Sudhir Kumar Gulati, Chandigarh V. ITO, Chandigarh

ITA 289/CHANDI/2016

• Counselvise Citation: [2016] 132 COUNSELVISE.COM (IT) 9960 (ITAT-CHANDIGARH)
• Duration Of Justice: 1 month(s) 18 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 19-05-2016
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: SMC
• Next Hearing Date: 12-05-2016
• Assessment Year: 2009-2010
• Appeal Filed On: 31-03-2016
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: S K MITTALDR
• Assessee Lawyers: V K GULATI
• Keywords: Depreciation; Agreed addition

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL SMC BENCH,CHANDIGARH BEFORE SHRI BHAVNESH SAINI, JUDICIAL MEMBER ITA NO. 289/CHD/2016 ASSESSMENT YEAR : 2009-10 SHRI SUDHIR KUMAR GULATI, VS THE ITO, PROP. M/S META MACH INDIA, WARD 1(2), 43, INDUSTRIAL AREA , CHANDIGARH. CHANDIGARH. PAN: ABEPG3337R (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI V.K.GULATI RESPONDENT BY : SHRI S.K.MITTAL,DR DATE OF HEARING : 18.05.2016 DATE OF PRONOUNCEMENT : 19.05.2016 O R D E R THIS APPEAL BY ASSESSEE HAS BEEN DIRECTED AGAINST THE ORDER OF LD. CIT(APPEALS)-1, CHANDIGARH DATED 29.01.2016 FOR ASSESSMENT YEAR 2009-10. 2. I HAVE HEARD LD. REPRESENTATIVES OF BOTH THE PAR TIES AND PERUSED THE FINDINGS OF AUTHORITIES BELOW. THE LD. COUNSEL FOR THE ASSESSEE REITERATED THE SUBMISSIONS MADE BEFORE AUTHORITIES BELOW. ON THE OTHER HAND, LD. D R SUBMITTED THAT ON MOST OF THE GROUNDS OF APPEAL, ASSESSEE AGREED FOR ADDITIONS, THEREFORE, NO APPEAL LIES ON THE AGREED ADDITIONS. LD. DR RELIED UPON ORDER OF THE LD. CIT(APPEALS). 2 3. I HAVE CONSIDERED RIVAL SUBMISSIONS. 4. ON GROUND NO. 1, ASSESSEE CHALLENGED ORDER OF LD. CIT(APPEALS) IN DIRECTING THE ASSESSING OFFICER TO RECOMPUTE THE PROFIT ON DIFFERENCE OF CLOSING STOCK AT THE RATE OF GROSS PROFIT SHOWN IN THE BOOKS OF ACCO UNT. 5. THE BRIEF FACTS OF THE CASE ON THIS ISSUE ARE THAT SURVEY WAS CONDUCTED ON 15.09.2008 AT BUSINESS PREMISES OF THE ASSESSEE. THE VALAUE OF THE STOCK FOUND DURING THE SURVEY WAS RS.2,12,705/-. HOWEVER , THE STOCK SHOWN IN THE BOOKS OF ACCOUNT WAS RS. 9,39,381/-. THE ASSESSING OFFICER CONSIDERED T HE DIFFERENCE IN THE STOCK AS SALES NOT RECORDED IN TH E BOOKS OF ACCOUNT AND APPLIED GP RATE OF 16.5% AS WORKED OUT ON THE DAY OF THE SURVEY AND MADE ADDITI ON OF RS. 1,19,902/-. THE ASSESSEE SUBMITTED BEFORE L D. CIT(APPEALS) THAT SHORTAGE WAS ON ACCOUNT OF SOME PILFERAGES BY THE WORKERS OVER THE NUMBER OF YEARS WHICH ASSESSEE COULD NOT DETECT. THE ASSESSEE, THEREFORE, CLAIMED LOSS ON ACCOUNT OF EMBEZZLEMENT BY THE EMPLOYEES. 