ITO, New Delhi V. Sh. Rajeev Gupta, New Delhi

ITA 3390/DEL/2014

• Counselvise Citation: [2017] 127 COUNSELVISE.COM (IT) 3582 (ITAT-DELHI)
• Duration Of Justice: 3 year(s) 4 month(s) 28 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 01-11-2017
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: F
• Next Hearing Date: 12-06-2017
• Assessment Year: 2010-2011
• Appeal Filed On: 03-06-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Unexplained investment; Loose papers; Cost of acquisition; Valuation report
• Section: 143(3); 133A

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH F NEW DELHI BEFORE SHRI SUDHANSHU SRIVASTAVA, JUDICIAL MEMBER AND SHRI PRASHANT MAHARISHI, ACCOUNTANT MEMBER ITA NO. 3390/DEL/2014 ASSESSMENT YEAR : 2010-11 INCOME TAX OFFICER, VS RAJEEV GUPTA, WARD 26(3), E-2 BLOCK, C-2/52, FF, 18 TH FLOOR, JANAK PURI, CIVIC CENTRE, NEW DELHI. NEW DELHI. (PAN: AAZPG2397R) (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI ATIQ AHMAD, SR. DR RESPONDENT BY : SHRI PIYUSH KUMAR KAMAL, CA O R D E R PER SUDHANSHU SRIVASTAVA, JUDICIAL MEMBER THIS APPEAL HAS BEEN PREFERRED BY THE REVENUE AGAIN ST THE ORDER PASSED BY THE LD. CIT(A)-XXIV, NEW DELHI DATE D 7.3.2014 FOR ASSESSMENT YEAR 2010-11 WHEREIN THE LD. CIT(A) HAD PARTLY ALLOWED ASSESSEES APPEAL AGAINST THE ASSESSMENT OR DER DATED 18.3.2013. 2. THE BRIEF FACTS OF THE CASE ARE THAT THE RETURN OF INCOME WAS FILED DECLARING INCOME OF RS. 1,71,980/- ON 29.03.2 011. A SURVEY U/S 133A OF THE INCOME TAX ACT, 1961 (HEREINAFTER R EFERRED TO AS 'THE ACT') WAS CARRIED ON THE PREMISES OF THE ASSES SEE ON 19.2.2010. DURING THE COURSE OF SURVEY, IT WAS FOU ND THAT THE I.T.A. NO. 3390/DEL/2014 ASSESSMENT YEAR 2010-11 2 ASSESSEE WAS RUNNING HIS PROPRIETARY CONCERN M/S SH RI RAMJI TILES & SANITARY FROM A NEWLY CONSTRUCTED BUILDING SITUATED AT B- 44, SHIV VIHAR, VIKAS NAGAR, UTTAM NAGAR, NEW DELHI . DURING THE COURSE OF SURVEY, AN EXCESS CASH AMOUNTING TO RS. 9 ,86,750/- AND DOCUMENTS PERTAINING TO UNEXPLAINED EXPENSES OF RS. 35,60,600/- INCURRED TOWARDS RENOVATION OF THE BUSI NESS PREMISES WERE FOUND. BESIDES THIS, EXCESS STOCK OF TILES OF RS. 45,82,966/- WAS ALSO FOUND. THE STATEMENT OF THE A SSESSEE WAS ALSO RECORDED AND THE ASSESSEE SURRENDERED THE EXCE SS CASH AMOUNTING TO RS. 9,86,750/-, UNEXPLAINED EXPENDITUR E ON RENOVATION AMOUNTING TO RS. 35,60,600/- AND EXCESS STOCK OF RS. 45,82,966/- FOR TAXATION. 