Shri Shish Kumar, Karnal V. IT, Karnal

ITA 4701/DEL/2014

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 96881 (ITAT-DELHI)
• Duration Of Justice: 11 month(s) 13 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 10-08-2015
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC 2
• Next Hearing Date: 10-07-2015
• Assessment Year: 2010-2011
• Appeal Filed On: 27-08-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ROBIN RAWAL
• Keywords: Business income; Corroborative evidences; Assessment record
• Section: 143(3); 142(1)

Judgement Text

ITA NO. 4701/DEL/2014 1 IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH SMC - 2 , NEW DELHI BEFORE SHRI H.S. SIDHU, JUDICIAL MEMBER I.T.A. NO . 4701 /DEL/2014 A.Y. : 20 10 - 11 SHRI SHISH KUMAR, PROP. M/S SURAJ BHAN MAM CHAND, MARKET COMMITTEE ROAD, KARNAL (PAN: ABLPK0291R) VS. INCOME TAX OFFICER, WARD - 4, KARNAL (APPELLANT) (RESPONDENT) ASSESSEE BY : SH. PARIKSHIT AGGARWAL, CA DEPARTMENT BY : SH. ROBIN RAWAL, SR. DR DATE OF HEARING: 10 .0 7 .2015 DATE OF ORDER : 1 0 . 0 8 .2015 ORDER THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST THE O RDER OF THE LD. COMMISSIONER OF INCOME TAX (APPEALS) DATED 2 . 12 .201 3 PERTAINING TO ASSESSMENT YEAR 20 10 - 11 . 2. THE ASSESSEE HAS RAISED THE FOLLOWING ISSUES: - 1. THAT ON FACTS, CIRCUMSTANCE AND LEGAL POSITION OF THE CASE, THE WORTHY CIT(A) THROUGH HER ORDER DATED 2.12.2013 HAS ERRED IN PASSING THAT ORDER IN CONTRAVENTION OF PROVISIONS OF SECTION 250(6) OF THE INCOME TAX ACT, 1961. 2. THAT ON FACTS, CIRCUMSTANCES A ND LEGAL POSITION OF THE CASE, THE WORTHY CIT(A) HAS ERRED IN CONFIRMING THE ACTION OF AO OF MAKING ADDITION OF RS. 3,29,995/ - ON ACCOUNT OF ALLEGED ITA NO. 4701/DEL/2014 2 DIFFERENCE IN OPENING STOCK OF BARDANA BAGS AS PER TRADING ACCOUNT WHEN COMPARED WITH THE STOCK REGISTER AND ESTIMATING THE VALUE OF DIFFERENCE OF 15500 BAGS AT RS. 3,29,995/ - BY TERMING THEM AS SALES OUTSIDE THE BOOKS OF ACCOUNTS. 3. THAT THE APPELLANT CRAVES LEAVE FOR ANY ADDITION, DELETION OR AMENDMENT IN THE GROUNDS OF APPEAL ON OR BEFORE THE DISPOSAL O F THE SAME. 3. THE BRIEF FACTS OF THE CASE ARE THAT THE RETURN DECLARING INCOME OF RS. 3,44,360/ - WAS FURNISHED BY THE ASSESSEE ON 2 . 