Goyal Sons Zaveri Pvt. Ltd., Haryana V. DCIT, Hisar

ITA 4654/DEL/2016

• Counselvise Citation: [2021] 108 COUNSELVISE.COM (IT) 6133 (ITAT-DELHI)
• Duration Of Justice: 4 year(s) 7 month(s) 18 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 20-04-2021
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: C
• Assessment Year: 2010-2011
• Appeal Filed On: 01-09-2016
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Keywords: Cost of acquisition; Corroborative evidences; TDS
• Section: 6

Judgement Text

1 THE INCOME TAX APPELLATE TRIBUNAL, DELHI C BENCH, NEW DELHI [THROUGH VIDEO CONFERENCE] BEFORE SHRI N.K. BILLAIYA, ACCOUNTANT MEMBER, AND SHRI SUDHANSHU SRIVASTAVA, JU DICIAL MEMBER ITA NO. 4654/DEL/2016 [ASSESSMENT YEAR: 2010-11] M/S GOYAL SONS ZAVERI [P] LTD VS. THE DY. C.I. T SCF 97, RAJGURU MARKET HISAR DISTT. HISAR, HARYANA PAN: AACCG 8213 A [APPELLANT] [RESPONDENT] DATE OF HEARING : 08.04.2021 DATE OF PRONOUNCEMENT : 20 .04.2021 ASSESSEE BY : SHRI K. SAMPATH, ADV REVENUE BY : MS. KIRTI SANKRATYAYAN, SR. DR ORDER PER N.K. BILLAIYA, ACCOUNTANT MEMBER, WITH THIS APPEAL, THE ASSESSEE HAS CHALLENGED THE C ORRECTNESS OF THE ORDER OF THE LD. CIT(A), HISAR DATED 27.07.2016 PERTAINING TO ASSESSMENT YEAR 2010-11. 2 2. THE GRIEVANCE OF THE ASSESSEE IS TWO-FOLD:- A. FIRSTLY, THE ASSESSEE IS AGGRIEVED BY THE DISALLOWANCE OF RS. 7,91,634/- ON ACCOUNT OF COMMISSION PAID TO 5 PERSONS; B. SECONDLY, THE ASSESSEE IS FURTHER AGGRIEVED BY T HE ADDITION OF RS. 4,88,592/- ON ACCOUNT OF ALLEGED UNDER VALUATION OF CLOSING STOCK OF GOLD AND SILVER COINS. 3. BRIEFLY STATED, THE FACTS OF THE CASE ARE THAT T HE ASSESSEE IS ENGAGED IN TRADING IN GOLD, SILVER AND DIAMOND JEWELLERY. THE ASSESSEE COMPANY HAS FRANCHISEE OF TANISHQ. RETURN FOR THE YEAR WAS ELECTRONICALLY FILED ON 30. 09.2010 DECLARING INCOME OF RS. 42,04,380/-. RETURN WAS SE LECTED FOR SCRUTINY ASSESSMENT AND ACCORDINGLY, STATUTORY NOTI CES WERE ISSUED AND SERVED UPON THE ASSESSEE. 3 4. DURING THE COURSE OF SCRUTINY ASSESSMENT PROCEED INGS, THE ASSESSING OFFICER NOTICED THAT THE ASSESSEE HAS PAID COMMISSION ON SALES AMOUNTING TO RS. 7,91,364/- AS UNDER: NAME ADDRESS AMOUNT SILKY AGGARWAL D/O VIJAY GAWARIA MANDI ROAD, HISAR RS. 1,70,599/ - SANGEETA W/O VIYA GAWARIA 1793/2, RAMPURA MOHALLA, HISAR RS. 1,79,500/ - AYUSHI GOYAL D/O SHRI PARDEEP GOYAL SCF - 99, RAJGURU MARKET, HISAR RS. 1,39,204/ - SONU GOYAL D/O SHRI SATISH GOYAL SCF - 99, RAJGURU MARKET, HISAR RS. 1,45,335/ - PRIYANKA GOYAL D/O SHRI SATISH GOYAL SCF - 99, RAJGURU MARKET, HISAR RS. 1,56,726/ - 5. THE ASSESSEE WAS ASKED TO EXPLAIN THE GENUINENES S OF THE TRANSACTIONS WITH SUPPORTING EVIDENCES. 