The ACIT,Vapi Circle, Vapi V. Shri Rameshbhai Tulsidas Agrawal, Vapi

ITA 2469/AHD/2012

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 94728 (ITAT-AHMEDABAD)
• Duration Of Justice: 3 year(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 02-12-2015
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: D
• Next Hearing Date: 30-11-2015
• Assessment Year: 2005-2006
• Appeal Filed On: 05-11-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: H V GANDHI
• Section: 133A

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD D BENCH AHMEDABAD BEFORE SHRI SHAILENDRA KUMAR YADAV, JUDICIAL MEMBER, AND SHRI RAJESH KUMAR, ACCOUNTANT MEMBER. ITA. NO.2469/AHD/2012 (ASSESSMENT YEARS:2005-06) INCOME TAX OFFICER, VAPI WARD-3,VAPI APPELLANT VS. RAMESH TULSIDAS AGARWAL PROP. OF MANISH SCRAP TRADERS PLOT NO.350/5, GIDC, VAPI RESPONDENT PAN: ABEPA6573F /BY APPELLANT : MS. SANYOGITA NAGPAL, SR. D.R. /BY RESPONDENT : SHRI H. V. GANDHI, A.R. /DATE OF HEARING : 30.11.2015 /DATE OF PRONOUNCEMENT : 02.12.2015 ORDER PER RAJESH KUMAR, A.M: THIS APPEAL FILED BY THE REVENUE IS AGAINST THE ORD ER OF CIT(A), VALSAD, DATED 30.08.2012 FOR A.Y. 2005-06 ON FOLLOW ING GROUNDS: 2 ITA NO.2469/ AHD/ 2012 (ITO VS. RAMESH TULSIDAS AG ARWAL) 1. ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) HAS ERRED IN DELETING THE PENALTY U/S.271(1)(C) OF THE ACT, LEVIED BY THE A.O. AMOUNTI NG TO RS.25,18,798/-. 2. IT IS THEREFORE, PRAYED THAT THE ORDER OF THE LEARNED CIT(A) BE SE T ASIDE AND THAT THE ORDER OF THE AO BE RESTORED. 2. THE ONLY GROUND RAISED BY THE REVENUE IS AGAINST THE DELETION OF PENALTY U/S.271(1)(C) OF THE ACT AMOUNTING TO RS.25 ,18,798/-. 3. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSE E WAS ENGAGED IN THE BUSINESS OF TRADING IN ALL TYPES OF SCRAP MATERIALS UNDER PROPRIETORSHIP CONCERN M/S. MANISH SCRAP TRADERS. THE ASSESSEE FI LED HIS RETURN OF INCOME FOR THE INSTANT YEAR ON 19.12.2005 DECLARING TOTAL INCOME OF RS.15,75,070/-. THE ASSESSEES BUSINESS PREMISES WERE SURVEYED U/S. 133A ON 09.03.2005 AND THE ASSESSEE SURRENDERED INTER ALIA UNACCOUNTED STO CKS/CASH DIFFERENCE TO THE TUNE OF RS.78,54,090/-. HOWEVER, WHILE FILING RETU RN THE ASSESSEE OFFERED AN AMOUNT OF RS.3,71,034/- FOR TAXATION OUT OF RS.78,5 4,090/- ONLY. THE LD. A.O. FRAMED THE ASSESSMENT U/S.143(3) VIDE ORDER DA TED 28.09.2007 AT A TOTAL INCOME OF RS.1,04,96,550/-. THUS, THE A.O. MADE AD DITION INTER ALIA OF RS.74,83,056/- ON ACCOUNT OF UNEXPLAINED STOCK/CASH DIFFERENCE NOT OFFERED FOR TAX BY THE ASSESSEE, WHICH WAS ADMITTED BY THE ASSESSEE AT THE TIME OF