Sh. Avinash Singh, Jamshedpur V. DCIT, Jamshedpur

ITA 40/RAN/2013

• Counselvise Citation: [2015] 134 COUNSELVISE.COM (IT) 0342 (ITAT-RANCHI)
• Duration Of Justice: 2 year(s) 6 month(s) 20 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 26-10-2015
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: DB
• Assessment Year: 2009-2010
• Appeal Filed On: 05-04-2013
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: CHOUDHARY ORAM
• Assessee Lawyers: S K PODDAR; M K CHOUDHARY
• Section: 133(6)

Judgement Text

1 IN THE INCOME TAX APPELLATE TRIBUNAL: CIRCUIT BENCH : RANCHI [BEFORE HONBLE S/SHRI N. S. SAINI, AM AND GEORGE M ATHAN, JM] ITA NO. 40/RAN/2013 ASSESSMENT YEAR: 2009-10 SHRI AVINASH SINGH, PROP. M/S. SINGH TRADING CO., NEAR HANUMAN MANDIR, MAIN ROAD, MANGO, JAMSHEDPUR PAN: APAPS0534E VS THE DY. COMMISSIONER OF INCOME TAX, CIRCLE-I, 47, C. H. AREA, BISTPUR, JAMSHEDPUR 831 001 (APPELLANT) (RESPONDENT) ITA NO. 70/RAN/2013 ASSESSMENT YEAR: 2009-10 THE DY. COMMISSIONER OF INCOME TAX, CIRCLE-I, 47, C. H. AREA, BISTPUR, JAMSHEDPUR 831 001 VS SHRI AVINASH SINGH, PROP. M/S. SINGH TRADING CO., NEAR HANUMAN MANDIR, MAIN ROAD, MANGO, JAMSHEDPUR PAN: APAPS0534E (APPELLANT) (RESPONDENT) ASSESSEE BY S/SHRI S. K. PODDAR AND M. K. CHOUDHARY, ADVOCATE DEPARTMENT BY SHRI CHOUDHARY ORAM, DR DATE OF HEARING: 26-10-2015 DATE OF PRONOUNCEMENT: 26-10-2015 O R D E R PER GEORGE MATHAN, JM: ITA NO.40/RAN/2013 IS AN APPEAL FILED BY THE ASSESS EE AND ITA NO.70/RAN/2013 IS AN APPEAL FILED BY THE REVENUE AG AINST THE ORDER OF ITA NO.40 AND 70/RAN/2013 (AY 2009-10) 2 THE LEARNED CIT(A), JAMSHEDPUR IN APPEAL NO.372/JSR /2011-12 DATED 26-03-2013 FOR ASSESSMENT YEAR 2009-10. 2. SHRI S. K. PODDAR ALONG WITH SHRI M. K. CHOUDHUR Y, ADVOCATES REPRESENTED ON BEHALF OF THE ASSESSEE AND SHRI CHOU DHARY ORAM, LEARNED DR REPRESENTED ON BEHALF OF THE REVENUE. 3. IT WAS SUBMITTED BY THE LEARNED AR THAT IN THE A SSESSEES APPEAL THERE WERE TWO ISSUES, FIRST BEING AGAINST THE ACTI ON OF THE LEARNED CIT(A) IN CONFIRMING THE ADDITION REPRESENTING THE DIFFERENCE BETWEEN CLOSING STOCK AS PER THE BOOKS OF ACCOUNTS AND THE STOCK SHOWN IN THE STATEMENT FILED BEFORE THE BANK. THE SECOND ISSUE W AS AGAINST THE ACTION OF THE LEARNED CIT(A) IN CONFIRMING THE DISA LLOWANCE OF 5% OF VARIOUS EXPENDITURES REPRESENTING TRAVELING EXPENSE S, TELEPHONE EXPENSES AND VEHICLE EXPENSES ON ACCOUNT OF PLAUSIB LE PERSONAL NATURE. IT WAS A SUBMISSION THAT THE ASSESSEE IS AN INDIVIDUAL WHO IS DOING THE BUSINESS OF IRON AND STEEL MERCHANT AND G ENERAL ORDER SUPPLIES. IT WAS A SUBMISSION THAT DURING THE COURS E OF ASSESSMENT PROCEEDINGS THE AO HAD ISSUED A NOTICE U/S 133(6) O F THE ACT TO CANARA BANK, MANGO