6. IN ITS REPLY, THE ASSESSEE EXPLAINED THAT COMMIS SION HAS BEEN PAID TO LADIES WHO HAD PROCURED CUSTOMERS AND EXECUTED SALES. COPIES OF THEIR BILLS WERE FILED. IT WAS EXPLAINED THAT ALL THE PAYMENTS HAVE BEEN MADE THRO UGH 4 CHEQUES AND TAX HAS BEEN DEDUCTED AT SOURCE, WHEREV ER APPLICABLE. 7. IN SO FAR AS PRODUCTION OF THE LADIES FOR EXAMIN ATION IS CONCERNED, THE ASSESSEE EXPLAINED THAT IT NEEDS SOM E TIME TO CONTACT THEM AND KNOW ABOUT THEIR AVAILABILITY. 8. REPLY OF THE ASSESSEE WAS CONSIDERED BY THE ASSE SSING OFFICER BUT DID NOT FIND ANY FAVOUR. 9. THE ASSESSING OFFICER OBSERVED THAT THREE LADIES , NAMELY, AYUSHI GOYAL, SONU GOYAL AND PRIYANKA GOYAL ARE RELATIVES/FAMILY MEMBERS OF THE DIRECTOR AND ARE RE SIDING AT THE SAME ADDRESS, NAMELY, SCF-97, RAJGURU MARKET, H ISAR, WHICH IS ADJACENT TO THE BUSINESS PREMISES OF THE A SSESSEE. 10. ACCORDING TO THE ASSESSING OFFICER, SINCE ALL T HE LADIES ARE RESIDING NEARBY TO ASSESSEES BUSINESS PLACE, T HE ASSESSEE COULD EASILY PRODUCE THEM FOR EXAMINATION. THE ASSE SSING OFFICER FURTHER OBSERVED THAT THE ASSESSEE HAS NOT MENTIONED 5 THE RATE OF COMMISSION PAID TO THE LADIES AND THE B ASIS OF SUCH COMMISSION. 11. THE ASSESSEE HAS BEEN CONSISTENTLY HARPING UPON THE FACT THAT THE PAYMENTS HAVE BEEN MADE THROUGH ACCOU NT PAYEE CHEQUES SUBJECT TO TDS. 12. BEING NOT CONVINCED WITH THE EXPLANATION OF THE ASSESSEE, THE ASSESSING OFFICER MADE AN ADDITION OF RS. 7,91,364/- 13. PROCEEDING FURTHER, THE ASSESSING OFFICER ASKED THE ASSESSEE TO FURNISH THE BASIS OF VALUATION OF THE C LOSING STOCK. THE ASSESSEE FURNISHED THE DETAILS EXPLAINI NG THAT THE STOCK WAS VALUED AT COST OR NET REALIZABLE VALUE WH ICHEVER IS LESS AND SINCE THE PURCHASE COST WAS LOWER, THEREFO RE, THE STOCK HAS BEEN VALUED AT PURCHASE COST. 14. THE ASSESSING OFFICER, AFTER PERUSING THE DETAI LS, FOUND THAT THE VALUE OF CLOSING STOCK OF GOLD/SILVER COIN S HAS BEEN VALUED AT AVERAGE VALUE OF OPENING STOCK + PURCHASE S + 6 CLOSING STOCK AS NOT CORRECT. THE ASSESSING OFFICE R RECALCULATED THE VALUE OF CLOSING STOCK ON THE BASI S OF AVERAGE OF OPENING STOCK AND COST PRICE AND MADE AD DITION OF RS. 4,88,592/-. 15. AGGRIEVED BY THE AFOREMENTIONED TWO ADDITIONS, THE ASSESSEE AGITATED THE MATTER BEFORE THE LD. CIT(A) BUT WITHOUT ANY SUCCESS. 