The Assistant Commissioner of Income-tax, Bathinda V. M/s. Bhalaria Construction, Bathinda

ITA 462/ASR/2014

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 8870 (ITAT-AMRITSAR)
• Duration Of Justice: 1 year(s) 6 month(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 03-02-2016
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Next Hearing Date: 20-01-2016
• Assessment Year: 2011-2012
• Appeal Filed On: 14-07-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: R K SHARDA
• Assessee Lawyers: P N ARORA
• Section: 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AMRITSAR BENCH; AMRITSAR BEFORE SH. A.D.JAIN, HONBLE JUDICIAL MEMBER AND SH. T.S. KAPOOR, HONBLE ACCOUNTANT MEMBER I.T.A NO. 462(ASR)/2014 ASSESSMENT YEAR: 2011-12 THE ASST. COMMISSIONER OF INCOME TAX, CIRCLE-1, BATHINDA. VS. M/S BHALARIA CONSTRUCTION, 2928, E/10, BIBIWALA ROAD, BATHINDA. PAN:AAHFB6283B (APPELLANT) (RESPONDENT) APPELLANT BY: SH. R.K. SHARDA (DR.) RESPONDENT BY: SH. P.N. ARORA (ADV.) DATE OF HEARING: 20.01.2016 DATE OF PRONO UNCEMENT: 03.02.2016 ORDER PER T. S. KAPOOR (AM): THIS IS AN APPEAL FILED BY THE REVENUE AGAINST THE ORDER OF LEARNED CIT(A), DATED 27.05.2014 FOR THE ASST. YEAR 2011-12 . 2. THE GROUNDS OF APPEAL TAKEN BY REVENUE ARE REPRO DUCED BELOW. (I) IN THE FACTS AND CIRCUMSTANCES OF THE CASE, TH E LD. CIT(A) HAS ERRED BOTH IN LAW AND ON FACTS IN NOT APPRECIATING THAT O N THE FACE OF THE FACT THAT THE ASSESSEE HAD ITSELF SUPPLIED A FIGURE OF RS. 1, 39,85,000/- AS ITS CLOSING STOCK TO ITS BANK, THE ONUS OF PROVING TO THE DEPAR TMENT THAT THE CLOSING STOCK AS DISCLOSED IN ITS I.T. RETURN AT RS.56,77,9 13/- WAS THE CORRECT FIGURE, HAD SQUARELY SHIFTED ON IT, WHICH IT HAS FA ILED TO DISCHARGED. (II) IN THE FACTS AND CIRCUMSTANCES OF THE CASE TH E LD. CIT(A) HAS ERRED BOTH IN LAW AND ON FACTS IN OPINIONED THAT THE A.O HAS F AILED TO BRING ANY EVIDENCE ON RECORD TO JUSTIFY THE ADDITION BECAUSE IT WAS NOT POSSIBLE BY THE BANK STAFF TO COUNT OR WEIGH THE STOCK WORTH CR ORES OF RUPEES LYING IN OPEN AT VARIOUS PLACES. HE HAS HELD THAT THE A.O HA S FAILED TO BRING MATERIAL ON RECORD TO SHOW THAT THE APPELLANT IN FA CT POSSESSED LARGER QUANTITY OF STOCK THAN THE STOCK RECORDED IN THE BO OKS OF ACCOUNT, AND THAT A MERE REFERENCE TO THE DRAWING POWER REGISTER, STA TEMENT OF THE BANK ITA NO.462 (ASR)/2014 ASST. YEAR 2011-12 2 MANAGER, THE STOCK STATEMENT SUBMITTED TO THE BANK WAS NOT SUFFICIENT EVIDENCE. (III) THE LD. CIT(A) HAS ERRED BOTH IN LAW AND ON FACTS THAT THE A.O HAS FAILED TO POINT OUT SPECIFIC DEFECT EXCEPT THAT THE ADDRESSES OF LABOURERS ARE NOT AVAILABLE. THE WAGES REGISTER SUBMITTED FOR VER IFICATION WAS NOT RELIABLE AND ACCEPTABLE. 