Sh. Sushil Kumar Prop, SHAHKOT V. The Income-tax Officer, Nakodar

ITA 475/ASR/2011

• Counselvise Citation: [2013] 120 COUNSELVISE.COM (IT) 0603 (ITAT-AMRITSAR)
• Duration Of Justice: 1 year(s) 4 month(s) 2 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 08-01-2013
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Next Hearing Date: 03-01-2013
• Assessment Year: 2006-2007
• Appeal Filed On: 06-09-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: R L CHHANALIA
• Assessee Lawyers: PARVEEN JAIN
• Section: 133A

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AMRITSAR BENCH; AMRITSAR. BEFORE SH. H.S. SIDHU, JUDICIAL MEMBER AND SH. B.P.JAIN, ACCOUNTANT MEMBER I.T.A. NO.475(ASR)/2011 ASSESSMENT YEAR:2006-07 PAN :AAWPK8901E SH. SUSHIL KUMAR, VS. THE INCOME TAX OFFICER, PROP. DHARAM PAL SUSHIL KUMAR, NAKODAR. MAIN BAZAR, SHAHKOT. (APPELLANT) (RESPONDENT) APPELLANT BY:SH. PARVEEN JAIN, ADVOCATE RESPONDENT BY:SH. R.L. CHHANALIA, DR DATE OF HEARING: 03/01/2013 DATE OF PRONOUNCEMENT:08/01/2013 ORDER PER BENCH ; THIS APPEAL OF THE ASSESSEE ARISES FROM THE ORDER OF THE CIT(A), JALANDHAR, DATED 13.06.2011 FOR THE ASSESSMENT YEAR 2006-07. THE ASSESSEE HAS RAISED FOLLOWING GROUNDS OF APPEAL: 1. THAT THE LD. CIT(A) ERRED IN CONFIRMING AN AD DITION OF RS.1,89,245/- MADE ON ACCOUNT OF ALLEGED UNEXPLAIN ED DIFFERENCE IN STOCK AS ON THE DAY OF SURVEY, IGNORING THE FACT T HAT THE ASSESSEE HAD RECONCILED THE DIFFERENCE AND THE REVENUE AUTHORIT IES DID NOT POINT OUT ANYTHING TO THE CONTRARY. 2 2. WHETHER REPORTS AND FACTS COLLECTED AT THE TIME OF SURVEY ARE ALWAYS SUBJECT TO EXPLANATION AND RECONCILIATION BY ASSESSEE, WHICH CAN BE EXPLAINED EITHER AT THE TIME OF SURVEY OR AF TER SURVEY BEFORE AO AT TIME OF ASSESSMENT. 3. WHETHER AS THE APPELLANT HAD BEEN ABLE TO EXPLA IN THE DISCREPANCY IN STOCK FOUND DURING THE COURSE OF SU RVEY, THE AO COULD NOT HAVE MADE AID ADDITION SOLELY ON THE BASIS OF STATEMENT OF THE APPELLANT. 4. THAT THE LD. CIT(A0) ERRED IN CONFIRMING THE AD DITION OF RS.6,269/- BEING EXCESS CASH FOUND DURING THE COUR SE OF SURVEY. THE CASH-IN-HAND AS PER BOOKS WAS TAKEN AS OPENING BAL ANCE AS ON THE DATE OF SURVEY BUT THE FACT THAT THE SURVEY WAS CONDUCT ED AT NOON WAS IGNORED. 2. THE BRIEF FACTS OF THE CASE ARE THAT A SURVEY U/ S 133A OF THE ACT, WAS CONDUCTED ON THE BUSINESS PREMISES OF THE ASSESSEE ON 08.03.2006 AND DURING THE COURSE OF SURVEY, ON PHYSICAL VERIFICATI ON, THE STOCK OF THE VALUE OF RS.30,47,195/- WAS FOUND AS AGAINST THE CLOSING STOCK OF RS.32,86,440/- SHOWN AS PER THE TRADING ACCOUNT WHICH WAS PREPARED ON THE DATE OF SURVEY, BESIDES EXCESS CASH OF RS.6,269/-. THE ASSESSEE IS ENGAGED IN THE AGENCY BUSINESS OF SALE OF GHEE, REFINED OIL AND PRODUCTS OF COMPANIES LIKE TAT, GODREJ ETC. AT THE TIME OF SURVEY, THE ASSESSEE DEC LARED ADDITIONAL MISCELLANEOUS INCOME OF RS.50,000/- UNDER THE HEAD INCOME FROM OTHER SOURCES. DURING THE COURSE OF THE ASSESSMENT PROCE EDINGS, THE AO ASKED THE ASSESSEE TO EXPLAIN THE DISCREPANCY FOUND OF RS.2, 39,245/- IN THE STOCK FOUND AT THE TIME OF SURVEY AND ALSO TO RECONCILE T HE EXCESS CASH FOUND AT RS.6,269/-. SINCE THE ASSESSEE COULD NOT SATISFY TH E AO REGARDING THE 3 DIFFERENCE IN STOCK FOUND LESS DURING THE COURSE O F SURVEY OPERATION AND THE EXCESS CASH FOUND AT RS.6,269/- , THE AO AFTER GIVI NG THE ASSESSEE THE BENEFIT OF RS.50,000/- SURRENDERED AT THE TIME OF SURVEY OU T OF THE LESS STOCK FOUND AT RS.2,39,245/- , MADE AN ADDITION OF RS.1,89,245/ - TO THE DECLARED TRADING RESULTS AND ALSO ADDED THE UNEXPLAINED EXCESS CASH FOUND AT RS.6,269/- TO THE INCOME OF THE ASSESSEE. 