16. BEFORE US, THE LD. COUNSEL FOR THE ASSESSEE VEH EMENTLY STATED THAT IN THE REMAND PROCEEDINGS, TWO LADIES, NAMELY, AYUSHI GOYAL AND SANGEETA AGGARWAL WERE EXAMINED AN D THEY HAVE CATEGORICALLY CONFIRMED THE TRANSACTIONS OF RE CEIPT OF COMMISSION @ 1.5%. IT IS THE SAY OF THE LD. COUNSE L FOR THE ASSESSEE THAT IN THEIR RESPECTIVE STATEMENTS, THEY HAVE EXPLAINED THAT THEY HAVE INTRODUCED 25-30 CUSTOMERS ON WHICH THEY HAVE RECEIVED COMMISSION. IN SO FAR AS OTHER THREE LADIES ARE CONCERNED, THE LD. COUNSEL FOR THE ASSESSEE STATED THAT SINCE THEY ARE NOW MARRIED, IT WAS NOT POSSIBLE TO CONTACT THEM. 7 17. PER CONTRA, THE LD. DR STRONGLY SUPPORTED THE F INDINGS OF THE ASSESSING OFFICER. 18. WE HAVE GIVEN THOUGHTFUL CONSIDERATION TO THE O RDERS OF THE AUTHORITIES BELOW. IT IS TRUE THAT ALL THE FIVE LADIES ARE RESIDENTS OF HISAR AND THREE LADIES LIVE AT THE ADJ ACENT BUILDING OF THE BUSINESS PREMISES OF THE ASSESSEE. IT IS ALSO A FACT THAT THE TWO LADIES, NAMELY, AYUSHI GOYAL AND SANGEETA AGGARWAL DID APPEAR BEFORE THE ASSESSING OFFICER WH OSE STATEMENTS WERE RECORDED BY HIM AND THEY HAVE CONFI RMED THE RECEIPT OF SALES COMMISSION. THEIR STATEMENTS A RE EXHIBITED AT PAGES 69 TO 76 OF THE PAPER BOOK. 19. SINCE THE TWO LADIES HAVE CONFIRMED THE TRANSAC TIONS BY STATEMENTS RECORDED BY THE ASSESSING OFFICER, WE DO NOT FIND ANY REASON WHY ADDITION SHOULD BE MADE. WE, ACCORD INGLY, DIRECT THE ASSESSING OFFICER TO DELETE THE ADDITION OF COMMISSION PAID TO AYUSHI GOYAL AND SANGEETA AGGARW AL. 20. IN RESPECT OF THE OTHER LADIES, NAMELY SILKY AG GARWAL, SONU GOYAL AND PRIYANKA GOYAL, THEY MAY HAVE BEEN M ARRIED, 8 BUT NOTHING PREVENTED THEM TO FURNISH THEIR STATEME NTS BY WAY OF AFFIDAVITS. MERELY BECAUSE THE PAYMENTS HAV E BEEN MADE THROUGH ACCOUNT PAYEE CHEQUES WOULD NOT JUSTIF Y THE RENDITION OF SERVICES SINCE NO EVIDENCES HAVE BEEN FURNISHED BEFORE US EXCEPT FOR THE BALD STATEMENT THAT THE LA DIES ARE NOW MARRIED AND DO NOT RESIDE IN HISAR. 21. THE CONTENTION OF THE LD. COUNSEL FOR THE ASSES SEE THAT SINCE OUT OF THE 5 LADIES, 2 HAVE CONFIRMED THE TRA NSACTIONS, THEREFORE BY PREPONDERANCE OF PROBABILITIES IT CAN BE SAFELY PRESUMED THAT THE TRANSACTIONS WITH OTHER 3 LADIES WERE ALSO GENUINE IS NOT ACCEPTABLE. SINCE NO EVIDENCE HAS B EEN FURNISHED TOWARDS RENDITION OF SERVICES BY SILKY AG GARWAL, SONU GOYAL AND PRIYANKA GOYAL, DISALLOWANCE OF COMM ISSION PAID TO THEM IS HEREBY CONFIRMED WHICH MEANS GROUND NO. 1 IS PARTLY ALLOWED. 