Shivam Traders, Tiruppur V. DCIT, Tiruppur

ITA 3395/CHNY/2016

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 4611 (ITAT-CHENNAI)
• Duration Of Justice: 4 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 04-05-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: D
• Next Hearing Date: 05-04-2017
• Assessment Year: 2014-2015
• Appeal Filed On: 19-12-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SUMATHI VENKATRAMAN
• Assessee Lawyers: S SWAMINATHAN

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL D BENCH, CHENNAI . . . , !' .$%$&, ( ') BEFORE SHRI N.R.S. GANESAN, JUDICIAL MEMBER AND SHRI ABRAHAM P. GEORGE, ACCOUNTANT MEMBER ./ ITA NO.3395/MDS/2016 & +& / ASSESSMENT YEAR : 2014-15 M/S SHIVAM TRADERS, NO.78, NEW MARKET STREET, TIRUPUR 641 604. PAN : ABVFS 9742 F V. THE DEPUTY COMMISSIONER OF INCOME TAX, CIRCLE 2, TIRUPUR 641 602. (-./ APPELLANT) (/0-./ RESPONDENT) -. 1 2 / APPELLANT BY : SHRI S. SWAMINATHAN, ADVOCATE /0-. 1 2 / RESPONDENT BY : SMT. SUMATHI VENKATRAMAN, JCI T 3 1 4( / DATE OF HEARING : 05.04.2017 56+ 1 4( / DATE OF PRONOUNCEMENT : 04.05.2017 / O R D E R PER N.R.S. GANESAN, JUDICIAL MEMBER: THIS APPEAL OF THE ASSESSEE IS DIRECTED AGAINST THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS) -3 COIMBAT ORE, DATED 24.10.2016 AND PERTAINS TO ASSESSMENT YEAR 2014-15. 2. SHRI S. SWAMINATHAN, THE LD.COUNSEL FOR THE ASSE SSEE, SUBMITTED THAT THE ASSESSEE-PARTNERSHIP FIRM IS ENG AGED IN THE BUSINESS OF GOLD JEWELLERY IN THE NAME AND STYLE OF SREE KUMARAN 2 I.T.A. NO.3395/MDS/16 THANGAMALIGAI. ACCORDING TO THE LD.COUNSEL, THERE WAS A SEARCH ON 19.03.2014 IN RESPECT OF ONE OF THE EMPLOYEES OF SR EE KUMARAN THANGAMALIGAI, SHRI IKRAM MULLA KHAN WHILE TRAVELLI NG BY FLIGHT NO.6E-277 TO KOLKATA. THE SAID SHRI IKRAM MULLA KH AN, IN FACT, WAS CARRYING ON 3000 GRAMS OF GOLD BULLION FOR MAKING O RNAMENTS, TO KOLKATA BY FLIGHT. ACCORDING TO THE LD. COUNSEL, T HE AIR INTELLIGENCE UNIT OF INCOME TAX DEPARTMENT INTERCEPTED THE EMPLO YEE OF THE ASSESSEE AND IN FACT SEIZED THE GOLD BULLION. THE ASSESSEE FILED A WRIT PETITION BEFORE THE CALCUTTA HIGH COURT IN WP NO.19090(W) OF 2015. THE CALCUTTA HIGH COURT BY AN ORDER DATED 08 .09.2015 FOUND THAT THE SPECIFIC CASE OF THE ASSESSEE IS THAT THE BULLION SEIZED BY THE AIR INTELLIGENCE UNIT OF INCOME TAX DEPARTMENT WAS PART OF STOCK-IN-TRADE OF THE ASSESSEE. IN FACT, ACCORDING TO THE LD. COUNSEL, THE CALCUTTA HIGH COURT DIRECTED THE INCOM E-TAX AUTHORITIES TO DECIDE WHETHER THE BULLION SEIZED FROM SHRI IKRA M MULLA KHAN WAS STOCK-IN-TRADE OF THE ASSESSEE OR NOT. 3. THE LD.COUNSEL