Smt. Ansuyaben G.Kachhadia, Vapi V. The ACIT.,Vapi Circle, Vapi

ITA 2281/AHD/2009

• Counselvise Citation: [2012] 140 COUNSELVISE.COM (IT) 60581 (ITAT-AHMEDABAD)
• Duration Of Justice: 2 year(s) 11 month(s) 17 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 10-07-2012
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: A
• Next Hearing Date: 11-04-2012
• Assessment Year: 2005-2006
• Appeal Filed On: 23-07-2009
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: RAHUL KUMARSR
• Assessee Lawyers: R M UPADHYAY
• Section: 133A

Judgement Text

ITA NO 2281 /AHD/2009 A.YR.. 2005 -06 1 IN THE INCOME TAX APPELLATE TRIBUNAL ABENCH, AH MEDABAD (BEFORE SHRI D. K. TYAGI, J./M. & SHRI ANIL CHATUR VEDI A.M.) I.T.A. NO.228 1/AHD/2009. (ASSESSMENT YEAR: 2005-06) SMT. ANSUYABEN G. KACHHADIA, PROP. M/S. DAMANGANGA STEEL PLOT NO.125-126, OPP. SHIVSENA OFFICE, SILVASA ROAD, VAPI. (APPELLANT) VS. ASSISTANT COMMISSIONER OF INCOME TAX, VAPI CIRCLE, INCOME TAX OFFICE, VAPI. (RESPONDENT) PAN: AJGPK 2891C APPELLANT BY : SHRI R. M. UPADHYAY. RESPONDENT BY : MR.RAHULKUMAR,SR. D.R. ( )/ ORDER DATE OF HEARING : 11-4-2012. DATE OF PRONOUNCEMENT : 10-7-2012 PER: SHRI ANIL CHATURVEDI, ACCOUNTANT MEMBER. THIS APPEAL IS FILED BY THE ASSESSEE AGAINST THE O RDER OF CIT (A)-I, SURAT DATED 27-5-2009 FOR THE ASSESSMENT YEAR 2005- 06. 2. THE ASSESSEE RAISED FOLLOWING GROUNDS OF APPEAL:- 1. LD. A.O. HAS ERRED IN LAW AND ON FACTS TO ADD A N AMOUNT OF EXCESS CASH FOUND OF RS.2,00,000/- WHICH WAS DISCLO SED ALONG WITH AN AMOUNT OF RS.41,00,000/- INCOME AND OFFERED FOR TAXATION, WHEN ASSESSMENT IS DONE UNDER SCRUTINY SCHEME, AND WHEN SALES, PURCHASES, EXPENSES ARE BEING ALLOWED SEPARATE ADDI TION OF ITA NO 2281 /AHD/2009 A.YR.. 2005 -06 2 RS.2,00,000/- AS EXCESS CASH IS NOT JUST AND LEGAL. LD. CIT (A)-I SURAT HAS ERRED ADDITION OF RS.2,00,000/- ONLY FOR THE RE ASON THAT ASSESSEE HAD MADE SPECIFIC DISCLOSURE,. ADDITION MADE BY A.O . AND CONFIRMED BY CIT(A)-I, SURAT IGNORING HONBLE BOARD CIRCULAR THAT ADDITION SHOULD NOT BE MADE SOLELY ON THE BASIS OF ACQUIENCE . 2. LD. A.O. HAS ERRED IN LAW AND ON FACTS TO ADD AN AMOUNT OF RS.2,24,714/- AS STOCK DIFFERENCE. DETAILS OF STOCK IN QUANTITY AS WELL AS IN VALUE IN FURNISHED AS PER AUDITED STATEMENT O F ACCOUNTS, G.P. OF LAST YEAR WAS 2% WHILE IN THE YEAR UNDER APPEAL IT IS 6.77% WHICH POSITION WHEN ACCEPTED ADDITION MADE BY A.O. AND SU STAINED BY CIT (A)-I, SURAT IS NOT JUST AND PROPER. 