Uttam Sahoo, Purba Medinipur V. Income Tax Officer-Ward-2, Haldia, Purba Medinipur

ITA 2651/KOL/2013

• Counselvise Citation: [2016] 121 COUNSELVISE.COM (IT) 3138 (ITAT-KOLKATA)
• Duration Of Justice: 2 year(s) 2 month(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 03-02-2016
• Appeal Filed By: Assessee
• Bench Allotted: B
• Assessment Year: 2006-2007
• Appeal Filed On: 22-11-2013
• Court: TRIBUNAL
• Department Lawyers: DEBASISH BANERJEE
• Assessee Lawyers: MIRAJ D. SHAH
• Keywords: Unexplained investment

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL SMC BENCH : KOLKATA [BEFORE HONBLE SRI N.V.VASUDEVAN, JM ] I.T.A NO. 2651/KOL/20 13 ASSESSMENT YEAR : 2006-0 7 UTTAM SAHOO -VS.- I.T.O., WARD-2, PURBA MEDINIPUR HALDIA. [PAN : AYOPS3202L) (APPELLANT) (RESPONDENT) FOR THE APPELLANT : SHRI MIRAJ D.SHAH, ADVOCATE FOR THE RESPONDENT : SHRI DEBASISH BANERJEE, JCIT, SR.DR DATE OF HEARING : 18.01.2016. DATE OF PRONOUNCEMENT : 3.2.2016. ORDER THIS IS AN APPEAL BY THE ASSESSEE AGAINST THE ORDER DATED 18.09.2013 OF CIT(A)- XXXIII, KOLKATA, RELATING TO AY 2006-07. 2. THE ASSESSEE HAS RAISED SEVERAL GROUNDS OF APPEA L BUT THE ONLY POINT OF DISPUTE IN THE APPEAL IS THE ADDITION OF RS.11,90,660/- MADE B Y THE ASSESSING OFFICER ON ACCOUNT OF DIFFERENCE IN THE STOCK AS PER THE STOCK REGISTE R AND THE DETAILS OF STOCK SUBMITTED BY THE ASSESSEE TO APPELLANT TO CONTAI CO-OPERATIVE BA NK LTD., HARIA FOR THE PURPOSE OF OBTAINING A LOAN. THE ASSESSING OFFICER HAS GIVEN T HE DETAILS OF THE DIFFERENCE IN QUANTITY AND VALUE OF THE STOCK AS PER STOCK REGIST ER AND THE STOCK DETAILS GIVEN TO THE BANK IN THE ASSESSMENT ORDER AS FOLLOWS :- SL.NO. PRODUCT QUANTITY AS PER STOCK STATEMENT SUBMITTED TO THE BANK AS ON 20.06.05 QUANTITY AS PER YOUR STOCK REGISTER FURNISHED BY YOU BEFORE THE I.T.DEPTT. AS ON 20.06.05 DIFFERENCE (IN QUANTITY) RATE (IN RS.) DIFFERENCE OF VALUE (IN RS.) 2 ITA NO.2651/KOL/2013 UTTAM SAHOO A.YR.2006-07 2 1. FINE PADDY 1500 QUINTAL 19 QUINTAL 1481 QUINTAL 660/QNT 9,77,460/- 2. FINE RICE 2000 QUINTAL 1939 QUINTAL 61 QUINTAL 1200/QNT. 73,200/- 3. SUPER FINE RICE 100 QUINTAL NIL 100 QUINTAL 1400/QNT 1,40,000/- TOTAL QUANTITATIVE STOCK DIFFERENCE(IN RS.) 11,90 ,660/- 2.1. THE AO CALLED UPON THE THE ASSSESSEE TO EXPLAI N THE DIFFERENCE BY ISSUE OF SHOW CAUSE NOTICE ON 12-12-2008. THE ASSESSEE TOOK A ST AND THAT THE DETAILS OF CLOSING STOCK SUBMITTED BEFORE THE BANK