BRANCH, JAMSHEDPUR AND THE BANK HAS INTIMATED A CLOSING STOCK OF RS.4,13,12,442/- WHEREAS IN THE FORM 3CD, THE ASSESSEE HAD SHOWN A CLOSING STOCK OF RS.2,78,12,60 0/-. WHEN QUESTIONED, IT WAS SUBMITTED THAT THE STOCK STATEME NT HAD BEEN INFLATED AND WAS GIVEN TO THE BANK. IT WAS A SUBMIS SION THAT THE INFLATION WAS DONE SO AS TO GET BETTER CREDIT FACIL ITIES. IT WAS A SUBMISSION THAT IN VIEW OF THE JUDGMENT OF THE HON BLE JHARKHAND HIGH COURT IN THE CASE OF CIT VS ARVIND TRADING CO. IN T AX APPEAL NO.58 OF 2010 DATED 09-09-2011, THE HONBLE HIGH COURT HAS H ELD THAT SUCH ADDITION CANNOT BE SUSTAINED AS THERE IS GENUINE PR ACTICE OF GIVING HIGHER STOCK IN THE BANK FOR OBTAINING MORE CREDIT FACILITIES. IT WAS A ITA NO.40 AND 70/RAN/2013 (AY 2009-10) 3 SUBMISSION THAT THE ADDITION CONFIRMED BY THE LEARN ED CIT(A) IS LIABLE TO BE DELETED. 4. IN REGARD TO THE ADDITIONS REPRESENTING 5% ESTIM ATED DISALLOWANCE, THE LEARNED AR DID NOT RAISE ANY SERI OUS OBJECTION. IT WAS A SUBMISSION THAT ESTIMATED ADDITION WAS NOT PE RMISSIBLE. 5. IN REPLY, THE LEARNED DR SUBMITTED THAT IN THE C OURSE OF ASSESSMENT PROCEEDINGS, THE AO HAD WRITTEN A LETTER TO THE BANK AND IT WAS SPECIFICALLY CLARIFIED BY THE BANK THAT THE BAN K HAD SANCTIONED THE LIMIT AFTER PHYSICAL VERIFICATION OF THE STOCK AND THE TOTAL STOCK IS PLEDGED WITH BANK AND THE PHYSICAL STOCK HAS BEEN V ERIFIED. HE DREW OUR ATTENTION TO THE ASSESSMENT ORDER IN PARA 1.3 W HERE THIS HAS BEEN EXTRACTED. IT WAS A SUBMISSION THAT THE ASSESSEE WA S NOT MAINTAINING ANY STOCK REGISTER AND THE ASSESSEE HAD FAILED TO S UBSTANTIATE THE CLOSING STOCK WITH THE PURCHASE BILLS AND OTHER MAT ERIALS. THE CLOSING STOCK WAS PLEDGED WITH THE BANK IN ITS ENTIRETY. TH E QUANTITY OF STOCK IS NOT MAINTAINED BY THE ASSESSEE BUT THE BANK HAS VERIFIED THE STOCK AND HAS MADE VALUATION AFTER PHYSICAL VERIFICATION AS REPORTED BY THE BANK. IT WAS A SUBMISSION THAT THE DECISION OF THE HONBLE JHARKHAND HIGH COURT IN THE CASE OF ARVIND TRADING IN TAX APP EAL NO.58 OF 2010 WAS DISTINGUISHABLE. IT WAS FURTHER SUBMISSION THAT THE ASSESSEE HAD ALSO NOT SHOWN AS TO HOW THERE WAS NO INCLUSION OF PERSONAL EXPENDITURES IN RESPECT OF TRAVELING EXPENSES, VEHI CLE EXPENSES AND TELEPHONE EXPENSES. IT WAS A SUBMISSION THAT ADDITI ON CONFIRMED BY THE LEARNED CIT(A) IS LIABLE TO BE UPHELD. 6. