The Income-Tax officer, Ward-1(4), V. M/s. Aum Fashions,

ITA 263/RJT/2006

• Counselvise Citation: [2011] 140 COUNSELVISE.COM (IT) 56648 (ITAT-RAJKOT)
• Duration Of Justice: 5 year(s) 1 month(s) 28 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 12-08-2011
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Next Hearing Date: 09-08-2011
• Assessment Year: 2002-2003
• Appeal Filed On: 14-06-2006
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: MK SINGH
• Assessee Lawyers: RM MANEK
• Section: 69

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL RAJKOT BENCH, RAJKOT BEFORE SHRI A.L. GEHLOT (AM) AND SHRI N.R.S. GANESA N (JM) I.T.A. NO.263/RJT/2006 (ASSESSMENT YEAR 2002-03) ITO, WD.1(4) VS M/S AUM FASHIONS RAJKOT ROYAL CORNER DR. YAGNIK ROAD, RAJKOT PAN : AAFFA6810R (APPELLANT) (RESPONDENT) DATE OF HEARING : 09-08-2011 DATE OF PRONOUNCEMENT : 12-08-2011 APPELLANT BY : SHRI MK SINGH RESPONDENT BY: SHRI RM MANEK O R D E R PER N.R.S. GANESAN, JM THIS APPEAL OF THE REVENUE IS DIRECTED AGAINST THE ORDER OF CIT(A)-I, RAJKOT DATED 29-03-2006 PERTAINING TO THE ASSESSMENT YEAR 2002-03. 2. THE FIRST GROUND OF APPEAL IS WITH REGARD TO ADD ITION OF RS. 13,31,337 U/S 69 OF THE INCOME-TAX ACT TOWARDS EXCESS STOCK FOUND DURING THE COURSE OF SURVEY PROCEEDINGS. 3. SHRI MK SINGH, THE LD.DR FOR THE ASSESSEE SUBMIT TED THAT THERE WAS A SURVEY OPERATION IN THE PREMISES OF THE ASSESSEE ON 19-02-2002. DURING THE COURSE OF SURVEY OPERATION EXCESS STOCK OF 13,31,33 7 WAS FOUND. THE ASSESSEE COULD NOT EXPLAIN THE EXCESS STOCK FOUND DURING THE COURSE OF SURVEY OPERATION BEFORE THE ASSESSING OFFICER. THEREFORE, THE ASSES SING OFFICER MADE ADDITION OF RS.13,31,337. HOWEVER, ON APPEAL BY THE ASSESSEE, THE CIT(A) FOUND THAT THE SURVEY TEAM VALUED THE GOODS ON THE BASIS OF SALE P RICE, THEREFORE, EXCESS STOCK WAS FOUND. IF WE TAKE THE COST OF THE STOCK THERE MAY NOT BE ANY EXCESS AT ALL. ITA NO.263/RJT/2006 2 ACCORDING TO THE LD.DR, DURING THE COURSE OF SURVEY OPERATION INVENTORY WAS TAKEN AND THE EXCESS STOCK WAS WORKED OUT ON THE BA SIS OF THE INVENTORY TAKEN DURING THE COURSE OF SURVEY OPERATION. THEREFORE, THE CIT(A) IS NOT CORRECT IN DELETING THE ADDITION MADE BY THE ASSESSING OFFICER . 4. ON THE CONTRARY, SHRI RM MANEK, THE LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT DURING THE COURSE OF SURVEY OPERATIO N THE STOCKS WERE VALUED ON THE BASIS OF THE TAG PRICE INSTEAD OF PURCHASE PRIC E. ACCORDING TO THE LD.REPRESENTATIVE TAG PRICE IS NOTHING BUT SELLING PRICE OF THE MATERIAL. THE LD.REPRESENTATIVE SUBMITTED THAT FOR THE PURPOSE OF STOCK, THE ASSESSEE HAS DISCRETION EITHER TO VALUE THE