Appeal details
Counselvise Citation
[2011] 134 COUNSELVISE.COM (IT) 9206 (ITAT-LUCKNOW)
Assessee PAN
Bench
Appeal Number
Duration Of Justice
7 month(s) 19 day(s)
Appellant
Respondent
Appeal Type
Income Tax Appeal
Pronouncement Date
07-01-2011
Appeal Filed By
Department
Bench Allotted
A
Next Hearing Date
06-01-2011
Assessment Year
2007-2008
Appeal Filed On
19-05-2010
Judgement Text
IN THE INCOME TAX APPELLATE TRIBUNAL LUCKNOW BENCH A : LUCKNOW BEFORE SHRI H. L. KARWA, HONBLE VICE PRESIDENT AND SHRI N. K. SAINI, ACCOUNTANT MEMBER I.T.A. NO.353/LUC/10 ASSESSMENT YEAR:2007-2008 A.C.I.T.-II, VS. SHRI SHITEJ DHAWAN, KANPUR. 122/235, FAZAL GANJ, KANPUR. (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI ANADI VERMA, D. R. RESPONDENT BY: SHRI RAKESH GARG, ADVOCATE ORDER ORDER ORDER ORDER PER N. K. SAINI: PER N. K. SAINI: PER N. K. SAINI: PER N. K. SAINI: THIS APPEAL, FILED BY THE DEPARTMENT, IS DIRECTED AG AINST THE ORDER DATED 15/03/2010 OF CIT(A)-II, KANPUR RELEVAN T TO ASSESSMENT YEAR 2007-2008. IN THIS APPEAL THE DEPARTMENT HAS RA ISED THE FOLLOWING GROUNDS: 1. THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS)- LL, KANPUR HAS ERRED IN LAW AND ON FACTS IN DELETING THE ADDITION OF `89,87,576/- ON ACCOUNT OF EXCESS STOCK FO UND AT THE TIME OF SURVEY UNDER SECTION 133A OF INCOME T AX ACT, 1961, WITHOUT APPRECIATING THE FACTS OF THE CASE AND MATERIAL BROUGHT ON RECORDS BY THE ASSESSING OFFICER. 2. THE LD. COMMISSIONER OF INCOME TAX (APPEALS)-LL, KANPUR HAS ERRED IN LAW AND ON FACTS IN IGNORING TH E FACT 2 THAT DURING THE COURSE OF SURVEY UNDER SECTION 133A OF THE INCOME TAX ACT, 1961 THE ASSESSEE HAD VOLUNTARILY ADMITTED EXCESS STOCK FOUND AND ACCORDINGLY SURRENDERED THE UNDISCLOSED INCOME OF `90,00,000/- FOR THE F. Y. 2006- 07. DURING THE SURVEY OPERATION STOCK INVENTORY WAS PREPARED BY THE SURVEY TEAM WITH ASSISTANCE OF THE ASSESSEE, QUANTITY RATE AND VALUE WAS DULY CERTIFIED BY THE ASSESSEE. THE RATE WAS APPLIED AS PROVIDED BY THE ASSESSEE. 3. THAT THE ORDER OF THE LD. COMMIS1IONER OF INCOME TAX (APPEALS)-II, KANPUR BEING ERRONEOUS IN LAW AND O N FACTS THAT THE ASSESSEE HAS FILED AFFIDAVIT ON 10.02.2008 FOR RETRACTION OF HIS STATEMENT ON OATH DATED 27.09.2007 I.E. AFTER A GAP OF PERIOD OF 8 MONTHS. LD.CIT(A)-II, KA NPUR HAS IGNORED THE RATIO OF THE JUDGMENT IN THE CASE OF K.V.NARASIMHAN VS. INCOME TAX OFFICER (1994) 209 ITR (MAD), WHEREIN THE HON'BLE COURT HELD AS UNDER: 'IF IT IS TRUE THAT CONFESSION STATEMENTS HAD BEEN OBTAINED UNDER COERCION, THE ACCUSED WOULD NOT HAVE SIMPLY KEPT QUITE WITHOUT IMMEDIATELY OR AT LEAST WITHIN A REASONABLE TIME RETRACTING THEM.' THAT IS, RETRACTION CAN BE MADE ONLY WITHIN A REASONABLE TIME. 4. THE COMMISSIONER OF INCOME TAX (APPEALS)-II KANPUR HAS FAILED TO ESTABLISH THAT THE CONCLUSION OF THE ASSESSIN G OFFICER WAS INCORRECT. AS SUCH HIS ORDER IS BAD IN LAW . THEREFORE, THE ORDER OF THE LD. CIT (A)-II, KANPUR DATED 15.03.2010 NEEDS TO BE QUASHED AND THE ORDER PASSED BY THE ASSESSING OFFICER DATED 24.12.2009 TO BE RESTORED. 