ITO, New Delhi V. Smt. Ritu Dimri, New Delhi

ITA 3315/DEL/2009

• Counselvise Citation: 331520114 RSA 2009
• Duration Of Justice: 3 year(s) 4 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 23-11-2012
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: F
• Next Hearing Date: 18-09-2012
• Assessment Year: 2006-2007
• Appeal Filed On: 23-07-2009
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: RAJEEV DIMRI; H RAGHVEBDRA RAO
• Keywords: Unexplained investment; Opportunity of being heard
• Section: 143(3); 133A

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL (DELHI BENCH F NEW DELHI) BEFORE SHRI RAJPAL YADAV, JUDICIAL MEMBER AND SHRI T.S. KAPOOR, ACCOUNTANT MEMBER I.T.A. NO.3315/DEL/2009 ASSESSMENT YEAR : 2006-07 ITO, SMT. RITU DIMRI, WARD-24 (1), C-9, SOAMI NAGAR (SOUTH), NEW DELHI. V. NEW DELHI. (APPELLANT) (RESPONDENT) PAN /GIR/NO. PAN /GIR/NO. PAN /GIR/NO. PAN /GIR/NO.AEBPD AEBPD AEBPD AEBPD- -- -9931 9931 9931 9931- -- -L LL L APPELLANT BY : SHRI SANJAY JAIN, SR. DR. RESPONDENT BY : SHRI H. RAGHVEBDRA RAO, ADVOCATE & SHRI RAJEEV DIMRI, FCA. ORDER PER TS KAPOOR, AM: THIS IS AN APPEAL FILED BY THE REVENUE AGAINST THE OR DER OF LD CIT(A) DATED 20.5.200. THE GROUNDS RAISED BY THE REVENUE ARE AS UNDER:- 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE THAT THE LD CIT(A) HAS ERRED IN LAW AND ON FACTS IN DELETING THE ADDITION OF ` .10,00,000/- MADE ON ACCOUNT OF SUPPRESSED TURNOVER AS UNDISCLOSED INCOME. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LD CIT(A) HAS ERRED IN LAW AND ON FACTS IN DELETING THE ADDITIO N OF ` .34,87,903/- MADE ON ACCOUNT OF EXCESS STOCK FOUND ON THE DATE OF SURVEY AS UNDISCLOSED INCOME. ITA NO3315/DEL/2009 2 3. THE APPELLANT CRAVES LEAVE TO ADD, ALTER OR AMEND AN Y GROUNDS OF APPEAL BEFORE OR DURING THE COURSE OF HEARING OF THE APPEAL. 2. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE IS A SOLE PROPRIETOR OF M/S VYAKT STUDIO GALLERY AND IS ENGAGED IN THE BUSINESS OF SALE OF POTTERIES/SCENERIES AND ART WORK. THE RETUR N FOR THE YEAR UNDER CONSIDERATION WAS FILED ON 31.3.2007 DECLARING A LOSS OF ` .2,26,811/-. A SURVEY U/S 133A OF THE INCOME TAX ACT , 1961 WAS CONDUCTED AT THE PREMISES OF THE ASSESSEE ON 23.12.2005 AND ON THE DATE OF SURVEY THE INVENTORY OF STOCK WAS PREPARED AT ` . 