ACIT CEN CIR 33, MUMBAI V. ROYAL CHAINS, MUMBAI

ITA 610/MUM/2012

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 92403 (ITAT-MUMBAI)
• Duration Of Justice: 3 year(s) 2 month(s) 17 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 17-04-2015
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: D
• Next Hearing Date: 18-03-2015
• Assessment Year: 2007-2008
• Appeal Filed On: 30-01-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: LOVE KUMAR
• Keywords: Valuation report
• Section: 143(3); 133A

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, MUMBAI BENCH D, MUMBAI BEFORE SHRI B.R BASKARAN, ACCOUNTANT MEMBER AND SHRI AMIT SHUKLA, JUDICIAL MEMBER ITA NO. 610/MUM/2012 ASSESSMENT YEAR: 2007-08 ACIT, CENTRAL CIRCLE 33 R. NO.32(2) GROUND FLOOR, AAYAKAR BHAVAN M.K. ROAD MARINE LINES MUMBAI VS. M/S. ROYAL CHAINS 203/205 BHARAT INDUSTRIAL ESTATE, TOKARSI JIVRAJ ROAD SEWREE (W), MUMBAI 400 015 PAN:AAHFR 4348 D (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI NITESH JO SHI REVENUE BY : SHRI LOVE KUMAR DATE OF HEARING : 18 .03.2015 DATE OF PRONOUNCEMENT : 17 .04.2015 O R D E R PER AMIT SHUKLA, JM: THIS APPEAL HAS BEEN PREFERRED BY THE REVENUE AGAI NST ORDER DATED 15.11.2011, PASSED BY THE LD.CIT(A)-41, MUMBA I FOR THE QUANTUM OF ASSESSMENT U/S 143(3) OF THE ACT, FOR THE A.Y. 2007-08, ON FOLLOWING GROUNDS:- 1. WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES O F THE CASE AND IN LAW, THE LD. CIT(A) WAS JUSTIFIED IN DELETIN G THE ADDITION OF RS.15,23,252/- MADE ON ACCOUNT OF ADDITIONAL INCOME DECLARED BY THE ASSESSEE WHEN THE SAME IS BASED ON THE STATEMEN T GIVEN BY THE ASSESSEE U/S 131(1) OF THE INCOME TAX ACT. 2. WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW THE CIT(A) IS JUSTIFIED IN ACCEPTING THE CLA IM OF THE ASSESSEE THAT THE DISCREPANCY IN STOCK IS AT RS.44, 76,948/-, WHEN ITA NO. 610/MUM/2012 ASSESSMENT YEAR: 2007-08 2 THE ASSESSEE HAS DECLARED A SUM OF RS.60,00,000/- ON ACCOUNT OF STOCK DISCREPANCY DURING THE SURVEY. 2. BRIEF FACTS OF THE CASE ARE THAT, THE ASSESSEE I S ENGAGED IN THE BUSINESS OF MANUFACTURING AND TRADING OF OLD JEWELL ERY ON WHOLESALE AND LABOUR JOB CHARGE BASIS. DURING THE PREVIOUS YEAR, RELEVANT TO THE A.Y. 2007-08, A SURVEY U/S 133A WAS CARRIED OUT ON 13.12 .2006 AT THE BUSINESS PREMISES OF THE ASSESSEE. THE STOCK FOUND AT THE BUSINESS PREMISES WAS INVENTORISED AND VALUED BY THE DEPARTM ENTAL VALUER. FROM THE VALUATION REPORT, IT WAS NOTICED THAT THE STOCK OF GOLD FOUND AT THE PREMISES IN DIFFERENT CARATS AND QUANTITY IN NET WE IGHT WERE AS UNDER:- I) 22 CARATS VALUED AT RS.1,11,84,007 13266.92 GMS II) 20 CARATS VALUED AT RS.77,39,961 10104.390 GMS III) 18 CARATS VALUED AT RS.1,65,16,020 23936.27 