9 .20 10 , WHICH WAS PROCESSED ON 04 .5.20 11 . THE ASSESSEE IS ENGAGED IN THE BUSINESS OF PURCHASE AND SALE OF OLD BARDANA ON WHOLE SALE BASIS. THE CASE WAS SELECTED UNDER SCRUTINY AFTER OBTAINING THE APPROVAL FROM THE LD. CIT, KARNAL. SUBSEQUENTLY, NOTICES U/S. 143(2) OF THE I.T. ACT, 1961 DATED 27.9 .2011 ISSUED AND SENT THROUGH SPEED POST AND THROUGH NOTICE SERVER WERE DULY SERVED UPON THE ASSESSEE ON 29.9.2011 FIXING THE CASE FOR 7.10.2011 AND THE CASE WAS ADJOURNED, AFTER FILING THE POWER OF ATTORNEY BY THE ASSESSEE S COUNSEL. LATER, A NOTICE U/S. 142(1) OF THE I.T. ACT, 1961 DATED 10.2.2012 ALONG WITH A DETAILED QUESTIONNAIRE WAS ISSUED AND DULY SERVED UPON THE ASSESSEE. IN RESPONSE TO THE SAME, ASSESSEE S COUNSEL ATTENDED THE ASSESSMENT PROCEEDINGS AND FILED THE REQUISITE INFORMATION AND OTHER D ETAILS FROM TIME TO TIME, WHICH WERE EXAMINED BY THE AO ON TEST CHECK BASIS. THE AO MADE THE ADDITION OF RS. 3,29,995/ - DUE TO THE ALLEGED DIFFERENCE IN THE OPENING STOCK OF BARDANA BAGS AS PER THE TRADING ACCOUNT VIS - A - VIS THE STOCK REGISTER AND ESTIMAT ING THE VALUE OF DIFFERENCE OF 15,500 BAGS AT RS. 3,29,995/ - AND TREATED THIS AS SALE OUTSIDE THE BOOKS OF ACCOUNTS AND ITA NO. 4701/DEL/2014 3 COMPLETED THE ASSESSMENT U/S. 143(3) OF THE I.T. ACT, 1961 VIDE ORDER DATED 29.11.2002. 4. AGGRIEVED WITH THE AFORESAID ASSESSMENT ORD ER, ASSESSEE APPEALED BEFORE THE LD. CIT(A), WHO VIDE IMPUGNED ORDER DATED 02 . 12 .201 3 HAS DISMISSED THE APPEAL OF THE ASSESSEE. 5. AGAINST THE AFOREMENTIONED IMPUGNED ORDER DATED 02 . 12 .201 3 , ASSESSEE IS IN APPEAL BEFORE THE TRIBUNAL. 6. LD. COUNSEL OF THE ASSESSEE IN APPEAL BEFORE THE LD. FIRST APPELLATE AUTHORITY HAS FILED A PAPER BOOK CONTAINING PAGES 1 TO 29 HAVING WRITTEN ARGUMENTS; COPY OF INCOME TAX RETURN AND COMPUTATION OF INCOME; COPY OF BALANCE SHEET, TRADING ACCOUNT, PROFIT AND LOSS ACCO UNT AND AUDIT REPORT; COPY OF EXPLANATION SUBMITTED BEFORE THE AO DATED 16.11.2002; COPY OF CHALLAN NO. 29 DATED 28.3.2009; COPY OF GR NO. 5909 ISSUED BY HARYANA ROADLINES CO.,; COPY OF STOCK REGISTER; COPY OF SALE NOTE NO. 53 DATED 15.5.2009; COPY OF LEDG ER ACCOUNT OF BARDANA (OUT OF STATE). THE LD. COUNSEL OF THE ASSESSEE AGAIN FILED THE SAME PAPER BOOK BEFORE THE TRIBUNAL ON 6.7.2015 . THE WRITTEN SUBMISSIONS IN RESPECT OF THE ISSUE IN DISPUTE , FILED BEFORE THE LD. CIT(A) READS AS UNDER : - 'THAT THE APP E LLA NT ASSESSEE IS ENGAGED IN THE BUSINESS OF PURCHASE AND SALES OF JUTE BAGS AND OTHER ALLIED ITEMS ON A WHOLESALE BASIS. THE APPELLANT ASSESSEE HAVE MAINTAINED DAY TO DAY ACCOUNT BOOKS IN THE SHAPE OF C ASH BOOK AND LEDGER, PURCHASE AND SALES VOUCHERS. THE APPELLANT HA VE ALSO MAINTAINED DAY TO DAY STOCK REGISTER IN RESPECT OF THE QUANTITY O F BARDANA