5. THAT THE APPELLANT CRAVES LEAVE TO MODIFY ANY OF THE GROUNDS OF APPEAL MENTIONED ABOVE AND/OR TO ADD ANY FRESH GROUNDS AS AND WHEN IT IS REQUIRED TO DO SO. 2. FROM THE ABOVE GROUNDS IT WOULD BE CLEAR THAT TH E ONLY GRIEVANCE OF THE DEPARTMENT IN THIS APPEAL RELATES TO THE DELET ION OF ADDITION OF 3 `89,87,576/- MADE BY THE ASSESSING OFFICER ON ACCOUNT O F EXCESS STOCK FOUND AT THE TIME OF SURVEY U/S 133A OF THE I.T. ACT, 1961. 3. THE FACTS RELATED TO THIS ISSUE, IN BRIEF, ARE THAT THE ASSESSEE FILED HIS RETURN OF INCOME ON 31/10/2007 DECLARING AN INCO ME OF `3,10,38,600/-. SUBSEQUENTLY, THE RETURN WAS REVISED ON 03/03/2008 SHOWING TOTAL INCOME OF `3,14,21,790/-. IN THE REV ISED RETURN FILED BY THE ASSESSEE, THERE WAS NO CHANGE IN THE INCOME SHOWN UN DER THE HEAD INCOME FROM BUSINESS BUT THE ASSESSEE HAD DECLARED INCOME FROM OTHER SOURCES AT `6,41,571/- AS AGAINST `2,48,372 /- SHOWN IN THE ORIGINAL RETURN. BESIDES THIS THE ASSESSEE ALSO REVISED TH E DEDUCTION UNDER CHAPTER VI OF THE ACT TO `1,10,000/- AS AGAINST `1,00,000/- CLAIMED IN THE ORIGINAL RETURN OF INCOME. IN THIS C ASE A SURVEY U/S 133A WAS CONDUCTED ON 27/09/2007 AT THE BUSINESS PREMISES OF T HE ASSESSEE. SUBSEQUENTLY, THE CASE WAS SELECTED FOR SCRUTINY. THE ASSESSING OFFICER POINTED OUT IN THE ASSESSMENT ORDER AS UN DER: 'DURING THE COURSE OF SURVEY, HUGE STOCK OF SADDLER ITE MS WAS FOUND AND PHYSICALLY INVENTORISED AT THE VALUE OF `3, 46,56,179/-. DURING THE COURSE OF SURVEY PROCEEDINGS IN HIS STATEMENT ON OATH, THE ASSESSEE HAS ADMITTED THAT HIS BOOKS OF ACCOUNTS WERE MAINTAINED ON COMPUTER SYSTEM. ON VERIFICATION OF THE STOCK WITH THE BOOKS OF ACCOUNT MAINTAINED ON COMPUTER SYSTEM DUR ING THE COURSE OF SURVEY, IT WAS FOUND THAT STOCK HAD BEEN ENT ERED AT THE VALUE OF `2,56,68,603/-. WHILE RECORDING THE STATEM ENT ON OATH, THE ASSESSEE WAS REQUESTED TO EXPLAIN THE DIFFERENCE OF ST OCK 4 SHOWN IN COMPUTER SYSTEM AND PHYSICALLY INVENTORISED BY THE DEPARTMENT. THE ASSESSEE IN HIS STATEMENT ON OATH AT POIN T NO. 16 HAS ADMITTED THAT THE DIFFERENCE WAS DUE TO NON-MA INTAINING OF STOCK REGISTER AND RELATED TO F.Y.2006-07. ACCORDI NGLY THE ASSESSEE SURRENDERED `90,00,000/- AS UNDISCLOSED INCOME FOR F.Y.2006-07 BY GIVING THE CHEQUE NO.789765 FOR `30, 29,400/- TO BE TREATED AS TAX ON THIS UNDISCLOSED INCOME. THE ASSESSEE HAD ALSO STATED IN STATEMENT ON OATH THAT HE WOULD ENHANCE HIS REGULAR INCOME BY THIS UNDISCLOSED INCOME IN THE RETUR N FOR F.Y.2006-07 RELEVANT TO A.Y.2007-08 ' 'ON 10.06.2008, THE ASSESSEE FILED AFFIDAVIT FOR RETRAC TION OF HIS STATEMENT ON OATH RECORDED DURING THE COURSE OF SURVEY PROCEEDINGS U/S 133A OF THE ACT STATING THAT HE UNDER DURESS, MENTAL STRESS, WITHOUT FREE AND FAIR WILL AND IN THE A BSENCE' OF ANY LEGAL SUPPORT SIGNED THE STATEMENT AND SURRENDERE D A SUM OF RS.90,00,000/- AS UNEXPLAINED INCOME FOR A.Y.2007 -08.' 