2.1 HOWEVER, WHEN THE RETURN OF INCOME WAS SUBSEQUE NTLY FILED ON 29.03.2011, THE INCOME OF ONLY 1,71,980/- WAS DE CLARED AND THE ASSESSING OFFICER, DURING THE COURSE OF ASSESSM ENT PROCEEDINGS, NOTED THAT THE ASSESSEE HAD NOT SHOWN THE SURRENDERED ADDITIONAL INCOME NOR PAID THE ADDITION AL TAX DUE ON THE SAME. THE ASSESSEE WAS ASKED TO SHOW CAUSE AND THE ASSESSEE SUBMITTED BEFORE THE ASSESSING OFFICER THA T HE HAD RETRACTED FROM THE SURRENDER MADE DURING THE COURSE OF SURVEY PROCEEDINGS BY STATING THAT NO EXCESS CASH WAS FOUN D, NO EXPENSE I.T.A. NO. 3390/DEL/2014 ASSESSMENT YEAR 2010-11 3 WAS INCURRED ON RENOVATION OF PREMISES AND THERE WA S NO EXCESS STOCK. THE ASSESSEE FURTHER SUBMITTED BEFORE THE A SSESSING OFFICER THAT THE DIFFERENCE IN STOCK WAS DUE TO DIF FERENCE BETWEEN THE RATE TAKEN BY THE DEPARTMENT AND THE ACTUAL COS T PRICE. HOWEVER, THE ASSESSING OFFICER DID NOT ACCEPT THE A SSESSEES CONTENTION AND COMPLETED THE ASSESSMENT U/S 143(3) OF THE ACT AFTER MAKING ADDITIONS ON ACCOUNT OF EXCESS STOCK, RENOVATION OF BUSINESS PREMISES AND EXCESS CASH. 2.2 AGGRIEVED, THE ASSESSEE PREFERRED AN APPEAL BEF ORE THE FIRST APPELLATE AUTHORITY AND RAISED THE CONTENTION THAT NO ACTUAL SURRENDER WAS MADE DURING THE COURSE OF SURVEY AND, IN ANY CASE, THE SAME WAS RETRACTED AS THE SURRENDER WAS O BTAINED UNDER DURESS, HARASSMENT, FEAR AND COERCION. THE A SSESSEE ALSO REITERATED BEFORE THE LD. CIT(A) THAT THE SURVEY TE AM HAD VALUED THE STOCK INCORRECTLY, BOTH IN TERMS OF VALUE AND Q UANTITY, AND A DETAILED CHART WAS FILED BEFORE THE ASSESSING OFFIC ER EXPLAINING THE DEFICIENCIES IN STOCK VALUATION IN THE VARIOUS ITEMS OF INVENTORY. REGARDING THE ALLEGED EXPENSES ON RENOV ATION, THE ASSESSEE CONTENDED BEFORE THE LD. CIT(A) THAT ONLY TWO LOOSE PAPERS WERE FOUND DURING THE COURSE OF SURVEY BUT T HERE WAS NO CORROBORATIVE EVIDENCE TO PROVE THAT SUCH EXPENDITU RE HAD BEEN I.T.A. NO. 3390/DEL/2014 ASSESSMENT YEAR 2010-11 4 INCURRED BY THE ASSESSEE AS NO OTHER VOUCHER OR BIL L WAS FOUND AND THE PAPERS WERE ALSO UNDATED. REGARDING EXCESS CASH, THE ASSESSEE CONTENDED BEFORE THE LD. CIT(A) THAT AS TH IS ALLEGED UNACCOUNTED CASH WAS LEFT WITH THE ASSESSEE AND NOT SEIZED BY THE DEPARTMENT, OBVIOUSLY, THERE WAS NO ACTUAL CASH FOUND DURING THE COURSE OF SURVEY AND THE THEORY OF EXCESS CASH HAVING BEEN FOUND WAS INTRODUCED BY THE DEPARTMENT TO FORCE SUR RENDER OF THE AMOUNT. THE ASSESSEE ALSO SUBMITTED THAT NO UNACCO UNTED SALES BILLS WERE FOUND DURING THE COURSE OF SURVEY. THE ASSESSEE ALSO SUBMITTED THAT THE ENTIRE ADDITION HAD BEEN MADE ON THE BASIS OF THE STATEMENT OF THE ASSESSEE WHICH THE ASSESSEE WA S NOT ACCEPTING AND HAD RETRACTED. 2.3 HOWEVER, THE LD. CIT(A) HAD NOT ACCEPTED THE AS SESSEES CONTENTION REGARDING EXCESS CASH AND CONFIRMED THE SAME. THE LD. CIT(A) ALSO CONFIRMED THE ADDITION PERTAINING T O UNEXPLAINED INVESTMENT IN THE RENOVATION OF BUSINESS PREMISES B Y NOTING THAT THE ASSESSEE HAD, DURING THE COURSE OF APPELLATE PR OCEEDINGS, ADMITTED THAT THE HANDWRITING ON THE TWO PIECES OF PAPER WAS HIS OWN AND THAT HE HAD DESTROYED THE RELATED VOUCHERS OF EXPENSES. 