DCIT, Chandigarh V. M/s Golden Laminates Ltd., Chandigarh

ITA 37/CHANDI/2013

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 77183 (ITAT-CHANDIGARH)
• Duration Of Justice: 1 year(s) 6 month(s) 6 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 15-07-2014
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 09-07-2014
• Assessment Year: 2009-2010
• Appeal Filed On: 09-01-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Documents seized
• Section: 143(3); 133A

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL CHANDIGARH BENCH B CHANDIGARH BEFORE SHRI T.R.SOOD ACCOUNTANT MEMBER AND MS. SUSHMA CHOWLA, JUDICIAL MEMBER ITA NO.24/CHD/2013 ASSESSMENT YEAR : 2009-10 M/S GOLDEN LAMINATES LTD., VS THE J.C.I.T. (OSD), (NOW KNOWN AS STYLAM IND.LTD.), CIRCLE 1(1), SCO 14, CHANDIGARH. SECTOR 7-C, CHANDIGARH. PAN : AAACG5969R & ITA NO.37/CH D/2013 ASSESSMENT YEAR : 2009-10 THE D.C.I.T., VS M/S GOLDEN LAMINATES LTD., CIRCLE I (1), (NOW KNOWN AS STYLAM IND.LTD.) CHANDIGARH. SCO 14, SECTOR 7-C, CHANDIGARH. (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI VINEET KRISHAN DEPARTMENT BY : SHRI AKHILESH GUPTA DATE OF HEARING : 09.07.2014 DATE OF PRONOUNCEMENT : 15.07.2014 O R D E R PER SUSHMA CHOWLA, JM THE CROSS APPEALS FILED BY THE ASSESSEE AND THE REV ENUE ARE DIRECTED AGAINST THE ORDER OF THE COMMISSIONER OF I NCOME TAX (APPEALS) CHANDIGARH DATED 09.10.2012 RELATING TO ASSESSMENT YEAR 2009-10 AGAINST THE ORDER PASSED UNDER SECTION 143(3) OF THE INCOME TAX ACT, 1961 (IN SHORT 'THE ACT'). 2. THE CROSS APPEALS FILED BY THE ASSESSEE AND THE REVENUE ON SIMILAR ISSUE WERE HEARD TOGETHER AND ARE BEING DISPOSED OF BY THIS CONSOLIDATED ORDER FOR THE SAKE OF CONVENIENCE. 2 3. THE REVENUE IN ITA NO. 37/CHD/2013 HAS RAISED TH E FOLLOWING GROUNDS OF APPEAL : 1. THE LD. CIT(A) HAS ERRED IN FACTS AS WELL AS LAW IN DELETING THE ADDITION OF RS.2512,850/- ON ACCOUNT OF EXCESS STOC K FOUND DURING THE COURSE OF SURVEY BECAUSE THE ASSESSEE FAILED TO REC ONCILE THE DIFFERENCE AT THE TIME OF SURVEY AND NO REASONABLE EXPLANATION WAS OFFERED DURING ASSESSMENT PROCEEDINGS. 2. THE APPELLANT CRAVES TO ADD OR AMEND ANY GROUND/GRO UNDS OF APPEAL BEFORE THE APPEAL IS HEARD OR DISPOSED OFF. 3. IT IS PRAYED THAT THE ORDER OF THE LD. CIT(A) BE CA NCELLED AND THAT OF THE ASSESSING OFFICER MAY BE RESTORED. 