SMT. AVTAR KAUR, JALANDHAR V. ASSTT. COMMISSIONER OF INCOME TAX, CIRCLE - II, JALANDHAR

ITA 216/ASR/2017

• Counselvise Citation: [2019] 118 COUNSELVISE.COM (IT) 6848 (ITAT-AMRITSAR)
• Duration Of Justice: 1 year(s) 8 month(s) 8 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 02-01-2019
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: DB
• Next Hearing Date: 30-10-2018
• Assessment Year: 2013-2014
• Appeal Filed On: 24-04-2017
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Assessee Lawyers: S S KALRA
• Keywords: Unexplained cash credit; Search and seizure; Onus to prove
• Section: 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AMRITSAR BENCH, AMRITSAR. BEFORE SH. SANJAY ARORA, ACCOUNTANT MEMBER AND SH. N. K. CHOUDHRY, JUDICIAL MEMBER I. T. A. NO. 216/(ASR)/201 7 ASSES SMENT YEAR: 2013-14 AVTAR KAUR, H.NO. 22, DAULATPURI, JALANDHAR [PAN: AMMPK 1337Q] VS. ASSTT. COMMISSIONER OF INCOME TAX, CIRCLE-II, JALANDHAR (APPELLANT) (RESPONDENT) APPELLANT BY : SH. S. S. KALRA (C. A.) RESPONDENT BY: SH. CHARAN DAS (D.R.) DATE OF HEARING: 30.10.2018 DATE OF PRONOUNCEMENT: 02.01.2019 ORDER PER SANJAY ARORA, AM: THIS IS AN APPEAL BY THE ASSESSEE DIRECTED AGAINST THE ORDER BY THE COMMISSIONER OF INCOME TAX (APPEALS)-1, JALANDHAR ( CIT(A) FOR SHORT) DATED 23.02.2017, PARTLY ALLOWING THE ASSESSEES APPEAL C ONTESTING HER ASSESSMENT UNDER SECTION 143(3) OF THE INCOME TAX ACT, 1961 ('THE AC T' HEREINAFTER) DATED 28.03.2016 FOR THE ASSESSMENT YEAR (AY) 2013-14. 2. THE APPEAL RAISES TWO ISSUES, WHICH WE WILL TAKE UP IN SERIATIM. THE ASSESSEE, IN RETAIL FRANCHISE BUSINESS OF A POPULA R BRAND OF APPARELS AND ALLIED PRODUCTS (REEBOK), IN VIEW OF, AS STATED, PROBLEMS BEING FACED BY ITS PRINCIPAL (REEBOK INDIA COMPANY, OR RIC FOR SHORT), CLOSED HER SAID BUSINESS DURING THE RELEVANT YEAR. THE ISSUE ARISING IS THE TRADING LOS S, IF ANY, INCURRED BY THE ASSESSSEE ITA NO. 216/ASR/2017 (AY 2013-14) AVTAR KAUR V. ASST. CIT 2 ON THE DISPOSAL OF THE STOCK-IN-TRADE OF THE SAID B USINESS. WHILE THE ASSESSEE CLAIMS TO HAVE SOLD ITS BROUGHT FORWARD (FROM THE PRECEDI NG YEAR) STOCK FOR RS. 5.55 LACS, INCURRING THUS A LOSS OF RS. 39.33 LACS, THE REVENU E HAS ASSESSED IT AT A PROFIT OF RS. 4.99 LACS. THE ASSESSEES, ADMITTEDLY NOT MAINTAINI NG ANY STOCK REGISTER, CASE IS THAT OF THE OPENING STOCK OF RS. 171.06 LACS, THAT FOR RS. 126.18 LACS WAS RETURNED BACK TO THE PRINCIPAL. THE BALANCE STOCK OF RS. 44. 88 LACS LEFT WITH IT BEING NOT SALEABLE, WAS ACCORDINGLY SOLD TO THE STREET VENDOR S (THARIWALAS) FOR RS. 5.55 LACS, RESULTING THUS IN THE CLAIMED LOSS (REFER TRADING A CCOUNT AT PB PG. 7). THE SAME HAS BEEN SOLD IN CASH, EVEN AS NO RECEIPTS, ETC. COULD BE EXPECTED FROM AND, THUS, OBTAINED FROM THE STREET VENDORS, WHILE THE (CASH) SALE ACCOUNT WAS PRESENTED IN THE ASSESSMENT PROCEEDINGS (PB PGS. 8 42). THERE IS, UNDER THE CIRCUMSTANCES, NO VALID REASON FOR THE REJECTION OF ASSESSEES BOOKS OF ACCOUNT, WHICH STANDS THOUGH ENDORSED BY THE LD. CIT(A). THE REVENUES CASE, ON THE OTHER HAND, IS THAT THE LOSS BOOKED BY THE ASSESSEE IS NOT EVIDENCED. THE ASSESS EES NORMAL GROSS PROFIT (GP) RATE IS IN THE RANGE OF 20%, BEING AT 21% FOR AY 20 11-12, SO THAT A GP RATE OF 10%, I.E., ON THE BALANCE GOODS WITH IT, ADMITTEDLY SOLD, ITSELF IMPLIES A REBATE OF 10% (ON SALE VALUE). 3. WE HAVE HEARD THE PARTIES, AND PERUSED THE MATER IAL ON RECORD, AND GIVEN OUR CAREFUL CONSIDERATION TO THE MATTER. 3.1 THE ASSESSEE BEFORE US STRONGLY OBJECTED TO RE JECTION OF ITS TRADING RESULTS, I.E., INVOCATION OF SECTION 145(3) QUA THE DISPOSAL THROUGH SALE OF ITS OPENING STOCK, RESULTING IN A TRADING LOSS OF RS. 39.33 LAC S AND, INSTEAD, ESTIMATING IT AS SOLD AT RATE/S YIELDING A GROSS PROFIT RATE OF 10%, OR R S. 4,98,631/-. THE ADJUDICATION BY THE LD. CIT(A) OF THIS ISSUE IS AS UNDER: 08. DURING THE COURSE OF APPELLATE PROCEEDINGS, TH E ASSESSEE STATED THAT THERE WAS NO DIFFERENCE IN OPENING STOCK AS SUCH SINCE THE ASSES SEE HAD CLEARLY SHOWN THE ADJUSTMENT OF PURCHASE RETURNS OF RS. 1,26,18,099/- IN ITS TRADIN G ACCOUNT. THESE WERE ON ACCOUNT OF CLOSURE ITA NO. 216/ASR/2017 (AY 2013-14) AVTAR KAUR V. ASST. CIT 3 OF BUSINESS WITH M/S REEBOK WHO OPERATE THROUGH THE IR ALLIES SUCH AS GOSHIES, BERKLEY & ROYAL