3.1 THE ASSESSING OFFICER WHILE FRAMING THE ASSESSMENT ORDE R DID NOT ACCEPT THE RETRACTION MADE BY THE ASSESSEE AND MADE AN ADDITION OF `89,87,576/- ON ACCOUNT OF EXCESS STOCK FOUND. THE ASSE SSING OFFICER ALSO MADE CERTAIN OTHER ADDITIONS. WHILE MAKING THE ABOVE ADDITION, THE ASSESSING OFFICER DID NOT FIND MERIT IN THE FOLLOWI NG CONTENTION OF THE ASSESSEE: 'FURTHER REGARD TO THE SURRENDER FOR STOCK DURING THE COURSE OF SURVEY, IT IS SUBMITTED THAT THE SAID SURRENDER WAS MADE IN HASTE UNDER A WRONG IMPRESSION. THE SURRENDER MADE AT THE TIME OF SURVEY HAS BEEN RETRACTE D BY THE ASSESSEE BY FILING AN AFFIDAVIT DATED 12TH MARCH 2008. THE REASON FOR RETRACTION HAVE ALREADY BEEN FURNISHED BY US. IT IS SUBMITTED THAT THE SURRENDER MADE BEING NOT VOLUNTARY, IN HASTE, UNDER PRESSURE, BEING DULY RETRACTED, AND THE SAME IS NOT ACCEPTABLE. 5 THERE IS NO DISCREPANCY IN THE STOCK AS MAINTAINED BY U S AND FOUND AT THE TIME OF SURVEY. THERE IS NO EXCESS STOC K NOR THERE IS ANY UNDERVALUATION OF STOCK. ENTIRE PURC HASE AND SALES ARE DULY ACCOUNTED FOR AND RECORDED IN THE BOOKS OF ACCOUNT. THE STOCKS ARE STORED/MAINTAINED ON DIFFER ENT FLOORS OF THE SAME PREMISES; COMPLETE DETAILS OF THE STOC K ARE MAINTAINED ON THE COMPUTER. THE STOCK AVAILABLE ON THE DATE OF SURVEY WAS NOT PHYSICALLY VALUED BUT THE V ALUE WAS ESTIMATED ON HERESAY BASIS OR ON APPROXIMATION BASIS. THE STOCKS VALUED AT THE TIME OF SURVEY DOES NOT REFLE CT THE TRUE AND CORRECT STATE OF AFFAIRS OF THE BUSINESS FO R THE REASON THAT THE SAME WERE NOT PHYSICALLY VALUED IN THE MANNER IT SHOULD OUGHT TO HAVE BEEN DONE. AS PER OUR BOOKS OF ACCOUNT THE TOTAL VALUE OF STOCK AS ON THE D ATE OF SURVEY COMES TO `4,01,88,615.34, WHILE AS PER THE ESTIMATION MADE BY THE DEPARTMENT MADE ON THE DATE O F SURVEY THE SAME COMES TO `3,46,56,179.00. THE POSITION OF STOCK AS WORKED OUT BY US IS BASED ON THE ACTUAL FIGURES OF PURCHASES AND SALE MADE UPTO THAT TIME. OUR SUBMISSION THAT THE STOCK ON DATE OF SURVEY HAS NOT BEEN VALUED A S IT SHOULD OUGHT TO HAVE BEEN VALUED IS BASED ON THE FACT THAT LOOKING TO THE VOLUME OF THE STOCK, IT IS NOT PRACTIC AL NOR POSSIBLE TO ACCOUNT FOR EACH AND EVERY ITEM OF STOCK I N A SINGLE DAY. THE ITEMS ARE MULTIPLE VARYING IN SIZE AND QUALITY, CONSIDERABLE AMOUNT OF LABOUR AND TIME HAS T O BE PUT IN FIRST TO SEGREGATE THE STOCK, PHYSICALLY IDENTIF Y THE SAME, COUNT THE PIECES AND THEN APPLY THE RATE AT WHI CH THEY HAVE BEEN PURCHASED. NOT A SINGLE ITEM HAS BEEN VALUED IN THIS MANNER. EVEN THE QUALITY OF STOCK HAS NOT BEEN DEMARCATED. FO R INSTANCE, ENGLISH LEATHER PURCHASES IS OF DIFFERENT QUAL ITY AND THICKNESS, HAVE ALL BEEN VALUED AT A GENERAL RATE . THE RATE VARIES WITH THE EXCHANGE RATE. THE QUANTITY HAS ALSO BEEN DOUBTED. IT IS SUBMITTED THAT ENGLISH LEATHER IS N OT PRODUCED IN INDIA. THE ENTIRE PURCHASES IS IMPORTED, THE QUANTITY CANNOT BE EXCESSIVE. FURTHER LEATHER IS IMPOR TED IN DIFFERENT SIZES AND IN DIFFERENT UNITS OF MEASUREMEN T. NONE OF THE LEATHER PIECES WERE PHYSICALLY MEASURED I N ABSENCE OF THE SAME BEING PHYSICALLY MEASURED, A GENERA L RATE CAN NEVER BE APPLIED SAME IS THE CASE OF OTHER I TEMS WHICH WERE ALSO NOT MEASURED. 