4. THE ASSESSEE IN ITA NO. 24/CHD/2013 HAS RAISED T HE FOLLOWING GROUNDS OF APPEAL : 1. THAT IN THE FACTS AND CIRCUMSTANCES OF THE CASE, TH E ID. COMMISSIONER OF INCOME TAX (APPEALS) GRAVELLY ERRED IN IGNORING THE FACTS ON RECORD AS NO INVENTORY OF THE STOCKS INCLUDING THE RAW MATERIAL WAS THAT THE ORDE R PASSED UNDER SECTION 250(6) BY THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) , CHANDIGARH IN APPEAL NO. 575/11-12 DATED 09.10.2012 IS CONTRARY TO LAW A ND FACTS OF THE CASE. 2. THAT IN THE FACTS AND CIRCUMSTANCES OF THE CASE, TH E ID. COMMISSIONER OF INCOME TAX (APPEALS) GRAVELLY ERRED IN SUSTAINING THE ADDI TION OF RS. 11,67,378/- OUT OF THE TOTAL ADDITION OF RS. 36,80,228/- MADE BY THE A SSESSING OFFICER ON THE GROUND THAT THERE WAS A DIFFERENCE OF STOCKS AS PER BOOKS OF ACCOUNTS AND ONE FOUND AT THE TIME OF SURVEY. 3. THAT IN THE FACTS AND CIRCUMSTANCES OF THE CASE, TH E ID. COMMISSIONER OF INCOME TAX (APPEALS) GRAVELLY ERRED IN IGNORING THE FACTS ON RECORD AS NO INVENTORY OF THE STOCKS INCLUDING THE RAW MATERIAL WAS WORKED OUT BY THE DEPARTMENT AND THERE ARE MANY INFIRMITIES IN THE VALUATION ADOPTED BY THE RE VENUE. 5. THE BRIEF FACTS OF THE CASE ARE THAT SURVEY UNDER SECTION 133A OF THE ACT WAS CONDUCTED AT THE BUSINESS PREMISES OF T HE ASSESSEE AT CHANDIGARH IN THE UNIT AT INDUSTRIAL AREA, PHASE-I CHANDIGARH AND PANCHKULA ON 18.09.2008. THE SURVEY ACTION WAS CON DUCTED OVER A PERIOD OF THREE DAYS AND WAS CONCLUDED ON 20.09.200 8. DURING THE COURSE OF SURVEY PROCEEDINGS, VARIOUS BOAS AND LOOS E DOCUMENTS WERE EXAMINED. THE TRADING ACCOUNT OF THE ASSESSEE WAS PREPARED AS ON THE DATE OF SURVEY. THE ASSESSEE WAS ASKED TO FURNISH T HE COMPLETE DETAILS OF 3 CLOSING STOCK AS THE ASSESSEE WAS NOT MAINTAINING D ETAILED INVENTORY OF STOCK. THE STOCK INVENTORY WAS PREPARED DURING THE COURSE OF SURVEY AND ALSO VARIOUS LOOSE DOCUMENTS AND SALE BILLS WERE IM POUNDED. ON COMPARING THE STOCK VALUATION AS PER THE BOOKS OF A CCOUNT AND THE STOCK FOUND FROM THE ASSESSEE, DIFFERENCE IN STOCK VALUAT ION WAS FOUND TO BE RS. 36,80,228/- AS EXCESS OF LYING AT THE BUSINESS PREMISES OF THE ASSESSEE. THE ASSESSEE WAS SHOW CAUSED TO EXPLAIN AS TO WHY DIFFERENCE OF RS. 36,80,228/- SHOULD NOT BE ADDED TO ITS TOTAL INCOME. SHOW CAUSE NOTICE ISSUED TO THE ASSESSEE IS REPRODUCED UNDER P ARA 5.4 AT PAGE 4 OF THE ASSESSMENT ORDER. THE ASSESSEE IN REPLY ASKED FOR THE DOCUMENTS SEIZED ALONG WITH COPIES OF THE INVENTORY OF STOCK TAKEN. FURTHER, IT WAS POINTED OUT BY THE ASSESSEE THAT ON THE DATE OF SUR VEY, NO INCRIMINATING DOCUMENT OR PAPER WAS FOUND AND NO DIFFERENCE WAS P OINTED OUT IN THE STOCK FOUND FROM THE ASSESSEE. THE ASSESSING OFFIC ER POINTED OUT THAT THE COPIES OF THE STATEMENT RECORDED AT THE TIME OF SURVEY, COMPLETE STOCK