D.C.I.T.,Circle-1(2), Kolkata, Kolkata V. M/s Wilson Eng. Industries Pvt. Ltd., Kolkata

ITA 2284/KOL/2016

• Counselvise Citation: [2019] 115 COUNSELVISE.COM (IT) 7295 (ITAT-KOLKATA)
• Duration Of Justice: 2 year(s) 10 month(s) 21 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 23-10-2019
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: C
• Assessment Year: 2012-2013
• Appeal Filed On: 02-12-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: RANU BISWAS
• Assessee Lawyers: K M ROY
• Keywords: Rejection of books of accounts; Unexplained expenditure; Business income; Retraction
• Section: 143(3); 133A; 201; 143(2); 191; 139(1); 131; 132; 10

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL B, BENC H KOLKATA BEFORE SHRI A. T. VARKEY, JM &DR. A.L. SAINI, AM ./ITA NO.2284/KOL/2016 ( / ASSESSMENT YEAR:2012-13) DCIT, CIRCLE- 1(2), KOLKATA VS. M/S WILSON ENG. INDUSTRIES PVT. LTD. BLOCK-7B, 7 TH FLOOR, ANJU CHAMBER, 24, PARK STREET, KOLKATA-700016. ./ ./PAN/GIR NO.: AAACW 2689 J (APPELLANT) .. (RESPONDENT) C.O. NO.03/KOL/2017 (ARISING OUT OF ./ITA NO.2284/KOL/2016) ( / ASSESSMENT YEAR:2012-13) M/S WILSON ENG. INDUSTRIES PVT. LTD. BLOCK-7B, 7 TH FLOOR, ANJU CHAMBER, 24, PARK STREET, KOLKATA-700016. VS. DCIT, CIRCLE- 1(2), KOLKATA ./ ./PAN/GIR NO.: AAACW 2689 J (CROSS-OBJECTOR) .. (RESPONDENT) APPELLANT BY : SMT. RANU BISWAS, ADDL. CIT RESPONDENT BY : SHRI K. M. ROY, FCA. / DATE OF HEARING : 06/08/2019 /DATE OF PRONOUNCEMENT : 23/10/2019 / O R D E R PER DR. A. L. SAINI: THE CAPTIONED APPEAL FILED BY THE REVENUE AND TH E CROSS OBJECTION FILED BY THE ASSESSEE, PERTAINING TO ASSESSMENT YEAR 2012-13 , ARE DIRECTED AGAINST THE ORDER PASSED BY THE COMMISSIONER OF INCOME TAX (APPEAL)-1 , KOLKATA, IN APPEAL M/S WILSON ENG. INDUSTRIES PVT. LTD. ITA NO.2284/KOL/2016& C.O. NO. 03/KOL/2017 ASSESSMENT YEAR:2012-13 PAGE | 2 NO.627/CIT(A)-1/C-3(1)/2015-16, DATED 20.09.2016, W HICH IN TURN ARISES OUT OF AN ASSESSMENT ORDER PASSED BY THE ASSESSING OFFICER U /S 143(3) OF THE INCOME TAX ACT, 1961 (IN SHORT THE ACT) DATED 30/03/2015. 2. THE GROUNDS OF APPEAL RAISED BY THE REVENUE ARE AS FOLLOWS: 1. WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES O F THE CASE OF LAW, THE LD. CIT(A) ERRED IN DELETING ADDITION OF RS.1.5 CRORES ON ACCOUNT OF STOCK DIFFERENCE & RS. 50 LAKH ON ACCOUNT OF UNEXPLAINED EXPENDITURE MADE BY THE ASSESSING OFFICER FOR THE DETAILED REASON GIVEN IN THE ASSESSMENT ORDER AND MATERIAL FACTS BASED ON DISCLOSURE DURING SURVE Y. 2. WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND LAW, THE LD. CIT(A), ERRED IN RELYING UPON CASE WHICH ARE CLEARL Y DISTINGUISHABLE ON THE FACT AND IN LAW. 3. WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND LAW, THE LD. CIT(A) ERRED IN DELETING ADDITION ON ACCOUNT OF EMP LOYEES CONTRIBUTION TO PF BEYOND DUE DATE, INFRINGING PROVISIONS OF SECTI ON 36(1)(VA) R.W.S2(24)(X). 4. THAT THE ASSESSEE CRAVES TO ADD, ALTER AND/OR MO DIFY, SUBSTITUTE ALL OR ANY OF THE GROUND OF APPEAL, DURING THE COURSE OF HEARI NG. 3. GROUND NOS. 1 AND 2 RAISED BY THE REVENUE RELATE TO DELETION OF ADDITION OF 1.5 CRORES ON ACCOUNT OF STOCK DIFFERENCE AND RS. 50 LA KH ON ACCOUNT OF UNEXPLAINED EXPENDITURE. 