FOR THE ASSESSEE FURTHER SUBMITTE D THAT THE ASSESSEE PURCHASED THE BULLION FROM M/S KUBERAN BUL LION ON 19.03.2014 BY INVOICE DATED 18.03.2014. REFERRING TO PAGE 5 OF THE PAPER-BOOK, THE LD.COUNSEL SUBMITTED THAT IN FACT T HE ASSESSEE PURCHASED GOLD BULLION AND THE SAME WAS ISSUED TO G M JEWELLERS, 3 I.T.A. NO.3395/MDS/16 KOLKATA FOR MAKING GOLD ORNAMENTS. REFERRING TO PA GE 11 OF THE PAPER-BOOK, THE LD.COUNSEL SUBMITTED THAT THIS IS T HE SALES BILL ISSUED BY M/S KUBERAN BULLION, COIMBATORE FOR PURCH ASING 3000 GRAMS OF GOLD BULLION BY THE ASSESSEE. REFERRING T O PAGE 12 OF THE PAPER-BOOK, THE LD.COUNSEL SUBMITTED THAT THIS IS T HE LEDGER MAINTAINED BY THE ASSESSEE IN RESPECT OF PURE METAL BULLION FOR PURCHASE OF 3000 GRAMS OF GOLD JEWELLERY RECORDED O N 18.03.2014. ON 19.03.2014, THE SAME BULLION WAS ISSUED TO GM JE WELLERS, KOLKATA BY MEANS OF TWO INVOICES / STOCK REGISTER A ND THE SAME WAS ALSO RECORDED IN PURE METAL BULLION ACCOUNT. THERE FORE, IT IS OBVIOUS THAT 3000 GRAMS OF GOLD BULLION RECOVERED F ROM THE EMPLOYEE OF THE ASSESSEE IS PART OF THE STOCK-IN-TR ADE, HENCE, ACCORDING TO THE LD. COUNSEL, THERE CANNOT BE ANY A DDITION IN THE HANDS OF THE ASSESSEE. 4. REFERRING TO PAGE 28 OF THE PAPER-BOOK, THE LD.C OUNSEL FOR THE ASSESSEE SUBMITTED THAT THIS IS THE INVOICE ISS UED BY THE ASSESSEE FOR ISSUING GOLD BULLION TO GM JEWELLERS, KOLKATA FOR MAKING GOLD ORNAMENTS. SINCE THE COMPUTER WAS NOT WORKING PROPERLY ON THE PARTICULAR DATE, NAMELY, 19.03.2014 , A MANUAL VOUCHER WAS ISSUED. IN THE MANUAL VOUCHER, THE VOU CHER NUMBER WAS WRONGLY MENTIONED BY HANDWRITING. BY TAKING AD VANTAGE OF THIS 4 I.T.A. NO.3395/MDS/16 MISTAKE IN WRITING THE INVOICE WHILE WRITING THE IN VOICE BY HAND, ACCORDING TO THE LD. COUNSEL, THE REVENUE AUTHORITI ES CLAIM THAT THE GOLD SEIZED BY AIR INTELLIGENCE UNIT OF INCOME TAX DEPARTMENT DOES NOT FORM PART OF ASSESSEES STOCK-IN-TRADE. ACCORD ING TO THE LD. COUNSEL, THE PURCHASE OF GOLD BULLION AND AVAILABIL ITY OF GOLD BULLION WITH THE ASSESSEE IS ESTABLISHED BY THE INVOICE ISS UED BY M/S KUBERAN BULLION. THE ISSUE OF GOLD BULLION TO GM J EWELLERS IS ALSO ESTABLISHED BY ENTRIES MADE IN PURE METAL BULLION A CCOUNT. THEREFORE, ACCORDING TO THE LD. COUNSEL, THE CONCLU SION OF THE REVENUE AUTHORITIES THAT THE GOLD BULLION WAS UNACC OUNTED STOCK OF THE ASSESSEE IS NOT JUSTIFIED. 