ITO, Ward - 40(1), Kolkata, Kolkata V. M/s. Balaram Hosiery, Kolkata

ITA 46/KOL/2012

• Counselvise Citation: 4623514 RSA 2012
• Duration Of Justice: 2 year(s) 8 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 26-09-2014
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: Not Allotted
• Assessment Year: 2006-2007
• Appeal Filed On: 10-01-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: PIJUSH MUKHERJEE
• Assessee Lawyers: ARVIND AGARWAL
• Keywords: Depreciation
• Section: 69; 133A

Judgement Text

I.T.A. NO.: 46/KOL./2012 ASSESSMENT YEAR : 2006-2007 PAGE 1 TO 6 1 IN THE INCOME TAX APPELLATE TRIBUNAL, KOLKATA B BENCH, KOLKATA CORAM : SHRI SHAMIM YAHYA (ACCOUNTANT MEMBER) AND SHRI GEORGE MATHAN (JUDICIAL ME MBER) I.T.A. NO.: 46/KOL./ 2012 ASSESSMENT YEAR : 2006-2007 INCOME TAX OFFICER,............................... ....APPELLANT WARD-40(1), KOLKATA, 18, RABINDRA SARANI, PODDAR COURT, 4 TH FLOOR, KOLKATA-700 001 -VS.- M/S. BALARAM HOSIERY,.............................. ............RESPONDENT P-156/1, CIT ROAD, SCHEME-VII(M), KOLKATA-700 054 [PAN : AAFFB 0896 E] APPEARANCES BY: SHRI PIJUSH MUKHERJEE, JCIT, FOR THE DEPARTMENT SHRI ARVIND AGARWAL, A.R., FOR THE ASSESSEE DATE OF CONCLUDING THE HEARING : SEPTEMBER 24, 201 4 DATE OF PRONOUNCING THE ORDER : SEPTEMBER 26, 2014 O R D E R PER SHAMIM YAHYA, ACCOUNTANT MEMBER : 1. THIS APPEAL BY THE REVENUE IS DIRECTED AGAINST T HE ORDER OF LD. COMMISSIONER OF INCOME TAX (APPEALS)-XII, KOLKATA D ATED 31.10.2011 FOR THE ASSESSMENT YEAR 2006-07. 2. GROUNDS OF APPEAL RAISED BY THE REVENUE ARE AS U NDER:- (1) THAT IN THE FACTS AND IN THE CIRCUMSTANCES OF T HE CASE, THE CIT(A)-XIX, KOLKATA IS WRONG IN ALLOWING THE ADDITI ON U/S 69 AMOUNTING TO RS.26,23,788/- AS UNACCOUNTED STOCK SI NCE THE STOCK PHYSICALLY FOUND AS ON 02.03.2006 (SURVEY DAT E) WAS RS.6,21,391/- WHICH SHOULD HAVE BEEN AT RS.25,16,45 0/- AS PER ACCOUNTS AS ON THAT DATE. (2) THAT IN THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE CIT(A)-XIX, KOLKATA IS ERRED IN ALLOWING THE EXPENS ES OF RS.51,496/- WITHOUT ANY BASIS (WITHOUT VERIFYING BI LLS AND I.T.A. NO.: 46/KOL./2012 ASSESSMENT YEAR : 2006-2007 PAGE 1 TO 6 2 VOUCHERS OF THE EXPENSES) ONLY CONSIDERING THE TURN OVER OF THE ASSESSEE. 3. FACTS APROPOS GROUND NO. 1 ARE THAT THE ASSESSEE IN THIS CASE CARIES ON THE BUSINESS OF MANUFACTURING AND TRADING OF HOS IERY GOODS. DURING THE CONCERNED PREVIOUS YEAR, THE ASSESSEE-FIRM HAS SHOWN A GROSS TURNOVER OF RS.1,13,30,924/- FROM WHICH THE GROSS P ROFIT WAS RS.22,96,791/- (20.27%) AND NET PROFIT WAS RS.4,57, 246.73. DURING THE COURSE OF ASSESSMENT, THE ASSESSING OFFICER NOTED T HAT THERE WAS A SURVEY UNDER SECTION 133A CONDUCTED AT THE BUSINESS PREMIS ES OF THE ASSESSEE ON 