3. THE LD. CIT(A) CONFIRMED THE ACTION OF THE ASSES SING OFFICER. 4. THE LD. COUNSEL FOR THE ASSESSEE, SH. PARVEEN JA IN, ADVOCATE ARGUED THAT ALL THE BILLS WERE ENTERED IN THE COMPUTER AND THE STOCK OF PURCHASES HAD BEEN MAINTAINED ITEM-WISE AND SIMILARLY THE SALES WERE ALSO ENTERED IN THE COMPUTER ITEM-WISE. THE SAME WAS TALLIED WITH THE C OMPUTER ON FIFO METHOD. THE SALES AND PURCHASES HAD BEEN TALLIED W ITH THE VAT RETURNS FILED WITH THE EXCISE DEPARTMENT. THE DETAILS OF ST OCK AS PER BOOK ON 08.03.2006 AND 31.03.2006 WERE SUBMITTED DURING THE ASSESSMENT PROCEEDINGS AND NO DISCREPANCY WAS NOTICED BY THE A O. THE BOOKS OF ACCOUNT WERE AUDITED U/S 44AB OF THE ACT . THERE IS NO DISCREPANCY FOUND IN THE VALUATION OF STOCK . HE FURTHER AGUED THAT EVE N IF ANY STOCK IS FOUND LESS ON PHYSICAL VERIFICATION DURING THE COURSE OF SURVE Y, THE SAME CANNOT BE SUBJECT MATTER OF ADDITION. EVEN THE CONTENTION OF THE AO IS ADMITTED THAT THE SALES WERE MADE OUT OF BOOKS ON ACCOUNT OF SHOR T STOCK OF RS.2,39,240/-, THE SAME HAS TO BE WORKED OUT TO RS.8,565/- BEING G ROSS PROFIT @ 3.58% 4 DECLARED BY THE ASSESSEE IN THE TRADING ACCOUNT DUR ING THE IMPUGNED YEAR. THE ASSESSEE HAS ALREADY DECLARED RS.50,000/- ON AC COUNT OF SUCH WORKING OF G.P. AND CASH EXCESS FOUND AT RS.6,269/-, WHICH IS A SUBJECT MATTER OF DECLARED INCOME AS AN ADDITIONAL INCOME IS NOT UNDE R DISPUTE. THEREFORE, HE PRAYED TO REVERSE THE ORDER OF THE LD. CIT(A) AND ALLOW THE GROUNDS OF THE ASSESSEE. 5. THE LD. DR, ON THE OTHER HAND, RELIED UPON THE O RDERS OF THE AUTHORITIES BELOW. 6. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE FACTS OF THE CASE. THE ARGUMENTS MADE BY SH. PARVEEN JAIN, ADVOCATE, ARE FOUND TO BE CONVINCING THAT EVEN THERE IS DISCREPANCY IN THE VA LUATION OF STOCK THAT TOO WHEN STOCK IS FOUND LESS AS COMPARED TO THE STOCK D ECLARED IN THE BOOKS OF ACCOUNT, IT IS ONLY GROSS PROFIT OF THE SHORT STOCK BEING SALES MADE OUTSIDE THE BOOKS OF ACCOUNT WHICH WORKED OUT AT RS.8,565/- CA N BE SUBJECT MATTER OF ADDITION. IN THE PRESENT CASE, THERE IS NO CASE OF THE AO THAT THE ASSESSEE HAS MADE THE PURCHASES OUTSIDE THE BOOKS OF ACCOUNT BUT THE ISSUE RELATES TO THE SHORT STOCK WHICH AT THE MOST INDICATE SALES OUTSI DE THE BOOKS OF ACCOUNT AND NOT PURCHASES. THEREFORE, ESSENTIALLY, THE AO C AN MAKE ADDITION ONLY OF THE G.P. DECLARED BY THE ASSESSEE. THOUGH ANY DISCR EPANCY FOUND DURING SURVEY CAN BE EXPLAINED DURING THE ASSESSMENT PROCE EDINGS. IN THE PRESENT CASE, THE ASSESSEE IS MAINTAINING THE PURCHASES, S ALES AND STOCK ITEM-WISE 5 WHICH IS NOT IN DISPUTE AND THEREFORE, IN THE ABSEN CE OF ANY DEFECT IN THE BOOKS OF ACCOUNT, THE AO IS NOT JUSTIFIED IN MAKING ANY ADDITION ON THIS ACCOUNT. THOUGH THE ASSESSEE HAVING DECLARED ADDIT IONAL INCOME OF RS.50,000/-, WHICH HAS NOT BEEN DISPUTED IN HIS RET URN OF INCOME ON ACCOUNT OF EXCESS CASH FOUND OF RS.6,2,69/- AND LESS STOCK FOUND DURING THE COURSE OF SURVEY, THEREFORE, NO ADDITION IN THE FACTS AND CIR CUMSTANCES OF THE CASE IS CALLED FOR. THE ADDITION MADE IS DIRECTED TO BE DEL ETED. THE ORDER OF THE LD. CIT(A) IS REVERSED ACCORDINGLY. THUS, ALL THE GROU NDS OF THE ASSESSEE ARE ALLOWED. 7 IN THE RESULT, THE APPEAL OF THE ASSESSEE IN ITA NO.475(ASR)/2011 IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 8TH JANUARY, 2013. SD/- SD/- (H.S. SIDHU) (B.P. JAIN) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 8TH JANUARY, 2013 /SKR/ COPY OF THE ORDER FORWARDED TO: 1. THE ASSESSEE:SH. SUSHIL KUMAR, SHAHKOT, 2. THE ITO NAKODAR. 3. THE CIT(A), JALANDHAR. 4. THE CIT, JALANDHAR. 5. THE SR DR, ITAT, AMRITSAR. TRUE COPY BY ORDER (ASSISTANT REGISTRAR)