Shri Arvindbhai Narandas Mehta, Ahmedabad V. The Income tax Officer,Ward-9(3), Ahmedabad

ITA 495/AHD/2010

• Counselvise Citation: 49520514 RSA 2010
• Duration Of Justice: 2 year(s) 4 month(s) 10 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 22-06-2012
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: D
• Assessment Year: 2003-2004
• Appeal Filed On: 12-02-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: B L YADAV
• Assessee Lawyers: HITESH P SHAH
• Keywords: Unexplained investment

Judgement Text

, , , , D, IN THE INCOME TAX APPELLATE TRIBUNAL AT AHMEDABAD, D BENCH , , , , , , , , !' !' !' !', , , , #$ #$ #$ #$ # % # % # % # % BEFORE S/SHRI MUKUL KUMAR SHRAWAT, JUDICIAL MEMBER AND ANIL CHATURVEDI, ACCOUNTANT MEMBER) ITA NO.495/AHD/2010 [ASSTT.YEAR : 2003-2004] ARVINDBHAI NARANDAS MEHTA C/O. MEHTA LODHA & CO. 195, SAKAR-1, NR. GANDHIGRAM RAILWAY STATION, ASHRAM ROAD AHMEDABAD 380 009. PAN : ABFPM 0148 P /VS. THE ITO, WARD-9(3) AHMEDABAD. ( (( ('( '( '( '( / APPELLANT) ( (( ()*'( )*'( )*'( )*'( / RESPONDENT) + , - #/ ASSESSEE BY : SHRI HITESH P. SHAH / , - #/ REVENUE BY : SHRI B.L. YADAV 0 , '$/ DATE OF HEARING : 5 TH JUNE, 2012 123 , '$/ DATE OF PRONOUNCEMENT : 22-6-2012 #4 / O R D E R PER ANIL CHATURVEDI, ACCOUNTANT MEMBER: THIS APPEAL IS BY THE ASSESSEE AGAINST THE ORDER OF THE CIT(A)-I, SURAT DATED 21.11.2009 FOR THE A.Y.2003-2004. THE ASSES SEE IS AGGRIEVED ITA NO.495/AHD/2010 -2- BY THE ACTION OF THE CIT(A) IN CONFIRMING PENALTY O F RS.10,92,853/- UNDER SECTION 271(1)(C) OF THE I.T.ACT. 2. THE LEARNED COUNSEL FOR THE ASSESSEE, AT OUTSET, SUBMITTED THAT THE ASSESSEE HAD CHALLENGED BEFORE THE ITAT, AHMEDA BAD BENCHES AGAINST QUANTUM ADDITION IN RESPECT OF UNACCOUNTED INVESTMENT IN STOCK AMOUNTING TO RS.34,69,372/- IN ITA NO.1865/AH D/2007 FOR A.Y.2003-2004, AGAINST WHICH, THE REVENUE HAS IMPOS ED PENALTY UNDER SECTION 271(1)(C) OF THE ACT, WHICH IS UNDER CHALLENGE IN THIS APPEAL. THE ITAT VIDE ITS ORDER DATED 13 TH OCTOBER, 2010 IN THE ABOVE APPEAL HAS SET ASIDE THE ORDERS OF THE LOWER AUTHOR ITIES ON THE ISSUE OF ADDITION IN RESPECT OF UNEXPLAINED INVESTMENT IN ST OCK WITH A DIRECTION TO VERIFY ALL THE EXPLANATIONS AND EVIDENCES FURNIS HED BY THE ASSESSEE AND TO DECIDE THE ISSUE AFRESH AS PER LAW AND AFTER ALLOWING REASONABLE OPPORTUNITY OF HEARING TO THE ASSESSEE. THE LEARNE D COUNSEL FOR THE ASSESSEE HAS PLACED ON RECORD A COPY OF THE ABOVE T RIBUNAL ORDER. IT IS THEREFORE SUBMITTED THAT IN VIEW OF SETTING ASIDE O F THE ORDERS OF THE LOWER AUTHORITIES IN RESPECT OF QUANTUM ADDITION, T HE PENALTY IMPOSED BY THE AO WILL NOT SURVIVE, AND THEREFORE THE SAME MAY BE CANCELLED. THE LEARNED DR HAS NOT CONTROVERTED TO THIS SUBMISS ION OF THE ASSESSEE. 3. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE O RDER OF THE ITAT IN THE ASSESSEES QUANTUM APPEAL REFERRED TO A BOVE. THE ITAT, AHMEDABAD BENCH-A HAS SET ASIDE THE ORDERS OF TH E AO AND THE CIT(A) BY HOLDING AS UNDER: 8. HOWEVER, THE ASSESSEE COULD NOT PRODUCE ANY EVI DENCE TO SHOW THAT BEFORE WHOM AND WHEN THIS DECLARATION WAS FILED. BE THAT AS IT MAY. WE FIND THAT IN THE INSTANT CASE BO OK STOCK WAS ITA NO.495/AHD/2010 -3- FOUND AT A NEGATIVE FIGURE OF .8,44,800/- AND THIS NEGATIVE FIGURE WAS ARRIVED AT BY ASSUMING GROSS PROFIT OF 4.67% WH EREAS FOR THE