BAGS RECEIVED AND DISPATCHED ON A DAY TO DAY BASIS. ALL THES E ITA NO. 4701/DEL/2014 4 ACCOUNT BOOKS AND RECORD WAS PRODUCED AND CHECKED BY THE LEARNED AS S ESSIN G OFFICER. THAT SOME O F THE SALES OF THE ASSESSEE ARE IN THE NATURE OF CONSIGNMENT SOLES WHICH IS A COMMON BUSINESS PRACTICE FOLLOWED BY SEVERAL BUSIN E SSMEN IN WHICH THE GOODS ARE SENT FOR SALE ON CONSIGNMENT B A SIS AND THE SALE PROCEEDS ARE RECEIVED AT A LATER STAGE AFTER THE DISPO SAL OF GOODS BY THE CONSIGNEE AGENT. IN SUCH A SITUATION TILL THE GOODS ARE DISPOSED OF BY THE CONSIGNEE AGENT AND SALE PROCEEDS ARE RE CEIVED, THE PERSON SENDING THE GOODS FOR SALE ON CONSIGNMENT B A SIS IS THE OWNER OF THE GOODS AS PER ACCOUNT BOOKS A ND LEDGER ALTHOUGH HE MAY NOT BE IN PHYSICAL POSSESSION OF THE GOODS. IN SUCH SITUATION S WHEN THE GOODS ARE DISPATCHED THE SAME ARE IMMEDIATELY RE D UCED FROM THE STOCK REGISTER BUT THE GOODS ACCOUNT IS ONLY CREDITED ( SALE REFLECTED) AFTER RECEIVING THE SALE PROCEEDS FROM THE CONSIGNEE A G EN TS THAT IN THE PRESE NT CASE O F THE APPELLANT THE OPENING STOCK OF BARDANA BAGS AS ON 1.4.2 009 AS PER STOCK REGISTER WAS 114030 BAGS WHEREAS THE OPENING STOC K AS PER ACCOUNT BOOKS AND TRADING ACCOUNT WAS 129530 BAGS I.E. T O SAY THE STOCK IN THE TRADING ACCOUNT WAS HIGHER BY 15500 BAGS. THE APPELLANT ASSESSEE EXPLAINED THE POSITION IN RESPECT O F THESE 15500 B AGS BEFORE THE LEARNED ASSESSING OFFICER BY POINTING, OUT THAT 15500 B AGS WERE DISPATCHED ON 28.3.2009 TO M/S BIK ANER BARDANA STORE, B I KANER (RAJASTHAN) FOR SALE ON CONSIGNMENT BASIS AND THIS QUANTITY O F 1 5500 BAGS WAS REDUCED FROM THE STOCK REGISTER ON THE DATE O F DISPA T CH I.E. 28.3.2009 ITSELF DUE TO WHICH THE STOCK AS PER STOCK REGISTER AS ON 1.4.2009 WAS LESSER B Y THIS 15500 BAGS ITA NO. 4701/DEL/2014 5 AND THE STOCK WAS HI G HE R IN THE TRADING ACCOUNT BY 15500 BAGS. COMPLETE EXPLANATION AN D SUPPORTING EVIDENCE IN RESPECT O F THESE GOODS DISPATCHED FOR SALE ON 28.3.2009 WERE SUBMITTED AND PLACED ON THE FILE BEFORE THE LEARNED A.O. (COPY O F WHICH IS FINDING PLACE AT PAGE NO. 17 TO 18 OF THE J JAPER BOOK IN THIS EXPLANATION. THE STOCK POSITION O F BARDANA BAGS AS ON 1.4.2009 WAS RECONCILED WHICH STANDS PLACED O N THE RECORD. THAT THE ADDITION O F RS. 329995/ - ON ACCOUNT OF ALLEGED DIFFERENCE IN THE OPENING STOC K OF BARDANA BAGS AS PER TRADING ACCOUNT VIZ A V IZ THE OPENING STOCK OF BARDANA BAGS AS PER STOCK: REGISTER IS WITHOUT, ANY BASIS AND THE EARNED A. O. HAVE FRAMED THE ASSESSMENT