GOYAL TOBACCO CO. P LTD., Jaipur V. ITO, Jaipur

ITA 454/JPR/2013

• Counselvise Citation: 45423114 RSA 2013
• Duration Of Justice: 2 year(s) 6 month(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 04-11-2015
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: 2008-2009
• Appeal Filed On: 01-05-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: RAJ MEHRA

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. 454/JP/2013 FU/KZKJ.K O'K Z @ ASSESSMENT YEAR : 2008-09 M/S GOYAL TOBACCO CO. PVT. LTD., B-20, KRISHNAPURI, OLD RAMGARH MODE, JAIPUR. CUKE VS. INCOME TAX OFFICER, WARD 5(1), JAIPUR. LFKK;H YS[KK LA-@THVKBZVKJ L A-@ PAN/GIR NO.: AABCG 3829 R VIHYKFKHZ @ APPELLANT IZR;FKHZ @ RESPONDENT FU/KZKFJRH DH VKSJ LS @ ASSESSEE BY : SHRI MANISH AGARWAL (CA) JKTLO DH VKSJ LS @ REVENUE BY : SHRI RAJ MEHRA (JCIT) LQUOKBZ DH RKJH[ K@ DATE OF HEARING : 26/10/2015 MN?KKS'K .KK DH RKJH[ K @ DATE OF PRONOUNCEMENT : 04/11/2015 VKNS'K @ ORDER PER: R.P. TOLANI, J.M. THIS IS AN APPEAL FILED BY THE ASSESSEE AGAINST THE ORDER DATED 20/03/2013 PASSED BY THE LEARNED CIT(A)-II, JAIPUR FOR A.Y. 2008-09. THE SOLE GROUND OF APPEAL IS AS UNDER:- 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE THE LD CIT(A) HAS GROSSLY ERRED IN SUSTAINING AN ADDITIO N OF RS. 2,59,752/- ON ACCOUNT OF EXCESS STOCK FOUND DURING THE COURSE OF SURVEY ARBITRARILY. ITA 454/JP/2013_ M/S GOYAL TOBACCO CO. P LTD VS ITO 2 1.1 THAT THE LD. CIT(A) HAS FURTHER ERRED IN IGNORI NG THE FACT THAT THE VITAL EVIDENCES SUBMITTED DURING THE COURSE OF ASSESSMENT PROCEEDINGS WHEREIN STOCK AS PER BOOKS OF ACCOUNTS AND THAT FOUND DURING THE COURSE OF SURVEY ARE IN PARITY. HENCE THE ADDITION OF RS. 2,59,752/- SO SUSTAINED DESERVES TO BE DELETED. 1.2 THAT THE LD CIT(A) HAS FURTHER ERRED IN IGNORIN G THE STATEMENTS RECORDED DURING THE COURSE OF SURVEY WHEREIN THE ASSESSEE HAS CATEGORICALLY STATED THAT T HE BOOKS OF ACCOUNTS AS ON THE DATE OF SURVEY WERE NOT COMPLETE AND VARIOUS ENTRIES WERE TO BE MADE TO ARRIVE AT THE FIGURE OF STOCK. HENCE THE ADDITION O F RS. 2,59,752/- SO SUSTAINED DESERVES TO BE DELETED. 