M/s. Kalakriti Sarees, New Delhi V. ACIT, New Delhi

ITA 2701/DEL/2011

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 97983 (ITAT-DELHI)
• Duration Of Justice: 4 year(s) 6 month(s) 13 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 08-12-2015
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: D
• Next Hearing Date: 27-10-2015
• Assessment Year: 2006-2007
• Appeal Filed On: 26-05-2011
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Assessee Lawyers: P N CHAWLA
• Keywords: Assessment record
• Section: 143(3); 133A; 154

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, DELHI BENCH D NEW DELHI BEFORE : SHRI C.M. GARG , JUDICIAL MEMBER & SHRI L.P. SAHU, ACCOUNTANT MEMBER ITA NO. 2701/DEL./2011 ASSTT. YEAR : 2006 - 07 KALAKRITI SAREES, VS. A.C.I.T., CIRCLE 29(1), C/O SH. P.N. CHAWLA, ADVOCATE, NEW DELHI. B - V, VANDANA BUILDING, 11, TOLSTOY MARG, NEW DELHI. [PAN: AACFK8744R] (APPELLANT) (RESPONDENT) APPELLANT BY : SH. P.N. CHAWLA, ADVOCATE RESPONDENT BY : MS. RITU SH ARMA, SR. DR DATE OF HEARING : 27.10.2015 DATE OF PRONOUNCEMENT : 08 .12.2015 ORDER PER L.P. SAHU, ACCOUNTANT MEMBER: THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER DATED 24.03.2011 OF LD. CIT(A) - XV, NEW DELHI FOR THE ASSESSMENT YEAR 2006 - 07 ON THE FOLLOWING GROUNDS : 1. THAT THE ORDER IS BAD IN LAW AND IN FACTS. 2. THAT IN THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LEARNED ASSESSING OFFICER GROSSLY ERRED IN INITIATING PROCEEDINGS UNDER SECTION 154 OF THE INCOME TAX ACT, WHEN THERE WAS NO MISTAKE APPARENT FROM THE ASSESSMENT RECORDS. HE THEREBY ERRED IN ADDING BA CK A SUM OF RS.4,96,250/ - IN THE ITA NO. 2701/DEL./2011 2 ORIGINALLY ASSESSED INCOME UNDER SECTION 143(3). THE LEARNED COMMISSIONER (APPEALS) HAS ERRED IN CONFIRMING THE SAID ORDER. 3. THAT THE LEARNED ASSESSING OFFICER HAS GROSSLY ERRED IN NOT APPRECIATING THE VOLUNTARY DISCLOSU RE OF RS.69,70,000/ - WAS MADE BY THE APPELLANT AT THE TIME OF SURVEY OPERATIONS ON 09.09.2005 ON THE INDUCEMENT OF THE VISITING OFFICER OF THE INCOME TAX DEPARTMENT AND THE SAME WAS NOT VOLUNTARY IN THE STRICT SENSE OF THE WORD AND AS SUCH NO FURTHER ADDIT ION COULD BE MADE IN THE AMOUNT VOLUNTARY DISCLOSED AND SURRENDERED FOR TAXATION BY THE APPELLANTS IN ANY CIRCUMSTANCES, WHATSOEVER. 4. THAT EVEN IF FOR THE S A KE OF ARGUMENT, IT IS ADMITTED THAT THE STOCK AVAILABLE AT THE TIME OF SURVEY WAS UNDERVALUED B Y THE VISITING OFICER BY MISTAKE, THE ADDITION AS MADE BY THE LEARNED ASSESSING OFFICER CANNOT BE SUSTAINED AS THE ADDITION IN THE OPENING STOCK OF THE APPELLANTS HAS A LINK WITH THE CLOSING STOCK. AS THE CLOSING STOCK WAS ACCEPTED BY THE ASSESSING OFFICER WHILE COMPLETING THE ASSESSMENT U/S. 143(3) ANY ADDITION IN THE OPENING STOCK SHALL HAVE NO EFFECT ON THE NET PROFIT FOR THE YEAR UNDER ASSESSMENT. THE SAID ADDITION MADE BY THE LEARNED ASSESSING OFFICER AND SUSTAINED BY THE LEARNED 1 ST APPELLATE AUTHORIT Y IS, AS SUCH, LIABLE TO BE DELETED. 2. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE IS A PARTNERSHIP FIRM AND WAS CARRYING ON THE BUSINESS OF SAREES ETC. THE SURVEY U/S. 133A WAS CONDUCTED ON 09.09.2005 (F.Y. 2005 - 06). DURING THE COURSE OF SURVEY, PHYSICAL STOCK INVENTORY WAS TAKEN, ACCORDING TO WHICH PHYSICAL STOCK OF RS.1,35,03,598/ - WAS FOUND AS AGAINST THE STOCK OF RS.75,13,598/ - FOUND ENTERED IN THE BOOKS OF ACCOUNT. AS SUCH, THE EXCESS STOCK OF RS.59,90,000/ - WAS CONSIDERED AS UNEXPLAINED INVE STMENT. DURING THE COURSE OF SURVEY, THE PARTNER OF THE FIRM SHRI RAVI KAPOOR ON BEING CONFRONTED REGARDING EXCESS STOCK IN QUESTION NO. 20, ANSWERED THAT HE ADMITS THE EXCESS UNEXPLAINED ITA NO. 2701/DEL./2011 3 STOCK AND MADE VOLUNTARY DISCLOSURE