ITO, Central, Kolhapur, V. Shri Kuber Bandu Bhivate, Kolhapur

ITA 313/PUN/2009

• Counselvise Citation: [2011] 140 COUNSELVISE.COM (IT) 49934 (ITAT-PUNE)
• Duration Of Justice: 2 year(s) 4 month(s) 17 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 22-07-2011
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 09-06-2011
• Assessment Year: 2006-2007
• Appeal Filed On: 06-03-2009
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ANN KAPTHUAMA
• Keywords: Unexplained investment

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH B , PUNE BEFORE SHRI I.C. SUDHIR (JM) AND SHRI D. KARUNAKARA RAO (AM) ITA NO. 313/PN/2009 (ASSTT. YEAR : 2006-07) THE INCOME TAX OFFICER, (CENTRAL) ... APPELLAN T ANNEX BUILDING, AAYAKAR BHAVAN, TARABAI PARK, KOLHAPUR V. SHRI KUBER BANDU BHIVATE RESPONDENT SHIVAJI PARK, KOLHAPUR APPELLANT BY : MS. ANN KAPTHUAMA RESPONDENT BY : SHRI NIKHIL PATHAK ORDER PER I.C. SUDHIR, JM THE REVENUE HAS QUESTIONED FIRST APPELLATE ORDER M AINLY ON THE GROUND THAT THE LD CIT(A) HAS ERRED IN REDUCING THE ADDITION OF RS. 25,000,00/- MADE ON ACCOUNT OF UNDISCLOSED INVESTME NT IN EXCESS STOCK TO RS. 5,44,950/-. 2. THE RELEVANT FACTS ARE THAT THE A.O MADE AN ADDI TION OF RS. 25,000,00/- AS UNEXPLAINED INVESTMENT IN EXCESS ST OCK AND GROSS PROFIT ON THE SAME AT RS. 1,50,000/-. THE A.O TRIED TO JU STIFY THE ADDITION WITH THIS FINDING THAT THERE WAS NEGATIVE CASH BALANCE F OUND IN THE BOOKS OF RS. 25,000,00/-. THE CONTENTION OF THE ASSESSEE RE MAINED THAT EVIDENCE OF UNACCOUNTED SALES OF VARIOUS ITEMS WERE FOUND DU RING THE COURSE OF SEARCH. THE CONSIDERATION RECEIVED FOR THOSE SALES WOULD BE CASH IN THE HANDS OF THE ASSESSEE, KEPT OUT OF THE BOOKS. IF T HIS CASH IS BROUGHT TO THE BOOKS, NEGATIVE BALANCE WILL BE REDUCED TO THAT EXTENT. IT WAS SUBMITTED THAT THE EXCESS STOCK DECLARATION MADE BY THE ASSESSEE OF RS.1,36,45,000/- WHICH COVERS THE AMOUNT OF RS. 25, 000,00/- ESTIMATED ITA . NO 313/PN/2009 SHRI KUBER BANDU BHIVATE, A.Y 2006-07 PAGE OF 4 2 AS EXCESS STOCK AND ADDED TO THE INCOME OF THE ASSE SSEE. IT WAS SUBMITTED FURTHER THAT UNACCOUNTED SALES OF RS. 19. 55 LAKH HAS BEEN TAXED SEPARATELY IN THE ASSESSMENT ORDER. IT WAS C ONTENDED THAT EITHER WAY THERE SHOULD BE NO SEPARATE ADDITION. ACCEPTIN G THESE CONTENTIONS, LD CIT(A) HAS REDUCED THE ADDITION TO RS.5,44,950/- WITH THIS FINDING THAT UNACCOUNTED SALES AND EXCESS STOCK DECLARED BY THE ASSESSEE CANNOT BE TAKEN AT THE SAME TIME, ONLY A NET FIGURE HAS TO BE TAKEN. 3. IN SUPPORT OF THE GROUND, THE LD. D.R. HAS BASIC ALLY PLACED RELIANCE ON THE ASSESSMENT ORDER AND REFERRED CONTENTS OF PA RA NO. 11(I) OF THE ASSESSMENT ORDER. 4. THE LD. A.R., ON THE OTHER HAND, TRIED TO JUSTIF Y THE FIRST APPELLATE ORDER ON THE ISSUE. HE REFERRED CONTENTS OF PARA N O. 16 OF THE FIRST APPELLATE ORDER. 