V.Leelavathi, Salem V. ITO, Salem

ITA 475/CHNY/2015

• Counselvise Citation: 47521714 RSA 2015
• Duration Of Justice: 9 month(s) 9 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 18-12-2015
• Appeal Filed By: Assessee
• Bench Allotted: D
• Next Hearing Date: 14-10-2015
• Assessment Year: 2007-2008
• Appeal Filed On: 09-03-2015
• Court: TRIBUNAL
• Assessee Lawyers: S SRIDHAR ADVODATEERODE
• Keywords: Tangible material; Corroborative evidences
• Section: 143(3)

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL D BENCH, CHENNAI ... , . , , BEFORE SHRI N.R.S.GANESAN, JUDICIAL MEMBER AND SHRI A.MOHAN ALANKAMONY, ACCOUNTANT MEMBER ./ I.T.A.NO.475 /MDS./2015 ( !' #' / ASSESSMENT YEAR :2007-08) SMT.V.LE E LAVATHI , PROP.M/S.VARDHAMAN ELECTRICALS, 66,ARUNACHALA ASARI STREET, SALEM 636 001. VS. INCOME TAX OFFICER, WARD-1(1), 3,GANDHIROAD, SALEM-7. PAN ACCPJ 6661 N ( / APPELLANT ) ( / RESPONDENT ) $% & ' / APPELLANT BY : MR.S.SRIDHAR, ADVODATE,ERODE ()$% & ' / RESPONDENT BY : DR.B.NISCHAL,JCIT, D.R * + & ,- / DATE OF HEARING : 14.10.2015 .# & ,- /DATE OF PRONOUNCEMENT : 18.12.2015 / O R D E R PER A.MOHAN ALANKAMONY , ACCOUNTANT MEMBER: THIS APPEAL IS FILED BY THE ASSESSEE, AGGRIEVED B Y THE ORDER OF THE LEARNED COMMISSIONER OF INCOME TAX(A), SALEM DA TED ITA NO.475 /MDS/2015 2 30.12.2014 IN ITA NO.224/2009-10 PASSED UNDER SEC. 143(3) READ WITH SECTION 250 OF THE ACT. 2. THE ASSESSEE HAS RAISED THREE ELABORATE GROUNDS IN HER APPEAL; HOWEVER THE CRUX OF THE ISSUE IS THAT THE A SSESSEE IS AGGRIEVED BY THE ORDER OF THE LD. CIT (A), WHO HAD SUSTAINED THE ADDITION MADE BY THE LD.A.O ON ACCOUNT OF SHORTAGE OF STOCK BY PHYSICALLY VERIFYING THE STOCK WITH THE BOOKS OF AC COUNTS AT THE TIME OF SURVEY. 3. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESS EE IS AN INDIVIDUAL, ENGAGED IN THE BUSINESS OF TRADING OF E LECTRICAL GOODS IN THE NAME AND STYLE OF M/S.VARDHAMAN ELECTRICALS, FI LED HER E-RETURN OF INCOME FOR THE ASSESSMENT YEAR 2007-08 ON 31.10.200 7. SUBSEQUENTLY, THE CASE WAS TAKEN UP FOR SCRUTINY CO NSEQUENT TO SURVEY CONDUCTED IN THE BUSINESS PREMISES OF THE AS SESSEE AND THE ASSESSEES HUSBAND SHRI G.VIJAYARAJ JAIN. IN THE CO URSE OF SURVEY IT WAS OBSERVED THAT THERE WAS SHORTAGE OF STOCK ON PH YSICAL VERIFICATION WITH THE BOOKS OF ACCOUNTS AS DETAILED HEREIN BELOW:- ITA NO.475 /MDS/2015 3 CLOSING STOCK AS PER THE BOOKS OF ACCOUNTS 1,72,40, 434 CLOSING STOCK AS PER PHYSICAL VERIFICATION 1,62,26, 684 TOTAL- 10,11,750 SIC 10,13,750 AT THE TIME OF ASSESSMENT PROCEEDINGS, THE ASSESSEE HAD EXPLAINED BEFORE THE LD. ASSESSING OFFICER THAT ON THE DAY OF THE SURVEY CERTAIN GOODS WERE DELIVERED TO THE CUSTOMERS ON RECEIPT OF ADVANCE WITHOUT GENERATING BILL. THE BILLS