5(I) THE LD. CIT(APPEALS) FOUND THAT THE ASSESS EE HAS NOT RAISED THE ISSUE OF EMBEZZLEMENT BY THE EMPLOYEES DURING THE SURVEY PROCEEDINGS AND NO MATERIAL HAS BEEN BROUGHT ON RECORD TO PROVE THAT THERE HAS BEEN ANY THEFT, PILFERAGE OR EMBEZZLEMENT . THEREFORE, CONTENTION OF THE ASSESSEE WAS REJECTED AS 3 FOUND AFTER THOUGHT. THE LD. CIT(APPEALS) ALSO NOT ED THAT ASSESSING OFFICER HAS NOT REJECTED THE BOOKS O F ACCOUNT, THEREFORE, ESTIMATION OF THE PROFIT AT THE RATE OF GROSS PROFIT COMPUTED FOR PART OF THE RELEVANT Y EAR CANNOT BE A REASONABLE BASIS TO ESTIMATE PROFIT OF THE ENTIRE YEAR. THE LD. CIT(APPEALS) DELETED THE ADDI TION MADE BY THE ASSESSING OFFICER, HOWEVER, DIRECTED TH E ASSESSING OFFICER TO COMPUTE THE PROFIT AT THE DIFFERENCE OF CLOSING STOCK OF RS. 7,26,676/- AT TH E RATE OF GROSS PROFIT SHOWN IN THE BOOKS OF ACCOUNT FOR THE ENTIRE PERIOD OF THE RELEVANT YEAR. THIS GROUN D WAS, THEREFORE, PARTLY ALLOWED. 6. ON CONSIDERATION OF THE RIVAL SUBMISSIONS, I DO NOT FIND ANY MERIT IN THIS GROUND OF APPEAL OF THE ASSESSEE. ADMITTEDLY, DURING THE COURSE OF SURVEY OF PHYSICAL STOCK INVENTORY PREPARED BY THE REVENUE DEPARTMENT, THE VALUE OF THE STOCK ON THE DAY OF TH E SURVEY WAS FOUND LESSER BY RS. 7,26,676/-. THE ASSESSEE COULD NOT PRODUCE ANY EVIDENCE TO PROVE AS TO WHERE THE STOCK HAS BEEN TAKEN, SOLD OR CONSUMED. THE ASSESSEE, FOR THE FIRST TIME CLAIMED BEFORE LD. CIT(APPEALS) THAT STOCK WAS LESS BECAUSE OF SOME PILFERAGE COMMITTED BY SOME EMPLOYEES, HOWEVER, FOR WHICH NO EVIDENCE WAS FILED AND EVEN CONTENTION SO RAISED WAS NOT SUBSTANTIATED THROUGH ANY EVIDENCE. THUS, THE ONLY INFERENCE COULD BE DRAWN AGAINST THE ASSESSEE WOULD BE THAT THERE WERE SALES MADE BY 4 ASSESSEE OUTSIDE THE BOOKS OF ACCOUNT IN A SUM OF RS. 7,26,676/- AGAINST WHICH NO PROFIT HAD BEEN SHOWN BY THE ASSESSEE. THE LD. CIT(APPEALS) WAS, THEREFORE, JUSTIFIED IN DIRECTING THE ASSESSING OFF ICER TO APPLY GROSS PROFIT AGAINST THIS VALUE IN MAKING THE ADDITION. NO INFIRMITY HAD BEEN POINTED OUT IN THE ORDER OF THE LD. CIT(APPEALS). I, THEREFORE, DISMI SS THIS GROUND OF APPEAL OF THE ASSESSEE. 7. ON GROUND NO. 2, ASSESSEE CHALLENGED THE ADDITION OF RS. 18,312/- ON ACCOUNT OF DIFFERENCE O F WAGES. DURING THE COURSE OF SURVEY, IT WAS FOUND T HAT ASSESSEE WAS BOOKING PAYMENT OF WAGES MORE THAN THE ACTUAL PAYMENT. THE DISCREPANCY IN PAYMENT OF WAGE S IN THE CASE OF THREE EMPLOYEES WERE FUND TO BE RS. 3,052/-. THE ASSESSEE SUBMITTED THAT VARIATION IS DUE TO PAYMENT TO LABOURERS ON ACCOUNT OF OVER-TIME. T HE ASSESSING OFFICER DID NOT AGREE WITH SUBMISSION OF THE ASSESSEE BECAUSE NO SUCH FACT HAS BEEN BROUGHT ON RECORD OR DURING THE COURSE OF SURVEY. AFTER DISCUSSION, ASSESSEE AGREED FOR ADDITION OF RS. 36,624/- ON THIS ACCOUNT. 