CHANDRESH PANDEY, Jaipur V. ACIT, Alwar

ITA 43/JPR/2015

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 5517 (ITAT-JAIPUR)
• Duration Of Justice: 1 year(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-01-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: 2008-2009
• Appeal Filed On: 15-01-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: RAJ MEHRA JCIT DR DHK
• Assessee Lawyers: K L MOOLCHANDAN I

Judgement Text

VK;DJ VIHYH; VF/KDJ.K] T;IQJ U;K;IHB] T;IQJ IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCHES (SMC), JAIPUR JH VKJ-IH-RKSYKUH] U;KF;D LNL; DS LE{K BEFORE: SHRI R.P. TOLANI, JUDICIAL MEMBER VK;DJ VIHY LA-@ ITA NO. 43/JP/2015 FU/KZKJ.K O'K Z@ ASSESSMENT YEAR : 2008-09 SHRI CHANDRESH PANDEY 1899, PANDEY BHAWAN, KHEJRON KA RASTA, CHANDPOLE BAZAR, JAIPUR CUKE VS. THE ACIT CENTRAL CIRCLE ALWAR LFKK;H YS[KK LA-@THVKBZVKJ LA-@ PAN/GIR NO .: APIPP 9782 P VIHYKFKHZ@ APPELLANT IZR;FKHZ@ RESPONDENT FU/KZKFJRH DH VKSJ LS@ ASSESSEE BY : K.L. MOOLCHANDANI, ADV. JKTLO DH VKSJ LS@ REVENUE BY : SHRI RAJ MEHRA, JCIT- DR LQUOKBZ DH RKJH[K@ DATE OF HEARING : 02/12/2015 ?KKS'K .KK DH RKJH[K@ DATE OF PRONOUNCEMENT : 27 /01/2016 VKNS'K@ ORDER PER R.P. TOLANI, JM THIS IS AN APPEAL FILED BY THE ASSESSEE AGAINST TH E ORDER OF THE LD. CIT(A)-, ALWAR, DATED 13-11-2014 FOR THE ASSESSMENT YEAR 2008-09 WHEREIN THE SOLITARY GROUND RAISED BY THE ASSESSEE IS AS UNDER:- ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE , THE LD. CIT(A) HAS FACTUALLY AND LEGALLY EARNED IN CONF IRMING THE ADDITION TO THE EXTENT OF RS. 10,10,300/- OUT OF TH E ADDITION OF RS. 13,10,300/- MADE BY THE AO ON ACCOUNT OF THE AL LEGED ITA NO. 43/JP/2015 SHRI CHANDRESH PANDEY VS. ACIT CENTRAL CIRCLE- , AL WAR . 2 EXCESS STOCK FOUND AT THE TIME OF SEARCH OPERATION S WITHOUT APPRECIATING THE FACTS OF THE CASE IN RIGHT PERSPEC TIVE. 2.1 BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE I S ENGAGED IN MANUFACTURING AND TRADING OF MARBLE IDOLS. A SEARCH OPERATION WAS CONDUCTED ON THE PREMISES OF A GROUP OF WHICH ASSES SEE IS A MEMBER. AS THE GROUND SUGGEST, THE LD. CIT(A) HAS PARTLY RETAI NED THE EXCESS VALUATION OF STOCK FOUND AT THE TIME OF SEARCH TO T HE EXTENT OF RS. 3.00 LACS. THE LD. COUNSEL FOR THE ASSESSEE CONTENDS THA T THE LD. CIT(A) ERRED IN RETAINING EXCESS VALUATION OF STOCK BY 3 LACS ON FOLLOWING COUNTS: (I) THE ADDITION WAS MADE ON THE BASIS OF ADMISSION OF THE BROTHER OF THE ASSESSEE SHRI KAMAL