Vikas, Prop. M/s. Neha Enterprises, Delhi V. ACIT, Circle- 34(1), Delhi

ITA 3803/DEL/2018

• Counselvise Citation: [2021] 108 COUNSELVISE.COM (IT) 7808 (ITAT-DELHI)
• Duration Of Justice: 2 year(s) 10 month(s) 4 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 25-03-2021
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: F
• Assessment Year: 2012-2013
• Appeal Filed On: 21-05-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: RAKESH JAIN
• Section: 113

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH F, NEW DELHI BEFORE SH. AMIT SHUKLA, JUDICIAL MEMBER DR. B. R. R. KUMAR, ACCOUNTANT MEMBER (THROUGH VIDEO CONFERENCING) ITA NO. 3803/DEL/2018 : ASSTT. YEAR : 2012-13 VIKAS, PROP. M/S NEHA ENTERPRISES, 76, SSI, CO-OPERATIVE INDUSTRIAL ESTATE, G. T. KARNAL ROAD, NEW DELHI-110033 VS ACIT, CIRCLE-34(1), NEW DELHI (APPELLANT) (RESPONDENT) PAN NO. A AEPV2363D ASSESSEE BY : SH. RAKESH JAIN, ADV. REVENUE BY : SH. APOORVA BHARDWAJ, SR. DR DATE OF HEAR ING: 03 . 0 2 .20 2 1 DATE OF PRONOUNCEMENT: 25 .03 .20 2 1 ORDER PER DR. B. R. R. KUMAR, ACCOUNTANT MEMBER: THE PRESENT APPEAL HAS BEEN FILED BY THE ASSESSEE AGAINST THE ORDER OF THE LD. CIT(A)-12, NEW DELHI DATED 18. 01.2018. 2. FOLLOWING GROUNDS HAVE BEEN RAISED BY THE ASSESS EE: 1. BECAUSE THE ACTION IS BEING CHALLENGED ON THE FACTS & LAW, FOR MAKING ADDITION ON ACCOUNT OF DIFFERENCE IN STOCK OFF RS.3,07,79,543/- FOUND DURI NG SURVEY PROCEEDINGS OVERLOOKING & IGNORING THE PLEADINGS, FACTS, EVIDENCES, PROVISIONS OF ACT, PRINCIPLES OF LAW ADVANCED HENCE UNSUSTAINABLE ORDER. 2. BECAUSE THE ACTION IS BEING CHALLENGED ON THE FACTS & LAW, FOR MAKING ADDITION OF RS.3,07,79,543/ - BY TAKING THE VALUE OF STOCK DURING SURVEY PROCEEDING AT MARKET PRICE OVERLOOKING THE ITA NO. 3803/DEL/2018 VIKAS 2 EXPLANATION SUBMITTED BY THE ASSESSEE WITH RECONCILIATION DULY SUPPORTED BY EVIDENCES. 3. BECAUSE THE ACTION IS BEING CHALLENGED ON THE FACTS & LAW, FOR MAKING ADDITION OF RS.3,07,79,543/ - OVERLOOKING THE CONSIDERED LEGAL POSITION THAT THE STATEMENT RECORDED DURING SURVEY HAS NO EVIDENTIARY VALUE. STOCK FOUND EXCESS BY RS.5,02,30,400/- 3. FACTS RELEVANT FOR ADJUDICATION TO THE ISSUE BEF ORE US ARE THAT A SURVEY U/S 133 OF THE INCOME TAX ACT, 1961 H AS BEEN CONDUCTED ON THE ASSESSEE ON 28.03.2012 AND DURING THE SURVEY EXCESS STOCK WORTH RS.5.02 CR. WAS DETERMINED BY TH E REVENUE. IN THE INCOME TAX RETURN, THE ASSESSEE HAS DISCLOSE D RS.1.94 CR. ON ACCOUNT OF EXCESS STOCK FOR TAXATION AGAINST STOCK OF RS.5.02 CR. AS FOUND ON THE DATE OF SURVEY. THE ASS ESSING OFFICER MADE ADDITION OF THE BALANCE AMOUNT OF RS.3 .07 CR. TO THE ASSESSED INCOME DECLARED BY THE ASSESSEE. 4. THE LD. CIT (A) CONFIRMED THE ACTION OF THE ASSE SSING OFFICER HOLDING THAT THE CONTRACTION IN THE DISCLOS ED INCOME ON ACCOUNT OF THE EXCESS STOCK CANNOT BE ACCEPTED AS T HE ASSESSEE HAS APPROVED FOR THE PHYSICAL INVENTORY TAKEN BY TH E REVENUE AUTHORITIES ON THE DATE OF SURVEY. 