M/s. Amit Marbles Pvt. Ltd., Delhi V. ACIT, New Delhi

ITA 2235/DEL/2015

• Counselvise Citation: [2019] 117 COUNSELVISE.COM (IT) 5239 (ITAT-DELHI)
• Duration Of Justice: 4 year(s) 1 month(s) 1 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 17-05-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2010-2011
• Appeal Filed On: 15-04-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: S N
• Keywords: Set aside
• Section: 133A

Judgement Text

PAGE | 1 INCOME TAX APPELLATE TRIBUNAL DELHI BENCH A: NEW DELHI BEFORE SMT BEENA A PILLAI, JUDICIAL MEMBER AND SHRI PRASHANT MAHARISHI, ACCOUNTANT MEMBER ITA NO. 2235/DEL/2015 (ASSESSMENT YEAR: 2010-11) AMIT MARBLES PVT. LTD, KHASRA NO. 5, NEAR CHOUDHRY RAM RATAN ESTATE & CO, FATEHPUR, DELHI PAN: AABCA3515C VS. ACIT, CIRCLE-1(1), NEW DELHI (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI MAHENDRA DADU, CA SHRI PANKAJ DADU, CA REVENUE BY: SHRI S. N. PANDEY, SR. DR DATE OF HEARING 15/05 / 201 9 DATE OF PRONOUNCEMENT 17 / 05 / 2019 O R D E R PER PRASHANT MAHARISHI, A. M. 1. THIS IS AN APPEAL FILED BY THE ASSESSEE AGAINST TH E ORDER OF COMMISSIONER OF INCOME TAX (APPEALS) 1, NEW DELHI DATED 27/1/2015 FOR ASSESSMENT YEAR 2010 11. 2. THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS OF AP PEAL:- 1. THE LEARNED ASSESSING OFFICER, CIRCLE-1(1), NEW DELHI HAS ERRED IN MAKING ADDITIONS ON ACCOUNT OF DIFFERENCE IN STOCK OF RS. 1,21,66,083/- AND RS. 4,65,146/- ON ACCOUNT OF UNDISCLOSED CASH WITHOUT GOING INTO THE FACTS OF CA SE AND WITHOUT PROVIDING DUE OPPORTUNITY. 2. AGGRIEVED BY THE INCOME TAX ASSESSMENT ORDER, TH E ASSESSEE FILED AN APPEAL BEFORE THE LD CIT(A)-I, NEW DELHI. IT HAS STATED THAT M/S. AMIT GRANITES & MARBLES ALSO OPERATES FRO M THE SAID PREMISES AND THE CASH OF RS. 4,65,146/- & STOC K OF RS. 1,21,66,083/- BELONGED TO M/S. AMIT GRANITES & MARB LES BUT INSPITE OF SUBMISSION OF NECESSARY DOCUMENTS, LEARN ED COMMISSIONER OF INCOME-TAX (A)-I, NEW DELHI DID NOT ALLOW THE APPEAL BUT DISMISSED THE SAID APPEAL WITHOUT GOING INTO THE DEPTH AND FACTS OF THE CASE. PAGE | 2 3. THE SAID ADDITIONS MAY PLEASE BE ORDERED TO BE D ELETED. 3. BRIEF FACTS OF THE CASE SHOWS THAT ASSESSEE IS A CO MPANY DERIVING INCOME FROM THE BUSINESS OF TRADING IN MARBLES AND GRANITES. IT FILED ITS RETURN OF INCOME ON 15/10/2010 DECLARING INCOME OF INR 5300710/. THE ASSESSMENT U/S 143 (3) OF THE INCOM E TAX ACT, 1961 (THE ACT) WAS PASSED ON 30/3/2013 DETERMINING TOTAL INCOME OF INR 17931940/. DURING THE YEAR THE SURV EY OPERATION U/S 133A OF THE INCOME TAX ACT WAS CARRIE D OUT ON 8/1/2010 AT THE BUSINESS PREMISES OF THE