ACIT, CHENNAI V. P.Raju, CHENNAI

ITA 604/CHNY/2014

• Counselvise Citation: 60421714 RSA 2014
• Duration Of Justice: 1 year(s) 4 month(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-07-2015
• Appeal Filed By: Department
• Order Result: Partly Allowed
• Bench Allotted: C
• Next Hearing Date: 02-06-2015
• Assessment Year: 2007-2008
• Appeal Filed On: 12-03-2014
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: G BASKAR
• Assessee Lawyers: P RADHAKRISHNAN

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH, CHENNAI , . !' , # $% BEFORE SHRI CHANDRA POOJARI, ACCOUNTANT MEMBER AND SHRI V. DURGA RAO, JUDICIAL MEMBER ./ ITA NOS. 604 & 605 /MDS/2014 / ASSESSMENT YEARS : 2008-09 & 2009-10 M/S. AVR SWARNA MAHAL, V. THE ASSISTANT COMMISSIO NER OF NO.251- A, OMALUR ROAD, INCOME-TAX, SWARNAPURI, CENTRAL CIRCLE, SALEM 636 004. 3, GANDHI ROAD, PAN AAKFA6190K SALEM-636 007. APPELLANT) RESPONDENT) ./ ITA NO. 606/MDS/2014 / ASSESSMENT YEAR : 2009-10 M/S. SWARNAPURI AVR JEWELLERY, THE ASSISTANT COMM ISSIONER OF NO.251-A OMALUR ROAD, INCOME-TAX, SWARNAPURI, V. CENTRAL CIRCLE, SALEM-636 004. 3, GANDHI ROAD, PAN AAZFS8945H SALEM 636 007. APPELLANT) RESPONDENT) / APPELLANTS BY : SHRI G. BASKAR, ADVOCATE / RESPONDENT BY : SHRI P. RADHAKRISHNAN, JCIT ! / DATE OF HEARING : 27.05.2015 '# ! / DATE OF PRONOUNCEMENT: 19.06.2015 - - ITA 604, 605 & 606/15 2 & / O R D E R PER CHANDRA POOJARI, ACCOUNTANT MEMBER THESE APPEALS BY THE ASSESSEES ARE DIRECTED AGAI NST THE DIFFERENT ORDERS OF THE COMMISSIONER OF INCOME-TAX( APPEALS) DATED 29.1.2015. SINCE, THESE APPEALS ARE BELONG ING TO SAME GROUP OF ASSESSEE AND ISSUES INVOLVED IN THESE APPE ALS ARE INTER-RELATED, THEY ARE CLUBBED TOGETHER, HEARD TOG ETHER AND DISPOSED OFF BY THIS COMMON ORDER FOR THE SAKE OF C ONVENIENCE 2. THE GRIEVANCE OF THE ASSESSEE IN ITA NO.604/MDS/ 2015 IS WITH REGARD TO SUSTAINING THE ADDITION OF ` 2,47,628/-, WHICH REFERS TO THE GROSS PROFIT DIFFERENCE BETWEEN SERVE R COPY AND BOOKS OF ACCOUNTS. 3. THE BRIEF FACTS OF THE CASE ARE THAT THERE WAS A SURVEY UNDER SEC.133A OF THE ACT ON 29.1.2009 AT THE PREMI SES OF THE ASSESSEE. DURING THE COURSE OF SURVEY, ITEM NO.75 IN ANNEXURE ANN/BY/B&D/IMP DATED 30.1.2009, A JILEBA SOFTWARE W AS CAPTURED IN EXCEL FORMAT AND SOFT COPY GIVEN TO THE ASSESSEE. IT WAS ASKED BY THE ASSESSING OFFICER TO RECONCILE THE SAME. THERE WAS DIFFERENCE BETWEEN SERVER COPY AND BOOKS OF - - ITA 604, 605 & 606/15 3 ACCOUNT. IN THE SERVER COPY, THE