Sh. Anil Kumar, Agra V. Addl. C.I.T., Range-1, Agra

ITA 367/AGR/2012

• Counselvise Citation: [2019] 117 COUNSELVISE.COM (IT) 0576 (ITAT-AGRA)
• Duration Of Justice: 6 year(s) 9 month(s) 21 day(s)
• Appeal Type: Cross Objection
• Pronouncement Date: 16-05-2019
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: DB
• Next Hearing Date: 28-01-2013
• Assessment Year: 2007-2008
• Appeal Filed On: 25-07-2012
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Assessee Lawyers: NAVIN GARGH
• Section: 133A

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, AGRA BENCH, AGRA BEFORE : SHRI BHAVNESH SAINI, JUDICIAL MEMBER AND SHRI A.L. GEHLOT, ACCOUNTANT MEMBER ITA NO. 367/AGRA/2012 ASSTT. YEAR : 2007-08 ANIL KUMAR, VS. ADDL. C.I.T., RANGE-1, PROP. M/S. RAMAN LAL & CO. AGRA. 22/2A/A MOTI LAL NEHRU ROAD, AGRA. (PAN : AASPK 9360 K) (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI NAVIN GARGH, ADVOCATE RESPONDENT BY : SHRI WASEEM ARSHAD, SR. D.R. DATE OF HEARING : 28.01.2013 DATE OF PRONOUNCEMENT OF ORDER : 29.01.2013 ORDER PER BHAVNESH SAINI, J.M.: THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST TH E ORDER OF LD. CIT(A)-I, AGRA DATED 19.01.2012 FOR THE ASSESSMENT YEAR 2007- 08, IN WHICH THE ASSESSEE CHALLENGED THE ORDER OF LD. CIT(A) IN CONFIRMING TH E ADDITION OF RS.8,16,213/- OUT OF ADDITION OF RS.9,51,466/- ON ACCOUNT OF UNACCOUN TED INVESTMENT IN STOCK. THE LD. COUNSEL FOR THE ASSESSEE DID NOT PRESS GROUND N O. 2. THE SAME IS ACCORDINGLY DISMISSED AS NOT PRESSED. 2. BRIEFLY, THE FACTS OF THE CASE ARE THAT IN THIS CASE, A SURVEY U/S. 133A WAS CONDUCTED ON 24.01.2007 IN THE BUSINESS PREMISES OF THE ASSESSEE. DURING THE ITA NO. 367/AGRA/2012 2 COURSE OF SURVEY, ON MAKING PHYSICAL INVENTORY OF S TOCK, IT HAS BEEN VALUED AT RS.1,37,09,100/- AS AGAINST CLOSING STOCK WORKED OU T AS PER BOOKS OF ACCOUNT ON THE BASIS OF PROVISIONAL TRADING ACCOUNT PREPARED D URING THE SURVEY AT RS.95,00,000/-. THUS, THE EXCESS STOCK AMOUNTING TO APPROXIMATELY RS.42,00,000/- WAS WORKED OUT BY THE SURVEY TEAM. SON OF THE ASSES SEE WAS PRESENT DURING THE COURSE OF SURVEY WHO IN HIS STATEMENT STATED THAT S UCH A DIFFERENCE CAN BE EXPLAINED BY HIS FATHER, I.E., THE ASSESSEE AND OFF ERED RS.25,00,000/- FOR THE PURPOSE OF TAXATION ON ACCOUNT OF EXCESS STOCK. THE AO, HOWEVER, AT THE ASSESSMENT STAGE, MADE A DETAILED EXAMINATION OF TH E STOCK FOUND AT THE TIME OF SURVEY AND AFTER TAKING INTO ACCOUNT ASSESSEES SUB MISSIONS WITH REGARD TO CERTAIN MISTAKES COMMITTED IN COUNTING THE STOCK, CALCULATE D THE VALUATION OF STOCK FOUND DURING THE