3. AT THE OUTSET, THE LEARNED AR SUBMITTED THAT THE CASE OF THE ASSESSEE WAS COVERED BY THE DECISION OF HONBLE TRI BUNAL IN THE CASE OF ASSESSEE ITSELF FOR ASST. YEAR 2009-10 IN ITA NO.20 0(ASR)/2013. THE LEARNED AR SUBMITTED THAT THE HONBLE TRIBUNAL VIDE CONSOLIDATED ORDER DATED 26.03.2015 HAD DECIDED THE SIMILAR ISSUE IN F AVOUR OF ASSESSEE BY DISMISSING THE APPEAL FILED BY THE REVENUE. EXPLAIN ING THE FACTS OF THE CASE, THE LEARNED AR SUBMITTED THAT THE ASSESSING O FFICER HAD MADE ADDITION TO THE INCOME OF ASSESSEE ON THE BASIS OF DIFFERENCE IN VALUE OF CLOSING STOCK AS PER STATEMENT AS SUBMITTED TO BANK AND AS DISCLOSED IN THE BALANCE SHEET AND IN THIS RESPECT THE LEARNED A R INVITED OUR ATTENTION TO PAGE 6 OF THE SAID ORDER WHEREIN THE G ROUNDS OF APPEAL RELATING TO ASSESSEE IN ASST. YEAR 2009-10 WERE REP RODUCED. THE LEARNED AR SUBMITTED THAT THE TRIBUNAL HAD DISMISSED THE AP PEALS OF REVENUE UNDER SIMILAR FACTS AND CIRCUMSTANCES AND HE SUBMIT TED THAT EVEN THE GROUNDS OF APPEAL TAKEN BY REVENUE IN THE PRESENT Y EAR ARE SIMILAR TO THE GROUNDS OF APPEAL TAKEN BY REVENUE IN ASSESSMEN T YEAR 2009-10. 4. THE LEARNED DR, THOUGH SUPPORTED THE ORDER OF AS SESSING OFFICER BUT CONCEDED THAT THE MATTER IS COVERED IN FAVOUR O F ASSESSEE. 5. WE HAVE HEARD THE RIVAL PARTIES AND HAVE GONE TH ROUGH THE MATERIAL PLACED ON RECORD. WE FIND THAT THE ASSESSI NG OFFICER HAD MADE ITA NO.462 (ASR)/2014 ASST. YEAR 2011-12 3 AN ADDITION OF RS.83,07,087/- ON ACCOUNT OF DIFFERE NCE IN STOCK AS PER STATEMENTS SUBMITTED TO BANK AND AS PER STOCK DECLA RED IN ITS FINAL ACCOUNTS. THE LEARNED CIT(A) HAS HOWEVER DELETED TH E ADDITION BY RELYING UPON THE APPELLATE ORDER FOR ASST. YEAR 2010-11. FO R THE SAKE OF CONVENIENCE THE FINDINGS OF LEARNED CIT(A) ARE REPR ODUCED BELOW. 3.3 IN APPELLATE ORDER FOR A.Y.2010-11 THE FINDI NG IN 3.6 ON PAGE 16 & 17 ARE AS UNDER:- AFTER CAREFUL PERUSAL OF THE FACTS AND LAW AS STAT ED BY THE AO IN THE ASSESSMENT ORDER AND THE REMAND REPORT AND AS STATED BY THE A/R OF T HE APPELLANT IN THE WRITTEN SUBMISSIONS AND ARGUMENTS RAISED DURING THE COURSE OF APPELLANT PROCEEDINGS IT HAS BEEN OBSERVED THAT IN THE PRESENT CASE THE APPELLANT IS ENJOYING THE CC LIMIT AGAINST HYPOTHECATION OF GOODS AND NOT PLEDGE. NO STOCK STA TEMENT DATED MARCH 31, 2010 WAS FILED BY THE APPELLANT AND THE AO HAS BASICALLY GON E WRONG IN COMPUTING THE DIFFERENCE OF STOCK FROM THE STOCK STATEMENT DATED MARCH 10, 2 010 AND IN THE BALANCE SHEET DATED MARCH 31, 2010. THE DIFFERENCE OF RS.631448/- AS AG AINST THE STOCK OF RS. 13660000/- REPORTED BY APPELLANT DOES NOT LEAD TO THE CONCLUSI ON THAT THE APPELLANT POSSESSED LARGER QUANTITY OF STOCK THEN THE STOCK AS PER BOOKS AS TH E DIFFERENCE IS NOT SUBSTANTIAL. THE STOCK STATEMENT AND DP REGISTER ON WHICH THE AO HAS RELIE D TO MAKE THE ADDITION HAVE NOT PROVED TO BE RELIABLE ON ACCOUNT OF THE SHORTCOMING