ASSESSEE C OMPANY. DURING THE COURSE OF SURVEY OPERATION, PHYSICAL VE RIFICATION OF STOCK WAS TAKEN AND THERE WAS A DIFFERENCE IN STOCK AMOUNTING TO INR 20107380/ AND EXCESS CASE OF INR 4 65146/ WHI CH WAS FOUND TO BE NOT RECORDED IN THE BOOKS OF ACCOUNTS. THE STATEMENT OF THE DIRECTOR OF THE COMPANY WAS RECORD ED DURING THE COURSE OF THE SURVEY. IN THE STATEMENT OF THE DIRE CTOR, A QUESTION WAS ASKED SHOWING THAT STOCK LYING AT THE PREMISES IS APPROXIMATELY INR 80,000,000 AND FURTHER AS PER THE TRADING ACCOUNT PROVIDED BY THE ASSESSEE AS ON 5/1/2000 AND THE CLOSING STOCK WAS SHOWN AT INR 7 8486047/. THE PH YSICAL VERIFICATION OF THE INVENTORY WAS CONDUCTED WHICH W AS FOUNDED INR 9 8593427/ AND THEREFORE THERE WAS A DIFFERENC E OF INR 20107380/ WAS FOUND. IN ANSWER TO THE ABOVE QUEST ION DIRECTOR OF THE ASSESSEE SUBMITTED THAT CLOSING STOCK DIFFER ENCE TO THE TUNE OF INR 2 0107380/ WAS ON ACCOUNT OF UNRECORDE D PURCHASE OUT OF THE BOOKS OF ACCOUNTS WHICH WAS IN EXCESS AND OVER AND ABOVE FROM RECORD THE REGULAR INCOME OF TH E ASSESSEE. THEREFORE HE OFFERED INR 20107380 FOR TAXATION. 4. DURING THE COURSE OF ASSESSMENT PROCEEDINGS THE LEA RNED ASSESSING OFFICER ISSUED A SHOW CAUSE NOTICE DATED 18/2/2013 TO SHOW WHY THE DIFFERENCE IN STOCK MAY NOT BE ADDED T O THE TAXABLE PAGE | 3 INCOME. THE ASSESSEE SUBMITTED THAT STATEMENT OF T HE DIRECTOR OF ASSESSE SHOWS THAT ON THE DATE HE IS ALSO A PARTN ER IN ANOTHER PARTNERSHIP FIRM M/S AMIT GARNIES AND MARBLES. I T WAS SUBMITTED THAT ASSESSEE HAS SUBMITTED A COMPLETE RECONCILIATION OF THE DIFFERENCE IN THE STOCK OF IN R 20107380/- ON THAT DATE EXPLAINING THAT DIFFERENCE IN THE STOC K SURRENDERED IN THE FINANCIAL STATEMENT FOR ASSESSMENT YEAR 2010 11 IS RS. 2382947/, TOTALLING ERROR AND RATE AS PER THE DOCU MENTS SUBMITTED BY THE ASSESSEE BEFORE THE ASSESSING OFFI CER IS OF RS. 5558350/ AND STOCK OF AMIT GRANITES AND MARBES AS ON 8/1/2010 IS OF INR 12166083.98. THEREFORE, THERE IS A COMPLETE RECONCILIATION AVAILABLE OF INR 20107380.98 AND HEN CE THERE IS NO FURTHER UNDISCLOSED INCOME. THE LEARNED ASSES SING OFFICER VERIFIED THE EXPLANATION SUBMITTED BY THE ASSESSEE. THE LEARNED AO ACCEPTED THE EXPLANATION OF THE ASSESSEE ABOUT T HE TOTALING ERROR AND RATE ADJUSTMENT AS PER THE DOCUMENTS SUB MITTED BY THE ASSESSEE OF RS. 5558350/. THE LEARNED ASSESSI NG OFFICER FURTHER NOTED THAT STOCK DIFFERENCE IN STOCK OF INR 2382947 HAS ALREADY BEEN DECLARED IN THE RETURN OF INCOME BY TH E ASSESSEE. THEREFORE THESE 2 DIFFERENCES WERE ACCEPTED BY THE LEARNED ASSESSING OFFICER. HOWEVER WITH RESPECT TO THE DIF FERENCE IN