INVENTORY AND COPIES OF ALL OTHER DOCUMENTS I MPOUNDED DURING THE SURVEY WERE SUPPLIED TO THE ASSESSEE THOUGH THEY WE RE ALREADY IN POSSESSION OF THE ASSESSEE. THE ASSESSEE WAS SPECI FICALLY CONFRONTED ABOUT THE DISCREPANCY IN THE STOCK DURING THE COURS E OF SURVEY PROCEEDINGS ITSELF AND STATEMENT OF THE EXECUTIVE D IRECTOR OF THE ASSESSEE COMPANY WAS RECORDED IN WHICH HE WAS QUEST IONED ABOUT THE VALUATION OF THE STOCK. THE RELEVANT PORTION OF TH E SAID STATEMENT IS REPRODUCED BY THE ASSESSING OFFICER UNDER PARA 5.6 AT PAGES 7 TO 9 OF THE ASSESSMENT ORDER. THE ASSESSING OFFICER THUS, OBSE RVED THAT EACH AND EVERY ASPECT RELATING TO THE CLOSING STOCK WAS CONF RONTED TO THE ASSESSEE DURING THE COURSE OF SURVEY. IN VIEW THEREOF AND I N THE ABSENCE OF ANY PLAUSIBLE EXPLANATION FILED BY THE ASSESSEE, AN ADD ITION OF RS. 36,80,228/- WAS MADE IN THE HANDS OF THE ASSESSEE. 4 6. THE COMMISSIONER OF INCOME TAX (APPEALS) AFT ER GOING THROUGH THE SURVEY FOLDER AND AFTER DISCUSSION WITH THE ASSESSI NG OFFICER NOTED THAT THE DIFFERENCE WORKED OUT AT RS. 36,80,228/- IN STO CK WAS ADDED TO THE TOTAL INCOME OF THE ASSESSEE. HOWEVER, THE COMMISS IONER OF INCOME TAX (APPEALS) NOTED THAT THE PERUSAL OF ANNEXURE F-1 RE VEALS THAT THE TOTAL OF THE TYPED FIGURES WORKED OUT TO RS. 62,93,640/- AND SOME OF THE FIGURES WERE REPEATED ON THE LEFT SIDE OF THE ROWS WITH RED INK AND THE TOTAL OF THESE FIGURES WORKED OUT TO RS. 25,12,850/-. THE F INDING OF THE COMMISSIONER OF INCOME TAX (APPEALS) WAS THAT THE S AID FIGURES WERE NOT PART OF ANY OTHER ANNEXURE AND IT WAS NOT CLEAR AS TO WHY RS. 25,12,850/- WAS TAKEN AS PART OF STOCK INVENTORY. CONSEQUENTLY, THE COMMISSIONER OF INCOME TAX (APPEALS) DIRECTED THAT THE ADDITION TO THE EXTENT OF RS. 25,12,850/- BE DELETED. IT WAS FURTH ER OBSERVED BY THE COMMISSIONER OF INCOME TAX (APPEALS) THAT THE CONTE NTION OF THE ASSESSEE THAT INVENTORY OF STOCK WAS NOT GIVEN TO T HE ASSESSEE AT THE TIME OF SURVEY WAS NOT CORRECT. THE SAID STOCK STATEMEN T WAS HANDED OVER TO THE EXECUTIVE DIRECTOR WHO IN-TURN WAS ASKED TO GIV E THE VALUATION AS PER MRP. ANOTHER PLEA RAISED BY THE ASSESSEE BEFOR E THE COMMISSIONER OF INCOME TAX (APPEALS) THAT THE ASSESSING OFFICER WAS NOT RIGHT IN TAKING THE GP RATE @ 20% AGAINST GP RATE SHOWN BY T HE ASSESSEE @ 23% WAS ALSO NOT ACCEPTED. IN VIEW THEREOF, ADDITION T O THE EXTENT OF RS. 11,67,378/- WAS CONFIRMED IN THE HANDS OF THE ASSES SEE. 7. THE REVENUE IS IN APPEAL AGAINST THE DELETIO N OF RS. 25,12,850/- AND THE ASSESSEE IS IN APPEAL AGAINST THE ADDITION OF R S. 11,67,378/-. 