TRADING. THE ASSESSEE HAS ALSO PROVIDED A COP Y OF ITS ACCOUNT IN THE BOOKS OF M/S GOSHIES APPAREL PVT. LTD. WHICH CONSTITUTED THE MAJ OR PURCHASE RETURNS. THE ASSESSEE HAS ALSO FILED A COPY OF THE TERMINATION AGREEMENT BETW EEN THE ASSESSEE AND M/S REEBOK INDIA CO. WHICH CLEARLY STATES THAT THE FRANCHISE HAS BEE N TERMINATED W.E.F. 30.10.2012. (*) 09. THE ASSESSING OFFICER HAS NOT RAISED AN ISSUE W ITH THE PURCHASE RETURNS OR WITH THE DEBIT NOTES PRODUCED BY THE ASSESSEE DURING ASSESSM ENT INCLUDING THE QUANTITY AND VALUE OF GOODS RETURN. HOWEVER, THE ASSESSING OFFICER REJECT ED THE TRADING RESULTS SINCE THE ASSESSEE COULD NOT PRODUCE BOOKS OF ACCOUNTS, BILLS, VOUCHER S, STOCK REGISTER ETC. THE ASSESSEES PURCHASE RETURNS TOTALING RS.1,26,18,099/- INCLUDE THE FOLLOWING:- GOSHIES APPARELS P. LTD. 1,15,52,825/- BERKLEY RETAILS LTD. 7, 93,615/- ROYAL TRADING CO. 2,71,659/- TOTAL PURCHASE RETURN 1,26,18,099/- 10. THESE HAVE NOT BEEN QUESTIONED BY THE ASSESSING OFFICER. THEREFORE I SEE NO LOGIC, EVEN AFTER REJECTION OF BOOKS, TO ESTIMATE G.P. ON PURCHASES WHICH WERE RETURNED TO M/S REEBOKS ASSOCIATES. TO DO THAT, IT IS NECESSARY TO REJECT THE ENTIRE EXERCISE OF CLOSURE OF BUSINESS AND THE TERMINATION AGREEMENT BETWEEN THE TWO PARTIES. 11. DURING APPELLATE PROCEEDINGS THE ASSESSEE HAS S TATED THAT WHATEVER STOCK WAS REMAINING HAD BEEN SOLD OUT TO HAWKERS AT A THROW A WAY PRICE OF RS. 5,55,291/- AGAINST THE PURCHASE PRICE OF RS. 44,87,679/-. THIS EXPLANATION OF THE ASSESSEE CANNOT BE BELIEVED. ANY STOCK OF A BRAND LIKE REEBOK IS ALWAYS FAVORED BY C USTOMERS. A DISCOUNT OF 30-40% CAN BE UNDERSTOOD BUT SALE OF STOCK OF RS. 44,87,679/- @ L /8TH OF ITS PURCHASE PRICE IS BEYOND THE REALM OF IMAGINATION. REEBOK IS A COMPANY WHICH HAS A VERY HIGH BRAND VALUE IN INDIA AND WHETHER THE COMPANY IS GOING THROUGH A FINANCIAL CR ISIS HARDLY CONCERNS THE COMMON CONSUMER. SALE OF SUCH STOCK TO HAWKERS IS SOMETHIN G THAT CANNOT BE BELIEVED. IN THE INTEREST OF JUSTICE THE ASSESSEE SALE OF REMAINING STOCK IS ESTIMATED AT THE SAME G.P. AS AVERAGE OF TWO EARLIER YEARS OF 10%. IT IS WORTHWHILE TO NOTE THAT THE G.P. FOR THE A.Y. 2011-12 HAS BEEN SHOWN @ 21% BY THE ASSESSEE HERSELF. DUE TO LOSS IN SUBSEQUENT YEAR, THE AVERAGE G.P. COMES TO 10%. THEREFORE AN ADDITION OF RS.4,98,631/ - ON ACCOUNT OF G.P. ON SALE OF REMAINDER STOCK IS DIRECTED TO BE ADDED TO THE INCO ME OF THE ASSESSEE. (*) [THE CORRECT DATE IS 30.11.2012] AS CLEAR FROM THE READING OF THE ASSESSMENT AND THE APPELLATE ORDER, THE REVENUE HAS NOT ACCEPTED THE CLAIMED LOSS IN VIEW OF ITS N ON-SUBSTANTIATION. THE ASSESSEE HAVING NOT PRODUCED ANY DOCUMENTARY EVIDENCE TOWARD THE SAME, THE ASSESSING OFFICER (AO) DID NOT ACCEPT EVEN THE CLAIM WITH REG ARD TO PURCHASE RETURN (FOR RS. ITA NO. 216/ASR/2017 (AY 2013-14) AVTAR KAUR V. ASST. CIT 4 126.18 LACS), AND ASSESSED THE INCOME ON THE DISPOS AL OF STOCK BY APPLYING A GP RATE OF 10% ON THE TOTAL STOCK, COSTING RS. 171.06 LACS, I.E., AS BEING CARRIED IN THE ASSESSEES ACCOUNTS, OR AT RS. 19,00,642/- (RS.171. 06 LACS X 1/9) (REFER PARAS 3.1, 3.2 AND 3.3 OF THE ASSESSMENT ORDER). THE LD. CIT(A ) RESTRICTED THE SAME, AND ONLY CORRECTLY SO, TO THE STOCK WITH THE ASSESSEE, I.E., THE BALANCE LEFT AFTER THAT RETURNED TO THE PRINCIPAL, OR RS. 44,87,679/- (RS.171.06 LAC S - RS. 126.18 LACS). WE SAY SO AS THE PURCHASE RETURN OF RS. 126.18 LACS, BEING ALREA DY BOOKED IN THE ASSESSEES ACCOUNTS, IMPLYING A CREDIT TO THE TRADING ACCOUNT TO THAT EXTENT, THE CLAIM FOR EXPENDITURE QUA STOCK-IN-HAND BY THE ASSESSEE, AS A PPARENT FROM THE TRADING ACCOUNT ITSELF, IS LIMITED TO RS. 44.88 LACS . AS SUCH, EVEN IF, AS THE AO STATES, AND WHICH WE HAVE NO REASON TO DOUBT, THE ASSESSEE DID NOT FURNISH ANY SUPPORTING DOCUMENTS WITH REGARD TO THE PURCHASE RETURN BEFORE HIM, THERE IS NO CLAIM (FOR EXPENDITURE) BY THE ASSESSEE TO THAT EXTENT, FOR IT TO BE DISALLOWED OR NOT ACCEPTED. IT IS IN FACT THIS THAT IS THE BASIS OF OUR STATING , AT THE BEGINNING OF THIS ORDER, WHILE DELINEATING THE ISSUE ARISING, THE ASSESSEE TO HAVE CLAIMED A LOSS OF RS.39.33 LACS (I.E., RS. 44.88 LACS RS.5.55 LACS) THROUGH THE T RADING ACCOUNT (REFER PARA 2 OF THIS ORDER). THE AOS STAND TO THIS EXTENT IS, THEREFORE , MISPLACED, AND RIGHTLY REVERSED BY THE LD. CIT(A), WHO HAS IN PRINCIPLE ACCEPTED TH E AOS STAND, I.E., OF THE ASSESSEE BEING UNABLE TO ESTABLISH THE CORRECTNESS AND COMPLETENESS OF ITS ACCOUNTS IN RESPECT OF THE LOSS ON SALE OF STOCK, I.E., AS A VAILABLE WITH IT AND, THUS, THE CORRECTNESS OF ITS DISCLOSED TRADING RESULTS. 