ACIT, Noida V. MRs. Surjeet Kaur, Prop., Noida

ITA 4450/DEL/2011

• Counselvise Citation: [2012] 140 COUNSELVISE.COM (IT) 58691 (ITAT-DELHI)
• Duration Of Justice: 4 month(s) 12 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 17-02-2012
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: G
• Next Hearing Date: 15-02-2012
• Assessment Year: 2006-2007
• Appeal Filed On: 05-10-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: RENU JAUHARI
• Assessee Lawyers: P N SASTHRI
• Keywords: Business income

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH : G : NEW DELHI BEFORE SHRI I.P. BANSAL, JUDICIAL MEMBER AND SHRI K.D. RANJAN, ACCOUNTANT MEMBER ITA NO.4450/DEL/2011 ASSESSMENT YEAR :2006-07 ACIT, CIRCLE, NOIDA G BLOCK, SHOPPING COMPLEX, SECTOR 20, NOIDA. VS. SURJEET KAUR, PROP. AJMANI CHEMICALS, E-82, SECTOR 27, NOIDA. PAN : AKUPK2464L (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI M.P. RASTOGI, ADVOCATE & SHRI P.N. SASTHRI, CA REVENUE BY : SMT. RENU JAUHARI, CIT, DR ORDER PER I.P. BANSAL, JUDICIAL MEMBER THIS IS AN APPEAL FILED BY THE REVENUE. IT IS DIRECT ED AGAINST THE ORDER PASSED BY THE CIT (A) DATED 26 TH JULY, 2011 FOR ASSESSMENT YEAR 2006-07. THE GROUNDS OF APPEAL READ AS UNDER:- 1. LD. CIT (A) HAS ERRED IN LAW AND ON FACTS BY AL LOWING RELIEF OF RS.9,29,547/- TO THE ASSESSEE ON THE ISSUE OF SUPPR ESSED CLOSING STOCK WITHOUT APPRECIATING THE FACTS MENTIONED BY THE A.O. IN THE ASSESSMENT ORDER. 2. LD. CIT (A) HAS ERRED IN LAW AND ON FACTS BY ALLO WING RELIEF OF RS.57,715/- TO THE ASSESSEE ON THE ISSUE OF PROFIT O N EXCESS SALES WITHOUT APPRECIATING THE FACTS MENTIONED BY THE A.O. IN THE ASSESSMENT ORDER. 3. THAT THE ORDER OF LD. CIT (APPEALS) BEING ERRONEOUS I N LAW AND ON THE FACTS DESERVES TO BE SET ASIDE AND THE ORDER OF THE A.O. BE RESTORED. ITA NO.4450/DEL/2011 2 2. THE ASSESSEE IS ENGAGED IN THE BUSINESS OF TRADING IN C HEMICALS. THE SALES SHOWN IN THE PROFIT & LOSS ACCOUNTS WERE ` 3,15 ,85,478/- AND AGAINST THAT PURCHASES WERE SHOWN AS ` 2,93,31,117/- ON WHICH GROSS PROFIT OF ` 7.95% WAS DECLARED. THE ASSESSEE WAS REQUIRE D TO SUBMIT MONTH-WISE DETAILS OF SALES AND PURCHASES ACCORDING TO WH ICH THE TOTAL SALES WERE REPORTED AT ` 3,22,81,924/- AND PURCHASES WE RE REPORTED AT ` 3,04,17,709/-. THUS, IT WAS OBSERVED BY THE ASSESSING O FFICER THAT THERE WAS A DIFFERENCE OF ` 6,96,447/- IN THE SALES AN D ` 10, 86,596/- IN THE PURCHASES. THE ASSESSEE WAS REQUIRED TO EXPLAIN THE SA ME AND THE ASSESSEE TRIED TO EXPLAIN THE DIFFERENCE BY REDUCIN G THE GP @ 8% AND ON THESE CALCULATION THE ASSESSING OFFICER OBSERVED T HAT THE SHORTAGE OF STOCK AVAILABLE FOR SALE WITH THE ASSESSEE IN THE MONTH OF