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS. A PERU SAL OF THE ASSESSMENT ORDER CLEARLY SHOWS THAT THE AO HAS VERI FIED WITH THE BANK AND THE BANK HAS SPECIFICALLY CONFIRMED THAT IT HAS PHYSICALLY VERIFIED ITA NO.40 AND 70/RAN/2013 (AY 2009-10) 4 THE STOCK IN THE STATEMENT GIVEN BY THE ASSESSEE TO THE BANK. THE ASSESSEE HAS NOT BEEN ABLE TO PLACE BEFORE ANY OF T HE LOWER AUTHORITIES OR BEFORE US ANY STOCK REGISTER OR METHODOLOGY FOR QUANTIFYING THE STOCK AS DISCLOSED BY THE ASSESSEE IN ITS BOOKS OR BEFORE THE BANK AUTHORITIES. THE ASSESSEE HAS FILED AN AFFIDAVIT DA TED 27-11-2014 WHEREIN HE HAS STATED THAT THE STOCK OF STEEL PRODU CTS IN WHICH THE ASSESSEE DOES TRADING WAS KEPT AT AN OPEN SPACE IN THE ASSESSEES BUSINESS PREMISES AND IT WAS JUST IMPOSSIBLE TO VER IFY THE WEIGHT, LENGTH AND ALL THE DETAILS OF THE STOCK AS ON 31-03 -2009 OR AFTERWARDS. THE ASSESSEE HAS FURTHER SUBMITTED IN ITS AFFIDAVIT THAT THE BANK HAS NEVER VERIFIED THE ACTUAL STOCK ON THE ASSESSEES P REMISES WITH THE STATEMENT FILED. IN ANY CASE, THIS AFFIDAVIT HAS NO T BEEN PUT TO THE BANK AUTHORITIES AND IS CLEARLY A FRESH EVIDENCE. T HE ASSESSEE IS ALSO UNABLE TO EXPLAIN AS TO HOW HE IS VALUING HIS CLOSI NG STOCK. THE DECISION OF THE HONBLE JHARKHAND HIGH COURT IN THE CASE OF ARVIND TRADING CITED SUPRA, WOULD NOT COME TO THE RESCUE O F THE ASSESSEE IN SO FAR AS IN THE SAID DECISION, THE BANK HAD SPECIF ICALLY, COMMUNICATED THAT THE DECLARATION OF THE STOCK BY THE ASSESSEE I S A DECLARATION WHICH WAS NOT VERIFIED BY THE BANK. IT IS BECAUSE, THERE WAS NO VERIFICATION OF THE STOCK BY THE BANK IN THAT CASE, THE ADDITION MA DE REPRESENTING THE DIFFERENCE BETWEEN THE STOCK STATEMENT GIVEN TO THE BANK AND GIVEN BY THE ASSESSEE HAD BEEN DELETED. IN THE PRESENT CA SE, IT IS NOT SO. HERE, THE BANK HAS REPEATEDLY CONFIRMED THAT IT HAS DONE PHYSICAL VERIFICATION AND IT IS THE ASSESSEE HEREIN WHO IS U NABLE TO PRODUCE ANY STOCK REGISTER OR ANY EVIDENCE TO SUBSTANTIATE ITS CLAIM IN RESPECT OF CLOSING STOCK AS REFLECTED IN ITS BOOKS. IT COULD V ERY WELL BE THAT THE ASSESSEE HAS MADE UNACCOUNTED PURCHASES AND UNACCOU NTED SALES WHICH WOULD NEVER BEEN SHOWN AND THE PURCHASES AND SALES CONSEQUENTLY ONLY TO SUCH EXTENT, AS THE ASSESSEE D ESIRED, THE BILLS ITA NO.40 AND 70/RAN/2013 (AY 2009-10) 5 WOULD BE MAINTAINED TO TALLY WITH THE STOCK AS SHOW N IN ITS CLOSING STOCK. THE FACT THAT THE ASSESSEES STATEMENT TO TH E BANK HAS BEEN SPECIFICALLY CONFIRMED TO HAVE BEEN VERIFIED HAVING NOT BEEN DISLODGED, WE ARE OF THE VIEW THAT THE ADDITION AS MADE BY THE AO AND AS CONFIRMED BY THE LEARNED CIT(A) IS LIABLE TO BE UPH ELD AND WE DO SO. 7. IN REGARD TO THE SECOND ISSUE REPRESENTING DISAL LOWANCE OF THE EXPENSES RELATING TO TRAVELING EXPENSES, TELEPHONE EXPENSES AND VEHICLE EXPENSES, THE ASSESSEE HAS NOT BEEN ABLE TO SHOW THAT THE ASSESSEE HAS ANY OTHER TELEPHONE WHICH HE USED FOR PERSONAL PURPOSE OR THAT HE HAD ANY OTHER VEHICLE WHICH HE USED FOR PERSONAL PURPOSE. CONSEQUENTLY, IN VIEW OF ABSENCE OF ANY PROOF, THE ADDITION AS MADE BY THE AO AND AS CONFIRMED BY THE LEARNED CIT(A) ST ANDS UPHELD. 