5. ON THE CONTRARY, SMT. SUMATHI VENKATRAMAN, THE L D. DEPARTMENTAL REPRESENTATIVE, SUBMITTED THAT THE INV OICES, COPY OF WHICH IS AVAILABLE AT PAGE 28 OF THE PAPER-BOOK SHO WS DIFFERENT NUMBERS. FIRST INVOICE SHOWS AS INVOICE NO.6065 AN D THE SECOND ONE SHOWS 7479. ACCORDING TO THE LD. D.R., THE REV ENUE AUTHORITIES EXAMINED ONE SHRI M.P. KOLINJINATHAN ON 29.10.2015, WHO IN FACT PREPARED THE INVOICE MANUALLY. THE SAI D SHRI KOLINJINATHAN CLAIMS THAT HIS STAFF PREPARED THE MA NUAL INVOICE IN THE LAST MINUTE DUE TO SHORTAGE OF TIME AND AFTER WAITI NG FOR LONG HOURS FOR THE SYSTEM TO RESTORE. ONE OF THE INVOICE SLIP S NUMBERED 7479 5 I.T.A. NO.3395/MDS/16 MATCHES WITH SYSTEM GENERATED SERIAL NUMBER. HOWEV ER, THE OTHER ONE DOES NOT MATCH. ACCORDING TO THE LD. D.R., THE ASSESSEE COULD NOT ESTABLISH BEFORE THE ASSESSING OFFICER THAT THE GOLD BULLION CARRIED BY SHRI IKRAM MULLA KHAN WAS THE SAME GOLD BAR PURCHASED BY THE ASSESSEE FROM M/S KUBERAN BULLION. THE LD. D.R. FURTHER POINTED OUT THAT THE GOLD BULLION DID NOT HAVE ANY DISTINCTIVE SERIAL NUMBER. THE STANDARD GOLD BULLION ISSUED BY AUTHOR IZED BANKS CONTAINS DISTINCTIVE SERIAL NUMBER. WHEN GOLD BULL IONS ARE SOLD, THE DISTINCTIVE NUMBER SHALL BE REFERRED IN THE INVOICE S. ACCORDING TO THE LD. D.R., THE SERIAL NUMBER OF THE INVOICES ISS UED BY THE ASSESSEE HAS BEEN TAMPERED WITH. NO MATERIAL EVIDE NCE WAS FILED BEFORE THE ASSESSING OFFICER TO SUBSTANTIATE THAT T HE GOLD BULLION ISSUED BY THE ASSESSEE AND CARRIED BY SHRI IKRAM MU LLA KHAN WAS PART OF THE STOCK OF THE ASSESSEE. HENCE, ACCORDIN G TO THE LD. D.R., THE CIT(APPEALS) HAS RIGHTLY CONFIRMED THE ORDER OF THE ASSESSING OFFICER. 6. BY WAY OF REJOINDER, SHRI S. SWAMINATHAN, THE LD .COUNSEL FOR THE ASSESSEE, SUBMITTED THAT IT IS NOT CORRECT TO S AY THAT THE DISTINCT NUMBER WAS NOT MENTIONED IN THE GOLD BULLION. REFE RRING TO THE REPORT FILED BY THE DEPUTY DIRECTOR OF INCOME TAX B EFORE THE CALCUTTA HIGH COURT, THE LD.COUNSEL SUBMITTED THAT THE DEPUTY 6 I.T.A. NO.3395/MDS/16 DIRECTOR ADMITTED THAT THE GOLD BARS SOLD BY M/S KU BERAN BULLION TO THE ASSESSEE ON 18.03.2014 WERE 99.99% PURITY GOLD BARS AND DO NOT HAVE ANY DISTINCT NUMBERS AS ADMITTED BY THE DE PUTY DIRECTOR BEFORE THE CALCUTTA HIGH COURT. THERE IS NO QUESTI ON OF REFERRING THE DISTINCTIVE NUMBER IN THE INVOICE OR SALES BILL EIT HER BY M/S KUBERAN BULLION OR BY THE ASSESSEE. REFERRING TO THE REPOR T FILED BY THE DEPUTY DIRECTOR BEFORE CALCUTTA HIGH COURT, THE LD. COUNSEL SUBMITTED THAT THERE ARE TWO TYPES OF BULLIONS AVAI LABLE IN THE MARKET. ONE TYPE OF BULLION IS 995 GOLD BAR AND AN OTHER ONE IS 99.99% PURITY GOLD BULLION. 995 GOLD BARS ARE PURC HASED EITHER FROM THE AUTHORIZED BANK OR FROM IMPORTERS WHICH WOULD H AVE SEPARATE IDENTITY / DISTINCT NUMBER EMBOSSED ON EACH GOLD BA R, WHEREAS, 99.99% PURE GOLD BAR DOES NOT HAVE ANY SUCH IDENTIT Y OR DISTINCT NUMBER. 