ACIT, New Delhi V. M/s. Kukra Chain and Jewellary (P) Ltd., Delhi

ITA 4110/DEL/2010

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 82150 (ITAT-DELHI)
• Duration Of Justice: 4 year(s) 2 month(s) 4 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 10-11-2014
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: D
• Next Hearing Date: 10-11-2014
• Assessment Year: 2007-2008
• Appeal Filed On: 06-09-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: GAURAV DUDEJA
• Assessee Lawyers: ASHWANI TANEJA
• Keywords: Rejection of books of accounts; Unexplained investment; Income from undisclosed sources

Judgement Text

ITA NO. 4110/ DEL/ 2010 1 IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH D , NEW DELHI BEFORE SHRI H.S. SIDHU, JUDICIAL MEMBER AND SHRI T.S. KAPOOR, ACCOUNTANT MEMBER I.T.A. N O. 4110 /DEL/201 0 A.Y. : 200 7 - 0 8 ASSISTANT COMMISSIONER OF ICNOME TAX, CENTRAL CIRCLE - 23, ROOM NO. 359, ARA CENTRE, E - 2, JHANDEWALAN, NEW DELHI VS. M/S KUKRA CHAIN AND JEWELLERY PVT. LTD., 1166/303, KUCHA MAHAJANI, CHANDANI CHOWK, DELHI (PAN: AABCK7968H) (APPELLANT) (RESPONDENT) DEPARTMENT BY : SH. GAURA V DUDEJA, SR. D.R. ASSESSEE BY : SH. ASHWANI TANEJA, ADV. DATE OF HEARING : 10 - 11 - 2014 DATE OF ORDER : 10 - 11 - 2014 ORDER PER H.S. SIDHU : J M TH IS APPEAL BY THE REVENUE IS DIRECTED AGAINST THE O RDER OF THE LD. COMMISSIONER OF INCOME TAX (APPEALS ) - I II , DELHI DATED 07 . 6 .201 0 P ERTAINING TO ASSESSMENT YEAR 200 7 - 0 8 ON THE FOLLOWING GROUNDS: - 1. WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) HAS ERRED IN LAW ON FACTS IN DELETING THE ADDITION OF RS. 1,00,06,656/ - MADE BY THE AO ON ACCOUNT OF EXCESS VALUE OF STOCK? 2. WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) HAS ERRED IN LAW ON FACTS IN NOT APPRECIATING THE FACTS THAT AS PER ITA NO. 4110/ DEL/ 2010 2 CERTIFICATE GIVEN BY THE ASSESSEE TO THE BAN K, THE STOCK WAS VALUED IN THE SAME MANNER AS ADOPTED FOR COMPANY S AUDITED ACCOUNTS? 3. THE APPELLANT CRAVES LEAVE TO ADD, ALTER OR AMEND ANY / ALL OF THE GROUNDS OF APPEAL BEFORE OR DURING THE COURSE OF THE HEARING OF THE APPEAL. 2. THE FACTS NARRA TED BY THE REVENUE ARE NOT IN DISPUTE BY BOTH THE PARTIES, THEREFORE, NOT REPEATING THE SAME HERE FOR THE SAKE OF CONVENIENCE. 3 . AT THE TIME OF HEARING, SH. GAURAV DUDEJA, SR. DEPARTMENTAL REPRESENTATIVE, RELIED UPON THE ORDER OF THE ASSESSING OFF ICER . ON THE OTHER HAND, THE LD. AUTHORISED REPRESENTATIVE OF THE ASSESSEE HAS RELIED UPON THE ORDER OF THE LD. CIT(A) AND STATED THAT LD. CIT(A) S ORDER MAY BE UPHELD. TO SUBSTANTIATE ITS CLAIM LD. COUNSEL OF THE ASSESSEE HAS FILED THE SYNOPSIS WHEREIN HE HAS SUBMITTED THE FOLLOWING: - THE ONLY ISSUE IN THE DEPARTMENT APPEAL IS AGAINST THE