WERE GENERATED SUBSEQUEN TLY AND THEREAFTER ACCOUNTED IN THE BOOKS OF ACCOUNTS DUE TO WHICH THE DISCREPANCY OCCURRED AT THE TIME OF SURVEY. THE ASSESSEE HAD F URTHER EXPLAINED THAT ON THE DATE OF THE SURVEY THE ASSESSEES SON A CCEPTED THE SHORTAGE OF STOCK AS UNACCOUNTED SALES WITHOUT UNDE RSTANDING THE INTRICACIES OF THE ISSUE. SUBSEQUENTLY THE BOOKS O F ACCOUNTS WERE COMPLETED AND ACCORDINGLY PROFITS & LOSS ACCOUNT WA S DRAWN AND THEREFORE IT WAS ARGUED THAT ADDITION OF ` 10,11,750/- ON ACCOUNT OF SHORTAGE OF STOCK IS UNWARRANTED. HOWEVER, THE LD. ASSESSING OFFICER REJECTED THE EXPLANATION STATED BY THE ASSESSEE AND ADDED ` 10,11,750/- ON ACCOUNT OF SHORTAGE OF STOCK BY OBSE RVING AS UNDER:- THE ABOVE REPLY IS NOT ACCEPTABLE BECAUSE THE ASSES SEE FAILED TO PROVE WITH SUPPORTING EVIDENCE SUCH AS THE DELIVERY CHALLANS C LAIMED TO HAVE BEEN ISSUED TO THE SO CALLED ELECTRICIANS. IT WAS ALSO EVIDENC ED AT THE TIME OS SURVEY THAT NO ITA NO.475 /MDS/2015 4 SUCH DELIVERY CHALLANS WAS AVAILABLE. THE ASSESSEE HAS NOT DISPUTED THE VALUATION OF PHYSICAL STOCK AND THE VALUATION OF CL OSING BOOK STOCK. IT WAS ALSO ESTABLISHED FACT THAT THE PURCHASES WERE ALREADY AC COUNTED FOR IN THE BOOKS OF ACCOUNTS. SO, THE ABOVE SUBMISSIONS ARE ONLY AN AFT ERTHOUGHT. THE SHORTAGE OF STOCK REPRESENTS THE SALE MADE OUTSIDE THE BOOKS. T HE ASSESSEE ALSO FAILED TO PROVE WITH EVIDENCE THAT THE ABOVE SALE AMOUNT WERE AVAILABLE FOR MAKING INVESTMENTS IN BUILDINGS, EXCESS CASH FOUND OF RS.5 ,00,000/- ETC. THE SUBMISSION OF THE ASSESSEE TO TREAT THE GROSS PROFI T OF RS.70,000/- @ 6.92% IS NOT ACCEPTABLE BECAUSE OF THE REASON THAT THE PURCH ASES WERE ALREADY TAKEN INTO ACCOUNT. IN VIEW OF THE ABOVE, THE SHORTAGE OF STOC K AS ADMITTED BY THE ASSESSEE AT THE TIME OF SURVEY AND NOT PROVIDE WITH SUPPORTI NG EVIDENCES DURING THE COURSE OF ASSESSMENT PROCEEDINGS NOW IS TO BE TREATED AS T HE INCOME OF THE ASSESSEE. 4. ON APPEAL THE LD. CIT (A) CONFIRMED THE ORDER O F THE LD. ASSESSING OFFICER BY STATING AS UNDER:- 4.2. THE APPELLANTS SUBMISSION HAS BEEN CONSIDER ED. IT IS SEEN THAT THERE HAS BEEN SHORTAGE OF STOCKS ESTABLISHED BETWE EN THE ACCOUNTED STOCK AND THE ACTUAL AVAILABLE STOCK. THE APPELLAN T HAS TRIED TO EXPLAIN THE SAME BY WAY OF DELIVERY CHALLANS FOR MATERIALS TAKE N BY ELECTRICIANS. 4.3. THE APPELLANT HAS ONLY MADE MERE STATEMENTS, BUT EVEN AT THE APPELLATE STAGE HAS NOT PROVIDED ANY EVIDENCE BY WA Y OF DELIVERY CHALLANS AND RECONNECTION THEREOF. THEREFORE, IT IS IS TO B E CORRECTLY INTERPRETED THAT ITA NO.475 /MDS/2015 5 THERE WAS ACTUALLY A SALE OF ACCOUNTED STOCK OUTSID E THE BOOKS OF ACCOUNTS. 