The Asstt. Commissioner of Income-tax, Bathinda V. M/s Ram Kumar Bansal, Bathinda

ITA 459/ASR/2014

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 8863 (ITAT-AMRITSAR)
• Duration Of Justice: 1 year(s) 6 month(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 10-02-2016
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Next Hearing Date: 08-02-2016
• Assessment Year: 2010-2011
• Appeal Filed On: 14-07-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: S S KANWAL
• Assessee Lawyers: P N ARORA
• Keywords: Assessment record
• Section: 69

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, AMRITSAR BENCH; AMRITSAR BEFORE SH. A.D. JAIN, JUDICIAL MEMBER AND SH. T.S. KAPOOR, ACCOUNTANT MEMBER ITA NOS.459 & 461(ASR)/2014 ASSESSMENT YEAR:2010-11 & 2011-12 PAN:AAHFR9629R THE ASSTT. COMMR. OF INCOME TAX, VS. M/S. RAM KUMAR BANSAL, CIRCLE-1, BATHINDA. CONTRACTOR, BIBIWALA ROAD, BATHINDA. (APPELLANT) (RESPONDENT) C.O.NOS.49& 48(ASR)/2014 (ARISING OUT OF ITA NOS.459 & 461(ASR)/2014) ASSESSMENT YEAR:2010-11 & 2011-12 PAN: AAHFR9629R M/S. RAM KUMAR BANSAL, VS. THE ASSTT. COMMR. OF INC OME TAX, CONTRACTOR, CIRCLE-1, BATHINDA. BIBIWALA ROAD, BATHINDA. (APPELLANT) (RESPONDENT) ITA NO.479(ASR)/2014 ASSESSMENT YEAR: 2011-12 PAN: AABC!2581A THE ASSTT. COMMR. OF INCOME TAX, VS. M/S. ISHAR INF RASTRUCTURE CIRCLE-1, BATHINDA. DEVELOPERS PVT. LTD. BATHINDA. (APPELLANT) (RESPONDENT) DEPARTMENT BY: SH. S.S. KANWAL, DR RESPONDENT BY: SH. P.N. ARORA, ADVOCATE DATE OF HEARING: 08/02/2016 DATE OF PRONOUNCEMENT: 10/02/2016 ORDER PER BENCH; THESE ARE THREE APPEALS FILED BY THE REVENUE AGAIN ST THE SEPARATE ORDERS OF THE LD. CIT(A), BATHINDA, DATED 30.05.201 4, 30.05.2014 AND ITA NOS.459, 461 & 479/2014 CO. NO. 48 & 49(ASR)/2014 2 27.05.2014 RESPECTIVELY. THE ASSESSEE IN ITA NOS. 4 59 & 461 HAS ALSO FILED C.OS AGAINST THE APPEALS FILED BY THE REVENUE . THESE APPEALS & CROSS OBJECTIONS WERE HEARD TOGETHER AND THERE ARE COMMON ISSUES, THEREFORE, THESE ARE BEING DISPOSED OFF THROUGH THI S CONSOLIDATED ORDER. 2. AT THE OUTSET, THE LD. AR INVITED OUR ATTENTION TO AN ORDER PASSED BY THE AMRITSAR BENCH OF THE TRIBUNAL, DATED 26.03. 2015 AND SUBMITTED THAT IN THE CASE OF THE ASSESSEE ITSELF, SIMILAR IS SUES HAVE BEEN DECIDED IN FAVOUR OF THE ASSESSEE AND THE DEPARTMENTAL APPEALS IN THESE CASES WERE DISMISSED. EXPLAINING THE FACTS OF THE CASE, THE LD . COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE AO HAD MADE ADDITION ON ACCOUNT OF DIFFERENCE IN VALUATION OF CLOSING STOCK AND BOOK D EBTS, AS SUBMITTED TO THE BANK AND AS FILED ALONGWITH THE RETURN OF INCO ME. IN THIS RESPECT, THE LD. COUNSEL FOR THE ASSESSEE INVITED OUR ATTENT ION TO ITA NO.457(ASR)/2013 FOR THE ASSESSMENT YEAR 2009-10 AN D ITA NO.198(ASR)/2013 FOR THE ASSESSMENT YEAR 2009-10 D EALT BY THE TRIBUNAL IN ITS CONSOLIDATED ORDER DATED 26.03.201 5. THE LD. COUNSEL FURTHER SUBMITTED THAT IN THE BUNCH OF CASES DECID ED BY THE TRIBUNAL IN ITS ORDER DATED 26.03.2015, THE CASE OF ISHAR INFRA STRUCTURE DEVELOPERS PVT. LIMITED, HAS BEEN TAKEN AS THE LEAD CASE AND OTHER CASES HAVE BEEN DECIDED FOLLOWING THE SAME. 3. THE LD. DR, ON THE OTHER HAND, CONCEDED THAT IF THE CASES ARE COVERED IN FAVOUR OF THE ASSESSEE THEN HE HAD NO OB JECTION, IF SIMILAR DECISION IS PASSED BY THE TRIBUNAL, IN THE PRESENT CASES. ITA NOS.459, 461 & 479/2014 