TURNOVER WAS ` 817,252,574.43 AND AS PER BOOKS OF ACCOUNT, THE TURNOVER WAS ` 814,667,729.87. THE ASSESSEE EXPLAINED THAT DUE TO LARGE VOLUME OF TRANSACTIONS, IT WAS NOT POSSIBLE TO RECONCILE THE DIFFERENCE OF ` 25,84,844.56 AND ASKED THE ASSESSING OFFICER TO CON SIDER THE NET PROFIT AS INCOME OF THE ASSESSEE. HOWEVER, THE ASSESSING OFFICER CONSIDERED THE GP RATE AT 9.58% ON THE TURN OVER OF ` 25,84,844/- AND MADE ADDITION OF ` 2,47,630/-. AGAINST THIS THE ASSESSEE WENT IN APPEAL BEFORE THE COMMISSIONER OF INCOME- TAX(APPEALS) AND PLEADED THAT IT WAS A HUMAN ERROR COMMITTED BY THE STAFF AND THERE IS NO DIFFERENCE. FURTHER, IT WAS PLEADED THAT SINCE THE ASSESSEE HAS ACCEPTED THE ADDITIONAL INCOME, NO SEPARATE ADDITION MAY BE MADE TO THE STOCK ACCOUNT. THE COMMISSIONER OF INCOME-TAX(APPEALS) REJECTED THE PL EA OF THE ASSESSEE OBSERVING THAT THERE IS A DIFFERENCE BETW EEN STOCK AND PHYSICAL STOCK AT ` 25,84,844/- AND THE GROSS PROFIT OF THE TURNOVER TO BE CONSIDERED FOR ADDITION AS ` 2,47,630/-, AS ALL THE EXPENDITURE IS RELATING TO THE ASSESSEES BUSINESS, WHICH HAS BEEN DEBITED IN THE PROFIT AND LOSS ACCOUNT. AGAIN ST THIS, THE ASSESSEE IS IN APPEAL BEFORE US. - - ITA 604, 605 & 606/15 4 4. THE LD. AR SUBMITTED THAT NET PROFIT IS TO BE CO NSIDERED FOR ADDITION DUE TO STOCK DIFFERENCE WITHOUT PREJUDICE. IT IS SUBMITTED THAT THE EXCESS STOCK FOUND AS ON 29.1.2009 WAS ADM ITTED IN THE RETURN OF INCOME FOR THE ASSESSMENT YEAR 2009-10AND BEING SO, NO ADDITION IS TO BE MADE IN THE IMPUGNED ASSESSMEN T YEAR. HE FURTHER SUBMITTED THAT THE COMMISSIONER OF INCOME-T AX(APPEALS) HAS NOT APPRECIATED VARIOUS DECISIONS RELIED ON BY THE ASSESSEE. 5. ON THE OTHER HAND, THE LD. DR RELIED ON THE ORDE R OF THE COMMISSIONER OF INCOME-TAX(APPEALS). 6. WE HAVE HEARD BOTH THE SIDES AND PERUSED THE MAT ERIAL ON RECORD. IN THIS CASE, ADMITTEDLY, THERE IS A DI FFERENCE OF ` 25,84,844/-, WHEN THE ASSESSEES BOOKS OF ACCOUNT C OMPARED WITH THE STOCK. THERE IS NO DISPUTE ON THIS ISSUE. THEREFORE, THE LD. ARS SUBMISSION THAT NET PROFIT TO BE CONSIDERE D, CANNOT BE ACCEPTED, AS ALL THE EXPENDITURE IS RELATING TO THE BUSINESS OF THE ASSESSEE AND ALREADY DEBITED IN THE PROFIT AND LOSS ACCOUNT. THERE IS NO IOTA OF EVIDENCE TO SUGGEST THAT ANY FU RTHER EXPENDITURE INCURRED RELATING TO UNACCOUNTED BUSINE SS. BEING SO, WE ARE NOT IN A POSITION TO UPHOLD THE ARGUMENT OF THE LD. AR. HE ALSO SUBMITTED THAT SINCE, THE ASSESSEE HAS OFFE RED HUGE - - ITA 604, 