4.4 THE APPELLANTS SUBMISSION THAT THE GROSS PROFI T MAY BE TAKEN AS INCOME IS ALSO NOT ACCEPTABLE AS THE SALE IS FROM A CCOUNTED STOCKS AND THE COST OF PURCHASE AND OTHER EXPENSES WOULD HAVE ALREADY BEEN TAKEN INTO ACCOUNT. SALE OF STOCKS WITHOUT BILLS FROM ACC OUNTED STOCKS CAN ONLY HAPPEN WHEN THE INTENTION IS TO CONCEAL THE ENTIRE SALES. THE APPELLANTS CONTENTION IS NOT ACCEPTED. 5. BEFORE US, THE LD. A.R SUBMITTED THAT SUBSEQUEN T TO SURVEY THE ASSESSEE HAD RECORDED ALL THE INCOMPLETE TRANSACTIO NS WHICH WERE LEFT OUT TO BE RECORDED IN THE BOOKS OF ACCOUNTS AT THE TIME OF SURVEY. THEREAFTER, SHE HAD DRAWN THE BOOKS OF ACCOUNTS AND CAST THE P&L A/C. SINCE THE SHORTAGE OF STOCK FOUND DURING THE COURSE OF SURVEY WAS CORRECTLY ACCOUNTED IN THE BOOKS OF ACCOUNTS SU BSEQUENT TO THE SURVEY, IT WAS ARGUED THAT THE ADDITION MADE BY THE LD. ASSESSING OFFICER IS NOT WARRANTED. LD. D.R ON THE OTHER HAN D RELIED ON THE ORDERS OF THE REVENUE. ITA NO.475 /MDS/2015 6 7. WE HAVE HEARD BOTH THE PARTIES AND CAREFULLY PE RUSED THE MATERIALS AVAILABLE ON RECORD. AT THE TIME OF ASSE SSMENT PROCEEDINGS, THE ASSESSEE CLAIMS THAT ALL THE TRANS ACTIONS WERE ENTERED INTO THE BOOKS OF ACCOUNTS AND ACCORDINGLY THE P&L A/C WAS DRAWN. THE REVENUE HAS NOT FOUND OUT ANY DEFICIENCI ES IN THE BOOKS OF ACCOUNTS MAINTAINED BY THE ASSESSEE AT THE TIME OF ASSESSMENT PROCEEDINGS. INSTEAD THEY HAVE SIMPLY PROCEEDED BA SED ON THE SWORN STATEMENTS MADE AT THE TIME OF SURVEY AND DIS CREPANCIES IN THE STOCK FOUND IN THE COURSE OF SURVEY ON PHYSICAL VERIFICATION. IN THIS SITUATION UNLESS THE REVENUE POINTS OUT ANY SH ORT COMINGS OR DISCREPANCIES IN THE BOOKS OF ACCOUNTS MAINTAINED B Y THE ASSESSEE AT THE TIME OF ASSESSMENT PROCEEDINGS WHICH LEADS T O THE SHORTAGE OF STOCK AT THE TIME OF SURVEY, SUCH ADDITIONS CANNOT BE JUSTIFIED. THEREFORE, WE DO NOT FIND ANY MERIT EITHER IN THE O RDER OF THE LD. ASSESSING OFFICER OR THE LD. CIT (A) ON THIS ISSUE. NEEDLESS TO MENTION THAT SWORN STATEMENT OBTAINED AT THE TIME O F SURVEY HAS NO EVIDENCE VALUE UNLESS CORROBORATED BY SOME TANGIBLE MATERIALS AS HELD ON SEVERAL OCCASIONS BY HIGHER JUDICIARY. HENC E WE HEREBY DIRECT THE LD. ASSESSING OFFICER TO DELETE THE ADDI TION OF ` 10,11,750/- ITA NO.475 /MDS/2015 7 MADE BY THE LD. ASSESSING OFFICER ON ACCOUNT OF SHO RTAGE OF STOCK FOUND DURING THE COURSE OF SURVEY WHICH WAS FURTHER SUSTAINED BY THE LD. CIT (A) IN THE CASE OF THE ASSESSEE. 8. IN THE RESULT, THE APPEAL OF ASSESSEE IS ALLOWED . ORDER PRONOUNCED ON THE 18 TH DECEMBER, 2015 AT CHENNAI. SD/- SD/- ( . . . ) ( N.R.S.GANESAN ) ( . '#$ %' ) (A.MOHAN ALANKAMONY) JUDICIAL MEMBER ACCOUNTANT MEMBER CHENNAI, DATED THE 18 TH DECEMBER, 2015. K S SUNDARAM. & (,/0 1 0#, /COPY TO: 1. $% /APPELLANT 2. ()$% /RESPONDENT 3. * 2, ( ) /CIT(A) 4. * 2, /CIT 5. 05 (,6! /DR 6. ' 7+ /GF