STOCK OF INR 12166083/ WHICH WAS STATED TO BE BELONGING TO THE STOCK OF AMIT GRANITES AND MARBLES , WHICH IS ANOTHER PA RTNERSHIP FIRM CARRYING ON ITS BUSINESS FROM THE SAME PREMISE S, AND THE STOCK OF THE PARTNERSHIP FIRM WAS ALSO LYING AT THE SAME PREMISES, WAS NOT ACCEPTED. THE MAIN REASON FOR M AKING THE ADDITION WAS THAT THE DIRECTOR OF THE ASSESSEE OFFE RED THE ABOVE AMOUNT FOR TAXATION AND FURTHER THE DIRECTOR OF THE ASSESSEE WAS ALSO THE PARTNER OF THE SAME FIRM BUT DID NOT ST ATE THAT THE PAGE | 4 STOCK BELONGS TO THAT FIRM, BUT THE SAME HAS NOT B EEN EXPRESSED CLEARLY WHILE GIVING THE STATEMENT BY THE DIRECTOR THAT NO SUCH STOCK BELONGS TO OTHER CONCERN. THEREFORE THE LEAR NED ASSESSING OFFICER RECORDED THAT THIS IS AN AFTERTHOUGHT OF TH E ASSESSEE WHICH IS NOT ACCEPTABLE PARTICULARLY WHEN AT ONE STAGE HE SAYS THAT HE IS THE PARTNER IN THE OTHER CONCERN WHICH HE REMEMB ERS AT THE TIME OF GIVING OF THE STATEMENT BUT HE DID NOT DISC LOSE THAT THE PART OF THE INVENTORY ALSO BELONGS TO THE PARTNERSH IP FIRM. HE FURTHER NOTED THAT THE AUTHORISED REPRESENTATIVE OF THE ASSESSEE COMPANY HAS FAILED TO PRODUCE ANY CORROBORATIVE EVI DENCE REGARDING JUSTIFICATION FOR THE STOCK OF AMIT GRANI TE AND MARBLES FOUND LYING IN THE BUSINESS PREMISES OF THE ASSESSE E BELONGING TO THE PARTNERSHIP FIRM. ACCORDINGLY THE ADDITION OF INR 12166083/ WAS MADE. 5. AGGRIEVED, ASSESSEE PREFERRED AN APPEAL BEFORE THE LEARNED CIT A. BEFORE HIM THE ASSESSEE REITERATED THE SAME SUB MISSION. THE LEARNED CIT A REJECTED THE CONTENTION OF THE ASSE SSEE VIDE PARA NUMBER 5.2.1 OF THE ORDER. HE HELD THAT THE DIREC TOR IN THE APPELLANT COMPANY HAS NOWHERE MENTIONED IN HIS STAT EMENT THAT THE STOCK BELONGS TO ITS SISTER CONCERN. HE FURTHE R STATED THAT EVEN DURING ASSESSMENT PROCEEDINGS NO DOCUMENTARY E VIDENCES WERE SUBMITTED TO SUBSTANTIATE THE ABOVE CONTENTION THAT EXCESS STOCK BELONGS TO THE SISTER CONCERN. ACCORDINGLY H E ALSO HELD THAT EXPLANATION OF THE ASSESSEE IS AN AFTERTHOUGHT. TH EREFORE ASSESSEE IS AGGRIEVED, HAS PREFERRED THE APPEAL BE FORE US. 6. THE LEARNED AUTHORISED REPRESENTATIVE SUBMITTED THA T AMIT GRANITE AND MARBLES IS A SISTER CONCERN OF THE ASSE SSEE COMPANY WHICH ALSO OPERATES FROM SAME PREMISES FOR A LONG TIME. DURING THE COURSE OF ASSESSMENT PROCEEDINGS THE ASSESSEE S UBMITTED PAGE | 5 THAT AN AMOUNT OF INR 12166083.98 IS A STOCK BELONG ING TO THAT CONCERN AND NOT OF THE ASSESSEE AS ON 8/1/2010. TH E ASSESSEE ALSO SUBMITTED AND SUPPORTED THE EVIDENCES BY THE C OPIES OF PURCHASE AND SALE BILL OF THAT FIRM, COPIES OF THE VAT RETURNS AND THE COPY OF TRADING