Anjanikumar Goel, Hyderabad V. ITO, Hyderabad

ITA 458/HYD/2010

• Counselvise Citation: [2010] 136 COUNSELVISE.COM (IT) 3174 (ITAT-HYDERABAD)
• Duration Of Justice: 3 month(s) 1 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 25-06-2010
• Appeal Filed By: Assessee
• Bench Allotted: B
• Next Hearing Date: 17-06-2010
• Assessment Year: 2004-2005
• Appeal Filed On: 24-03-2010
• Court: TRIBUNAL
• Department Lawyers: E S NAGENDRA PRASAD
• Assessee Lawyers: HARIKISHEN ASAWA
• Section: 133A

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCH B', HYDERABAD BEFORE SHRI N.R.S. GANESAN, JUDICIAL MEMBER AND SHRI CHANDRA POOJARI, ACCOUNTANT MEMEBR ITA NO. 458/HYD/2010 ASSESSMENT YEAR 2004-05 SHRI ANJANIKUMAR GOEL HYDERABAD PAN: AVKPG3742J VS. THE I.T.O., WARD 5(1) HYDERABAD APPELLANT RESPONDENT APPELLANT BY: SHRI HARIKISHEN ASAWA RESPONDENT BY: SHRI E.S. NAGENDRA PRASAD O R D E R PER N.R.S. GANESAN, JM: THIS APPEAL OF THE ASSESSEE IS DIRECTED AGAINST TH E ORDER OF THE CIT(A)-V DATED 5.3.2010 AND PERTAINS TO ASSESSM ENT YEAR 2004-05. 2. THE FIRST ISSUE ARISING FOR CONSIDERATION IS ADDITI ON OF RS.16,41,997/- TOWARDS THE DIFFERENCE IN STOCK. SH RI HARIKISHEN ASAWA, THE LEARNED COUNSEL FOR THE ASSESSEE SUBMITT ED THAT THE ASSESSEE IS A WHOLESALE DEALER IN DRUGS AND PHARMAC EUTICALS. ACCORDING TO THE LEARNED COUNSEL FOR THE ASSESSEE, THE ASSESSING OFFICER HAS NOT TAKEN ANY STOCK AS ON 31.3.2004. D URING THE COURSE OF SURVEY ON 14.10.2004 THE DEPARTMENT FOUND THE STOCK AS SHOWN IN THE BOOKS. THE LEARNED COUNSEL FOR THE ASSESSEE FURTHER SUBMITTED THAT THE ASSESSING OFFICER HAS OV ERLOOKED THE LEAKAGE, BREAKAGES AND SHORTAGE WHILE TAKING THE DI FFERENCE IN STOCK. THE LEARNED COUNSEL FOR THE ASSESSEE FURTH ER SUBMITTED THAT THE ASSESSING OFFICER MADE THE ADDITION WITHOU T ANY BASIS. EVEN THOUGH THE ASSESSEE TRANSACTED THE BUSINESS HI GH TURNOVER NO BAD DEBT WAS CLAIMED. THEREFORE, ACCOR DING TO THE LEARNED COUNSEL FOR THE ASSESSEE THE ADDITION MADE BY THE ITA NO. 458/HYD/2010 SHRI ANJANIKUMAR GOEL ============= 2 ASSESSING OFFICER TO THE EXTENT OF RS.16,41,997/- T OWARDS THE DIFFERENCE IN STOCK IS UNWARRANTED. 