8. SHRI VINEET KRISHAN APPEARED FOR THE ASSESSEE AN D SHRI AKHILESH GUPTA APPEARED FOR THE REVENUE AND PUT FORWARD THEI R RIVAL CONTENTIONS. 9. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE RECORD. IN THE FACTS OF THE PRESENT CASE, THE STOCK INVENTORY WAS DRAWN BY THE SURVEY 5 TEAM WHILE CARRYING OUT THE SURVEY AT THE PREMISES OF THE ASSESSEE AS ON 18.09.2008. THE SAID INVENTORY PREPARED BY A SURVE Y TEAM WAS CONFRONTED TO THE DIRECTOR WHOSE STATEMENT WAS RECO RDED DURING THE COURSE OF SURVEY AND AS PER QUESTION 15, THE SAID D IRECTOR WAS ASKED TO PROVIDE THE VALUATION AS PER MRP ON THE COPY OF THE QUANTIFIED STOCK STATEMENT. IN REPLY, IT WAS CLAIMED BY THE DIRECTO R OF THE ASSESSEE COMPANY THAT THE VALUATION REQUIRES A LOT OF TIME A ND THE SAME WOULD BE PROVIDED ON MONDAY (AN) I.E. 22.09.2008. IT MAY BE CLARIFIED AT THIS JUNCTURE THAT THE ADDITION IN THE HANDS OF THE ASSE SSEE WAS MADE ONLY ON ACCOUNT OF THE FINISHED GOODS AND NO ADDITION WAS M ADE ON ACCOUNT OF THE RAW MATERIAL AND THE WORK IN PROGRESS WHICH WAS ACCEPTED IN ENTIRETY BY THE ASSESSING OFFICER. THE SURVEY TEAM HAD ADMI TTED QUANTIFIED DETAILS OF STOCK AND WORKED OUT THE DIFFERENCE IN S TOCK AS UNDER : SALE PRICE AS PER ANNEXURE A-E RS. .87, 62,172 EXPORT GOODS (PACKED) RS. _75,86,250 RS. 1,63,48,422 TAKING GP RATE OF 20% AS EXCISE DUTY HAS NOT BEEN INCLUDED ABOVE RS. (-) 32,6 9.684 COST OF GOODS RS. 1,30, 78,738 ADD: COST OF GOODS AS PER ANNEXURE F-1 RS. 62,93,640 RS. 25.12.850 RS. 2,18,85,228 FINISHED GOODS CLOSING STOCK FIGURES AS GIVEN BY TH E ASSESSEE RS. 1,82, 05,000 DIFFERENCE RS. 36,80, 228 10. THE PERUSAL OF THE ABOVESAID DETAILS WOULD REFL ECT THAT WHILE COMPUTING THE COST OF GOODS, THE ASSESSING OFFICER HAD ADOPTED THE COST OF GOODS AS PER ANNEXURE F-1 AT RS. 62,93,640/- AND HAD FURTHER ADDED SUM OF RS. 25,12,850/-. 11. THE LD. AR FOR THE ASSESSEE HAD DRAWN OUR ATTEN TION TO THE BREAK- UP OF THE INVENTORY FURNISHED AT PAGE 232 OF THE PA PER BOOK. THE VALUE OF THE STOCK FOUND DURING THE COURSE OF SURVEY TOTA LED TO RS. 62,93,640/- 6 AND AT THE LEFT HAND SIDE OF THE TABLE, CERTAIN FIG URES WERE WRITTEN IN HAND WHICH TOTALED TO RS. 25,12,850/-. PERUSAL OF T HE SAID DETAILS REFLECT THAT THE SAME TALLIED WITH THE FIGURES WHICH WERE P ART OF TOTAL OF RS. 62,93,640/-. AS PER THE ASSESSING OFFICER, NO EXPLANATION OR EVIDENCE HAS BEEN FURNISHED IN RESPECT OF THE SAID ITEMS TOTALING RS. 25,12,850/-. WE ARE IN CONFORMITY WITH THE FINDING S OF COMMISSIONER OF INCOME TAX (APPEALS) THAT THE FIGURES WORKED OUT AT