1.3 THAT THE LD CIT(A) HAS FURTHER ERRED IN IGNORING THE FACT THAT THE ADDITION WAS MADE AND SUSTAINED SOLELY ON THE BASIS OF SO CALLED ADMISSION BY THE DIRECTOR OF ASSESSEE COMPANY RECORDED ON OATH DURING THE COURSE OF SURVEY WHICH IS AGAINST THE PROVISION OF ACT THUS THE RELIANCE ON SUCH ILLEGAL STATEMENTS DESERV ES TO BE HOLD BAD IN LAW AND THE CONSEQUENT ADDITION OF RS. 2,59,752/- DESERVES TO BE DELETED IN TOTO. 1.4 THAT THE LD CIT(A) HAS FURTHER ERRED IN IGNORING THE FACT THAT THE TRADING RESULTS DECLARED WERE ACCEPTED BY LD. A.O. WHICH WERE COMPUTED ON THE BASIS OF STOCK RECODED IN THE BOOKS OF ACCOUNTS AS ON THE DA TE OF SURVEY, THUS THE ACTION OF LD. CIT(A) IN ACCEPTIN G THE BOOKS OF ACCOUNTS AND REJECTING THE STOCK RECORDED THEREIN IS SERIOUS ERROR AND THUS THE ADDI TION OF RS. 2,59,752/- SUSTAINED BY LD CIT(A) DESERVES TO BE DELETED. ITA 454/JP/2013_ M/S GOYAL TOBACCO CO. P LTD VS ITO 3 2. THE SOLE GROUND RAISED BY THE ASSESSEE PERTAINS T O ADDITION OF RS. 2,59,752/- ON ACCOUNT OF ALLEGED EXCESS STOCK WORKED OUT BY THE AO DURING THE COURSE OF SURVEY CONDUCTED IN BUSINESS P REMISES ON 25/07/2007. AT THAT TIME OF SURVEY THE BOOKS OF ACC OUNTS WERE FOUND TO BE NOT UP TO DATE AND COMPLETE. STATEMENT OF DIRECT OR OF THE ASSESSEE SHRI RAJESH AGRAWAL WAS RECORDED, WHO DEPOSED THAT THE INCOMPLETE BOOKS OF ACCOUNTS SHOULD BE COMPLETED AND UPDATED. THE STOCK INVENTORY PREPARED BY THE SURVEY TEAM INDICATED THA T THERE WAS EXCESS STOCK OF RS. 2,59,752/- WHICH THE DIRECTOR AGREED TO OFFER AS INCOME. 2.1 THE ASSESSEE COMPLETED BOOKS OF ACCOUNTS ON THE BASIS WHEREOF THERE WAS NO EXCESS STOCK, RETURN OF INCOME WAS FILED ACCORDINGLY. AO HOWEVER WAS OF THE VIEW THAT SINCE THE DIRECTOR HAS CA TEGORICALLY ACCEPTED THE EXCESS STOCK AS PER PHYSICAL INVENTORY TAKEN IN THE COURSE OF SURVEY, ADDITION OF RS. 2,59,752/- WAS MADE. IN FIRST APPEAL THE ADDITION WAS CONFIRMED. AGGRIEVED ASSESSEE IS IN SEC OND APPEAL. LD COUNSEL CONTENDS THAT ASSESSING OFFICER OUGHT TO HAVE VERIFIED THE BOOKS OF ACCOUNT PRODUCED DURING ASSESSMENT WHIC H WERE COMPLETE AND SHOWING NO EXCESS STOCK. IN THE ASSESSMENT PROCE EDINGS, THE BOOKS OF ACCOUNTS HAVE BEEN ACCEPTED WITHOUT ANY OBJECTION AND HAVE NOT BEEN REJECTED FINDING THEM TO BE CORRECT AND COMPLE TE. THUS, THE SALES ITA 454/JP/2013_ M/S GOYAL TOBACCO CO. P LTD VS ITO 4 AND PURCHASES AND STOCK DETAILS AS FURNISHED BY THE ASSESSEE WAS FOUND TO BE CORRECT. IN COURSE OF ASSESSMENT A DETAILED WO RKING FOR RECONCILIATION OF DIFFERENCE IN PHYSICAL INVENTORY AND BOOKS WAS ALSO FURNISHED WHICH FINDS MENTIONED IN THE ASSESSMENT OR DER AS UNDER:- THE WORKING OF CLOSING STOCK NOW