36,37,903/- CONSISTING OF ` .32,46,500/- ON ACCOUNT OF SCENERIES AND ` .3,91,403/- ON ACCOUNT OF POTTERIES. IN HER STATEMENT RECORDED ON TH E DATE OF SURVEY, IT WAS EXPLAINED BY THE ASSESSEE THAT THE VALUE OF STOCK OWNED BY HER ON THE DATE OF SURVEY WAS ` .1,50,000/- AND SHE HAD RECEIVED CONSIGNMENT STOCK FROM VARIOUS ARTISTS VALUED AT ` .35 LAKHS WHICH ACCORDING TO HER WAS PART OF INVENTORY PREPARED ON T HE DATE OF SURVEY. HOWEVER, THE ASSESSEE COULD NOT PRODUCE ANY EVIDENCE I N SUPPORT OF HER CLAIM THAT SHE HAD RECEIVED GOODS ON CONSIGNMENT AND SHE WAS DIRECTED TO RECONCILE THE PHYSICAL STOCK WITH THE AMO UNT OF STOCK APPEARING IN THE BOOKS OF ACCOUNTS AND WAS FURTHER DIR ECTED TO FURNISH EVIDENCE IN RESPECT OF STOCK RECEIVED ON CONSIGNMENT. DESPITE VARIOUS REMINDERS THE ASSESSEE DID NOT FILE ANY EVIDENCE IN RESPE CT OF STOCK RECEIVED ON CONSIGNMENT AND ASSESSING OFFICER AFTER ALLO WING CREDIT OF ` .1,50,000/- AS HER OWN STOCK AS PER BOOKS OF ACCOUNTS M ADE AN ADDITION OF ` .34,87,903/- BEING THE DIFFERENCE BETWEEN PHYSICAL ST OCK AND STOCK IN THE BOOKS. THE ASSESSING OFFICER FURTHER MAD E AN ADDITION OF ` .10 LAKHS ON THE BASIS THAT DUE TO HUGE STOCK THE ASSESSEE MUST BE HAVING A GOOD TURNOVER OTHER THAN THE DECLARED TURN OVER IN THE BOOKS OF ACCOUNTS AND THEREFORE AN AMOUNT OF ` .10 LAKHS WAS INCLUDED AS UNDISCLOSED INCOME ON ACCOUNT OF PROFIT ON SUPPRESSED TU RNOVER. ITA NO3315/DEL/2009 3 3. DISSATISFIED WITH THE ORDER, THE ASSESSEE FILED APPEAL BEFORE LD CIT(A) AND SUBMITTED AS UNDER:- I) THAT ON 23 RD DECEMBER, 2005 A SURVEY U/S 133A OF THE INCOME TAX ACT, 1961 WAS CONDUCTED AT THE PREMISES OF THE APP ELLANT AND 8 ITEMS OF PAINTINGS WITH A SELLING PRICE OF ` .32,46,500/- AND 47 ITEMS OF POTTERIES WITH THE SELLING PRICE OF ` .3,91,402/- WERE INVENTORISED BY THE SURVEY TEAM AND THREE RECEIP T BOOKS INDICATING RECEIPT OF WORK OF ARTS FROM THE ARTISTS WE RE IMPOUNDED BY THE DEPARTMENT. II) THAT THE BUSINESS MODEL ADOPTED BY THE APPELLANT WAS T O RECEIVE THE WORK OF ART IN THE FORM OF PAINTING, PO TTERIES ON CONSIGNMENT BASIS FROM VARIOUS ARTISTS AND TO DISPLAY TH E SAME IN THE ART GALLERY FOR A PARTICULAR PERIOD OF T IME. THE ASSESSEE USED TO CHARGE COMMISSION ON SALE OF WORK OF ART AND POTTERIES RECEIVED FROM VARIOUS ARTISTS. III) THAT THE TOTAL CONSIGNMENT OF STOCK WORKED OUT TO BE ` .37,42,289/- AGAINST THE PHYSICAL STOCK ON THE DATE OF SURVEY AMOUNTING TO ` .36,37,903/- AND THUS THE ENTIRE AMOUNT OF STOCK WAS ACCOUNTED FOR AND THERE WAS NO EXCESS STOCK. IV) THAT