3. ON THE CONTRARY SHRI E.S.N. PRASAD, THE LEARNED DEPARTMENTAL REPRESENTATIVE SUBMITTED THAT DURING T HE COURSE OF SURVEY THE REVENUE AUTHORITIES FOUND A COMPUTER WHICH IS USED FOR BILLING THE SALE OF MEDICINES. THE COMPUT ER ALSO CONTAINS DETAILS OF STOCK, PURCHASES AND SALES MADE DURING THE FINANCIAL YEAR. THE LEARNED DEPARTMENTAL REPRESENT ATIVE FURTHER SUBMITTED THAT THE ASSESSING OFFICER HAS TA KEN PRINT OUT FROM THE COMPUTER FOR THE FINANCIAL YEAR 2003-04 AN D VERIFIED THE SAME WITH THE RETURN FILED BY THE ASSESSEE. TH E ASSESSING OFFICER, ACCORDING TO THE LEARNED DEPARTMENTAL REPR ESENTATIVE, FOUND THAT WHEN THE ASSESSEE IDENTIFIES THE CORRESP ONDENCE MADE BY HIM, HE CANNOT DENY THE CLOSING STOCK DETAI LS AVAILABLE IN THE VERY SAME COMPUTER. ACCORDINGLY THE ASSESSI NG OFFICER BROUGHT RS.16,41,997/- BEING THE DIFFERENCE OF STOC K DISCLOSED AND THE STOCK FOUND AS PER THE COMPUTER STATEMENT. 4. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS ON EITHER SIDE AND PERUSED THE MATERIAL ON RECORD. ADMITTEDLY THE RE WAS A SURVEY U/S. 133A OF THE ACT IN THE BUSINESS PREMISE S OF THE ASSESSEE ON 14.10.2004. AS SEEN FROM THE ASSESSMEN T ORDER, STOCK INVENTORY WAS TAKEN. THE ASSESSING OFFICER F OUND A COMPUTER WHERE THE DETAILS OF STOCK, PURCHASES AND SALES MADE BY THE ASSESSEE WERE SAID TO BE AVAILABLE. THE ASS ESSING OFFICER ALSO APPEARS TO HAVE TAKEN OUT A PRINTOUT WITH THE HELP OF A SOFTWARE ENGINEER. AFTER VERIFYING THE PRINTOUT TA KEN FROM THE COMPUTER WITH THE RETURN FILED BY THE ASSESSEE, THE ASSESSING OFFICER TAKEN THE DIFFERENCE OF RS.16,41,997/- AS S TOCK IN DIFFERENCE. THE CLAIM OF THE ASSESSEE TOWARDS BREA KAGES AND LEAKAGE OF STOCK WERE ALSO NOT ACCEPTED BY THE ASSE SSING OFFICER. AS PER THE ASSESSMENT ORDER THE ASSESSEE APPEARS TO HAVE ITA NO. 458/HYD/2010 SHRI ANJANIKUMAR GOEL ============= 3 DECLARED A STOCK OF WORTH OF RS.36,54,115/- AS ON 3 1.3.2004. THOUGH THE ASSESSING OFFICER APPEARS TO HAVE TAKEN STOCK INVENTORY, HE HAS NOT CHOSEN TO DISCLOSE THE VALUE OF SUCH STOCK TAKEN IN THE ASSESSMENT ORDER. THE ASSESSING OFFIC ER MAINLY RELIES UPON THE PRINTOUT TAKEN FROM THE COMPUTER. WHEN THE ASSESSING OFFICER HAS TAKEN PHYSICAL STOCK INVENTOR Y ON THE DATE OF SURVEY, THE DIFFERENCE, IF ANY, IN THE STOCK AS FOUND ON PHYSICAL VERIFICATION AND AS DISCLOSED IN THE BOOKS OF ACCOUNT AS ON THE DATE OF SURVEY MAY BE EXCESS STOCK. IN THE CASE BEFORE US THE ASSESSEE CLAIMED THAT HE HAS NOT MAINTAINED ANY STOCK REGISTER. THEREFORE, THE REVENUE HAS NO OTHER ALTE RNATIVE EXCEPT TO PLACE ITS RELIANCE ON THE COMPUTER PRINTOUT TAKE N FROM THE COMPUTER MAINTAINED BY THE ASSESSEE. IT IS NOT IN DISPUTE THAT THE ASSESSEE WAS USING THE COMPUTER FOR MAINTAINING THE DETAILS OF PURCHASES AND SALES INCLUDING THE DETAILS OF STO CK. THEREFORE, THE DETAILS DISCLOSED IN THE COMPUTER AS ON 31.3.20 04 HAVE TO BE TAKEN AS