S AS POINTED OUT BY THE A/R OF THE APPELLANT AND CAREFULLY EXAMINED BY ME. THE DEPARTM ENT HAS FAILED TO PROVIDE OPPORTUNITY TO THE APPELLANT TO CROSS EXAMINE THE B ANK MANAGER REGARDING THE CONTENTS OF THE LETTER IN WHICH HE HAS STATED THAT THE STOCK WA S PHYSICALLY VERIFIED BY THE BANK OFFICERS. THE STATEMENT OF THE BANK MANAGER RECORDE D IN THE CASE OF THIRD PARTY I.E. M/S ISHAR INFRASTRUCTURE DEVELOPERS PVT. LTD. BATHINDA REGARDING PHYSICAL VERIFICATION OF STOCK BY THE BANK ALSO STAND REBUTTED BECAUSE OF TH E FACTS ADMITTED BY SH. KAMLESH GUPTA DURING THE COURSE OF CROSS EXAMINATION IN THE CASE OF M/S ISHAR INFRASTRUCTURE DEVELOPERS PVT. LTD. AND DISCUSSED IN DETAIL SUPRA. IN THE CAS E OF M/S ISHAR INFRASTRUCTURE DEVELOPERS PVT. LTD. BATHINDA THE APPEAL HAS BEEN DECIDED IN F AVOUR OF THE APPELLANT IN APPEAL NO.20/13-14 VIDE ORDER DATED 30.05.2013 BY THE COMM ISSIONER OF INCOME TAX (APPEALS). BATHINDA. THUS, THE AO HAS COMMITTED AN ERROR BY RE LYING ON THE THE STATEMENT OF THE BANK MANAGER RECORDED IN THE CASE OF THIRD PARTY WI THOUT ALLOWING ANY OPPORTUNITY TO THE APPELLANT TO CROSS EXAMINE THE CONCERNED BANK OFFIC ERS. SH. KAMLESH GUPTA DURING THE COURSE OF HIS CROSS EXAMINATION ON 05.03.2013 HAS A CCEPTED THE FACT THAT HE JOINED THE BRANCH RECENTLY BUT THE MATTER RELATED TO A.Y.2010- 11. IT HAS BEEN HELD BY THE JURISDICTIONAL BENCH IN THE CASE OF JAI SHARDA RICE MILLS THAT WHERE THE BANK MANAGER ON WHOSE STATEMENT THE DEPARTMENT HAS RELIED WAS NO T IN THE RELEVANT BRANCH AT THE RELEVANT TIME I.E. DURING THE PERIOD FOR WHICH THE ASSESSMENT ORDER HAS BEEN PASSED, THE STATEMENT OF SUCH BRANCH MANGER HAS NO EVIDENTIARY VALUE. IN THE PRESENT CASE, THE AO HAS FAILED TO PROVE THAT THE STOCKS POSSESSED BY TH E APPELLANT WERE EVER PHYSICALLY VERIFIED BY THE BANK OFFICERS. IT HAS BEEN HELD IN THE CASE OF SHEENA EXPORTS BY HON'BLE PUNJAB & HARYANA HIGH COURT THAT WHERE THE DIFFERENCE IN THE QUANTITY OF STOCK IS NOT PROV ED AND THE STOCK IS NEITHER PLEDGED NOR VERIFIED BY THE BANK OFFICIALS THEN NO ADDITION CAN BE MADE. ITA NO.462 (ASR)/2014 ASST. YEAR 2011-12 4 RESPECTFULLY FOLLOWING THE ORDERS OF THE JURISDICTI ONAL BENCH OF THE ITAT AND THE HONBLE PUNJAB & HARYANA HIGH COURT DISCUSSED S UPRA THE AO IS DIRECTED TO DELETE THE ADDITION OF RS. 6,31,448/- M ADE U/S 69 ON ACCOUNT OF DIFFERENCE IN STOCK. THE GROUNDS OF APPEAL IS AL LOWED. 