POSITION DATED 23 RD DECEMBER, 2005 WAS EXPLAINED TO THE ASSISTANT DIRECTOR OF INCOME TAX (INV.) DURING THE SURV EY AND THE ENTIRE PROCEDURE OF RECEIVING THE WORK OF ART A ND THEIR EVENTUAL RETURN TO ARTIST WAS EXPLAINED ALONG WITH TH E DOCUMENTS TO THE SURVEY TEAM. V) THAT THE APPELLANT HAD TURNOVER OF BELOW ` .10 LAKHS P.A. AND THERE WERE NO DETAILS IN THE BOOKS OF ACCOUNTS BEING MAINTAINED. HOWEVER, FULL; DETAILS OF RECEIPT OF WOR K OF ART AND THEIR RETURN WAS AVAILABLE WITH THE APPELLANT. THE L D AR ALSO ITA NO3315/DEL/2009 4 ENCLOSED CONFIRMATION FROM VARIOUS ARTISTS CONFIRMING T HAT THEY HAD SENT STOCK ON CONSIGNMENT BASIS TO THE ASSESSEE. VI) THAT LD ASSESSING OFFICER IGNORED ALL THE STATEMENTS OF THE APPELLANT, THE MATERIAL PROVIDED DURING THE SURVEY A S WELL AS DURING THE HEARING AND HAD WRONGLY ASSUMED THAT STOCK IN HAND BELONGED TO THE ASSESSEE. VII) THAT LD ASSESSING OFFICER WHILE PASSING THE ORDER HAS MADE AN ADDITION OF ` .10 LAKHS ON ACCOUNT OF UNDISCLOSED TURNOVER WITHOUT APPLICATION OF MIND WHICH IS CLEAR FROM THE FACTS THAT IN THE CALCULATION MADE IN THE ASSESSMENT ORDER, THE ASSESSING OFFICER HAD TAKEN THE FIGURE AT ` .15 LAKHS INSTEAD OF ` .10 LAKHS AS DISCUSSED IN THE ASSESSMENT ORDER. VIII) THAT THE LD ASSESSING OFFICER HAD COMPLETELY IGNORED TH E FACT THAT IN PREVIOUS TWO ASSESSMENTS OF THE APPELLANT, THE ASSESSMENT WAS COMPLETED AFTER ACCEPTING THE RETURNED TURNOVER. IX) THAT SALES TAX DEPARTMENT HAS BEEN REGULARLY ACCEPTIN G THE TURNOVER OF THE APPELLANT. X) THAT APPELLANT HAD SCRUTINY ASSESSMENT U/S 143(3) IN THE ASSESSMENT YEAR 2005-06 WHEREIN THE ASSESSING OFFICER HAD ACCEPTED THE RETURNED INCOME. XI) THAT LD ASSESSING OFFICER HAS ERRED IN LAW AND ON FACTS IN TREATING THE CONSIGNMENT STOCK AS APPELLANTS UNEXPLAIN ED INVESTMENT WHEREAS THE STOCK WAS MOSTLY RETURNED TO RESPECTIVE ARTISTS FOR WHICH EVIDENCE AND DETAILS WERE FILED. XII) THAT APPELLANT HAD PROVIDED FULL DETAILS ALONG WITH CONFIRMATION FOR WORK OF ART/POTTERIES RECEIVED ON CONSIGNMENT BASIS AND THIS FACT WAS NOT DISPUTED BY THE ASSESSING OFFICER IN THE ASSESSMENT YEAR 2005-06. ITA NO3315/DEL/2009 5 XIII) THAT STOCK DATED 23 RD DECEMBER, 2005 WAS VALUED AT SALE PRICE AND THIS YEAR GROSS PROFIT AMOUNTING TO 38.50% A ND THUS SALE VALUE HAS BEEN ERRONEOUSLY ADOPTED AS STOCK OR IN VESTMENT AND HENCE THE ASSESSING OFFICER HAD OMITTED THE FACT THAT THE PURCHASE PRICE