605 & 606/15 5 INCOME OF ` 7,20,07,082/- TO THE NEXT A.Y., WHICH ALSO INCLUDE S SALE OF THIS IMPUGNED STOCK, SEPARATE ADDITION NOT TO BE MADE IN THIS A.Y. IN OUR OPINION, EACH A.Y. IS AN INDEPEND ENT A.Y. THERE IS DIFFERENCE IN STOCK WHICH SAID TO BE UNACCOUNTED IN THIS A.Y. AND ON THAT BASIS UN-ACCOUNTED SALES ARE ARRIVED FO R THIS ASSESSMENT YEAR AND THE INCOME WAS ESTIMATED BY APP LYING GP RATE, WHICH IS JUSTIFIED. WE HAVE NOT FOUND ANY ME RIT IN THE ARGUMENT OF THE ASSESSEE AND THE ORDER OF THE COMMI SSIONER OF INCOME-TAX(APPEALS) IS CONFIRMED. THIS APPEAL IS D ISMISSED. 7. THE GRIEVANCE IN ITA NO.605/MDS/2015 IS WITH REG ARD TO THE COMMISSIONER OF INCOME-TAX(APPEALS) OUGHT TO HA VE GIVEN BENEFIT FOR TELESCOPE OF ADDITION MADE IN IMMEDIATE LY PRECEDING YEAR, AS INCOME ON EXCESS SALES, AGAINST EXCESS STO CK. 8. THE FACTS OF THE CASE ARE THAT THE ASSESSEE FILE D RETURN OF INCOME FOR THE ASSESSMENT YEAR 2009-10 ADMITTING AN AMOUNT OF ` 7,20,07,082/-. THE ASSESSING OFFICER, DURING THE COURSE OF SURVEY, FOUND THAT THERE WAS DIFFERENCE BETWEEN CAS H FOUND PHYSICALLY ( ` 60,68,015/-) AND CASH AVAILABLE AS PER BOOKS( ` 53,01,000/-) AND WORKED OUT THE DIFFERENCE TO ` 67,015/-. HE ALSO FOUND THAT THE ASSESSEE HAS ALREADY OFFERED ` 7,00,000/- - - ITA 604, 605 & 606/15 6 AS INCOME OF THE ASSESSEE AND DIFFERENCE OF ` 67,015/- WAS ADDED AS INCOME OF THE ASSESSEE. THE ASSESSEE CARR IED THE MATTER BEFORE THE COMMISSIONER OF INCOME-TAX(APPEAL S) CHALLENGING THE ADDITION OF ` 67,015/-. BEFORE THE COMMISSIONER OF INCOME-TAX(APPEALS), IT WAS CHALLENGED THAT AN A MOUNT OF ` 2,47,630/- BEING THE GROSS PROFIT ADDED ON UNACCOUN TED SALES OF YEAR ENDED 31.3.2008 SHOULD HAVE BEEN REDUCED BY TH E ASSESSING OFFICER FROM THE INCOME OF THE ASSESSEE. OTHERWISE, IT WOULD AMOUNT TO DOUBLE TAXATION IN EACH OF THE T WO ASSESSMENT YEARS 2008-09 AND 2009-10. THE COMMISSI ONER OF INCOME-TAX(APPEALS) CONFIRMED THE ADDITION OF ` 67,015/- BUT HE FAILED TO GIVE ANY FINDING REGARDING TELESCOPE OF A DDITION OF ` 2,47,630/- WHICH IS ADDED AS INCOME IN THE EARLIER ASSESSMENT YEAR AND NOT ADJUDICATED GROUND NOS. 1 & 2 RAISED B EFORE HIM WHICH READS AS FOLLOWS: (1) THE COMMISSIONER OF INCOME-TAX(APPEALS) OUGHT TO HAVE GIVEN A FINDING ON THE GROUND OF APPEAL PRAYING FOR TELESCOPE OF ADDITION MADE IN IMMEDIATE PRECEDING YEAR, AS INCOME ON EXCESS SALES, AGAINST EXCESS STOCK FOUND ON 29-01-2009 (94 DTR AT 59 RAJKOT) (2) THOUGH EXCESS STOCK FOUND AS ON 29-01-2009 WAS