8. THE ASSESSEE SUBMITTED BEFORE LD. CIT(APPEAL S) THAT NO SUCH ADDITION CAN BE MADE. THE LD. CIT(APPEALS), CONSIDERING SUBMISSIONS OF THE ASSESS EE NOTED THAT EVIDENCE OF DIFFERENCE IN WAGES BOOKED I N THE ACCOUNTS AND ACTUAL PAYMENT MADE TO THE EMPLOYEES WERE SPECIFIC EVIDENCES FOUND DURING THE 5 COURSE OF SURVEY. THE ISSUE OF PAYMENT OF OVERTIME WORK WAS NOT RAISED DURING THE COURSE OF SURVEY. I T WAS, THEREFORE, HELD THAT ASSESSEE HAS MADE AFTER- THOUGHT STORY. THE LD. CIT(APPEALS) ALSO CONSIDERE D THAT SIMILARLY ASSESSING OFFICER CANNOT EXTRAPOLATE ON THE BASIS OF EVIDENCE FOUND DURING THE COURSE OF SURVEY AND MADE ADDITION IN THE POST SURVEY PERIOD. THE LD. CIT(APPEALS), THEREFORE, HELD THAT ADDITION ON THIS ACCOUNT IS RESTRICTED FOR THE PERIOD TILL SEPT EMBER I.E. THE MONTH OF SURVEY AND ACCORDINGLY, RESTRICTE D ADDITION TO RS. 18,312/-. 9. AFTER CONSIDERING RIVAL SUBMISSIONS, I DO NO T FIND ANY MERIT IN THIS GROUND OF APPEAL OF THE ASSESSEE. IT IS WELL SETTLED LAW THAT NO APPEAL LIES ON AGREED ADDITIONS. I RELY UPON DECISION OF HON'BLE PUNJAB & HARYANA HIGH COURT IN THE CASE OF BANTA SINGH KARTA R SINGH 125 ITR 239, DECISION OF BOMBAY HIGH COURT IN THE CASE OF JIWATLAL PRATAPSHI 65 ITR 261 AND DECIS ION OF KERALA HIGH COURT IN THE CASE OF VAMADEVAN BHANU 330 ITR 559. THE ASSESSING OFFICER BROUGHT SPECIFI C FACTS TO THE NOTICE OF THE ASSESSEE WITH REGARD TO DISCREPANCIES FOUND IN WAGES BOOKED AND ACTUALLY PAID. THE ASSESSEE COULD NOT GIVE ANY SATISFACTORY EXPLANATION AND THEREFORE, AGREED FOR THE ADDITION IN A SUM OF RS. 36,624/-. THEREFORE, EVEN NO APPEAL LIE S BEFORE LD. CIT(APPEALS) ON THIS AGREED ADDITION, HOWEVER, THE LD. CIT(APPEALS) IN IGNORANCE OF THE A BOVE 6 LEGAL PROPOSITION, HAS ALREADY GRANTED RELIEF TO TH E ASSESSEE AND RESTRICTED ADDITION TO RS. 18,312/-. THEREFORE, I DO NOT FIND ANY JUSTIFICATION TO INTER FERE WITH THE IMPUGNED ORDER. THIS GROUND OF APPEAL OF THE ASSESSEE IS DISMISSED BEING AGREED ADDITION. 10. ON GROUND NO.3, ASSESSEE CHALLENGED THE ADDITION OF RS. 2,181/- ON ACCOUNT OF DEPRECIATION CLAIM. IN THE DEPRECIATION CHART, ASSESSEE HAD SHO WN ADDITION TO FIXED ASSETS FOR RS. 16,038/- AND TOTAL DEPRECIATION OF RS. 9,727/- WAS CLAIMED. HOWEVER, ON EXAMINATION OF THE LEDGER ACCOUNT, IT WAS FOUND THA T THESE ADDITIONS ARE NOT REFLECTED IN THE BOOKS OF ACCOUNT AND ASSESSEE HAS CLAIMED DEPRECIATION OF RS . 