5. HAVING GONE THROUGH THE ORDERS OF THE AUTHORITIE S BELOW, WE FIND THAT THE FIRST APPELLATE ORDER ON THE ISSUE IS COM PREHENSIVE AND REASONED ONE. FOR A READY REFERENCE, PARA NO. 16 OF THE FIR ST APPELLATE ORDER IS BEING REPRODUCED HEREUNDER : 16. I HAVE CONSIDERED THE SUBMISSIONS. I FIND FRO M THE COMPUTATION THAT THERE ARE TWO SEPARATE WAYS IN WHI CH INCOME HAS BEEN COMPUTED, ON ASSET BASIS AND ON INCOME BASIS. THE TOTAL VALUE OF INVESTMENT HAS BEEN REDUCED BY THE AMOUNT DECLARED BY THE APPELLANT AND THE BALANCE AMOUNT TREATED AS NET ADDITION TO THE INCOME OFFERED BY THE APPELLANT. THE NEGATIVE BALA NCE WAS FOUND IN THE BOOKS OF ACCOUNTS DRAWN UP DURING THE SEARCH . IN THE FINAL BOOKS DRAWN UP OBVIOUSLY THERE WAS NO NEGATIVE BALA NCE. THE AMOUNT OF RS.1,36,45,000/- WHICH WAS OFFERED AS EXC ESS STOCK WAS CREDITED TO THE P/L ACCOUNT. THIS WOULD MEAN THAT ON THE LAST DAY OF THE YEAR, THIS STOCK WAS STILL IN THE POSSESSION OF THE APPELLANT. ITA . NO 313/PN/2009 SHRI KUBER BANDU BHIVATE, A.Y 2006-07 PAGE OF 4 3 IT CANNOT THEREFORE BE SAID THAT PART OF THE STOCK HAS BEEN SOLD AND THOSE SALES HAD NOT BEEN ACCOUNTED IN THE BOOKS. I N OTHER WORDS, NEGATIVE BALANCE WOULD INDICATE UNACCOUNTED SALES WHICH WERE INDEPENDENT OF THE EXCESS STOCK DECLARED. IF THE S UPPRESSED SALES OF RS. 19.55 LACS IS CREDITED TO THE BOOKS ON THE D ATE OF SEARCH, THE NEGATIVE BALANCE WOULD BE REDUCED TO THAT EXTENT BU T STOCKS TO THAT EXTENT WOULD ALSO HAVE TO BE REDUCED. THUS, THE TO TAL DECLARATION ON ACCOUNT OF EXCESS STOCK OF RS.1,36,45,000/- WOU LD BE REDUCED BY THE STOCK USED IN THE UNACCOUNTED SALES WHICH WO ULD BE VALUED AT RS.19,55,050/- LESS PERCENTAGE OF GROSS PROFIT O N THE AMOUNT. AT THE SAME TIME, THE SALES WOULD INCREASE BY STOCK SOLD ALONG WITH GROSS PROFIT WHICH SHOULD WORK OUT TO RS. 19,55,050 /- + RS.1,50,000/-. IT IS QUITE CLEAR THAT UNACCOUNTED SALES AND EXCESS STOCK DECLARED BY THE APPELLANT CANNOT BE TAKEN AT THE SAME TIME, ONLY A NET FIGURE HAS TO BE TAKEN. IN VIEW OF THE ABOVE, ADDITION OF RS. 25 LACS IS REDUCED BY AN AMOUNT OF RS.19,55,050 /-. THE BALANCE AMOUNT OF RS.5,44,950/- WOULD REMAIN AS ADD ITION TO THE INCOME OF THE APPELLANT. THIS AMOUNT OF ADDITION I S CONFIRMED. THE APPELLANT GETS RELIEF OF RS. 19,55,050/-. WE FULLY AGREE WITH THE ABOVE FINDINGS OF THE LD C IT(A) ON THE ISSUE THAT THE UNACCOUNTED SALES AND EXCESS STOCK DECLARED BY THE ASSESSEE CANNOT BE TAKEN AT THE SAME TIME, ONLY A NET FIGURE HAS TO BE TAKEN. THE LD CIT(A) WAS THUS JUSTIFIED IN REDUCING THE ADDITION OF RS.25,000,00/- BY AN AMOUNT OF RS.19,55,050/-, THE AMOUNT CREDITED TO TH E BOOKS ON THE DATE OF SEARCH AS SUPPRESSED SALES. THE RESULTANT BALAN CE ADDITION OF RS.5,44,950/- HAS BEEN THUS RIGHTLY SUSTAINED TO TH E INCOME OF THE ASSESSEE. THE FIRST APPELLATE ORDER IS THUS UPHELD . THE GROUND IS ACCORDINGLY REJECTED. 6. IN THE RESULT, APPEAL IS DISMISSED. ITA . NO 313/PN/2009 SHRI KUBER BANDU BHIVATE, A.Y 2006-07 PAGE OF 4 4 ORDER PRONOUNCED IN THE OPEN COURT ON 22ND JULY, 2 011. SD/- SD/- ( D. KARUNAKARA RAO ) ACCOUNTANT MEMBER ( I.C. SUDHIR ) JUDICIAL MEMBER PUNE, DATED THE 22 ND JULY, 2011 US COPY OF THE ORDER IS FORWARDED TO : 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT- I/II, KOLHAPUR /CIT (CENTRAL), PUNE 4. THE CIT(A)- KOLHAPUR 5. THE D.R. B BENCH, PUNE 6. GUARD FILE BY ORDER ASSISTANT REGISTRAR INCOME TAX APPELLATE TRIBUNAL PUNE