MAY, 2005 WAS TO THE EXTENT OF ` 71,835/- AND, THERE FORE, THE ASSESSING OFFICER OBSERVED THAT THE ASSESSEE HAD MADE SALES OUT OF T HE BOOKS. SIMILARLY, IN THE MONTH OF NOVEMBER, 2005 THE ASSESSING OFFICER NOTICED THAT SALES WERE MADE TO THE TUNE OF ` 28,39,6 39/- AGAINST THE AVAILABLE STOCK OF ` 20,27,795/- WHICH ALSO RESULTED I N THE SHORTAGE OF STOCK OF ` 5,84,672/-. HE FURTHER FOUND THAT DURING THE MONTH OF DECEMBER, 2005 TO MARCH, 2006, ACCORDING TO THE PU RCHASES AND SALES MADE BY THE ASSESSEE, THE STOCK AVAILABLE WITH THE ASSESSEE WAS ` 18,67,797/- AGAINST WHICH THE CLOSING STOCK WAS DISCLOSED ONLY AT ` 9,38,250/-. THE ASSESSING OFFICER MADE ADDITION OF THE DIFFERENCE BETWEEN THESE TWO WHICH HAS BEEN COMPUTED AT ` 9,29,5 47/- BEING THE DIFFERENCE IN STOCK AS AT THE END OF THE YEAR. THE A SSESSING OFFICER ASKED THE ASSESSEE TO EXPLAIN THE SAME AND THE ASSESSEE SUBMIT TED THE RECONCILIATION AND THE SALES INCLUDED THE SALE RET URN AS WELL AS THE PURCHASE RETURN. THE ASSESSING OFFICER DID NOT BELIEVE THE EXPLANATION OF THE ASSESSEE ON THE GROUND THAT PRIOR TO THAT THIS EX PLANATION WAS NOT FURNISHED BY THE ASSESSEE AND HE HAS ADDED THE SAID AM OUNT TO THE INCOME OF THE ASSESSEE. SIMILARLY, ON THE EXCESS SALE S WHICH WAS FOUND TO BE MADE BY THE ASSESSEE IN THE MONTH OF MAY AN D NOVEMBER, ITA NO.4450/DEL/2011 3 2005, THE ASSESSING OFFICER HAS COMPUTED 8% GROSS PROFIT O N THESE SALES OF ` 6,96,447/- AND FURTHER ADDITION OF ` 55,71 5/- HAS BEEN MADE. 3. THE AFOREMENTIONED ADDITIONS WERE AGITATED BEFORE THE CIT (A). BEFORE HIM THE RECONCILIATION OF THE SALES AND PURCHA SES WERE SUBMITTED AND IT WAS EXPLAINED THAT THERE WAS NO DIFFE RENCE WHICH HAS BEEN ALLEGED BY THE ASSESSING OFFICER. THE LEARNED CIT (A), AFTER GOING THROUGH THE RECONCILIATION SUBMITTED BY THE ASSESSEE, HA S GIVEN A FINDING THAT THE RECONCILIATION WAS ABSOLUTELY PROPER AND WAS AS PER BASIC PRINCIPLES OF ACCOUNTANCY AND BOOK KEEPING; THE EXPENSES WERE BACKED BY THE REQUISITE COPIES OF ACCOUNTS AND DOCUMEN TS AND THE ASSESSEE HAS CORROBORATED THIS EXPLANATION FROM THE FIGUR ES OF SALES AND PURCHASES AVAILABLE IN THE SALES-TAX ASSESSMENT ORDER. IN THESE CIRCUMSTANCES, HE HAS FOUND THAT THERE WAS NO DIFFERENC E WHATSOEVER IN THE SALES AND PURCHASES SHOWN BY THE ASSESSEE AND THE ADD ITION WAS NOT CALLED FOR. AS THE LEARNED CIT (A) HAS DELETE D THE BASIC ADDITION, THE ADDITION MADE ON ACCOUNT OF APPLICATI ON OF GROSS PROFIT OF ` 57,785/- IS ALSO DELETED. THE DEPARTMENT IS AGGRIEV ED, HENCE, IN APPEAL. 