4. BRIEF FACTS QUA THE ISSUE ARE THAT THE ASSESSEE FILED ITS RETURN OF INCOME FOR A.Y. 2012-13 ON 30.09.2012 DECLARING TOTAL INCOME TO THE TUNE OF RS. 36,93,210/-. THE ASSESSEES CASE WAS SELECTED FOR SCRUTINY U/S 143(2 ) OF THE ACT. IN CASE OF THE ASSESSEE COMPANY, A SURVEY OPERATION U/S 133A WAS CONDUCTED ON 19/10/2011 AND SOME INCRIMINATING DOCUMENTS WERE IMPOUNDED. DURING THE COURSE OF SURVEY PROCEEDINGS ON 20/10/2011, THE G.M. OF THE COMPANY, SHRI VISHAL SAHAY DISCLOSED AN AMOUNT OF RS. 1.50 CRORES ON ACCOUNT OF DIFFEREN CE IN STOCK VALUATION AND RS. 50 LAKH FOR UNACCOUNTED DISCLOSURE TOTALING RS.2 CR ORES. THE AO NOTED THAT SINCE THE ASSESSEE DISCLOSED THE STOCK DIFFERENCE DURING THE COURSE OF SURVEY AND ON THAT BASIS RS.1,50,00,000/- WAS ADDED BACK IN THE TOTAL INCOME OF THE ASSESSEE. THE AO ALSO NOTED THAT SINCE THE ASSESSEE ACCEPTED UNEXPLA INED EXPENDITURE AMOUNTING TO M/S WILSON ENG. INDUSTRIES PVT. LTD. ITA NO.2284/KOL/2016& C.O. NO. 03/KOL/2017 ASSESSMENT YEAR:2012-13 PAGE | 3 RS.50,00,000/- DURING THE COURSE OF THE SURVEY THER EFORE ON THAT BASIS RS. 50,00,000/- WAS ADDED BACK TO THE TOTAL INCOME OF T HE ASSESSEE. 5. AGGRIEVED BY THE STAND SO TAKEN BY THE ASSESSING OFFICER, THE ASSESSEE CARRIED THE MATTER IN APPEAL BEFORE THE LD. CIT(A) WHO HAS DELETED THE ADDITION MADE BY THE ASSESSING OFFICER. AGGRIEVED BY THE ORDER OF TH E LD. CIT(A) THE REVENUE IS IN APPEAL BEFORE US. 6. BEFORE US, LD. DR FOR THE REVENUE, HAS PRIMARILY REITERATED THE STAND TAKEN BY THE ASSESSING OFFICER WHICH WE HAVE ALREADY NOTED I N OUR EARLIER PARA AND THE SAME IS NOT BEING REPEATED FOR THE SAKE OF BREVITY. ON THE OTHER HAND, LD. COUNSEL FOR THE ASSESSEE HAS DEFENDED THE ORDER OF THE LD. CIT(A). 7. WE HEARD BOTH THE PARTIES AND CAREFULLY GONE THR OUGH THE SUBMISSION PUT FORTH ON BEHALF OF THE ASSESSEE ALONG WITH THE DOCUMENTS FURNISHED AND THE CASE LAWS RELIED UPON, AND PERUSED THE FACT OF THE CASE INCLU DING THE FINDINGS OF THE LD CIT(A) AND OTHER MATERIALS AVAILABLE ON RECORD. WE NOTE THAT LD CIT(A) PASSED THE ORDER OBSERVING THE FOLLOWINGS: I HAVE CONSIDERED THE AO`S FINDINGS, WRITTEN SUBM ISSIONS OF THE AR, REMAND REPORT, REJOINDER AND THE DOCUMENTS ON RECORD. IT IS OBSERV ED THAT THE ASSESSEE COMPANY HAD FILED ITS RETURN OF INCOME FOR THE RELEVANT YEAR DE CLARING INCOME RS.36,93,210/- .THE CASE WAS SELECTED FOR SCRUTINY THROUGH ISSUE OF NOTICES U/S 143(2) OF THE IT. ACT. DURING THE PROCEEDINGS; THE A.O FOUND THAT THE ASSESSEE HAD NO T DECLARED THAT ADDITIONAL INCOME ADMITTED BY THE ASSESSEE DURING THE COURSE OF SURVE Y U/S 133A. ON 19-10-2011, A SURVEY U/S 133A OF THE ACT WAS CONDUCTED AT THE BUSINESS P REMISES OF THE ASSESSEE COMPANY AND SOME INCRIMINATING DOCUMENTS WERE IMPOUNDED. THE A. O ALSO NOTED THAT DURING THE SURVEY ON 20/10/2011, THE G.M OF THE COMPANY, SH. V ISHAL SAHAY HAD DISCLOSED AN ADDITIONAL AMOUNT OF RS. 1.50 CRORES ON ACCOUNT OF DIFFERENCE IN STOCK VALUATION AND RS.50 LACS FOR UNACCOUNTED DISCLOSURE TOTALLING RS. 2 CRORES. HOWEVER, DURING THE COURSE OF ASSESSMENT PROCEEDINGS, SH. S.S. SAHAY, M.D OF T HE ASSESSEE COMPANY IN HIS STATEMENT. U/S 131 RECORDED ON 18/3/2015 HAD RETRACTED THE ADM ISSION MADE DURING THE SURVEY OFFERING THE ADDITIONAL AMOUNTS OF INCOME. THE ASSE SSEE'S DIRECTOR/G.,M, SH. S.S.SAHAY, DURING HIS STATEMENT RECORDED ON 18.3.2015 DID NOT ACCEPT THE ADDITIONAL INCOME AND CONTENDED THAT HIS STATEMENT DURING THE SURVEY WAS THE RESULT OF DURESS, AS HIS SON, SH. VISHAL SAHAY, G.M , MARKETING WAS MADE TO SIGN THE STATEMENT AT AROUND 4.00 A.M FORCEFULLY WITHOUT UNDERSTANDING THE IMPLICATIONS O F THE DISCLOSURE. THE A.O AFTER CONFRONTING THE SAID DISCREPANCIES TO THE ASSESSEE DURING