WITHOUT APPRECIATING THE FACTS AND CIRCUMSTANCES OF THE C ASE. THAT IN F ACT AS PAINTED OUT TO THE LEARNED A. O . VIDE REPLY DATED 16 - 11 - 2012, THE APPE L LANT ASSESSEE HAD DISPATCHED 15500 BAGS TO M/S BIKANER BARDANA STORE, BIKANER (RAJASTHAN) VIDE CHALLAN NO.CS - 29 TRANSPORTED IN VE HICLE NO. RJ 19GA - 4659 F OR SALE O N CONSIGNMENT BASIS AND THE QUANTITY OF BAGS TO THIS EXTENT WAS REDUCED FROM THE STOCK REGISTER ON THE DALE O F DISPATCH I.E. 28 - 03 - 2009 WHEREAS THE SALES PROCEEDS AGAINST THIS DISPATCH OF GOODS WAS NOT RECEIVED UPTO 31 - 03 - 2009. IN OTHER WORDS, THIS QUANT ITY OJ 15500 BAGS WAS STILL IN THE STOCK OF THE AS SESSES AS PER TRADING ACCOUNT AS ON 31 - 03 - 2009/01 - 4 - 2009 BUT THE PHYSICAL STOCK OF 15500 BAGS ALREADY STOOD REDUCED FROM THE STOCK REGISTER ON 28 - 03 - 2009. THE SALE PROCEEDS AGAINST THIS DISPATCH OF GOODS WA S RECEIVED IN THE MONTH OF MAY/ JUNE, 2009 AND ACCORDINGLY THE SALE WAS CREDITED IN THE ACCOUNT BOOKS ON 02 - 06 - 2009 IN AS MUCH ITA NO. 4701/DEL/2014 6 AS THE APPELLANT ASEESSEE RECEIVED SALE NOTE NO 53 DATED 15 - 05 - 2009 FROM M/ S BIKANER BARDANA STORE , BIKANER ( RA J ASTHANJ VIZ A VIZ THE ABOVE DISPAT CH GOODS ON 28.3.2009 NUMBERING 15500 BAGS IN THE END OF MAY, 2009 AND ACCORDINGLY THE SALES WAS REFLECTED IN THE ACCOUNT BOOKS ON 2.6.2009 WHEN AN AMOUNT OF RS. 414807/ - WAS CREDITED IN THE BARDANA OUT OF STATE ACCOUNT. COPY OF SALE N OTE AND LEDGER ACCOUNT WHERE THE SALE IS REFLECTED ARE ENCLOSED AND FINDING PLACE AT PAGES NO. 24 TO 29 OF THE PAPER BOOK. THAT WHEN THE APPELLANT ASSESSEE HAVE ALREADY ACCOUNTED F OR THE SALES OF ABO VE 55) BAGS IN THE SALES ACCOUNT ON 02 - 06 - 2009 FOR AN AM OUNT OF RS. 414807/ - WHICH IS INCLUDED IN THE TOTAL SALES OF THE ASSESSEE AS PER BALANCE SHEET THEN THERE IS NO QUESTION OF AN SALES OF AN SALES HAVING BEEN MADE OUTSIDE THE BOOKS OF ACCOUNTS AND MAKING ADDITION BY TERMING TH E SAME AS SALES OUTSIDE THE BOO KS OF ACCOUNTS AMOUNTING TO RS. 32939 5 / - AND MAKING ADDITION IN THE INCOME OF THE ASSESSE E WHEN THE ASSESSEE H AVE ALREADY REFLECTED THE SALES OF RS. 414807/ - PERTAINING TO THE ABOVE TRANSACTION IN THE SALES ACCOUNT ON 02 - 06 - 2009 COPY OF SALE LEDGER FINDIN G PLACED AT PAGES NO. 24 TO 29 OF THE PAPER BOOK. THAT THE LEA RNED AO HAVE UTTERLY FAILED TO EXAMINE THE CASE IN THE LIGHT OF WRITTEN EX PLANATION DATED 16 - 11 - 2012 WHEN THE ACCOUNT BOOKS WERE VERY MU CH AVAILABLE BEFORE HIM AND HE COULD HAVE VERIFIED THE FA CTS FROM THE