ADDITION OF RS. 1,00,06,656/ - MADE BY THE AO ON THE GROUND THAT THE ASSESS EE HAD SHOWN STOCK OF 92% OF GOLD JEWELLERY TO ITS BANK IN THE HYPOTHECATION STATEMENT OF RS. 1,45,23,475/ - WHEREAS VALUE AS PER BOOKS OF THE ASSESSEE WAS RS. 45,16,819/ - . THIS ADDITION WAS DELETED BY LD. CIT(A). IT IS THE CASE OF THE ASSESSEE THAT AC TUAL STOCK WAS OF RS. 1,77,17,888/ - IN WHICH STOCK OF 92% OF GOLD JEWELLERY WAS RS. 45,16,819/ - . STOCK WAS SHOWN TO THE BANK IN AN INFLATED MANNER AT THE TOTAL VALUE OF RS. 1,95,37,999/ - WHICH INCLUDED 92% GOLD JEWELLERY OF RS. 1,45,23,476/ - . CASE OF ASSE SSEE IS THAT ITA NO. 4110/ DEL/ 2010 3 INFLATED STOCK WAS GIVEN TO THE BANK FOR OBTAINING HIGHER OD LIMIT AND ACTUAL STOCK WAS THAT OF RS. 1,77,17,888/ - . ALTERNATIVELY, CASE OF THE ASSESSE WAS THAT IF LD. AO WAS TO ACCEPT THE BANK STATEMENT AS CORRECT, THEN HE OUGHT TO HAVE ACCEP TED THE ENTIRE STOCK STATEMENT GIVEN TO THE BANK AS CORRECT AND NOT TO HAVE PICKED UP 92% GOLD JEWELLERY IN ISOLATION AND LD. AO OUGHT TO HAVE MADE ADDITION ON ACCOUNT OF DIFFERENCE OF RS. 18,20,111/ - (RS. 1,95,37,999 RS. 1,77,17,888). RELIANCE IS PLAC ED ON THE FOLLOWING JUDGEMENTS: - I) CIT VS. LAXMI ENGG. INDUSTRIES : (2009) 308 279 (RAJ). II) CIT VS. UDAIPUR CHEMICALS & FERTILIZERS (P) LTD. : 166 TAXMAN 266, (2007) 211 CTR 191 (RAJ.). III) CIT VS. DAS INDUSTIRES (2008) 303 ITR 199 (ALL) IV) ACIT VS. JYOTI ROLLERS PVT. LTD. (2009) 125 TTJ 810 V) CIT VS. VEERDIP ROLLERS PVT. LTD. : (2010) 323 ITR 341 (GUJ.) UNEXPLAINED INVESTMENT ADDITION ON ACCOUNT OF DIFFERENCE IN THE VALUE OF CLOSING STOCK FURNISHED TO THE BANK AND THE VALUE OF THE STOCK FOUND IN THE BOOKS OF A CCOUNTS FURNISHED TO THE IT AUTHORITIES INFLATED STOCK FOUND IN THE BOOKS OF ACCOUNTS FURNISHED TO THE IT AUTHORITIES INFLATED STOCK WAS HYPOTHETICAL AND NOT PLEDGE BANK OFFICIAL HAD NOT VERIFIED ITA NO. 4110/ DEL/ 2010 4 THE SAID STATEMENT SHOWING THE INFLATED STOCK SO PRODU CED BY THE ASSESSEE OR THE SAME WAS ASCERTAIN FROM THE BANK ADDITION NOT SUSTAINED. VI) CIT VS. ARROW EXIM P LTD. (2010) 230 CTR 293 (GUJ.) INCOME FROM UNDISCLOSED SOURCES ADDITION DIFFERENCE IN THE VALUE OF CLOSING STOCK STOCKS ARE HYPOTHETIC AL AND NOT PLEDGED WITH BANK WHICH, AS EXPLAINED BY THE ASSESSEE, WERE INFLATED IN THE STATEMENT GIVEN TO THE BANK TO AVAIL HIGHER CREDIT FACILITIES TRIBUNAL HAS ACCEPTED THE EXPLANATION OF THE ASSESEE IN VIEW OF THE FACT THAT ASSESSEE S BOOKS OF ACCOUN T AND THE ACCOUNTING SYSTEM HAVE BEEN FOUND TO BE GENUINE AND IS SUPPORTED BY VOUCHERS, ETC. AND, THEREFORE DELETED THE ADDITION NO INTERFERENCE WARRANTED. 