SURVEY U/S.133A ON 09.03.2005. IN THE QUANTUM APPE AL, THE ABOVE ADDITION WAS CONFIRMED BY CIT(A) VIDE ORDER DATED 28.09.2008 FOLLOWING WHICH THE A.O. LEVIED PENALTY OF RS.25,18,798/- ON THE GROUND THAT ASSESSEE HAD NOT FURNISHED ANY EXPLANATION SUBSTANTIATING THE CIRCUM STANTIAL REASONS LEADING TO CORRECT FACTS /LAW AS APPLIED BY THE ASSESSEE FOR C OMPUTING LESS PROFIT INCOME BY WAY OF NOT SHOWING ACTUAL INVESTMENT AND STOCK A ND THEREBY SUPPRESSING THE ACTUAL PROFITS FOR THE YEAR UNDER CONSIDERATION AND THUS, THE ASSESSEE HAD FURNISHED INACCURATE PARTICULARS OF HIS INCOME. 3 ITA NO.2469/ AHD/ 2012 (ITO VS. RAMESH TULSIDAS AG ARWAL) 4. THE LD. CIT(A) DELETED THE PENALTY BY FOLLOWING THE ORDER PASSED BY THE TRIBUNAL IN QUANTUM APPEAL ON 06.07.2012 IN ITA NO.4064/AHD/08 WHEREIN THE ENTIRE ADDITION OF RS.74,83,056/- WAS D ELETED. 5. THE LD. D.R. RELIED ON THE ORDER OF A.O., WHEREA S, LD. A.R. FOR THE ASSESSEE SUBMITTED THAT SINCE THE QUANTUM APPEAL HA S BEEN DECIDED IN FAVOUR OF ASSESSEE DELETING THE ENTIRE ADDITION ON ACCOUNT OF STOCKS/CASH DIFFERENCE AMOUNTING TO RS.74,83,056/-, THE LD. CIT(A) HAD RIG HTLY DELETED THE PENALTY AND PRAYED THAT THE SAME DESERVED TO BE UPHELD. 6. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL ON RECORD. WE FIND THAT THE QUANTUM ADDITION OF RS.74 ,83,056/- ON THE BASIS OF WHICH THE PENALTY HAS BEEN LEVIED U/S.271(1)(C) STA NDS DELETED BY THE ITAT, AHMEDABAD D BENCH IN ITA NO.4064/AHD/08 VIDE ORDE R DATED 06.07.2012. THE RELEVANT PARA 7 OF THE SAID ORDER IS REPRODUCED AS UNDER: 7. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL ON RECORD. THE FACTUAL MATRIX OF THE CASE IS THAT SALES TAX AUTHORITIES HAD CARRIE D OUT SURVEY AT THE ASSESSEES PREMISES ON 5-3-2005 WHEREIN EXCESS STOCK TO THE EXTENT OF 34.310 MT. WAS FOUND. INCOME TAX AUTHORITIES ALSO CARRIED OUT SURVEY PROCEEDINGS IMMEDIATELY ON 9-3-2005 (I.E. IMMEDIATELY AFTER 3 DAYS OF SURVEY BY SALE S TAX AUTHORITIES) AND THEY RECORDED THE STATEMENT OF ASSESSEE AND ESTIMATED T HE PHYSICAL STOCK OF 586.826 MT. BETWEEN THE DATES OF BOTH THE SURVEYS THERE WAS A GAP OF THREE DAYS. THESE THREE DAYS INCLUDED TWO HOLIDAYS ON ACCOUNT MAHASHIVRATRI AND SUNDAY AND THERE WAS EFFECTIVELY ONLY ONE WORKING DAY. FROM THE STOCK OF 586.826 MT. THAT WAS ESTIMATED, IF ADJUSTMENT OF ACCOUNT OF OPENING STOCK AND SALES I S MADE, THE PURCHASES DURING THE PERIOD 5.3.2005 TO 9.3.2005 WOULD WORK OUT TO THE TUNE OF 426.616 MT. THE PURCHASES OF 426.616 MT. SEEMS TO BE FAR FETCHED PROPOSITION IN VIEW OF THE FACT THAT THE PURCHASES OF EACH MONTH DURING THE Y EAR