3. IF THE ADDITION MADE BY THE A.O. & SUSTAINED BY LD. CIT (A)-I, SURAT IS UPHELD, THEN THE DISCLOSURE MADE FOR RS.41 LAKHS AS INCOME DURING SURVEY IS REQUESTED TO BE DELETED. 3. THE BRIEF FACTS ARE THAT ASSESSEE IS PROPRIETOR OF DAMANGANGA STEEL AND IS ENGAGED IN THE TRADING OF IRON AND STEEL. SH E FILED HER RETURN OF INCOME ON 31-10-2005 DECLARING INCOME OF RS.42,52,7 00/-. A SURVEY ACTION U/S 133A WAS CONDUCTED ON 9-3-2005 AND HER STATEMEN T WAS RECORDED ON OATH. THE ASSESSEE MADE A DISCLOSURE OF ADDITIONAL INCOME UNDER THE FOLLOWING HEADS:- (1) EXCESS CASH. RS. 2,00,000/- (2) EXCESS STOCK. RS.34,00,000/- (3) MISCELLANEOUS INCOME. RS. 5,00,000/- ------------------- RS.41,00,000/- 4. THE PERUSAL OF RETURN OF INCOME REVEALED THAT TH E ASSESSEE HAS OFFERED AMOUNT ADMITTED DURING THE COURSE OF SURVEY PROCEEDINGS OF RS.41/- LAKHS AS STOCK. DURING THE COURSE OF ASSESS MENT PROCEEDINGS, THE ITA NO 2281 /AHD/2009 A.YR.. 2005 -06 3 VERIFICATION OF CASH BOOK REVEALED THAT THE CASH BA LANCE ON THE DATE OF SURVEY WAS RS 16,076/- WHEREAS CASH OF RS 2,04,042/ - WAS FOUND ON PHYSICAL VERIFICATION OF SURVEY PARTY. AT THE TIME OF SURVEY SINCE THE BOOKS OF ACCOUNTS WERE NOT COMPLETE, THE ASSESSEE DECLARE D RS 2,00,000/- ON ACCOUNT OF EXCESS CASH. THE ASSESSEE IN HER BOOKS O F ACCOUNT AND FINANCIAL STATEMENTS HAS GIVEN EFFECT OF ADDITIONAL INCOME OFFERED ON ACCOUNT OF EXCESS STOCK FOUND. THE ASSESSEE HAD CRE DITED CAPITAL ACCOUNT BY RS 44,25,871/- INCLUSIVE OF DISCLOSURE AMOUNT OF RS. 41,00,000/- AND ALSO SHOWN THE SAME ON ASSET SIDE OF BALANCE SHEET. THE AO WAS OF THE VIEW THAT THE AMOUNT DISCLOSED UNDER SPECIFIC HEAD OF CASH OF RS 2,00,000/- REQUIRED TO BE BROUGHT TO TAX AND ACCORD INGLY AN ADDITION OF RS 2,00,000/- WAS MADE TO THE INCOME. 5. AGGRIEVED WITH THE ACTION OF AO, THE ASSESSEE PR EFERRED APPEAL BEFORE CIT(A). BEFORE CIT(A), THE ASSESSEE CONTENDE D THAT THE AMOUNT OF RS 41 LACS DISCLOSED IN THE FORM OF STOCK ALREADY I NCLUDES RS 2 LAC DISCLOSED DURING THE SURVEY. THEREFORE THE ADDITION OF SEPARATE ADDITION OF RS 2 LAC WAS UNCALLED FOR. CIT(A) PARTLY ALLOWED TH E APPEAL OF THE ASSESSEE BY HOLDING AS UNDER: 6. AGAINST THIS NON-ALLOWANCE OF SET OFF OF RS.2 LA KH, ASSESSEE CARRIED THE MATTER IN APPEAL BEFORE THE CIT (A). 