Smt. Konatala Rajyalakshmi, Anakapalle V. The Income Tax , Ward-1, Anakapalle

ITA 554/VIZ/2019

• Counselvise Citation: [2021] 109 COUNSELVISE.COM (IT) 8829 (ITAT-VISAKHAPATNAM)
• Duration Of Justice: 1 year(s) 3 month(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 12-01-2021
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: SMC
• Assessment Year: 2012-2013
• Appeal Filed On: 23-09-2019
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: B RAMA KRISHNA
• Keywords: Set aside
• Section: 201; 13

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL, VISAKHAPATNAM BENCH, VISAKHAPATNAM (THROUGH WEB - BASED VIDEO CONFERENCING PLATFORM) , . . , BEFORE SHRI N.K.CHOUDHRY, JUDICIAL MEMBER & SHRI D.S. SUNDER SINGH, ACCOUNTANT MEMBER ./ I.T. A.NO. 554 /VIZ/20 19 ( / A SSESSMENT Y EAR : 20 1 2 - 1 3 ) SMT.KONATALA RAJYALAKSHMI D.NO.16 - 3 - 50, DIBBAVEEDHI GAVARAPALEM ANAKAPALLI [PAN :A RMPK0702G ] VS . INCOME TAX OFFICER WARD - 1 ANAKAPALLI ( / APPELLANT) ( / RESPONDENT) / APPELLANT BY : SHRI G.V.N.HARI , AR / RESPONDENT BY : S HRI B.RAMA KRISHNA, DR / DATE OF HEARING : 05 . 0 1 .202 1 / DATE OF PRONOUNCEMENT : 12 .01. 202 1 / O R D E R P ER SHRI D.S.SUNDER SINGH, ACCOUNTANT MEMBER : TH IS APPEAL IS FILED BY THE ASSESSEE AGAINST THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS) [CIT(A)] - 2 , GUNTUR IN ITA NO.10 20 7 / GNT /CIT(A) - 2 /201 5 - 16 DATED 2 7 . 0 6 .20 19 FOR THE ASSESSMENT YEAR (A.Y.) 201 2 - 1 3 . 2. ALL THE GROUNDS OF APPEAL ARE RELATED TO THE ADDITION OF RS. 7,69,085/ - TOWARDS THE DIFFERENCE IN CLOSING STOCK OF A.Y.2011 - 12 AND OPENING STOCK OF A.Y.2012 - 13. 2 I.T.A. NO . 554 /VIZ/20 19 , A.Y.201 2 - 1 3 SMT.KONATALA RAJYALAKSHMI, ANAKAPALLI 3. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE IS AN INDIVIDUAL, ENGAGED IN THE BUSINESS OF WHOLESALE JAGGERY. FOR THE A.Y.2012 - 13, THE ASSESSEE FILED THE RETURN OF INCOME DECLARING TOTAL IN COME OF RS.3,03,628/ - . T HE CASE WAS SELECTED FOR SCRUTINY AND DURING THE COURSE OF SCRUTINY PROCEEDINGS , THE ASSESSING OFFICER (AO) FOUND THAT THE ASSESSEE ADMITTED THE CLOSING STOCK OF RS.3,25,43,089/ - AS ON 31.03.2011 RELEVANT TO THE A.Y. 2011 - 12, WHERE AS, THE OPENING STOCK FOR THE A.Y.2012 - 13 WAS TAKEN AT RS.3,17,74,004/ - , WHICH RESULTED IN DIFFERENCE OF RS.7,69,085/ - (SHORT ADMISSION) . THE PREVIOUS YEARS CLOSING STOCK SHOULD BE OPENING STOCK OF THE IMPUGNED ASSESSMENT YEAR. THE ASSESSEE WAS REQUESTED TO SUBMIT THE RECONCILIATION FOR THE STOCK DIFFERENCE FOR WHICH THE ASSESSEE FAILED TO RECONCILE THE DIFFERENCE. THEREFORE, THE AO TREATED THE AMOUNT OF RS.7,69,085/ - AS INCOME AND BROUGHT TO