7. REFERRING TO SERIAL NUMBERS IN THE INVOICES, THE LD.COUNSEL FOR THE ASSESSEE SUBMITTED THAT DUE TO DELAY IN REC OVERY OF COMPUTER SYSTEM AND SHORTAGE OF TIME, THE ASSESSEE WAS FORCED TO PREPARE MANUAL INVOICE SLIPS AND THERE WAS A MISTAK E IN ONE OF THE INVOICES WHILE WRITING THE SERIAL NUMBER. ACCORDIN G TO THE LD. COUNSEL, WHEN ONE OF THE HAND WRITTEN INVOICES TALL Y WITH THE SERIAL NUMBER GENERATED BY COMPUTER, THERE CANNOT BE ANY I NTENTION ON 7 I.T.A. NO.3395/MDS/16 THE PART OF ASSESSEE TO SUPPRESS THE OTHER SERIAL N UMBER. ACCORDING TO THE LD. COUNSEL, MERELY BECAUSE THERE WAS A MISTAKE IN THE SERIAL NUMBER IN THE MANUALLY PREPARED VOUCH ER SLIP FOR TAKING GOLD BULLION TO KOLKATA BY FLIGHT, THE REVENUE AUTH ORITIES CANNOT IGNORE THE OTHER MATERIAL DOCUMENTS SUCH AS PURE ME TAL BULLION ACCOUNT AND OTHER RELEVANT RECORDS MAINTAINED BY TH E ASSESSEE IN THE ORDINARY COURSE OF BUSINESS. THEREFORE, ACCORD ING TO THE LD. COUNSEL, THE CIT(APPEALS) IS NOT JUSTIFIED IN CONFI RMING THE ADDITION MADE BY THE ASSESSING OFFICER. 8. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS ON EITH ER SIDE AND PERUSED THE RELEVANT MATERIAL AVAILABLE ON RECORD. ADMITTEDLY, THE AIR INTELLIGENCE UNIT OF INCOME TAX DEPARTMENT INTE RCEPTED THE ASSESSEES EMPLOYEE SHRI IKRAM MULLA KHAN AND SEIZE D 3000 GRAMS OF GOLD BULLION. AFTER REFERRING TO ISSUE VO UCHERS, A COPY OF WHICH IS AVAILABLE AT PAGE 28 OF THE PAPER-BOOK, TH E REVENUE AUTHORITIES FOUND THAT THERE WAS DIFFERENCE IN THE SERIAL NUMBER WHICH WAS WRITTEN IN HANDWRITING. IT IS AN ADMITT ED FACT THAT THE ASSESSEE IS MAINTAINING BOOKS OF ACCOUNT IN THE COM PUTER SYSTEM AND WHILE PREPARING ISSUE INVOICES, THE SERIAL NUMB ER WOULD COME SERIALLY. NOW THE ASSESSEE CLAIMS THAT DUE TO DELA Y IN RECOVERY OF SYSTEM, THE ASSESSEE WAS FORCED TO PREPARE THE ISSU E VOUCHER 8 I.T.A. NO.3395/MDS/16 MANUALLY AND WHEN ONE OF THE VOUCHER TALLIES WITH S ERIAL NUMBER GENERATED BY THE COMPUTER, THE OTHER VOUCHER DOES N OT TALLY WHICH WAS A HUMAN ERROR. THE QUESTION ARISES FOR CONSIDE RATION IS WHETHER THE 3000 GRAMS OF GOLD BULLION SEIZED BY TH E REVENUE AUTHORITIES IS A PART OF STOCK OF THE ASSESSEE OR N OT? THE REVENUE AUTHORITIES CONTEND THAT IT IS NOT PART OF STOCK AN D IT WAS A TRANSACTION OUTSIDE THE BOOKS. IN OTHER WORDS, IT IS UNACCOUNTED STOCK. 