DCIT, Faridabad V. Sh. Vinod Jain, Sonepat

ITA 403/DEL/2014

• Counselvise Citation: [2017] 130 COUNSELVISE.COM (IT) 6878 (ITAT-DELHI)
• Duration Of Justice: 3 year(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-01-2017
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: D
• Next Hearing Date: 07-11-2016
• Assessment Year: 2011-2012
• Appeal Filed On: 22-01-2014
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: S S RANA
• Keywords: Document seized
• Section: 32; 147; 131; 68; 246; 69; 145; 27; 148; 54; 37; 6; 56; 263; 63; 132; 12; 28; 144; 10; 90; 154; 2; 11; 15; 271(1)(b); 139; 92

Judgement Text

INCOME TAX APPELLATE TRIBUNAL DELHI BENCH D : NEW DELHI BEFORE SHRI H.S.SIDHU , JUDICIAL MEMBER AND SHRI PRASHANT MAHARISHI , ACCOUNTANT MEMBER I TA NO . 403/DEL/2014 (ASSESSMENT YEAR: 2011 - 12 ) DCIT, CENTRAL CIRCLE - 1, FARIDABAD VS. VINOD JAIN, PROP. M/S. NIKKI JEWELLERS, KACHEY QUARTER, OPP. SALES TAX OFFICER, MODEL TOWN, SONEPAT PAN:ADAPJ7267R (APPELLANT) (RESPONDENT) ASSESSEE BY : SH. SANJAY GUPTA, CA REVENUE BY: SH. SS RANA, CIT DR DATE OF HEARING 07/11/ 2016 DATE OF PRONOUNCEMENT 30 / 01 /201 7 O R D E R PER PRASHANT MAHARISHI , A . M . 1. THIS IS AN FILED BY THE REVENUE AGAINST THE ORDER DATED 19.11.2013 OF LD CIT(A), CENTRAL, GURGAON FOR THE ASSESSMENT YEAR 20011 - 12. 2. THE REVENUE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL: - 1. WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE THE LD CIT(A) HAS ERRED IN DELETING THE ADDITION OF RS. 5579727/ - MADE ON ACCOUNT OF DIFFERENCE OF STOCK AS VERIFIED PHYSICALLY AND AS RECORDED IN BOOKS OF ACCOUNTS ON THE DATE OF SEARCH? 2. WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE THE LD CIT(A) HAS ERRED IN DELETING THE ADDITION OF RS. 1200000/ - MADE ON ACCOUNT OF SURRENDER MADE IN THE STATEMENT U/S 132(4). 3. THE BRIEF FACTS OF THE CASE IS THAT THE ASSESSEE IS EARNING INCOME FROM JEWELLERY BUSINESS AS PROPRIETOR OF NIKKI JEWELLERS, SONEPAT. THE OFFICE PREMISES OF THE NIKKI JEWELLERS AND RESIDENTIAL PREMISES OF THE ASSESSEE WERE SUBJECT TO SEARCH ON 03.09.2010. THE ASSESSEE FILED ITS RETURN OF INCOME FOR RS. 1824 2400/ - ON 29.09.2011. SUBSEQUENTLY THE ASSESSMENT U/S 153B(1)(B) OF THE ACT WAS PASSED ON 30.11.2012 AT A TOTAL INCOME OF RS. 28882420/ - WAS MADE . THE ADDITION OF RS. 5579727/ - WAS MADE ON ACCOUNT OF EXCESS STOCK. A FURTHER ADDITION OF RS. 12 LAKHS WAS AL SO MADE AS UNDISCLOSED INCOME ON ACCOUNT OF SURRENDER MADE BY THE ASSESSEE PAGE 2 OF 4 DURING THE COURSE OF SEARCH. AN ADDITION