TAX. 4. AGAINST WHICH THE ASSESSEE WENT ON APPEAL BEFORE THE CIT(A) AND ARGUED THAT OUTSIDE PARTIES STOCK WAS ALSO LYING IN THE PREMISES OF THE ASSESSEE, WHICH WAS TAKEN AS THEIR OWN STOCK DUE TO INADVERTENT MISTAKE OF THE STAFF. T HE LD.CIT(A) CONFIRMED THE ORDER OF THE AO O BSERVING THAT THE ASSESSEE FAILED TO PROVE THE STOCK OF OTHER S KEPT IN HER GODOWN . AGAINST WHICH THE ASSESSEE FILED APPEAL BEFORE THIS TRIBUNAL. 3 I.T.A. NO . 554 /VIZ/20 19 , A.Y.201 2 - 1 3 SMT.KONATALA RAJYALAKSHMI, ANAKAPALLI DURING THE APPEAL HEARING, THE LD.AR SUBMITTED THAT THE ASSESSEE WAS HANDLING JAGGERY ON HIS OWN AS WELL AS CUSTOMERS JAGGERY ON COMMISSION BASIS. AS ON 31.03.2011, THE ASSESSEES OWN STOCK WAS RS.3,17,74,004/ - AND THE STOCK PERTAINING TO THE CUSTOMERS L YING IN THE GODOWN WAS RS.7,69,085/ - , THUS, THE TOTAL STOCK WAS RS.3,25,43,089/ - INCLUDING THE CUSTOMERS STOCK. THE LD.AR FURTHER SUBMITTED THAT THE COMPUTER OPERATOR INADVERTENTLY ENTERED THE ENTIRE STOCK OF RS.3,25,43,250/ - IN THEIR BOOKS INSTEAD OF RS .3,17,74,004/ - . THUS, THERE WAS DIFFERENCE OF RS.7,69,085/ - , WHICH WAS SHORT ADMISSION AND THE SAME CANNOT LEAD TO SUPPRESSION OF INCOME, HENCE, REQUESTED TO DELETE THE ADDITION. THE LD.AR FURTHER SUBMITTED THAT THE EXCESS CLOSING STOCK INCREASES THE INCOM E AND SHORT CLOSING STOCK IN THE SUBSEQUENT YEAR ALSO INCREASES THE INCOME, THUS, ARGUED THAT BY CLAIMING THE SHORT OPENING STOCK RS.3,17,74,004/ - , IN THE IMPUGNED ASSESSMENT YEAR, THE ASSESSEE HAS REDUCED THE EXPENDITURE AND INCREASED THE INCOME AND HENC E, SUBMITTED THAT THERE IS NO CASE FOR MAKING THE ADDITION, ACCORDINGLY , REQUESTED TO DELETE THE ADDITION. THE LD.AR FURTHER STATED THAT EVEN IF IT IS PRESUMED THAT THE ASSESSEE HAS UNDERSTATED THE OPENING STOCK, THE DIFFERENCE IN THE CLOSING STOCK AND TH E OPENING STOCK REQUIRED TO BE CONSIDERED AS SALES 4 I.T.A. NO . 554 /VIZ/20 19 , A.Y.201 2 - 1 3 SMT.KONATALA RAJYALAKSHMI, ANAKAPALLI OUTSIDE THE BOOKS OF ACCOUNTS AND O NLY THE PROFIT ELEMENT CONSTITUTES INCOME . 5. ON THE OTHER HAND, THE LD.DR ARGUED THAT THE ASSESSEE HAS ADMITTED THE CLOSING STOCK OF RS.3,25,43,089/ - IN THE IMMEDIATEL Y PRECEDING ASSESSMENT YEAR AND CLAIMED THE OPENING STOCK OF RS.3, 17 ,74,004/ - , THUS THERE WAS DIFFERENCE OF RS.7,69,085/ - WHICH THE ASSESSEE IS UNDER OBLIGATION TO RECONCILE. THOUGH THE ASSESSEE CLAIMED THAT THE STOCK WORTH RS.7,69,085/ - WAS BELONGING TO THE OUTSIDE PARTIES LYING IN THE GODOWN, THE SAME WAS NOT RECONCILED BY THE ASSESSEE, THEREFORE, THE AO RIGHTLY MADE THE ADDITION WHICH THE LD.CIT(A) HAS CONFIRMED. THEREFORE, ARGUED THAT NO INTERFERENCE IS CALLED FOR IN TH E ORDER OF THE LD.CIT(A) . 6. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE MATERIAL PLACED ON RECORD. THE CONTENTION OF THE ASSESSEE IS THAT OUT OF CLOSING STOCK OF RS.3,25,40,089/ - , STOCK WORTH RS.3,17,74,004/ - WAS OWN STOCK AND THE BALANCE WAS PERTAINING TO THE CUSTOMERS. BEFORE THE LD.CIT(A), NO EVIDENCE WAS PLACED ON RECORD TO SHOW THAT THE STOCK OF RS.7,69,085/ - WAS BELONGING TO THE CUSTOMERS. NO EVIDENCE WAS PLACED BEFORE US ALSO TO PROVE THAT THE STOCK OF OTHER PARTIES WAS KEPT IN HIS GODOWN. THE ASSESSEE ALSO DID NOT 5 I.T.A. NO . 554 /VIZ/20 19 , A.Y.201 2 - 1 3 SMT.KONATALA RAJYALAKSHMI, ANAKAPALLI SHOW THE RELEVANT CONTRA ENTRIES IN RESPECT OF STO CKS BELONGING TO OTHER PARTIES IN THE BOOKS AND THE FINANCIAL STATEMENTS . IT IS THE MANDATORY OBLIGATION OF THE ASSESSEE TO PROVE THE CORRECTNESS OF CLAIM WITH RELEVANT EVIDENCES AND THE BOOKS. SINCE THE ASSESSEE FAILS TO PROVE THE CORRECTNESS OF THE CLAIM, THE ISSUE NEEDS TO BE VERIFIED BY THE AO WITH RELEVANT EVIDENCES AND C ONTRA ENTRIES TO VERIFY GENUINE NE SS OF THE ASSESSEES CL A IM WITH REGARD TO THE STOCK OF DIFFERENCE . THEREFORE, WE REMIT THE MATTER BACK TO THE FILE OF THE AO WITH A DIRECTION TO EXAMINE THE ISSUE AFRESH AND DECIDE THE SAME ON MERITS. AS STATED BY THE LD. AR DURING THE APPEAL HEARING, IN CASE, THE ASSESSEE FAILS TO ESTABLISH THAT STOCK DIFFERENCE OF RS.7,69,085/ - BELONG ED TO THE CUSTOMERS, THE ASSESSEES ARGUMENT TO TREAT THE SALES OUTSIDE THE BOOKS OF ACCOUNTS AND TAXING THE PROFIT ON SALES OUTSIDE THE BO OKS OF ACCOUNTS MAY BE CONSIDERED ON THE FACTS AND THE CIRCUMSTANCES OF THE CASE. HOWEVER, WE KEEP THE ISSUE OPEN FOR RECONSIDERATION OF THE AO WITH RELEVANT MATERIAL OR RECORDS. WITH THE ABOVE OBSERVATION, WE SET ASIDE THE ORDERS OF THE LOWER AUTHORITIE S AND REMIT THE ISSUE BACK TO THE FILE OF THE AO FOR DENOVO CONSIDERATION. 7 . IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSE . 6 I.T.A. NO . 554 /VIZ/20 19 , A.Y.201 2 - 1 3 SMT.KONATALA RAJYALAKSHMI, ANAKAPALLI ORDER PRONOUNCED IN THE OPEN COURT ON 12 TH JANUARY, 2021 SD/ - SD/ - ( ) ( . . ) ( N.K.CHOUDHRY ) ( D.S.SUNDER SINGH) / JUDICIAL MEMBER /ACCOUNTANT MEMBER /DATED : 12 . 01.2021 L.RAMA, SPS / COPY OF THE ORDER FORWARDED TO : - 1 . / THE ASSESSEE SMT.KONATALA RAJYALAKSHMI , D.NO.16 - 3 - 50, DIBBAVEEDHI, GAVARAPALEM, ANAKAPALLI 2 . / THE REVENUE INCOME TAX OFFICER, WARD - 1, ANAKAPALLI 3. THE PR. COMMISSIONER OF INCOME TAX , VISAKHAPATNAM 4. THE COMMISSIONER OF INCOME TAX (APPEALS) - 2 , GUNTUR 5 . , , / DR, ITAT, VISAKHAPATNAM 6 . / GUARD FILE / BY ORDER // TRUE COPY // SR. PRIVATE SECRETARY ITAT, VISAKHAPATNAM