6 MOREOVER THE STOCKS BEING STORED IN THREE STOREY'S COULD NOT BE VALUED IN A SINGLE DAY WITHOUT PROPER GADGETS. IN ABSENCE OF THE PROPER EXERCISE OF VALUATION OF STOCKS, IT CANNOT BE SAID NOR CONCLUDED THAT THERE WAS EXCESS STOCK . THIS SUBMISSION OF OURS STANDS FURTHER CORROBORATED BY THE FACT THAT NOT A SINGLE PIECE OF PAPER FAR LESS ANY BIL L DOCUMENT WAS FOUND SUGGESTING THAT GOODS HAVE BEEN PURCHASED OUT OF BOOKS. HAD THE SURVEY TEAM LOOKED INT O THE PURCHASE BILLS AND TALLIED THE SAME WITH REFERENCE TO STOCK PHYSICALLY FOUND THEY THEMSELVES WOULD HAVE FOUND THAT THERE IS NO DISCREPANCY IN THE STOCK FAR LESS THER E BEING ANY EXCESS STOCK. THE OTHER THING IS THAT THE STOC K LIST TAKEN OUT FROM THE COMPUTER DOES NOT REFLECT THE TRUE STATE OF AFFAIRS, AS IT IS A PARTIAL AND NOT COMPLETE L IST. IT IS NOT KNOWN AS TO HOW THE STOCK INVENTORY WAS TAKEN OUT AND FOR WHICH PARTICULAR DATE. AS PER THE COMPUTER SOFTW ARE USED BY THE ASSESSEE THERE ARE A NUMBER OF WAYS TO KNOW THE STOCK POSITION, SUCH AS FLOOR/GODOWN WISE, ITEM WISE , RATE WISE ETC. THUS THERE IS A STRONG POSSIBILITY THAT T HE COMPLETE LIST OF STOCK MAY NOT HAVE BEEN OBTAINED BY THE SURVEY TEAM. ONE OF THE OPTIONS IS THAT THE STOCK CAN B E VALUED ON MASTER RATES. THE MASTER RATES ARE THE ESTIMATED PURCHASE RATES ENTERED WHILE OPENING OF A NE W ITEM IN THE SOFTWARE, FOR ESTIMATION/COSTING PURPOSES AN D TO KNOW THE DEVIATION BETWEEN THE MARKET PRICE AND THE ESTIMATED PRICE OF AN ITEM. IT CAN BE ENTIRELY DIFFE RENT FROM ACTUAL PURCHASE PRICE WHICH MAY VARY QUITE OFTEN. THE SUM AND SUBSTANCE IS THAT THE STOCKS AT THE TIME OF SURVEY HAVE NOT BEEN PHYSICALLY INSPECTED, SCIENTIFICA LLY VALUED, CANNOT BE RELIED UPON. THERE IS NO OTHER MAT ERIAL SUGGESTING ANY VARIATION IN THE STOCK AS PER BOOKS OR AS PHYSICALLY VERIFIED ON ACCOUNT OF THESE INFIRMITIES TH E STOCK STATEMENT PREPARED BY THE DEPARTMENT SHOULD NOT BE GI VEN WEIGHTAGE. AS SUBMITTED EARLIER, BARING THE STATEMENT RECORDED TH ERE IS NO OTHER MATERIAL SUGGESTING OTHERWISE. IT IS THEREFO RE PRAYED THAT NO ADDITION BE MADE ON ACCOUNT OF THE SURRENDER ALLEGED TO HAVE BEEN MADE. 7 FURTHER WITHOUT PREJUDICE TO THE ABOVE THE METHOD O F VALUATION STOCK IS ALSO AGAINST REGULAR ACCOUNTANCY PO LICY ADOPTED BY US FOR VALUATION OF STOCK. THE STOCK SHOULD HAVE BEEN VALUED AT FIFO AS AGAINST THE SAME HAVE BEEN VALU ED AT MASTER RATES. IF FIFO METHOD IS APPLIED ON THE STOCK LIST PREPARED AT THE TIME OF SURVEY THEN ALSO THE VALUE O F STOCK ALLEGED TO HAVE BEEN FOUND WOULD BE AROUND `2,84,93,907/- ONLY AND NOT `3,46,56,179.00, AS ALLE GED BY THE DEPARTMENT AND ASKED TO HAVE BEEN SURRENDERED. FURTHER THE VALUE OF STOCK AS PER THE STOCK LIST OBTAIN ED BY THE SURVEY TEAM ON 27/09/2007 IS `2,56,68,603/- WHERE AS AS PER THE ESTIMATE MADE BY THE SURVEY TEAM THE STOCK I S VALUED AT `3,46,56,179/-. EVEN FOR THE SAKE OF ARGUM ENT, THOUGH NOT CONCEDED, THE QUANTITY OF STOCK AS ESTIMATE D BY THE SURVEY TEAM IS TAKEN TO BE CORRECT, YET THE V ALUATION SHOULD OUGHT TO BE DONE BY FIFO METHOD AS EXPLAINED EARLIER, THE VALUATION AS PER FIFO METHOD WOULD COME TO `2,84,93,900/- AS AGAINST THE ESTIMATED VALUE OF STOCK AT `3,46,56,179/-. EVEN THEN, THE DIFFERENCE WOULD BE HARDLY `28,25,297 (`2,84,93,900 - `2,56,68,603), IF AT ALL , SUBJECT TO OTHER VERIFICATIONS. MOREOVER, FOR INSTANCE, THE TOTAL STOCK OF BRIDLE, OF DIFFERENT QUALITY IS 923 PCS. THE SAME CONSISTS OF 28 VARIETIES, CARRYING