OF RS. 3812290/ - WAS ALSO MADE ON ACCOUNT OF SALES OF THE ASSESSEE. ALL THESE ADDITION WERE CHALLENGED BEFORE THE LD CIT(A), WHO DELETED THE ADDITION ON ACCOUNT OF EXCESS STOCK OF RS. 55.79 LAKHS AND ALSO ADDITION OF RS. 12 LAKHS ON ACCOUNT OF THE SURRENDER MADE. THEREFORE, REVENUE IS IN APPEAL BEFORE US. 4. GROUND NO. 1 OF THE APPEAL PERTAINS TO DELETION OF ADDITION OF RS. 55.79 LAKHS ON ACCOUN T OF EXCESS STOCK. 5. THE LD DR SUBMITTED THAT DURING THE COURSE OF SEARCH A PHYSICAL STOCK OF RS. 2.22 CRORE WAS FOUND WHEREAS, THE STOCK OF RS. 16620273/ - WAS FOUND WHERE IS A CLEAR CUT DIFFERENCE OF RS. 55.79 LAKHS WHICH HAS BEEN ADDED. HE VEHEMENTLY SUPP ORTED THE ORDER OF THE LD ASSESSING OFFICER. 6. AGAINST THIS THE LD AR SUBMITTED THAT THE LD CIT(A) DELETED THE ABOVE ADDITION VIDE PARA NO. 6.2 OF THIS ORDER AND HE FURTHER SUBMITTED THAT AS THE ASSESSEE HAS MADE A SURRENDER OF RS. 2.50 CRORES INCLUDED RS. 2.20 CORES ON ACCOUNT OF EXCESS STOCK AND THEREFORE THE ADDITION IS NOT JUSTIFIED AND RIGHTLY DELETED BY THE LD CIT(A). HE FURTHER SUBMITTED THAT A CHART DURING THE COURSE OF HEARING BIFURCATING THE MATERIAL FOUND AND THE RATE ADOPTED AND THEN WORKED OUT EXCESS STOCK OF RS. 16620273/ - . 7. WE HAVE CAREFULLY CONSIDERED THE RIVAL CONTENTIONS. THE TOTAL STOCK FOUND ON PHYSICAL VERIFICATION DURING THE COURSE OF S EARCH WAS RS. 6.53 AND AS PER THE BOOKS OF ACCOUNT INVENTORY OF RS. 4.31 CROES AND THEREFORE, THERE WAS CLEAR DIFFERENCE IN THE BOOKS STOCK AND ACTUAL STOCK WAS RS. 2.22 CORES. THE VALUATION OF THE STOCK AT THE TIME OF SEARCH WAS MADE BY THE REGISTERED VAL UER WHO TOOK THE MARKET RATE AGAINST THE COST PRICE. ACCORDING TO THE ASSESSEE THE COST PRICE SHOULD HAVE TAKEN AT RS. 1575 / - GRAM . THE LD CIT(A) HAS HELD THAT THE STOCK AS PER BOOKS OF ACCOUNT WAS VALUED AT RS. 1575/ - PER GRAM AS PER THE REGULAR METHOD O F ACCOUNTING FOLLOWED AMOUNTING TO RS. 43069945/ - AND THE EXCESS STOCK HAS BEEN VALUED AT MARKET RATE OF RS. 1865/ - / GRAM WHICH IS WORKED OUT AT RS. 16620273/ - . THUS THE ASSESSEE IS APPLIED THE RATE ADOPTED BY THE REGISTER VALUE ON THE EXCESS STOCK FOUND AND SAME WAS INCLUDED IN THE RETURN OF INCOME. MOREOVER, ASSESSEE HAS ALSO SURRENDERED A RS. 2.20 CRORES ON ACCOUNT OF EXCESS STOCK. BEFORE US THE LD DR COULD NOT POINT OUT ANY INFIRMITY IN THE ORDER OF THE LD CIT(A) WHO HAS GIVEN A CAREFUL THOUGHT TO PAGE 3 OF 4 THE RATE ADOPTED OF EXCESS STOCK FOUND DURING THE COURSE OF SEARCH. IN VIEW OF THIS WE CONFIRM THE FINDING OF THE LD CIT(A) IN DELETING THE ADDITION OF RS. 55.79 LAKHS ON ACCOUNT OF EXCESS STOCK. IN THE RESULT GROUND NO. 1 OF THE APPEAL OF THE REVENUE IS DISM ISSED. 