SUBMITTED DURING ASSESSMENT PROCEEDINGS IS AFTER INCORPORATION OF EF FECT OF SOME PURCHASES AND SALES STATED TO BE MADE PRIOR TO THE DATE OF SURVEY I.E. 25/07/2007. THE ABOVE OBSERVATION OF LD. A.O. IN THE ASSESSMENT ORDER MAKE IT CLEAR BEYOND DOUBT THAT THE ASSESSEE HAD ACTUALL Y SUBMITTED THE BILLS, VOUCHERS OF PURCHASE AND SALE AND AFTER INCORPORATI NG THE PURCHASE AND SALES REPRESENTED BY THOSE BILLS, COMPLETE AND CORR ECT WORKING OF CLOSING STOCK WAS FURNISHED BEFORE THE LD A.O. WHICH CAME AT RS. 10,85,259/- AND THE STOCK FOUND DURING THE COURSE OF SURVEY WAS VALUED AT RS. 10,82,897/-, DIFFERENCE BEING OF MERE RS. 2,362/- C ONSTITUTING ONLY 0.2% WHICH IS NEGLIGIBLE AND DESERVES TO BE IGNORED. BESI DES THE TRADING RESULTS DECLARED WERE ACCEPTED AND PROVISIONS OF SEC TION 145(3) ARE NOT INVOKED BY THE LD A.O. THE DIFFERENCE AT THE TIME OF SURVEY WAS BECAUSE OF T HE REASON THAT SOME OF THE GOODS WHICH WERE FOUND IN THE PREMIS ES, ITA 454/JP/2013_ M/S GOYAL TOBACCO CO. P LTD VS ITO 5 CORRESPONDING PURCHASE BILLS WERE NOT RECEIVED AND T HEREFORE, WERE NOT ENTERED IN THE BOOKS; NO QUESTION IN THIS BEHALF WAS ASKED DURING THE COURSE OF SURVEY STATEMENT. ON RECEIPT AFTER SURVEY , THE PURCHASE BILLS WERE DULY INCORPORATED AND THE DIFFERENCE WAS PROPERL Y EXPLAINED. 2.2 THE LD ASSESSING OFFICER AND LD CIT(A) WITHOUT CON SIDERING THE MERITS OF THE EXPLANATION AND THE FACT THAT THE BOO KS OF ACCOUNT WERE ACCEPTED, MADE ADDITION SOLELY RELYING ON THE STATE MENT OF DIRECTOR. IT HAS NOT BEEN APPRECIATED THAT IN STATEMENT ITSELF T HE DIRECTOR HAD CLEARLY STATED THAT BOOKS OF ACCOUNT WERE NOT READY AND THE EXACT POSITION OF STOCK CAN BE EXPLAINED ONLY AFTER COMPLETION OF BOO KS. THE ASSESSEE COMPLIED WITH THE STATEMENT WHILE EXPLAINING THE ALL EGED DIFFERENCE IN THE STOCK INVENTORY AT THE TIME OF STATEMENT. THE AD DITION BEING CONTRARY TO THE EVIDENCE AND MATERIAL ON RECORD AND MERELY B ASED ON THE STATEMENT DURING THE COURSE OF SURVEY IS UNTENABLE. THE ASSESSEES BOOKS OF ACCOUNT HAVING BEEN ACCEPTED, NO ADVERSE C OMMENTS HAVE BEEN OFFERED ON THE EXPLANATION SUBMITTED BY THE AS SESSEE. THE ADDITION IS UNJUSTIFIED. IN ANY CASE, THE ADDITION ON ACCOUN T OF STOCK IS REVENUE NEUTRAL AS IF THE ADDITION IS UPHELD THEN THE CLOS ING STOCK IS TO BE INCREASED TO THAT EXTENT AS OPENING STOCK OF THE SU BSEQUENT YEAR. ITA 454/JP/2013_ M/S GOYAL TOBACCO CO. P LTD VS ITO 6 RELIANCE IS PLACED ON THE DECISION OF HON'BLE SUPRE ME COURT IN THE CASE OF CIT VS. EXCEL INDUSTRIES LTD. (2013) 358 ITR 295 ( SC). 