RATAN PAPERS PVT. LTD., Jaipur V. ITO, Jaipur

ITA 23/JPR/2017

• Counselvise Citation: [2018] 126 COUNSELVISE.COM (IT) 2055 (ITAT-JAIPUR)
• Duration Of Justice: 1 year(s) 1 month(s) 21 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-02-2018
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: B
• Assessment Year: 2012-2013
• Appeal Filed On: 05-01-2017
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: NEENA JEPH JCIT DR DHK
• Keywords: Retraction
• Section: 133A

Judgement Text

VK;DJ VIHYH; VF/KDJ.K] T;IQJ U;K;IHB] T;IQJ IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCHES, JAIPUR JH FOT; IKY JKO] U;KF;D LNL; ,O JH HKKXPUN] YS[KK LNL; LNL; DS LE{K BEFORE: SHRI VIJAY PAL RAO, JM & SHRI BHAGCHAND, AM VK;DJ VIHY LA-@ ITA NO. 23/JP/2017 FU/KZKJ.K O'K Z@ ASSESSMENT YEAR: 2012-13 M/S. RATAN PAPERS PVT. LTD 50-54, RAMANUJ COLONY, SANGANER, JAIPUR CUKE VS. THE ITO WARD- 7(2) JAIPUR LFKK;H YS[KK LA-@THVKBZVKJ LA-@ PAN/GIR NO .: AAACR 8589 E VIHYKFKHZ@ APPELLANT IZR;FKHZ@ RESPONDENT VK;DJ VIHY LA-@ ITA NO. 11/JP/2017 FU/KZKJ.K O'K Z@ ASSESSMENT YEAR: 2012-13 THE ITO WARD- 7(2) JAIPUR CUKE VS. M/S. RATAN PAPERS PVT. LTD 50-54, RAMANUJ COLONY, SANGANER, JAIPUR LFKK;H YS[KK LA-@THVKBZVKJ LA-@ PAN/GIR NO .: AAACR 8589 E VIHYKFKHZ@ APPELLANT IZR;FKHZ@ RESPONDENT FU/KZKFJRH DH VKSJ LS@ ASSESSEE BY: SHRI MANISH AGARWAL, CA JKTLO DH VKSJ LS@ REVENUE BY:SMT. NEENA JEPH, JCIT - DR LQUOKBZ DH RKJH[K@ DATE OF HEARING : 19/02/2018 ?KKS'K .KK DH RKJH[K@ DATE OF PRONOUNCEMENT : 27/02/2018 VKNS'K@ ORDER PER BHAGCHAND, AM BOTH THESE APPEALS ARE THE CROSS APPEALS FILED AG AINST THE ORDER OF THE LD. CIT(A)-III, JAIPUR DATED 28-10-2016 FOR THE ASSESSMENT YEAR 2012-13 RAISING THEREIN FOLLOWING GROUNDS OF APPEAL . ITA NO.23/JP/2017 M/S. RATA N PAPERS PVT. LTD. VS ITO, WARD- 7(2) ,JAIPUR 2 ITA NO. 23/JP/2017 ASSESSEE 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE C ASE, THE LD. CIT(A) HAS GROSSLY ERRED IN CONFIRMING THE ACTION O F THE INVOCATION OF SECTION 145(3) OF THE I.T. ACT, ARBITRARILY. ASSESS EE PRAYED THAT REJECTION OF BOOKS OF ACCOUNT BY AO BEING WITHOUT P OINTING OUT ANY SPECIFIC DEFECTS IN BOOKS AND CLOSELY BASED ON ALLE GED SO CALLED SURRENDER MADE BY SHRI GAURAV JAIN, DIRECTOR OF ASS ESSEE VIA STATEMENTS RECORDED DURING SURVEY PROCEEDINGS U/S 1 33A, WHICH STOOD RETRACTED, THUS HAVE NO EVIDENTIARY VALUE. ASSESSEE PRAYED THAT REJECTION