INCLUDED IN RETURNED FOR ASSESSMENT YEAR 2009-10, T HE COMMISSIONER(APPEALS) OUGHT TO HAVE DISCUSSED THE - - ITA 604, 605 & 606/15 7 SUBMISSION MADE TO REDUCE IT BY THE AMOUNT OF SUCH ADDITION MADE IN ASSESSMENT YEAR 2008-09. THOUGH THE ASSESSEE RAISED THE ABOVE GROUNDS BEFORE HIM, THEY WERE NOT ADJUDICATED BY THE COMMISSIONER OF INCOME- TAX(APPEALS). THEREFORE, WE ARE OF THE OPINION THA T IT IS APPROPRIATE TO REMIT THE ISSUES BACK TO THE FILE OF THE COMMISSIONER OF INCOME-TAX(APPEALS) FOR ADJUDICATIO N. ACCORDINGLY, WE REMIT THIS ISSUE TO THE FILE OF THE COMMISSIONER OF INCOME-TAX(APPEALS) TO DECIDE THE ISSUE IN ACCOR DANCE WITH LAW. IN THE RESULT, ITA NO.605/MDS/2015 IS ALLOW ED FOR STATISTICAL PURPOSES. 9. THE GRIEVANCE IN ITA NO.606/MDS/2015 IS WITH REG ARD TO CONFIRMING THE ADDITION OF ` 8,79,327/- MADE TOWARD EXCESS STOCK OF JEWELLERY. 10. THE FACTS OF THE CASE ARE THAT THE ASSESSEE FIR M IS ENGAGED IN JEWELLERY BUSINESS. ACTION UNDER SEC.13 3A OF THE ACT WAS CONDUCTED ON 29.1.2009 IN THE CASE OF THE ASSES SEE AND SEARCH UNDER SEC.132 WAS CONDUCTED IN THE CASE OF S HRI A.B.SUDARSANAM, PARTNER OF M/S. SWARNAPURI AVR JEWE LLERY. IN RESPONSE TO NOTICE U/S.153C OF THE ACT, THE ASSESSE E FILED RETURN OF INCOME ON 11.10.2010 ADMITTING INCOME OF ` 1,25,25,700/-. - - ITA 604, 605 & 606/15 8 THE AO COMPLETED ASSESSMENT FOR THE ASSESSMENT YEAR 2009- 10 DETERMINING TOTAL INCOME AT ` 1,34,05,029/-, MAKING AN ADDITION OF ` 8,79,329/- ON ACCOUNT OF UNACCOUNTED SALES. AGGRIEVED, THE ASSESSEE WENT IN APPEAL BEFORE THE COMMISSIONER OF INCOME-TAX(APPEALS). 11. ON APPEAL, THE COMMISSIONER OF INCOME-TAX(APPEA LS) OBSERVED THAT THERE WAS SURVEY ACTION UNDER SEC.133 A ON 29.1.2009 AT AN EXHIBITION STALL OCCUPIED BY THE AS SESSEE. DURING THE COURSE OF SURVEY, THE PHYSICAL INVENTORY OF STOCK WAS TAKEN AND THE AO ARRIVED AT EXCESS STOCK OF THE VAL UE OF ` 8,79,329/- AFTER RECONCILING THE SAME WITH THE BOOK STOCK. THE ASSESSEE CONTENDED THAT THE ACTION OF THE AO WAS NO T JUSTIFIED IN ARRIVING AT EXCESS STOCK. HOWEVER, DURING THE COUR SE OF SCRUTINY, WHEN THE AO WAS ASKED THE ASSESSEE TO RECONCILE THE PHYSICAL STOCK FOUND WITH BOOK STOCK AS PER REGULAR BOOKS OF ACCOUNTS, THE ASSESSEE FAILED TO DO SO. AS THE AO HAS ARRIVE D AT THE EXCESS STOCK OF 697.880 GRAMS AFTER PHYSICAL VERIFI CATION FOLLOWED BY RECONCILIATION OF THE SAME WITH BOOK ST OCK AND THE ASSESSEE FAILED TO EXPLAIN THE EXCESS STOCK, THE A O WAS LEFT WITH NO OPTION BUT TO TREAT