3. THE LD DR HAS VEHEMENTLY RELIED ON THE ORDER OF T HE LOWER AUTHORITIES. 4. I HAVE HEARD THE RIVAL CONTENTIONS OF BOTH THE P ARTIES AND PERUSED THE MATERIAL AVAILABLE ON THE RECORD. IT EMERGES FR OM THE RECORD THAT (I) THE ASSESSEES FIRM DIRECTOR HAD DEPOSED THAT T HE BOOKS OF ACCOUNT WERE NOT COMPLETE AT THE TIME OF SURVEY AND THE EXACT POSITION OF STOCK WILL BE KNOWN AFTER COMPLETION THEREOF. (II) THE BOOKS OF ACCOUNT HAVE BEEN COMPLETED BY T HE ASSESSEE AND RECONCILIATION OF STOCK DEFERENCE WAS F URNISHED, NO ADVERSE COMMENTS WHATSOEVER IN RESPECT OF PURCHASE, SALE OR STOCK IN THE BOOKS OF ACCOUNT HAVE BEEN MADE BY THE ASSESSING OFFICER. (III) THE ASSESSEE FURNISHED PROPER EXPLANATION AS TO WHY AT THAT POINT OF TIME SURVEY WAS APPEARED SOME EXCESS STOCK, WHICH HAS NOT BEEN CONTROVERTED BY THE LOWER AUTHORITIES. SINCE THE BOOKS OF ACCOUNT ARE ACCEPTED AND THE ASS ESSEES EXPLANATION HAS NOT BEEN CONTROVERTED, THE ADDITION MADE SOLELY ON THE BASIS OF SURVEY STATEMENT OF DIRECTOR IS UNJUSTIFIED AND DES ERVES TO BE DELETED. I ITA 454/JP/2013_ M/S GOYAL TOBACCO CO. P LTD VS ITO 7 FIND MERIT IN THE ALTERNATE PLEA OF THE ASSESSEE TH AT THE ADDITION ON ACCOUNT OF STOCK WILL RESULT IN HIGHER OPENING STOCK IN NEXT YEAR AND IN ANY CASE, THE EXERCISE WILL BE REVENUE NEUTRAL THE P LEA IS SUPPORTED BY THE HON'BLE SUPREME COURT JUDGMENT IN THE CASE OF C IT VS. EXCEL INDUSTRIES LTD. (SUPRA), WHICH ALSO APPLICABLE TO TH E ASSESSEES CASE. IN THE ENTIRETY OF FACTS AND CIRCUMSTANCES, THE ALLEGE D STOCK ADDITION IS NOT JUSTIFIED, WHICH IS DELETED. 5. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALL OWED. ORDER PRONOUNCED IN THE OPEN COURT ON 04/11/2015. SD/- VKJ-IH-RKSYKUH (R.P.TOLANI) U;KF;D LNL;@ JUDICIAL MEMBER TK;IQJ @ JAIPUR FNUKAD @ DATED:- 04 TH NOVEMBER, 2015 *RANJAN VKNS'K DH IZFRFYFI VXZSFKR @ COPY OF THE ORDER FORWARDED TO: 1. VIHYKFKHZ @ THE APPELLANT- M/S GOYAL TOBACCO CO. PVT. LTD., JAIP UR. 2. IZR;FKHZ @ THE RESPONDENT- THE ITO, WARD 5(1), JAIPUR 3. VK;DJ VK;QDR @ CIT 4. VK;DJ VK;QDR @ CIT(A) 5. FOHKKXH; IZFRFUF/K] VK;DJ VIHYH; VF/KDJ.K] T;IQJ @ DR, ITAT, JAIPUR 6. XKMZ QKBZY @ GUARD FILE (ITA NO. 454/JP/2013) VKNS'KKUQLKJ @ BY ORDER, LGK;D IATHDKJ @ ASST. REGISTRAR