OF BOOKS BY AO BE HELD BAD IN LAW. 1.1 THAT THE LD. CIT(A) HAS FURTHER ERRED IN CONFIR MING THE ADDITION TO THE EXTENT OF RS. 19,35,591/- OUT OF AD DITION OF RS. 51,72,923/- MADE BY AO ALLEGING THE SAME AS EXCESS STOCK BY IGNORING THE EXPLANATION FURNISHED BY ASSESSEE SUBSTANTIATIN G THE DIFFERENCE BETWEEN STOCK DECLARED BY THE ASSESSEE AND COMPUTED BY AO ON THE BASIS OF INVENTORY PREPARED DURING SURVEY, THUS THE ENTIRE ADDITION DESERVES TO BE DELETED. ITA NO.11/JP/2017 REVENUE (I) ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE, THE LD. CIT(A) ERRED IN DELETING THE ADDITION OF RS. 32,37, 314/- (RS. 23,27,679+RS. 9,09,635) AS AGAINST TRADING ADDITION OF RS. 51,72,923/- (RS. 50,01,026+1,71,897) MADE BY THE AO ON ACCOUNT OF EXCESS STOCK SURRENDERED BY DIRECTOR HIMSELF IN HIS STATEMENT DA TED 4-08-2011 RECORDED DURING SURVEY. (II) ON THE FACTS AND IN THE CIRCUMSTANCES OF THE C ASE, THE LD. CIT(A) ERRED IN DELETING RS. 9,09,635/- OUT OF TOTA L TRADING ADDITION MADE BY THE AO (RS. 50,01,026+RS. 1,71,897) ON THE GROUND THAT G.P. RATE OF 22.64% SHOULD HAVE BEEN APPLIED ON THE TRAD ING ACCOUNT PREPARED DURING SURVEY AS AGAINST THE G.P. RATE 18. 79% APPLIED BY THE SURVEY TEAM. 2.1 APROPOS GROUND NO. 1 AND 1.1 OF THE ASSESSEE A ND GROUND NO. (I) AND (II) OF THE REVENUE, THE FACTS AS EMERGES FROM THE ORDER OF THE LD. CIT(A) ARE AS UNDER:- ITA NO.23/JP/2017 M/S. RATA N PAPERS PVT. LTD. VS ITO, WARD- 7(2) ,JAIPUR 3 4.3 I HAVE CAREFULLY CONSIDERED THE FACTS OF THE CASE, FINDING OF THE AO AND SUBMISSION OF THE APPELLANT. THE AO M ADE THE ADDITION ON THE BASIS OF TRADING ACCOUNT PREPARED AT THE TIM E OF SURVEY AND SURRENDER MADE BY THE DIRECTOR. AS PER TRADING ACCO UNT, THE STOCK AS ON THE DATE OF SURVEY WORKS OUT TO RS. 5,78,921/- AS A GAINST PHYSICAL STOCK OF RS. 55,79,947/- LEAVING A DIFFERENCE OF RS. 50,0 1,026/-. FURTHER ADDITION OF RS. 1,71,879/- WAS ALSO MADE BY AO ON B ASIS OF SEPARATE STATEMENT AS PER REPLY TO QUESTION NO. 35. IN APPEL LATE PROCEEDINGS, THE LD.AR ARGUED THAT THERE ARE VARIOUS DEFECTS IN TRAD ING / P&L ACCOUNT PREPARED AT THE TIME OF SURVEY PROCEEDINGS. MAJOR D EFECT POINTED OUT BY A/R ARE:- VALUE OF STOCK ASCERTAINED BY THE I.T. OFFICIALS DU RING THE COURSE OF SURVEY RS. 5,78,921/- ADD:- DIFFERENCE IN OPENING STOCK (RS. 69,67,131- R S. 26,39,452) RS. 23,27,679/- ADD: PURCHASES CONSIDERED BY SHORT AMOUNT BY SURVEY TEAM