THE COURSE OF SCRUTINY PROCEEDINGS, MADE AND ADDITION OF RS.1,50,00,000/- ON ACCOUNT OF STOCK DIFFERENCE FOUND DURING THE SURVEY AND RS. 50,00,000/- ON ACCOUNT OF UNEXPLAINED EXPENDITURE TO THE TOTAL INCOME OF THE ASSESSEE AGGREGATING RS.2,00,00,000/- . THE ASSESSEE'S A.R HAS MAINLY CONTENDED IN RESPECT OF THE IMPUGNED ADDITIONS TO T HE INCOME BY THE A.O THAT FIRSTLY, THE ASSESSEE HAD RETRACTED THE ADMISSION MADE DURING TH E SURVEY. IN THIS REGARD';' REFERENCE WAS MADE TO THE QUESTION NO. 13 OF THE STATEMENT RE CORDED U/S 131 ON 20/10/2011 BY M/S WILSON ENG. INDUSTRIES PVT. LTD. ITA NO.2284/KOL/2016& C.O. NO. 03/KOL/2017 ASSESSMENT YEAR:2012-13 PAGE | 4 VISHAL SAHAY, G.M MARKETING. IT WAS; ARGUED THAT TH E STATEMENT DOES NOT HAVE ANY EVIDENTIARY VALUE BECAUSE IT WAS NOT RECORDED UNDER OATH. IN THIS REGARD, ON PERUSAL THE SAID STATEMENTS, IT IS OBSERVED THAT ALTHOUGH THE A . R HAD ANNEXED COPY OF HAND WRITTEN STATEMENT OF SH.VISHAL SAHAY PURPORTEDLY RECORDED D URING SURVEY U/S133A, THE A.O HAS SUBMITTED A COPY OF STATEMENT U/S 131 DATED 20.10.2 011.THEREFORE, THE AVERMENTS MADE IN THE ADMISSION MADE BY SH. VISHAL SAHAY NEED TO BE E XAMINED ALONG WITH, RELEVANT DOCUMENTARY EVIDENCE TO ASCERTAIN WHETHER THE SURRE NDER IS CORROBORATED BY ANY DOCUMENTARY EVIDENCE. IN THE DECISION IN PULLANGODE RUBBER PRODUCE CO. LTD. V. STATE OF KERALA (1973) 91 ITR18 (SC) THE HON'BLE APEX COURT HELD THAT AN ADMISSION IS AN IMPORTANT PIECE OF EVIDENCE, BUT IT CANNOT BE SAID THAT IT IS CONCLUSIVE AND IT IS OPEN TO THE PERSON WHO MADE THE ADMISSION TO SHOW THAT IT IS IN CORRECT. SECONDLY, IT WAS ARGUED THAT DISCREPANCY, I.E. THE DIFFERENCE IN VALUATION WAS A SCRIBED TO 31/03/2010 AND 31/03/2011, WHEREAS THE BASIS FOR WORKING OUT NET PROFIT OF ASS ESSEE'S BUSINESS WAS VALUATION OF CLOSING STOCK AS ON 31/03/2012. IT WAS FURTHER AVER RED THAT THE ADDITION OF RS.1,50,00,000/- ON ACCOUNT OF STOCK DIFFERENCE WAS MADE ONLY ON THE BASIS OF STATEMENT FOR STOCK HYPOTHECATION SUBMITTED TO THE BANK WAS O F A HIGHER VALUE BASED ON THE BUSINESS NEED TO MAINTAIN THE DRAWAL POWER ON THE CASH CREDI T FACILITY WITH THE BANK. THE VALUE OF CLOSING STOCK IN THE FINAL BOOKS OF ACCOUNTS IS ASC ERTAINED IS ON THE BASIS OF LOWER OF COST AND NET REALIZABLE VALUE. IN THIS REGARD, IT WAS ST ATED THAT THIS WAS ALSO EVIDENT FROM THE COPIES OF THE STOCK STATEMENTS SUBMITTED TO THE BAN K WHICH WERE ALSO VERIFIED AT THE BANK BY INCOME TAX OFFICERS UNDER THE INSTRUCTIONS OF TH E APPROPRIATE AUTHORITY. IN THIS REGARD, FROM PERUSAL OF DOCUMENTS MARKED AS WEIPL-9, IT IS OBSERVED THAT IT'S A STATEMENT OF 'COMBINED STOCK' AS ON 31.3.2010, WHEREIN THE AGGRE GATE STOCK FOR 3 BRANCHES IS SHOWN AS 1285.11 MTS, WHEREAS THE 'COMBINED STOCK AS ON 3 1.3.2010 IS SHOWN AT 1327.33 MTS. THUS, THE DIFFERENCE IN VALUATION OF CLOSING STOCK HAS BEEN TAKEN BY THE A.O. AS THE BASIS FOR ADMISSION OF RS.1,50,00,000 BY THE ASSESSEE. HO WEVER, THE A.O HAS NOT CONFRONTED THE SAID DISCREPANCY TO THE ASSESSEE OR SOUGHT HIS EXPL ANATION TO ASCERTAIN AS TO HOW THE STOCK DIFFERENCE AS ON 31.3.2010 BETWEEN STOCK HYPO THECATED TO BANK AND AS PER STOCK STATEMENT AS ON 31.3.2011, COULD BE THE BASIS FOR A DDITION TO BUSINESS INCOME FOR THE A.Y.2012-13.THE A.O. HAS MISDIRECTED HIMSELF BY CON SIDERING THE ALLEGED STOCK DIFFERENCE PERTAINING TO F.Y. ENDING 31.3.2011 PERTAINING TO A .Y 2011-12,TO BE THE BASIS FOR ADDITION OF VALUE OF STOCK DIFFERENCE FOR THE A.Y.2012- 