PRASAD PANDE Y WHO HAD NOTHING TO DO WITH ASSESSEE'S PROPRIETORSHIP BU SINESS AND WAS MERELY PRESENT AT THE TIME OF STOCK INVENTORY. (II) THE OPENING STOCK OF BUSINESS HAS BEEN TAKEN ERRONEOUSLY AS NIL. (III) THE VALUATION OF VARIOUS DEFECTIVE IDOLS HAS BEEN TAKEN AT FULL VALUE WHICH IS ARBITRARY AS NOBODY BU YS BROKEN IDOL, REFERENCE IS MADE TO THE STOCK INVENTORY WHER EIN BROKEN HANUMAN IDOL HAS BEEN VALUED AT RS. 50,000/- AS IF IT WAS A ITA NO. 43/JP/2015 SHRI CHANDRESH PANDEY VS. ACIT CENTRAL CIRCLE- , AL WAR . 3 FRESH IDOL. SIMILARLY, VARIOUS OTHER DISCREPANCIES ARE POINTED OUT TAKING MARKET VALUATION AND NOT THE COST. 2.2 THE LD. DR SUPPORTED THE ORDERS OF THE AUTHORIT IES BELOW. 2.3 I HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE MATERIALS AVAILABLE ON RECORD AND FIND MERIT IN THE CONTENTS OF THE LD. AR OF THE ASSESSEE. THERE IS NO JUSTIFICATION IN TAKING THE O PENING STOCK AT NIL AND ADOPTING THE VALUE OF THE BROKEN IDOL AT FULL VALUE . SIMILARLY, THE ADOPTION OF MARKET VALUE OF THE IDOLS AS CLOSING STOCK VALUE CANNOT BE SUSTAINED, AS PER ACCOUNTING PRINCIPLES STOCK IS TO BE VALUED ON THE BASIS OF THE COST OR MARKET VALUE WHICHEVER IS LOW. BESIDES THE ADDITION IS REVENUE NEUTRAL INASMUCH AS THE CLOSING STOCK VALUED AT HIGHER FIGU RE IS TO BE ALLOWED AS OPENING STOCK OF THE SUBSEQUENT PERIOD. THE HON'BLE SUPREME COURT IN THE CASE OF CIT VS. EXCEL INDUSTRIES LTD. (2013) 35 8 295 HELD THAT SUCH NEUTRAL ADDITIONS SHOULD NOT BE AGITATED BY THE DEP ARTMENT. THUS IN VIEW OF FOREGOING AND HONBLE SUPREME COURT JUDGMENT IN THE CASE OF EXCEL INDUSTRIES LTD. (SUPRA), THE EXCESS VALUATION OF RS . 3.00 LACS AS SUSTAINED BY THE LD. CIT(A) IS DELETED. THUS THE APPEAL OF TH E ASSESSEE IS ALLOWED. ITA NO. 43/JP/2015 SHRI CHANDRESH PANDEY VS. ACIT CENTRAL CIRCLE- , AL WAR . 4 3.0 IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWE D. ORDER PRONOUNCED IN THE OPEN COURT ON 27 /01/20 16. SD/- VKJ-IH-RKSYKUH (R.P.TOLANI) U;KF;D LNL;@ JUDICIAL MEMBER TK;IQJ@ JAIPUR FNUKAD@ DATED:- 27 /01/ 2016 *MISHRA VKNS'K DH IZFRFYFI VXZSF'KR@ COPY OF THE ORDER FORWARDED TO: 1. VIHYKFKHZ@ THE APPELLANT- SHRI CHANDRESH PANDEY, JAIPUR 2. IZR;FKHZ@ THE RESPONDENT- THE ACIT, CENTRAL CIRCLE, ALWAR 3. VK;DJ VK;QDRVIHY@ CIT(A). 4. VK;DJ VK;QDR@ CIT, 5. FOHKKXH; IZFRFUF/K] VK;DJ VIHYH; VF/KDJ.K] T;IQJ@ DR, ITAT, JAIPUR 6. XKMZ QKBZY@ GUARD FILE (ITA NO. 43/JP/2015) VKNS'KKUQLKJ@ BY ORDER, LGK;D IATHDKJ@ ASSISTANT. REGISTRAR