CO. NO. 48 & 49(ASR)/2014 3 4. WE HAVE HEARD THE RIVAL CONTENTIONS AND HAVE PER USED THE MATERIAL PLACED ON RECORD. WE FIND THAT THE LD. CIT(A) IN T HE CASE OF RAM KUMAR BANSAL, HAD DELETED THE ADDITIONS MADE BY THE AO ON ACCOUNT OF DIFFERENCE IN FIGURES OF BOOK DEBT AND STOCK BY H OLDING AS UNDER: 5. GROUND NO.4 RELATES TO ADDITION OF RS.33,41,815 /- ON ACCOUNT OF DISCREPANCY IN THE BOOK DEBTS AS ON 31.03.2010 R EPORTED TO THE BANK AND BOOK DEBTS AS PER BALANCE SHEET AS ON 31.0 3.2010. THE ISSUE INVOLVED HAS ALREADY BEEN ADJUDICATED FOR TH E AY 2009-10 VIDE APPELLATE ORDER DATED 22.03.2013. IN THE ASSES SMENT YEAR 2009-10 THE ADDITION SO MADE HAS BEEN DELETED BY ME BY OBSERVING AS UNDER: GROUND NO.4 RELATES TO ADDITION OF RS.1,04,19,771/ - ON ACCOUNT OF DISCREPANCY IN THE BOOK DEBTS AS ON 31.0 3.2009 REPORTED TO THE BANK AND BOOK DEBTS AS PER BALANCE SHEET AS ON 31.03.2009. DURING THE APPELLATE PROCEEDINGS THE A/R OF THE ASSESSEE ARGUED THAT THE AO HAS NOT TAKEN INTO CONSIDERATION ALL THE DEBIT BALANCES OF THE AUDITED BALANCE SHEET AT THE TIME OF MAKING ADDITION. IF THE BALANC E SHEET IS PROPERLY EXAMINED, THE DEBIT SIDE OF THE BALANCE SH EET COMES TO RS.6,30,03,625/- AND AFTER DEDUCTING THERE FROM THE VALUE OF FIXED ASSETS AND CLOSING STOCK THE DEBTS COMES T O RS.5,41,36,103/- AGAINST REPORTED TO THE BANK AT RS.2,88,37,441/-. I HAVE EXAMINED THE BALANCE SHEET OF THE ASSESSEE AND ALSO THE DETAILS OF DEBTS CONSIDERED B Y THE AO AS PER PAGE 25 OF THE ASSESSMENT ORDER AND FIND THA T IN THESE DEBTS THE ADVANCES MADE TO M/S. SILVER OAKS TOWN SHIP HAS NOT BEEN CONSIDERED WHEREAS THESE ADVANCES ARE VERY MUCH CONNECTED WITH THE BUSINESS OF THE ASSESSEE, AS SUC H, IF THIS ADVANCE OF RS.35718463/- IS CONSIDERED, THERE IS NO DISCREPANCY IN THE BOOK DEBTS DECLARED TO THE BANK. HENCE, ADDITION MADE ON THIS ACCOUNT AMOUNTING TO RS.1,04, 19,771/- IS DELETED AND THIS GROUND OF APPEAL OF THE ASSESSE E APPELLANT IS ALLOWED. 5.1. FROM THE EXAMINATION OF THE BALANCE SHEET, I F IND THAT THIS YEAR THE ASSESSEE HAS MADE AN ADVANCE OF RS.3,06,6 3,992/- TO SILVER OAKS TOWNSHIP WHICH HAS NOT BEEN CONSIDERED BY THE AO AT THE TIME OF WORKING OF BOOK DEBTS. SO KEEPING IN VI EW, MY OBSERVATIONS DURING THE APPELLATE PROCEEDINGS FOR T HE AY 2009-10, THE ADDITION MADE OF RS.33,41,815/- IN THIS YEAR IS ALSO NOT IN ORDER. HENCE, THE SAME IS DELETED AND THIS GROUND OF APPEA L OF THE ASSESSEE IS ALLOWED. ITA NOS.459, 461 & 479/2014 CO. NO. 48 & 49(ASR)/2014 4 5. SIMILARLY, FOR THE ASSESSMENT 2011-12, THE LD. C IT(A) HAD DELETED THE ADDITION BY HOLDING AS UNDER: GROUND OF APPEAL NO.2,3& 4 RELATED TO ADDITION OF RS.1,70,83,4441/- ON ACCOUNT OF DISCREPANCY IN CLOS ING STOCK AS REPORTED TO THE BANK IN THE STOCK STATEMENT AS ON 3 1.03.2011 AND AS REFLECTED IN THE BOOK OF ACCOUNT. AFTER EXAMINATION OF THE ASSESSMENT RECORD, I FIND THAT THE ADDITION ON ACCOUNT OF DIFF ERENCE IN CLOSING STOCK HAS BEEN MADE ON THE BASIS OF SIMILAR FACTS A S MADE IN THE ASSESSMENT YEAR 2009-10. IN THE ASSESSMENT YEAR 200 9-410, THE ADDITION SO MADE HAS BEEN DELETED BY ME BY OBSERVIN G AS UNDER:- GROUND OF APPEAL NO.2&3 RELATED TO ADDITION OF RS.28736186/- ON ACCOUNT OF DISCREPANCY IN CLOSING STOCK AS REPORTED TO THE BANK IN THE STOCK STATEMENT AS ON 3 1.03.2009 AND AS REFLECTED IN THE BOOKS OF ACCOUNT. THE ISSUE INV OLVED IN THIS CASE HAS