4 . WE HAVE HEARD BOTH THE COUNSEL AND PERUSED THE RECORDS. WE FIND THAT LD. CIT(A) HAS ELABORATELY DISCUSSED THE ISSUE IN QUESTION, AFTER DEALING THE VARIOUS HIGH COURT DECISIONS, AND CONCLUDED HIS FINDING VIDE PARA NO. 6 AS UNDER: - 6. IT EMERGES FROM THE FACTS IN THE CASE BEFORE THE HON BLE COURT (VIZ. RECON MACHINE TOLLS PVT. LTD. REPORTED IN 286 ITR 637 KARNATAKA HIGH COURT DECISION), NO ACCEPTABLE EVIDENCE WAS PRODUCED BEFORE THE COURT TO DISBELIEVE THE BANK STATEMENT, WHEREIN THE PR ESENT CASE, THE APPELLANT HAD PRODUCED THE BILLS FOR THE ITA NO. 4110/ DEL/ 2010 5 PURCHASES AND SALES AND THE ASSESSING OFFICER HAD NOT POINTED OUT ANY SUPPRESSION OF PURCHASES OR SALES. THE BOOKS OF ACCOUNTS WERE PRODUCED FOR THE VERIFICATION AND THE SAME WERE FOUND TO BE IN ORDER. THE ASSESSING OFFICER WHILE MAKING THE IMPUGNED ADDITION OF RS. 1,00,06,656/ - TO THE INCOME OF THE APPELLANT HAS NOT REJECTED THE BOOKS OF ACCOUNTS. AS SUCH, THE RATIO OF THE DECISION RELIED BY THE ASSESSING OFFICER IS NOT APPLICABLE ON THE FACTS OF THIS CASE. THE JUDICIAL PRECEDENTS AS DISCUSSED ABOVE MAKE IT CLEAR THAT THE ADDITION ON ACCOUNT OF DIFFERENCE IN STOCK CAN BE MADE ONLY ON THE BASIS OF ADEQUATE MATERIAL, BUT NOT ARBITRARILY. ADMITTEDLY, THERE WAS A DIFFERENCE BETWEEN THE V ALUE OF STOCK DECLARED TO THE BANK AND THE ASSESSING OFFICER. THERE WAS NO DISPUTE THAT THE APPELLANT WAS MAINTAINING BOOKS OF ACCOUNTS ON DAY TO DAY BASIS. THE PURCHASES AND SALES AS ON 31.3.2007 ARE SUPPORTED BY VOUCHERS AND THE ASSESSING OFFICER HAD N OT POINTED OUT ANY SUPPRESSION OF PURCHASES OR SALES. IN VIEW OF THE TOTALITY OF THE FACTS AND CIRCUMSTANCES AND THE AFORESAID JUDICIAL PRECEDENTS, THE ADHOC ADDITION OF RS. 1,00,06,656/ - MADE BY THE AO TO THE INCOME OF THE APPELLANT IS DELETED. 4 .1 IN VIEW OF THE ABOVE, WE FIND CONSIDERABLE FORCE IN THE VIEW TAKEN BY LD. CIT(A) AND THE CONTENTION RAISED BY THE LD. COUNSEL OF ITA NO. 4110/ DEL/ 2010 6 THE ASSESSEE THROUGH HIS WRITTEN SYNOPSIS AS AFORESAID AND THE PRECEDENTS RELIED THAT THERE WAS NO DISPUTE THAT THE ASSSESSEE W AS MAINTAINING BOOKS OF ACCOUNTS ON DAY TO DAY BASIS. THE PURCHASES AND SALES AS ON 31.3.2007 ARE SUPPORTED BY VOUCHERS AND THE ASSESSING OFFICER HAD NOT POINTED OUT ANY SUPPRESSION OF PURCHASES OR SALES. THEREFORE, WE FIND LD. CIT(A) HAS RIGHTLY DELETED T HE ADHOC ADDITION OF RS. 1,00,06,656/ - MADE BY THE AO, WHICH DOES NOT NEED ANY INTERFERENCE ON OUR PART, HENCE, WE UPHOLD THE ORDER OF THE LD. CIT(A). 5 . IN THE RESULT, THE APPEAL FILED BY THE REVENUE STANDS DISMISSED. ORDER PRONOUNCED IN THE O PEN C OU RT ON 10/ 11 /20 1 4 . SD/ - SD/ - [ T.S. KAPOOR ] [ H.S. SIDHU ] ACCOUNTANT MEMBER JUDICIAL MEMBER DATE 10 / 11 /201 4 SRBHATNAGAR COPY FORWARDED TO: - 1. APPELLANT - 2. RESPONDENT - 3. CIT 4. CIT (A) 5. DR, ITAT TRUE COPY BY ORDER, ASSISTANT REGISTRAR, ITAT, DELHI BENCHES ITA NO. 4110/ DEL/ 2010 7