Income Tax Officer-1, Faizabad V. M/s Agarwal Jewellers, Faizabad

ITA 352/LKW/2016

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 4012 (ITAT-LUCKNOW)
• Duration Of Justice: 2 month(s) 22 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-08-2016
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 28-07-2016
• Assessment Year: 2012-2013
• Appeal Filed On: 08-06-2016
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Section: 44AD

Judgement Text

I.T.A. NO.352/LKW/16 ASSESSMENT YEAR:2012-13 1 IN THE INCOME TAX APPELLATE TRIBUNAL LUCKNOW BENCH A, LUCKNOW BEFORE SHRI P. K. BANSAL, ACCOUNTANT MEMBER AND SHRI ABY T. VARKEY, JUDICIAL MEMBER ITA NO.352/LKW/2016 ASSESSMENT YEAR:2012-13 INCOME TAX OFFICER-I, FAIZABAD. VS. M/S AGARWAL JEWELLERS, CHOWK, FAIZABAD. PAN:AARFA4555D (APPELLANT) (RESPONDENT) O R D E R PER P. K. BANSAL, A.M. THIS APPEAL HAS BEEN FILED BY THE REVENUE AGAINST THE ORDER OF CIT(A), FAIZABAD DATED 09/03/2016 RELATING TO ASSES SMENT YEAR 2012-13. THE ONLY ISSUE INVOLVED IN THIS APPEAL RELATES TO D ELETION OF ADDITION OF RS.59,45,653/- WHICH WAS MADE BY THE ASSESSING OFFI CER. 2. THE FACTS OF THE CASE, IN BRIEF, ARE THAT THE AS SESSING OFFICER, WHILE FRAMING THE ASSESSMENT, NOTED THAT THE ASSESSEE HAS DISCLOSED OPENING STOCK VALUED AT RS.59,45,653/-. ON PERUSAL OF THE DOWNLOADED ITR FOR PRECEDING ASSESSMENT YEAR 2011-12, IT WAS FOUND THA T THE CLOSING STOCK DISCLOSED BY THE ASSESSEE WAS ZERO. THUS, THERE WA S DIFFERENCE IN THE OPENING STOCK OF CURRENT ASSESSMENT YEAR WITH THE C LOSING STOCK OF PRECEDING ASSESSMENT YEAR. WHEN THE ASSESSEE WAS Q UESTIONED, THE APPELLANT BY SHRI RAJNISH YADAV, D. R. RESPONDENT BY SHRI RAKESH GARG, ADVOCATE DATE OF HEARING 28/07/2016 DATE OF PRONOUNCEMENT 31/08/2016 I.T.A. NO.352/LKW/16 ASSESSMENT YEAR:2012-13 2 ASSESSEE REPLIED VIDE LETTER DATED 12/09/2014 THAT THIS STOCK IS BEING BROUGHT FORWARD FROM THE PRECEDING YEAR TRADING PRO FIT & LOSS/ BALANCE SHEET. IT WAS FURTHER STATED THAT THE ASSESSEE HAS FILED ITS RETURN OF INCOME IN ITR-5 U/S 44AD AND WAS NOT REQUIRED TO FI LL UP THE BALANCE SHEET AND TRADING PROFIT & LOSS ACCOUNT IN THE RETURN OF INCOME. THE ASSESSING OFFICER WAS NOT SATISFIED WITH THE EXPLANATION OF T HE ASSESSEE AND THEREFORE, HE MADE AN ADDITION OF RS.59,45,653/- T REATING THE OPENING STOCK DISCLOSED BY THE ASSESSEE AS SECRET PURCHASE BY THE ASSESSEE ON THE FIRST DAY OF PREVIOUS YEAR RELEVANT TO THE ASSESSME NT YEAR. THE ASSESSEE WENT IN APPEAL BEFORE THE CIT(A). BEFORE THE CIT(A ) THE ASSESSEE SUBMITTED THAT THE ASSESSEE FIRM WAS CONSTITUTED WI TH EFFECT FROM 01/04/2010. PRIOR TO IT, ONE THE PARTNERS SHRI JAG AT NARAIN AGARWAL CARRIED THIS BUSINESS SINCE 1961. AT THE TIME OF FORMATION OF PARTNERSHIP DEED OF ASSETS AND LIABILITY OF PROPERTY BUSINESS OF SHRI J AGAT NARAIN AGARWAL WHICH WERE THERE ON 31/03/2010 WERE TAKEN BY PARTNERSHIP FIRM AS GOING CONCERN. THERE WAS STOCK OF GOLD AND SILVER ORNAME NTS OF TOTAL VALUE OF RS.59,45,653/- AS ON 02/04/2011. THE ACCOUNTS WERE AUDITED U/S 44AB OF THE ACT. THE QUANTITATIVE DETAILS OF OPENING AND C LOSING STOCK ARE MAINTAINED IN AUDIT REPORT. THE ASSESSEE FIRM E-FI LED ITS RETURN U/S 44AD OF THE ACT AS THE TURNOVER WAS LESS THAN RS.60 LAC. THE RETURN WAS FILED