RS. 81,08,657 RS. 79,62,913) RS. 1 ,46,044/- ADD: GROSS PROFIT DIFFERENCE DUE TO LOWER G.P. RATE TAKEN BY THE SURVEY TEAM (22.64% - 18.79%) RS. 9, 09,635/- ADD: INVOICE VALUE OF GOODS (STOCK) WHICH WERE PHYS ICALLY RECEIVED IN THE FACTORY PREMISES BUT THE ACCOUNTIN G ENTRY OF THESE PURCHASE INVOICES WERE PENDING AS ON DATE OF SURVEY (RS. 14,61,869+RS. 4,62,508 RS. 8,15,91 4) RS. 11,08,463/- ADD: DIRECT EXPENSES NOT CONSIDERED BY THE I.T. OF FICIALS RS. 11,48,367/- LESS: EXCHANGE RATE DIFFERENCE ENTRY NOT ACCOUNTED FOR AS ON THE DATE OF SURVEY RS. 4,04,113/- ON PERUSAL OF THE ASSESSMENT ORDER AND A/R SUBMISSI ON, I FIND THAT THE CONTENTION OF A/R IN RESPECT OF DIFFERENCE IN OPENING STOCK BY RS. 23,27,679/- AND DIFFERENCE IN GROSS PROFIT DUE TO LOWER G.P. RATE TAKEN BY RS. 9,09,635/- APPEARS TO BE CORRECT. THE SURVEY TEAM TOOK OPENING STOCK AT RS. 46,39,452/- THOUGH AUDITED ACC OUNTS SHOWS OPENING STOCK AT RS. 69,67,131/-. THUS THE OPENING STOCK WAS CONSIDERED SHORT AT THE TIME OF SURVEY BY RS. 23,2 7,679/- WHICH IS FULLY VERIFIABLE FROM AUDITED ACCOUNTS AND SAME IS THEREFORE, ACCEPTED. IN RESPECT OF G.P. RATE DIFFERENCE, IT IS SEEN THAT SURVEY TEAM PREPARED TRADING ACCOUNT BY APPLYING G.P. RATE OF 1 8.79% WHEREAS CORRECT AVERAGE G.P. RATE OF ASSESSEE FOR LAST THRE E YEARS WORKS OUT AT 22.64% RESULTING IN DIFFERENCE OF RS. 9,09,635/-. T HIS IS DULY VERIFIABLE FROM AUDITED ACCOUNTS AND THUS CONTENTION OF APPELL ANT IS ACCEPTED. ITA NO.23/JP/2017 M/S. RATA N PAPERS PVT. LTD. VS ITO, WARD- 7(2) ,JAIPUR 4 IN RESPECT OF OTHER CLAIMS MADE BY APPELLANT, SAME APPEARS TO BE AN AFTERTHOUGHT AND NOT SUPPORTED BY PROPER EVID ENCE THEREFORE, SAME ARE REJECTED. IN THE RESULT, APPELLANT GETS RELIEF OF RS. 32,37,3 14/- (2327679+909635) AND BALANCE ADDITION IS CONFIRMED. 2.2 DURING THE COURSE OF HEARING, THE LD. DR SUPPORTED THE ORDER OF THE AO. 2.3 ON THE OTHER HAND, THE LD.AR OF THE ASSESSEE SU BMITTED THAT THE LD. CIT(A) HAS ERRED IN CONFIRMING THE ACTION OF THE AO IN INVOKING THE PROVISIONS OF SECTION 145(3) OF THE ACT AND ALSO ER RED IN CONFIRMING THE ADDITION OF RS. 19,35,591/- OUT OF ADDITION OF RS. 51,72,923/- MADE BY THE AO. 2.4 WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE MATERIALS AVAILABLE ON RECORD. BRIEF FACTS OF THE CASE ARE TH AT ASSESSEE IS A PRIVATE LIMITED COMPANY ENGAGED IN MANUFACTURING OF HANDMAD E PAPER PRODUCTS AND HANDICRAFTS