTAL INCOME OF RS.40,43,360/-. THE ASSESSING OFFICER MA DE ADDITIONS ON THE GROUND THAT THERE IS UNEXPLAINED INVESTMENT IN THE STOCK OF CYLINDERS. WHILE DOING SO, THE ASSESSING OFFICER TOOK INTO ACC OUNT THE MONTHLY STATEMENT OF GAS CYLINDERS AS ON 1.4.2007, WHICH WA S SUBMITTED TO THE BANK, AMOUNTING TO RS. 2.48 CRORES AND THE VALUATI ON OF STOCK SUBMITTED TO THE BANK AS ON 31.3.2008, AMOUNTING T O RS. 2.82 CRORES. THE STOCK DIFFERENCE WAS TAKEN AT RS. 33.13 LAKHS A ND AS THE ASSESSEE HAS PURCHASED GAS CYLINDERS OF RS.17.45 LAKHS DURIN G THE YEAR, THE DIFFERENCE OF RS.15,67,804/- WAS TREATED AS UNEXPLA INED INVESTMENT. 5. THE ASSESSING OFFICER FURTHER MADE DISALLOWANCES UNDER SECTION 40A(2)(B) AND 40A(IA) OF THE INCOME TAX ACT, 1961. 6. THE FIRST APPELLATE AUTHORITY DELETED THESE ADDI TIONS. AGGRIEVED THE REVENUE IS IN APPEAL BEFORE US. 7. ON THE FIRST ISSUE OF ADDITION OF ALLEGED UNEXPL AINED INVESTMENT THE ASSESSING OFFICER STATES THAT THERE IS NO DISPUTE R EGARDING THE ITA NO. 2070/DEL/2 012 PAGE 3 OF 4 ASSESSMENT YEAR 2008-09 M/S HINDUSTAN REFRIGERATION STORES SUBMISSION OF THE VALUATION OF RAW MATERIAL STOCK T O THE BANK. THE ASSESSING OFFICER INSTEAD OF RECONCILING THE STOCK AS PER STATEMENT SUBMITTED TO THE BANK AND THE STOCK AS PER BOOKS, AFTER MAKING ADJUSTMENTS ETC. WENT BY INCREASE IN THE VALUATION OF STOCK STATEMENT SUBMITTED TO THE BANK. THIS IS AN ERRONEOUS APPROA CH. THE SUBMISSION OF THE ASSESSEE THAT IN THE STATEMENT OF STOCKS GIV EN TO THE BANKS, CYLINDERS LYING WITH THE CUSTOMERS AND CYLINDERS IN TRANSIT ARE NOT CONSIDERED, IS IGNORED BY THE ASSESSING OFFICER. THE DIFFERENCE IN VALUE OF STOCKS GIVEN TO THE BANK, CANNOT BE A BASIS OF A DDITION. THUS WE AGREE WITH THE FINDING OF THE FIRST APPELLATE AUTHORITY A T PARA 4.3 OF HIS ORDER. IN THE RESULT GROUND NOS. 1 AND 2 ARE DISMISSED. 8. COMING TO GROUND NO.3, THE DISALLOWANCE WAS MADE BY THE ASSESSING OFFICER ON ERRONEOUS FACT THAT TDS HAS NO T BEEN DEDUCTED ON THE PAYMENT MADE TO M/S HRI. THE COMMISSIONER OF I NCOME TAX (APPEALS) HAS RECORDED THAT THE ASSESSEE HAD DEDUCT ED TAX AT SOURCE FOR THE PAYMENTS MADE TOWARDS REPAIR AND MAINTENANCE JO BS. FOR MAKING DISALLOWANCE UNDER SECTION 40A(2)(B), THE ASSESSING OFFICER SHOULD HAVE BENCH MARKED THE PAYMENTS AGAINST A COMPARABLE AND ARRIVED AT THE EXCESSIVE COMPONENT. NO SUCH EXERCISE HAS BEEN DON E. UNDER THE CIRCUMSTANCES, WE UPHOLD THE FINDING OF THE FIRST A PPELLATE AUTHORITY AT PARA 5.3 OF HIS ORDER AND DISMISS THIS APPEAL BY TH E REVENUE. ITA NO. 2070/DEL/2 012 PAGE 4 OF 4 ASSESSMENT YEAR 2008-09 M/S HINDUSTAN REFRIGERATION STORES 9. IN THE RESULT APPEAL FILED BY THE REVENUE IS D ISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 21 ST DECEMBER,2012. SD/- SD/- (I.C. SUDHIR) (J.SUD HAKAR REDDY) JUDICIAL MEMBER ACCOUNTANT MEMBE R DATED: THE 21 ST DECEMBER, 2012 *MANGA COPY OF THE ORDER FORWARDED TO: 1. APPELLANT; 2.RESPONDENT; 3.CIT; 4.CIT (A); 5.DR; 6.GUARD FILE BY ORDER DY. REGISTRAR 1. DATE OF DICTATION: 2. DRAFT PLACED BEFORE THE AUTHOR ON: 3. DRAFT PROPOSED AND PLACED BEFORE SECOND MEMBER ON: 4. DRAFT DISCUSSED/APPROVED BY THE SECOND MEMBER ON: 5. APPROVED DRAFT CAME TO SR.P.S. ON: 6. DATE OF PRONOUNCEMENT : 7. FILE SENT TO BENCH CLERK ON : 8. DATE ON WHICH FILE GIVEN TO HEAD CLERK ON: 9. DATE OF DISPATCHING THE ORDER ON :