RECORD IN THE SHAPE OF CASH BOOK, LEDGER AND ALL OTHER DATA MAINTA INED BY THE ASSESSEE. BUT THE LEARNED A O PROCEEDED AHEAD IN FRA M ING THE ASSESSMENT IN A ITA NO. 4701/DEL/2014 7 HAPHAZARD MANNER BY MAKING AN ADDITION O F RS. 329995/ - BY MAKING HIS OWN CALCULATION AS AGAINST THE ACTUAL SAL ES ALREADY CREDITED IN THE TRADING ACCOUNT VIZ A VIZ THE DISPUTED DISP A TCH OF 15500 BAGS TO M/ S BIKANER BARDANA STORE, RAJASIHAN. T HERE CAN BE NO DIFFERENCE IN THE RECORD OF THE ASSESSEE ITSELF AND T HE ALLEGED DIFFERENCE WAS ALSO E XPLAINED / CLARIFIED VIDE EXPLANATION D ATED 16 - 11 - 2012 IN RESPONSE TO SPECIFIC QUERY RAISED IN THIS REGARD DURING THE COURSE OF ASSESSMENT PROCEEDINGS. THAT IN VIEW OF THE CLEAR FACTS AND CIRCUMSTANCES OF THE CASE, THE ADDITION OF RS. 3,29,995/ - MADE BY THE LEARNED A O IN THE RETURNED INCOME MA Y BE DELETED. 6.1 AFTER PERUSING THE WRITTEN SUBMISSIONS FILED BY THE ASSESSE, LD. CIT(A) HAS ADJUDICATED THE ISSUE IN DISPUTE AS UNDER: - THE ISSUE IS CONSIDERED. THE ASSESSMENT RECORD WAS CALLED FROM THE A.O IT IS NOTED THAT THIS IS A TAX AUDIT CASE AND IN THE TAX AUDIT REPORT FILED BY THE APPELLANT IN FORM 3CD, IN COLUMN 11(A), THE METHOD OF ACCOUNTING FOLLOWED BY THE APPELLANT AS CERTIFIED CV THE AUDITORS IS 'MERCANTILE SYSTEM'. THEREFORE, IF THE EXPLANATION OF THE APPE L LANT IS CONSIDERED THAT HE HAD DISPATCHED 15500 BAGS ON 28,03.2009 TO MLS BIK A NER BARDANA STORE, BIKANER AND HAD REDUCED THESE BAGS FROM HIS ACCOUNTS ON TILE SAME DATE I.E. ON 28.03.2009, THEN AS ON 31.03.2009, WHICH IS THE EARLIER ASS E SSMENT YEAR I.E. A.Y. 2009 - 10, THESE BAGS WERE NO LONGER IN THE BOOKS OF THE APP E LLANT. THEREFORE, THERE WAS NO QUESTION OF ANY DISCREPANCY IN ITA NO. 4701/DEL/2014 8 THE ACCOUNTS OF THE APPELLANT ON 01.04.2009, WHICH WAS THE 1ST DAY OF THE F INANCIAL YEAR UNDER CONSIDERATION . AS THE BA GS STOOD DISPATCHED IN THE PREVIOUS FINANCIAL YEAR AND WER E REDUCED FROM THE STOCK REGISTER ON THE SAME DAY I.E. 28.03,2009 THEREFORE, HE CONTENTION OF THE APPELLANT THAT 'THE SALE PROCEEDS AGAINST THE DISPATCH OF THE GOODS WAS RECEIVED IN THE MONTH OF MAY - JUNE 2009 AND ACCORDINGLY, THAT HE HAD CREDITED THE SALE IN THE BOOKS OF ACCOUNTS ON 02.06.2009 AS HE HAD RECEIVED THE SALE NOTE NO. 53 DATED 15.05.2009 FROM MIS BIKANER BARDANA STORE, BIKANER FOR THE DISPATCH OF GOODS MADE ON 28.03.2009 IN 15500 BAGS AND THAT HE HAD REFLECTED THE SALES OF RS. 4,14,807 / - ON 02.06.2009 IN HIS BOOKS OF ACCOUN TS IS BASELESS, ILLOGICAL AND