22. COMING TO THE SECOND GRIEVANCE, WE FIND THAT TH E ASSESSING OFFICER HAS VALUED THE CLOSING STOCK ON T HE BASIS OF AVERAGE OF OPENING STOCK AND COST PRICE WHEREAS IT THE SAY OF THE LD. COUNSEL FOR THE ASSESSEE THAT THE ASSESSEE HAS BEEN 9 CONSISTENTLY FOLLOWING THE COST OR MARKET PRICE, WH ICHEVER IS LOWER METHOD OF ACCOUNTING FOR VALUATION OF CLOSING STOCK. HOWEVER, WE FIND THAT THE LD. CIT(A), IN HIS ORDER, HAS MENTIONED THAT THE ASSESSEE ITSELF HAS CLAIMED IN T HE APPELLATE PROCEEDINGS THAT IT IS VALUING CLOSING ST OCK AT AVERAGE COST. 23. BEFORE US, THE LD. COUNSEL FOR THE ASSESSEE VEH EMENTLY STATED THAT THE OBSERVATIONS OF THE LD. CIT(A) ARE AGAINST THE FACTS AND THE ASSESSEE HAS NEVER MADE SUCH SUBMISSI ON. SINCE THERE ARE CONFLICTING SUBMISSIONS EMANATING F ROM THE ORDERS OF THE AUTHORITIES BELOW, WE DEEM IT FIT TO RESTORE THIS ISSUE TO THE FILE OF THE ASSESSING OFFICER. THE AS SESSEE IS DIRECTED TO DEMONSTRATE THAT THE STOCK HAS BEEN VAL UED AT COST PRICE WHICH IS IN CONSISTENCE WITH ITS PRACTIC E IN EARLIER YEAR AND THE ASSESSING OFFICER IS DIRECTED TO EXAMI NE THE DETAILS AFRESH AND IF SATISFIED THAT THE ASSESSEE H AS BEEN CONSISTENTLY VALUING ITS STOCK AT COST OR MARKET PR ICE, WHICHEVER IS LESS, THEN NO ADDITION NEEDS TO BE MAD E ON THIS ACCOUNT. 10 23. HOWEVER, IF THE ASSESSING OFFICER IS NOT SATISF IED WITH THE DETAILS OF THE ASSESSEE, HE MAY DECIDE THE ISSU E AFRESH AS PER PROVISIONS OF LAW. ACCORDINGLY, GROUND NO. 2 I S ALLOWED FOR STATISTICAL PURPOSES. 24. IN THE RESULT, THE APPEAL OF THE ASSESSEE IN I TA NO. 4654/DEL/2016 IS PARTLY ALLOWED FOR STATISTICAL PUR POSES. THE ORDER IS PRONOUNCED IN THE OPEN COURT ON 20.04 .2021. SD/- SD/- [SUDHANSHU SRIVASTAVA ] [N.K. BILLAIYA] JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 20 TH APRIL, 2021 VL/ COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT ASST. REGISTRAR 4. CIT(A) ITAT, NEW DELHI 5. DR 11 DATE OF DICTATION DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE DICTATING MEMBER DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE OTHER MEMBER DATE ON WHICH THE APPROVED DRAFT COMES TO THE SR.PS /PS DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE THE DICTATING MEMBER FOR PRONOUNCEMENT DATE ON WHICH THE FAIR ORDER COMES BACK TO THE SR.P S/PS DATE ON WHICH THE FINAL ORDER IS UPLOADED ON THE WE BSITE OF ITAT DATE ON WHICH THE FILE GOES TO THE BENCH CLERK DATE ON WHICH THE FILE GOES TO THE HEAD CLERK THE DATE ON WHICH THE FILE GOES TO THE ASSISTANT RE GISTRAR FOR SIGNATURE ON THE ORDER DATE OF DISPATCH OF THE ORDER