COURSE OF SURVEY AND MADE ADDITION OF RS .9,51,466/- IN ADDITION OF RS.25,00,000/- DECLARED BY THE ASSESSEE ON ACCOUNT OF EXCESS STOCK FOUND DURING THE SURVEY. THE ASSESSEE EXPLAINED BEFORE THE AO TH AT THE STOCK AS PER THE BOOKS OF ACCOUNT IS VALUED AT COST OR NET REALIZABLE VALUE W HICHEVER IS LOWER WHEREAS THE STOCK FOUND AND INVENTORIZED PHYSICALLY HAS BEEN WO RKED OUT AT SALE RATE TAKEN FROM THE PRICE LIST. THE PROFIT AND DISCOUNT SHOULD BE EXCLUDED AND FURTHER CONCESSION IN SAREES AND CHADAR ACCOUNT SHOULD BE G RANTED. FURTHER, THE STOCK INCLUDED DEAD STOCK, WHICH WAS ALSO LYING IN THE PR EMISES, FOR WHICH FURTHER BENEFIT SHOULD BE GIVEN. THE LD. CIT(A) WHILE CONSI DERING THE ISSUE FOUND THAT THE DISPUTE BEFORE HIM IS LEFT WITH REGARD TO DEDUCTION OF THE DEAD STOCK AND FOUND THAT ITA NO. 367/AGRA/2012 3 THE ASSESSEE AT THE STAGE OF SURVEY DID NOT IDENTIF Y THE DEAD STOCK AND NOTHING WAS POINTED OUT TO THE SURVEY PARTY AND THE ASSESSEES SON OFFERED RS.25,00,000/- ON ACCOUNT OF UNEXPLAINED STOCK. THEREFORE, THE ASSESS EE CANNOT BE ALLOWED DEDUCTION AS CLAIMED BY HIM. THE LD. CIT(A), HOWEVER, FOUND T HAT IN THE BUSINESS OF SAREES, THERE IS POSSIBILITY OF DEAD STOCK, BUT THE SAME WO ULD NOT BE AS HIGH AS HAS BEEN PROJECTED BY THE ASSESSEE IN THE WRITTEN SUBMISSION S. THE LD. CIT(A) FOUND THAT DEAD STOCK COMPUTED BY THE AO AT 2% IS QUITE JUSTIF IED, BUT THE SAME SHOULD NOT BE ESTIMATED ON THE AMOUNT OF EXCESS STOCK, BUT IT SHO ULD BE ESTIMATED ON THE TOTAL VALUE OF THE STOCK DETERMINED ON THE DATE OF SURVEY AND BY GIVING SUCH BENEFIT, ADDITION WAS RESTRICTED TO RS.8,16,213/- INSTEAD OF RS.9,51,466/-. THIS GROUND WAS PARTLY ALLOWED. 3. THE LD. COUNSEL FOR THE ASSESSEE REITERATED THE SUBMISSIONS MADE BEFORE THE AUTHORITIES BELOW AND SUBMITTED THAT THE ASSESSEES SON WAS PRESENT AT THE TIME OF SURVEY, WAS NOT AWARE OF THE DETAILS OF THE STOCK A ND IN HIS STATEMENT, HE HAS CATEGORICALLY STATED THAT HIS FATHER WOULD BE ABLE TO EXPLAIN THE SAME AND THE ASSESSEE AT THE ASSESSMENT STAGE TRIED TO EXPLAIN T HE SAME AND IN THE BUSINESS OF SAREES, THERE IS ALWAYS A DEAD STOCK AND AVERAGE CO ST OF SAREES IS NOT TO MUCH HIGH AS ESTIMATED BY THE SURVEY PARTY. THEREFORE, IN THE CONFUSION, AN AMOUNT OF RS.25,00,000/- HAS ALREADY BEEN DECLARED AS TAXABLE INCOME, THEREFORE, NO FURTHER ADDITION IS JUSTIFIED. IN THE ALTERNATE CONTENTION, HE HAS SUBMITTED THAT THE ADDITION ITA NO. 367/AGRA/2012 4 IS STILL EXCESSIVE. ON THE OTHER HAND, THE LD. DR R ELIED UPON THE ORDER OF THE LD. CIT(A). 