2.3. I HAVE CONSIDERED THE SUBMISSION MADE BY THE APPELLANT AND THE OBSERVATION OF THE A.O. THE EXCESS CASH FOUND D URING THE COURSE OF SURVEY WAS RS.2,04,042/- WHEREAS AS PER THE BOOK S OF ACCOUNT PRODUCED DURING THE ASSESSMENT PROCEEDINGS EVEN AFT ER THE BOOKS OF ACCOUNT WERE COMPLETED THE CASH BALANCE ON THE DATE OF SURVEY IS ONLY RS.16,076/-.SINCE THE BOOKS OF ACCOUNT HAVE BE EN COMPLETELY WRITTEN AND THE CASH BALANCE IS STILL UNEXPLAINABLE THE ADDITION MADE ITA NO 2281 /AHD/2009 A.YR.. 2005 -06 4 BY THE A.O. IN RESPECT OF EXCESS CASH FOUND IS CORR ECT HOWEVER THE ADDITION OF RS.2 LACS IS REDUCED TO RS.1,87,966/- B EING THE DIFFERENCE OF THE CASH ACTUALLY FOUND AND AS PER THE BOOKS OF ACCOUNT ON THE DATE OF SURVEY. HENCE THIS GROUND OF APPEAL IS PART LY ALLOWED. 7. AGGRIEVED BY THE ORDER OF CIT(A), THE ASSESSEE I S IN APPEAL BEFORE US. BEFORE US IT WAS CONTENDED BY THE LD.A.R. SUBMITTED THAT THE ASSESSEE IN HER BOOKS OF ACCOUNTS AND FINANCIAL STATEMENT HAS G IVEN EFFECT OF ADDITIONAL INCOME OFFERED ON ACCOUNT OF EXCESS STOCK FOUND. TH E LD. A.R. POINTED OUT TO THE PROFIT AND LOSS ACCOUNT SUBMITTED ON RECORD AT PAGE 13 OF THE PAPER BOOK WHEREIN THE ASSESSEE HAD INCLUDED THE DISCLOSU RE OF RS 41 LACS MADE DURING THE COURSE OF SURVEY TO THE TOTAL INCOME. TH E NET PROFIT OF RS 44,25,871/- THAT HAS BEEN CREDITED TO THE CAPITAL A CCOUNT THUS INCLUDED THE ENTIRE AMOUNT OF RS 41 LACS MADE DURING THE COURSE OF SURVEY. IT ASSESSEE DUE TO MISTAKE HAD SHOWN THE ENTIRE AMOUNT OF RS 41 LACS AS STOCK WHEREAS IN REALITY THE ASSESSEE SHOULD HAVE BIFURCA TED THE AMOUNT OF RS 41 LACS INTO THAT OF EXCESS CASH RS 2 LACS, EXCES S STOCK RS 34 LACS AND MISCELLEOUS INCOME RS 5 LAC. THE A.R. THUS CONTENDE D THAT RS 2 LAC WAS ALREADY INCLUDED BY THE ASSESSEE IN THE DISCLOSURE AND AGAIN THE AO HAS MADE ADDITION OF RS 2 LAC. THIS ACTION OF AO AMOUNT ED TO DOUBLE ADDITION. THE LD.A.R. THUS URGED THAT THE ADDITION OF RS 2 LA C MADE BE DELETED. IN THE ALTERNATE, LD. A.R., REQUESTED THAT THE MATTER BE RESTORED TO THE FILE OF AO FOR VERIFICATION. 8. THE LD. D.R. ON THE OTHER HAND RELIED ON THE ORD ER OF THE AO AND CIT(A). ITA NO 2281 /AHD/2009 A.YR.. 2005 -06 5 9. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL ON RECORD. IT IS AN UNDISPUTED FACT THAT A SURVEY ACTI ON TOOK PLACE AT THE PREMISES OF THE ASSESSEE. DURING THE COURSE OF SURV EY THE ASSESSEE MADE DISCLOSURE OF RS 41 LACS COMPRISING OF EXCESS CASH OF RS 2 LAC, EXCESS STOCK OF RS 34 LACS AND MISCELLANEOUS INCOME OF RS 5 LAC. IN THE PROFIT AND LOSS ACCOUNT THE ASSESSEE HAD DISCLOSED RS. 41 LAC AS IT DECLARED STOCK AND THE SAME WAS OFFERED FOR TAX. THE AO HAD ALSO M ADE AN ADDITION ON ACCOUNT OF