5. DURING THE ARGUMENTS BEFORE US, THE LD. AR SUBMI TTED THAT SUBSEQUENT TO THE SURVEY CONDUCTED ON 28.03.2012, A RECONCILED STATEMENT OF STOCK WAS GIVEN TO THE DCIT VIDE LETTER DATED 23.04.2012 (PB 34). IT WAS ARGUED THAT THE RE VENUE AUTHORITIES FAILED TO TAKE NOTE OF THE CONTENTS OF THE SAID LETTER AND ALSO THE FACTS ON RECORD. ITA NO. 3803/DEL/2018 VIKAS 3 6. ON THE OTHER HAND, THE LD. DR SUBMITTED THAT THE RECONCILIATION STATEMENT WAS A PART OF THE RETRACT ION WITHOUT SUBSTANTIATION AND HENCE CANNOT BE GIVEN ANY CREDE NCE, POST SURVEY. 7. HEARD THE ARGUMENTS OF BOTH THE PARTIES AND PERU SED THE MATERIAL AVAILABLE ON RECORD. 8. WE FIND THAT THE STOCK LISTS WERE PREPARED IN TW O PARTS: 1. FINISHED GOODS TOTAL VALUE RS.8,06,31,028 (RS.4,23, 88,830 & RS.3,82,42,198/-) AND 2. RAW MATERIAL AND THE PACKING MATERIAL TOTAL VALUE RS.1,75,99,372. 9. THE DETAILS OF STOCK WAS GIVEN AT PAGE NOS. 30, 31 & 32 OF THE PAPER BOOK. THE BILLS HAVE BEEN ENCLOSED AT PAG E NOS. 38 & 39 OF THE PAPER BOOK WHICH HAVE BEEN EXAMINED. THE ASSESSEE IS THE MANUFACTURER AND TRADER OF MEHANDI AND IN TH IS PROCESS SEVERAL TYPES OF RAW MATERIALS AND PACKING MATERIAL S SUCH AS MEHANDI POWDER, LAMINATES OF VARIOUS DIMENSIONS, DA NDLERS, CARTONS, POLYTHENE, PHDE BAGS ETC. WHICH ARE USED T O PRODUCE THE FINAL PRODUCT. THE FINISHED PRODUCTS REMAIN PAC KED IN BAGS AND BOXES READY FOR DISPATCH. WITH REGARD TO RAW MA TERIAL AS PER THE EVIDENCES FILED BEFORE US, THE COST OF MEHA NDI POWDER WAS VALUED AT RS.50/- KG WHICH IS 20-25% HIGHER THA N THE PURCHASE PRICE AS PER THE INVOICES. THIS LED TO HIG HER VALUATION OF THE MEHANDI POWDER BY AN AMOUNT OF RS.12.28 LACS FOR WHICH THE REMISSION NEEDS TO BE GIVEN. ITA NO. 3803/DEL/2018 VIKAS 4 10. WITH REGARD TO THE FINISHED GOODS, AS PER THE E STABLISHED PROCEDURE, THE STOCK HAS TO BE VALUED AT COST PRICE OR MARKET PRICE WHICHEVER IS LOWER. THE INVOICES WERE SUBMITT ED AT PAGE NOS. 41 TO 107 AND THE INVENTORY OF STOCK TAKEN AT THE TIME OF SURVEY ALONG WITH THE VALUATION HAS BEEN SUBMITTED AT PAGE NOS. 113 TO 123. WE HAVE ALSO PERUSED THE STATEMENT RECORDED ON THE DATE OF SURVEY OF SHRI VIKAS S/O KESHO RAM G UPTA WHEREIN THE VALUE OF THE EXCESS STOCK HAS BEEN SURR ENDERED TO TAXATION. WE HAVE ALSO PERUSED THE DETAIL INVOICES WHICH GENERALLY OFFERED 3% DISCOUNT TO THE BUYERS. ON EXA MINATION OF THE VALUE TAKEN OF THE FINISHED GOODS IN THE INVENT ORY, WE FIND THAT THE VALUE HAS BEEN DETERMINED AS PER THE SALE PRICE WHEREAS THEY HAVE TO BE VALUED AT THE COST PRICE. W E HAVE GONE THROUGH THE RECONCILIATION STATEMENT VIS--VIS, THE INVOICES AND THE INVENTORY. ON VERIFICATION OF RECORD, WE AGREE WITH THE CONTENTION OF THE ASSESSEE THAT THE GOODS HAVE BEEN VALUED IN EXCESS BY RS.2.95 CR. 11. AS A RESULT, THE APPEAL OF THE ASSESSEE ALLOWED . ORDER PRONOUNCED IN THE OPEN COURT ON 25/03/2021. SD/- SD/- (AMIT SHUKLA) ( DR. B. R. R. KUMAR) JUDICIAL MEMBER ACC OUNTANT MEMBER DATED: 25/03/2021 *SUBODH* COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(APPEALS) 5. DR: ITAT ASSISTANT REGISTRAR