DEVOID OF MERIT AS THE APPELLANT IS FOLLOWING MERCANTILE SYSTEM OF ACCOUNTING AND ONCE THE SALE HAS TAKEN PLACE IN THE PREVIOUS FINANCIAL Y EAR I.E , F.Y. 2008 - 09 THERE IS NO QUESTION OF THE APPELLANT CREDITING THE SALE PROCEEDS IN THE CURRENT FINANCIAL YEAR, AFTER RECEIVING THE SALE NOTE FROM THE CONSIGNEE AS IN THE MERCANTILE SYSTEM OF ACCOUNTING THE INCOME ARISES ON ACCRUAL BASIS. ACCORDIN GLY, THE ADDITION OF RS. 3,29,995/ - IS UPHELD. IN RESULT, GROUND OF APPEAL NO. 1 IS DISMISSED. 6.2 LD. COUNSEL OF THE ASSESSEE STATED THAT THE LD. CIT(A) HAS ERRED IN CONFIRMING THE ACTION OF THE AO OF MAKING ADDITION OF RS. 3,29,995/ - ON ACCOUNT OF ALLE GED DIFFERENCE IN OPENING STOCK OF BARDANA BAGS AS ITA NO. 4701/DEL/2014 9 PER TRADING ACCOUNT WHEN COMPARED WITH THE STOCK REGISTER AND ESTIMATING THE VALUE OF DIFFERENCE OF 15500 BAGS AT RS. 3,29,995/ - BY TERMING THEM AS SALES OUTSIDE THE BOOKS OF ACCOUNTS. 6. 2 ON THE CONTRARY, LD. DR RELIED UPON THE ORDERS OF THE REVENUE AUTHORITIES AND STATED THAT THE SAME MAY BE UPHELD. 7 . I HAVE HEARD THE RIVAL CONTENTIONS IN LIGHT OF THE MATERIAL PRODUCED. I FIND THAT THE ASSESSEE IS ENGAGED IN THE BUSINESS OF PURCHASE AND SALES OF JUTE BAGS AND OTHER ALLIED ITEMS ON A WHOLESALE BASIS. THE ASSESSEE ASSESSEE HA S MAINTAINED DAY TO DAY ACCOUNT BOOKS IN THE SHAPE OF C ASH BOOK AND LEDGER, PURCHASE AND SALES VOUCHERS. THE A SSESSEE HA S ALSO MAINTAINED DAY TO DAY STOCK REGISTER IN RESPECT OF THE QUANTITY O F BARDANA BAGS RECEIVED AND DISPATCHED ON A DAY TO DAY BASIS. ALL THES E ACCOUNT BOOKS AND RECORD WAS PRODUCED AND CHECKED BY THE LEARNED AS S ESSIN G OFFICER. I FIND FORCE IN THE CONTENTION OF THE ASSESSEE THAT S OME O F THE SALES OF T HE ASSESSEE ARE IN THE NATURE OF CONSIGNMENT S A LES WHICH IS A COMMON BUSINESS PRACTICE FOLLOWED BY SEVERAL BUSIN E SSMEN IN WHICH THE GOODS ARE SENT FOR SALE ON CONSIGNMENT B A SIS AND THE SALE PROCEEDS ARE RECEIVED AT A LATER STAGE AFTER THE DISPO SAL OF GOODS BY THE CONSIGNEE AGENT. IN SUCH A SITUATION TILL THE GOODS ARE DISPOSED OF BY THE CONSIGNEE AGENT AND SALE PROCEEDS ARE RE CEIVED, THE PERSON SENDING THE GOODS FOR SALE ON CONSIGNMENT B A SIS IS THE OWNER OF THE GOODS AS PER ACCOUNT BOOKS AND LEDGER ALTHOUGH HE MAY NOT BE IN PHYSICAL POSSESSION OF THE GOODS. IN SUCH SITUATION S WHEN THE GOODS ARE DISPATCHED THE SAME ARE IMMEDIATELY RE D UCED FROM THE STOCK REGISTER BUT THE GOODS ACCOUNT IS ONLY CREDITED ( SALE REFLECTED) AFTER RECEIVING THE SALE PROCEEDS FROM THE