ITO, Panipat V. M/s Durga Iron Foundary, Panipat

ITA 3628/DEL/2011

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 74224 (ITAT-DELHI)
• Duration Of Justice: 2 year(s) 6 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 14-02-2014
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 11-02-2014
• Assessment Year: 2007-2008
• Appeal Filed On: 22-07-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: NIDHI SRIVASTAVA SENIOR
• Keywords: Unexplained investment
• Section: 69C

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL (DELHI BENCH B : NEW DELHI) BEFORE SHRI U.B.S. BEDI, JUDICIAL MEMBER AND SHRI B.C. MEENA, ACCOUNTANT MEMBER ITA NO.3628/DEL./2011 (ASSESSMENT YEAR : 2007-08) ITO, WARD 4, VS. M/S. DURGA IRON FOUNDARY, PANIPAT. G.T. ROAD, SAMALKHA. (PAN : AABFB4358F) (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI ABHISHEK GUPTA, ADVOCATE REVENUE BY : MS. NIDHI SRIVASTAVA, SENIOR DR ORDER PER B.C. MEENA, ACCOUNTANT MEMBER : THIS APPEAL FILED BY THE REVENUE EMANATES FROM THE ORDER OF THE CIT (APPEALS), KARNAL DATED 18.04.2011. THE GROUNDS OF APPEAL TAKEN BY THE REVENUE READ AS UNDER :- 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE, THE LD. CIT (A) HAS ERRED IN DELETING THE ADDITION OF RS.18,53, 010/- ON ACCOUNT OF UNACCOUNTED INVESTMENT IN THE PURCHASE OF RAW MATER IAL OF WHICH SALE OF FINISHED GOODS WAS SHOWN EXCESS BY 102945 KGS. A ND THE ASSESSEE COULD NOT RECONCILE THE DIFFERENCE FROM THE QUANTIT ATIVE DETAILS OF RAW MATERIAL, SPARE PARTS AND FINISHED GOODS MANUFACTUR ED MAINTAINED. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E, THE LD. CIT (A) HAS FURTHER ERRED IN DELETING THE ADDITION WITH OUT APPRECIATING THAT THE EXCESS SALE OF STOCK COULD NOT HAVE BEEN MADE W ITHOUT ITA NO.3628/DEL./2011 2 AVAILABILITY OF UNACCOUNTED STOCK AND AS SUCH THE F UNDS INVESTED IN THE ACQUISITION OF UNACCOUNTED STOCK REPRESENTED UN DISCLOSED INCOME OF THE ASSESSEE. 3. THE APPELLANT CRAVES LEAVE TO ADD OR AMEND THE G ROUNDS OF APPEAL BEFORE THE APPEAL IS HEARD OR DISPOSED OFF. 2. THE ASSESSING OFFICER MADE AN ADDITION OF RS.18, 43,010/- BY REJECTING THE BOOKS OF ACCOUNT U/S 145(3) OF THE ACT HOLDING THE SAME AS UNEXPLAINED INVESTMENT U/S 69C OF THE INCOME-TAX ACT, 1961 FOR PURCHASES O F MATERIAL OUT OF THE BOOKS OF ACCOUNT. THE CIT (A) HAS DELETED THE ADDITION BY H OLDING THAT THIS ADDITION HAS BEEN MADE WITHOUT DETECTING ANY ITEM FOR WHICH PURC HASE HAS BEEN MADE OUT OF BOOKS AND THE CORRESPONDING SALES HAS BEEN INCLUDED IN THE SALES, THUS UNACCOUNTED PURCHASES WERE ALREADY TAXED SHOWN IN ACCOUNTS BOOK . LD. DR RELIED ON THE ORDER OF ASSESSING OFFICER. LD. AR SUBMITTED THAT ONCE S ALES ARE FULLY RECORDED AND NO SPECIFIC DEFECT HAS BEEN FOUND IN PURCHASES, THE CI T (A) WAS JUSTIFIED IN DELETING THE ADDITION. LD. AR ALSO RELIED ON THE DECISION OF ITAT, JODHPUR BENCH IN THE CASE OF ITO VS. NARESH FABRICS AND ITAT DELHI BENCH D DECISION IN THE CASE OF KAITHAL TIMBERS PVT. LTD. VS. ACIT, KARNAL CIRCLE, KARNAL IN ITA NO.4464/DEL/2012 DATED 17.05.2012 AND INDUSTRIAL TR ADING COMPANY VS. ITO REPORTED IN 50 TTJ 177. 3. AFTER HEARING BOTH THE SIDES, WE FIND THAT THE A SSESSING OFFICER HAS NOT DOUBTED THE QUANTUM OF SALES. THE SALES HAVE BEEN ACCEPTED WHICH INCLUDES THE SALES CORRESPONDING TO ALLEGE UNACCOUNTED PURCHASES . IT IS ALSO NOTICED THAT THE ASSESSING OFFICER HAS NOT SPECIFIED WHICH ITEMS OF GOODS WERE PURCHASED UNACCOUNTED. THE ITAT, JODHPUR BENCH IN ITO VS. NA RESH FABRICS HELD AS UNDER :- ITA NO.3628/DEL./2011 3 THERE IS HOWEVER, FORCE IN THE OTHER CONTENTION OF THE COUNSEL OF THE ASSESSEE THAT CORRESPONDING SALES IN RESPECT OF UNRECORDED PURCHASES HAVE BEEN DULY RECORDED