ALREADY BEEN ADJUDICATED BY ME IN THE CASE OF M /S ISHAR INFRASTRUCTURE DEVELOPER PVT.LTD., IN APPEAL NO425- IT/CIT(A)BTI/11-12 DATED 31.01.2012. IN THIS CASE I HAVE DELETED THE ADDITION BY HOLDING AS UNDER:- THE FOLLOWING ARE THE UNDISPUTED FACTS: 1. THE APPELLANT FILED AUDITED ACCOUNTS ALONGWITH TAX AUDIT REPORT DURING THE COURSE OF ASSESSMENT PROCEEDINGS. THE BO OKS OF ACCOUNT ALONGWITH BILLS/VOUCHER WERE ALSO PRODUCED AND EXAM INED DURING THE COURSE OF ASSESSMENT PROCEEDINGS AND THE AO HAS CONFIRMED THIS FACT IN PARAGRAPH 2 ON PAGE-1 OF THE ASSESSMEN T ORDER. 2. THE AO HAS NOT POINTED OUT ANY DEFECTS IN THE BOOK OF ACCOUNT OR THE PURCHASES MADE BY THE APPELLANT OR THE RECEIPTS FRO M THE WORK CONTRACT IN THE ASSESSMENT ORDER. 3. THE APPELLANT IS AVAILING CASH CREDIT LIMIT FROM BA NK AGAINST HYPOTHECATION OF STOCK AND COLLATERAL SECURITIES OF THE PROPERTIES. AS RIGHTLY POINTED OUT BY THE A/R OF THE APPELLANT THE REAL DIFFERENCE BETWEEN PLEDGING AND HYPOTHECATION IS THAT IN THE C ASE OF PLEDGING THE GOODS REMAINED UNDER THE LOCK AND KEY OF THE BA NK AUTHORITIES AND, THEREFORE, LIABLE TO BE PHYSICALLY CHECKED AND EXAMINED. BUT IN THE CASE OF HYPOTHECATION, SUCH GOODS REMAIN IN THE CUSTODY OF THE ASSESSEE. 4. I) THE APPELLANT FILED STOCK STATEMENT BEFORE THE BANK ON31.03.2009 AND THE STOCK AS DECLARED IN THE STOCK STATEMENT DI D NOT TALLY WITH THE STOCK AS PER BOOKS. THE AO CONFRONTED THIS FACT TO THE APPELLANT DURING THE COURSE OF ASSESSMENT PROCEEDINGS AND THE APPELLANT STATED DURING THE COURSE OF ASSESSMENT PROCEEDING S THAT THE BANK DOES NOT ATTACH MUCH SIGNIFICANCE TO THE STOCK STAT EMENT AND ALSO NO ITA NOS.459, 461 & 479/2014 CO. NO. 48 & 49(ASR)/2014 5 PHYSICAL VERIFICATION OF THE STOCK IS CARRIED OUT B ECAUSE THE INTEREST OF THE BANK IS COVERED BY THE COLLATERAL SECURITIES PROVIDED BY THE APPELLANT TO THE BAN. THE A/R OF THE APPELLANT HAS ALSO RELIED ON THE FACT THAT THE STOCK STATEMENT AS ON 31.03.2009 ON W HICH THE AO HAS RELIED AND ON THE BASIS OF WHICH ADDITION HAS BEEN MADE, IS UNSIGNED. BUT THE AO DID NOT ACCEPT THIS PLEA ON TH E BASIS OF STATEMENT OF BANK MANAGER RECORDED IN THE CASE OF M UNISH KUMAR BANSAL CONTRACTOR AS THE BANK MANAGER STATED IN THA T CASE THAT THE STOCK ARE PHYSICALLY VERIFIED BY THE BANK. II) THE A/R OF THE APPELLANT HAS STATED IN HIS WRIT TEN SUBMISSION REPRODUCED SUPRA THAT THE AO HAS FAILED TO PROVE TH AT ANY PHYSICAL VERIFICATION OF THE STOCK AS ON31.03.2009 WAS CARRI ED OUT BY THE BANK . IT HAS BEEN STATED THAT IT WAS NOT POSSIBLE FOR THE BANK STAFF TO INSPECT OR PHYSICALLY VERIFY BY STOCK. THE RELIA NCE HAS BEEN PLACED ON THE DICTIONARY MEANING OF PHYSICAL VERIFICATION AND ON THE JUDGMENT OF HONBLE DELHI HIGH COURT IN THE CASE OF CIT VS. BALAJI WIRE PVT.LT.,304 ITR 393. III) THE A/R OF THE APPELLANT HAS RELIED ON THE VAR IOUS JUDGMENT OF HIGH COURT AND BENCHES OF THE ITAT AND THE COPIES O F THE SAME HAS BEEN PLACED ON RECORD. 