3.2 AS REGARDS THE INVOCATION OF SECTION 145(3), UP HELD BY THE LD. CIT(A), I.E., QUA THE STOCK NOT RETURNED BY THE ASSESSEE TO ITS PRI NCIPAL, AND IN RESPECT OF WHICH IT THEREFORE MAKES A CLAIM (FOR LOSS) THROUGH ITS T RADING ACCOUNT FOR THE YEAR, THE SAME IS TO BE UNDERSTOOD IN ITS PROPER PERSPECTIVE. THE ISSUE ARISING, AND THE CASE OF THE REVENUE RESTS, ON THE SUSTAINABILITY (OR OTH ERWISE) OF THE ASSESSEES CLAIM IN ITA NO. 216/ASR/2017 (AY 2013-14) AVTAR KAUR V. ASST. CIT 5 RESPECT OF THE LOSS STATED AS INCURRED AND, ACCORDI NGLY, CLAIMED ON THE SALE OF THE SAID STOCK, I.E., IN THE FACTS AND CIRCUMSTANCES OF THE CASE. IT IS NOT NECESSARY FOR THE REVENUE FOR EFFECTING OR SUSTAINING THE SAID DISALL OWANCE TO REJECT THE ASSESSEES TRADING ACCOUNT/RESULTS, WHICH IT THOUGH DOES IN VI EW OF THE UNRELIABILITY OF THE ACCOUNTING FIGURES AS TO STOCK AS WELL AS THE ABSEN CE OF ANY RELIABLE EVIDENCE AS TO SALE; THE CASH SALE BILL/S BEING ONLY A SELF GENERA TED DOCUMENT. THE BURDEN TO PROVE ITS RETURN, AND THE CLAIMS PREFERRED THEREBY, IT M AY BE APPRECIATED, IS ON THE ASSESSEE ( CIT V. CALCUTTA AGENCY LTD . [1951] 19 ITR 191 (SC); CIT V. R. VENKATASWAMY NAIDU [1956] 29 ITR 529 (SC)). WHERE, THEREFORE, THE LOS S AS CLAIMED IS NOT REASONABLY PROVED, A DISALLOWANCE IN ITS RESPECT SHALL ENSUE IRRESPECTIVE OF WHETHER SUBSTANTIAL DOUBTS HAVE BEE N RAISED QUA THE RELIABILITY OF THE ASSESSEES ACCOUNTS IN GENERAL. IN FACT, NO SUC H DOUBTS HAVE INDEED BEEN RAISED. THE REJECTION OF ACCOUNTS IS THUS PRIMARILY IN RE LATION TO THE STOCK SALES; THERE BEING NO PURCHASES FOR THE YEAR, AS WELL AS THE VAL UE OF THE STOCK (AFTER THAT RETURNED TO ITS PRINCIPAL, FOR WHICH CREDIT STANDS ALLOWED TO IT THROUGH ITS ALLIES) WITH IT. BOTH THESE ELEMENTS, AS WE SHALL PRESENTLY SEE, REM AIN UNPROVED . THE ONLY TRADING OPERATIONS CARRIED OUT DURING THE YEAR BE ING THE DISPOSAL, BY WAY OF SALE, OF THE LEFTOVER STOCK, IS WHAT HAS PROMPTED THE REV ENUE TO, DISREGARDING THE DECLARED TRADING RESULTS, ESTIMATE THE SAME. IT I S IN THIS CONTEXT THAT THE INVOCATION OF SECTION 145(3) IS TO BE UNDERSTOOD IN THE INSTAN T CASE. THAT IS, IT IS EQUALLY VALID FOR THE REVENUE TO DISALLOW THE LOSS CLAIMED BY THE ASSESSEE, STATING IT AS UNPROVED, AND ESTIMATING SOME PROFIT INSTEAD. RATHER, IF THE PROFIT COMPONENT, ESTIMATED THEREFORE BY THE REVENUE, WERE TO BE REMOVED, THE O NLY ADJUSTMENT TO THE ASSESSEES INCOME QUA THE SOLD STOCK THAT REMAINS IS THE ALLOWANCE (OR O THERWISE) OF THE LOSS CLAIMED IN ITS RESPECT, WHICH COULD BE EFFECTED EVEN DE HORS SECTION 145(3). THE ONLY DIFFERENCE, TECHNICALLY SPEAKING, BETWEEN THE TWO, THUS, IS THE ESTIMATION OF THE PROFIT ON SUCH SALE ALONG WITH, I.E., SIMULTANEOUS WITH THE ITA NO. 216/ASR/2017 (AY 2013-14) AVTAR KAUR V. ASST. CIT 6 DISALLOWANCE OF LOSS, AND WHICH MAY REQUIRE INVOC ATION OF SECTION 145(3). NOW, WHILE THE LATTER COULD SURVIVE INDEPENDENT OF THE F ORMER, THE FORMER SUBSUMES THE LATTER IN-AS-MUCH AS THE PROFIT SIGNIFIES ABSENCE OF LOSS. THE TWO ARE IN FACT INTERRELATED AS A LOSS ARISES ONLY ON ACCOUNT OF TH E INABILITY TO RECOUP THE COST PRICE OF THE RELEVANT GOODS, TO WHATEVER EXTENT, IMPLICIT WHEREIN IS INABILITY TO FETCH THE SELLING PRICE, WHICH IS MARKED, AS IS USUALLY THE C ASE, OVER THE COST PRICE. IN OTHER WORDS, THE ONLY SIGNIFICANCE OF THE INVOC ATION OF SECTION 145(3) IS A SIMULTANEOUS ESTIMATION OF PROFIT. IN FACT, IT IS A MOOT POINT, AND STANDS TO REASON THAT IF A CLAIM OF COST COULD BE DOUBTED OR REGAR DED AS UNPROVED FOR BEING UNSUBSTANTIATED WITHOUT NECESSARILY REJECTING THE A CCOUNTS, WHY COULD NOT, SIMILARLY, THE CLAIM OF SALE. THE ANSWER, TO A PO INT, MAY ALSO LIE IN THE NATURE OF THE COUNTER EVIDENCE AVAILABLE WITH THE REVENUE. NO T ACCEPTING A CLAIM, BE IT A DEBIT (EXPENDITURE) OR CREDIT (INCOME), COULD BE DU E TO THE UNRELIABILITY OR INDEFINITENESS OF THE MATERIAL FURNISHED IN SUBSTAN TIATION, AS ALSO THE POSITIVE EVIDENCES LED BY THE REVENUE IN REBUTTAL. WHILE