4. RELYING UPON THE FACTS MENTIONED IN THE ASSESSMENT OR DER, IT WAS PLEADED BY THE LEARNED DR THAT THERE WAS A DIFFERENC E BETWEEN THE SALES AND PURCHASES SHOWN IN THE PROFITS & LOSS ACCOUNT AND IN THE MONTH-WISE DETAILS FURNISHED BY THE ASSESSEE. THEREFORE, SHE PLEADED THAT LD. ASSESSING OFFICER WAS RIGHT IN MAKING THE ADDIT ION AND IT HAS WRONGLY BEEN DELETED BY LEARNED CIT (A). SHE PLEAD ED THAT THE ORDER OF LEARNED CIT (A) SHOULD BE SET ASIDE AND THAT OF ASSESSI NG OFFICER SHOULD BE RESTORED. 5. ON THE OTHER HAND, IT WAS SUBMITTED BY THE LEARNED AR THAT THERE WAS NO DIFFERENCE AS SUCH. THE DIFFERENCE IN THE SALES WAS ON ACCOUNT ITA NO.4450/DEL/2011 4 OF RETURNED SALES, SALES-TAX, CARTAGE, ETC. THE DIFFER ENCE IN THE PURCHASE WAS DUE TO THE RETURNED PURCHASES. HE ALSO SUBM ITTED THAT ALL THESE RECONCILIATIONS WERE SUBMITTED TO THE ASSESSING OFFICER AND THE ASSESSING OFFICER WITHOUT APPRECIATING THE POSITION HAS MADE THE ADDITION. HE SUBMITTED THAT LEARNED CIT (A) HAS RETU RNED A FINDING THAT THE DIFFERENCE HAS BEEN RECONCILED BY THE ASSESSEE. HE A LSO DREW OUR ATTENTION TOWARDS DETAILS FILED AT PAGES 4, 5 AND 6 OF THE PAPER BOOK IN WHICH ALL THE DIFFERENCES IN THE SALES AND PURCHASES VIS -A-VIS THE CLOSING STOCK HAVE BEEN EXPLAINED. REFERRING TO THESE DETAILS IT WAS PLEADED BY THE LEARNED AR THAT LEARNED CIT (A) HAS R IGHTLY DELETED THE ADDITION. 6. WE HAVE CAREFULLY CONSIDERED THE RIVAL SUBMISSIONS IN THE LIGHT OF THE MATERIAL PLACED BEFORE US. IT WILL BE RELEVANT T O REPRODUCE THE RECONCILIATION SUBMITTED BY THE ASSESSEE WHICH ARE PLACE D AT PAGES 4, 5 AND 6 OF THE PAPER BOOK:- GENERAL CALCULATION OF STOCK IS AMOUNT DEDUCTION GP RA TE SHOWN IN BAL. SHEET OF YEAR 2005-06 AS PER QUESTION RAISED BY THE DE PARTMENT. MONTH MONTHLY OPENING STOCK NET PURCHASE AS PER BAL. SHEET NET PURCHASE + OPENING STOCK NET SALE AFTER LESS DEDUCTION GP @ 8% MONTHLY CLOSING STOCK APRIL, 2005 492950.00 492950.00 492950.00 492950.00 1866926.08 2359876.08 2145380.94 214495.14 MAY, 2005 214495.14 2211350.00 2425845.14 2408328.76 17516.39 JUNE, 2005 17516.39 2762891 2780407.63 2598924.56 181483.07 JULY, 2005 181483.07 2660948.00 2842431.07 2001686.46 840744.61 AUG, 2005 840744.61 2741878.65 3582623.26 2949369.12 633254.14 SEP, 2005 633254.14 2368912.34 3002166.48 1899355.18 1102811.30 OCT, 2005 1102811.30 2105609.34 3208420.64 23666653.08 841767.56 NOV, 2005 841767.56 1498062.88 2339830.44 2542649.72 -202819.29 DEC 2005 -202819.29 4289957.76 4087138.47 2741385.18 1345753.29 JAN 2006 1345753.29 2060255.94 3406009.23 2001234.60 1404774.63 FEB, 2006 1404774.63 2415735.10 3820509.73 2290103.10 1530406.63 MAR, 2006 1530406.63 2348584.50 3878991.13 3113569.34 765421.79 765421.79 765421.79 765421.79 ITA NO.4450/DEL/2011 5 DESCRIPTION OF PURCHASE FOR THE YEAR 2005-06 MONTH PURCHASE AMOUNT LESS PUR. AMOUNT TOTAL