WERE ONLY FOR THE PURPOSE OF OBTAINING BANK LOAN AND THE STOCK REGISTER PRESENTED THE CORRECT PICTURE OF THE CLOSING STOCK. THE ASSESSING OFFICER DID NOT ACCEPT THE ASSESSEES EXPLANATION AND TREAT ED THE DIFFERENCE IN THE STOCK AS EXCESS UNEXPLAINED EXCESS STOCK. HE RELIED UPON THE FOLLOWING CASE LAWS :- I) COIMBATORE SPINNING AND WEAVING CO. LTD. VS. CIT (1 974) 95 IT%R 375.(MAD) II) DHANSIRAM AGARWALA VS. CIT 201 ITR 192. (GAU.) III) CIT VS. ASHOKE ESTATE (P)LTD. 141 ITR 785 (KERALA) IV) ACIR VS VIKAS AGENCY 85 ITD 536 (ITAT AHD.) 3. BEFORE CIT(A) THE ASSESSEE REITERATED THE SUBMIS SIONS THAT THE STOCK TAKING GIVEN TO THE BANK OUGHT NOT TO HAVE TAKEN TO THE AO AS TR UE. THE ASSESSEE POINTED OUT THAT THE BUSINESS WAS STARTED ONLY ON 01.04.2005 WITH AN OPE NING CAPITAL OF RS.24,501/-. THEREFORE THE ASSESSEE COULD NOT HAVE HAD THE STOCK AS PER THE STOCK STATEMENT GIVEN TO THE BANK. CIT(A), HOWEVER REJECTED THE PLEA RAISED BY THE ASSESSEE OBSERVING AS FOLLOWS :- 6. I HAVE CONSIDERED THE FACTS OF THE CASE AND THE WRITTEN SUBMISSIONS GIVEN BY THE APPELLANT. THE APPELLANT HAS STATED THAT THE ASSESS ING OFFICER EXAMINED THE BOOKS OF ACCOUNTS AND DID NOT FIND ANY DEFECTS. HOWEVER, IN THE ASSESSMENT ORDER, THE ASSESSING OFFICER HAS CLEARLY MENTIONED THAT THE APPELLANT FA ILED TO PRODUCE THE REGULAR BOOKS OF ACCOUNTS IN SPITE OF GRANT OF ADEQUATE OPPORTUNITY. THE APPELLANT HAS ALSO CONTENDED THAT THE STOCK STATEMENT WAS SUBMITTED TO THE BANK FOR O BTAINING LOAN OF RS. 20,00,000/- BUT THE OPERATIONS OF THE APPELLANT'S MILL HAD NOT EVEN STA RTED AND THE HYPOTHECATION STATEMENT GIVEN TO THE BANK WAS BOGUS AND IMAGINARY. IN SUPPO RT OF THIS CONTENTION, THE APPELLANT HAS ALSO TRIED TO DRAW SUPPORT FROM THE FIGURE OF O PENING CAPITAL OF RS. 24,501/- ONLY. THE 3 ITA NO.2651/KOL/2013 UTTAM SAHOO A.YR.2006-07 3 APPELLANT'S CONTENTIONS CAN NOT BE ACCEPTED AS THE STOCK REGISTER REFLECTED 19 QUINTALS OF FINE PADDY AND 1939 QUINTALS OF FINE RICE RESPECTIV ELY AND, THEREFORE, THE CONTENTION THAT THE OPERATIONS HAD NOT EVEN BEGUN AND THERE WAS NO STOCK AS PER BOOKS ALSO IS NOT CORRECT. IN A SITUATION WHERE THE APPELLANT HAS MAINTAINED A STOCK REGISTER AND SUBMITTED A STOCK STATEMENT TO THE BANK WHICH AS AT VARIANCE WITH THE STOCK REGISTER, THE ONUS IS ON THE APPELLANT TO PROVE THAT THE STOCK FIGURES SUBMITTED TO THE BANK WERE NOT CORRECT. THE ADMITTED FACTS ARE THAT THE APPELLANT'S BUSINESS