GMS IV) 24 CARATS VALUED AT RS. 5,04,960 548.870 GMS THE STOCK POSITION AS ON DATE OF SURVEY AS PER THE ITEM REGISTER WAS AS UNDER:- I) 22 CARATS 16182.643 GMS II) 20 CARATS 10433.040 GMS III) 18 CARATS 22253.222 GMS IV) 24 CARATS NIL DURING THE COURSE OF SURVEY, THE ASSESSEE WAS REQUI RED TO EXPLAIN THE DISCREPANCY STOCK OF GOLD. IN RESPONSE THE ASSESSEE SUBMITTED THAT THERE WERE CERTAIN DISCREPANCIES IN THE STOCK REGIS TER MAINTAINED AND STATED THAT IT DOES NOT DISPUTE THE QUANTIFICATION AND VALUE MADE BY THE GOVERNMENT VALUER. THE AO IN THE ASSESSMENT ORDER H AS NOTED THAT IN THE LATER STATEMENT THE ASSESSEE HAS MADE A DECLARA TION OF RS.60 LAKHS, ITA NO. 610/MUM/2012 ASSESSMENT YEAR: 2007-08 3 AS ADDITIONAL INCOME. DURING THE COURSE OF THE ASSE SSMENT PROCEEDINGS, THE AO HOWEVER, NOTICED THAT, IN THE TRADING AND P& L ACCOUNT, THE ASSESSEE HAD SHOWN THE SALES OF RS.26,84,99,256/- W HICH INCLUDES ADDITIONAL INCOME OF UNDISCLOSED GOLD OF RS.44,76,9 48/-. THE AO REQUIRED THE ASSESSEE TO EXPLAIN WHY THE FULL DISCL OSURE OF RS. 60 LAKHS WAS NOT SHOWN AS INCOME AND WHY THE DIFFERENCE OF R S.15,23,052/- [60,00,000-44,76,948] SHOULD NOT BE ADDED TO THE IN COME OF THE ASSESSEE. IN RESPONSE, THE ASSESSEE SUBMITTED THE A CTUAL WORKING OF THE DIFFERENCE WHICH WAS ONLY RS.44,76,948/- AND THE AM OUNT OFFERED DURING THE SURVEY WAS BASED ON ESTIMATE AND ON APPROXIMATE BASIS. THE ASSESSING OFFICER HOWEVER, DID NOT ACCEPT THE ASSES SEES EXPLANATION AND HELD THAT DIFFERENCE OF RS.15,23,052/- SHOULD B E ADDED TO THE INCOME OF THE ASSESSEE. 3. BEFORE THE LD. CIT(A), THE ASSESSEE SUBMITTED TH AT EFFECT OF QUANTITATIVE DISCREPANCIES FOUND AT THE TIME OF SUR VEY WAS TABULATED AS UNDER:- KARATAGE QUANTITY AS PER STOCK REGISTER QUANTITY AS PER PHYSICAL STOCK VERIFIED BY IT DEPT. VALUER DISCREPANCIES FOUND IN STOCK DECLARED AS AN ADDITIONAL INCOME VALUATION (RS.) 18 22253.192 GMS 23936.270 GMS 1683.078 GMS 12,62,287.00 20 10433.040 GMS 10104.390 GMS 328.650 GMS 2,51,746.00 22 16182.706 GMS 13266.920 GMS 2915.786 GMS 24,57,955.00 24(.995) 0 548.870 GMS 548.870 GMS 5,04,960.00 TOTAL 44,76,948.00 ITA NO. 610/MUM/2012 ASSESSMENT YEAR: 2007-08 4 IT WAS SUBMITTED THAT THE ASSESSEE NEVER AGREED FOR QUANTUM OF DISCLOSURE OF RS. 60 LAKHS AT THE TIME OF FIRST STA TEMENT RECORDED ON 13.12.2006. THE SECOND STATEMENT WHICH WAS RECORDED LATER ON, THE ASSESSEE HAD MADE A DECLARATION OF RS. 60 LAKHS AS ADDITIONAL INCOME WHICH WAS PURELY BASED ON APPROXIMATION. THE ASSESS EE SUBMISSIONS ALONG WITH THE RELEVANT STATEMENT RECORDED AT THE T IME OF SURVEY HAS BEEN REPRODUCED FROM PAGES 3 TO 4 OF THE APPELLATE ORDER. THE LD. CIT(A) HAD CALLED FOR THE REMAND REPORT OF THE AO I N WHICH THE AO REITERATED