13 U NDER CONSIDERATION, WHICH IS PRIMA- FACIE ERRONEOUS. THIRDLY, IT WAS EMPHASIZED BY THE A.R THAT THE A.O DID NOT BRING OUT ANY DIFFERENCE IN PHYSICAL QUANTITY OF CLOSING STOCK OR ANY SPECIFIC DEFECT WAS POINTED OUT BY THE A.O. MOREOVER, IT WAS AVERRED THAT NO STOCK TAK ING WAS UNDERTAKEN AT THE VARIOUS LOCATIONS AT ANY POINT. FURTHER THE QUESTION NO. 14 POSED BEFORE VISHAL SAHAY HAS GOT NO RELEVANCE AS THIS WAS ASKED ON 20/10/2011 WHEREAS C LOSING STOCK IS VALUED ON 31/03/12. THE ASSESSEE HAS THUS SUBMITTED THAT THERE WAS NO S COPE OF ADDITION OF RS. 150 LACS ON THIS ISSUE. AS REGARDS, THE ADDITION OF RS.50,00,00 0/- MADE BY THE A.O IN RESPECT OF ADMISSION OF UNEXPLAINED EXPENDITURE, THE A.O HELD THAT THE ASSESSEE ACCEPTED UNEXPLAINED EXPENDITURE AMOUNTING RS.50,00,000/- DU RING THE COURSE OF SURVEY AND DURING SCRUTINY, WHICH WAS ADDED BACK AS UNDISCLOSE D EXPENDITURE. THE ASSESSEE'S A/R HAS CONTENDED THAT THE ENTIRE ADDITION OF RS. 50 LA CS FOR UNACCOUNTED EXPENDITURE IS BASED SOLELY ON SURRENDER WITHOUT ANY CORROBORATIVE EVIDENCE BROUGHT ON RECORD BY THE A.O. IT IS OBSERVED THAT THE ASSESSING OFFICER HAD CONDUCTED A SURVEY AT-THE PREMISES OF THE ASSESSEE AND, INTER ALIA, RECORDED HIS STATEMEN T IN WHICH THE G.M/DIRECTOR'S SON, SH. VISHAL SAHAY HAD SURRENDERED ADDITIONAL INCOME OF R S. 50,00,000/- FOR THE ASSESSMENT YEAR 2012-13. THE ASSESSEE'S A.R HAS ARGUED THAT TH E DISCLOSURE WAS MADE OF 50 LAKH RUPEES ROUGHLY, WHICH POINTS OUT THAT IT WAS ONLY A N APPROXIMATE INDICATION. IN THE SUBSEQUENT ASSESSMENT, THE ADDITION WAS MADE SIMPLY ON THE BASIS OF THE STATEMENT WHICH WAS IN COHESIVE. IN THE COURSE OF ASSESSMENT, IT WA S DULY POINTED OUT THAT THE EXPENSES WERE ALL DISCLOSED IN PROFIT AND LOSS A/C AND THE S TATEMENT GIVEN OUT BY MR S.S SAHAY WAS A MERE REPETITION POINTED OUT EARLIER AND WAS GIVEN AS A TOKEN OF COOPERATION WITH THE DEPARTMENT. HENCE, IT APPEARS THAT DURING THE ASSES SMENT PROCEEDINGS, THE ASSESSEE DID NOT ACCEPT THE ADDITIONAL INCOME OF RS. 50 LACS AND CONTENDED THAT HIS STATEMENT DURING THE SURVEY WAS NOT BASED UPON ANY ACTUAL UNEXPLAINE D EXPENDITURE BUT THE RESULT OF MISAPPRECIATION OF ISSUES CONFRONTED TO HIM DURING THE SURVEY. THIS CONTENTION. WAS NOT M/S WILSON ENG. INDUSTRIES PVT. LTD. ITA NO.2284/KOL/2016& C.O. NO. 03/KOL/2017 ASSESSMENT YEAR:2012-13 PAGE | 5 ACCEPTED BY THE A.O WHO ADDED BACK THE IMPUGNED AM OUNT OF RS. 50 LACS TO THE TAXABLE INCOME OF THE ASSESSEE. THE ASSESSEE'S A.R HAS CONT ENDED THROUGH THE WRITTEN SUBMISSIONS THAT THE ASSESSEE HAVING RETRACTED THE STATEMENT MADE DURING THE SURVEY, IT WAS THE DUTY OF THE ASSESSING OFFICER TO COLLECT SO ME MATERIAL THAT THERE WAS ADDITIONAL INCOME AND THAT STATEMENT HAVING BEEN RETRACTED, TH E SAME COULD NOT BE MADE THE BASIS OF THE ASSESSMENT. HE CONTENDED THAT THE STATEMENT WAS RECORDED UNDER DURESS AND WAS, THEREFORE, NOT VALID. IT WAS FURTHER ARGUED THAT AP ART FROM THE STATEMENT MADE DURING THE SURVEY, THERE WAS NO MATERIAL TO SUPPORT THAT THERE WAS ADDITIONAL INCOME. IT WAS ALSO CONTENDED THAT THE ASSESSEE HAVING RETRACTED THE ST ATEMENT MADE DURING THE SURVEY, IT WAS THE DUTY OF THE ASSESSING OFFICER TO COLLECT SOME MATERIAL THAT THERE WAS ADDITIONAL INCOME AND THAT STATEMENT HAVING BEEN RETRACTED, TH E SAME COULD NOT BE MADE THE BASIS OF THE ASSESSMENT. THE A.R HAS THUS ARGUED THAT THE ST ATEMENT WAS RECORDED UNDER DURESS AT LATE HOUR OF 4 A.M OF SH. VISHAL SAHAY WHO WAS