OF RS.59,90,000/ - . DURING THE C OURSE OF SURVEY, THERE WAS EXCESS UNEXPLAINED CASH OF RS.9,80,000/ - , WHICH WAS ALSO ACCEPTED BY THE PARTNER SHRI RAVI KAPOOR. SO, THERE WAS TOTAL VOLUNTARY DISCLOSURE OF RS.69,70,000/ - . THE STOCK INVENTORY WAS MADE IN TWO PARTS AND AS PER LIST A VALUATIO N OF STOCK WAS RS.66,77,368/ - AND AS PER LIST B , THE VALUATION OF STOCK WAS RS. 68,26,230/ - AND THUS THERE WAS TOTAL INVENTORY OF RS.1,35,03,598/ - (RS.66,77,368 + 68,26,230). THE ASSESSEE FILED ITS RETURN OF INCOME OF RS.72,11,390/ - WHICH INCLUDED UNDISC LOSED INCOME OF RS.69,70,000/ - , SURRENDERED DURING THE COURSE OF SURVEY. THE AO ACCEPTING THE RETURN OF INCOME OF THE ASSESSEE MADE ASSESSMENT U/S. 143(3) ON 02.04.2008. 3. DURING THE INTERNAL AUDIT, IT WAS FOUND THAT THERE WAS A MISTAKE IN PAGE NO. 3 OF LIST B IN TOTAL WHERE THE TOTAL WAS RS.15,15,620/ - WHICH SHOULD BE ACTUALLY RS.20,11,870/ - . SO THERE WAS A SHORT VALUATION OF PHYSICAL STOCK TO THE EXTENT OF RS.4,96,250/ - (RS.20,11,870 RS.15,15,620). IT MEANS THAT THERE WAS SHORT VALUATION OF STOCK TO THE EXTENT OF RS.4,96,250/ - (RS.1,39,99,848 RS.1,35,03,598). THEREFORE, THE LD. ASSESSING OFFICER MADE RECTIFICATION U/S. 154 OF THE IT ACT SINCE THIS WAS A MISTAKE APPARENT FROM THE RECORD AND MADE FURTHER ADDITION OF RS.4,96,250/ - VIDE ORDER DATED 13. 03.2009 . AGGRIEVED BY ITA NO. 2701/DEL./2011 4 THIS ORDER, THE ASSESSEE PREFERRED APPEAL BEFORE THE LD. CIT(A), WHO ALSO CONFIRMED THE RECTIFICATION MADE BY THE AO VIDE THE IMPUGNED ORDER. AGAINST THIS ORDER, THE ASSESSEE HAS COME UP IN THIS APPEAL BEFORE US. 4. THE LD. AR OF THE ASSESSEE CONTENDED THAT THE SHORT VALUATION OF STOCK WORKED OUT DUE TO CALCULATION MISTAKE IS THE PART OF PURCHASE AND SAME HAS BEEN ADDED IN THE PURCHASES MADE BY THE ASSESSEE. HE ACCORDINGLY FILED THE REVISED T RADING, P ROFIT & L OSS ACCO UNT BEFORE US SHOWING REDUCTION IN G.P.. HE ALSO CREDITED THE PROFIT AND LOSS ACCOUNT BY THIS AMOUNT AND THEREFORE, THERE IS NO EFFECT IN THE TOTAL NET PROFIT. HE SUBMITTED THAT THE ADDITION MADE BY THE AUTHORITIES BELOW IS NOT SUSTAINABLE. 5. THE LD. DR , ON THE OTHER HAND, RELIED UPON THE ORDER OF THE AUTHORITIES BELOW AND CONTENDED THAT THE RECTIFICATION WAS CORRECTLY MADE BY THE AUTHORITIES BELOW. 6. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND HAVE GONE THROUGH THE ENTIRE MATERIAL AVAILABLE ON RECOR D BEFORE US AND WE FIND NO INFIRMITY IN THE ORDER OF THE LD. CIT(A). IT IS AN ADMITTED FACT THAT THERE WAS UNDER VALUATION OF STOCK IN THE INVENTORY OWING TO A CLERICAL/CALCULATION MISTAKE. IT IS ALSO NOT IN ITA NO. 2701/DEL./2011 5 DISPUTE THAT THE ASSESSEE HAD MADE VOLUNTARY SUR RENDER OF EXCESS STOCK FOUND PHYSICALLY AS PER STOCK INVENTORY FOR TAXATION. THE DEFICIENCY IN WORKING OUT THE VALUATION OF STOCK HAS EMERGED FROM THE SAME INVENTORY DUE TO CALCULATION MISTAKE. IN OUR OPINION, THE CLERICAL/CALCULATION MISTAKE CREPT IN THE STOCK INVENTORY, BEING APPARENT FROM THE RECORD, IS WELL RECTIFIABLE U/S. 154 OF THE IT ACT. WE, THEREFORE, HOLD THAT THE LD. AUTHORITIES BELOW HAVE COMMITTED NO ERROR WHILE MAKING AND SUSTAINING FURTHER ADDITION OF RS. 4,96,250/ - MADE BY WAY OF RECTIFICA TION U/S. 154 OF THE ACT. ACCORDINGLY, THE APPEAL OF ASSESSEE, BEING DEVOID OF MERITS, IS LIABLE TO BE DISMISSED. 7. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 08.12.2015 . SD/ - SD/ - ( C.M. GARG ) (L.P. SAHU) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED : 08.12.2015 *AKS/ - COPY OF ORDER FORWARDED TO: (1) THE APPELLANT (2) THE RESPONDENT (3) COMMISSIONER (4) CIT(A) (5) DEPARTMENTAL REPRESENTATIVE (6) GUARD FILE BY ORDER ASSISTANT. REGISTRAR INCOME TAX APPELLATE TRIBUNAL DELHI BENCHES, NEW DELHI