ITEMS. A SURVEY U/S 133A OF THE ACT WAS CARRIED OUT AT THE PREMISES OF THE ASSESSEE COMPANY AND OTHER ASSOCIAT E BUSINESS CONCERNS ON 4-08-2011. DURING THE COURSE OF SURVEY OPERATION S, STATEMENT OF SHRI GAURAV JAIN, DIRECTOR OF ASSESSEE COMPANY AND VARIO US OTHER EMPLOYEES WERE RECORDED WHEREIN A SURRENDER OF INCOME OF RS. 51,72,923/- WAS OBTAINED FROM HIM ON ACCOUNT OF ALLEGED EXCESS STOC K FOUND DURING ITA NO.23/JP/2017 M/S. RATA N PAPERS PVT. LTD. VS ITO, WARD- 7(2) ,JAIPUR 5 SURVEY. THEREAFTER VIDE AFFIDAVIT DATED 14-09-2011, SHRI GAURAV JAIN HAD MADE RETRACTION. THE RETURN OF INCOME WAS FILED DEC LARING TOTAL INCOME AT RS. 24,14,770/-. ASSESSMENT WAS COMPLETED BY THE AO WHEREIN PROVISIONS OF SEC 145(3) WERE INVOKED AND ADDITIONS OF RS. 51,72,923/- WERE MADE BEING THE DIFFERENCE IN STOCK AS PER TRAD ING ACCOUNT PREPARED ON THE DATE OF SURVEY AND THAT PHYSICALLY FOUND. TH E ADDITIONS WERE MADE ON THE BASIS OF DISCREPANCIES FOUND IN SURVEY AND S TATEMENT RECORDED. THE RELEVANT PARA AS TO MAKING THE ADDITION OF RS. 50,01,026/-AND RS. 1,71,897/- BY THE AO IS AS UNDER:- THE ASSESSEE THROUGH ITS DIRECTOR SHRI GAURAV JAI N SURRENDERED THE EXCESS STOCK OF RS. 50,01,026/- AS ON 04-08-201 1 AS PER ANSWER OF QUESTION NO. 25 OF THE STATEMENTS RECORDED DURING T HE COURSE OF SURVEY PROCEEDINGS. THE ASSESSEE'S DIRECTOR SHRI GAURAV JA IN AGAIN SURRENDERED THE STOCK OF RS. 1,71,897/- AS PER ANSW ER OF QUESTION NO. 35 OF THE STATEMENTS. THE ASSESSEE'S DIRECTOR STATE D IN HIS STATEMENTS THAT THE RAW MATERIAL WAS SENT FOR JOB WORK WHICH W AS EXTRA STOCK FROM THEABOVE STOCK OF RS. 50,01,026/- ALREADY SURRENDER ED FOR TAXATION UNDER THE INCOME TAX ACT, 1961 BUT THE ASSESSEE IN ITS REPLY SAID THAT THE STOCK OF RS. 1,71,897/- WAS ALSO MIXED UP WHILE THE DIRECTOR OF THE ASSESSEE SHRI GAURAV JAIN SURRENDERED SEPARATELY AS PER ANSWER OF QUESTION NO. 35 OF THE STATEMENTS. CONSIDERING THE FACTS OF THE CASE, THE ASSESSEE DOES NOT MAINTAIN THE BOOKS OF ACCOUNTS AN D OTHER RELEVANT DOCUMENTS PROPERLY AND THE SAME ARE HEREBY REJECTED BY INVOKING THE PROVISIONS OF SECTION 145(3) OF THE INCOMETAX ACT, 1961 . THEREFORE, ITA NO.23/JP/2017 M/S. RATA N PAPERS PVT. LTD. VS ITO, WARD- 7(2) ,JAIPUR 6 THE EXCESS STOCK OF RS. 50,.01,026/- AND RS. 1,71,8 97/-SURRENDERED DURING THE COURSE OF SURVEY PROCEEDINGS U/S 133A OF THE INCOME TAX ACT, 1961. IN FIRST APPEAL, THE LD. CIT(A) HAS