CO MMENCED ON 01.04.2005, THE LOAN OF RS. 20,00,000/- WAS SANCTIONED ON 28.05.2005 AND THE ST OCK STATEMENT WAS FURNISHED TO THE BANK ON 20.06.2005. IN THE FACE OF THESE FACTS, THE APPELLANT HAS NOT BEEN ABLE TO ESTABLISH THAT HE WOULD NOT HAVE HAD ANY STOCK ON 20.06.2005. IT IS NOT THE CASE OF THE APPELLANT THAT PURCHASES CANNOT BE MADE BY THE APPELLANT WITHOUT A CCOUNTING FOR THE SAME. IT HAS ALSO NOT BEEN CONTENDED OR PROVED BY THE APPELLANT THAT THE PHYSICAL STOCK WAS NOT CHECKED BY THE BANK AUTHORITIES. IN FACT, THE APPELLANT HAS SU BMITTED A COPY OF A STATEMENT OF STOCK SUBMITTED TO THE BANK ON 20-06-2005 AND THE STATEME NT REVEALS THAT A FIELD OFFICER OF CONTAI CO-OPERATIVE BANK TD. HAD CERTIFIED AT THE E ND OF THE STATEMENT AS UNDER:- 'I DO HEREBY CERTIFY THAT THE HYPOTHECATED GOODS ME NTIONED ON THE REVERSE AND ABOVE WERE CHECKED BY ME ON 20-06-2005 AND WERE FOU ND IN ORDER.' IN VIEW OF THE CERTIFICATE OF BANK OFFICER, IT IS F OR THE APPELLANT TO ESTABLISH THAT THE STOCK STATEMENT GIVEN TO THE BANK WAS FALSE. THE APPELLAN T HAS FAILED TO DISCHARGE THIS ONUS. THE APPELLANT HAS ALSO TRIED TO DISTINGUISH ITS FACTS F ROM THE CASES RELIED UPON BY THE ASSESSING OFFICER BUT THE FACTS OF THOSE CASES AS SUMMARIZED IN THE ASSESSMENT ORDER CANNOT REALLY BE DISTINGUISHED FROM THE APPELLANT'S CASE. THE QUANTI TY AS WELL AS VALUE OF STOCK DECLARED BY THE APPELLANT BEFORE THE BANK WAS HIGHER AND, THERE FORE, THE APPELLANT'S CASE IS COVERED BY THE FOUR CASES CITED BY THE ASSESSING OFFICER. HENC E, THE ADDITION OF RS. 11,90,660/- MADE BY THE ASSESSING OFFICER ON ACCOUNT OF UNEXPLAINED INVESTMENT IN EXCESS STOCK ON THE BASIS OF THE STOCK STATEMENT SUBMITTED TO THE BANK IS HELD TO BE RIGHTLY MADE AND IS CONFIRMED. 4. AGGRIEVED BY THE ORDER OF CIT(A) ASSESSEE PREFE RRED THE PRESENT APPEAL BEFORE THE TRIBUNAL. 5. THE LEARNED COUNSEL FOR THE ASESSEE SUBMITTED B EFORE ME THAT THE AO PROCEEDED TO REJECT THE BOOKS OF ACCOUNTS OF THE ASSESSEE BY INVOKING THE PROVISION OF SECTION 145(3) OF THE INCOME TAX ACT, 1961 (ACT). IT WAS HI S SUBMISSION THAT THERE WAS CONTRADICTION IN THE ORDER OF AO IN AS MUCH AS AO H AS COMPARED THE QUANTITY AS PER THE STOCK STATEMENT GIVEN TO THE BANK AND THE QUANTITY STOCK STATEMENT FURNISHED BY THE ASSESSEE BEFORE THE INCOME TAX DEPARTMENT. ACCORDIN G TO HIM THE AO INVOKED THE 4 ITA NO.2651/KOL/2013 UTTAM SAHOO A.YR.2006-07 4 PROVISIONS OF SEC.145(3) OF