5. THE AO HAS MADE ADDITION U/S 69 WHILE RELYING ON TH E JUDGMENT OF DEVGON RICE AND GEN. MILLS 263 ITR 391. IN VIEW OF THE ARGUMENTS OF THE A/R OF THE APPELLAN T RAISED DURING THE COURSE OF ASSESSMENT PROCEEDINGS BEFORE THE AO AND IN THE APPELLATE PROCEEDINGS BEFORE ME, THE FINDING S ON ISSUE OF PHYSICAL VERIFICATION OF STOCK AS ON 31.03.2009 BY THE BANK ON THE BASIS OF WHICH THE AO HAS MADE THE ADDITION, ARE AS UNDER:- I) I AM CONVINCED WITH THE ARGUMENTS OF THE A/R OF THE APPELLANT THAT THE BANK DOES NOT ATTACH MUCH SIGNIFICANCE TO THE STOCK STATEMENT BECAUSE THE CASH CREDIT LIMIT WAS EXTENDE D TO THE APPELLANT ON THE HYPOTHECATION OF THE STOCK IN WHIC H THE CONTROL AND POSSESSION OF THE STOCK REMAINED WITH T HE APPELLANT AND THE INTEREST OF THE BANK WAS COVERED BY COLLATERAL SECURITY PROVIDED BY THE APPELLANT TO TH E BANK. II) THE AO IN THE PRESENT CASE HAS TRIED TO PROVE THAT THE STOCK WAS PHYSICALLY VERIFIED BY RECORDING THE STATEMENT OF BANK MANAGER IN THE CASE OF M/S MUNISH KUMAR BANSAL CONT RACTOR. BUT IN MY OPINION UNLESS THE AO PROVES THAT THE STO CK WAS PHYSICALLY VERIFIED IN THE CASE OF APPELLANT, NO AD DITION CAN BE UPHELD. ITA NOS.459, 461 & 479/2014 CO. NO. 48 & 49(ASR)/2014 6 III) THE ONLY CONCLUSION WHICH CAN BE DRAWN FROM THE AB OVE STATED FACTS IS THAT NO INSPECTION/PHYSICAL VERIFIC ATION OF THE STOCK WAS CARRIED OUT BY THE BANK IN THE CASE OF TH E APPELLANT ON 31.03.2009 AND THE AO ERRED IN MAKING ADDITION O N ACCOUNT OF DISCREPANCY OF STOCK AS RECORDED IN THE STOCK STATEMENT AND AS REFLECTED IN THE BOOKS OF ACCOUNT B SOLELY REPLYING ON THE STOCK STATEMENT AS ON31.03.2009 AND THE AO HAS FAILED TO BRING ANY EVIDENCE ON RECORD TO JUSTI FY THE ADDITION. THIS CONCLUSION IS BASED ON THE FACT THAT IT WAS NOT POSSIBLE BY THE BANK STAFF TO COUNT/WEIGH THE STOCK WORTH CRORE OF RUPEES AND LYING IN OP[EN AT VARIOUS PLACE S IN DIFFERENT STATE. THE HONBLE MADRAS HIGH COURT IN THE CASE OF CIT VS. N SWAMY (REPRODUCED SUPRA) HELD THAT THE MERE FACT TH AT ASSESSEE HAD MADE SUCH A STATEMENT TO THE BANK BY I TSELF CANNOT BE TREATED AS HAVING RESULTED IN AN IRREBUTA BLE PRESUMPTION AGAINST THE ASSESSEE AND THE BURDEN OF SHOWING THAT THE ASSESSEE HAD UNDISCLOSED INCOME IS ON THE REVENUE. SIMILARY, THE HONBLE PUNJAB & HARYANA HIGH COURT H AS HELD IN THE CASE OF SANTOSH BOX FACTORY THAT IT IS FOR T HE REVENUE TO BRING MATERIAL ON SHOW THAT THE APPELLATE IN FACT P OSSESSED LARGER QUANTITY OF STOCK THEN THE STOCK RECORDED IN THE BOOKS OF ACCOUNT. AS DISCUSSED SUPRA, I FIND THAT THE AO HAS FAILED T O BRING ANY MATERIAL ON RECORD, EXCEPT THE STOCK STATEMENT SUBMITTED TO THE BANK, TO JUSTIFY THE ADDITION. THE FACTS AND CIRCUMSTANCE OF THE CASE OF ASSESSEE APPELLANT ARE SIMILAR AS THE ADDITION OF RS.2873618 6/- MADE IN THIS CASE IS ALSO NOT IN ORDER. HENCE, ADDITION MADE OF RS.28736186/- IS DELETED AND THIS GROUND OF APPEAL OF THE ASSESSEE APPELLANT IS ALLOWED. 4.1 SO KEEPING IN VIEW, MY OBSERVATIONS DURING TH E APPELLATE PROCEEDINGS FOR THE ASSESSMENT YEAR 2009-10, THE AD DITION MADE OF RS.1,70,83,441/- IN THE YEAR ALSO NOT IN ORDER. HENCE, THE SAME IS DELETED AND THESE GROUNDS OF APPEAL OF THE ASSESSEE APPELLANT ARE ALLOWED. 6. THE FINDINGS OF THE LD. CIT(A) IN THE CASE OF IS HAR INFRASTRUCTURES AND DEVELOPERS PVT. LIMITED ARE CONTAINED IN PARA 3.1. TO 3.4, WHICH ARE REPRODUCED BELOW: ITA NOS.459, 461 & 479/2014 CO. NO. 48 & 49(ASR)/2014 7 3.1 AFTER CAREFUL PERUSAL OF THE ASSESSMENT ORDER AND WRITTEN SUBMISSIONS FILED BY THE A/R OF THE APPELLANT I AM CONVINCED WITH THE ARGUMENTS OF THE A/R OF THE APPELLANT THAT THE ISSUE IS COVERED BY THE EARLIER APPELLATE ORDER 425-IT/2011-12 VIDE ORDER DATED 31.01.2013 FOR AY 2009-10 AND 200-IT/2013-14 VIDE O RDER 30.05.2014. IN VIEW OF THE ARGUMENTS OF