AND PROFIT AND LOSS ACCOUNT OF THAT PARTICULAR FIRM. ASSESSEE ALSO SUBMITTED A PROOF THAT AMIT GR ANITES AND MARBLES IS ALSO SITUATED AT THE SAME PLACE BUT THE LEARNED AO HAS DISREGARDED THOSE DOCUMENTS. HE FURTHER SUBMIT TED THE COPIES OF THE INCOME TAX RETURNS OF THE PARTNERSHIP FIRM FOR LAST SEVERAL YEARS TILL TO DATE WHICH SHOWS THE GROSS PR OFIT RATIO OF 12% 13% AND THE CLOSING STOCK EVERY YEAR. HE SUB MITTED THAT THE STOCK AND THE BOOKS OF ACCOUNTS OF THE ASSESSEE AS WELL AS THE PARTNERSHIP FIRM WERE ACCEPTED BY THE INCOME TA X DEPARTMENT. HE THEREFORE STATED THAT WHEN THE ASS ESSEE HAS SUBMITTED THE COMPLETE SET OF THE ANNUAL ACCOUNTS O F THE PARTNERSHIP FIRM ALONG WITH THE COPIES OF PURCHASE BILLS, COPIES OF THE BANK STATEMENTS SHOWING PURCHASE AND SALE TRANS ACTION AS WELL AS THE COPIES OF THE INCOME TAX RETURNS OF THE PARTNERSHIP FIRM, THE BALANCE SHEET OF THE COMPANY AS WELL AS T HE PARTNERSHIP FIRM SHOWING THAT THERE IS A STOCK LYING IN THE BOO KS OF ACCOUNTS OF THE PARTNERSHIP FIRM, LOWER AUTHORITIES SHOULD H AVE ACCEPTED THE SAME. HE FURTHER STATED THAT DURING THE COURSE OF THE ASSESSMENT PROCEEDINGS THE ASSESSEE SUBMITTED THE C OMPLETE RECONCILIATION OF THE PURCHASE AND SALE OF ITS ACCO UNTS AND CLOSING STOCK OF THE ASSESSEE COMPANY AND ALSO FULL PURCHASE AND SALES OF THE MATERIAL ALONG WITH THE VALUE OF C LOSING STOCK OF THE PARTNERSHIP FIRM AS ON THE DATE OF SURVEY. THE REFORE HE SUBMITTED THAT THE LOWER AUTHORITIES HAVE GROSSLY E RRED IN NOT APPRECIATING CONTENTION OF THE ASSESSEE AND HAS NO T GRANTED THE PAGE | 6 CREDIT OF THE CLOSING STOCK FOUND DURING THE COURSE OF SURVEY WHICH IS BELONGING TO THE PARTNERSHIP FIRM. HE FUR THER STATED THAT DIRECTOR OF THE COMPANY THOUGH COULD NOT RECON CILE AND RECOLLECT AT THE TIME OF SURVEY THAT THE STOCK OF THE PARTNERSHIP FIRM IS ALSO INCLUDED IN THE PHYSICAL VERIFICATION AND THEREFORE IN ANXIETY HE HAS FORGOT TO MENTION SO. HE FURTHER ST ATED THAT MERELY BECAUSE THE DIRECTOR COULD NOT MENTION THE S TOCK PERTAINING TO THE PARTNERSHIP FIRM, SUBSEQUENTLY WH EN THE COMPLETE RECONCILIATION IS PROVIDED, THE ADDITION C ANNOT BE MADE IN THE HANDS OF THE ASSESSEE. 7. THE LEARNED DEPARTMENTAL REPRESENTATIVE VEHEMENTLY SUPPORTED THE ORDERS OF THE LOWER AUTHORITIES AND SUBMITTED T HAT DURING THE COURSE OF SURVEY THE ASSESSEE WAS SPECIFICALLY ASKE D TO EXPLAIN THE DIFFERENCE BETWEEN THE CLOSING STOCK IN THE PHY SICAL STOCK FOUND. DURING THE COURSE OF STATEMENT THE DIRECTOR OF THE COMPANY DID NOT MENTION THAT PART OF THE STOCK IS B ELONGING TO THE PARTNERSHIP FIRM AND NOT TO THE ASSESSEE COMPAN Y, THEREFORE, THE LOWER AUTHORITIES HAVE CLEARLY HELD, AND RIGHTL Y SO, THAT IT IS MERELY AN AFTERTHOUGHT. 