DIFFERENT CODES AND HAVING DIFFERENT COST. T HE SURVEY TEAM HAS VALUED THE BRIDLE ON WHOLESALE BASIS AT A GENERAL RATE OF `3,300/- AND `1,350/-. THIS ITSELF HA S RESULTED IN EXCESS VALUATION OF STOCK TO THE EXTENT O F `11,00,000/- APPROX. WE ARE HEREBY ENCLOSING A COMPLETE LIST OF THE ENTIRE STOCK AS PER OUR BOOKS OF ACCOUNT WITH REFERENCE TO DESCRIPT ION OF QUALITY, QUANTITY AND RATE ALONG WITH A COMPARAT IVE LIST PREPARED BY THE DEPARTMENT ON THE DATE OF SURVEY - ANNEXURE-3. A BARE PERUSAL WOULD SPELL OUT THAT THE ST OCK AS PER BOOKS ARE FAR IN EXCESS AS AGAINST ESTIMATED BY TH E DEPARTMENT. A LIST OF INSTANCES OF ITEMS WHICH WERE NOT THERE IN THE LIST ON THE DATE OF SURVEY ALONG WITH BI LLS OF PURCHASE THEREOF, JUSTIFYING BOTH THE PURCHASE AND VALUATION OF STOCK IS ALSO BEING ANNEXED MARKED AS ANNEXURE-4.' 8 3.2 THE ASSESSING OFFICER MADE THE IMPUGNED ADDITION BY OBSERVING AS UNDER: I HAVE GONE THROUGH THE REPLY DATED 04.12.2009 AS WELL AS EARLIER REPLY FILED BY THE ASSESSEE REGARDING RETRACTION OF SURRENDER OF UNDISCLOSED INCOME. THE CONTENTION OF THE ASSESSEE IS NOT ACCEPTABLE BECAUSE OF THE FACTS OF THE CASE AS MENTIONED HEREUNDER IN DETAI L: (1) IT IS NOT CORRECT TO SAY THAT SURRENDER OF UNDISCL OSED INCOME AMOUNTING TO `90,00,000/- ON ACCOUNT OF EXCE SS STOCK FOUND DURING THE COURSE OF SURVEY WAS NOT VOLUNTA RILY AND UNDER PRESSURE. IN THIS REGARD, IT MAY BE RELEVANT TO MENTION HERE THAT IN REPLY TO QUESTION NO. 16 OF THE STATEMENT ON OATH RECORDED DURING THE COURSE OF SURVEY , THE ASSESSEE HAS VOLUNTARILY ADMITTED TO FOUND EXCESS STOCK AND ACCORDINGLY SURRENDERED THE UNDISCLOSED INCOM E OF `90,00,000/- FOR F.Y. 2006-07 RELEVANT TO ASSESSMENT YEAR UNDER CONSIDERATION. NOT ONLY THIS, THE ASSESSEE ALS O HANDED OVER THE CHEQUE NO. 789765 OF `30,29,400/- A S TAX ON THIS UNDISCLOSED INCOME. (2) THUS, IT IS CLEAR THAT AS PER STATEMENT RECORDED DURING THE COURSE OF SURVEY THE ASSESSEE HAS ACCEPTED THAT THERE WAS NO MANUAL STOCK REGISTER MAINTAINED BY HIM A ND SAME ARE MAINTAINED ON COMPUTER ONLY. AS PER COMPUTER , THE STOCK WAS ENTERED AT THE VALUE OF `2,56,68,403/- AS ON 27.9.2007 I.E. DATE OF SURVEY WHEREAS THE ASSESSEE VIDE HIS REPLY DATED 04.12.2009 FILED DURING THE COURSE OF ASSESSMENT PROCEEDINGS HAS STATED AS UNDER: 'AS PER OUR BOOKS OF ACCOUNT THE TOTAL VALUE OF STOC K AS ON THE DALE OF SURVEY COMES TO `4,01,88,615.34, WHILE AS PER THE ESTIMATION MADE BY THE DEPARTMENT MADE ON THE DATE OF SURVEY THE SAME COMES TO `3,46,56,179.00. THE POSITION OF STOCK AS WORKED OUT BY US IS BASED ON THE ACTUAL FIGURES OF PURCHASE AND SALE MADE UPTO THAT TIME.' 9 AS STATED BY THE ASSESSEE MENTIONED ABOVE, THERE WAS GREAT DIFFERENCE BETWEEN THE STOCK OF `2,56,68,403/- ENTERED IN THE COMPUTER AS ON 27.9.2007 I.E. DATE OF SURVEY AND STOCK OF `4,01,88,615.34 VALUED BY THE ASSESSEE AS ON 27.9.2007. THUS, IT IS ESTABLISHED THAT THERE WAS HUGE STOCK AT THE BUSINESS PREMISES OF THE ASSESSEE, WHICH WAS NOT ENTERED IN THE COMPUTER AT THE TIME OF SURVEY AND, THEREFORE, UNDOUBTEDLY IT CAN BE TREATED OUT OF BOOKS. DIFFERENCE AS POINTED OUT BY THE ASSESSEE EXPLICITLY SHOWS THAT RESULTS