EXCESS AMOUNT OF CASH OF RS 2 LAC FOUND DURING THE COURSE OF SURVEY. FROM THE ASSESSMENT ORDER OF THE AO AND THE ORDER OF CIT(A) IT IS NOT CLEAR AS TO WHETHER THE AMOUNT OF RS 41 LACS IN CLUDES RS 2 LAC OF EXCESS CASH FOUND. IN VIEW OF THESE FACTS, WE ARE O F THE OPINION THAT IN THE FAIRNESS OF THINGS AND TO MEET THE ENDS OF JUSTICE THIS MATTER BE REMANDED TO THE FILE OF A.O FOR VERIFICATION. WE THUS DIRECT THE AO TO VERIFY AND ASCERTAIN AS TO WHETHER THE ADDITION OF RS 2 LAC MA DE WAS ALREADY INCLUDED IN THE AMOUNT OF RS 41 LACS DISCLOSED. NEEDLESS TO SAY, THE ASSESSEE WILL COOPERATE WITH THE AO IN PROVIDING ALL THE NECESSAR Y DOCUMENTS AND DETAILS REQUIRED BY THE AO FOR VERIFICATION. THE AO SHALL G IVE ADEQUATE OPPORTUNITY TO THE ASSESSEE FOR BEING HEARD IN THE MATTER. THUS THIS GROUND OF ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSES. 10. THE NEXT GROUND OF APPEAL RELATES TO THE ADDITI ON OF RS.2,24,714/- AS STOCK DIFFERENCE. 11. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, A. R. OF THE ASSESSEE WAS ASKED TO SUBMIT STATEMENT ON THE BASIS OF PURCH ASES WORKED ON FIFO METHOD INCLUSIVE OF TRANSPORTATION CHARGES AND LOAD ING CHARGES. DETAILS OF ITA NO 2281 /AHD/2009 A.YR.. 2005 -06 6 STOCK POSITION BASED ON FIFO METHOD AS ON 31.3.2005 REVEALED THE STOCK OF RS.63,98,909/- WHEREAS THE ASSESSEE HAD SHOWN ST OCK OF RS.61,74,195/- INCLUSIVE OF RS.41,00,000/- BEING A MOUNT DISCLOSED DURING THE SURVEY PROCEEDINGS. THUS THERE WAS EXCESS DIFFE RENCE IN STOCK OF RS.2,24,714/-. AS THE ASSESSEE COULD NOT SATISFACTO RILY EXPLAIN THE DISCREPANCY, THE A.O. ADDED RS 2,24,714/- TO THE TO TAL INCOME OF ASSESSEE. 12. AGGRIEVED BY THIS ACTION OF THE A.O., THE ASSES SEE CARRIED THE MATTER IN APPEAL BEFORE THE CIT (A). CIT (A) AFTER CONSID ERING THE SUBMISSIONS OF THE A.R. CONFIRMED THE ACTION OF THE A.O. BY HOLDIN G AS UNDER:- I HAVE CONSIDERED THE SUBMISSION MADE BY THE APPE LLANT AND OBSERVATION OF THE A.O. I DO NOT AGREE WITH THE APP ELLANT. THE FIFO METHOD IS CORRECT METHOD TO FOLLOW. THE STOCK MUST INCLUDE THE TRANSPORTATION CHARGES AND LOADING CHARGES TO BRING THE STOCK TO THE GODOWN AND HENCE THE ADDITION MADE BY THE A.O. IS C ONFIRMED. THIS GROUND OF APPEAL IS THEREFORE, DISMISSED. 13. AGAINST THE ABOVE ORDER OF CIT(A), NOW THE ASSE SSEE IS IN APPEAL BEFORE THE TRIBUNAL. 