THE CONTENTS GIVEN BY THE EARLIER AO IN THE ASSESSMENT ORDER. IN REJOINDER, THE ASSESSEE SUBMITTED THAT, DURING T HE COURSE OF SURVEY THE DISCREPANCY OF STOCK CONFRONTED TO THE ASSESSEE AND FOUND WAS ONLY RS.44,76,948/- WHICH WAS OFFERED AS ADDITIONAL INCO ME AT THE TIME OF FIRST STATEMENT ITSELF. AT THAT TIME NOWHERE THE AS SESSEE DECLARED THE AMOUNT OF RS.60 LAKHS. IN THE SECOND STATEMENT RECO RDED BY THE AO, IN THE QUESTION ITSELF THE DEPARTMENT HAS WRITTEN THE QUESTION THAT ASSESSEE HAS DECLARED RS. 60 LAKHS AND ASKED THE AS SESSEE TO CONFIRM THE SAME. IT IS IN RESPONSE TO THIS QUESTION, THE A SSESSEE STATED THAT HE IS CONFIRMING THE ADDITIONAL INCOME OF RS. 60 LAKHS . THUS, THE DIFFERENCE OF ACTUAL STOCK FOUND CAN ONLY BE TREATED AS ADDITI ONAL INCOME OFFERED. THE LD. CIT(A) DULY APPRECIATED THE ASSESSEES CONT ENTION AND DELETED THE SAID ADDITION ON ACCOUNT OF SAID DIFFERENCE AFT ER OBSERVING AND HOLDING AS UNDER:- I HAVE PERUSED THE STATEMENT RECORDED DURING THE C OURSE OF SURVEY AND IT IS NOTICED THAT THE CONTENTION OF THE A.R. OF THE APPELLANT IS TRUE THAT THE ASSESSEE HAS DECLARED TH E DISCREPANCY FOUND DURING THE COURSE OF SURVEY AMOUNTING TO RS. 44,76,948/- AND NO WHERE DECLARED RS. 60 LAKHS IN THE ORIGINAL STATEMENT. ONLY IN THE SECOND STATEMENT, THE AO HAS CONFRONTED THAT YOU HAVE DECLARED RS.60 LAKHS WHICH WAS CONFIRMED BY TH E ASSESSEE. ON THE FACTS OF THE CASE, THERE IS NO DISPUTE THAT THE DISCREPANCY ITA NO. 610/MUM/2012 ASSESSMENT YEAR: 2007-08 5 FOUND WAS ONLY RS.44,76,948/- WHICH WAS DECLARED BY THE ASSESSEE IN THE ORIGINAL STATEMENT. NO OTHER DISCRE PANCY IN ANY MANNER CONFRONTED TO THE ASSESSEE, THEREFORE THE QU ESTION OF DECLARATION OF RS. 60 LAKHS DOES NOT ARISE. EVEN IN THE REMAND REPORT, THE A.O. HAS RELIED ON ONLY ON THE SECOND S TATEMENT RECORDED WHERE THE ASSESSEE HAS CONFIRMED THE DECLA RATION OF RS.60 LAKHS. NO OTHER DISCREPANCY WAS POINTED OUT E XCEPT THE AMOUNT WRITTEN IN THE STATEMENT OF RS. 60 LAKHS. SI NCE THERE IS NO OTHER DISCREPANCY EXCEPT THE STOCK, THEREFORE, NO A DDITION IS CALLED FOR ON THE BASIS OF SECOND STATEMENT WHICH I S ALSO NOT BASED ON ANY TRUE FACT BECAUSE THE ASSESSEE HAS NOT DECLARED RS. 60 LAKHS IN THE ORIGINAL STATEMENT. KEEPING IN VIEW ALL THESE FACTS AND CIRCUMSTANCES, IT IS HELD THAT THE ADDITION MAD E BY THE A.O. IS WITHOUT ANY DISCREPANCY POINTED OUT, THEREFORE N OT SUSTAINABLE, HENCE DELETED. GROUND OF APPEAL IS ALLOWED. 