WOULD HAVE TO BE FAR LO WER. XIV) THAT STOCK OF THE APPELLANT WAS VALUED ON 13TH DECEMB ER, 2002 BY THE SALES TAX DEPARTMENT AND IT WAS ACCEPTED BY THE SALES TAX DEPARTMENT THAT APPELLANTS STOCK ON THAT D ATE WAS ` .31,050/- AND STOCK WORTH ` .18,80,289/- WAS ON CONSIGNMENT BASIS AND THAT THIS FACT HAD ESCAPED CONSIDERATION BECA USE ADEQUATE OPPORTUNITY OF BEING HEARD WAS NOT ALLOWED TO THE ASSESSEE. XV) THAT RECEIPT BOOK SEIZED BY THE DEPARTMENT DURING SU RVEY BELONGED TO THE PERIOD OF CONSIGNMENT RECEIVED PRIOR TO MARCH 31 ST , 2005 AND LD ASSESSING OFFICER HAD ERRED IN LAW IN WORKING OUT THE UNEXPLAINED INVESTMENT IN STOCK DURIN G ASSESSMENT YEAR 2006-07 AND ASSESSMENT FOR THE YEAR 2005- 06 HAS ALREADY BEEN COMPLETED AFTER CONSIDERING THE S AID INFORMATION AND WITHOUT ANY ADDITION. 4. THE LD CIT(A) AFTER GOING THROUGH THE SUBMISSIONS OF ASSESSEE DELETED THE ADDITIONS MADE BY ASSESSING OFFICER. 5. AGGRIEVED, THE REVENUE FILED APPEAL BEFORE THIS T RIBUNAL. 6. AT THE OUTSET, THE LD DR ARGUED THAT ONUS WAS ON TH E ASSESSEE TO PROVE THAT STOCK DID NOT BELONG TO HER AND WAS ON CON SIGNMENT BASIS. POINTING OUT AT ASSESSMENT ORDER, THE LD DR INVITED OU R ATTENTION TO THE FACT THAT IN SPITE OF OPPORTUNITIES ALLOWED THE ASSESSEE WAS NOT ABLE TO RECONCILE THE PHYSICAL STOCK ON THE DATE OF SU RVEY WITH THE ITA NO3315/DEL/2009 6 STOCK AS PER HER BOOKS AND FURTHER ARGUED THAT CONFIRM ATION FROM THE SUPPLIERS WERE PROVIDED ONLY AFTER SEIZURE AND THESE WE RE NOT FILED BEFORE THE ASSESSING OFFICER. HE FURTHER ARGUED THAT LD CIT(A) VERIFIED ONLY ONE DOCUMENT AND HE SHOULD HAVE CALLED FOR EVID ENCE AND CONFIRMATIONS FROM ALL ARTISTS. 7. ON THE OTHER HAND, THE LD AR ARGUED THAT ALL PAP ERS WERE SEIZED AND WERE WITH THE DEPARTMENT AND THEREFORE THE ASSESSEE WAS NOT IN A POSITION TO SUBMIT PROOF OF CONSIGNMENT TO ASSESSING OFFI CER. 8. WE HAVE HEARD THE RIVAL SUBMISSIONS OF THE PARTIES A ND HAVE GONE THROUGH THE MATERIAL AVAILABLE ON RECORD. WE HAVE OBSERVED THAT ASSESSEE IS A SMALL TIME BUSINESS LADY AND USED TO DISPLAY IT EMS OF SCENERIES/POTTERIES RECEIVED FROM VARIOUS ARTISTS AND WH ATEVER ARTICLES WERE SOLD SHE USED TO PAY THE ARTIST AFTER DEDUCTING HE R COMMISSION AND SIMILARLY FOR UNSOLD ITEMS SHE USED TO RETURN BACK THE ITEMS TO THE RESPECTIVE ARTISTS. THE STOCK OF ASSESSEE WAS VALUED ON 13TH DECEMBER, 2002 BY THE SALES TAX DEPARTMENT AND IT WA S ACCEPTED BY THE