BY THE ASSESSEE I N HIS BOOKS OF ACCOUNT AND ACCORDINGLY THE VALUE OF PURCHASES INCL UDING PROFIT THEREON HAS GOT DECLARED IN THE INCOME RETURNED BY THE ASSESSEE AND AS SUCH ADDITIONS MADE ON ACCOUNT OF UNEXPLAINED IN VESTMENT IN SUCH PURCHASES WOULD AMOUNT TO DOUBLE TAXATION, INA SMUCH AS THE ENTIRE AMOUNT OF SALES CORRESPONDING TO THE UNRECOR DED PURCHASES INCLUDING PROFIT THEREON STANDS DECLARED BY THE ASS ESSEE AND HENCE NO SEPARATE ADDITIONS ON THIS ACCOUNT IS WARRANTED. EVEN IF THE ADDITIONS ARE MADE ON ACCOUNT OF UNEXPLAINED INVEST MENT IN PURCHASE, SIMILAR AMOUNT OF ALLOWANCE IS REQUIRED T O BE GRANTED SIMULTANEOUSLY ON ACCOUNT OF EXPENDITURE ON PURCHAS ES NOT RECORDED IN THE BOOKS OF ACCOUNT OF THE ASSESSEE AN D AS SUCH REMAINED UNCLAIMED. THEREFORE, CONSIDERING ALL THE FACTS OF THE CASE, AS ALSO THE MATERIAL ON RECORD, THERE IS NO I NFIRMITY IN THE IMPUGNED ORDER OF THE CIT (A). ITAT, DELHI BENCH D IN THE CASE OF KAITHAL TIMBER S PVT. LTD. VS. ACIT HELD AS UNDER :- 9. HAVING HEARD THE RIVAL CONTENTIONS IN THE LIGHT OF THE MATERIAL BROUGHT ON RECORD, WE FIND THAT THE ASSESSING OFFIC ER MADE AN ADDITION OF ` 40,393/- REPRESENTING GROSS PROFIT IN RESPECT OF OU TWARD ISSUANCE FROM THE ASSESSEES STOCK REGISTER. THESE OUTWARD ISSUANCES WERE CONSIDERED BY THE ASSESSING OFFICER AS SALES M ADE BY THE ASSESSEE. ALSO, THE ASSESSING OFFICER MADE AN ADDI TION OF ` 12,83,630/-, REPRESENTING SALES MADE BY THE ASSESSE E AS PER SALES BILLS AND RECORDED IN THE ASSESSEES BOOKS OF ACCOU NT. THE ASSESSING OFFICER OBSERVED THAT THE PURCHASES OF THESE ITEMS SOLD HAD NOT BEEN RECORDED IN THE ASSESSEES BOOKS OF ACCOUNT, SINCE THE CORRESPONDING ENTRIES OF THESE SALES WERE ABSENT IN THE STOCK REG ISTER OF THE ASSESSEE. THIS MISMATCH HAS BEEN EXPLAINED BY THE ASSESSEE BY CONTENDING THAT IT WAS NOT, IN FACT, A MISMATCH, BUT IT APPEARED TO BE SO DUE TO THE NOMENCLATURE ONLY, FROM WHICH, NO ADVERSE INFERENCE IS CALLED FOR. ALTERNATIVELY, THE ASSESSEE HAS CONTENDED THAT SINC E THE ENTIRE SALES STAND ACCOUNTED FOR, NO FURTHER ADDITION ON ACCOUNT OF PURCHASES OF THESE ITEMS SOLD OUGHT TO HAVE BEEN MADE BY THE ASS ESSING OFFICER AND THE ASSESSING OFFICER WAS NOT JUSTIFIED IN DOIN G SO. NOW, IT IS SEEN THAT AS EXPLAINED BY THE ASSESSEE, IT IS ONLY THAT IN THE SALES INVOICES A PARTICULAR CATEGORY HAS BEEN MENTIONED, WHEREAS IN THE STOCK REGISTER, THE ISSUANCE FINDS RECORDED UNDER T HE SPECIFIC QUALITY OF GOODS SOLD AGAINST THE INVOICES. THUS, INDEED, I T IS ONLY DUE TO THE ITA NO.3628/DEL./2011 4 NOMENCLATURE THAT THE ALLEGED DIFFERENCE IN THE DES CRIPTION APPEARS. HOWEVER, IN THE FACTS OF THE CASE, EVEN IF THE ASSE SSEES EXPLANATION IS NOT CONSIDERED, SO FAR AS REGARDS THE SALES WHICH H AVE BEEN FULLY ACCOUNTED FOR IN THE ASSESSEES BOOKS OF ACCOUNT, N O FURTHER ADDITION REGARDING ACCOUNTED PURCHASES CORRESPONDING TO THES E SALES OUGHT TO HAVE BEEN MADE. THUS, IN OUR CONSIDERED OPINION, TH E ADDITION OF ` 12,83,630/- MADE BY THE ASSESSING OFFICER BY ASSUMI NG UNACCOUNTED PURCHASES IS INCORRECT AND THE SAME IS DIRECTED TO BE DELETED. FINDING THE ASSESSEES GRIEVANCE JUSTIFIED TO THIS EXTENT, THE SAME IS ACCEPTED TO THIS EXTENT ONLY. ORDERED ACCOR DINGLY. IN VIEW OF THESE FACTS, WE FIND NO FAULT IN THE ORD ER OF CIT (A). WE DISMISS THIS GROUND OF REVENUES APPEAL. 4. IN THE RESULT, THE APPEAL OF THE REVENUE STANDS DISMISSED. ORDER PRONOUNCED IN OPEN COURT ON THIS 14 TH DAY OF FEBRUARY, 2014. SD/- SD/- (U.B.S. BEDI) (B.C. MEENA) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED THE 14 TH DAY OF FEBRUARY, 2014 TS COPY FORWARDED TO: 1.APPELLANT 2.RESPONDENT 3.CIT 4.CIT(A), KARNAL. 5.CIT(ITAT), NEW DELHI. AR, ITAT NEW DELHI.