THE ACT, AS ACCORDING T O HIM, THE BOOK OF ACCOUNTS WERE NOT PRODUCED BY THE ASSESSEE IN THE COURSE OF ASSESSMEN T PROCEEDINGS. ACCORDING TO HIM THEREFORE THE CLAIM THAT THERE WAS DIFFERENCE IN VA LUE OF STOCK AS PER THE BOOKS OF ACCOUNTS AND STATEMENT GIVEN TO THE BANK, CANNOT BE TRUE. HE POINTED OUT THAT THE PROCEEDINGS BEFORE THE AO WERE COMPLETED U/S.144 OF THE ACT (BEST JUDGMENT ASSESSMENT) AND THEREFORE THERE WAS NO PROPER OPPOR TUNITY OF BEING HEARD TO THE ASSESSEE. HE THEREFORE SUBMITTED THAT AO HAS NOT P ROPERLY LOOKED INTO THE BOOKS OF ACCOUNT OF THE ASSESSEE. HE FILED BEFORE US A COPY OF THE STOCK REGISTER OF RICE AND PADDY FOR A.Y.2006-07, PURCHASE AND SALE REGISTER FOR A.Y .2006-07. HIS PRAYER WAS THAT ADDITION MADE BY THE AO AND SUSTAINED BY CIT(A) SHO ULD BE SET ASIDE AND AO SHOULD BE DIRECTED TO EXAMINE THE BOOKS OF ACCOUNTS OF THE ASSESSEE NOW PRODUCED BEFORE THE TRIBUNAL AND COME TO A CONCLUSION AS TO WHETHER THE STOCK STATEMENT MAINTAINED BY THE ASSESSEE IS TRUE OR WHETHER THE STOCK STATEMENT GIV EN TO THE BANK IS TRUE. THE LEARNED DR OPPOSED THE PRAYER OF THE LEARNED COUNSEL FOR THE A SSESSEE. 6. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS. IN MY VIEW AS RIGHTLY POINTED OUT BY THE LEARNED COUNSEL FOR THE ASSESSEE, THERE IS CONT RADICTION IN THE ORDER OF THE AO IN AS MUCH AS HE HAS PROCEEDED TO FRAME THE ASSESSMENT ON THE BASIS THAT BOOKS OF ACCOUNT WERE NOT PRODUCED FOR HIS EXAMINATION. THE AO HOWEV ER REFERS TO THE STOCK STATEMENT MAINTAINED BY THE ASSESSEE. IN THIS SCENARIO IT WOU LD BE PROPER TO ACCEPT THE PRAYER OF THE LEARNED COUNSEL FOR THE ASSESSEE. ACCORDINGLY T HE ORDER OF CIT(A) IS SET ASIDE AND THE ISSUE IN QUESTION IN THIS APPEAL IS REMANDED TO THE AO FOR FRESH CONSIDERATION IN THE LIGHT OF THE DOCUMENTS NOW FILED BEFORE THE TRIBUNA L. AO WILL AFFORD OPPORTUNITY TO THE ASSESSEE OF BEING HEARD. 5 ITA NO.2651/KOL/2013 UTTAM SAHOO A.YR.2006-07 5 7. IN THE RESULT THE APPEAL OF THE ASSESSEE IS TREA TED AS ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE COURT ON 03.02.2016. SD/- [ N.V.VASUDEVAN ] JUDICIAL MEMBER DATED : 03.02.2016. [RG PS] COPY OF THE ORDER FORWARDED TO: 1.UTTAM SAHOO, VILL&P.O.-ITABERIA, P.S.BHUPATINAGAR , DIST.PURBA MIDNAPUR-721456. 2.I.T.O., WARD-2, HALDIA. 3. CIT(A)-XXXIII, KOLKATA 4. CIT-XVIII, KOL KATA. 5. CIT(DR), KOLKATA BENCHES, KOLKATA. TRUE COPY BY ORDER ASSTT.REGISTRAR, ITAT, KOLKATA BENCHES