BORNE OUT FROM THE BOOKS ARE NOT CORRECT. THE STOCK INVENTORY WHICH IS ANNEXED AS ANNEXURE 'A' OF THE ORDER WAS PREPARED BY THE SURVEY TEAM WITH THE ASSISTANCE OF THE ASSESSEE. EACH AND EVERY PAGE HAS BEEN SIGNED BY THE ASSESSEE CERTIFYING THE QUANTITY, RATE AND VALUE. THE SURVEY TEAM FOUND DIFFERENCE IN QUANTITY OF SOME ITEMS WHICH HAVE BEEN MENTIONED IN THE LIST ITSELF. THE RATE HAS BEEN APPLIED AS PROVIDED BY THE ASSESSEE. DIFFERENCE IN QUANTITY AND VALUE HAS BEEN DULY CERTIFIED AND THERE IS NO AMBIGUITY. (3) NOT ONLY THIS, THE ASSESSEE VIDE REPLY DATED 04.12.2009 FILED DURING THE COURSE OF ASSESSMENT PROCEEDINGS, HAS FURTHER ADMITTED AS UNDER: FURTHER THE VALUE OF STOCK AS PER THE STOCK LIST OBTAINED BY THE SURVEY TEAM ON 27/09/2007 IS `2,56,68,603/- WHEREAS AS PER THE ESTIMATE MADE BY THE SURVEY TEAM THE STOCK IS VALUED AT `3,46,56,179/- EVEN FOR THE SAKE OF ARGUMENT, THOUGH NOT CONCEDED, THE QUANTITY OF STOCK AS ESTIMATED BY THE SURVEY TEAM IS TAKEN TO BE CORRECT, YET THE VALUATION SHOULD OUGHT TO BE DONE BY FIFO METHOD AS EXPLAINED EARLIER, THE VALUATION AS PER FIFO METHOD WOULD COME TO `2,84,93,900/- AS AGAINST THE ESTIMATED VALUE OF STOCK AT `3,46,56,179/-. EVEN THEN, THE DIFFERENCE WOULD BE HARDLY `28,25,297/- (`2,84,93,900/- - `2,56,68,603/-), IF AT ALL, SUBJECT TO OTHER VERIFIC ATION.' IN VIEW OF ABOVE FACTS, IT IS HELD THAT RETRACTION FI LED BY ASSESSEE REGARDING SURRENDER OF UNDISCLOSED INCOME 10 HAS NO MERITS AND SEEMS TO BE FILED AFTER THOUGHT. BY FILING ALLEGED RETRACTION, THE ASSESSEE IS CLEVERLY TRYING TO A VOID FROM TAXATION ON THE UNDISCLOSED INCOME OF `90,00,000 /- VOLUNTARILY SURRENDERED BY HIM DURING THE COURSE OF S URVEY ON ACCOUNT OF EXCESS STOCK NOT SHOWN IN THE BOOKS OF ACCOUNTS FOR F.Y. 2006-07 RELEVANT TO ASSESSMENT YEAR UNDER CONSIDERATION. THEREFORE, THE RETRACTION FILED BY THE ASSESSEE IS REJECTED AND SUM OF `89,87,576/- ON ACCOUNT O F EXCESS STOCK NOT SHOWN IN THE RETURN OF INCOME FOR THE YEAR UNDER CONSIDERATION IS ADDED TO THE TOTAL INCOME OF T HE ASSESSEE. PENALTY PROCEEDINGS U/S271(1)(C) OF THE INCOME FAX ACT, 1961 IS BEING INITIATED SEPARATELY FOR FURNI SHING INACCURATE PARTICULARS BY NOT SHOWING THE EXCESS STOCK FOUND DURING THE COURSE OF SURVEY IN THE RETURN BY TH E ASSESSEE. ADDITION:`89,87,576/- 4. THE ASSESSEE CARRIED THE MATTER TO LEARNED CIT(A) WH O DELETED THE ADDITION BY OBSERVING AS UNDER: 3.3 ON PERUSAL OF RECORDS, IT IS SEEN THAT THE SURVEY P ARTY HAD A COPY OF STOCK STATEMENT (EXTRACTED FROM THE COMPUTER OF THE APPELLANT) WHICH SHOWED STOCK AS ON TH AT DAY AT `2,56,68,603/- WHICH ON STOCK TAKING WAS FURTH ER INCREASED BY THE SURVEY PARTY BY A SUM OF `89,87,576.- . SUBSEQUENTLY DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE APPELLANT RETRACTED HIS STATEMENT IN HIS AFFIDAVIT AS UNDER: '3. THAT THE DEPONENT UNDER DURESS, MENTAL STRESS, WITHOUT FREE AND FAIR WILL AND IN THE ABSENCE OF ANY LEGAL SUPPORT SIGNED THE STATEMENT AND SURRENDERED A SUM OF `90,00,000/- (RS. NINETY LACS) AS UNEXPLAINED INCOME OF A.Y.2007-08. 