THE FORMER COULD RESULT IN A PASSIVE DISALLOWANCE, WHICH AGAIN COULD BE TOTAL OR PARTIAL, SO THAT SOME ESTIMATION IS INTRINSIC TO THE EXERCISE, THE LATTER WOULD ENABLE THE AO, WHOSE POWERS IN THE MATTER OF ASSESSMENT ARE PLENARY, TO ESTIMATE A FIGURE, OF COURSE, BASED ON THE FACTS AND CIRCUMSTANCES OF THE CASE AS WELL AS THE MATERIAL ON RECORD. WHETHER THE CLAIM/S IS REASONABLY PROVED ON THE BAS IS OF THE EVIDENCES LED, OR NOT, A QUESTION OF FACT, IS A DIFFERENT MATTER, CONCERNI NG THE MERITS OF THE CLAIM/S. WHAT IS BEING SOUGHT TO BE BROUGHT FORTH, PLAINLY, IS TH AT THE MATTER IS, RATHER THAN TECHNICAL, FACTUAL, AND BOILS DOWN TO, ON ONE HAND, THE PROVING OF THE ASSESSEES CLAIMS BY HER, AND THE DISPROVING OF THE ASSESSEE S CLAIMS BY THE REVENUE, ON THE OTHER. TO, HOWEVER, ANSWER THE QUESTION AS TO T HE APPLICABILITY OF SECTION 145(3), WE, FOR THE REASONS AFORE-STATED, AS WELL A S THAT MAY FIND ELABORATION IN THE SUBSEQUENT PART OF THIS ORDER, SEE NO INFIRMITY THE REIN QUA THE ASSESSEES TRADING ITA NO. 216/ASR/2017 (AY 2013-14) AVTAR KAUR V. ASST. CIT 7 RESULTS, WHICH ONLY STAND DISTURBED BY THE REVENUE. RATHER, WE OBSERVE, APART FROM ABSENCE OF STOCK RECONCILIATION/DETAILS, ALSO UN-RE CONCILED BALANCES WITH TRADE PARTIES, IMPINGING ON THE CORRECTNESS AND COMPLETEN ESS OF THE ASSESSEES ACCOUNTS. 3.3 WE SHALL NOW DEAL WITH THE MATTER ON A FACTUAL PLANE. THE ASSESSEE IS NOT MAINTAINING ANY STOCK RECORDS. WHAT, THEN, ONE MAY ASK, IS THE BASIS FOR DETERMINATION OF THE FIGURE OF THE CLOSING STOCK AS AT THE YEAR-END AND, THUS, THE PROFIT FOR A PARTICULAR YEAR? NONE IS STATED. STOCK RECORDS, AN INTEGRAL PART OF THE BOOKS OF ACCOUNT, ONLY WOULD LEND CREDENCE TO AND C ONFIRM THE VERACITY OF THE QUANTITY AND COMPOSITION OF THE STOCK AS AT THE YEA R-END AND, THUS, ALSO ITS VALUATION. ABSENCE THEREOF, IS, IN FACT, MOST SURPR ISING IN THE PRESENT CASE AS THE ACCOUNTING SOFTWARE USED BY THE FRANCHISEES ARE USU ALLY THAT EMPLOYED BY, OR IN ANY CASE, IN AGREEMENT WITH THAT DEPLOYED BY, THE P RINCIPALS, WHO THEREFORE HAVE INFORMATION ON STOCK STATUS OF ANY FRANCHISEE ON A REAL-TIME BASIS. IN FACT, NO RECONCILIATION BETWEEN THE STOCK FIGURES, I.E., AS AVAILABLE WITH THE ASSESSEE AS PER ITS ACCOUNTS, AND THAT AS PER THE BOOKS OF THE PRI NCIPAL, COULD BE ARRIVED AT EVEN ON THE STOCK-TAKING FOR THE PURPOSE OF STOCK RETURN. W HILE THE ASSESSEES ACCOUNTS STATE THE SAID FIGURE TO BE AT RS. 44.88 LACS, THAT AS PE R THE PRINCIPAL, IT IS RS. 27,32,978/-. THIS IS NOTED BY THE AO AT PARA 3.4 OF HIS ORDER, A ND CITED AS AMONG THE REASONS FOR THE STOCK FIGURE AS PER THE ASSESSEES BOOKS BEING NOT RELIABLE. THE SAID FINDING HAS NOT BEEN REBUTTED OR OTHERWISE EXPLAINED AT ANY STA GE. WHY, WE HAVE ALREADY STATED THE STOCK FIGURE AS PER THE ASSESSEES ACCOUNTS AS NOT VERIFIABLE IN THE ABSENCE OF THE STOCK RECORDS, ADMITTEDLY NOT MAINTAINED BY THE ASSESSEE. HOW COULD, THEN, THE LOSS ON DISPOSAL OF SAID STOCK, STATED TO FETCH A M ERE RS. 5.55 LACS, REFLECTING THUS TRADING LOSS OF RS. 39.33 LACS, BE VERIFIED? WHY, THE SALE AMOUNT OF RS. 5.55 LACS, STATED TO BE IN CASH TO STREET HAWKERS, IS ITSELF N OT VERIFIABLE. THE ASSESSEE JUSTIFIES THE SAME BEFORE US ON THE BASIS OF IT BEING A DISTR ESS SALE; THE ASSESSEE BEING ITA NO. 216/ASR/2017 (AY 2013-14) AVTAR KAUR V. ASST. CIT 8 REQUIRED TO VACATE THE RENTED PREMISES USED AS SHOW ROOM/S. BESIDES, WITHOUT DOUBT, THE STOCK WAS DAMAGED, OR ELSE THE COMPANY W OULD ITSELF ACCEPT IT BACK, SO THAT THE VERY FACT THAT IT DID NOT IS PROOF ENOUGH THAT THE SAID STOCK, I.E., AS NOT RETURNED TO THE COMPANY, WAS NOT SALEABLE. NO PROPE R BILLS/RECEIPTS COULD BE EXPECTED TO BE ISSUED TO/RECEIVED FROM THE THARIWAL AS (STREET VENDORS), TO WHOM THE GOODS WERE SOLD. AS REGARDS THE CLAIM OF DISTRE SS SALE, WE ARE UNABLE TO UNDERSTAND THE BASIS THEREOF. THERE ARE NO PURCHASE S, FOR BOTH THE SHOWROOMS, DURING THE YEAR. AS SOME PURCHASE ORDERS, DUE TO TH E LEAD TIME FOR SUPPLY, ARE IN PIPELINE AT ANY GIVEN POINT OF TIME, THE VERY FACT OF ABSENCE OF ANY PURCHASE, AT LEAST SINCE APRIL 01, 2012, IMPLIES THAT NO PURCHAS E/SUPPLY ORDERS WERE ISSUED/MADE SINCE PRIOR THERETO. THAT IS, THE ASSES SEE HAD CEASED ITS PURCHASES, CONVEYING UNDERSTANDABLY THIS FACT TO ITS PRINCIPA L. THAT