PARTLY ALLOWED THE RELIEF OF RS. 32,37,314/-. THE AO HAS INVOKED THE PROVISIONS OF S ECTION 145(3) OF THE I.T. ACT, 1961 AND MADE THE ADDITION ON ACCOUNT OF EXCESS STOCK. THE LD. CIT(A) AFTER CONSIDERING THE RECONCILIATION HAD AC CEPTED THE CONTENTION IN PART. THE DIFFERENCE ON ACCOUNT OF OPENING STOCK AND G.P. RATE DIFFERENCE WERE ALLOWED RESULTING INTO THE DELETION OF ADDITION TO BE EXTENT OF RS. 32,37,314/- AND FOR THE REMAINING AMOUNT OF RS. 19,35,591/-, IT WAS OBSERVED BY LD. CIT(A) THAT THE SAME IS AN AFT ERTHOUGHT. AFTER GOING THROUGH THE FACTUAL DETAILS FILED AND CONSIDERING T HE PLEADINGS OF BOTH SIDES, WE HOLD THE LD. CIT(A) HAS CONSIDERED ALL GE NUINE PLEADINGS AND RECONCILIATION IN RIGHT PERSPECTIVE AND ALLOWED PAR T RELIEF. THE OTHER GROUNDS OF RECONCILIATION ARE BALD ASSERTION NOT SU PPORTED BY ANY INDEPENDENT AND POSITIVE EVIDENCE. THESE ARE SIMPLY AFTERTHOUGHT WHICH HAVE NO WEIGHTAGE IN THE EYES OF LAW.IT IS UNDISPUT ED FACT THAT THE BOOKS OF ACCOUNTS OF THE ASSESSEE WERE INCOMPLETE AS ON T HE DATE OF SURVEY, THEREFORE THE SAME CANNOT BE ACCEPTED AS SUCH. IN OUR CONSIDERED VIEW, THE PROVISIONS OF SECTION 145(3) OF THE ACT WERE RI GHTLY INVOKED BY THE ITA NO.23/JP/2017 M/S. RATA N PAPERS PVT. LTD. VS ITO, WARD- 7(2) ,JAIPUR 7 AO. FURTHER, THE DETAILS WITH EVIDENCES FILED BY A SSESSEE WERE CONSIDERED BY THE LD. CIT(A) AND PARTLY ACCEPTED. THE GENUINE CLAIMS OF THE ASSESSEE AS MADE IN RECONCILIATION WERE ACCEPTED AND THOSE W HICH WERE AFTERTHOUGHT AND UNSUPPORTED BY ANY POSITIVE EVIDEN CE WERE REJECTED. UNDER THESE CIRCUMSTANCES, IN OUR CONSIDERED VIEW THE PART ADDITION SO SUSTAINED BY LD. CIT(A) WAS JUSTIFIED. 3.0 IN THE RESULT, THE APPEALS OF THE ASSESSEE AS WELL AS OF THE REVENUE ARE DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 27 -02-2018. SD/- SD/- FOT; IKY JKO HKKXPUN (VIJAY PAL RAO) ( BHAGCHAND) U;KF;D LNL; / JUDICIAL MEMBER YS[KK LNL;@ ACCOUNTANT MEMBER TK;IQJ@ JAIPUR FNUKAD@ DATED:- 27 /02/ 2018 *MISHRA VKNS'K DH IZFRFYFI VXZSF'KR@ COPY OF THE ORDER FORWARDED TO: 1. VIHYKFKHZ@ THE APPELLANT- M/S. RATAN PAPERS PVT. LTD., JAIPUR 2. IZR;FKHZ@ THE RESPONDENT- THE ITO, WARD- 7(2), JAIPUR 3. VK;DJ VK;QDRVIHY@ CIT(A). 4. VK;DJ VK;QDR@ CIT, 5. FOHKKXH; IZFRFUF/K] VK;DJ VIHYH; VF/KDJ.K] T;IQJ@ DR, ITAT, JAIPUR 6. XKMZ QKBZY@ GUARD FILE (ITA NO.23/JP/2017) VKNS'KKUQLKJ@ BY ORDER, LGK;D IATHDKJ@ ASSISTANT. REGISTRAR