7,546/- ON THE OPENING BALANCE OF RS. 50,310/-. TH E DIFFERENCE IN THE DEPRECIATION CLAIMED OF RS. 2,181 /- WAS DISALLOWED. THE LD. CIT(APPEALS) CONFIRMED THE ADDITION BECAUSE NO EXPLANATION WAS OFFERED BY ASSESSEE DURING ASSESSMENT PROCEEDINGS. 11. AFTER CONSIDERING RIVAL SUBMISSIONS, I AM OF TH E VIEW NO INTERFERENCE IS CALLED FOR IN THE MATTER. THE ASSESSING OFFICER, ON ACCOUNT OF EXCESSIVE DEPRECIA TION CLAIMED IN THE BOOKS OF ACCOUNT PROPOSED TO DISALLO W EXCESS DEPRECIATION OF RS. 2,181/- TO WHICH THE ASSESSEE AGREED. THEREFORE, THIS GROUND OF APPEAL IS ACCORDINGLY DISMISSED. 7 12. ON GROUND NO. 4 AND 5, ASSESSEE CHALLENGED THE ADDITION OF RS. 20,000/- ON ACCOUNT OF DISALLOWANCE OF THE EXPENDITURE AND ADDITION OF RS. 1,25,000/- ON ACCOUNT OF HOUSEHOLD EXPENSES. THE ASSESSEE SUBMITTED BEFORE LD. CIT(APPEALS) THAT THE RE IS A DISCREPANCY IN THE COMPUTATION OF INCOME AND T HE DISCUSSION MADE IN THE ASSESSMENT ORDER. THE ASSESSING OFFICER HAS MADE ADDITION OF RS. 20,000/- AS PER DISCUSSION IN THE ASSESSMENT ORDER BUT MADE ADDITION OF RS. 40,000/- IN THE COMPUTATION OF INCO ME ON GROUND NO. 4. 12(I) THE LD. CIT(APPEALS) FOUND MISTAKE IN THE COMPUTATION OF INCOME AND ACCORDINGLY DIRECTED THE ASSESSING OFFICER TO RECOMPUTE INCOME ACCORDINGLY. SIMILARLY, ON ACCOUNT OF ADDITION OF HOUSEHOLD WITHDRAWALS, THE ADDITION IS MADE OF RS. 2,25,000/- BUT IN THE ORDER, ASSESSING OFFICER MADE THE ADDITI ON OF RS. 1,25,000/- ONLY. THE LD. CIT(APPEALS), THEREFORE, DIRECTED THE ASSESSING OFFICER TO RE-COM PUTE THE INCOME ACCORDINGLY AND RECTIFY THE MISTAKE. 13. AFTER CONSIDERING RIVAL CONTENTIONS, I DO NOT FIND ANY MERIT IN THIS GROUND OF APPEAL OF THE ASSESSEE. THE ASSESSEE RAISED GROUND OF APPEAL BEF ORE LD. CIT(APPEALS) FOR RECTIFICATION OF THESE GROUNDS BECAUSE ASSESSING OFFICER MADE THE ADDITION OF RS. 40,000/- AGAINST ADDITION OF RS. 20,000/- AND ALSO MADE ADDITION OF RS. 2,25,000/- AGAINST ADDITION OF 8 RS. 1,25,000/-. THIS MISTAKE IS CORRECTED BY THE L D. CIT(APPEALS) IN THE ORDER. THEREFORE, THERE SHOULD NOT BE ANY GRIEVANCE LEFT WITH THE ASSESSEE ON GROUND N OS. 4 AND 5. FURTHER, THESE ARE ALSO AGREED ADDITIONS BEFORE ASSESSING OFFICER ON WHICH NO APPEAL LIES. THE LD. COUNSEL FOR THE ASSESSEE COULD NOT EXPLAIN ANYT HING AS TO HOW THESE GROUNDS HAVE BEEN RAISED IN THE GROUNDS OF APPEAL. THERE IS NO INFIRMITY IN THE OR DER OF LD. CIT(APPEALS), THEREFORE, GROUND NOS. 4 AND 5 OF THE APPEAL ARE DISMISSED. 14. IN THE RESULT, APPEAL OF THE ASSESSEE IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT. SD/- (BHAVNESH SAINI) JUDICIAL MEMBER DATED: 19 TH MAY, 2016. POONAM COPY TO: THE APPELLANT, THE RESPONDENT, THE CIT(A), THE CIT, DR ASSISTANT REGISTRAR, ITAT/CHD