IS, THE DECISION TO CLOSE BUSINESS; THE ASSESSEE ALSO CITING FINANCIAL PROBLE MS BEING FACED BY THE PRINCIPAL, HAD BEEN TAKEN PRIOR TO THE BEGINNING OF THE YEAR, AND THE NEGOTIATIONS FOR CLOSURE, I.E., THE TERMS THEREOF, ETC., ON. THE ADJUSTMENT O F THE PURCHASE RETURN FROM THE OPENING STOCK IS ALSO PRESUMABLY ON ACCOUNT OF THIS , I.E., IS SUPPORTIVE. THE FRANCHISE AGREEMENT/ARRANGEMENT CEASES W.E.F. NOVEM BER 30, 2012, THE TERMINATION DATE. THE ASSESSEE, THUS, HAD ADEQUATE TIME TO DISPOSE THE GOODS. EVEN IF SOME TIME OF THE CURRENT YEAR IS REGARDED AS CON SUMED IN IDENTIFYING THE STOCK WHICH RIC WOULD NOT ACCEPT, STILL THE ASSESSEE HAD SUFFICIENT TIME FOR THE PURPOSE, PARTICULARLY CONSIDERING THAT NEGOTIATIONS WERE ON AND THE ASSESSEE KNEW ABOUT THE RETURN-ABILITY OF THE STOCK, WHICH WOULD AGAIN, PRE SUMABLY, ONLY BE IN TERMS OF THE AGREEMENT. WHY, THE SALE OF STOCK BY THE ASSESSEE B EGINS AS EARLY AS ON APRIL 03, 2012 (PB PGS. 8, 25), CONTINUING UP TO 29/9/2012 IN DIFFERENT ACCOUNTS (SALE 5%, 5.5%, 12.5% & 13%) (PB PGS. 8 - 42). THAT IS, THE S ALE CONTINUES FOR SIX MONTHS, SELLING MOST OF IT BY 31/8/2012 (FOR STOCK ON WHICH DATE IT STANDS SUPPOSEDLY COMPENSATED BY THE PRINCIPAL), AND THE ASSESSEE HAD EXHAUSTED ITS ENTIRE STOCK ITA NO. 216/ASR/2017 (AY 2013-14) AVTAR KAUR V. ASST. CIT 9 WELL BEFORE THE TERMINATION DATE, BY WHICH DATE IT WAS TO HAND OVER THE POSSESSION OF THE SHOWROOM. THE CLAIM OF DISTRESS SALE, WHICH WE OBSERVE AS ABSENT BEFORE THE REVENUE AUTHORITIES, IS ONLY A BOGEY. THE ASSESSEES NEXT ARGUMENT IS THAT THE GOODS BEI NG DAMAGED, WERE NOT SALEABLE AND, ACCORDINGLY, SOLD AT THROW-AWAY PRICE S, WHICH WE OBSERVE TO BE AT ABOUT 10% OF THE SALE PRICE, RECKONING THE SAME AT 25% OVER COST (SO AS TO YIELD A GP RATE OF 20%). THE ISSUE, THEREFORE, IS IF THE SA ME STOOD DAMAGED TO AN EXTENT TO BE CLASSIFIED OR REGARDED AS DEAD STOCK. THE VARI OUS REASONS FOR THE DAMAGE USED AS A GENERIC TERM, OF STOCK, AS EXPLAINED DURI NG ASSESSMENT PROCEEDINGS BY THE ASSESSEE, ARE AS UNDER: (REFER ASSESSEES LETTER DA TED 21/3/2016 TO THE AO, AT PB PGS. 4-6) (A) ITEMS PUT ON RACKS AS SAMPLES LOOSE THEIR ORIG INAL LOOK. (B) GOODS DAMAGED BECAUSE OF SEEPAGE OF ANY KIND WH ICH IS NORMAL IN RUNNING BUSINESS. (C) GOODS DAMAGED BECAUSE OF DAMPNESS. (D) CERTAIN PIECES, E.G. SHOES ONE PIECE IS DISPLA YED WHICH LOOSES ITS ORIGINALITY THE OTHER PIECE DOESNT MATCH WITH SHOE DISPLAYED. (E) GOODS NOT CLEARED EVEN AFTER REPEATED REDUCTION SALES ARE CALLED OLD FASHIONED AND OLD MODEL WHICH ARE NOT SALABLE. (F) MANY OTHER FACTORS SUCH AS GOODS DAMAGED WHILE PACKING OR UNPACKING. (G) COLOR FADING BECAUSE OF TIME GAP. (H) VARIOUS OTHER UNFORESEEN FACTORS WHICH IS NORMA L CREATIONS OF A BUSINESS. TO PUT SUCCINCTLY, THESE ARE: (I) DAMAGE ON ACCOUNT OF DAMPNESS, COLOUR FADING, ETC.; (II) STOCK GETTING OUT OF FASHION; (III) LOSS OF ORIGINALITY OF THE PRODUCT, WHICH IS FOR SE VERAL REASONS, AS ON ACCOUNT OF DISPLAY, ETC. ITA NO. 216/ASR/2017 (AY 2013-14) AVTAR KAUR V. ASST. CIT 10 ALL THESE FACTORS, WHICH ARE A NORMAL INCIDENT OF T HE TRADE, WOULD SURELY RESULT IN LOSS OF VALUE, BUT WOULD NOT, WITHOUT DOUBT, RENDER THE RELEVANT GOODS VALUELESS, OR NEARLY SO, AS THE ASSESSEE CLAIMS. THE ASSESSEE HAS , FURTHER, NOT LED ANY MATERIAL QUA THE EXTENT OF THE DAMAGE TO ITS GOODS AT ANY STAG E, EVEN AS THE SAME WOULD INDEED HAVE BEEN DOCUMENTED, ONLY WHEREUPON THE SAI D STOCK, DULY IDENTIFIED, STANDS DETERMINED, AND THE VALUE OF WHICH, AS PER T HE BOOKS OF RIC, IS AT RS. 27.33 LACS. WHY? HOW DOES, FURTHER, THE ASSESSEE JUSTIFY THE BALANCE ? WE FIND NONE. THOUGH STATED IN THE MEMORANDUM OF UNDERSTANDING (M OU) (PB PGS. 43-47) TO BE THE VALUE OF STOCK AT WHOLESALE PRICE, I.E., THE AS SESSEES COST PRICE, FOR THE GOODS AT THE ASSESSEES STORE 1, WE OBSERVE NO EXPLANATION B Y THE ASSESSEE AT ANY STAGE, INCLUDING BEFORE US, WITH REFERENCE TO THE STOCKS L YING AT ITS TWO DIFFERENT STORES. THE ASSESSEE IS MAINTAINING CONSOLIDATED ACCOUNTS F OR BOTH THE STORES, AND THE ENTIRE STOCK FIGURES AS FURNISHED, VIZ. OPENING STO CK, RETURNED, AND THAT SOLD, ARE WITH REFERENCE TO ITS ENTIRE STOCK. MERE SUGGESTIO N OF THE BALANCE STOCK LYING AT THE OTHER, SECOND STORE, WOULD IMPLY THE OPENING STOCK, PURCHASE RETURN AND