SUCH IN THE ABSENCE OF ANY OTHER MATERIAL. IN THE CASE BEFORE US THE ASSESSEE HAS DECLARED THE STOCK OF RS .36,54,115/-. HOWEVER, THE STOCK DETAILS MAINTAINED BY THE ASSESS EE IN THE COMPUTER AS ON 31.3.2004 SHOW THE VALUE AT RS.52,56 ,947/-. IN THE ABSENCE OF ANY DETAILS AND IN THE ABSENCE OF ANY OTHER MATERIAL, THE ASSESSING OFFICER HAS RIGHTLY TAKEN T HE DIFFERENCE OF RS.16,41,997/- AS INCOME OF THE ASSESSEE. WE DO NOT FIND ANY INFIRMITY IN THE ORDERS OF THE LOWER AUTHORITIE S AND ACCORDINGLY THE SAME IS CONFIRMED. 5. THE NEXT GROUND OF APPEAL IS ADDITION OF RS.88,323/ - TOWARDS CONVEYANCE CHARGES/STAFF WELFARE. WE HAVE HEARD THE LEARNED COUNSEL FOR THE ASSESSEE AND THE LEARNED DE PARTMENTAL REPRESENTATIVE. THE ASSESSEE APPEARS TO HAVE CLAIM ED TOTAL EXPENDITURE OF RS.4,41,616/- TOWARDS CONVEYANCE CHA RGES, STAFF WELFARE AND PETROL EXPENSES, ETC. IN THE ABSENCE O F ANY PROPER VOUCHERS, THE ASSESSING OFFICER HAS DISALLOWED 20% OF THE TOTAL ITA NO. 458/HYD/2010 SHRI ANJANIKUMAR GOEL ============= 4 CLAIM. THE CIT(A) CONFIRMED THE SAME ON THE GROUND THAT THE ONUS OF PROVING THE EXPENDITURE AS GENUINE IS ON TH E ASSESSEE. 6. NO DOUBT WHEN THE ASSESSEE CLAIMED AN EXPENDITURE, THE PRIMARY ONUS LIES ON THE ASSESSEE. IN THIS CASE TH E ASSESSEE COULD NOT PRODUCE VOUCHERS IN SUPPORT OF EXPENDITUR E. THE FACT REMAINS IS THAT THE ASSESSEE IS ENGAGED IN THE BUSI NESS OF WHOLESALE OF MEDICINE AND PHARMACEUTICALS AND THE T OTAL ADMITTED TURNOVER WAS ABOUT RS.9.5 CRORES. THE ASS ESSEE WOULD NOT HAVE TRANSACTED THE BUSINESS TO THE EXTENT OF R S.9.5 CRORES UNLESS HE SPENDS THE MONEY FOR CONVEYANCE AND STAFF WELFARE. IN OUR OPINION, THE EXPENDITURE OF RS.4,41,616 APPE ARS TO BE VERY REASONABLE WHEN COMPARED TO THE TOTAL TURNOVER OF RS.9.5 CRORES. THEREFORE, THE DISALLOWANCE OF 20% OF THE EXPENDITURE ON ESTIMATE MAY NOT BE JUSTIFIED IN THE FACTS AND C IRCUMSTANCES. ACCORDINGLY, WE DELETE THE ADDITION OF RS.88,323/-. 7. THE NEXT GROUND OF APPEAL IS ADDITION OF RS.8,685 T OWARDS TELEPHONE EXPENDITURE. WE HEARD THE LEARNED COUNSE L FOR THE ASSESSEE AND THE LEARNED DEPARTMENTAL REPRESENTATIV E. THE ASSESSEE CLAIMED AN EXPENDITURE OF RS.86,647/- TOWA RDS TELEPHONE EXPENSES. IT APPEARS THAT THIS EXPENDITU RE IS FOR TELEPHONE OF THE ASSESSEE INCLUDING THE TELEPHONE I NSTALLED AT THE RESIDENCE AND THREE MOBILE PHONES USED BY ASSES SEE'S TWO SONS. THEREFORE, THE ASSESSING OFFICER HAS DISALLO WED 10% OF THE TOTAL CLAIM. THE FACT THAT THE TELEPHONE WAS I NSTALLED IN ASSESSEE'S