ITA NO. 4701/DEL/2014 10 CONSIGNEE A G EN TS. I FURTHER FIND THAT IN THE PRESE NT CASE O F THE A SSSESSEE THE OPENING STOCK OF BARDANA BAGS AS ON 1.4.2 009 AS PER STOCK REGISTER WAS 114030 BAGS WHEREAS THE OPENING STOC K AS PER ACCOUNT BOOKS AND TRADING ACCOUNT WAS 129530 BAGS I.E. TO SAY THE STOCK IN THE TRADING ACCOUNT WAS HIGHER BY 15500 BAGS. THE A SSESSEE ASSESSEE EXPLAINED THE POSITION IN RESPECT O F THESE 15500 B AGS BEFORE THE ASSESSING OFFICER BY POINTING, OUT THAT 15500 B AGS WERE DISPATCHED ON 28.3.2009 TO M/S BIK ANER BARDANA STO RE, B I KANER (RAJASTHAN) FOR SALE ON CONSIGNMENT BASIS AND THIS QUANTITY O F 1 5500 BAGS WAS REDUCED FROM THE STOCK REGISTER ON THE DATE O F DISPA T CH I.E. 28.3.2009 ITSELF DUE TO WHICH THE STOCK AS PER STOCK REGISTER AS ON 1.4.2009 WAS LESSER BY THIS 15500 BAG S AND THE STOCK WAS HI G HE R IN THE TRADING ACCOUNT BY 15500 BAGS. COMPLETE EXPLANATION AN D SUPPORTING EVIDENCE IN RESPECT O F THESE GOODS DISPATCHED FOR SALE ON 28.3.2009 WERE SUBMITTED AND PLACED ON THE FILE BEFORE THE A.O. , BUT THE SAME COULD NOT BE CONSIDERED BY THE AO. T HE STOCK POSITION O F BARDANA BAGS AS ON 1.4.2009 WAS RECONCILED WHICH PLACED O N THE RECORD. 7.2 I FURTHER NOTE THAT THE ADDITION O F RS. 329995/ - ON ACCOUNT OF ALLEGED DIFFERENCE IN THE OPENING STOC K OF BARDANA BAGS AS PER TRADING ACCOUNT VIZ A V IZ THE OPENING STOCK OF BARDANA BAGS AS PER STOCK REGISTER IS WITHOUT, ANY BASIS AND THE A.O. HA S FRAMED THE ASSESSMENT WITHOUT APPRECIATING THE FACTS AND CIRCUMSTANCES OF THE CASE. I FURTHER OBSERVED THAT IN F ACT AS P O INTED OUT TO THE A. O . VIDE REPLY DATED 16 - 11 - 2012, THE A SSESSEE T ASSESSEE HAD DISPATCHED 15500 BAGS TO M/S BIKANER BARDANA STORE, BIKANER (RAJASTHAN) VIDE CHALLAN NO.CS - 29 TRANSPORTED IN VE HICLE NO. RJ 19GA - 4659 F OR SALE ON CONSIGNMENT BASIS AND THE QUANTITY OF BAGS TO THIS EXTENT WAS REDUCED FROM THE STOCK REGISTER ON THE DALE O F DISPATCH I.E. 28 - 03 - 2009 WHEREAS THE SALES ITA NO. 4701/DEL/2014 11 PROCEEDS AGAINST THIS DISPATCH OF GOODS WAS NOT RECEIVED UPTO 31 - 03 - 2009. IN OTHER WORDS, THIS QUANTITY O F 15500 BAGS WAS STILL IN THE STOCK OF THE AS SE SSES AS PER TRADING ACCOUNT AS ON 31 - 03 - 2009/01 - 4 - 2009 BUT THE PHYSICAL STOCK OF 15500 BAGS ALREADY STOOD REDUCED FROM THE STOCK REGISTER ON 28 - 03 - 2009. THE SALE PROCEEDS AGAINST THIS DISPATCH OF GOODS WAS RECEIVED IN THE MONTH OF MAY/ JUNE, 2009 AND ACCOR DINGLY THE SALE WAS CREDITED IN THE ACCOUNT BOOKS ON 02 - 06 - 