SALES, TO ALSO INCLUDE STOCK OF STORE 2, RENDERING THE SEGREG ATION OF STOCK AS OF NO CONSEQUENCE. IN FACT, SUCH A SEGREGATION COULD ONLY BE POSSIBLE ON THE BASIS OF SEPARATE ACCOUNTS, OR IN THE VERY LEAST SEPARATE ST OCK REGISTERS, I.E., WHERE THE ACCOUNT OF THE TWO UNITS ARE CONSOLIDATED FOR PRESE NTATION PURPOSES. AS AFORESAID, THERE IS NO WHISPER OF STORE-WISE (STOCK) ACCOUNTIN G, NOR ANY REFERENCE THERETO OR MENTION OF THE SAID SEGREGATION IN THE ASSESSEE EXP LANATION/S AND, CONSEQUENTLY, ANY FINDING OR EVEN REFERENCE THERETO IN THE ORDERS BY THE REVENUE AUTHORITIES. WE HAVE ALREADY NOTED THAT THE SAID DIFFERENCE OF RS. 17.55 LACS (RS. 44.88 LACS RS. 27.33 LACS), EMPHASIZED BY THE AO, REMAINS UNEXPLAI NED, AND AT ANY STAGE. COMING TO THE EXTENT OF DAMAGE, THE STATED INFIRMIT IES DO NOT SUGGEST A SERIOUS DAMAGE SO AS TO QUALIFY IT AS A DEAD STOCK, AS CONT ENDED. THAT THE EXTENT OF THE DAMAGE STANDS DULY FACTORED OR TAKEN INTO ACCOUNT B ETWEEN THE PARTIES IN SETTLING ITA NO. 216/ASR/2017 (AY 2013-14) AVTAR KAUR V. ASST. CIT 11 THEIR ACCOUNTS, IS, FURTHER, BORNE OUT BY A CONJOIN T READING OF CLAUSES (6) AND (7) OF THE MOU DATED 17/01/2013 (PB PGS. 43 47), WHICH R EAD AS UNDER: (6) RIC HAS DETERMINED THE STOCK LYING WITH THE FR ANCHISEE AT STORE I AS ON AUGUST 31,2012 FROM THE DATA IN ITS LOGIC SOFTWARE AND ASCERTAINED THE WHOLE SALE PRICE OF SUCH STOCK TO BE RS.27,32,978/- (RUPEES TWENTY SEVEN LAKH THIRTY TWO THOUSAND NINE HUNDRED AND SEVENTY EIGHT ONLY). (7) IN ARRIVING AT THE AFORESAID FULL AND FINAL SET TLEMENT AMOUNT OF RS. 12,64,159/- (RUPEES TWELVE LAKH SIXTY FOUR THOUSAND ONE HUNDRED AND FIF TY NINE ONLY), RIC HAS ALLOWED AN AMOUNT EQUIVALENT TO 40% OF THE WHOLE SALE PRICE OF SUCH STOCK , I.E., AN AMOUNT OF RS. 10,93,191/- (RUPEES TEN LAKH NINETY THREE THOUSAND ONE HUNDRED AND NINETY ONE ONLY), TO THE FRANCHISEE TOWARDS STOCK LIQUIDATION SUPPORT . (EMPHASIS, BY UNDERLINING, OURS) CLEARLY, THEREFORE, THE STOCK WITH THE ASSESSEE HAS BEEN ASSESSED TO YIELD ONLY 60% OF THE WHOLESALE (COST) PRICE, FOR THE PRINCIPAL (R IC) TO HAVE IN FACT COMPENSATED THE ASSESSEE FOR THE ANTICIPATED LOSS OF THE BALANC E 40% THEREOF. THIS COMPENSATION, DULY ACCOUNTED FOR BY THE ASSESSEE, T HOUGH, WOULD NOT ALTER OUR ALGORITHM OR THE LOSS UNDER CONSIDERATION (RS. 39 .33 LACS), AS THE SAME IS BEING RECKONED ON GROSS LOSS BASIS, I.E., THE DIFFERENCE BETWEEN THE COST OF THE UNRETURNED GOODS LYING WITH THE ASSESSEE, I.E., AS CLAIMED, AN D THEIR VALUE AS REALIZED ON SALE, AGAIN, AS CLAIMED, BOTH OF WHICH REMAIN UNCHANGED A T RS. 44.88 LACS AND RS. 5.55 LACS RESPECTIVELY. THE AFORESAID ASSESSMENT, DULY A CCEPTED BY AND BETWEEN THE PARTIES, I.E., IN SETTLING THEIR ACCOUNTS ON THE CL OSURE OF BUSINESS RELATIONSHIP OR TERMINATION OF THE FRANCHISE AGREEMENT, CAN ONLY BE REGARDED AS A FAIR ASSESSMENT OF SUCH LOSS AND, THUS, A PROPER BASIS FOR ASCERTAI NING THE SAME FOR TAX PURPOSES. A DISCOUNT OF 40% ON COST, IT MAY BE NOTED, WORKS TO OVER 50% ON SALE PRICE , CONSIDERING A MARK-UP THAT YIELDS THE NORMATIVE GP RATE OF 20%. THIS ASSESSMENT, IT MAY BE FURTHER NOTED, IS IN BROAD AGREEMENT WITH THAT BY THE LD. CIT(A), WHO STATES OF A DISCOUNT OF 30%-40% AS UNDERSTANDABLE ( AT PARA 11 OF HIS ORDER, REPRODUCED SUPRA), THOUGH INEXPLICABLY, AND IN CONT RADICTION TO HIS OWN ASSESSMENT, ALLOWS NO LOSS, BUT ASSESSES A PROFIT O F RS. 4.99 LACS. THERE IS IN FACT NO ITA NO. 216/ASR/2017 (AY 2013-14) AVTAR KAUR V. ASST. CIT 12 EVIDENCE WITH THE REVENUE WHICH SUGGESTS OR INDICAT ES THE ASSESSEE TO HAVE REALIZED THE STOCK TO ANY EXTENT, OVER COST PRICE . FURTHER, NO DOUBT THE MOU STATES THE COMPENSATION TO BE OUT OF STOCK WITH THE ASSESS EE AS ON 31.08.2012. IT IS, HOWEVER, APPARENT THAT THE SAME ONLY REFERS TO THE STOCK LEFT WITH THE ASSESSEE AFTER RETURN BACK, FOR WHICH CREDIT STANDS ALLOWED TO IT BY THE PRINCIPAL IN FULL, I.E., AT COST. RATHER, IF NOT SO, THE ASSESSEE, ON THE CONTR ARY, STANDS TO GAIN BY BEING COMPENSATED FOR THIS STOCK, ALREADY SOLD BY IT AND, THUS, NO LONGER WITH IT AS ON 31.08.2012, WHICH APPARENTLY IS THE RELEVANT DATE F OR COMPENSATION. AS IT APPEARS, THE ASSESSEE HAS NOT REPORTED THE CASH SALES (UP TO 31.08.2012) TO ITS PRINCIPAL. HERE IT MAY ALSO BE RELEVANT TO STATE THAT THE LOSS , ARISE AS IT DOES IN RESPECT OF THE ASSESSEES OPENING STOCK, SO THAT IT HAS IN FACT AR ISEN EARLIER TO THE CURRENT YEAR, ON ACCOUNT OF FACTORS THAT ARE NORMAL INCIDENCES OF TH E RETAIL TRADE, I.E., REPRESENTS BUSINESS LOSS OF THE PRECEEDING YEARS, ACCOUNTED FO R IN THE CURRENT YEAR. THOUGH, THEREFORE, STRICTLY SPEAKING, NOT ALLOWABLE FOR THE CURRENT YEAR, WE YET CONSIDER IT ADMISSIBLE AS THE SAID LOSS IS IN FACT RECOVERABLE UNDER THE FRANCHISE AGREEMENT FROM THE PRINCIPAL UPON DETERMINATION, AS INDEED CO MPENSATED FOR BY IT. THE OBSERVATION BY THE LD. CIT(A) THAT THE BRAND REEBO K CARRIES A HIGH PREMIUM IN THE MARKET AND, THEREFORE, COULD NOT POSSIBLY BE DI SPOSED THROUGH STREET HAWKERS, ALSO MERITS ACCEPTANCE, PARTICULARLY WHEN JUXTAPOSE D WITH THE FACT THAT NO SERIOUS DEFECTS IN STOCK HAVE BEEN POINTED OUT, AND COUPLED WITH THE COMPLETE ABSENCE OF ANY CREDIBLE MATERIAL TO SHOW THAT THE SAID STOCK H AD INDEED BEEN SOLD, AS CLAIMED, TO THARIWALAS. 3.4 THE NEXT QUESTION BEFORE US, WOULD THEREFORE BE THE EXTENT OF THE LOSS THAT CAN BE REGARDED AS PROVED, OR REASONABLY SO, BY THE ASSESSEE, I.E., IN THE FACTS AND CIRCUMSTANCES OF ITS CASE AND, CONSEQUENTLY, THE B ALANCE FOR WHICH THEREFORE A DISALLOWANCE BECOMES THEREFORE SUSTAINABLE, IT BEIN G BY NOW CLEAR THAT THE SAME ITA NO. 216/ASR/2017 (AY 2013-14) AVTAR KAUR V. ASST. CIT 13 COULD NOT FETCH ITS COST PRICE, MUCH LESS ITS SALE PRICE, SO THAT THERE IS NO QUESTION OF ANY PROFIT ON ITS SALE. THE ASSESSEES ACCOUNTS REF LECTING STOCK-IN-TRADE AT COST, AT WHICH IT IS ALLOWED CREDIT FOR BY ITS PRINCIPAL ON RETURN, RS. 44.88 LACS REPRESENTS THE VALUE OF THE STOCK LEFT WITH IT AT COST. THE DI FFERENCE OF RS. 17.55 LACS; THE PRINCIPAL DETERMINING THE SAME AT RS. 27.33 LACS, R EMAINS UNEXPLAINED. THE REALIZABLE VALUE OF THE STOCK IS AT 60%, I.E., RS. 16.398 LACS, AS AGAINST RS. 5.553 LACS BY THE ASSESSEE, WHOSE CLAIM, THUS, CAN BE SAI D TO BE PROVED TO THE EXTENT OF RS. 10.932 LACS (RS.27.33 LACS - RS. 16.398 LACS), I.E., OUT OF THE TOTAL LOSS OF RS. 39.33 LACS CLAIMED BY THE HER. THE ASSESSEE, ACCORD INGLY, INSTEAD OF BEING ASSESSED AT A PROFIT OF RS. 4.99 LACS, AS BY THE REVENUE, WO ULD STAND TO BE ALLOWED A LOSS OF RS. 10.932 LACS AND, ACCORDINGLY, GETS A RELIEF FOR RS. 15.922 LACS (I.E., RS. 4.99 LACS + RS.10.932 LACS). HERE IT MAY ALSO BE RELEVANT TO MENTION, AND EVEN AS OBSERVED BY THE BENCH DURING HEARING, THAT A PROPER ADJUSTME NT TO THE ASSESSEES RETURNED INCOME IN THIS RESPECT WOULD WARRANT AN ADD BACK (D ISALLOWANCE) OF THE LOSS CLAIMED, FOLLOWED BY REDUCTION OF THE LOSS ASSESSED (OR A FURTHER ADD BACK OF THE PROFIT SUSTAINED), AND WHICH ALSO EXPLAINS THE AFOR ESAID FIGURE OF RS.15.922 LACS. WE REFER TO THE PROFIT SUSTAINED EVEN AS WE HAVE ACCEPTED THE ASSESSEES CLAIM FOR LOSS, TO WHATEVER EXTENT, ONLY FOR COMPLETENESS OF THE STATED ALGORITHM. AN ASSESSMENT AT A PROFIT OF RS. 50, FOR EXAMPLE, AS A GAINST THE CLAIMED LOSS OF RS. 100, WOULD WARRANT AN ADDITION FOR RS. 150 TO AN AS SESSEES RETURNED INCOME. WE STATE SO AS WE OBSERVE THAT THIS HAS NOT BEEN FOLLO WED IN COMPUTING THE ASSESSEES INCOME, RESULTING IN A MISMATCH BETWEEN THE INCOME AS ASSESSED AND ITS COMPUTATION; THE REVENUE FAILING TO MAKE DISALLOWAN CE FOR THE LOSS NOT ACCEPTED BY IT, IMPLICIT IN THE REJECTION OF ACCOUNTS AND AS SESSMENT AT A PROFIT @ 10%. THE LD. COUNSEL FOR THE ASSESSEE, SH. KALRA, WOULD, UPO N THIS BEING OBSERVED BY THE BENCH DURING HEARING, OBJECT, STATING THAT THE SAME CAN ONLY BE THE SUBJECT MATTER OF THE REVENUES APPEAL. WE ARE AFRAID, WE COULD NO T DISAGREE MORE. THE QUESTION ITA NO. 216/ASR/2017 (AY 2013-14) AVTAR KAUR V. ASST. CIT 14 IS OF GIVING EFFECT TO THE INCOME ASSESSED, I.E., T HE INCOME AS DETERMINED IN ASSESSMENT (OR, AS FURTHER MODIFIED IN APPEAL) NO THING LESS AND NOTHING MORE, AND HAS NOTHING TO DO WITH THE REVENUES NON-EXISTENT A PPEAL. THE REVENUES APPEAL, WHERE SO, COULD ONLY BE QUA THE ACCEPTANCE OF THE PURCHASE RETURN BY THE LD. CIT(A), AS AGAINST IT AS NOT BY THE AO, IMPACTING T HE VOLUME OF THE STOCK THAT COULD BE REGARDED AS AVAILABLE WITH THE ASSESSEE, A ND HAS NOTHING TO DO WITH THE COMPUTATIONAL FLAW AFORE-REFERRED. THE MISTAKE, WHI CH IS IN THE NATURE OF AN ARITHMETICAL ANOMALY, COULD BE RECTIFIED