NOT WELL AWARE OF THE IMPLICATIONS AND THE SURRENDER WAS, THEREFORE, NOT VALID. THE A.O HAS NEITHER REJECTED THE BOOKS OF ACCOUNTS OR THE BOOK RESULTS. THUS, THE EVIDENTIARY VALUE OF THE AUDITED BOOKS OF ACCOUNTS AND VOUCHERS WERE, LOST SIGHT IN THE MIND OF THE AO WHO WANTED TO JUSTIFY THE ADDITION O F IMPUGNED DIFFERENCE IN STOCK AND UNEXPLAINED EXPENDITURE SOLELY ON THE BASIS OF SURR ENDER STATEMENT OF THE ASSESSEE DURING THE SURVEY. THUS, THERE IS MERIT IN THE CONTENTION OF THE LEARNED A. R. THAT THE DIFFERENCE IN STOCK AND EXPENDITURE, HAVING BEEN FOUND IN EXCESS COULD HAVE BEEN FOUND IN EXCESS ONLY ON THE BASIS OF PROPER INVENTORY OF STOCK VIS--VIS RELEVANT ENTRIES THEREOF IN THE BOOKS OF ACCOUNTS, AS AVAILABLE ON THE DATE OF SURVEY. THE I NTERVENING PERIOD OF MORE THAN 4 YEARS COULD HAVE BEEN UTILIZED BY THE AO IN MAKING NECESS ARY ENQUIRIES TO VERIFY THE AUTHENTICITY OF BOOK RESULTS AND CONNECTED TRANSACT IONS RECORDED IN THE BOOKS OF ACCOUNTS OF THE ASSESSEE. THIS CLEARLY INDICATES THE CONTRAD ICTION IN THE AO'S FINDING WHICH ARE DEALT WITH HEREUNDER. IT IS OBSERVED THAT THE A.O HAS NOT FOUND ANY SERIO US DEFECTS IN THE BOOKS OF ACCOUNTS WHICH WERE DULY AUDITED AND THE A.O HAS ALSO NOT RE JECTED THE BOOKS OF ACCOUNTS OR THE BOOK RESULTS BY INVOKING PROVISIONS OF SECTION 145( 3.) OF THE ACT. IT IS PERTINENT TO NOTE THE CONTENTION OF THE ASSESSEE MADE DURING THE ASSESSME NT PROCEEDINGS, THAT THE SURVEY WAS CONDUCTED ON 19TH OCTOBER, 2011 AND AFTER THAT OUR ASSESSMENT FOR THE ASSESSMENT YEAR 2009-10, 2010-11 AND 2011-12 WERE COMPLETED U/ S 143(3) WITHOUT ANY ADDITION ON THIS GROUND DESPITE THE FACT THAT THE SURVEY REPORT WAS VERY MUCH ON RECORD . THEREFORE, BY NO STRETCH OF THE IMAGINATION THE VERACITY OF OU R ACCOUNTS CAN NOW BE CHALLENGED.' SIMILARLY, THE ADDITION OF THE IMPUGNED AMOUNT OF R S.50,00,000/-, ON ACCOUNT OF UNEXPLAINED EXPENDITURE WAS MADE MERELY ON THE BASI S OF ADMISSION OF SH. VISHAL SAHAY WITHOUT ANY CORRESPONDING CORROBORATIVE EVIDENCE. T HUS, AFTER THE REBUTTAL OF THE PRESUMPTION BY THE ASSESSEE, THE ONUS HAD SHIFTED T O THE A.O TO SUBSTANTIATE THE VALIDITY OF THE IMPUGNED ADDITIONS BY WAY OF INFERENCE FROM FIN DING OF FACTS OR DOCUMENTARY EVIDENCE ON RECORD. THE A.O WAS FOUND TO BE UNABLE TO BRING ANY COGENT EVIDENCE OR FINDING OF FACT ON RECORD, THROUGH THE REMAND REPOR T TO ESTABLISH THAT THERE WAS EXCESS STOCK VALUED AT RS.1,50,00,000/- AS ON 31.3.2012 RE PRESENTING THE DISCREPANCY IN THE VALUE OF CLOSING STOCK. FROM PERUSAL OF THE IMPOUNDED DOCUMENTS RELIED UPON BY THE A.O TO CORRELATE THE DISCREPANCY IN CONNECTION WITH THE SURRENDER OF RS. 1,50,00,000/-PERTAINING TODISCREPANCY IN CLOSING STOCK THERE IS REFERENCE T O DOCUMENT MARKED. WEIPL-10 IN THE STATEMENT OF SH. VISHAL SAHAY, WHEREIN IT IS OBSERV ED AS UNDER:- 'Q.12. PLEASE GO THROUGH THE BUNCH OF LOOSE SHEETS BEARING ID MARKS WEIPL-L0. IN PAGE Q32 THE COMBINED STOCK AS ON 31/3/2011 AMOUNTING TO RS. 1327.7 LAKHS HAS BEEN SHOWN IN PAGE 55 OF THIS BUNCH COMBINED STOCK AS ON 31/3/ 2010 AMOUNTING TO RS. 1285.00 LAKHS HAS BEEN SHOWN. WHAT IS THE MEANING OF COMBINED STO CK MENTIONED IN THESE PAGES. M/S WILSON ENG. INDUSTRIES PVT. LTD. ITA NO.2284/KOL/2016& C.O. NO. 03/KOL/2017 ASSESSMENT YEAR:2012-13 PAGE | 6 ANS. THIS STOCK POSITION OF COMBINED STOCK OF OUR F ACTORIES AT HOWRAH (TWO UNITS), PATNA AND AT UTTARAKHAND. BUT AS PER AUDIT REPORT OF THE COMPANY AS ON 31/03/2010 AND AS ON 31/02/2011 