2.4 ON THE ISSUE RELATING TO DIFFERENCE IN VALUATIO N OF STOCK, THE LD. CIT(A) TOOK INTO CONSIDERATION THE SUBMISSIONS OF THE ASSESSEE I.T.A. NO. 3390/DEL/2014 ASSESSMENT YEAR 2010-11 5 AS WELL AS THE RELEVANT PURCHASE INVOICES AND SUSTA INED THE ADDITION ON THIS ACCOUNT ONLY TO THE TUNE OF RS. 1, 47,674/-. 3. THE DEPARTMENT HAS NOW CHALLENGED THE ACTION OF THE LD. CIT(A) IN RESTRICTING THE ADDITION ON ACCOUNT OF DI FFERENCE IN STOCK. THE FOLLOWING GROUNDS HAVE BEEN RAISED BY THE DEPAR TMENT :- ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW CIT(A) ERRED IN- 1. ADMITTING THE SWEEPING SUBMISSION OF ASSESSEE AND NOT GETTING THE FACTS CONFRONTED BY THE AO BY PROVIDING OPPORTUNITY UNDER RULE 46A. 2. RESTRICTING THE ADDITION ON ACCOUNT OF DIFFERENCE IN STOCK TO RS. 1,47,292/- AS AGAINST THE ADDITION OF RS. 45,82,966/-. 4. THE LD. SR. DR PLACED RELIANCE ON THE FINDING S OF THE ASSESSING OFFICER AND VEHEMENTLY ARGUED THAT THE LD . CIT(A) HAD IGNORED THE FINDINGS OF FACT AS RECORDED BY THE SUR VEY TEAM WHICH WAS RECORDED ON THE SPOT AND THAT HE HAD GIVEN BENE FIT TO THE ASSESSEE WITHOUT EVEN REQUIRING THE ASSESSING OFFIC ER TO SUBMIT A REMAND REPORT ON THE ISSUE. IT WAS PRAYED THAT THE DELETION MADE BY THE LD. CIT(A) BE REVERSED. 5. IN RESPONSE, THE LD. AR SUBMITTED THAT THE LD. CIT(A) HAD GIVEN RELIEF TO THE ASSESSEE ONLY AFTER TAKING INTO ACCOUNT THE DEFICIENCIES WHICH WERE BROUGHT TO NOTICE REGARDING THE VALUATION OF INVENTORY. THE LD. AR SUBMITTED THAT THE SAME S HOULD BE I.T.A. NO. 3390/DEL/2014 ASSESSMENT YEAR 2010-11 6 UPHELD. 6. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL AVAILABLE ON RECORD. IT IS SEEN THAT DURIN G THE COURSE OF SURVEY, STOCK OF TILES WORTH RS. 99,43,096/- WAS FO UND IN THE BUSINESS PREMISES OF THE ASSESSEE. OUT OF THIS, ON THE DATE OF SURVEY, STOCK WORTH RS. 53,60,130/- WAS FOUND TO BE RECORDED IN THE BOOKS OF ACCOUNTS OF THE ASSESSEE AND, THUS, AS PER THE DEPARTMENT, THERE WAS EXCESS STOCK OF RS. 45,82,966 /-. THE ASSESSEE HAD OBJECTED TO THE VALUATION ON THE GROUN D THAT THE SAME HAD BEEN OVERVALUED BY THE SURVEY TEAM. DURIN G THE COURSE OF APPELLATE PROCEEDINGS, THE ASSESSEE OBJEC TED TO VALUATION OF 87 ITEMS OF STOCK WHICH, ACCORDING TO HIM, HAD BEEN OVERVALUED BY THE SURVEY TEAM. THE ASSESSEE FURNIS HED COPIES OF PURCHASE INVOICES TO DEMONSTRATE THE CORRECT RATE O F PURCHASE OF THE IMPUGNED ITEMS OF STOCK. HOWEVER, ON PERUSAL O F THE SAME, IT WAS NOTICED BY THE LD. COMMISSIONER OF INCOME TAX(A ) THAT WHILE TAKING THE VALUE OF PURCHASE COST OF MANY ITEMS, TH E ASSESSEE HAD NOT INCLUDED EXCISE DUTY, VAT AND SURCHARGE. ON BE ING POINTED OUT THE SAME, THE ASSESSEE ACCEPTED AND DROPPED HIS OBJECTIONS FOR 46 ITEMS. THE ASSESSEE FURTHER CHALLENGED THE VALUATION OF STOCK BEFORE THE LD. COMMISSIONER OF INCOME TAX(A) AND STATED I.T.A. NO. 3390/DEL/2014 ASSESSMENT YEAR 2010-11 7 THAT WHILE VALUING THE STOCK IN GODOWN NO. C, THE V ALUE OF STOCK HAD BEEN TAKEN ERRONEOUSLY AS THE SURVEY TEAM HAD V ALUED 8 ITEMS (52135 PIECES) ERRONEOUSLY ON PIECE BASIS INS TEAD OF BOX BASIS. THIS ISSUE WAS PARTLY ALLOWED BY THE LD. CO MMISSIONER OF INCOME TAX(A). 