DCIT, Jaipur V. RASTOGI FURNISHERS & DECORATORS, Jaipur

ITA 405/JPR/2011

• Counselvise Citation: [2011] 140 COUNSELVISE.COM (IT) 54140 (ITAT-JAIPUR)
• Duration Of Justice: 3 month(s) 30 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 02-09-2011
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Assessment Year: 2006-2007
• Appeal Filed On: 03-05-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: D K MEENA
• Section: 133A

Judgement Text

1 ITA 405-11 ` IN THE INCOME TAX APPELLATE TRIBUNAL JAIPUR BENCH B JAIPUR BEFORE SHRI R.K. GUPTA AND SHRI N.L. KALRA ITA NO. 405/JP/2011 ASSTT. YEAR : 2006-07. THE DCIT, CIRCLE-2, VS. M/S. RASTOGI FURNISHERS & JAIPUR. DECORATORS PVT. LTD., 3 GF, ANUKAMPA MANSION, M.I. ROAD, JAIPUR. (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI D.K. MEENA RESPONDENT BY : SHRI MANISH AGARWAL DATE OF HEARING : 18.8.2011. DATE OF PRONOUNCEMENT : 02.09.2011. ORDER DATE OF ORDER : 02/09/2011. PER R.K. GUPTA, J.M. THIS IS AN APPEAL BY DEPARTMENT AGAINST THE ORDER OF LD. CIT (A) RELATING TO ASSESSMENT YEAR 2006-07. 2. THE DEPARTMENT IS OBJECTING IN DELETING THE ADDI TION OF RS. 9,00,000/- MADE BY AO ON ACCOUNT OF EXCESS STOCK. 3. IN THIS CASE SURVEY UNDER SECTION 133A WAS CONDU CTED IN THE ASSESSEES CASE ON 29.6.2005. IT WAS FOUND THAT ASSESSEE HAS NOT MAIN TAINED STOCK REGISTER AND BOOKS OF ACCOUNTS WERE INCOMPLETE. PAYMENTS MADE TO KARIGAR S WERE NOT PROPERLY RECORDED AND DETAILS REGARDING JOB WORK WERE NOT MAINTAINED. EXC ESS STOCK WAS ALSO FOUND AND ON THIS 2 ACCOUNT, THE ASSESSEE HAS MADE DISCLOSURE OF RS. 9, 00,000/-. HOWEVER, WHEN THE RETURN OF INCOME WAS FILED, THE SURRENDER MADE OF RS. 9,00,00 0/- IN RESPECT OF EXCESS STOCK FOUND WAS NOT OFFERED FOR TAXATION. IT WAS EXPLAINED THA T AS PER THE INVENTORY PREPARED BY THE DEPARTMENT THE STOCK AVAILABLE WAS OF RS. 20,40,287 /- WHEREAS THE SAME WAS VALUED AT RS. 20,30,140/- BY THE ASSESSEE. THE AO ON THE BAS IS OF STATEMENT OF THE DIRECTOR SHRI MAHESH RASTOGI INFERRED THAT THE BOOKS OF ACCOUNT W ERE NOT UP DATED AND THE CLOSING STOCK FIGURES WERE REPORTED BY THE DIRECTOR OF THE COMPANY ONLY. DAY TO DAY STOCK REGISTER WAS NOT MAINTAINED, THEREFORE, HE REJECTED THE BOOKS OF ACCOUNT AND MADE ADDITION OF RS. 9,00,000/- AS UNDISCLOSED INCOME AS THE SURRENDER WAS MADE DURING THE COURSE OF SURVEY. IT WAS CONTENDED BEFORE LD. CIT ( A) THAT DURING THE COURSE OF SURVEY PROCEEDINGS EXCESS STOCK OF RS. 9,00,000/- WAS WORK ED OUT AND ACCORDINGLY THE SAME WAS SURRENDERED. IT WAS SUBMITTED THAT STATEMENT RECORD ED DURING THE SURVEY IS NOT PERMISSIBLE IN VIEW OF THE DECISION OF HONBLE KERALA HIGH COUR T IN THE CASE OF PAUL MATHEWS & SONS VS. CIT, 263 ITR 101. THEREFORE, THE STATEMEN T HAS TO BE AVOIDED. IT WAS EXPLAINED THAT THE STOCK WAS TAKEN ARBITRARILY THOUGH AS PER BOOKS OF ACCOUNT THERE WAS NO DIFFERENCE. DISCREPANCIES FOUND DURING THE COURSE OF SURVEY WERE EXPLAINED BUT THEY WERE NOT ACCEPTED BY THE AO. MANUFACTURING AND TRA DING ACCOUNTS WERE ALSO PREPARED AND FILED BEFORE AO. FURTHER, DETAILED SUBMISSIONS WERE FILED BEFORE LD. CIT (A). IT WAS ALSO SUBMITTED THAT THE REJECTION OF BOOKS OF ACCOU NT WERE ALSO NOT JUSTIFIED BY INVOKING PROVISIONS OF SECTION 145(3). 