4. AFTER HEARING BOTH THE PARTIES AND ON PERUSAL OF THE FINDINGS GIVEN IN THE IMPUGNED ORDER AND MATERIAL PLACED BEFORE US , WE FIND THAT DURING THE COURSE OF THE SURVEY PROCEEDINGS ON 13.1 2.2006, IN THE STATEMENT RECORDED ON OATH, THE ASSESSEE WAS CONFRO NTED WITH THE DISCREPANCY IN THE STOCK AS PER THE STOCK REGISTER MAINTAINED BY IT AND THE QUANTIFICATION AND VALUATION MADE BY THE GOVERN MENT VALUER. AT THAT TIME, THE EXACT AMOUNT OF DISCREPANCY WAS NOT POINT ED OUT EITHER BY THE DEPARTMENT OR WAS ACCEPTED BY THE ASSESSEE. THIS IS EVIDENT FROM THE STATEMENT RECORDED ON THE DATE OF SURVEY. ON THE SU BSEQUENT DATE, THE ITO, VIDE QUESTION NO. 3 RAISED THE QUESTION WHICH READS AS UNDER:- Q. DURING THE CASE OF SURVEY PROCEEDINGS YOU ARE M ADE DECLARATION AT RS.60,00,000/-( SIXTY LAKHS) AS ADDI TIONAL INCOME FOR THE CURRENT FINANCIAL YEAR PLEASE CONFIRMED THE SAME. ANS. YES, I DO CONFIRM THAT I HAVE MADE DECLARATIO N OF RS.60,00,000/- (SIXTY LAKHS) AS ADDITIONAL INCOME F OR THE CURRENT FINANCIAL YEAR AND IN RESPECT OF THE SAME. I HAVE A LREADY HANDED OVER THE CHEQUES OF RUPEES TO THE SURVEY PARTY AS U NDER:- DATE CHEQUE NO. AMOUNT 15.12.2006 823563 12,91,500 15.03.2007 823564 8,67,000 ITA NO. 610/MUM/2012 ASSESSMENT YEAR: 2007-08 6 DURING THE COURSE OF THE ASSESSMENT PROCEEDINGS THE ASSESSEE HAS GIVEN THE EXACT EFFECT OF THE QUANTITATIVE DISCREPA NCIES WHICH HAS BEEN TABULATED IN THE FORGOING PARAGRAPH. SUCH DISCREPAN CY WORKS OUT TO RS. 44,76,948/- ONLY WHICH HAS BEEN OFFERED BY THE ASSE SSEE AS ADDITIONAL INCOME. ONCE SUCH A FACTUM OF ACTUAL DISCREPANCY HA S NOT BEEN DISPUTED AND NO DISCREPANCY WHATSOEVER HAS BEEN FOU ND EITHER AT THE TIME OF SURVEY OR DURING THE COURSE OF ASSESSMENT P ROCEEDINGS, THEN, NO ADDITION ON ACCOUNT OF DIFFERENCE CAN BE MADE, SIMP LY BECAUSE THE ASSESSEE AGREED FOR ADDITIONAL INCOME OF RS. 60 LAK HS IN RESPONSE TO A QUESTION RAISED BY THE ITO ON A DIFFERENT DATE. THU S, THE FINDING RECORDED BY THE LD. CIT(A) AS ABOVE THAT NO OTHER D ISCREPANCY HAS BEEN FOUND EXCEPT FOR THE STOCK WHICH HAS BEEN PROPERLY QUANTIFIED AND INCOME HAS BEEN OFFERED ON THE BASIS OF SUCH QUANTI FICATION OF DISCREPANCY, NO FURTHER ADDITION CAN BE SUSTAINED. FURTHER DECLARATION OF RS. 60 LAKHS WAS NOT MADE BY THE ASSESSEE IN THE OR IGINAL STATEMENT AND ALSO IT DOES NOT HAVE ANY BASIS ON MATERIAL TO SUBS TANTIATE. ACCORDINGLY, THE ORDER OF THE LD. CIT(A) IS AFFIRMED AND THE GRO UND RAISED BY THE REVENUE IS DISMISSED. 5. IN THE RESULT, THE APPEAL FILED BY THE REVENUE IS DISMISSED . ORDER PRONOUNCED IN THE OPEN COURT ON THIS 17 TH DAY OF APRIL, 2015. S D/- SD/- (B.R. BASKARAN) (AMIT SHUKLA) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI, DATED: 17.04.2015 *SRIVASTAVA COPY TO: THE APPELLANT THE RESPONDENT THE CIT, CONCERNED, MUMBAI THE CIT(A) CONCERNED, MUMBAI THE DR D BENCH // TRUE COPY// BY ORDER ITA NO. 610/MUM/2012 ASSESSMENT YEAR: 2007-08 7 DY/ASSTT. REGISTRAR, ITAT, MUMBAI. ITA NO. 610/MUM/2012 ASSESSMENT YEAR: 2007-08 8