4. ON CONSIDERATION OF THE RIVAL SUBMISSIONS, WE AR E OF THE VIEW THAT THE ADDITION IS ON EXCESSIVE SIDE ON ACCOUNT OF UNDISCL OSED STOCK FOUND DURING THE COURSE OF SURVEY. THE ASSESSEE IS ENGAGED IN THE BU SINESS OF MANUFACTURING AND DEALING IN EMBROIDERY ON CLOTHS ETC. THE ASSESSEE A LSO DEALS IN SAREES AND BOTH THE AUTHORITIES BELOW HAVE ACCEPTED THAT IN THE NATURE OF BUSINESS OF THE ASSESSEE, THERE IS BOUND TO BE DEAD STOCK AND THE AUTHORITIES BELOW HAVE GIVEN CONCESSION @ 2% ON ACCOUNT OF DEAD STOCK IN THE STOCK COMPUTED BY T HE SURVEY PARTY. THE LD. COUNSEL FOR THE ASSESSEE REFERRED TO THE DETAILED S UBMISSIONS MADE BEFORE THE AO, IN WHICH THE ASSESSEE HAS CATEGORICALLY EXPLAINED T HAT VALUE OF STOCK HAS BEEN WORKED OUT ON THE BASIS OF PRICE LIST WHICH INCLUDE S PROFIT, DISCOUNT ETC., WHICH IN OUR VIEW HAS NOT BEEN PROPERLY ADDRESSED TO BY THE AUTHORITIES BELOW. FURTHER, THE ASSESSEES SON ALREADY MADE OFFER TO SURRENDER RS.2 5,00,000/- ON ACCOUNT OF EXCESS STOCK, WHICH HAS BEEN ACCEPTED BY THE AUTHORITIES B ELOW AND FURTHER IT IS NOT A DENYING FACT THAT IN THE BUSINESS OF SAREES THERE I S POSSIBILITY OF DEAD STOCK. THE LD. CIT(A) GAVE BENEFIT OF 2% AS WAS GIVEN BY THE AO, B UT IT WAS GIVEN ON TOTAL VALUE OF STOCK DETERMINED ON THE DATE OF SURVEY. SIMILARL Y, THE ASSESSEE HAS NOT POINTED OUT OR IDENTIFIED COMPLETE DETAILS OF DEAD STOCK LY ING IN HIS PREMISES AT THE TIME OF SURVEY. THEREFORE, CONSIDERING THE NATURE OF BUSINE SS OF THE ASSESSEE AND THE FACTS ITA NO. 367/AGRA/2012 5 NOTED BY THE AUTHORITIES BELOW, IT IS DIFFICULT TO ESTIMATE EXACT QUANTUM OF DEAD STOCK LYING AT THE PREMISES OF THE ASSESSEE. HOWEVE R, CONSIDERING THE INCOME ALREADY DECLARED BY THE ASSESSEE INCLUDING THE UNDI SCLOSED INCOME AND THE EXPLANATION OF THE ASSESSEE AND NATURE OF BUSINESS OF ASSESSEE, IT WOULD BE REASONABLE AND APPROPRIATE TO RESTRICT THE ADDITION ON THIS ISSUE ON ACCOUNT OF UNDISCLOSED INVESTMENT IN THE STOCK IN A SUM OF RS. 4,00,000/- IN ALL AS AGAINST ADDITION SUSTAINED BY THE LD. CIT(A) AT RS.8,16,213 /-. THE ORDERS OF THE AUTHORITIES BELOW TO THAT EXTENT ARE MODIFIED AND THE AO IS DIR ECTED TO MAINTAIN THE ADDITION OF RS.4,00,000/- ON THIS ISSUE. IN THE RESULT, THE APP EAL OF THE ASSESSEE IS LIABLE TO BE PARTLY ALLOWED. 5. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS PAR TLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT. SD/- SD/- (A.L. GEHLOT) (BHAVNESH SAINI) ACCOUNTANT MEMBER JUDICIAL MEMBER *AKS/- COPY OF THE ORDER FORWARDED TO : 1. APPELLANT 2. RESPONDENT 3. CIT(A), CONCERNED BY ORDER 4. CIT, CONCERNED 5. DR, ITAT, AGRA 6. GUARD FILE SR. PRIVATE SECRETARY TRUE COPY