THE INVENTORIES OF STOCKS AMOUNTING TO R S.1096.37 LAKS AND RS. 1022.25 LAKHS RESPECTIVELY HAS BEEN SHOWN. Q.13.PLEASE EXPLAIN THE DIFFERENCES OF STOCKS AS PE R PAGE 132 AND PAGE SS OF WEIPL 10 AND THE AUDIT REPORT OF THE COMPANY. ANS. THESE STATEMENTS ARE MADE FOR SUBMITTING IT AT THE BANK FOR LOAN PURPOSES. HOWEVER THREE ARE DISCREPANCIES IN VALUATION OF STOCK AS PE R BOOKS AND AS PER WEIPL -10. Q-14 HOW MUCH THERE MAY BE THE DISCREPANCY IN THE V ALUATION OF CLOSING STOCK? ANS. ROUGHLY AROUND 1.5CRORES. THIS MAY BE CALCULAT ED AFTER GOING THROUGH THE PAGES IN WEIPL-10 AND OUR AUDITED BOOKS. THUS, FROM APPRAISAL OF THE ABOVE DISCUSSION, IT IS APPARENT THAT THE 'SURRENDER' OF RS. 1,50,00,000/- WAS MADE ON THE ASSESSEES BEHALF ON THE BASIS OF ALLEGED DISCREPANCIES FOUND AS PER NARRATION IN WEIPL-10 INDICATING SOME DIFFERENCE IN VALUE OF COMBINED STOCK AS ON 31/3/2010 AND 31/3/2011 AS SUBMITTED TO THE BANK FOR HYPOTHECATION FOR LOAN PURPOSES AND AS PER FIGURES OF CLOSING STOCK IN THE AUDITED ACCOUNTS. HOWEVER, THE ADMISSION, WHICH FORMED THE BASIS OF THE SURRENDER OF THE IMPUGNED AMOUNT OF RS. 1,50,00,000/-, WAS RELIED UPON BY THE ASSESSING OFF ICER FOR MAKING THE ADDITION OF RS.L,50,00,000/- WAS ERRONEOUSLY CONSIDERED BY THE A.O IN RESPECT OF FINANCIAL YEAR END 31.3.2012 RELEVANT TO THE A.Y. 2012-13 UNDER CONSID ERATION. IT IS WELL SETTLED THAT EVERY ASSESSMENT YEAR IS SEPARATE AND THE INCOME IS TO BE CONSIDERED FOR TAXATION IN RESPECT OF INCOME AND EXPENDITURE PERTAINING, ONLY, TO THE TRA NSACTIONS FOR RELEVANT PREVIOUS YEAR. THEREFORE, THE ADDITION MADE BY THE A.O FOR DISCREP ANCIES PERTAINING TO THE PRECEDING ASSESSMENT YEARS 2010-11 AND 2011-12, IF FOUND TO B E ERRONEOUS AND IN, LAW CANNOT FORM THE BASIS FOR ANY VALID ADDITIONS ON THIS ACCOUNT D URING A.Y. 2012-13. THE ASSESSEE HAD FILED DETAILS OF ITS PURCHASES AND SALES, ALONG WITH SEPARATE TRADING ACCOUNT FOR TAXABLE GOODS AND TAX PAID GOODS AND HA D ALSO GIVEN DETAILS OF OPENING STOCK, CLOSING STOCK, PURCHASES, SALES ETC. THE AO DID NOT DISTURB THE SAME, THEREBY INDIRECTLY ACCEPTING THE FLOW OF STOCK FROM 1ST OF APRIL, 2011 UP TO THE DATE OF SURVEY. SIMILARLY, WITH THE CASH BALANCE THE EXPENSES AND O THER CLAIMS MADE BY THE ASSESSEE ON, ACCOUNT OF PAYMENTS TO CREDITORS WERE NOT DISTURBED WHICH WERE TRANSCRIBED IN THE BOOKS OF ACCOUNTS ON THE BASIS OF PRIMARY VOUCHERS AND, T HEREFORE, WERE ACCEPTED BY THE AO. THE A.O. HAS THUS IGNORED THE BOOK RESULTS BASED ON AUDITED ACCOUNTS, WITHOUT REJECTION OF THE METHOD OF ACCOUNTING OR THE BOOK RESULTS OF THE ASSESSEE COMPANY, ALTHOUGH AR HAS ARGUED THAT THE ADDITIONS WERE MADE WITHOUT ANY BASIS. ON THE ISSUE OF UNEXPLAINED EXPENDITURE OF RS.50,00 ,000/- WAS ALSO FOUND TO HAVE BEEN MADE BY THE A.O WITHOUT VERIFYING THE CONCERNED TRA NSACTIONS OR MATERIAL ON RECORD, ALTHOUGH EXPLAINED BY THE ASSESSEE AS DULY REFLECT ED IN ITS AUDITED ACCOUNTS FOR THE RELEVANT PERIOD AND, THEREFORE, NO ADDITION COULD BE MADE ON THE BASIS OF MERE ADMISSION WITHOUT ANY CORROBORATIVE EVIDENCE TO ACC OUNT FOR THE ALLEGED UNEXPLAINED EXPENDITURE. THE RETRACTION AND SUPPORTING ARGUMENT S, THEREFORE, COULD NOT BE HELD AS AN AFTERTHOUGHT INSOFAR AS THEY HAD VERY MUCH ARISEN F ROM THE FINDING OF FACTS NOT CONTROVERTED BY THE AO. THE ASSESSEE HAS RELIED UPO N THE RATIO OF SEVERAL JUDICIAL DECISIONS, INCLUDING BY THE JURISDICTIONAL CALCUTTA HIGH COURT IN THE CASE OF COMMISSINER OF INCOME TAX, KOLKATA-L