8. WE HAVE CAREFULLY CONSIDERED THE RIVAL CONTENTION A ND PERUSED THE ORDERS OF THE LOWER AUTHORITIES. ADMITTEDLY DU RING THE COURSE OF SURVEY THE EXCESS STOCK WAS FOUND THEN WHAT WAS RECORDED IN THE BOOKS OF ACCOUNTS AMOUNTING TO INR 20107380/-. THE ASSESSEE COULD RECONCILE THE DIFFERENCE IN THE STOC K ON ACCOUNT OF TOTALING ERROR AND THE RATE DIFFERENCE AMOUNTING TO RS. 5558350/. THE BALANCE DIFFERENCE IN THE STOCK WAS SURRENDERED FOR ASSESSMENT YEAR 2010 11 OF INR 2382947. THES E 2 ITEMS OF THE ADJUSTMENT WERE UNDISPUTED ON EITHER SIDE. HOW EVER THE ONLY DISPUTE IS WITH RESPECT TO THE STOCK OF INR 12 166083/- PAGE | 7 WHICH IS PERTAINING TO THE STOCK OF AMIT GRANITE A ND MARBLE WHICH IS ANOTHER PARTNERSHIP FIRM MAINTAINING STOCK IN THE SAME PREMISES ON WHICH SURVEY TOOK PLACE. THE ASSESSEE SUPPORTED THE ARGUMENT THAT THE STOCK BELONGS TO THE PARTNERS HIP FIRM AND NOT TO THE ASSESSEE BY SUBMITTING THE A. COPY OF THE PURCHASE AND SALES BILL B. ANNUAL ACCOUNTS OF THE PARTNERSHIP FIRM C. INCOME TAX RETURNS D. VAT RETURNS E. STOCK DETAILS IT IS FURTHER STATED THAT AMIT GRANITE AND MARBLES IS CONTINUOUSLY ASSESSED TO INCOME TAX AS WELL AS UNDER VAT LAWS. THEREFORE, MERELY BECAUSE THE ASSESSEE HAS MADE A STATEMENT AN D FOUND LATER ON THAT THERE IS AN ERROR AND THERE IS A STOC K LYING AT THE PREMISES BELONGING TO ANOTHER ASSESSEE, A PARTNERSH IP FIRM AND NOT OF THE ASSESSEE COMPANY, WITHOUT EXAMINING THE COMPLETE FACTS ABOUT THE ARGUMENT OF THE ASSESSEE WHICH IS H EAVILY SUPPORTED BY THE EVIDENCES, THERE IS NO REASON TO M AKE AN ADDITION. BEFORE US, ASSESSEE HAS SUBMITTED THE AU DITED ACCOUNTS OF THE PARTNERSHIP FIRM PLACED AT PAGE NUM BER 14 21 OF THE PAPER BOOK. AS ON 31/3/2009 THE PARTNERSHIP FIRM WAS HAVING A CLOSING STOCK OF INR 12658039/ AND SALES OF RS. 13250138 AND PURCHASES OF INR 1 4168630/. THE PART NERSHIP FIRM WAS ALSO HAVING THE OPENING STOCK OF RS. 92166 14/. THESE ANNUAL ACCOUNT SHOWS THAT THE SISTER CONCERN OF THE ASSESSEE WAS ALSO HAVING THESE CLOSING STOCK AVAILABLE AT TH E SAME PREMISES. THE LEARNED AO AS WELL AS THE LEARNED CI T A DID NOT CONTROVERT THE FACT THAT BOTH ASSESSEE AS WELL AS T HE PARTNERSHIP FIRM IS EXISTING AT THE SAME PLACE. BOTH THE LOWER AUTHORITIES PAGE | 8 HAVE REJECTED THE CONTENTION OF THE ASSESSEE FOR TH E SIMPLE REASON THAT THEY HAVE CONSIDERED THE EXPLANATION OF THE AS SESSEE AS AN AFTERTHOUGHT. HOWEVER, MERELY ON THE PRESUMPTION T HAT IT IS AN AFTERTHOUGHT, OVERWHELMING EVIDENCES PRODUCED BY TH E ASSESSEE