YEAR UNDER CONSIDERATION THE ASSESSEE HAS DISCL OSED OVERALL GROSS PROFIT AT 3.50% WHICH HAS BEEN ACCEPTED BY TH E DEPARTMENT. THERE CANNOT BE A NEGATIVE STOCK AND TH IS ITSELF CONCLUSIVELY PROVES THAT BOOKS OF ACCOUNT WERE INCO MPLETE AND ENTIRE PURCHASES OF THE ASSESSEE WERE NOT RECORDED IN THE BOOKS OF ACCOUNT. THE LOWER AUTHORITIES AFTER FINDING THI S IMPOSSIBLE SITUATION OF HAVING A NEGATIVE STOCK HAD MADE NO AT TEMPT TO DETERMINE THE ACTUAL STATE OF AFFAIRS AND IT APPEAR S THAT IN THEIR ENTHUSIASM OF MAKING ADDITION THEY MADE ADDITION ON ACCOUNT OF THIS ALLEGED NEGATIVE STOCK ALSO. THE ABOVE ACTI ON ON THE PART OF THE REVENUE IS CLEARLY UNSUSTAINABLE. THE ASSESS EE HAS PLACED COPIES OF PURCHASE INVOICES AT PAGE NO. 45 TO 147 O F THE PAPER BOOK IN RESPECT OF ALLEGED PURCHASES WHICH WERE NOT RECORDED IN THE BOOKS AND POINTED OUT THAT THE SAME WERE INVOIC E-CUM DELIVERY CHALAN AND IT IS THE COMMON PRACTICE IN TH IS LINE OF TRADE FOR NOT ISSUING OF SEPARATE DELIVERY CHALAN. THUS, MERELY BECAUSE OF NO SEPARATE DELIVERY CHALAN THE LOWER AU THORITIES WERE NOT JUSTIFIED IN REJECTING THE EVIDENCES FILED BY THE ASSESSEE IN RESPECT OF ITS PURCHASES IN THE FORM OF INVOICES WHEREIN NO DEFECT COULD BE POINTED OUT BY THE REVEN UE. THE ASSESSEE ALSO CONTENDED THAT IN MANY CASES, EVEN TH E PAYMENTS WERE MADE BEFORE THE DATE OF THE SURVEY THROUGH BAN KING CHANNEL WHICH CONCLUSIVELY PROVES THAT THE ASSESSEE S SUBMISSION WAS NOT COOKED UP STORY AND THE LOWER AU THORITIES HAVE EVEN REFUSED TO ACCEPT SUCH PURCHASES AS GENUI NE WITHOUT ANY VERIFICATION. IN OUR CONSIDERED OPINION THE REJ ECTION OF EVIDENCE FURNISHED BY THE ASSESSEE COULD NOT BE MAD E WITHOUT BRINGING ON RECORD COGENT REASONS TO SHOW THAT WHY SUCH EVIDENCES ARE NOT LEGALLY ACCEPTABLE. IN OUR CONSID ERED OPINION IN THE INSTANT CASE THE FACTS AND EVIDENCES FILED B Y THE ASSESSEE NEEDS PROPER VERIFICATION BY THE LEARNED ASSESSING OFFICER BEFORE ACCEPTING OR REJECTING THE SAME. WE THEREFOR E, SET ASIDE THE ORDERS OF THE LOWER AUTHORITIES AND RESTORE THI S ISSUE BACK TO THE FILE OF THE LEARNED ASSESSING OFFICER FOR PROPE R VERIFICATION OF ALL THE EXPLANATIONS AND EVIDENCES FURNISHED BY THE ASSESSEE AND THEREAFTER TO DECIDE THE ISSUE AFRESH AS PER LA W AFTER ALLOWING REASONABLE OPPORTUNITY OF HEARING TO THE A SSESSEE. THUS, THIS GROUND OF APPEAL OF THE ASSESSEE IS ALLO WED FOR STATISTICAL PURPOSES. ITA NO.495/AHD/2010 -4- WE ARE OF THE VIEW THAT IN LIGHT OF THE AFORESAID F ACTS, THE ISSUE OF QUANTUM ADDITION IN RESPECT OF UNEXPLAINED INVESTME NT IN STOCK SINCE HAS BEEN REMITTED BACK TO THE FILE OF THE AO FOR FR ESH ADJUDICATION, VIDE ORDER DATED 13-10-2010 (SUPRA), THE PENALTY UN DER SECTION 271(1)(C) OF THE ACT AT PRESENT DOES NOT SURVIVE IN THIS CASE, HOWEVER, THE AO IS AT LIBERTY TO TAKE THE APPROPRIATE STEPS AS PER LAW CONSEQUENCE TO THE FINAL OUTCOME OF THE REMITTED MA TTER ON THE QUANTUM ADDITION. 4. IN THE RESULT, THE ASSESSEES APPEAL IS ALLOWED IN THE ABOVE TERMS. ORDER PRONOUNCED IN OPEN COURT ON THE DATE MENTIONE D HEREINABOVE. SD/- SD/- ( / MUKUL KR. SHRAWAT) ( /JUDICIAL MEMBER ( !' !' !' !' / ANIL CHATURVEDI) #$ #$ #$ #$ /ACCOUNTANT MEMBER C OPY OF THE ORDER FORWARDED TO: 1) : APPELLANT 2) : RESPONDENT 3) : CIT(A) 4) : CIT CONCERNED 5) : DR, ITAT. BY ORDER DR/AR, ITAT, AHMEDABAD