Mr. Gaurav Garg, Uttar Pradesh V. ITO, Noida

ITA 531/DEL/2016

• Counselvise Citation: [2019] 115 COUNSELVISE.COM (IT) 6761 (ITAT-DELHI)
• Duration Of Justice: 3 year(s) 8 month(s) 13 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 15-10-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Assessment Year: 2011-2012
• Appeal Filed On: 02-02-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: K P GARG
• Keywords: Unexplained investment
• Section: 69

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH: C NEW DELHI BEFORE SHRI BHAVNESH SAINI, JUDICIAL MEMBER & SHRI PRASHANT MAHARISHI, ACCOUNTANT MEMBER ITA NO. 531/DEL/2016 ASSESSMENT YEAR: 2011-12 GAURAV GARG, NEAR SHARMA PATHOLOGY, JARCHA ROAD, DADRI, GAUTAM BUDH NAGAR, UTTAR PRADESH. PAN NO. AFLPG4724P VS ITO WARD 3(1) NOIDA. APPELLANT RESPONDENT ASSESSEE BY SHRI K.P. GARG, CA REVENUE BY MS. RAKHI VIMAL, SR. DR ORDER PER SHRI BHAVNESH SAINI, J.M. THIS APPEAL BY ASSESSEE HAS BEEN DIRECTED AGAINST THE ORDER OF LD. CIT(APPEALS)-1, NOIDA DATED 30.11.2015 FOR A Y 2011-12, CHALLENGING THE ADDITION OF RS. 61,62,426/- ON ACCO UNT OF OPENING STOCK AS UNEXPLAINED INVESTMENT. DATE OF HEARING 09.10.2019 DATE OF PRONOUNCEMENT 15.10.2019 2 ITA NO . 531/DEL/2016 2. BRIEFLY THE FACTS OF THE CASE, ARE THAT ASSESSEE FILED RETURN OF INCOME ON 28.09.2012 DECLARING AN INCOME OF RS. 4,6 8,560/-. THE ASSESSEE IS ENGAGED IN THE BUSINESS OF PROCESSING A ND TRADING OF RICE. THE ASSESSEE DURING THE YEAR UNDER CONSIDERA TION, HAS DECLARED GROSS SALES OF RS. 6,33,76,996/- AND DECLA RED NET PROFIT OF RS. 5,31,867/-. THE MAIN CONTENTION BETWEEN THE AS SESSEE AND THE REVENUE IS THE DISCREPANCIES IN THE VALUE OF CL OSING STOCK AS SHOWN ON 31.03.2011 AND AS TAKEN ON 01.04.2010 AS O PENING STOCK. THE AO STATED THAT IN THE RETURN FILED FOR PRECEDING AY 2010-11, THE ASSESSEE HAS CLAIMED THAT HE WAS NOT L IABLE FOR AUDIT ITS BOOKS OF ACCOUNT U/S 44AB OF THE ACT AND, THERE FORE, THERE WAS NO NEED TO MENTION THE NAME OF THE AUDITOR SIGNING THE TAX AUDIT REPORT. THE AO HAS STATED IN THE ORDER THAT THE CL OSING STOCK WAS SPECIFICALLY SHOWN TO BE NIL IN THE RETURN OF INCOM E FOR PRECEDING AY 2010-11. IN VIEW OF THE SAME, THE AO HAS TREATE D THE OPENING STOCK AS ON 01.04.2010 OF RS. 61,62,426/- AS UNEXPL AINED INVESTMENT U/S 69 OF THE ACT AND MADE THE ADDITION. 3. THE ASSESSEE CHALLENGED THE ADDITION BEFORE LD. CIT(A) AND IT WAS SUBMITTED THAT RETURN FOR PRECEDING AY 2010-11 WAS FILED BY SOME OTHER PROFESSIONAL AND BY MISTAKE AND OVERSIGH T THE SAID PROFESSIONAL DID NOT FILL UP THE PARTICULARS OF CLO SING STOCK CORRECTLY. IT WAS FURTHER ARGUED BY THE COUNSEL TH AT THE CASE OF THE ASSESSEE FOR AY 2010-11 WAS LIABLE FOR AUDIT U/ S 44AB AND THE AUDIT WAS ALSO DONE AS PER LAW BUT THE PROFESSIONAL FILING THE RETURN OF INCOME INCORRECTLY MENTIONED THAT THE ASS ESSEE WAS NOT LIABLE FOR SUCH AUDIT AND NO SUCH AUDIT HAVING BEEN DONE THERE 3 ITA NO . 