V. M/S NEO CARBONS PVT. LT D IN ITAT NO. 191 OF 2013 G.A. NO. 3286 OF 2013: 'WITH REGARD TO THE OTHER ASPECT OF THE MATTER, THE CIT(APPEAL) DELETED THE ADDITION ON THE BASIS THAT THE ASSESSEE WAS ENTITLED TO VALUE, THE CLOSING STOCK EITHER AT COST OR ON THE MARKET RATE, WHICHEVER IS LOWER. THE ASSESSING OFFI CER HAD PROCEEDED TO MAKE THE M/S WILSON ENG. INDUSTRIES PVT. LTD. ITA NO.2284/KOL/2016& C.O. NO. 03/KOL/2017 ASSESSMENT YEAR:2012-13 PAGE | 7 ADDITION ON THE BASIS OF THE VALUATION FURNISHED BY THE ASSESSEE TO THE BANKER. THE CIT(APPEAL) HELD THAT SUCH VALUATION IS NOT MATERIA L FOR THE PURPOSES OF THE INCOME TAX ACT. THE REVENUE UNSUCCESSFULLY CHALLENGED THE ORDE R OF THE CIT BEFORE THE TRIBUNAL AND HAS ULTIMATELY COME UP BEFORE THIS COURT. WE ARE SATISFIED THAT THE ISSUES RAISED ARE ESSENTI ALLY QUESTIONS OF FACT AND HAVE BEEN CONCURRENTLY ANSWERED IN FAVOUR OF THE ASSESSEE BOT H BY THE CIT(APPEAL) AND THE TRIBUNAL. WE, THEREFORE, REFUSE TO ADMIT THE APPEAL , WHICH IS ACCORDINGLY DISMISSED.' THE ASSESSEE'S A.R HAS ALSO RELIED UPON THE DECISIO N OF THE JURISDICTIONAL ITAT, KOLKATA IN THE CASE OF ACIT VS:, SMT. USHA AGARWAL I.T.A. N O. 142/KOL/2014 FOR A.V. 2010- 11 WHERE IN THE ITAT HAD UPHELD THE DELETION OF ADDITI ON OF RS. 1 CRORE MADE ON THE MERELY BASIS OF DISCLOSURE. IT WAS HELD, THAT: 'WE HAVE HE ARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIALS AVAILABLE ON RECORD. WE FIND THAT THE ENTIRE ADDITION OF RS.1 CRORE MADE BY THE LEARNED ASSESSING OFFICER WAS MERELY BASED ON THE DISCLOSURE MADE BY THE ASSEESEE'S HUSBAND WHILE, MAKING TOTAL DISCLOSURE O F RS. 7.5 CRORES FOR THE TOTAL GROUP AS A WHOLE AND THE ASSESSEE'S NAME HAS BEEN INCLUDED I N THE FIGURE OF RS. 1 CRORE ONLY IN ORDER TO MAKE THE, TOTAL DISCLOSURE TO RS. 7.5CRORE S. WE FIND THAT NO INCRIMINATING MATERIALS WHATSOEVER WAS FOUND DURING THE COURSE OF SEARCH REPRESENTING UNDISCLOSED INCOME OR UNDISCLOSED ASSETS BELONGING TO THE ASSES SEE JUSTIFYING THE DISCLOSURE MADE IN THE SUM OF RS.1CRORE. UNDER THESE CIRCUMSTANCES, IT IS RIGHT ON THE PART OF THE ASSESSEE TO HAVE RESTRICTED FROM THE EARLIER DISCLOSURE WHILE F ILING HER RETURN OF INCOME FOR THE ASST. YEAR 2010-11. WE DRAW SUPPORT FROM THE FOLLOWING CA SE LAWS IN THIS REGARD:- (I) PULLANGODE RUBBER PRODUCE CO. VS STATE OF KERAL A AND ANR (1973) 911TR 18 (SE) THE HONBLE SC HAS OBSERVED THAT AN ADMISSION IS AN EXT REMELY IMPORTANT PIECE OF EVIDENCE BUT IT CANNOT BE SAID THAT IT IS CONCLUSIVE. IT IS OPEN TO THE PERSON WHO MADE THE ADMISSION TO SHOW THAT IT IS INCORRECT...' IN VIEW OF THE ABOVE DISCUSSION AND THE TOTALITY OF FACTS OF THE CASE, IT IS FOUND THAT THE ASSESSEE'S CONTENTIONS ARE FORTIFIED BY THE RATIO O F DECISION OF THE HONBLE SUPREME COURT IN CIT VS. S. KADER KHAN SON IN 352 ITR 480 (SC) AN D BY THE JURISDICTIONAL ITAT IN USHA AGARWAL IN ITA NO. 142/KOL/2014 DATED 08.06.2016, W HICH SUPPORTS THE PROPOSITION THAT THE AMOUNT OF ALLEGED DISCREPANCY IN CLOSING STOCK WAS BY WAY OF REGULAR BUSINESS TRANSACTION AND NOT INCOME HAVING REMAINED UNDISCLO SED DURING THE RELEVANT PERIOD. THEREFORE, WE ARE OF VIEW THAT THE ASSESSING OFFICE R WAS NOT JUSTIFIED IN MAKING THE IMPUGNED ADDITIONS OF RS. 1,50,00,000/- ON ACCOUNT OF STOCK DIFFERENCE AND RS.50,00,000/- AS UNEXPLAINED EXPENDITURE. IN VIEW THEREOF, THE ASSESSING OFFICER IS DIRECTED TO DELETE THE IMPUGNED ADDITION OF RS. 2,0 0,00,000/-. WE HAVE CAREFULLY GONE THROUGH THE ABOVE FINDINGS O F THE LD CIT(A) AND NOTE THAT LD CIT(A) HAS DEALT THE ISSUE IN A JUDICIOUS WAY CO VERING ALL THE ASPECTS. THE CONCLUSIONS ARRIVED AT BY THE CIT(A) ARE, THEREFORE , CORRECT AND ADMIT NO INTERFERENCE BY US. ON THIS PARTICULAR ISSUE, WE, APPROVE AND CONFIRM THE ORDER OF THE CIT(A). THAT BEING SO, WE DECLINE TO INTERFERE IN THE ORDER PASSED BY THE LD. CIT(A), HIS ORDER ON THIS ISSUE, IS HEREBY UPHELD A ND THE GROUND NOS. 1 AND 2 RAISED BY THE REVENUE IS DISMISSED. 