U/S. 154. HOW COULD WE, HOWEVER, BE OBLIVIOUS TO OR OVERLOOK A GLARING MISTAKE STARING US IN THE FACE, AND WHICH THEREFORE STANDS BROUGHT TO THE FORE. IN FACT, WE W OULD BE FAILING IN OUR DUTY WERE WE NOT TO DO SO. REFERENCE, INTER ALIA , BE MADE TO THE DECISION IN KAPURCHAND SHRIMAL V. CIT [1981] 131 ITR 451 (SC), WHEREIN IT STANDS EXPLAIN ED BY THE APEX COURT THAT AN APPELLATE AUTHORITY HAS THE JURISDICT ION AS WELL AS THE DUTY TO CORRECT ALL ERRORS IN THE PROCEEDINGS UNDER APPEAL AND TO, IF NECESSARY, ISSUE APPROPRIATE DIRECTIONS TO THE AUTHORITY AGAINST WHOSE DECISION THE APPEAL IS PREFERRED IN DISPOSING THE MATTER BEFORE IT. INASMUCH AS THE SAM E, HOWEVER, WOULD RESULT IN AN INCREASE IN INCOME, IT WAS CONSIDERED PROPER BY U S TO PUT THIS FORTH TO THE LD. COUNSEL FOR THE ASSESSEE WHO, WHILE AGREEING WITH T HE SAME, I.E., THE COMPUTATIONAL ALGORITHM, QUESTIONS ITS LEGITIMACY IN THE INSTANT PROCEEDINGS. THIS IS UNFORTUNATE IN VIEW OF IT BEING A SIMPLE MATTER OF AN ARITHMETICAL MISTAKE, AS POINTED OUT EARLIER. HOW COULD, ONE MAY ASK, THE ASSESSEE BE ALLOWED REL IEF OF RS. 15.922 LACS, I.E., PURSUANT TO OUR ORDER, WHERE NO DISALLOWANCE OF LOS S HAS BEEN MADE BY THE REVENUE IN THE FIRST PLACE; THE AFORE-SAID FIGURE I NCLUDING THE CLAIM OF LOSS AT RS. 10.932 LACS. WE ARE CONSCIOUS THAT THE ASSESSEES G D. 2; GD. 1 BEING GENERAL IN NATURE, WARRANTING NO ADJUDICATION, RESTRICTS ITSEL F TO THE ADDITION QUA THE PROFIT SUSTAINED, AND WHICH ADDITION WE HAVE FOUND AS WITH OUT BASIS. THIS, HOWEVER, IS OF NO MOMENT. THE ASSESSMENT AT A PROFIT, FIRSTLY, ITS ELF IMPLIES ABSENCE OF LOSS, SO ITA NO. 216/ASR/2017 (AY 2013-14) AVTAR KAUR V. ASST. CIT 15 THAT THERE IS NO QUESTION OF THE LOSS CLAIMED HAVIN G BEEN ACCEPTED (BY THE REVENUE), A PART OF WHICH IN FACT STANDS ALLOWED BY US, I.E., IN DECIDING THE ISSUE DISCERNED AS ARISING FOR ADJUDICATION. THE TRIBUNAL IS EVEN OTHERWISE NOT CONFINED TO THE GROUND/S RAISED BEFORE IT, THOUGH IS BOUND T O, AS WE HAVE, HEAR THE PARTIES IN THE MATTER (RULE 11 OF THE APPELLATE TRIBUNAL (INCO ME-TAX) RULES, 1963). WE COULD FURTHER DWELL ON THE SCOPE OF A TAX APPEAL AS WELL AS THE POWERS OF THE TRIBUNAL; THE LAW ON WHICH IS WELL-SETTLED, BUT DO NOT CONSIDER I T NECESSARY TO DO SO IN-AS-MUCH AS WE HAVE NOT TRAVELED OUTSIDE THE ISSUE ARISING F OR ADJUDICATION, AND WHAT STANDS HIGHLIGHTED HERE IS A SIMPLE ARITHMETICAL MISTAKE I N COMPUTATION. 3.5 WE DECIDE ACCORDINGLY, AND THE ASSESSEE GETS PA RT RELIEF. 4. THE NEXT AND THE ONLY OTHER ISSUE ARISING IN THE INSTANT APPEAL IS THAT RAISED PER ITS GROUNDS 3 AND 4, QUA AN ADDITION FOR RS. 3,74,007/-, BEING THE DIFFEREN CE IN ACCOUNT WITH M/S. GOSHIES APPARELS (P.) LTD., ONE O F THE ALLIES OF RIC, THROUGH WHICH, AMONG OTHERS, THE BUSINESS WAS BEING TRANSAC TED BY IT WITH THE ASSESSEE. WHILE THE ASSESSEES ACCOUNTS REFLECT A DEBIT BALAN CE OF RS. 66,97,987/- IN THE ACCOUNT OF GOSHIES APPARELS (P.) LTD., THAT OF THE SAID CREDITOR SHOWS A BALANCE OF RS. 63,23,980/- TO THE ASSESSEES CREDIT. ADDITION WAS MADE ON ACCOUNT OF THE DIFFERENCE (OF RS. 3.74 LACS) BEING UNEXPLAINED. WE AGREE WITH THE LD. COUNSEL, SH. KALRA, THAT NO ADDITION COULD BE MADE IN THE INSTAN T CASE EVEN IF THE SAID DIFFERENCE IS, AS IS ADMITTEDLY THE CASE, UNEXPLAINED. THE REA SON IS THE LOWER CREDIT ALLOWED TO THE ASSESSEE BY THE SAID CREDITOR. THE ASSESSEES A CCOUNTS REFLECT A HIGHER DEBIT BALANCE THERETO, WHICH ONLY IMPLIES A CORRESPONDING CREDIT (TO, AS WE SUPPOSE, A NOMINAL ACCOUNT) IN THE ASSESSEES ACCOUNTS TO THAT EXTENT. THERE IS AS SUCH NO UNEXPLAINED CREDIT IN THE ASSESSEES ACCOUNTS. NO A DDITION, ACCORDINGLY, UNDER THE CIRCUMSTANCES, IS CALLED FOR. WE DECIDE ACCORDINGLY . ITA NO. 216/ASR/2017 (AY 2013-14) AVTAR KAUR V. ASST. CIT 16 5. IN THE RESULT, THE ASSESSEES APPEAL IS PARTLY A LLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON JANUARY 02, 2 019 SD/- SD/- (N. K. CHOUDHRY) (SANJAY ARORA) JUDICIAL MEMBER ACCOUNTANT MEMBER DATE: 02.01.2019 /GP/PKK/SR. PS. COPY OF THE ORDER FORWARDED TO: (1) THE APPELLANT: AVTAR KAUR H.NO. 22, DAULATP URI, JALANDHAR (2) THE RESPONDENT: ASSTT. COMMISSIONER OF INCO ME TAX, CIRCLE-II, JALANDHAR (3) THE CIT(APPEALS)-1, JALANDHAR (4) THE CIT CONCERNED (5) THE SR. DR, I.T.A.T. TRUE COPY BY ORDE R