RS. 25,12,850/- WERE DUPLICATE AND COST OF GOODS EQUIVALENT TO THE SAME WERE ALREADY INCLUDED IN THE FIGURE OF RS. 62,93,640/-. THE COM MISSIONER OF INCOME TAX (APPEALS) HAD ALSO GIVEN A FINDING THAT THE FIG URES MENTIONED IN THE RED INK ON THE LEFT HAND SIDE WERE NOT PART OF ANY OTHER ANNEXURE, WHICH HAS NOT BEEN CONTROVERTED BY THE LD. DR FOR THE REV ENUE. IN THE ABSENCE OF ANY EVIDENCE TO THE CONTRARY, WE UPHOLD THE ORDE R OF COMMISSIONER OF INCOME TAX (APPEALS) IN DELETING THE ADDITION OF RS . 25,12,850/- AND DISMISS GROUND OF APPEAL RAISED BY THE REVENUE. 12. NOW COMING TO THE GROUND OF APPEAL RAISED BY TH E ASSESSEE AGAINST THE UPHOLDING OF ADDITION TO THE EXTENT OF RS. 11,6 7,378/- ON ACCOUNT OF THE DIFFERENCE IN STOCK VALUATION I.E. THE VALUE OF STOCK FOUND DURING THE COURSE OF SURVEY AND THE STOCK AVAILABLE AS PER THE BOOKS OF ACCOUNT. THE MAIN PLEA OF THE ASSESSEE IN THIS REGARD WAS TH AT WHILE COMPUTING THE COST OF GOODS, GP RATE OF 20% WAS APPLIED TO TH E SALE VALUE OF THE GOODS. HOWEVER, THE ASSESSEE HAD SHOWN GP RATE OF 2 3% DURING THE YEAR UNDER CONSIDERATION WHICH SHOULD HAVE BEEN APPLIED TO COMPUTE THE COST OF GOODS. ANOTHER ASPECT RAISED BY THE ASSESSEE WA S THAT THE SURVEY REPORT WAS PREPARED ON A LATER DATE AND IT WAS NOT CONFRONTED TO THE ASSESSEE. 13. THE LD. DR FOR THE REVENUE ON THE OTHER HAND, S TRONGLY OPPOSED THE CONTENTION OF THE ASSESSEE. 7 14. IN THE ENTIRETY OF THE FACTS AND CIRCUMSTANCES AND IN VIEW OF THE FACT THAT THE STOCK HAS BEEN VALUED BY ADOPTING THE MARKET VALUE OF THE PRODUCTS AND THEREFROM DEDUCTING THE GP AND IN TURN COMPUTING THE COST OF GOODS I.E. THE VALUE OF STOCK INVENTORY AVAILABL E WITH THE ASSESSEE, ON ESTIMATE BASIS. WHILE COMPUTING THE SAID VALUATION , GP RATE OF 20% HAS BEEN APPLIED BY THE ASSESSING OFFICER AS AGAINST 23 % DECLARED BY THE ASSESSEE FOR THE YEAR UNDER CONSIDERATION. IN VIEW OF THE SAME, WE RESTRICT THE ADDITION TO RS. 7,00,000/- AS AGAINST RS. 11,67,378/- MADE BY THE ASSESSING OFFICER. WE FIND NO MERIT IN THE PLE A OF THE ASSESSEE THAT STOCK INVENTORY PREPARED AT THE TIME OF SURVEY WAS NOT CONFRONTED TO ASSESSEE. THUS, THE GROUND OF APPEAL RAISED BY THE ASSESSEE IS PARTLY ALLOWED. 15. IN THE RESULT, APPEAL OF THE REVENUE IS DIS MISSED AND APPEAL OF THE ASSESSEE IS PARTLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 15 TH JULY,2014. SD/- SD/- ( T.R.SOOD) (SUSHMA CHOWLA) ACCOUNTANT MEMBER JUDICI AL MEMBER DATED: 15 TH JULY,2014 POONAM COPY TO: THE APPELLANT, THE RESPONDENT, THE CIT(A), THE CIT, DR ASSISTANT REGISTRAR ITAT/CHD