RANGED BETWEEN MINIMUM PURCHASE OF 3.340 MT. AND MAXIMUM OF 134.480 MT. FURTHER THE CASH REQUIREMENT FOR THE PURCHASE OF AFORESAID QUANTITY WOULD BE T O THE EXTENT OF APPROX. RS.72LACS APART FROM THE LARGE STORAGE SPACE REQUIRED T O STORE THE GOODS. IT IS ALSO A FACT THAT THE SALES TAX AUTHORITIES HAVE C OMPLETED THE SALES TAX ASSESSMENT AFTER CONSIDERING THE STOCK OF 34.310 MT. IN THE CASE OF CIT VS. ANANDHA METAL CORPORATION (2005) 273 ITR 262 (MAD.), THE HONBLE MADRAS HIGH COURT HAS HELD THAT RETURN ACCEPTED BY THE COMMERCIAL TAX DEPARTME NT UNDER THE TAMIL NADU GENERAL SALES TAX ACT IS BINDING ON THE I.T. AUTHORITIES AND THE A.O. HAS NO JURISDICTION TO GO BEYOND THE VALUE OF THE CLOSING STOCK DECLARE D BY THE ASSESSEE AND ACCEPTED BY THE COMMERCIAL TAX DEPARTMENT. AND CONSE QUENTLY NO ADDITION U/S.69 COULD BE MADE IN RESPECT OF UNEXPLAINED DIFFERENCE BETWEEN T HE 4 ITA NO.2469/ AHD/ 2012 (ITO VS. RAMESH TULSIDAS AG ARWAL) VALUE OF CLOSING STOCK AS FOUND NOTED IN A SEIZED DOCUMENT AND THE VALUE ADMITTE D BY ASSESSEE. IN THE PRESENT CASE THE REVENUE HAS ESTIMATED THE S TOCK ON THE BASIS OF THE STATEMENT OF THE ASSESSEE RECORDED U/S.133A. IT IS ALSO A FACT THAT THE ASSESSEE HAS RETRACTED THE STATEMENT MADE U/S.133A BY MEANS OF NOTARIZE D AFFIDAVIT. IT IS A SETTLED LAW THAT THE STATEMENT MADE U/S.133A DOES NOT CARRY EVIDENTIARY VALUE. THE REVENUE HAS APART FROM THE STATEMENT OF ASSESS EE NOT BROUGHT ANY OTHER MATERIAL ON RECORD TO PROVE ITS CONTENTION THAT THE STOCK ON T HE DATE OF SURVEY WAS 586.826 MT. IN VIEW OF THE TOTALITY OF THE FACTS M ENTIONED HEREINBEFORE AND RESPECTFULLY FOLLOWING THE DECISION OF THE HIGH COURT, WE ARE OF THE VIEW THAT IT IS NOT POSSIBLE FOR ASSESSEE TO PURCHASE AND STORE THE STOCK AS ESTIMATE BY A.O. IN VIEW OF THESE FACTS THE ADDITION OF STOCK TO T HE EXTENT OF RS.78,54,056/- (CALCULATED ON THE BASIS OF 586.826 MT.) IS UNCALLED FOR AND THEREFORE DIRECTED TO BE DELETED. THE GROUND NO.2 & 3 OF THE ASSESSEE A RE THUS ALLOWED. IN VIEW OF THE ORDER PASSED BY THE TRIBUNAL DELETIN G THE QUANTUM ADDITION, WE UPHOLD THE ORDER OF CIT(A) BY DISMISSING THE APPEAL OF THE REVENUE. 7. IN THE RESULT, THE APPEAL OF REVENUE IS DISMISSE D. PRONOUNCED IN THE OPEN COURT ON THIS THE 2 ND DAY OF DECEMBER, 2015. SD/- SD/- (SHAILENDRA KUMAR YADAV) (RAJESH KUMAR) JUDICIAL MEMBER ACCOUNTANT MEMBER AHMEDABAD: DATED 02/12/2015 TRUE COPY / COPY OF ORDER FORWARDED TO:- / REVENUE 2 / ASSESSEE $ %&%'( ) / CONCERNED CIT 4 )- / CIT (A) , -./ 00'(1 '( 1 23& / DR, ITAT, AHMEDABAD 4 /56 78 / GUARD FILE. BY ORDER / 1 / 2 % '( 1 23&