M/s. Sahu and Sons, Jamshepur V. ITO, Jamshepur

ITA 58/RAN/2013

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 85430 (ITAT-RANCHI)
• Duration Of Justice: 1 year(s) 6 month(s) 24 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 24-11-2014
• Appeal Filed By: Assessee
• Bench Allotted: DB
• Assessment Year: 2008-2009
• Appeal Filed On: 30-04-2013
• Court: TRIBUNAL
• Department Lawyers: RAKESH DAS JCITLD
• Assessee Lawyers: S K PODDAR; M K CHOUDHURY S LD ARS
• Section: 133A; 69

Judgement Text

INCOME TAX APPELLATE TRIBUNAL, CIRCUIT BENCH, RANCHI BEFORE HON'BLE SHRI H.L. KARWA, PRESIDENT , AND HON'BLE SHRI B.R. BASKARAN, ACCOUNTANT M EMBER ITA NO . 58 /RAN/201 3 A.Y 200 8 - 09 M/S. SAHU & SONS, JAMSHEDPUR VS. I. T.O WARD 3(4), JAMSHEDPUR PAN: A A Q FS9422G ( APPELLANT ) ( RESPONDENT ) FOR THE APPELLANT : S/ SH RI S.K PODDAR & M.K CHOUDHURY, ADVOCATES, LD.ARS FOR THE RESPONDENT : SHRI RAKESH DAS , JCIT/LD.DR DATE OF HEARING : 24 - 11 - 2014 DATE OF PRONOUNCEMENT: 24 - 11 - 201 4 ORDER SHRI B.R. BASKARAN, ACCOUNTANT MEMBER : TH E APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER DATED 27 - 02 - 2013 PASSED BY LD. CIT(A) , JAMSEHEPUR AND IT RELATES TO THE ASSESSMENT YEAR 2008 - 09. 2. THE ASSESSEE IS AGGRIEVED BY THE DECISION OF THE LD.CIT(A) IN CONFIRMING THE ADDITION MADE BY THE ASSESSING OFFICER TO THE EXTENT OF RS. 4,07,938/ - . 3. WE HEARD THE PARTIES AND PERUSED THE RECORDS. THE FACTS RELATING TO THE ABOVE SAID ADDITION ARE STATED IN BRIEF. THE REVENUE CARRIED OUT SURVEY OPERATION AT THE BUSINESS PREMISES OF THE ASSESSEE ON 19 - 03 - 2008 U/S. 133A OF THE ACT . DURING THE COURSE OF SURVEY INVENTORY OF STOCK WAS TAKEN AND THE VALUE OF PHYSICAL STOCK FOUND AT THAT TIME WAS DETERMINED AT RS.21,74,043/ - . IN THE STATEMENT TAKEN DURING THE COURSE OF SURVEY , THE ASSESSEE ADMITTED THAT THE VALUE OF BOOKS STOCK SHOULD BE RS.14 LAKHS . THUS, THERE WA S A DIFFERENCE OF RS. 7 ,74,043/ - IN THE VALUE OF PHYSICAL STOCK AND BOOK STOCK . 2 ITA NO. 58/ /RAN/13 M/S. SAHU & SONS, 4 . AT THE TIME OF ASSESSMENT PROCEEDINGS , THE ASSESSING OFFICER PREPARED A TRADING ACCOUNT FOR THE PERIOD FROM 1 - 4 - 07 TO 19 - 03 - 08 BY ADOPTING THE GROSS PROFIT RATE AT 10.46% , BEING THE GROSS PROFIT RATE SHOWN BY THE ASSESSEE IN THE IMMEDIATELY PRECEDING YEAR . ACCORDI NGLY, T HE ASSESSING OFFICER ARRIVED AT THE BOOK VALUE OF THE CLOSING STOCK AT RS.28,67,507/ - . WE HAVE ALREADY NOTICED THAT VALUE OF PHYSICAL STOCK AS ON 19 - 03 - 08 WAS DETERMINED AT RS.21,74,043/ - . THE ASSESSING OFFICER TREATED THE DIFFERENCE OF RS.6,93,464 (RS. 28,67,507 - 21,74,043) AS INCOME OF THE ASSESSEE U/S.69 OF THE ACT. 5 . IN THE APPELLATE PROCEEDINGS , THE LD.CIT(A) TOOK THE VIEW THAT THE ASSESSING OFFICER HAS ERRED IN MAKING AN ADDITION OF RS.6,93,464/ - AS UNDISCLOSED INVESTMENT, S INCE THE VALUE OF P HYSICAL STOCK WAS LESS THAN THE VALUE OF BOOK STOCK . T HE LD.CIT(A) NOTICED THAT THE GROSS PROFIT AMOUNT DETERMINED BY THE ASSESSING OFFICER BY ADOPTING THE GROSS PROFIT RATE AT 10.46% WAS OF RS.4,07,938/ - . THE LD.CIT(A) TOOK THE VIEW THAT THE ADDITION SHOULD BE RESTRICTED TO GROSS PROFIT AMOUNT. ACCORDINGLY , HE DIRECTED THE ASSESSING OFFICER TO RESTRICT THE ADDITION TO RS.4,07,938/ - . STILL AGGRIEVED, THE ASSESSEE HAS FILED THE APPEAL BEFORE US. 6 . WE HAVE SEEN EARLIER THAT T HE LD.CIT(A) HAS NOTICED THAT THE VALUE OF PHYSICAL STOCK FOUND AT THE TIME OF SURVEY WAS LESS THAN THE VALUE OF BOOK STOCK DETERMINED BY THE ASSESSING OFFICER, MEANING THEREBY THERE WAS ACTUALLY SHORTAGE OF STOCK. HENCE, IN OUR VIEW , THE LD CIT(A) WAS JUSTIFIED IN HOLDING THAT THE PROVISIONS OF SECTION 69 OF THE ACT RELATING TO THE UNDISCLOSED INVESTMENT SHALL NOT APPLY TO THE SHORTAGE OF STOCK. 