RESIDENCE AND THREE MOBILE PHONES WERE U SED BY THE ASSESSEE'S SONS IS NOT DISPUTED BY THE ASSESSEE. T HEREFORE, THE ELEMENT OF PERSONAL USE OF THE TELEPHONES CANNOT BE RULED OUT. IN SUCH A SITUATION THE DISALLOWANCE OF 10% OF THE EXPENDITURE ON ESTIMATE BY THE ASSESSING OFFICER IS JUSTIFIED. WE DO NOT FIND ANY INFIRMITY IN THE ORDER OF THE LOWER AUTHORITIES AND ACCORDINGLY THE SAME IS CONFIRMED. ITA NO. 458/HYD/2010 SHRI ANJANIKUMAR GOEL ============= 5 8. THE NEXT GROUND OF APPEAL IS ADDITION OF RS.1,69,51 3/- DUE TO DIFFERENCE IN THE BOOKS OF ACCOUNT OF THE AS SESSEE AND IN THE CASE OF M/S. LUPIN CO. THE LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED THAT AS PER THE ACCOUNT OF LUPIN CO. THE BALANCE WAS NIL AND THEY GAVE A CERTIFICATE TO THAT EFFECT. ACC ORDING TO THE LEARNED COUNSEL FOR THE ASSESSEE THIS WAS NOT AN IN COME AT ALL. HOWEVER, THE LEARNED DEPARTMENTAL REPRESENTATIVE PL ACED HIS RELIANCE ON THE OBSERVATIONS MADE BY THE ASSESSING OFFICER. 9. WE HAVE HEARD THE RIVAL SUBMISSIONS ON EITHER SIDE AND PERUSED THE MATERIAL ON RECORD. AS PER THE ASSESSE E'S BOOKS OF ACCOUNT THE BALANCE SHOWN IN THE ACCOUNT OF LUPIN C O. IS AT RS.1,71,222/-. HOWEVER, IN THE ACCOUNTS OF LUPIN C O., IT WAS SHOWN AT RS.4,708/-. THEREFORE, THE DIFFERENCE OF RS.1,69,513/- WAS BROUGHT TO TAX. EVEN THE ASSESSEE COULD NOT EX PLAIN THE DIFFERENCE BETWEEN THE ACCOUNTS. IN THE ABSENCE OF ANY EXPLANATION FROM THE ASSESSEE, WE DO NOT FIND ANY I NFIRMITY IN THE ORDER OF THE LOWER AUTHORITIES. ACCORDINGLY, T HE SAME IS CONFIRMED. SIMILARLY, AN ADDITION OF RS.20,709 WAS MADE DUE TO DIFFERENCE IN THE ASSESSEE'S BOOKS OF ACCOUNT AND I N THE ACCOUNT OF RANBAXY LABORATORIES LTD. THE ASSESSEE COULD NO T EXPLAIN WHY SUCH DIFFERENCE HAS COME IN THE BOOKS OF ACCOUN T. THEREFORE, WE DO NOT FIND ANY INFIRMITY IN THE ORDE R OF THE LOWER AUTHORITIES. ACCORDINGLY THE SAME IS CONFIRMED. 10. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS PARTLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 25TH JUNE, 2010. SD/- (CHANDRA POOJARI) ACCOUNTANT MEMBER SD/- (N.R.S. GANESAN) JUDICIAL MEMBER TPRAO HYDERABAD, DATED 25TH JUNE, 2010 ITA NO. 458/HYD/2010 SHRI ANJANIKUMAR GOEL ============= 6 COPY FORWARDED TO: 1. THE APPELLANT SHRI ANJANIKUMAR GOEL, C/O. SHRI HARIKISHEN ASAWA, ADVOCATE, 4-1-13/3 TILAK ROAD, AT HYDERABAD-500 001. 2. THE RESPONDENT THE ITO-5(1), HYDERABAD. C/O. T HE DR BEFORE THE ITAT, HYDERABAD. 3. THE CIT(A)-V, HYDERABAD 4 THE CIT-IV, HYDERABAD 5. THE DR B BENCH, HYDERABAD