9. WE HAVE CAREFULLY GONE THROUGH THE MATERIAL AVAI LABLE ON RECORD. THE SALES BILL ISSUED BY M/S KUBERAL BULLI ON, A COPY OF WHICH IS AVAILABLE AT PAGE 11 OF THE PAPER-BOOK, SH OWS THAT ON 18.03.2014, THE ASSESSEE PURCHASED 3000 GRAMS OF GO LD BULLION. THE PURCHASE OF GOLD BULLION WAS RECORDED IN THE PU RE METAL BULLION ACCOUNT MAINTAINED BY THE ASSESSEE, A COPY OF WHICH IS AVAILABLE AT PAGE 12. THEREFORE, IT IS OBVIOUS THAT THE ASSESSE E HAD SUFFICIENT STOCK OF 3000 GRAMS OF GOLD BULLION FOR ISSUE TO M/ S GM JEWELLERS, KOLKATA FOR MAKING JEWELLERY. IT IS NOT IN DISPUTE THAT THE ASSESSEE IS IN THE HABIT OF SENDING GOLD BULLION TO M/S GM JEWE LLERS FOR MAKING GOLD ORNAMENTS. THE OTHER OBJECTION OF THE REVENUE IS THAT THE DISTINCT NUMBER OF GOLD BULLION IS NOT REFERRED IN THE BILL ISSUED BY M/S KUBERAN BULLION OR INVOICES ISSUED BY THE ASSES SEE TO M/S GM 9 I.T.A. NO.3395/MDS/16 JEWELLERS. THE REPORT FILED BY THE DEPUTY DIRECTOR OF INCOME TAX BEFORE THE CALCUTTA HIGH COURT CLEARLY DISCLOSES TH AT DISTINCT NUMBER WOULD BE AVAILABLE IN 995 GOLD BULLION SOLD BY AUTH ORIZED BANK/IMPORTER. IN RESPECT OF 99.99% PURE GOLD BULL ION, IT DOES NOT HAVE ANY DISTINCT OR IDENTITY NUMBER. IN VIEW OF T HIS ADMISSION OF DEPUTY DIRECTOR OF INCOME TAX BEFORE THE CALCUTTA H IGH COURT IN THE REPORT FILED, THE REVENUE CANNOT CONTEND THAT THE G OLD BULLION SEIZED DOES NOT CONTAIN DISTINCT OR IDENTITY NUMBER. THE REVENUE IS HARPING UPON THE SERIAL NUMBER MENTIONED IN THE MAN UAL VOUCHERS ISSUED BY THE ASSESSEE. 10. WHEN THE ASSESSEE HAS PURCHASED GOLD BULLION FR OM M/S KUBERAN BULLION AND SUFFICIENT STOCK OF GOLD BULLIO N WAS AVAILABLE WITH THE ASSESSEE, THIS TRIBUNAL IS OF THE CONSIDER ED OPINION THAT THE ISSUE OF 3000 GRAMS OF GOLD BULLION FOR MAKING GOLD ORNAMENTS TO M/S GM JEWELLERS CANNOT BE DOUBTED AT ALL. THE MAT TER WOULD STAND DIFFERENTLY IN CASE THE ASSESSEE DID NOT HAVE SUFFI CIENT STOCK OF GOLD BULLION ON THE DATE OF ISSUE OF INVOICE. SINCE THE ASSESSEE HAD SUFFICIENT STOCK OF GOLD BULLION ON 19.03.2014, MER E ENTRY OF WRONG INVOICE NUMBER CANNOT BE A REASON TO HOLD THAT THE GOLD BULLION SEIZED BY THE AIR INTELLIGENCE UNIT OF THE DEPARTME NT AT KOLKATA AIRPORT IS OUTSIDE THE BOOKS. THEREFORE, THIS TRIB UNAL IS UNABLE TO 10 I.T.A. NO.3395/MDS/16 UPHOLD THE ORDERS OF THE LOWER AUTHORITIES. ACCORD INGLY, THE ORDERS OF THE LOWER AUTHORITIES ARE SET ASIDE AND THE ADDI TION MADE BY THE ASSESSING OFFICER IS DELETED. 11. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED ON 04 TH MAY, 2017 AT CHENNAI. SD/- SD/- ( !' .$%$& ) ( . . . ) (ABRAHAM P. GEORGE) (N.R.S. GANESAN) ( / ACCOUNTANT MEMBER /JUDICIAL MEMBER /CHENNAI, 8 /DATED, THE 04 TH MAY, 2017. KRI. 1 /49: ;:+4 /COPY TO: 1. -. /APPELLANT 2. /0-. /RESPONDENT 3. 3 <4 () /CIT(A)-3, COIMBATORE 4. PRINCIPAL CIT-3, COIMBATORE 5. := /4 /DR 6. & > /GF.