8. GROUND NO. 3 RAISED BY THE REVENUE RELATES TO DE LETION OF ADDITION ON ACCOUNT OF EMPLOYEES CONTRIBUTION TO PF. M/S WILSON ENG. INDUSTRIES PVT. LTD. ITA NO.2284/KOL/2016& C.O. NO. 03/KOL/2017 ASSESSMENT YEAR:2012-13 PAGE | 8 9. BRIEF FACTS QUA THE ISSUE ARE THAT FROM THE TAX AUDIT REPORT SUBMITTED BY THE ASSESSEE IT HAS BEEN NOTED BY AO THAT EMPLOYEES CO NTRIBUTION TO PROVIDENT FUND AMOUNTING TO RS. 17,961/- FOR THE MONTH OF JULY 201 1 HAS BEEN PAID AFTER DUE DATE WHICH DOES NOT QUALIFY FOR DEDUCTION U/S 2(24)(X) R .W.S. 36(1)(VA) OF THE ACT. IN VIEW OF THE ABOVE THE AMOUNT OF RS.17,961/- WAS DIS ALLOWED BY AO. 10. ON APPEAL, LD CIT(A) DELETED THE ADDITION. AGGR IEVED BY THE ORDER OF THE LD. CIT(A) THE REVENUE IS IN APPEAL BEFORE US. 11. BEFORE US, LD. DR FOR THE REVENUE HAS PRIMARI LY REITERATED THE STAND TAKEN BY THE ASSESSING OFFICER WHICH WE HAVE ALREADY NOTED I N OUR EARLIER PARA AND THE SAME IS NOT BEING REPEATED FOR THE SAKE OF BREVITY AND ON THE OTHER HAND THE LD. COUNSEL FOR THE ASSESSEE HAS DEFENDED THE ORDER OF THE LD. CIT(A). 12. WE HEARD BOTH THE PARTIES AND CAREFULLY GONE TH ROUGH THE SUBMISSION PUT FORTH ON BEHALF OF THE ASSESSEE ALONG WITH THE DOCUMENTS FURNISHED AND THE CASE LAWS RELIED UPON, AND PERUSED THE FACT OF THE CASE INCLU DING THE FINDINGS OF THE LD CIT(A) AND OTHER MATERIALS AVAILABLE ON RECORD. WE NOTE THAT THE ISSUE UNDER CONSIDERATION IS NO LONGER RES INTEGRA . WE NOTE THAT HON`BLE SUPREME COURT IN THE CASE OF CIT VS. ALON EXTRUSIONS PVT. LTD. IN CIVIL APPEAL NO. 7771 OF 2009 SUPPORTS ASSESSEE`S CASE THAT PAYMENTS MADE BEFORE DUE DATE OF FURNISHING OF THE RETURN OF INCOME U/S 139(1) ARE ALLOWABLE AS DEDUCT ION. THEREFORE, LD CIT(A) HAS RIGHTLY DIRECTED THE ASSESSING OFFICER TO ALLOW THE ASSESSEES CLAIM AFTER DUE VERIFICATION OF THE ACTUAL DATE OF PAYMENT OF THE E MPLOYEES CONTRIBUTION TO PROVIDENT FUND AMOUNTING TO RS.17,961/-.THAT BEING SO, WE DECLINE TO INTERFERE IN THE ORDER PASSED BY THE LD. CIT(A), HIS ORDER ON TH IS ISSUE, IS HEREBY UPHELD AND THE GROUND NO. 3 RAISED BY THE REVENUE IS DISMISSED. 13. THE CROSS OBJECTION FILED BY THE ASSESSEE IS ON LY SUPPORTIVE TO THE ORDER OF THE LD. CIT(A). SINCE, WE HAVE CONFIRMED THE ORDER OF LD CIT(A) THEREFORE, THE CROSS OBJECTION FILED BY THE ASSESSEE BECOMES INFRUCTUOUS . M/S WILSON ENG. INDUSTRIES PVT. LTD. ITA NO.2284/KOL/2016& C.O. NO. 03/KOL/2017 ASSESSMENT YEAR:2012-13 PAGE | 9 14. IN THE RESULT, THE APPEAL FILED BY THE REVENUE IS DISMISSED AND CROSS OBJECTION FILED BY THE ASSESSEE IS ALSO DISMISSED BEING RENDE RED AS INFRUCTUOUS. ORDER PRONOUNCED IN THE COURT ON 23.10.2019 SD/- ( A.T. VARKEY ) SD/- (A.L.SAINI) / JUDICIAL MEMBER / ACCOUNTANT MEMBER / DATE: 23/10/2019 ( SB, SR.PS ) COPY OF THE ORDER FORWARDED TO: 1. DCIT, CIRCLE-1(2), KOLKATA 2. M/S WILSON ENG. INDUSTRIES PVT. LTD. 3. C.I.T(A)- 4. C.I.T.- KOLKATA. 5. CIT(DR), KOLKATA BENCHES, KOLKATA. 6. GUARD FILE. TRUE COPY BY ORDER ASSIST ANT REGISTRAR ITAT, KOLKA TA BENCHES