2009 IN AS MUCH AS THE A SSESSEE RECEIVED SALE NOTE NO 53 DATED 15 - 05 - 2009 FROM M/ S BIKANER BARDANA STORE , BIKANER (RA J ASTHANJ VIZ A VIZ THE ABOVE DISPAT CH GOODS ON 28.3.2009 NUMBERING 15500 BAGS I N THE END OF MAY, 2009 AND ACCORDINGLY THE SALES WAS REFLECTED IN THE ACCOUNT BOOKS ON 2.6.2009 WHEN AN AMOUNT OF RS. 414807/ - WAS CREDITED IN THE BARDANA OUT OF STATE ACCOUNT. IN MY VIEW THE A SSESSEE HA S ALREADY ACCOUNTED F OR THE SALES OF ABO VE 55 BAGS IN THE SALES ACCOUNT ON 02 - 06 - 2009 FOR AN AMOUNT OF RS. 414807/ - WHICH IS INCLUDED IN THE TOTAL SALES OF THE ASSESSEE AS PER BALANCE SHEET THEN THERE IS NO QUESTION OF AN SALES OF AN SALES HAVING BEEN MADE OUTSIDE THE BOOKS OF ACCOUNTS AND MAKING ADDITION BY TERMING TH E SAME AS SALES OUTSIDE THE BOOKS OF ACCOUNTS AMOUNTING TO RS. 32939 5 / - AND MAKING ADDITION IN THE INCOME OF THE ASSESSE E WHEN THE ASSESSEE H AVE ALREADY REFLECTED THE SALES OF RS. 414807/ - PERTAINING TO THE ABOVE TRANSACTION IN THE S ALES ACCOUNT ON 02 - 06 - 2009 . IN MY CONSIDERED OPINION, THE AO HAS FAILED TO EXAMINE THE CASE IN THE LIGHT OF WRITTEN EX PLANATION DATED 16 - 11 - 2012 WHEN THE ACCOUNT BOOKS WERE VERY MU CH AVAILABLE BEFORE HIM AND HE COULD HAVE VERIFIED THE FACTS FROM THE REC ORD IN THE SHAPE OF CASH BOOK, LEDGER AND ALL OTHER DATA MAINTA INED BY THE ASSESSEE. BUT THE A O PROCEEDED AHEAD IN FRA M ING THE ASSESSMENT IN A HAPHAZARD MANNER BY MAKING AN ADDITION O F RS. 329995/ - BY MAKING HIS OWN CALCULATION AS AGAINST THE ITA NO. 4701/DEL/2014 12 ACTUAL SAL ES ALREADY CREDITED IN THE TRADING ACCOUNT VIZ A VIZ THE DISPUTED DISP A TCH OF 15500 BAGS TO M/ S BIKANER BARDANA STORE, RAJASIHAN AND LD. CIT(A) HAS AFFIRMED THE ACTION OF THE AO . T HERE CAN BE NO DIFFERENCE IN THE RECORD OF THE ASSESSEE ITSELF AND T HE ALLE GED DIFFERENCE WAS ALSO EXPLAINED / CLARIFIED VIDE EXPLANATION D ATED 16 - 11 - 2012 IN RESPONSE TO SPECIFIC QUERY RAISED IN THIS REGARD DURING THE COURSE OF ASSESSMENT PROCEEDINGS. KEEPING IN VIEW OF THE FACTS AND CIRCUMSTANCES OF THE CASE, THE ADDITION OF RS . 3,29,995/ - MADE BY THE AO AND SUSTAINED BY THE LD. CIT(A) IS HEREBY DELETED AND I ALLOW THE APPEAL OF THE ASSESSEE ACCORDINGLY. 8 . IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 1 0 / 8 /201 5 . S D / - [H.S. SIDHU] JUDICIAL MEMBER DATE 1 0 / 8 /201 5 SRB HATNGAR COPY FORWARDED TO: - 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT (A) 5. DR, ITAT TRUE COPY BY ORDER, ASSISTANT REGISTRAR, ITAT, DELHI BENCHES