IN ITR-5. IT WAS NOT REQUIRED TO FILL UP THE BALANCE SHEET AND TRADING ACCOUNT IN THE RETURN DUE TO WHICH CLOSING STOCK FIGURE AND OTHER FIGURES OF BALANCE SHEET WERE NOT APPEARING IN THE RETURN IN ASSESSMEN T YEAR 2011-12. THE ASSESSEE PRODUCED THE TRADING AND PROFIT & LOSS ACC OUNT AND BALANCE SHEET OF PARTNERSHIP CONCERN AS WELL AS THAT OF THE ASSES SEE FIRM FOR THE ASSESSMENT YEAR 2011-12 AND 2012-13 TO PROVE THE CA RRY FORWARD OF THE STOCK. THE CIT(A), AFTER VERIFYING THE FACTS, DELET ED THE ADDITION. I.T.A. NO.352/LKW/16 ASSESSMENT YEAR:2012-13 3 3. WE HAVE HEARD THE RIVAL SUBMISSIONS, CAREFULLY C ONSIDERED THE SAME ALONG WITH THE ORDERS OF THE TAX AUTHORITIES BELOW. WE NOTED THAT SINCE THE TURNOVER OF THE ASSESSEE WAS LESS THAN RS.60 LA C, THE ASSESSEE WAS NOT REQUIRED TO FILL UP THE TRADING AND PROFIT & LOSS A CCOUNT AND BALANCE SHEET IN ITR-5. THIS IS A FACT THAT THE FIRM WAS CONSTIT UTED ON 01/04/2010 AND AS PER CLAUSE 4 OF PARTNERSHIP DEED, THE COPY OF WH ICH IS AVAILABLE AT PAGE NO. 45 TO 48 OF THE PAPER BOOK, THE ASSESSEE FIRM H AS TO TAKE OVER ALL THE ASSETS AND LIABILITIES OF THE PARTNERSHIP BUSINESS OF SHRI JAGAT NARAIN AGARWAL WHICH WERE THERE ON 31/03/2010 AS A GOING C ONCERN. LEARNED A. R. OF THE ASSESSEE DRAWN OUT ATTENTION TOWARDS PAGE NO. 30 WHICH CONTAINS THE PROFIT & LOSS ACCOUNT AND GIVES THE DE TAILS OF OPENING STOCK, PURCHASE, SALES AND CLOSING STOCK FROM 01/04/2009 T O 31/03/2010, THE COPY OF WHICH IS AVAILABLE ON PAGE NO. 30 OF THE PA PER BOOK. FROM THIS IT IS APPARENT THAT AS ON 31/03/2010 AGARWAL JEWELLERS WAS HAVING THE CLOSING STOCK AT RS.52,80,719/-. AS ON 01/04/2010, THE ASSESSEE HAS DEBITED TOWARDS THE STOCK A SUM OF RS.59,45,653/-. THIS FACT IS APPARENT FROM THE BALANCE SHEET AVAILABLE AT PAGE NO. 31 FOR THE FINANCIAL YEAR 2010-11. THE ASSESSEE HAS ALSO FILED AT PAGE NO. 3 2 THE DETAILS OF ANNUAL PURCHASE, SALES AND PROFIT & LOSS FOR THE FINANCIAL YEAR 2010-11. FROM THIS WE FIND THAT THE ASSESSEE HAS SHOWN OPENING STOCK A T RS.52,87,192/-, PURCHASES AT RS.43,51,963/-, SALES AT RS.54,57,789/ - AND THE CLOSING STOCK AT RS.59,45,653/-. THIS CLOSING STOCK WILL BECOME THE OPENING STOCK FOR THE FINANCIAL YEAR 2011-12 I.E. ASSESSMENT YEAR 201 2-13. WE ALSO NOTED FROM THE COPY OF THE ORDER OF THE COMMERCIAL TAX OF FICER FOR THE IMPUGNED FINANCIAL YEAR 2011-12 THAT THE ASSISTANT COMMISSIO NER (COMMERCIAL TAX) HAS DULY ACCEPTED THE OPENING STOCK OF THE ASSESSEE AT RS.59,45,653/-. WE ALSO NOTED FROM THE COPY OF THE TAX AUDIT REPORT AVAILABLE AT PAGE NO. 12 TO 19 OF THE PAPER BOOK THAT THE TAX AUDITOR HAS SHOWN THE QUANTITATIVE I.T.A. NO.352/LKW/16 ASSESSMENT YEAR:2012-13 4 DETAIL AT PAGE NO. 18 IN RESPECT OF THE OPENING STO CK. IN VIEW OF THIS FACT, IN OUR OPINION, THE CIT(A) HAS RIGHTLY DELETED THE ADDITION. WE, THEREFORE, CONFIRM THE ORDER OF CIT(A) DELETING THE SAID ADDIT ION. 4. IN THE RESULT, THE APPEAL OF THE ASSESSEE STANDS ALLOWED. (ORDER PRONOUNCED IN THE OPEN COURT ON 31/08/2016) SD/. SD/. ( ABY T. VARKEY ) ( P. K . BANSAL ) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED:31/08/2016 *SINGH COPY OF THE ORDER FORWARDED TO : 1. THE APPELLANT 2. THE RESPONDENT. 3. CONCERNED CIT 4. THE CIT(A) 5. D.R., I.T.A.T., LUCKNOW ASSTT. R EGISTRAR