4. THAT DURING THE COURSE OF SURVEY NO INCRIMINATING MATERIAL WAS FOUND FROM THE BUSINESS PREMISES OF THE ASSESSEE WHICH SUGGEST CONCEALMENT OF ANY INCOME AND NO PROPER STOCK TAKING WAS DONE. NO 11 INVENTORY WAS PREPARED OF EACH ITEM OF STOCK BECAUSE IT WAS NOT POSSIBLE TO COUNT AND TAKE PHYSICAL STOCK OF EACH ITEM IN FEW HOURS. 3.4 THE APPELLANT ALSO FILED DURING THE COURSE OF ASSESSMENT A DETAILED STOCK STATEMENT AS ON THE DATE OF THE SURVEY SHOWING BOOK STOCKS OF `4,01,88,615/-. THIS STOCK SEEMS TO BE MUCH HIGHER THAN `3,46,56,179/- WHIC H WAS COMPUTED BY THE SURVEY PARTY AFTER ADDING EXCESS STOCK OF `89,87,576/- (I.E. `2,56,68,603/- + `89,87, 576/-). THUS, IT WAS SUBMITTED BY THE APPELLANT THAT NO COGNIZ ANCE COULD BE TAKEN OF THE STOCK ESTIMATED BY THE SURVEY TE AM OR OF THE STATEMENT MADE BY THE APPELLANT DURING THE COURSE OF SURVEY AS IT WAS NOT BASED ON ANY ACTUAL FACTS. 3.10 UNDER THESE FACTS AND CIRCUMSTANCES OF THE CASE AN D LEGAL POSITION EMANATING FROM THE AFORESAID CASES, WITH OUT GOING INTO THE MERITS OF THE CASE (VIS-A-VIS QUANTIFICA TION OF EXCESS STOCK), I HOLD THAT IN THE FACE OF RETRACTION B Y THE ASSESSEE AND SINCE THERE WAS NO MATERIAL EVIDENCE IN POSSESSION OF THE ASSESSING OFFICER, IT WAS LEGALLY INCORREC T ON THE PART OF THE ASSESSING OFFICER TO MAKE THE SAID ADDITION OF `89,87,576/- IN THIS YEAR ON ACCOUNT OF EXCESS STOCK FOUND AT THE TIME OF SURVEY. RELIANCE WAS PLACED ON THE FOLLOWING CASE LAWS: (1) VINOD SOLANKI VS UOI (SC) (2) CIT VS. UTTAM CHAND JAIN (BOM) (3) TDI MARKETING (P) LTD. VS. ACIT 28 SOT 215 (DELHI) (4) ACIT VS. RAVI AGRICULTURAL INDUSTRIES [2009] 121 TTJ ( AGRA) (TM) 903 (5) DCIT VS. PREMSONS (ITAT MUMBAI) (6) CIT VS. S. KHADER KHAN SON [2008] 300 ITR 157 (MAD) NOW THE DEPARTMENT IS IN APPEAL. 5. DURING THE COURSE OF HEARING THE LEARNED COUNSEL F OR THE ASSESSEE, AT THE VERY OUTSET, STATED THAT THE ISSUE IS SQUARE LY COVERED 12 BY THE EARLIER ORDER DATED 11/11/2010 OF THE ITAT L UCKNOW BENCH B HAVING THE SAME CONSTITUTION IN THE CASE OF DY. CIT-II , KANPUR VS. SURENDRA KUMAR DHAWAN IN I.T.A. NO.422/LUC/10 FOR A SSESSMENT YEAR 2007-2008. IT WAS SUBMITTED THAT THE ASSESSEE IS THE SON OF SHRI SURENDRA KUMAR DHAWAN AND SURVEY WAS CONDUCTED SIMULTA NEOUSLY ON 27/09/2007. IT WAS POINTED OUT THAT THE FACTS OF THE PRESENT CASE ARE IDENTICAL TO THE FACTS INVOLVED IN THE CASE OF SHRI SURENDRA KUMAR DHAWAN AND THE ADDITION WAS ALSO MADE BY THE ASSESSING OF FICER IN THE SIMILAR MANNER WHICH HAS BEEN DELETED BY THE LEAR NED CIT (A) AS WAS DONE IN THE AFORESAID REFERRED TO CASE OF SHRI SUR ENDRA KUMAR DHAWAN. COPY OF THE ORDER DATED 11/11/2010 WAS FURN ISHED. 6. IN HIS RIVAL SUBMISSIONS, THE LEARNED D. R. ALTHOUGH SUPPORTED THE ORDER OF THE ASSESSING OFFICER BUT COULD NOT CONTROVER T THE AFORESAID CONTENTION OF THE LEARNED COUNSEL FOR THE ASSESSEE. 7. AFTER CONSIDERING THE RIVAL SUBMISSIONS AND THE MATER IAL ON RECORD, IT IS NOTICED THAT THE FACTS OF THE PRESENT CASE ARE IDENTICAL TO THE FACTS INVOLVED IN THE CASE OF DY. CIT-II, KANPUR VS. SURENDRA KUMAR DHAWAN (FATHER OF THE ASSESSEE) IN I.T.A. NO.422/LUC/10 FOR ASSESSMENT YEAR 2007-2008 (SUPRA). IN THE SAID CASE, THE RELEVAN T FINDINGS, IN ORDER DATED 11/11/2010, HAVE BEEN GIVEN AS UNDER: 13 7. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND CAREFULLY GONE THROUGH THE MATERIAL AVAILABLE ON TH E RECORD. IN THE INSTANT CASE, IT IS NOT IN DISPUTE THAT A SURVEY WAS CONDUCTED ON 27/09/2007 AND SOME EXCESS STOCK WAS FOUND DURING THE COURSE OF SURVEY BY THE SURVE Y PARTY. THE ASSESSEE DURING THE COURSE OF SURVEY SURRENDERED THE EXCESS STOCK FOUND AS UNDISCLOSED INCOME. LATER ON, THE ASSESSEE RETRACTED FROM THE STATEMENT BY STATING THAT THE SAID SURRENDER WAS UNDER DURESS, MENTAL STRESS, WITHOUT FREE AND FAIR WILL AND ALSO FURNISHED AN AFFIDAVIT IN SUPPORT OF THE ABOVE RETRACTION. IT W AS ALSO STATED IN THE AFFIDAVIT THAT DURING THE COURSE OF SURV EY NO INCRIMINATING MATERIAL WAS FOUND WHICH SUGGESTED CONCEALMENT OF ANY INCOME AND THAT NO PROPER STOCK TAKING WAS DONE. IT WAS ALSO STATED THAT NO INVENTORY WAS PREPARED OF EACH ITEM OF STOCK BECAUSE IT WAS NOT POSSI BLE TO COUNT AND TAKE PHYSICAL STOCK OF EACH ITEM IN FEW HOURS. THE ASSESSING OFFICER ALTHOUGH DID NOT FIND MERIT IN TH E ABOVE SUBMISSIONS OF THE ASSESSEE AND CONSIDERED THE SAME AS AN AFTER THOUGHT BUT THE FACTS REMAINED THAT T HE EXCESS STOCK, IF ANY, WAS FOUND DURING THE COURSE OF SURV EY ON 27/09/2007 WHICH ADMITTEDLY FALLS IN THE PREVIOUS YEAR 2007-2008 RELEVANT TO ASSESSMENT YEAR 2008-2009 AND NOT IN THE PREVIOUS YEAR 2006-2007 RELEVANT TO ASSESSMENT YEAR UNDER CONSIDERATION I.E. ASSESSMENT YEAR 2007-2008 AND NOTHING IS BROUGHT ON RECORD TO SUBSTANTIATE THAT THE EXCESS STOCK FOUND DURING THE COURSE OF SURVEY WAS ALSO AVAILABLE WITH THE ASSESSEE AT THE END OF THE PREVIOUS Y EAR I.E. ON 31/03/2007 RELEVANT TO ASSESSMENT YEAR UNDER CONSIDERATION I.E. 2007-2008. IN THAT VIEW OF THE M ATTER, WE ARE OF THE VIEW THAT THE LEARNED CIT (A) WAS FULL Y JUSTIFIED IN HOLDING THAT ANY EXCESS STOCK FOUNDING DUR ING THE SURVEY IN FINANCIAL YEAR 2007-2008 SHOULD PERTAIN TO ASSESSMENT FOR THE FINANCIAL YEAR 2007-2008 AND ASSESSMENT YEAR 2008-2009 UNLESS THERE WERE DOCUMENTS TO PROVE THAT SUCH EXCESS STOCK RELATED TO THE EARLIER YEAR. HOWEVER, IN THE PRESENT CASE, NOTHING IS BROUGHT ON RE CORD THAT THE EXCESS STOCK FOUND DURING THE COURSE OF SURVEY WAS RELATED TO THE EARLIER YEARS AND WAS AVAILABLE TO THE ASSESSEE ON THE CLOSE OF THE PERIOD RELEVANT TO ASSESSMENT YEAR UNDER CONSIDERATION. WE, THEREFORE, DO NOT SEE ANY 14 VALID GROUND TO INTERFERE WITH THE FINDINGS OF THE C IT (A). IN THAT VIEW OF THE MATTER, WE DO NOT SEE ANY MERIT IN THIS APPEAL OF THE DEPARTMENT. 7.1 SINCE THE FACTS OF THE PRESENT CASE ARE SIMILAR TO THE FACTS INVOLVED IN THE CASE OF DY. CIT-II, KANPUR VS. SUREN DRA KUMAR DHAWAN IN I.T.A. NO.422/LUC/10 FOR ASSESSMENT YEAR 2007-2008, SO RESPECTFULLY FOLLOWING THE AFORESAID REFERRED TO ORDER OF THE TR IBUNAL, WE DO NOT SEE ANY MERIT IN THIS APPEAL OF THE DEPARTMENT. 8. IN THE RESULT, THE APPEAL IS DISMISSED. (THE ORDER WAS PRONOUNCED IN THE OPEN COURT ON 07/01 /2011) SD/. SD/. ( H. L. KARWA ) (N. K. SAINI) VICE PRESIDENT ACCOUNTANT MEMBER DATED: 07/01/2011 *SINGH COPY FORWARDED TO THE: 1. APPELLANT. 2. RESPONDENT. 3. CIT (A) 4. CIT 5. DR. ASSISTANT REGISTRAR