14. BEFORE US, THE LD. A.R. SUBMITTED THAT AT THE T IME OF FILING OF INCOME TAX RETURN, STOCK STATEMENT AS ON 31.3.2005 WAS SUB MITTED ALONGWITH THE QUANTITY AND VALUE WHICH WAS WITHOUT TRANSPORT CHAR GES AND LOADING CHARGES WHILE THE STOCK STATEMENT ASKED FOR WAS INC LUDING TRANSPORT CHARGES AND LOADING CHARGES. THE VALUATION ASCERTAI NED BY THE SURVEY PARTY WAS ALSO INCLUDED IN THE DECLARATION OF INCOM E AND TAX WAS PAID. HE ITA NO 2281 /AHD/2009 A.YR.. 2005 -06 7 THEREFORE URGED THAT THE ADDITION OF RS 224714/- MA DE BY THE AO BE DELETED. 15. THE LD. D.R. RELIED ON THE ORDER OF THE LOWER A UTHORITIES. 16. WE HAVE HEARD THE RIVAL CONTENTIONS, PERUSED TH E MATERIAL ON RECORD. THE ADDITION WAS MADE BY THE AO AS THE DISCREPANCY BETWEEN THE BOOK STOCK AND THE STOCK POSITION WORKED OUT ON THE BASI S OF FIFO METHOD AT THE TIME OF SURVEY COULD NOT BE RECONCILED AND SATISFAC TORILY EXPLAINED. THE ASSESSEE COULD NOT DEMONSTRATE BEFORE CIT(A) THAT T HE CLOSING STOCK WAS WITHOUT TRANSPORTATION CHARGES AND LOADING CHARGES. THE LD.A.R. BEFORE US ALSO COULD NOT DEMONSTRATE WITH ANY TANGIBLE EVIDEN CE THE CORRECT WORKING OF STOCK. IN VIEW OF THESE FACTS, WE DO NOT FIND AN Y REASON TO INTERFERE WITH THE ORDER PASSED BY THE LD. CIT(A). ACCORDINGLY TH IS GROUND OF THE ASSESSEE IS DISMISSED. 17. THE LAST GROUND RELATING TO DISCLOSURE MADE OF RS 41 LACS BE DELETED. THIS GROUND BEING GENERAL IN NATURE AND SINCE NOT S ERIOUSLY ARGUED AND PRESSED IS THEREFORE NOT ADJUDICATED AND ACCORDINGL Y DISMISSED. 18. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS PA RTLY ALLOWED. ORDER PRONOUNCED IN OPEN COURT ON 10 - 7 - 2012. SD/- SD /- (D. K. TYAGI) (ANIL CHATURVEDI) JUDICIAL MEMBER ACC OUNTANT MEMBER ITA NO 2281 /AHD/2009 A.YR.. 2005 -06 8 AHMEDABAD. S.A.PATKI. COPY OF THE ORDER FORWARDED TO: - 1. THE APPELLANT. 2. THE RESPONDENT. 3. THE CIT (APPEALS)-I,SURAT. 4. THE CIT CONCERNED. 5. THE DR., ITAT, AHMEDABAD. 6. GUARD FILE. BY ORDER DEPUTY/ASSTT.REGISTRAR ITAT,AHMEDABAD. 1.DATE OF DICTATION 28 - 6 -2012 2.DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE TH E DICTATING 2-10 / 7 / 2012 MEMBER.OTHER MEMBER. 3.DATE ON WHICH THE APPROVED DRAFT COMES TO THE SR. P.S./P.S - -2012. 4.DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE THE DICTATING MEMBER FOR PRONOUNCEMENT - -2012 5.DATE ON WHICH THE FAIR ORDER COMES BACK TO THE SR .P.S./P.S - -2012 6.DATE ON WHICH THE FILE GOES TO THE BENCH CLERK - -2012. 7.DATE ON WHICH THE FILE GOES TO THE HEAD CLERK . 8.THE DATE ON WHICH THE FILE GOES TO THE ASSTT. REG ISTRAR FOR SIGNATURE ON THE ORDER 9.DATE OF DESPATCH OF THE ORDER..