02.03.2006. DURING THE COURSE OF SURVEY, TOTAL STOC K OF RS.32,45,117/- INVENTORISED AT COST PRICE, WAS FOUND WHICH COMPRIS ED OF FINISHED GOODS WORTH RS.29,31,242/- AND RAW MATERIALS OF RS.3,13,8 75/- BUT AS PER THE BOOKS OF ACCOUNT FOUND AND INVENTORISED ON THAT DAT E, THE STOCK SHOULD HAVE BEEN ONLY WORTH RS.6,21,329/-. ASSESSING OFFIC ER REQUESTED THE ASSESSEE TO FURNISH THE TRADING ACCOUNT AS ON THE D ATE OF SURVEY AND RECONCILE THE DIFFERENCE. ACCORDING TO THE TRADING ACCOUNT AS ON THE DATE OF SURVEY, THE CLOSING STOCK WAS RS.25,16,450/-. TH E ASSESSEES COUNSEL WAS REQUESTED TO FURNISH EXPLANATION IN THIS REGARD . LD. COUNSEL OF THE ASSESSEE SUBMITTED THAT STOCK WAS INVENTORISED AT M AXIMUM RETAIL PRICE AND NOT AT COST PRICE. BUT THE ASSESSING OFFICER RE JECTED THE SUBMISSION OF THE LD. COUNSEL OF THE ASSESSEE ON THE GROUND THAT AS PER THE STATEMENT ON OATH OF ONE OF THE PARTNERS SHRI N. BASAK, THE STOC K WAS INVENTORISED AND WAS AT THE COST PRICE. THE ASSESSING OFFICER FURTHE R OBSERVED THAT THE CLAIM OF STOCK ACCORDING TO BOOKS OF ACCOUNT, WORTH RS.25,16,450/- ON THE DATE OF SURVEY IS ALSO NOT ACCEPTABLE, SINCE THE BO OKS OF ACCOUNT MUST HAVE BEEN ADJUSTED LATER ON. ASSESSING OFFICER PROC EEDED TO HOLD THAT THE ASSESSEE-FIRM IS NOT REFLECTING ITS TRUE AFFAIRS IN THE BOOKS OF ACCOUNTS AND HE TREATED THE DIFFERENCE OF RS.26,23,788/- AS INVESTMENT MADE FROM UNDISCLOSED INCOMES AND ADDED IT BACK TO THE RETURN ED INCOME UNDER SECTION 69 OF THE INCOME TAX ACT, 1961. I.T.A. NO.: 46/KOL./2012 ASSESSMENT YEAR : 2006-2007 PAGE 1 TO 6 3 4. AGAINST THE ABOVE ORDER OF ASSESSING OFFICER, AS SESSEE WAS IN APPEAL BEFORE LD. CIT(APPEALS). CONSIDERING THE ASSESSEES SUBMISSION, LD. CIT(APPEALS) DELETED THE ADDITION BY HOLDING AS UND ER:- 4. AFTER CAREFUL CONSIDERATION OF THE ASSESSMENT O RDER AND WRITTEN SUBMISSION, IT IS NOTICED THAT THE AO H AS DISREGARDED THE STOCK REGISTER WHICH HAS BEEN IDENT IFIED BY ITO, WARD-40(1), KOLKATA DURING SURVEY ON 02.03.200 6 IN PAGE NO. 1 TO 57 OF DOCUMENT BH/12. THIS STOCK HAVE BEEN REFLECTED IN REGULAR BOOKS OF ACCOUNTS OF THE ASSES SEE AND THE QUANTITY TALLIES WITH THE INVENTORY OF STOCK MA DE BY THE SURVEY PARTY ON 02.03.2006 DURING 133A PROCEEDINGS. THE ASSESSEE HAS PREPARED PROFIT AND LOSS ACCOUNT FROM 01.04.2005 TO 02.03.2006 BY TAKING INTO CONSIDERATI ON THIS STOCK REGISTER MENTIONED ABOVE AND GROSS PROFIT FOR THIS PERIOD HAS BEEN WORKED AS 18.33% WHICH IS COMPARABL E TO GP FOR THE WHOLE FINANCIAL YEAR. IF THE CLOSING STO CK VALUE IS TAKEN AT RS.6,21,329/-, THE VALUE OF STOCK CALCULAT ED ON THE BASIS OF INVENTORY TAKEN BY SURVEY PARTY THEN THE G ROSS PROFIT FROM ASSESSEES BUSINESS BECOMES NEGATIVE FI GURE FOR THE PERIOD 01.04.2005 TO 02.03.2006 WHICH IS AN ABS URD RESULT SINCE ASSESSEE HAS SHOWN IN ITS BOOKS OF ACC OUNT GROSS PROFIT OF 20.3% FOR THE WHOLE FINANCIAL YEAR. THERE FORE, ADDITION MADE OF RS.26,23,788/- IN THE RETURN INCOM E U/S 69 IS DELETED. HENCE, GROUND NO. 1 IS ALLOWED. 