WITH RESPECT TO THE PARTNERSHIP FIRM IN THE FORM OF PURCHASE AND SALES BILLS, THE ANNUAL ACCOUNTS, SALES TAX RETURNS , INCOME TAX RETURNS AS WELL AS THE STOCK DETAILS, THE ADDITION CANNOT BE MADE. HOWEVER IT IS ALSO THE DUTY OF THE ASSESSEE TO SHOW BEFORE THE ASSESSING OFFICER ABOUT THE QUANTITY OF THE STOCK A S WELL AS THE VALUATION OF THOSE STOCK WHICH IS BELONGING TO THE SISTER CONCERN. UNDOUBTEDLY HEAVY BURDEN LIES ON THE ASSESSEE TO SH OW THE AVAILABILITY OF THE STOCK AT THE PREMISES PERTAININ G TO NOT THE ASSESSEE BUT TO THE PARTNERSHIP FIRM. THE LOWER AU THORITIES HAVE NOT EXAMINED THE PURCHASE AND SALES INVOICES AS WEL L AS THE EVIDENCES PRODUCED BY THE ASSESSEE BUT HAVE MERELY BRUSHED ASIDE THE SAME. SAME IS THE CASE WITH RESPECT TO T HE CASH FOUND OF INR 4 65146/- WHICH IS ALSO CLAIMED TO BE BELONG ING TO THE SISTER CONCERN. IN VIEW OF THIS, WE SET ASIDE THE WHOLE ISSUE OF THE AMOUNT OF ADDITION OF INR 1 2166083/ WITH RESP ECT TO THE UNDISCLOSED STOCK AVAILABLE DURING THE COURSE OF SU RVEY AND CASH FOUND OF INR 4 65146/, WHICH IS CLAIMED TO BE BELO NGING TO ANOTHER SISTER CONCERN, TO THE FILE OF THE LEARNED ASSESSING OFFICER FOR FRESH EXAMINATION. THE ASSESSEE IS DIRECTED TO SUBSTANTIATE ITS CLAIM BEFORE THE ASSESSING OFFICER TO THE SATIS FACTION OF THE AO. AO MAY EXAMINE THOSE DETAILS AND GRANT PROPER OPPOR TUNITY TO THE ASSESSEE TO SUBSTANTIATE ITS CLAIM. THEREAFTER HE MAY DECIDE THE ISSUE AFRESH. SAME IS THE CASE WITH RESPECT TO THE CASH FOUND OF INR 4 65146/. IN THE RESULT THE SOLITARY GROUN D OF APPEAL IS SET ASIDE TO THE FILE OF THE LEARNED ASSESSING OFFI CER. PAGE | 9 9. IN THE RESULT APPEAL OF THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 17/05/2019. -SD/- -SD/- (BEENA A PILLAI) (PRASHANT MAHARISHI) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 17/05/2019 A K KEOT COPY FORWARDED TO 1. APPLICANT 2. RESPONDENT 3. CIT 4. CIT (A) 5. DR:ITAT ASSISTANT REGISTRAR ITAT, NEW DELHI PAGE | 10 DATE OF DICTATION DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE DICTATING MEMBER DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE OTHER MEMBER DATE ON WHICH THE APPROVED DRAFT COMES TO THE SR. P S/ PS DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE THE DICTATING MEMBER FOR PRONOUNCEMENT DATE ON WHICH THE FAIR ORDER COMES BACK TO THE SR. PS/ PS DATE ON WHICH THE FINAL ORDER IS UPLOADED ON THE WEBSITE OF ITAT DATE ON WHICH THE FILE GOES TO THE BENCH CLERK DATE ON WHICH THE FILE GOES TO THE HEAD CLERK THE DATE ON WHICH THE FILE GOES TO THE ASSISTANT REGISTRAR FOR SIGNATURE ON THE ORDER DATE OF DISPATCH OF THE ORDER