4. THE LD. CIT (A) CONFIRMED THE REJECTION OF BOOKS OF ACCOUNT IN VIEW OF PROVISIONS OF SECTION 145(3). HOWEVER, HE FOUND THAT ASSESSEE HAS EXPLAINED THE DISCREPANCIES IN THE STOCK FOUND DURING THE COURSE OF SURVEY. IT WAS NO TED THAT THERE WAS A MINOR DIFFERENCE IN 3 STOCK OF RS. 10,000/- OR ODD WHICH WAS DUE TO VALUA TION. ACCORDINGLY HE DELETED THE ADDITION OF RS. 9,00,000/-. 5. NOW THE DEPARTMENT IS IN APPEAL HERE BEFORE THE TRIBUNAL. 6. THE LD. D/R PLACED RELIANCE ON THE ORDER OF A.O. 7. ON THE OTHER HAND, THE LD. COUNSEL OF THE ASSESS EE PLACED RELIANCE ON THE ORDER OF LD. CIT (A). 8. AFTER CONSIDERING THE ORDERS OF THE AO AND LD. C IT (A), WE FIND NO INFIRMITY IN THE FINDING OF LD. CIT (A) WHICH HAS BEEN RECORDED AT PAGE 3 OF HIS ORDER AS UNDER :- SO FAR AS AN ADDITION OF RS. 9 LACS IS CONCERNED, IT APPEARS THAT THE ADDITION HAS BEEN MADE ONLY ON ACCOUNT OF STATEMENT S GIVEN BY THE ACCOUNTANT WHO WAS AVAILABLE DURING THE COURSE OF S URVEY AND WHO ESTIMATED THE STOCK AVAILABLE THERE BEFORE STARTING OF SURVEY. THE EXCESS STOCK AS PER PHYSICAL VERIFICATION WAS VALUED BY SU RVEY PARTY AT RS. 20,40,287/- AND IN THE RETURN OF INCOME THE APPELLA NT HAS SHOWN CLOSING STOCK AS ON THE DATE OF SURVEY AT RS. 220,30,140/-. THUS, THERE IS ONLY NOMINAL DIFFERENCE OF RS. 10,147/-. TO WORK OUT EX CESS STOCK FOUND, THE AO HAS TAKEN STATEMENT OF THE ACCOUNTANT AS BASIS W HERE HE HAS SHOWN AS VALUE OF STOCK AS PER BOOKS AT RS. 11 LACS. THE ACT ION OF AO CANNOT BE APPROVED AS HE WAS SUPPOSED TO TAKE STOCK AS PER BO OKS ON THE BASIS OF BOOKS AVAILABLE AND AFTER TAKING INTO CONSIDERATION PURCHASE AND SALE BILLS UP TO THE DATE OF SURVEY AVAILABLE AT THAT TIME. A N ACCOUNTANT OR ANY BUSINESSMAN IS NOT SUPPOSED TO KNOW THE EXACT VALUE OF STOCK AVAILABLE WITH HIM ON A PARTICULAR DATE. THUS THE VERY BASIS TAKEN BY THE AO IS NOT CORRECT. THE ACTUAL DIFFERENCE IN THE EXCESS STOCK VALUED BY THE AO AS WELL AS THE APPELLANT IS RS. 10,147/- ONLY WHICH IS NOMI NAL AND, THEREFORE, CAN BE IGNORED. AS THE APPELLANT HAS ALREADY TAKEN INT O CONSIDERATION, THE EXCESS STOCK FOUND ON THE DATE OF SURVEY IN HIS BOO KS OF ACCOUNTS AND ON THE NEXT DATE I.E. 30.6.05, THE OPENING STOCK HAS B EEN TAKEN WHAT THE 4 CLOSING STOCK WAS WORKED OUT DURING THE COURSE OF S URVEY. WHILE TAKING INTO ACCOUNT EXCESS STOCK FOUND, THE APPELLANT HAS COMPLETED BOOKS OF ACCOUNTS AND PAID TAX OVER IT AND, THEREFORE, THERE IS NO JUSTIFICATION OF MAKING FURTHER ADDITION. THE AO IS, THEREFORE, DIRE CTED TO DELETE THE ADDITION OF RS. 9 LACS. THE SECOND GROUND OF APPEA L IS DECIDED IN FAVOUR OF THE APPELLANT. THESE FINDINGS ARE FINDING OF FACT WHICH REMAINED U NCONTROVERTED, THEREFORE, WE CONFIRM THE FINDING OF LD. CIT (A). 9. IN THE RESULT, APPEAL OF THE DEPARTMENT IS DISMI SSED. 10. THE ORDER IS PRONOUNCED IN THE OPEN COURT ON 02 .09.2011. SD/- SD/- ( N.L. KALRA ) ( R.K. GUPTA ) ACCOUNTANT MEMBER JUDICIAL MEMBER JAIPUR, D/- COPY FORWARDED TO :- THE DCIT, CIRCLE-2, JAIPUR. M/S. RASTOGI FURNISHERS & DECORATORS P. LTD., JAIPU R. THE CIT (A) THE CIT THE D/R GUARD FILE (ITA NO. 405/JP/2011) BY ORDER, AR ITAT JAIPUR.