6.1 IT IS SEEN THAT THE LD. COMMISSIONER OF INCOME TAX(A) HAS DULY NOTED THAT THE CONTENTION OF THE ASSESSEE WAS VERIFIED WITH RESPECT TO PURCHASE INVOICES AND IT HAS BEEN FURTHE R NOTED THAT IN THE PREVIOUS PAGES OF THE VALUATION REPORT IN RESPE CT OF GODOWN NO. C, THE SURVEY TEAM HAD TAKEN THE VALUE OF STOCK ON THE BASIS OF BOXES WHEREAS IN RESPECT OF THE 8 ITEMS OBJECTED TO BY THE ASSESSEE, THE SURVEY TEAM HAD TAKEN THE STOCK ON TH E BASIS OF PER PIECE. THE LD. COMMISSIONER OF INCOME TAX(A) HAS A LSO NOTED THAT IN PAGE 2 OF THE INVENTORY OF GODOWN NO. C, THERE W AS NO MENTION OF QUANTITY OF STOCK I.E. AS TO WHETHER IT WAS ON P ER BOX BASIS OR ON PER PIECE BASIS. THEREAFTER, LD. COMMISSIONER O F INCOME TAX(A) CALCULATED THE DIFFERENCE IN VALUE OF STOCK AS PER BOOKS OF ACCOUNT AND THE PHYSICAL INVENTORY AT RS. 1,47,674/- AND SU STAINED THE ADDITION ONLY TO THIS EXTENT. THIS FACT OF FINDING COULD NOT BE NEGATED BY THE DEPARTMENT DURING THE COURSE OF PROC EEDINGS BEFORE US AND THE LD. SR. DR COULD NOT POINT OUT TH E ERROR, IF ANY, I.T.A. NO. 3390/DEL/2014 ASSESSMENT YEAR 2010-11 8 HAD BEEN COMMITTED BY THE LD. COMMISSIONER OF INCOM E TAX(A) IN THE CALCULATION SO MADE. ACCORDINGLY, WE FIND NO R EASON TO INTERFERE IN THE ORDER OF THE LD. COMMISSIONER OF I NCOME TAX(A) WHICH IS ENTIRELY BASED ON FACTS. 6.2 AS FAR AS THE DEPARTMENTS CONTENTION ABOUT TH E LD. COMMISSIONER OF INCOME TAX(A)S NOT CALLING FOR A R EMAND REPORT IS CONCERNED, WE NOTE THAT NO FRESH DOCUMENTS WERE FURNISHED BEFORE THE LD. COMMISSIONER OF INCOME TAX(A) AND TH ESE DOCUMENTS WERE ALREADY BEFORE THE ASSESSING OFFICER DURING THE COURSE OF ASSESSMENT PROCEEDINGS. THE LD. COMMISSI ONER OF INCOME TAX(A) HAS GIVEN RELIEF TO THE ASSESSEE ON T HE BASIS OF ERROR COMMITTED BY THE SURVEY TEAM IN THE COURSE OF STOCK TAKING AND THE SAME IS ALSO ON RECORD AND BEFORE THE ASSES SING OFFICER. THEREFORE, THIS CONTENTION OF THE DEPARTMENT IS ALS O NOT ACCEPTABLE. ACCORDINGLY, WE UPHOLD THE ORDER OF THE LD. COMMISSIONER OF INCOME TAX(A) AND DISMISS THE APPEA L PREFERRED BY THE DEPARTMENT. 7. IN THE RESULT, THE APPEAL OF THE DEPARTMENT IS D ISMISSED. I.T.A. NO. 3390/DEL/2014 ASSESSMENT YEAR 2010-11 9 ORDER PRONOUNCED IN THE OPEN COURT ON 1.11. 2017. SD/- SD/- (PRASHANT MAHARISHI) (SUDHA NSHU SRIVASTAVA) ACCOUNTANT MEMBER JUDICIAL MEMBER DT. 1.11.2017 GS COPY FORWARDED TO:- 1. APPELLANT 2. RESPONDENT 3. CIT(A) 4. CIT 5. DR BY ORDER ASSTT. REGISTRAR