THE A/R OF THE APPELLAN T RAISED DURING THE COURSE OF ASSESSMENT PROCEEDINGS BEFORE THE AO AND IN THE APPELLATE PROCEEDINGS BEFORE ME, THE FIN DINGS ON ISSUE OF PHYSICAL VERIFICATION OF STOCK AS ON 31.03 .2009 BY THE BANK ON THE BASIS OF WHICH THE AO HAS MADE THE ADDI TION, ARE AS UNDER: I) I AM CONVINCED WITH THE ARGUMENTS OF THE A/R OF THE APPELLANT THAT THE BANK DOES NOT ATTACH MUCH SIGNIFICANCE TO THE STOCK STATEMENTS BECAUSE THE CASH CREDIT LIMIT WAS EXTEND ED TO THE APPELLANT ON THE HYPOTHECATION OF THE STOCK IN WHIC H THE CONTROL AND POSSESSION OF THE STOCK REMAINED WITH THE APPELLANT AND THE INTEREST OF THE BANK WAS COVERED BY COLLATERAL SECURITY PROV IDED BY THE APPELLANT TO THE BANK. II) THE AO IN THE PRESENT CASE HAS TRIED TO PROVE T HAT THE STOCK WAS PHYSICALLY VERIFIED BY RECORDING THE STATEMENT OF BANK MANAGER IN THE CASE OF M/S. MUNISH KUMAR BANSAL CONTRACTOR. BUT IN MY OPINION UNLESS THE AO PROVES THAT THE STOCK WAS PHY SICALLY VERIFIED IN THE CASE OF THE APPELLANT, NO ADDITION CAN BE UP HELD. III) THE ONLY CONCLUSION WHICH CAN BE DRAWN FROM TH E ABOVE STATED FACTS IS THAT NO INSPECTION/PHYSICALLY VERIF ICATION OF THE STOCK WAS CARRIED OUT BY THE BANK IN THE CASE OF THE APPE LLANT ON 31.03.209 AND THE AO ERRED IN MAKING ADDITION ON AC COUNT OF DISCREPANCY OF STOCK AS RECORDED IN THE STOCK STATE MENT AND AS REFLECTED IN THE BOOKS OF ACCOUNT BY SOLELY RELYING ON THE STOCK STATEMENT AS ON 31.03.2009 AND THE AO HAS FAILED TO BRING ANY EVIDENCE ON RECORD TO JUSTIFY THE ADDITION. THIS CO NCLUSION IS BASED ON THE FACT THAT IT WAS NOT POSSIBLE BY THE BANK ST AFF TO COUNT/WEIGH THE STOCK WORTH CRORE OF RUPEES AND LYING IN OPEN AT VARIOUS PLACES IN DIFFERENT STATES. THE HONBLE MADRAS HIGH COURT IN THE CASE OF CIT VS. N. SWAMY (REPRODUCED SUPRA) HELD THAT THE MERE FACT THAT ASSESSEE HAD MADE SUCH A STATEMENT TO THE BANK BY I TSELF CANNOT BE TREATED AS HAVING RESULTED IN AN IRREFUTABLE PRE SUMPTION AGAINST THE ASSESSEE AND THE BURDEN OF SHOWING THAT THE ASS ESSEE HAD UNDISCLOSED INCOME IS ON THE REVENUE. SIMILARLY, TH E HONBLE P & H HIGH COURT HAS HELD IN THE CASE OF SANTOSH BOX FA CTORY THAT IT IS FOR THE REVENUE TO BRING MATERIAL ON RECORD TO SHOW THA T THE APPELLATE IN ITA NOS.459, 461 & 479/2014 CO. NO. 48 & 49(ASR)/2014 8 FACT POSSESSED LARGER QUANTITY OF STOCK THEN THE S TOCK RECORDED IN THE BOOKS OF ACCOUNT. AS DISCUSSED SUPRA, I FIND THAT THE AO HAS FAILED TO BRING ANY MATERIAL ON RECORD, EXCEPT THE STOCK STATEMENT SUBM ITTED TO THE BANK, TO JUSTIFY THE ADDITION: 3.3. IN APPELLATE ORDER FOR AY 2001-12 THE RELEVANT FINDINGS IN PARA 2 ON PAGE 11 IS AS UNDER: 2. IN VIEW OF THE FACTS DISCUSSED SUPRA, I FIND TH AT ALTHOUGH THE AO HAS RELIED ON THE STATEMENT OF THE BANK MANAGER IN WHICH HE STATED THAT PHYSICAL VERIFICATI ON OF THE STOCK WAS CARRIED, IN SUPPORT OF HIS FINDING THAT T HE APPELLANT POSSESSED LARGER QUANTITY OF STOCKS THAN THE STOCK AS PER THE BOOKS OF ACCOUNT, BUT THE AO HAS NOT BEEN ABLE TO P ROVE THAT THE STOCKS LYING AT VARIOUS SITES AT MADHYA PRADESH AS PER STOCK STATEMENT DATED 20.03.2010 WERE ACTUALLY INSPECTED/COUNTED TO SUBSTANTIATE THE ABOVE SAID F INDING BECAUSE THE BANK OFFICERS HAS NOT BEEN ABLE TO PROD UCE THE RECORD OF THE MOVEMENT OF ANY BANK OFFICER FROM BAT HINDA TO MADHYA PRADESH AND THE RECORDS RELATING TO ACTUAL C OUNTING OF STOCK. AS FAR