THE EXCESS STOCK AS UNEXPLAI NED - - ITA 604, 605 & 606/15 9 INVESTMENT AND ADDING THE SAME TO RETURNED INCOME. ACCORDINGLY, THE COMMISSIONER OF INCOME-TAX(APPEALS ) DISMISSED THIS GROUND OF APPEAL. AGAINST THIS, THE ASSESSEE IS IN APPEAL BEFORE US. 12. THE LD. AR SUBMITTED THAT THERE IS NO BASIS FOR MAKING ADDITION OF ` 8,79,327/- TOWARDS EXCESS STOCK OF JEWELLERY AND THE LOWER AUTHORITIES HAVE NOT PROVIDED A COPY OF P HYSICAL STOCK PREPARED ON 29.1.2009 UNDER SEC.133A OF THE ACT. T HEREFORE, HE PLEADED THAT THE ADDITION TO BE DELETED. 13. ON THE OTHER HAND, THE LD. DR RELIED ON THE ORD ER OF THE COMMISSIONER OF INCOME-TAX(APPEALS). 14. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE MATERIAL ON RECORD. IN THIS CASE, THERE WAS A SURVEY IN TH E PREMISES OF HOTEL VELAN, TIRUPPUR. THE DISCLOSED STOCK WAS 697 .880 GMS., WHICH IS AS FOLLOWS: 1) STOCK AS PER LETTER DATED 27.01.2009 26010.440 2) LESS: SALES DURING 28/01/2009 AND 29/01/2009 224.810 BALANCE STOCK 25785.630 - - ITA 604, 605 & 606/15 10 1) STOCK AS PER PHYSICAL VERIFICATION. GOLD 22 CARAT 21944.850 GOLD 18 CARAT 398.200 GOLD IN DIAMONDS 4140.460 26483.510 STOCK AS PER PHYSICAL VERIFICATION 26483.51 0 STOCK AS PER LETTER DATED 27.01.2009 1) STOCK 26010.440 LESS: SALES 224.810 25785.630 EXCESS STOCK AS ON 29.01.2009 697.880 GRM THE LD. AR WANTED THE BASIS FOR PREPARATION OF THIS EXCESS STOCK. THE STOCK WAS TAKEN IN THE PRESENCE OF THE ASSESSEE, COMPARED WITH THE LETTER DATED 27.1.2009 ISSUED BY IT. ACTUALLY, THE ENTIRE PROCESS WAS TAKEN PLAC E IN FRONT OF THE ASSESSEE, WITHOUT CHALLENGING THE DIFFERENCE OF STOCK, THE ASSESSEE WANTED TO KNOW THE BASIS FOR EXCESS ST OCK. IN OUR OPINION, THE PLEA OF THE ASSESSEE IS DEVOID OF MERIT. THE COMPUTATION STATED ABOVE IS SELF-EXPLANATORY AN D BASED ON THE PHYSICAL STOCK AS WELL AS THE LETTER I SSUED BY THE ASSESSEE. BEING SO, THERE IS NO MERIT IN THE ARGUMENT OF THE LD. AR AND THIS GROUND IS REJECTED. THE APP EAL IS DISMISSED. - - ITA 604, 605 & 606/15 11 15. IN THE RESULT, THE APPEALS OF THE ASSESSEE IN I TA NOS.604 AND 606/MDS/2015 ARE DISMISSED AND ITA NO.605/MDS/2015 IS ALLOWED FOR STATISTICAL PURPOSES . ORDER PRONOUNCED ON FRIDAY, THE 19 TH OF JUNE, 2015 AT CHENNAI. SD/- SD/- ( . $ % ) ( & ' ( ) ) *+,-./01023 45067.082290.:3 ; $< /JUDICIAL MEMBER ! $<=>>2-6?06?@ABCA. &; /CHENNAI, D$ /DATED, THE 19 TH JUNE, 2015. MPO* $E FGHG /COPY TO: 1. /APPELLANT 2. /RESPONDENT 3. I3 /CIT(A) 4. I /CIT 5. GJ% K /DR 6. %LM /GF.