Shri Vidhan Bhargava, Indore V. The I.T.O., Indore

ITA 32/IND/2010

• Counselvise Citation: [2011] 134 COUNSELVISE.COM (IT) 9495 (ITAT-INDORE)
• Duration Of Justice: 1 year(s) 2 month(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-03-2011
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: DB
• Next Hearing Date: 31-03-2011
• Assessment Year: 2001-2002
• Appeal Filed On: 20-01-2010
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: PRADEEP KUMAR MITRA
• Section: 143(3); 133A

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL INDORE BENCH : INDORE BEFORE SHRI JOGINDER SINGH, JUDICIAL MEMBER AND SHRI R.C.SHARMA, ACCOUNTANT MEMBER PAN NO. : ABRPB4907B I.T.A.NO. 32/IND/2010 A.Y. : 2001-02 SHRI VAIDHAN BHARGAVA, ITO PROP. KANPUR LEATHER HOUSE, 4(1), INDORE. INDORE. APPELLANT RESPONDENT APPELLANT BY : SHRI MANOJ GUPTA, CA RESPONDENT BY : SHRI PRADEEP KUMAR MITRA, SR. DR O R D E R PER R. C. SHARMA, A.M. THIS IS AN APPEAL FILED BY THE ASSESSEE AGAINST THE ORDER OF CIT(A) DATED 5.10.2009 FOR THE ASSESSMENT YEAR 2 001-02 IN THE MATTER OF ORDER PASSED U/S 143(3) OF THE INCOME -TAX ACT, 1961. 2. THE ASSESSEE IS AGGRIEVED FOR RETAINING ADDITION OF RS. 1,70,697/- OUT OF TOTAL ADDITION OF RS. 4,70,697/- MADE BY THE ASSESSING OFFICER IN RESPECT OF STOCK. THE ASSESSEE IS ALSO -: 2: - 2 AGGRIEVED FOR RETAINING ADDITION OF RS.29,303/- OUT OF TOTAL ADDITION OF RS. 58,191/- MADE BY THE ASSESSING OFFI CER ON ACCOUNT OF DIARY FOUND IN THE SURVEY OPERATION. 3. RIVAL CONTENTIONS HAVE BEEN HEARD AND RECORDS PERUSED. 4. THE FACTS, IN BRIEF, ARE THAT THE ASSESSEE IS A SMA LL TRADER OF SHOES. ITS SALE WAS BELOW RS. 10 LAKHS. I T WAS NOT MAINTAINING ANY BOOKS OF ACCOUNT. THERE WAS A SURVE Y AT THE BUSINESS PREMISES U/S 133A ON 8.2.2001. A SURVEY TE AM ASKED FOR THE STOCK POSSESSED BY THE ASSESSEE. THE ASSESSEE CLEARLY STATED THAT NO BOOKS OF ACCOUNT WERE MAINTA INED, THEREFORE, NOT POSSIBLE TO STATE REGARDING THE AMOU NT OF STOCK BEING CARRIED ON BY HIM. HOWEVER, ON ESTIMATION, TH E ASSESSEE HAS STATED THAT THERE WAS STOCK OF AROUND RS. 3 LAK HS LYING AT THE STORE. THE SURVEY TEAM PHYSICALLY TAKEN THE STO CK WHICH WAS FOUND AT RS. 4,70,697/-. THE ENTIRE STOCK WAS A DDED BY THE ASSESSING OFFICER IN THE INCOME OF THE ASSESSEE . THE AO ALSO MADE ADDITION ON THE BASIS OF ENTRIES RECORDED IN DIARY FOUND DURING THE COURSE OF SURVEY AMOUNTING TO RS. 58,191/-. BY THE IMPUGNED ORDER, THE LD. CIT(A) REDUCED THE ADDITION ON -: 3: - 3 ACCOUNT OF STOCK BY RS. 3 LAKHS ON THE PLEA THAT TH E ASSESSEE IN HIS STATEMENT HAD STATED STOCK OF RS. 3 LAKHS. A CCORDINGLY, THE ADDITION OF RS. 1,70,697/- WAS RETAINED. SIMILA RLY, IN RESPECT OF ENTRIES FOUND IN THE DIARY, THE LD. CIT( A) REWORKED OUT THE SAME AT RS. 29,303/- IN PLACE OF ADDITION O F RS. 58,191/- MADE BY THE ASSESSING OFFICER. THE ASSESSE E IS IN FURTHER APPEAL BEFORE US AGAINST BOTH THE ADDITIONS AS RETAINED BY THE LD. CIT(A). ON SPECIFIC QUERY BY THE BENCH, IT WAS STATED THAT REVENUE HAS NOT FILED ANY APPEAL AGAINST THE D ELETION OF ADDITION BY THE LD. CIT(A). 