AS THE FINDING OF THE AO THAT THE PH YSICAL VERIFICATION WAS PROVED FROM THE DRAWING POWER REG ISTER, I FIND THAT THE DRAWING POWER REGISTER IS NOT AUTHENT IC ON ACCOUNT OF NON RECORDING OF VITAL INFORMATION BY T HE BANK OFFICERS WITH REGARD TO DATE OF FILING OF STOCK STA TEMENT AND DATE OF PHYSICAL VERIFICATION OF STOCK. THE AO HAS ALSO NOT BEEN ABLE TO REBUT THE STOCK STATEMENT TO AVAIL CRE DIT FROM THE BANK. THUS, THE ACTION OF THE AO OF RELYING ON THE STATEMENT OF THE BANK MANAGER, THE STOCK STATEMENT AND THE ACCOU NT OF DIFFERENCE IN STOCK, IS NOT JUSTIFIED ON FACTS. 3.4. FROM THE PERUSAL OF THE ASSESSMENT ORDER U/S 1 43(3) PASSED BY THE AO FOR AY 2011-12 T TRANSPIRES THAT NO NEW F ACT HAS BEEN BROUGHT ON RECORD AND THE AO HAS ONLY REITERATED TH E FINDINGS AS RECORDED IN ASSESSMENT ORDERS FOR AY 2009-10 & 2010 -11 TO MAKE THE ADDITION IN AY 2011-12 ON ACCOUNT OF DIFFERENCE IN THE STOCK AS RECORDED IN THE STOCK STATEMENT SUBMITTED TO THE BA NK AND STOCK AS REFLECTED IN THE BALANCE SHEET AS ON 31.03.2011. TH E AO HAS ONCE AGAIN NOT BEEN ABLE TO PROVE THAT THE STOCK AS REFL ECTED IN THE STOCK STATEMENT DATED 31.03.2011 WAS PHYSICALLY VERIFIED BY THE BANK OFFICERS. THE HONBLE P & H HIGH COURT HAS ALREADY HELD IN THE CASE OF SHEENA EXPORTS 20 TAXMAN .COM 664 THAT NO ADDITI ON CAN BE MADE ON THE BASIS OF DIFFERENCE IN STOCK AS PER STO CK STATEMENT AND AS PER BALANCE SHEET IN THE CASE OF THE APPELLANT W HO IS AVAILING CASH CREDIT LIMIT AGAINST HYPOTHECATION OF STOCK AN D NO DIFFERENCE IN ITA NOS.459, 461 & 479/2014 CO. NO. 48 & 49(ASR)/2014 9 THE QUANTITY OF STOCK HAS BEEN PROVED. THE AO HAS A LSO FAILED TO PROVE THAT THE APPELLANT POSSESSED LARGER QUANTITY OF STOCK THEN THE STOCK REFLECTED IN THE BALANCE SHEET. HE HAS RELIED ONLY ON THE STOCK STATEMENT TO MAKE THE ADDITION IN VIOLATION OF PRIN CIPLES OF LAW AS ENUNCIATED BY HONBLE P & H HIGH COURT IN THE CASE OF SIDHU RICE MILLS 281 ITR 428 & SANTOSH BOX FACTORY 44 IT REP. 473. HENCE, IN VIEW OF THE DETAILED FINDING RECORDED IN THE APPELL ATE ORDER FOR AY 2009-10 & 2010-11 AND THE FACT THAT FINDINGS OF THE AO STANDS REBUTTED BY THE ARGUMENTS OF THE A/R OF THE APPELLA NT ON FACTS AND LAW AS ENUNCIATED BY THE JURISDICTIONAL BENCH OF T HE HONBLE ITAT & HONBLE P & H HIGH COURT DISCUSSED SUPRA, THE GROU NDS OF APPEAL NO.3 IS ALLOWED AND THE AO IS DIRECTED TO DELETE TH E ADDITION OF RS.2,09,79,175/- MADE ON ACCOUNT OF DIFFERENCE IN S TOCK AS REPORTED IN STOCK STATEMENT SUBMITTED TO THE BANK AND CLOSI NG AS REFLECTED IN THE BALANCE SHEET AS ON 31.03.2011. 7. WE FURTHER FIND THAT THE AMRITSAR BENCH OF THE T RIBUNAL, VIDE ITS CONSOLIDATED ORDER DATED 26.03.2015, IN THE CASE O F RAM KUMAR BANSAL IN ITA NO.457(ASR)/2013 FOR THE A.Y. 2009-10 HAD NO TED DOWN THE FOLLOWING GROUNDS OF APPEAL: 1. THAT IN THE FACTS AND CIRCUMSTANCES OF THE CAS E THE LD. CIT(A) HAS ERRED BOTH IN LAW AND ON FACTS IN NOT AP PRECIATING THAT ON THE FACE OF THE FACT THAT THE ASSESSEE HAD HIMSELF SUPPLIED A FIGURE OF RS.2,99,50,000/- AS ITS CLOSIN G STOCK AS AT 31.03.2010 TO ITS BANK, THE ONUS OF PROVING TO T HE DEPARTMENT THAT THE CLOSING STOCK AS DISCLOSED IN I TS I.T. RETURN AT RS.12,13,814/- WAS THE CORRECT FIGURES, HAD SQUARELY SHIFTED ON IT, WHICH IT HAS FAILED TO DISC HARGE. 