531/DEL/2016 WAS NO NEED TO DISCLOSE THE PARTICULARS OF STATUTOR Y AUDITOR. THE ASSESSEE SUBMITTED THAT HE IS NOT MUCH EDUCATED AND THOUGH HE AUTHENTICATED THE RETURN OF INCOME FILED ON HIS BEH ALF BUT HE COULD NOT MAKE OUT THE ERRORS COMMITTED BY THE SAID PROFE SSIONAL. THE ASSESSEE FILED AFFIDAVIT EXPLAINING THE DISCREPANCY ON ACCOUNT OF DIFFERENCE IN THE CLOSING STOCK AS IS EXPLAINED IN THE AUDIT REPORT U/S 44AB OF THE ACT. 4. THE LD. CIT(A) FOUND THAT IN THE RETURN FOR PREC EDING AY 2010-11, THE VALUE OF THE CLOSING STOCK HAS BEEN SH OWN AS NIL. THE ASSESSEE ALSO STATED THAT HE WAS MAINTAINING RE GULAR BOOKS OF ACCOUNT BUT IN RETURN IT IS STATED THAT HE IS NOT L IABLE FOR AUDIT U/S 44AB OF THE ACT. THEREFORE, PARTICULARS ARE NOT FI LED. THE LD. CIT(A) DID NOT ACCEPT THE CONTENTION OF THE ASSESSE E AND AFFIDAVIT FILED BY HIM. LD. CIT(A) ALSO NOTED THAT ON THE DA TE OF FILING OF THE RETURN AUDIT REPORT FOR ASSESSMENT YEAR UNDER APPEA L AS WELL AS FOR PRECEDING ASSESSMENT YEARS WERE AVAILABLE, THER EFORE, IF ANY, MISTAKE HAS BEEN COMMITTED THE FIGURES WOULD NOT HA VE TALLIED. THE LD. CIT(A) REJECTED THE CONTENTION OF THE ASSES SEE AND CONFIRMED THE ADDITION. 5. LD. COUNSEL FOR THE ASSESSEE REITERATED THE SUBM ISSIONS MADE BEFORE AUTHORITIES BELOW AND SUBMITTED THAT IT WAS A MISTAKE IN THE RETURN FILED FOR PRECEDING AY 2010-11 IN NOT MENTIONING THE VALUE OF CLOSING STOCK THOUGH COMPLETE DETAILS ARE AVAILABLE. THE ASSESSEE MAINTAINED COMPLETE DETAILS OF CLOSING STO CK OF EARLIER YEARS AND ASSESSEE MAINTAINED REGULAR BOOKS OF ACCO UNT WHICH ARE 4 ITA NO . 531/DEL/2016 ALSO AUDITED. COPY OF THE AUDIT REPORT IS ALSO FIL ED IN THE PAPER BOOK. HE HAS SUBMITTED THAT IN THE AUDITED ACCOUNT FOR PRECEDING ASSESSMENT YEAR ASSESSEE HAS SHOWN VALUE OF CLOSING STOCK OF THE IMPUGNED AMOUNT. DETAILS OF WHICH ARE ALSO MAINTAI NED. COPY OF THE DETAILS OF THE OPENING STOCKS OF LAST THREE YEA RS ARE FILED AT PAGE 84 OF THE PAPER BOOK. LD. COUNSEL FOR ASSESSE E SUBMITTED THAT ASSESSEE IS WILLING TO PRODUCE BOOKS OF ACCOUN TS AND OTHER DETAILS OF CLOSING STOCK OF PRECEDING AY 2010-11 BE FORE AO FOR VERIFICATION. 6. ON THE OTHER HAND, LD. DR RELIED UPON THE ORDERS OF THE AUTHORITIES BELOW AND SUBMITTED THAT ASSESSEE HAS M ENTIONED IN THE AUDIT REPORT FOR THIS YEAR AS WELL AS PRECEDING YEAR THAT NO STOCK REGISTERED HAS BEEN MAINTAINED. LD. DR SUBMI TTED THAT ASSESSEE HAS UNNECESSARY BLAMED THE PROFESSIONAL AN D THAT WHEN ASSESSEE SAYS ACCOUNTS OF ASSESSEE ARE NOT LIABLE F OR AUDIT, THERE WAS NO REASON TO PRODUCE THE COPY OF THE AUDIT REPO RT BEFORE THE AUTHORITIES BELOW. 7. WE HAVE CONSIDERED THE RIVAL SUBMISSION AND PERU SED THE MATERIAL ON RECORD. THE ASSESSEE HAS CLAIMED OPENI NG STOCK OF THE IMPUGNED AMOUNT IN ASSESSMENT YEAR UNDER APPEAL. H OWEVER, NO CLOSING STOCK OF THE SIMILAR AMOUNT HAS BEEN SHOWN IN THE RETURN FOR PRECEDING AY 2010-11. IT HAS CREATED DOUBT IN THE MIND OF THE AO THAT ASSESSEE HAS MADE UNDISCLOSED INVESTMENTS I N THE STOCK. THE ASSESSEE, HOWEVER, CLAIMED THAT THERE WAS A MIS TAKE BY THE PROFESSIONAL IN NOT SHOWING THE CLOSING STOCK IN PR ECEDING AY 5 ITA NO . 