7 . AT THE TIME OF HEARING , THE LD.A. R SUBMITTED THAT SHORTAGE OF STOCK WAS ON ACCOUNT OF SALE S EFFECTED BY THE ASSESSEE, WHICH WAS PENDING TO BE ACCOUNTED IN THE BOOKS OF ACCOUNT. HE FURTHER SUBMITTED THAT THE ASSESSEE HAD SUPPLIED CEMENT TO A CONCERN NAMED M/S. SHANKAR PROMOTERS & 3 ITA NO. 58/ /RAN/13 M/S. SAHU & SONS, DEVELOPER S ON APPROVAL BASIS AND THE GOODS REACH ED THE ABOVE SAID PART Y DIRECTLY FROM THE SUPPLIER . A CCORDINGLY, THE LD A.R TRIED TO EXPLAIN THE SHORTAGE OF STOCK. HOWEVER, THE LD D.R SUPPORTED THE ORDER OF LD CIT(A). 8. IN OUR VIEW, THE EXPLANATION OF LD A.R FOR SHORTAGE OF STOCK IS HARD TO BELIEVE , SINCE THE SYSTEM OF SALE OF CEMENT ON SALE OR RETURN BASIS IS NOT HEARD OF. UNDER THESE CIRCUMSTANCES, WE ARE OF THE VIEW THAT THIS ISSUE WILL MEET THE ENDS OF JUSTICE IF THE ADDITION IS RESTRICTED TO THE GROSS PROFIT AMOUNT APPLICABLE TO SHORTAGE OF STOCK . AS THERE IS A POSSIBILITY THAT ASSESSEE C OULD HAVE SOLD THE GOODS OUTSIDE THE BOOKS OF ACCOUNT. THE LD.AR ALSO FAIRLY AGREED TO THE ABOVE SAID VIEW. ACCORDINGLY, WE ESTIMATE THE GROSS PROFIT O N THE SHORTAGE VALUE OF STOCK AT RS.70,000/ - AND DIRECT THE ASSESSING OFFICER TO RESTRICT THE ADDITION TO THE ABOVE SAID AMOUNT. THE ORDER OF THE LD.CIT(A) STANDS MODIFIED. 9 . IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS PARTLY ALLOWED . ORDER PRONOUNCED IN THE OPEN COURT ON 24 - 11 - 2014 SD/ - SD/ - [ H.L. KARWA ] [ B.R. BASKARAN ] PRESIDENT ACCOUNTANT MEMBER DT. 24 - 11 - 2014 PLACE : RANCHI PP, SR. PS COPY OF THE ORDER FORWARDED TO: 1. THE APPELLANT : M/S. SAHU & SONS, PARSU DH,JAMSHEDPUR, JHARKHAND. 2 THE RESPONDENT: I.T.O WARD 3(4), JSR 3. .THE CIT, 4.THE CIT(A), 5.DR, ITAT CIRCUIT BENCH, RANCHI 4 ITA NO. 58/ /RAN/13 M/S. SAHU & SONS, 6. GUARD FILE. TRUE COPY, BY ORDER, ASSTT. REGISTRAR 5 ITA NO. 58/ /RAN/13 M/S. SAHU & SONS, 1. DATE OF DICTATION ............. 24 - 11 - 2014 ....................... 2. DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE DICTATING MEMBER ........................OTHER MEMBER ....... 2 6 7 - 11 - 2014 ........................ 3. DATE ON WHICH THE APPROVED DRAFT COMES TO THE SR. P.S./P.S. ..................... 4. DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE THE DICTATING MEMBER FOR PRONOUNCEMENT.................................. 24 - 11 - 2014 ................................................... 5. DATE ON WHICH THE FAIR ORDER C OMES BACK TO THE SR. P.S./P.S ................ 6. DATE ON WHICH THE FILE GOES TO THE BENCH CLERK ....................................... 7. DATE ON WHICH THE FILE GOES TO THE HEAD CLERK ......................................... 8. THE DATE ON WHICH THE FIL E GOES TO THE ASSISTANT REGISTRAR FOR SIGNATURE ON THE ORDER ................................................................................................. 9. DATE OF DESPATCH OF THE ORDER ..............................................................