SAME ON THE SALE PRI CE OR ON THE COST PRICE. THE SALE PRICE INCLUDES COST, EXPENSES, OVERHEADS, PROF ITS, ETC. THEREFORE, THE ASSESSING OFFICER HAS TO NECESSARILY VALUE THE STOC K FOUND DURING THE COURSE OF SURVEY ON THE BASIS OF THE COST PRICE. THE CIT(A) FOUND THAT THE METHOD ADOPTED BY THE SURVEY TEAM IN VALUING THE STOCK IS NOT JUST IFIED. THEREFORE, HE RIGHTLY DELETED THE ADDITION MADE BY THE ASSESSING OFFICER. 5. WE HAVE CONSIDERED THE SUBMISSIONS ON EITHER SID E AND HAVE ALSO PERUSED THE MATERIAL AVAILABLE ON RECORD. ADMITTED LY, THERE WAS A SURVEY OPERATION IN THE PREMISES OF THE ASSESSEE AND THE I NVENTORY WAS TAKEN. FROM THE MATERIAL AVAILABLE ON RECORD IT APPEARS THAT THE PR ICE ON THE TAG HAS BEEN TAKEN AS COST OF THE GOODS. THE TAG PRICE IS NOTHING BUT A SALE PRICE. THE PARTICULARS SHOWN IN THE TAG AS SALE PRICE CANNOT BE TAKEN FOR THE PURPOSE OF VALUING THE STOCK FOUND DURING THE COURSE OF SURVEY OPERATION. IN OUR OPINION, THE STOCK HAS TO BE VALUED ONLY AT THE COST PRICE. THEREFORE, TH E CIT(A) HAS RIGHTLY FOUND THAT THE METHOD OF VALUATION ADOPTED BY THE ASSESSING OF FICER IS NOT JUSTIFIED. SINCE WORKING OF VALUATION IS FULLY SUPPORTED BY BILLS ON THE BASIS OF THE COST PRICE, IN OUR OPINION, THE CIT(A) HAS RIGHTLY DELETED THE ADD ITION MADE BY THE ASSESSING OFFICER. IN THE ABSENCE OF ANY CONTRARY MATERIAL W E DO NOT FIND ANY REASON TO INTERFERE WITH THE ORDER OF CIT(A). ACCORDINGLY TH E ADDITION IS CONFIRMED. ITA NO.263/RJT/2006 3 8. THE NEXT GROUND OF APPEAL IS ADDITION OF RS. 18, 434. WE HAVE HEARD THE LD.DR AND LD.COUNSEL FOR THE ASSESSEE. THE ASSESSI NG OFFICER MADE THE ADDITION ON THE GROUND THAT THERE WAS A DIFFERENCE IN CASH F OUND DURING THE COURSE OF SURVEY OPERATION AND AS PER THE BOOKS OF ACCOUNT. THE CIT(A) ON VERIFICATION OF THE ACCOUNTS FOUND THAT THE CASH FOUND TALLIED WITH BOOKS OF ACCOUNT. NO MATERIAL IS PRODUCED BEFORE THIS TRIBUNAL TO CONTRADICT THE FINDING RECORDED BY CIT(A). WHEN THE CIT(A) VERIFIED THE BOOKS OF ACCOUNT AND F OUND THAT THE CASH FOUND DURING THE COURSE OF SURVEY ACTION TALLIED WITH THE BOOKS OF ACCOUNT AND DELETED THE ADDITION, WE DO NOT FIND ANY REASON TO INTERFER E WITH THE ORDER OF THE LOWER AUTHORITY, MORE PARTICULARLY IN THE ABSENCE OF ANY MATERIAL. 9. IN THE RESULT, APPEAL OF THE REVENUE STANDS DISM ISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 12-08-2011. SD/- SD/- (A.L. GEHLOT) (N.R.S. GANESAN) ACCOUNTANT MEMBER JUDICIAL MEMBER RAJKOT, DT : 12 TH AUGUST, 2011 PK/- COPY TO: 1. ASSESSEE 2. REVENUE 3. THE CIT(A)-I, RAJKOT 4. THE CIT-I, RAJKOT 5. THE DR, I.T.A.T., RAJKOT (TRUE COPY) BY ORDER ASSTT.REGISTRAR, ITAT, RAJKOT