8. IN THE RESULT, THE APPEAL OF THE ASSESSEE STANDS DISMISSED. 9. IN REGARD TO THE REVENUES APPEAL IT WAS SUBMITT ED THAT THERE WERE THREE ISSUES, THE FIRST ONE AGAINST THE ACTION OF THE LEARNED CIT(A) IN DELETING THE ADDITION REPRESENTING BALANC E WRITE OFF, THE SECOND ISSUE AGAINST THE DELETION OF THE DISALLOWAN CE MADE BY THE AO UNDER THE HEAD INTEREST PAYMENT AND THE THIRD ISS UE AGAINST PARTIAL DELETION OF DISALLOWANCE OF RS.1,54,000/- OUT OF RS .2,20,000/- UNDER THE HEAD INCOME FROM OTHER SOURCES. 10. THE LEARNED DR VEHEMENTLY SUPPORTED THE ORDER O F THE AO. IN REPLY, THE LEARNED AR SUBMITTED THAT THE LEARNED CI T(A) HAD DELETED THE ADDITIONS AFTER TAKING INTO CONSIDERATION THE R EMAND REPORT AS GIVEN BY THE AO. IT WAS A SUBMISSION THAT IN THE RE MAND REPORT, THE AO HAD AGREED THAT THE ADDITIONS MADE WERE NOT CALL ED FOR. THE LEARNED AR DREW OUR ATTENTION TO PARAS 4.3. 5.3 AND PARA 6.3 OF THE ORDER OF THE LEARNED CIT(A) TO SHOW THAT THE LEARNE D CIT(A) HAD ITA NO.40 AND 70/RAN/2013 (AY 2009-10) 6 DELETED THE ADDITIONS ON T HE BASIS OF THE REMAND R EPORT FILED BY THE AO. 11. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS. A PER USAL OF PARAS 4.3, 5.3 AND 6.3 OF THE ORDER OF THE LEARNED CIT(A) CLEARLY SHOWS THAT THE LEARNED AO HAS VERIFIED THE ISSUES IN RESPECT O F THE VARIOUS ADDITIONS MADE IN THE REMAND REPORT AND HAS ADMITTE D THAT THE ADDITIONS ARE FIT TO BE DELETED. CONSIDERING THE FA CT THAT THE LEARNED CIT(A) HAS DELETED THE ADDITIONS ON THE BASIS OF TH E REMAND REPORT OF THE LEARNED AO, WE ARE OF THE VIEW THAT NO INTERFER ENCE TO THE ORDER OF THE LEARNED CIT(A) IS CALLED FOR. 12. IN THE RESULT, THE APPEAL OF THE REVENUE STANDS DISMISSED. 13. IN THE RESULT, THE APPEAL OF THE ASSESSEE AND T HE APPEAL OF THE REVENUE STAND DISMISSED. THE ORDER WAS PRONOUNCED IN THE OPEN COURT AT THE CLOSE OF HEARING ON 26-10-2015. SD/- SD/- ( N .S. SAINI ) ACCOUNTANT MEMBER (GEORGE MATHAN ) JUDICIAL MEMBER DATE : 26 .10 .1 5 LK DEKA/SR.PS ITA NO.40 AND 70/RAN/2013 (AY 2009-10) 7 COPY OF THE ORDER FORWARDED TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT CONCERNED 4. THE CIT(A) - 5. THE DR, ITAT, RANCHI 6. GUARD FILE BY ORDER DATE INITIAL ORIGINAL DICTATION PAD & DRAFT ARE ENCLOSED IN THE FILE 1. DRAFT DICTATED ON 26.10.2015 SR.PS 2. DRAFT PLACED BEFORE AUTHOR 26.10.2015 SR.PS 3. DRAFT PROPOSED & PLACED BEFORE THE SECOND MEMBER 26.10.2015 JM/AM 4. DRAFT DISCUSSED/APPROVED BY SECOND MEMBER 26.10.2015 JM/AM 5. APPROVED DRAFT COMES TO THE SR.PS/PS 26,.10.2015 SR.PS 6. DATE OF PRONOUNCEMENT 26.10.2015 SR.PS 7. FILE SENT TO THE BENCH CLERK 26.10.2015 SR.PS 8. DATE ON WHICH FILE GOES TO THE HEAD CLERK 9. DATE OF DISPATCH OF ORDER