531/DEL/2016 2010-11. THE ASSESSEE FILED AFFIDAVIT ALONG WITH A UDIT REPORT FOR PRECEDING AY 2010-11 TO SHOW THAT ACCOUNTS ARE MAIN TAINED BY ASSESSEE WHICH ARE ALSO AUDITED IN WHICH VALUE OF T HE CLOSING STOCK AS ON 31.03.2010 HAS BEEN SHOWN. THE ASSESSE E HAS ALSO FILED DETAILS OF THE CLOSING STOCK AS WELL AS DETAI LS OF CLOSING STOCK FOR LAST PRECEDING THREE ASSESSMENT YEARS. LD. COU NSEL FOR ASSESSEE SUBMITTED THAT ASSESSEE MAINTAINED REGULAR BOOKS OF ACCOUNT AND IS WILLING TO PRODUCE THE SAME BEFORE T HE AO FOR VERIFICATION. CONSIDERING IT TO BE A MISTAKE IN NO T DISCLOSING THE VALUE OF THE CLOSING STOCK IN PRECEDING ASSESSMENT YEAR, WE ARE OF THE VIEW THAT ONE MORE CHANCE COULD BE GIVEN TO THE ASSESSEE TO EXPLAIN THE VALUE OF THE CLOSING STOCK OF PRECEDING ASSESSMENT YEAR BEFORE AO ON PRODUCTION OF THE RELEVANT RECORD TO T HE SATISFACTION OF THE AO. IN THIS VIEW OF THE MATTER, WE SET ASID E THE ORDERS OF THE AUTHORITIES BELOW AND RESTORE THE MATTER IN ISSUE T O THE FILE OF THE AO WITH A DIRECTION TO RE-DECIDE THE ISSUE IN ACCOR DANCE WITH LAW BY GIVING REASONABLE SUFFICIENT OPPORTUNITY OF BEIN G HEARD TO THE ASSESSEE. ASSESSEE IS DIRECTED TO PRODUCE COMPLETE BOOKS OF ACCOUNT AND DETAILS OF CLOSING STOCK OF PRECEDING A Y 2010-11 BEFORE AO FOR HIS VERIFICATION. SINCE, AO DOUBTED AUDIT REPORT FOR AY 2010-11, THEREFORE, IN CASE ANY NEED ARISE, AO M AY ALSO RECORD STATEMENT OF THE AUDITOR WHO HAS PREPARED THE AUDIT REPORT FOR PRECEDING AY 2010-11 FOR VERIFICATION OF THE ABOVE ISSUE. THE ASSESSEE IS DIRECTED TO COOPERATE WITH THE AO FOR F INALIZATION OF THE MATTER. IN VIEW OF THE ABOVE DISCUSSION, WE ALLOW THE APPEAL OF THE ASSESSEE FOR STATISTICAL PURPOSES. 6 ITA NO . 531/DEL/2016 8. IN THE RESULT, THE APPEAL OF ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT. SD/- SD/- (PRASHANT MAHARISHI) (BHAVNESH SAI NI) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 15/10/2019 *KAVITA ARORA COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(APPEALS) 5. DR: ITAT TRUE COPY ASSISTANT REGISTRAR ITAT NEW DELHI DATE OF DICTATION 10.10.2019 DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE DICTATING MEMBER 14.10.2019 DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE OTHER MEMBER DATE ON WHICH THE APPROVED DRAFT COMES TO THE SR. P S/PS 15.10.2019 DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE THE D ICTATING MEMBER FOR PRONOUNCEMENT 15.10.2019 DATE ON WHICH THE FAIR ORDER COMES BACK TO THE SR. PS/PS 15.10.2019 DATE ON WHICH THE FINAL ORDER IS UPLOADED ON THE WE BSITE OF ITAT 15.10.2019 DATE ON WHICH THE FILE GOES TO THE BENCH CLERK 15.1 0.2019 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 7 ITA NO . 531/DEL/2016