5. WE HAVE CONSIDERED THE RIVAL CONTENTIONS, CAREFULLY GONE THROUGH THE ORDERS OF THE AUTHORITIES BELOW AN D FOUND FROM RECORD THAT THE ASSESSEE WAS A SMALL TRADER, T HEREFORE, U/S 44AF, HE IS NOT SUPPOSED TO KEEP BOOKS OF ACCOU NT. DURING THE SURVEY, SINCE THERE WAS NO BOOKS OF ACCO UNT, THE ASSESSEE COULD NOT TELL TO THE SURVEY TEAM REGARDIN G STOCK BEING CARRIED ON BY HIM AS PER BOOKS OF ACCOUNT. HO WEVER, ON ESTIMATE, HE STATED THAT THERE WAS STOCK OF AROUND RS. 3 LAKHS IN THE STORE. AFTER THE SURVEY, ON THE BASIS OF BIL LS ETC, THE ASSESSEE HAS COMPLIED WITH THE BOOKS OF ACCOUNT AND RETURN -: 4: - 4 WAS FURNISHED WITH TRADING AND PROFIT AND LOSS ACCO UNT, WHEREIN PROFIT OF AROUND 12 % WAS DECLARED. IN THE RETURN SO FILED, AS PER TRADING ACCOUNT, THERE WAS STOCK OF R S.4,70,697/-. HOWEVER, THE SURVEY TEAM HAS ALSO MADE ADDITION OF RS. 4,70,697/-. IT IS PERTINENT TO MENTION THAT NO INCR IMINATING DOCUMENT WAS FOUND DURING COURSE OF SURVEY, TO INDI CATE THAT THE ASSESSEE WAS HAVING ANY UNACCOUNTED PURCHASES. HOWEVER, THE AO WITHOUT BELIEVING THAT THE ASSESSEE WAS CARRYING ON ANY STOCK ADDED THE ENTIRE AMOUNT OF ST OCK FOUND DURING THE COURSE OF SURVEY. WE FOUND THAT THE ASSE SSEE WAS CARRYING ON THE BUSINESS SINCE 1998-99. TILL 28.2.2 000, IT WAS A PROPRIETORY CONCERN OF SHRI ALOK BHARGAVA FROM 1 ST MARCH, 2000, IT WAS CLEAR CONVERTED INTO PARTNERSHIP FIRM OF SHRI ALOK BHARGAVA AND THE ASSESSEE SHRI VAIDHAN BHARGAVA. TH IS PARTNERSHIP FIRM CONTINUED TILL 31 ST JANUARY, 2001. THUS, FROM 1 ST FEBRUARY, 2001, THE ASSESSEE FIRM WAS A PROPRIETOR Y FIRM OF SHRI VAIDHAN BHARGAVA, THERE WAS SURVEY ON 8.2.2001 . SINCE THE ASSESSEE WAS ALREADY CARRYING ON BUSINESS SINCE LAST 3-4 YEARS, IT IS NOT REASONABLE TO PRESUME THAT THERE W AS NO STOCK IN THE FIRM. HOWEVER, ONLY ON ESTIMATION, SINCE DAY TO DAY -: 5: - 5 BOOKS OF ACCOUNT WERE NOT MAINTAINED, THE ASSESSEE HAS STATED REGARDING STOCK OF AROUND RS. 3 LAKHS. THE LD. CIT( A) GIVEN CREDIT OF THE STOCK STATED BY THE ASSESSEE DURING T HE SURVEY, WHICH WAS ALSO ON ESTIMATION. SINCE NO BOOKS OF ACC OUNT WERE MAINTAINED AT THE TIME OF SURVEY, IT IS NOT CORRECT TO PRESUME THAT WHATEVER ROUGH STOCK WAS STATED BY THE ASSESSE E WAS THE STOCK AS PER ITS BOOKS OF ACCOUNT. THE BOOKS OF ACC OUNT COMPILED AFTER SURVEY INDICATED ROUGHLY STOCK AT TH E SAME AMOUNT AS VALUED BY THE ASSESSING OFFICER DURING CO URSE OF SURVEY. AS THE ASSESSEE WAS NOT SUPPOSED TO KEEP BO OKS OF ACCOUNT U/S 44AF, HE COULD NOT STATE THE STOCK POSI TION AS PER BOOKS OF ACCOUNT, HOWEVER, THE ASSESSEE HAS ROUGHLY STATED THE STOCK POSITION AT RS. 3.00 LAKHS. STOCK WORKED OUT BY THE ASSESSEE AS PER BOOKS COMPILED BY HIM AFTER SURVEY INDICATED THE STOCK POSITION EQUAL TO THE STOCK FOUND BY SURV EY TEAM. THUS, THE STOCK FOUND BY SURVEY TEAM WAS SUBSEQUENT LY SUPPORTED BY THE TRADING ACCOUNT SO PREPARED, WHERE IN NO MISTAKE WAS FOUND. ALSO KEEPING INTO ACCOUNT THAT N O INCRIMINATING DOCUMENT WAS FOUND DURING SURVEY INDI CATING ANY UNACCOUNTED PURCHASES, WE DO NOT FIND ANY JUSTI FICATION -: 6: - 6 FOR MAKING ANY ADDITION ON ACCOUNT OF STOCK. ACCORD INGLY, WE DELETE THE ADDITION OF RS. 1,70,697/- AS RETAINED B Y THE LD. CIT(A). 6. WITH REGARD TO THE ADDITION OF RS. 29,303/- AS SUSTAINED BY THE LD. CIT(A) WITH RESPECT TO THE ENT RIES FOUND IN THE DIARY, NOTHING WAS BROUGHT TO OUR NOTICE BY THE LD. AUTHORIZED REPRESENTATIVE TO PERSUADE US TO DEVIATE FROM THE FINDINGS RECORDED BY THE LD. CIT(A). ACCORDINGLY, W E DO NOT FIND ANY REASON TO INTERFERE IN THE ORDER OF THE CIT(A) FOR RETAINING ADDITION OF RS. 29,303/- OUT OF ADDITION OF RS. 58, 191/- MADE BY THE ASSESSING OFFICER ON ACCOUNT OF ENTRIES RECO RDED IN THE DIARIES FOUND DURING SURVEY. 7. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALLOWE D IN PART IN TERMS INDICATED HEREINABOVE. THIS ORDER HAS BEEN PRONOUNCED IN THE OPEN COURT ON 31 ST MARCH, 2011. SD/- SD/- (JOGINDER SINGH) ( R.C.SHARMA) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED : 31 ST MARCH, 2011. CPU* 31.3