8. GROUND NO. 2 OF THE APPEAL OF THE REVENUE IS AGAINST DELETION OF THE ADDITION OF RS. 12 LAKH BY LD FIRST APPELLATE AUTHORITY. DURING THE COURSE OF SEARCH THE ASSESSEE HAS MADE SURRENDER OF RS. 12 LAKHS ON ACCOUNT OF DISCREPANCIES FOUND IN THE SEIZE D MATERIAL VIDE QUESTION NO. 29 OF THE STATEMENT. BEFORE THE ASSESSING OFFICER THAT THE ABOVE DISCLOSURE WAS MADE MERELY ON ESTIMATION BASIS AND WITHOUT ANY SUPPORTING MATERIAL. ON THIS BACKGROUND THIS ADDITION WAS MADE. THE LD CIT(A) DELETED THE SAME. 9. THE LD DR SUBMITTED THAT WHEN THE ASSESSEE HAS DISCLOSED THE ABOVE SUM U/S 132(4) OF THE ACT SAME SHOULD HAVE BEEN HONORED. HE FURTHER RELIED UPON THE ORDER OF THE HON'BLE DELHI HIGH COURT IN CASE OF BAGHIRATH AGGARWAL VS. CIT IN ITA NO. 28/2012 DATED 27.01.2 013. 10. THE LD AR RELIED UPON THE ORDER THE LD CIT(A) AND SUBMITTED THAT ABOVE DISCLOSURE IS TO COVER POSSIBLE INCOME EARNED DURING THE COURSE OF SEARCH. HE FURTHER STATED THAT NO SUCH DOCUMENTS WERE SEIZED AND IN THE END HE FURTHER REFERRED TO THE TELESCOPI NG OF RS. 12 LAKHS AGAINST THE ADDITION OF RS. 38.12 LAKHS SUSTAINED BY THE LD CIT(A). 11. WE HAVE CAREFULLY CONSIDERED THE RIVAL CONTENTIONS. ON LOOKING AT THE ORDER OF THE LD CIT(A) IT IS ABSOLUTELY CLEAR THAT HE HAS NOT DELETED THE ADDITION OF RS. 12 LAKH S BUT HAS GRANTED TELESCOPING AGAINST THE OTHER ADDITION ALREADY SUSTAINED BY HIM OF RS. 3812290/ - ON ACCOUNT OF UNACCOUNTED SALES FOUND DURING THE COURSE OF SEARCH. THE GROUND OF APPEAL OF THE REVENUE IN FACT DID NOT OBJECT TO THE TELESCOPING THE ADDITION GRANTED TO THE ASSESSEE. THE SUM OF RS. 12 LAKHS WERE SURRENDERED BY ASSESSEE IN RESPONSE TO QNO. 29 OF HIS STATEMENT U/S 132(4) WHEREIN HE HAS STATED THAT IT COVERS THE POSSIBLE INCOME EARNED UNDER THE DOCUMENT SEIZED. AS THE ADDITION SUSTAINED OF RS. 3812290/ - IS ARISING OUT OF THE DOCUMENT SEIZED WE DO NOT FIND ANY INFIRMITY IN THE ORDER OF THE LD CIT(A) IN NOT UPHOLDING THE SEPARATE ADDITION OF RS. 12 LAKHS. IN THE RESULT GROUND NO. 2 OF THE APPEAL OF THE REVENUE IS DISMISSED. PAGE 4 OF 4 12. IN THE RESULT THE APPEAL OF THE REVENUE IS DISMIS SED. ORDER PRONOUNCED IN THE OPEN COURT ON 3 0 / 01/2017 . - SD / - - SD / - ( H.S.SIDHU ) (PRASHANT MAHARISHI) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 3 0 / 01/2017 A K KEOT COPY FORWARDED TO 1. APPLICANT 2. RESPONDENT 3. CIT 4. CIT (A) 5. DR:ITAT ASSISTANT REGISTRAR ITAT, NEW DELHI