5. AGAINST THE ABOVE ORDER OF LD. CIT(APPEALS), REV ENUE IS IN APPAL BEFORE THE TRIBUNAL. 6. WE HAVE CAREFULLY HEARD THE RIVAL SUBMISSIONS AN D PERUSED THE MATERIAL AVAILABLE ON RECORD. WE FIND THAT THE ASSE SSEE HAS SUBMITTED PROPER BOOKS OF ACCOUNT, STOCK REGISTER AND OTHER D OCUMENTS BEFORE THE ASSESSING OFFICER. THE ASSESSING OFFICER HAS NOT FO UND ANY MAJOR DISCREPANCY IN THE SAME. HE HAS ALSO NOT REJECTED T HE BOOKS OF ACCOUNT AND STOCK REGISTER. THE ASSESSING OFFICER HAS ONLY REFERRED TO THE SURVEY CONDUCTED AT THE ASSESSEES PREMISES ON 02.03.2006, WHEREIN DISCREPANCY WAS FOUND BY THE SURVEY OFFICIAL BETWEEN VALUE OF S TOCK FOUND AND THAT AS PER BOOKS OF ACCOUNT AND RECORDS. IT IS NOTED THAT THERE IS NO ALLEGATION THAT THERE WAS ANY DIFFERENCE IN THE QUANTITY OF ST OCK FOUND DURING THE COURSE OF SURVEY AND THAT AS REFLECTED IN THE RECOR DS AT THAT TIME. I.T.A. NO.: 46/KOL./2012 ASSESSMENT YEAR : 2006-2007 PAGE 1 TO 6 4 ASSESSEES CONTENTION IN THIS REGARD IS THAT THE VA LUE TAKEN BY THE SURVEY TEAM WAS AT THE MAXIMUM RETAIL PRICE. HOWEVER, THIS HAS BEEN COUNTERED BY THE ASSESSING OFFICER ON THE PREMISE THAT PARTNE R OF THE ASSESSEE-FIRM AT THE TIME OF SURVEY HAS AGREED ON OATH THAT THE V ALUATION WAS MADE AT COST AT THE TIME OF SURVEY. WE FIND THAT THIS IS NO T THE CASE THAT THE VALUATION WAS DONE BY THE SURVEY OFFICIALS BY REFER RING TO ANY SPECIFIC RECORD AND DOCUMENT. IT IS SETTLED LAW THAT STATEME NTS OBTAINED DURING THE COURSE OF SURVEY CANNOT BECOME THE CONCLUSIVE B ASIS OF ANY ASSESSMENT. HENCE MERE SUBMISSION THAT THE PARTNER OF THE ASSESSEE-FIRM HAS AGREED AT THE TIME OF SURVEY REGARDING THE VALU ATION, CANNOT ABSOLVE THE REVENUE FROM COGENTLY PROVING THAT THE VALUATIO N DONE BY THE SURVEY TEAM WAS CORRECT. MOREOVER WE NOTE THAT THE ASSESSI NG OFFICER HAS HIMSELF ASKED THE ASSESSEE TO MAKE A RECONCILIATION OF ACCOUNTS AND SUBMIT THE STOCK DETAILS AS ON THE DATE OF SURVEY O N 02.03.2006. THE ASSESSEE HAS DULY SUBMITTED DETAILS IN THIS REGARD, AND FROM THIS STOCK OF RS.25,16,450/- WAS ARRIVED AT ON THE DATE OF SURVEY . THE ASSESSING OFFICER HAS NOT FOUND ANY DEFECT IN THE SUBMISSIONS OF STOC K DETAILS AND RECONCILIATION SUBMITTED BY THE ASSESSEE. HE HAS ON LY REJECTED THE ASSESSEES SUBMISSION ON THE PROMISE THAT BOOKS OF ACCOUNT MUST HAVE BEEN ADJUSTED LATER ON. WE FIND THAT THIS AMPLY PR OVES THAT THE ADDITION IN THIS CASE HAS BEEN MADE MERELY ON CONJECTURE AND SURMISES AND WITHOUT ANY COGENT MATERIAL. THE ASSESSEE HAVING FU RNISHED NECESSARY RECONCILIATION AND DETAILS HAS TOTALLY DISCHARGED T HE ONUS. HENCE, IN OUR CONSIDERED OPINION THE ADDITION MADE BY THE ASSESSI NG OFFICER IS WITHOUT ANY BASIS. HENCE, WE UPHOLD THE ORDER OF LD. CIT(AP PEALS) DELETING THE ADDITION. 