SALES TAX DEPARTMENT THAT THE ASSESSEE WAS HOLDING STO CK OF HER OWN AT ` .31.050/- AND CONSIGNMENT STOCK VALUED AT ` .18,80,289/- THE ASSESSMENT OF THE ASSESSEE IN THE YEAR 2005-06 I.E. IMMEDI ATELY BEFORE THE ASSESSMENT YEAR UNDER CONSIDERATION WAS COMPL ETED U/S 143(3) OF THE ACT AND ORDER WAS PASSED ON 27.11.2007 W HICH WAS AFTER THE DATE OF SURVEY U/S 133A OF THE ACT AND THERE IS NO MENTION OF THE FACT OF ANY EXTRA STOCK RATHER THE RETURNED INCOME H AS BEEN ACCEPTED AS SUCH. THE ASSESSEE HAD ALSO SUBMITTED BEFORE LD CIT(A) T HAT CONFIRMATIONS FROM 13 ARTISTS WHO HAD CONFIRMED OF THE IR BEING OWNER OF THE ITEMS FOUND AT THE PREMISES OF ASSESSEE AND THEY H AVE CONFIRMED THAT THEY HAVE NOT SOLD THESE TO THE ASSESSEE. VARIOUS CONFIRMATIONS ALONG WITH ID PROOF OF THE ARTIST IS PLA CED AT PAPER BOOK ITA NO3315/DEL/2009 7 PAGES 28 TO 50. THE ADDITIONS WERE MADE BY ASSESSING OFFI CER ON THE BASIS THAT ASSESSEE DID NOT PROVIDE THE EVIDENCES DURING C OURSE OF ASSESSMENT PROCEEDINGS. THE LD CIT(A) HAS CONCLUDED THAT EVIDENCES WERE ALREADY WITH ASSESSING OFFICER WHICH WAS PART OF SEI ZED MATERIAL. IN VIEW OF THE ABOVE, WE ARE OF THE OPINION THAT EX CESS STOCK FOUND AT THE TIME OF SURVEY NECESSARILY BELONGED TO THE VARIOUS ARTISTS WHO HAD GOT THEIR WORK OF ART DISPLAYED AT THE GALLERY OF TH E ASSESSEE AND THESE WERE MEANT TO BE SOLD BY THE ASSESSEE ON COMMISSION BASIS. THE OTHER ADDITION MADE BY THE ASSESSEE ON ACCOUNT OF PROFIT ON SU PPRESSED SALES AMOUNTING TO ` .10 LAKHS ALSO DO NOT HOLD GROUND BECAUSE THE ASSESSING OFFICER JUST MADE ESTIMATE ON THE BASIS OF STOCK F OUND AT THE PREMISES WHICH IS AGAINST THE FACTS AS STOCK DID NOT BELO NG TO HER. WE FIND NO REASON TO INTERFERE IN THE ORDER OF LD CIT(A ). 9. IN THE RESULT, THE APPEAL FILED BY THE REVENUE IS DISMISSED. 10. ORDER PRONOUNCED IN THE OPEN COURT ON 23RD DAY OF NOVEMBER, 2012. SD/- SD/- (RAJPAL YADAV) (T.S. KAPOOR) JUDICIAL MEMBER ACCOUNTANT MEMBER DT. 23.11.2012. HMS COPY FORWARDED TO:- 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT 4. THE CIT (A)-, NEW DELHI. 5. THE DR, ITAT, LOKNAYAK BHAWAN, KHAN MARKET, NEW DEL HI. TRUE COPY. BY ORDER ITA NO3315/DEL/2009 8 (ITAT, NEW DELHI). DATE OF HEARING 18.9.2012 DATE OF DICTATION 8.11.2012 DATE OF TYPING 9.11.2012 DATE OF ORDER SIGNED BY 23.11.2012 BOTH THE MEMBERS & PRONOUNCEMENT. DATE OF ORDER UPLOADED ON NET 23.11.2012 & SENT TO THE BENCH CONCERNED.