PURCHASE AS PER B. SHEET APRIL, 2005 1872426.08 5500.00 1866926.08 MAY, 2005 2216850.00 5500.00 2211350.00 JUNE, 2005 2762891.24 2762891.24 JULY, 2005 2660948.00 2660948.00 AUG, 2005 2741878.65 2741878.65 SEP, 2005 2368912.34 2368912.34 OCT, 2005 2105659.34 50.00 2105659.34 NOV, 2005 1498062.88 1498062.88 DEC 2005 4290007.76 50.00 4289957.76 JAN 2006 2301326.94 241071.00 2060255.94 FEB, 2006 2934695.10 518960.00 2415735.10 MAR, 2006 2664055.50 315471.00 2348584.50 TOTAL 30417713.83 30417713.83 30417713.83 30417713.83 1086602.00 1086602.00 1086602.00 1086602.00 2933111.83 2933111.83 2933111.83 2933111.83 DESCRIPTION OF SALE FOR THE YEAR 2005-06 MONTH SALE AMOUNT LESS SALE TAX AMOUNT LESS SALE CARTAGE AMT. LESS CR. NOTE AMT. NET SALE AS PER B. SHEET APRIL, 2005 2380468.00 45748.00 2740.00 44.00 2331935.8 MAY, 2005 2678295.00 56729.25 3240.00 577.10 2617748.65 JUNE, 2005 2876915.00 44318.00 6589.00 1090.00 2824918.00 JULY, 2005 2236628.65 52466.30 5451.20 2965.00 2175746.15 AUG, 2005 3277712.50 62574.50 4932.00 4370.00 3205836.00 SEP, 2005 2141887.00 37273.50 2575.50 37521.50 2064516.50 OCT, 2005 2630504.00 51441.00 6614.00 23666653.08 2572449.00 NOV, 2005 2839639.50 74098.80 1791.00 2542649.72 2763749.70 DEC 2005 3040178.00 53844.50 5628.00 939.00 2979766.50 JAN 2006 2223577.00 45567.00 2755.00 2001234.60 2175255.00 FEB, 2006 2526946.00 34035.00 2700.00 968.50 2489242.50 MAR, 2006 3429175.00 41880.00 2349.50 631.00 3384314.50 TOTAL TOTAL TOTAL TOTAL 32281925.65 32281925.65 32281925.65 32281925.65 599975.85 599975.85 599975.85 599975.85 47365.20 47365.20 47365.20 47365.20 49106.10 49106.10 49106.10 49106.10 31585478.30 31585478.30 31585478.30 31585478.30 7. AFTER HEARING BOTH THE PARTIES AND AFTER TAKING INTO ACCOUNT THE AFOREMENTIONED DETAILS, WE ARE OF THE OPINION THAT T HE DIFFERENCE WHICH WAS POINTED OUT BY THE ASSESSING OFFICER HAS BEEN EXPLAIN ED BY THE ASSESSEE AND LEARNED CIT (A) HAS RIGHTLY HELD THAT THE D IFFERENCE HAS BEEN EXPLAINED BY THE ASSESSEE. IN THIS VIEW OF THE SITU ATION, WE DECLINE TO INTERFERE IN THE RELIEF GIVEN BY THE LEA RNED CIT (A). AS THE MAIN ADDITION WAS NOT SUSTAINABLE, THERE WAS NO QUESTION OF APPLYING ITA NO.4450/DEL/2011 6 ANY GP RATE ON THE SALES WHICH HAVE BEEN ALLEGEDLY FO UND TO BE SHORT BY THE ASSESSING OFFICER. 8. IN THE RESULT, THE APPEAL FILED BY THE DEPARTMENT IS DISMISSED IN THE MANNER AFORESAID. THE ORDER PRONOUNCED IN THE OPEN COURT ON 17.02.20 12. SD/- SD/- [K.D. RANJAN] [I.P. BANSAL] ACCOUNTANT MEMBER JUDICIAL MEMBER DATED, 17.02.2012. DK COPY FORWARDED TO: - 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR, ITAT TRUE COPY BY ORDER, DEPUTY REGISTRAR, ITAT, DELHI BENCHES