2. THAT IN THE FACTS AND CIRCUMSTANCES OF THE CASE THE LD. CIT(A) HAS ERRED BOTH IN LAW AND ON FACTS IN OPINIO NED THAT THE AO HAS FAILED TO BRING ANY EVIDENCE ON RECORD T O JUSTIFY THE ADDITION BECAUSE IT WAS NOT POSSIBLE BY THE BA NK STAFF TO COUNT OR WEIGH THE STOCK WORTH CRORES OF RUPEES LYI NG IN OPEN AT VARIOUS PLACES. HE HAS HELD THAT THE AO HAS FAIL ED TO BRING MATERIAL ON RECORD TO SHOW THAT THE APPELLANT IN FA CT POSSESSED LARGER QUANTITY OF STOCK THAN THE STOCK R ECORDED IN THE BOOKS OF ACCOUNT AND THAT A MERE REFERENCE TO T HE DRAWING POWER REGISTER WAS NOT SUFFICIENT EVIDENCE. 3. THAT IN THE FACTS AND CIRCUMSTANCES OF THE CASE THE LD. CIT(A) HAS ERRED BOTH IN LAW AND ON FACTS IN DELETI NG THE ITA NOS.459, 461 & 479/2014 CO. NO. 48 & 49(ASR)/2014 10 ADDITION MADE BY THE AO ON THE BASIS OF DIFFERENCE IN THE VALUE OF BOOK DEBT AS PER DRAWING POWER REGISTER OF THE BANK VIS--VIS VALUE OF BOOK DEBTS AS PER BALANCE S HEET FILED BEFORE THE DEPARTMENT. 8. SIMILARLY, WE FIND THAT THE HONBLE TRIBUNAL IN THE CASE OF ISHAR INFRASTRUCTURE AND DEVELOPERS PVT. LTD., IN ITA NO. 198(ASR)/2013 FOR THE AY 2009-10, HAD NOTED DOWN THE GROUNDS OF APPEAL A S UNDER: 1. THAT IN THE FACTS AND CIRCUMSTANCES OF THE CAS E THE LD. CIT(A) HAS ERRED BOTH IN LAW AND ON FACTS IN NOT AP PRECIATING THAT ON THE FACE OF THE FACT THAT THE ASSESSEE HAD HIMSELF SUPPLIED A FIGURE OF RS.6,39,30,292/- AS ITS CLOSIN G STOCK AS AT 31.03.2009 TO ITS BANK, THE ONUS OF PROVING TO T HE DEPARTMENT THAT THE CLOSING STOCK AS DISCLOSED IN I TS I.T. RETURN AT RS.4,66,13,761/- WAS THE CORRECT FIGURE S, HAD SQUARELY SHIFTED ON IT, WHICH IT HAS FAILED TO DISC HARGE. 2. THAT IN THE FACTS AND CIRCUMSTANCES OF THE CASE THE LD. CIT(A) HAS ERRED BOTH IN LAW AND ON FACTS IN OPINIO NED THAT THE AO HAS FAILED TO BRING ANY EVIDENCE ON RECORD T O JUSTIFY THE ADDITION BECAUSE IT WAS NOT POSSIBLE BY THE BA NK STAFF TO COUNT OR WEIGH THE STOCK WORTH CRORES OF RUPEES LYI NG IN OPEN AT VARIOUS PLACES. HE HAS HELD THAT THE AO HAS FAIL ED TO BRING MATERIAL ON RECORD TO SHOW THAT THE APPELLANT IN FA CT POSSESSED LARGER QUANTITY OF STOCK THAN THE STOCK R ECORDED IN THE BOOKS OF ACCOUNT AND THAT A MERE REFERENCE TO T HE DRAWING POWER REGISTER WAS NOT SUFFICIENT EVIDENCE. 8.1. WE FIND THAT GROUNDS OF APPEALS TAKEN BY THE R EVENUE IN THE PRESENT APPEALS ARE SIMILAR TO THE GROUNDS OF APPEA L WHICH HAS ALREADY BEEN ADJUDICATED BY THE HONBLE TRIBUNAL IN ITS ORD ER DATED 26.03.2015. 9. THE AMRITSAR BENCH OF THE TRIBUNAL IN ITS ORDER DATED 26.03.2015 HAD TAKEN THE CASE OF ISHAR INFRASTRUCTURE & DEVELO PERS PVT. LTD., AS A LEAD CASE AND HAS DECIDED THE ISSUE IN FAVOUR OF TH E ASSESSEE BY HOLDING AS FOLLOWS: ITA NOS.459, 461 & 479/2014 CO. NO. 48 & 49(ASR)/2014 11 32. THE DECISIONS RELIED UPON BY THE LD. CIT(A) OF THE HONBLE PUNJAB & HARYANA HIGH COURT, IN THE CASES OF M/S.SA NTOSH BOX FACTORY, M/S. SIDHU RICE MILLS AND IN THE CASE OF M/S. DEVI DAYAL RICE MILLS ARE SQUARELY APPLICABLE TO THE FACTS OF THE PRESENT CASE AS THE REVENUE AS THE REVENUE HAS NOT BROUGHT ON RECOR D DURING THE ASSESSMENT PROCEEDINGS OR BEFORE THE LD. CIT(A) OR EVEN BEFORE US THAT PHYSICAL VERIFICATION OF THE STOCK HAS ACTUALL Y BEEN DONE AND ACCORDINGLY STOCK STATEMENTS SO SUBMITTED BEFORE T HE BANK AUTHORITIES AND DP REGISTER CANNOT BE RELIED UPON. 33. IN THE CASE OF CIT VS. VEERDIP ROLLER (P) LTD. (2010) 323 ITR 341 (GUJ), THE FACTS ARE THAT THE AO MADE 