3.4. FROM A PERUSAL OF THE ASSESSMENT ORDER U/S 143(3) PASSED BY THE AO FOR A.Y.2011-12 IT TRANSPIRES THAT NO NEW FACT H AS BEEN BROUGHT ON RECORD AND THE AO HAS ONLY REITERATED THE FINDINGS AS RECORDED IN ASSESSMENT ORDERS FOR A.Y.2009-10 & 2010-11 TO MAKE THE ADDITION IN A.Y.2011-12 ON ACCOUNT OF DIFFERENCE IN THE STOCK A S RECORDED IN THE STOCK STATEMENT SUBMITTED TO THE BANK AND STOCK AS REFLEC TED IN THE BALANCE SHEET AS ON THE AO HAS ONCE AGAIN NOT BEEN ABLE TO PROVE THAT THE STOCK AS REFLECTED IN THE STOCK STATEMENT DATED 31.03.2011 W AS PHYSICALLY VERIFIED BY THE BANK OFFICERS. THE HON'BLE PUNJAB & HARYANA HIGH COURT HAS ALREADY HELD IN THE CASE OF SHEENA EXPORTS 20 TAXMA NN.COM 664 THAT NO ADDITION CAN BE MADE ON THE BASIS OF DIFFERENCE IN STOCK AS PER STOCK STATEMENT AND AS PER BALANCE SHEET IN THE CASE OF T HE APPELLANT WHO IS AVAILING CASH CREDIT LIMIT AGAINST HYPOTHECATION OF STOCK AND NO DIFFERENCE IN THE QUANTITY OF STOCK HAS BEEN PROVED. THE AO HA S ALSO FAILED TO PROVE THAT THE APPELLANT POSSESSED LARGER QUANTITY OF STO CK THEN THE STOCK REFLECTED IN THE BALANCE SHEET. HE HAS RELIED ONLY ON THE STOCK STATEMENT TO MAKE THE ADDITION IN VIOLATION OF PRINCIPLES OF LAW AS ENUNCIATED BY HON'BLE PUNJAB & HARYANA 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 APPELLATE ORDER FO R A.Y.2009-10 & 2010-11 AND THE FACT THAT FINDINGS OF THE AO STANDS REBUTTE D BY THE ARGUMENTS OF THE A/R OF THE APPELLANT ON FACTS AND LAW AS ENUNCI ATED BY THE JURISDICTIONAL BENCH OF THE HONBLE ITAT & HONBLE PUBJAB & HARYANA HIGH COURT DISCUSSED SUPRA, THE GROUNDS OF APPEAL NO.3 I S ALLOWED AND THE AO IS DIRECTED TO DELETE THE ADDITION OF RS.8307087/- MADE ON ACCOUNT OF DIFFERENCE IN STOCK AS REPORTED IN STOCK STATEMENT SUBMITTED TO THE BANK AND CLOSING AS REFLECTED IN THE BALANCE SHEET AS ON 31.03.2011. WE FIND THAT THE LEARNED CIT(A) HAS RELIED UPON THE ORDER OF IN THE CASE OF SHEENA EXPORTS DECIDED BY HONBLE PUNJAB & HARYANA HIGH COURT FOR THE PROPOSITION THAT WHERE THE DIFFERENCE IN THE QUANT ITY OF STOCK IS NOT PROVED AND THE STOCK IS NEITHER PLEDGED NOR VERIFIE D BY BANK OFFICIALS THEN NO ADDITION CAN BE MADE. WE FURTHER FIND THAT SIMILAR ADDITION WAS DECIDED IN FVOUR OF ASSESSEE BY CONSOLIDATED ORDER OF TRIBUNAL DATED 26.03.2015,WHEREIN APPEAL FILED BY THE REVENUE IN I TA NO.200(ASR)/2013 ITA NO.462 (ASR)/2014 ASST. YEAR 2011-12 5 WAS DISMISSED UNDER SIMILAR FACTS AND CIRCUMSTANCES . THE TRIBUNAL IN ITS CONSOLIDATED ORDER HAD TAKEN THE LEAD CASE OF M/S I SHAR INFRASTRUCTURE DEVELOPER (PVT.) LTD., BATHINDA AND IN REST OF CASE S THE DECISION TAKEN IN ISHAR INFRASTRUCTURE DEVELOPER (PVT.) LTD., BATHIND A HAS BEEN FOLLOWED. IN VIEW OF THE ABOVE JUDICIAL PRECEDENTS, WE DISMISS T HE APPEAL OF REVENUE. 6. IN NUTSHELL, THE APPEAL FILED BY THE REVENUE IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 3RD F EBRUARY, 2016. SD/- SD/- (A.D. JAIN) (T. S. KAPOOR) JUDICIAL MEMBER ACCOUNTANT ME MBER DATED:03.02.2016. /PK/ PS. COPY OF THE ORDER FORWARDED TO: (1) THE ASSESSEE: (2) THE (3) THE CIT(A), (4) THE CIT, (5) THE SR DR, I.T.A.T., TRUE COPY BY ORDER (ASSISTANT REGISTRAR) INCOME TAX APPELLATE TRIBUNAL, AMRITSAR BENCH: AMRITSAR.