7. FACTS APROPOS GROUND NO. 2 ARE THAT THE ASSESSIN G OFFICER HAS MADE ADHOC DISALLOWANCES OF 20% IN THE CASE OF FOLLOWING ITEMS:- GENERAL EXPENSES.........RS.43,941/- DELIVERY CHARGES..........RS.55,400/- CONVEYANCE CHARGES....RS.20,084/- I.T.A. NO.: 46/KOL./2012 ASSESSMENT YEAR : 2006-2007 PAGE 1 TO 6 5 ASSESSING OFFICER HAS MADE THE DISALLOWANCES ON THE GROUND THAT EITHER THERE WERE NO EVIDENCES OR ONLY DATE-WISE INTERNAL VOUCHERS WERE THERE. BESIDES THE ASSESSING OFFICER HAS ALSO DISALLOWED 2 0% OF CAR RUNNING, CAR REPAIRING AND CAR DEPRECIATION EXPENSES ON THE GROU ND THAT ELEMENT OF PERSONAL USE CANNOT BE RULED OUT. TOTAL DISALLOWANC E AT THE RATE OF 20% OF THESE EXPENSES TOTALLING TO RS.2,57,483/- CAME TO R S.51,496/-. 8. LD. CIT(APPEALS) DELETED THE ADDITION ON GENERAL EXPENSES ON THE GROUND THAT THE EXPENSES ARE VERY LOW AS PER THE AS SESSEES TURNOVER. AS REGARDS THE CAR EXPENSES, CAR DEPRECIATION AND CAR REPAIRS, LD. CIT(APPEALS) OBSERVED THAT THE ASSESSEE HAS BEEN SU BJECTED TO FRINGE BENEFIT TAX ON THE ABOVE EXPENSES. IN THESE CIRCUMS TANCES, LD. CIT(APPEALS) DELETED THE ADDITION. 9. AGAINST THE ABOVE ORDER OF LD. CIT(APPEALS), REV ENUE IS IN APPEAL BEFORE US. 10. WE HAVE HEARD THE LD. COUNSEL AND PERUSED THE R ECORDS. WE FIND THAT THE DISALLOWANCES IN THIS REGARD HAVE BEEN MAD E BY THE ASSESSING OFFICER ON AD HOC BASIS. THE ASSESSING OFFICER HAS NOT SPECIFIED ANY SPECIFIC INSTANCE OF DEFICIENCY STOOD IN VOUCHER. W E ALSO NOTE THAT THE EXPENDITURES INVOLVED ARE VERY LOW AS COMPARED TO T HE TURNOVER OF THE ASSESSEE. MOREOVER, THE ADDITION CANNOT BE MADE MER ELY ON SURMISES AND CONJECTURE. IN THESE CIRCUMSTANCES, IN OUR CONSIDER ED OPINION, THERE IS NO INFIRMITY IN THE ORDER OF LD. CIT(APPEALS) DELETING THE ADDITION. HENCE, WE UPHOLD THE ORDER OF LD. CIT(APPEALS). 11. IN THE RESULT, THE APPEAL FILED BY THE REVENUE STANDS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 26 TH DAY OF SEPTEMBER, 2014. SD/- SD/- GEORGE MATHAN SHAMIM YAHYA (JUDICIAL MEMBER) (ACCO UNTANT MEMBER) KOLKATA, THE 26 TH DAY OF SEPTEMBER, 2014 I.T.A. NO.: 46/KOL./2012 ASSESSMENT YEAR : 2006-2007 PAGE 1 TO 6 6 COPIES TO : (1) INCOME TAX OFFICER, WARD-40(1), KOLKATA, 18, RABINDRA SARANI, PODDAR COURT, 4 TH FLOOR, KOLKATA-700 001 (2) M/S. BALARAM HOSIERY, P-156/1, CIT ROAD, SCHEME-VII(M), KOLKATA-700 054 (3) CIT (4) CIT(A) (5) THE DEPARTMENTAL REPRESENTATIVE (6) GUARD FILE BY ORDER ETC ASSISTANT REGISTRAR INCOME TAX APPELLATE TRIBUNAL KOLKATA BENCHES, KOLKATA LAHA/SR. P.S.