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 ACCOUN T FURNISHED TO THE INCOME TAX AUTHORITIES INFLATED STOCK WAS HYPOTHE TICAL AND NOT PLEDGED AND THE BANK OFFICIALS HAD NOT VERIFIED TH E STATEMENT SHOWING INFLATED STOCK SO PRODUCED BY THE ASSESSEE . THE ADDITION ON ACCOUNT OF DIFFERENCE FURNISHED TO THE BANK AS P ER BOOKS OF ACCOUNT U/S 69B OF THE ACT CAN NOT BE SUSTAINED. CO NSEQUENTLY, THE APPEAL WAS DISMISSED BY THE HONBLE GUJRAT HIGH COU RT AGAINST THE SAID DECISION, THE REVENUE WENT IN APPEAL BEFORE TH E HONBLE SUPREME COURT AND THE HONBLE SUPREME COURT VIDE IT S ORDER DATED 13.12.2008 DISMISSED THE SLP FILED BY THE DEPARTME NT. 34. SIMILAR DECISIONS HAVE BEEN MADE BY VARIOUS CO URTS OF LAW REFERRED TO HEREINABOVE: I) CIT VS. SIDHU RICE & GENERAL MILLS REPORTED IN 2 81 ITR 428 (P&H) II) CIT VS. SANTOSH BOX FACTORY (P) LTD.., 44 IT RE PS. 472 (P&H) III) CIT VS. N. SWAMY REPORTEDE IN 241 ITR 363 (MAD RAS) I) ITO VS. DEVI DAYAL RICE MILLS REPORTED IN 75 TTJ 24 (ITAT, AMRITSAR BENCH. II) CIT VS. SIROHI STEEL ROLLING MILLS, REPORTED IN 200 CTR 595 (ALL.) III) ASHOK KUMAR VS. ITO, REPORTED IN 201 CTR 178 ( J & K) IV) CIT VS. DAS INDUSTRIES, REPORTED IN 303 ITR 199 (AL L.) V) CIT VS. SRI PADMAVATHI COTTON MILLS, REPORTED IN 23 6 ITR 340 (MAD.) VI) JAI SHARDA RICE MILLS. VS ITO REPORTED IN 36 ITD 25 4 (ITAT, ASR.) VII) CIT VS. RIDDHI STEEL AND TUBES (P) LTD. REPORTED I N 220 TAXMAN 148 (GUJ.) VIII) CIT VS. APCOM COMPUTERS P. LTD. REPORTED IN (2007) 292 ITR 630 (MAD.). 35. IN THE FACTS AND CIRCUMSTANCES, THE ARGUMENTS M ADE BY THE LD. DR IN HIS WRITTEN SUBMISSIONS AND COUNTER SUBMISSIO NS CANNOT HELP THE REVENUE AND ACCORDINGLY, WE FIND NO INFIRMITY I N THE ORDER OF THE ITA NOS.459, 461 & 479/2014 CO. NO. 48 & 49(ASR)/2014 12 LD. CIT(A) IN THE CASE OF M/S. ISHAR INFRASTRUCTURE DEVELOPERS (P LTD. IN ITA NO.198(ASR)/2013 IN THE IMPUGNED YEAR. 10. THE TRIBUNAL HAD RECORDED ITS FINAL CONCLUSION IN PARA 41, WHICH IS REPRODUCED AS UNDER: 41 IN THE RESULT, ALL THE SIX APPEAL OF THE REVENU E ITA NOS. 198 (ASR)/2013, ITA NO.536(ASR)/2013, 199(ASR)/2013, IT A NO.200(ASR)/2013 ITA NO.571(ASR)/2013 AND IN ITA NO.457(ASR)/2013 AND C.O. OF THE ASSESSEE BEARING NO.16(ASR)/2014 ARE DISMISSED. 11. FINDING GROUNDS OF APPEAL TAKEN BY THE REVENUE ARE PARI-MATERIA TO THE ISSUES ALREADY DECIDED BY THE TRIBUNAL IN IT S ORDER DATED 26.03.2015, RESPECTFULLY FOLLOWING THE SAME, THE G ROUNDS OF APPEAL TAKEN BY THE REVENUE ARE DISMISSED. 12. AS REGARDS THE C.OS FILED BY THE ASSESSEE, THE LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT THESE ARE SUPPORTIVE TO THE ORDER OF THE LD. CIT(A), THEREFORE, THE SAME ARE DISMISSED HAVING BECOME INFRUCTUOUS. 13. IN VIEW OF THE ABOVE, THE APPEALS FILED BY THE REVENUE AS WELL AS C.OS FILED BY THE ASSESSEE ARE DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 10/02/201 6 SD/- SD/- (T.S. KAPOOR) (A.D. JAIN) ACCOUNTANT MEMBER JUDICIAL MEM BER DATED: 10/02/2016 /SKR/ COPY OF ORDER FORWARDED TO: 1. THE ASSESSEES: I) RAM KUMAR BANSAL, BATHINDA (I I) M/S. ISHAR INFRASTRUCTURE DEVELOPERS PVT. LTD. BTHINDA. 2. THE ACIT, CIRCLE-1, BATHINDA 3. THE CIT(A), BATHINDA 4. THE CIT, BATHIDNA. 5. THE SR. DR, ITAT, ASR. ITA NOS.459, 461 & 479/2014 CO. NO. 48 & 49(ASR)/2014 13 TRUE COPY BY ORDER (ASSISTANT REGISTRAR) INCOME TAX APPELLATE TRIBUNAL AMRITSAR BENCH: AMRITSAR.