D.C.I.T.,CIR-28, KOLKATA, Kolkata V. DINESH KHANNA, Kolkata

ITA 611/KOL/2009

• Counselvise Citation: [2010] 136 COUNSELVISE.COM (IT) 2531 (ITAT-KOLKATA)
• Duration Of Justice: 1 year(s) 2 month(s) 9 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-06-2010
• Appeal Filed By: Department
• Bench Allotted: C
• Next Hearing Date: 25-05-2010
• Assessment Year: 2005-2006
• Appeal Filed On: 20-04-2009
• Court: TRIBUNAL
• Department Lawyers: K HARIPRASAD
• Assessee Lawyers: G P SEN
• Keywords: Principle of natural justice
• Section: 133A

Judgement Text

1 , C , , IN THE INCOME TAX APPELLATE TRIBUNAL, BENCH- C , KO LKATA [ . . . . . . . . , , , , , . .. . . .. . , , , , ! ] BEFORE SHRI D.K. TYAGI, JUDICIAL MEMBER & SRI C.D. RAO, ACCOUNTANT MEMBER ' ' ' ' / ITA NO. 611 (KOL) OF 2009 #$% &' / ASSESSMENT YEAR 2005-06 DY.COMMISSIONER OF INCOME-TAX, CIRCLE-28, KOLKATA. SHRI DINESH KHANNA, KOLKATA. (PAN-AGAPK4352R) (*+ / APPELLANT ) - $ - - VERSUS -. (.*+/ RESPONDENT ) *+ / 0 / FOR THE APPELLANT: / SRI K. HARI PRASAD .*+ / 0 / FOR THE RESPONDENT: / SRI G.P. SEN 1 / ORDER ( . .. . . .. . ), ! (C.D. RAO), ACCOUNTANT MEMBER : THIS APPEAL BY THE REVENUE IS DIRECTED AGAINST TH E ORDER DATED 22.01.2009 OF LD. C.I.T.(A)-XIV, KOLKATA PERTAINING TO ASSESSMENT YEA R 2005-06. THE REVENUE HAS RAISED SEVERAL GROUNDS WHICH ARE ALL DIRECTED AGAINST DELE TION OF ADDITION OF RS.2,82,48,434/- ON ACCOUNT OF SUPPRESSION OF SALES. 2. THE ASSESSEE IS OWNER OF PROPRIETARY CONCERN M/ S. B.B. ENTERPRISES, WHICH IS A WHOLE-SELLER OF INDIA MADE FOREIGN LIQUOR. THE PURC HASES ARE MADE DIRECTLY FROM THE MANUFACTURERS AND SOMETIMES FROM OTHER WHOLE-SELLER S. THE STOCK IS VALUED BY THE ASSESSEE AT COST. PURCHASES MADE DIRECTLY FROM MANU FACTURERS ARE KEPT IN BONDED WAREHOUSE UNDER CONTROL OF EXCISE DUTY AND THE STOC KS OUTSIDE THE BONDED WAREHOUSE ARE LABELED AS DUTY PAID STOCKS. ON 30.09.2004 A SU RVEY OPERATION U/S. 133A OF THE ACT WAS CONDUCTED AT THE BUSINESS PREMISES OF THE ASSES SEE AND THE A.O. NOTED THAT THE VALUE OF STOCKS WAS TAKEN ON 30.09.2004 & 01.10.2004 AND IT WAS ALSO FOUND THAT UNDERBOND STOCKS WERE VALUED AT RS. 1,07,82,840/- AND DUTY PAID STOCKS WAS VALUED AT RS.42,85,271!-. THEREFORE, THE TOTAL STOCK WAS VALU ED AT RS. 1,50,68,111/-. THE STOCKS WERE VALUED WITH EMPLOYEES OF THE ASSESSEE AND THE VALUATION WAS MADE ON THE BASIS OF PRICE AS DICTATED BY ASSESSEES EMPLOYEES, BUT IN T HE DETAILS OF CLOSING STOCK FILED BY THE 2 ASSESSEE IN COURSE OF ASSESSMENT PROCEEDINGS, IT WA S FOUND THAT THE STOCK AS ON 30.09.2004 HAD BEEN VALUED BY THE ASSESSEE AT RS.76 ,3L,780/-. VIDE LETTER DATED 17.12.2007 THE ASSESSEE WAS REQUESTED BY THE AO TO EXPLAIN WHY DEFLATED AMOUNT OF STOCK TO THE TUNE OF RS. 74,36,331/- WHICH HAS BEEN SUPPRESSED BY THE ASSESSEE SHOULD NOT BE ADDED BACK TO THE TOTAL INCOME. AGAIN ON 24. 12.2007 VIDE LETTER DATED 24.12.2007 THE ASSESSEE WAS ASKED TO EXPLAIN WHY THE BOOKS OF ACCOUNTS SHOULD NOT BE REJECTED FOR INCORRECT ENTRIES MADE IN REGARD TO VALUE OF STOCK. ACCORDING TO THE A.O., THE ASSESSEE DID NOT FILE ANY EXPLANATION. AFTER SURVEY CONDUCTE D ON 30.09.2004, THE ASSESSEE VIDE HIS LETTER DATED 11.10.2004 HAD STATED THAT THE VAL UATION OF STOCK WAS WRONGLY TAKEN ON M.R.P. INSTEAD OF COST PRICE. HOWEVER, THE A.O. HEL D THAT THE ASSESSEE HAD SUPPRESSED HIS SALES. HE ALSO OBSERVED THAT THE ASSESSEE STAT ED THAT THE VALUATION WAS MADE BY THE DEPARTMENT AT MRP. THEREFORE, AT LEAST MRP IS THE S ALE PRICE TO THE ASSESSEE. ON THE BASIS OF THE ABOVE, A.O. COMPUTED THE PROFIT PERCEN TAGE OF THE ASSESSEE AT 97.43% OF COST PRICE IN THE FOLLOWING WAY :- AS PER ASSESSEE CONTENTION VALUATION OF STOCK AT C OST PRICE IS RS. 76,31,780/-. MRP IS RS.1,50,68,111/- WHICH IS THE VALUATION OF STOCK AS ON THE DATE OF SURVEY AND AS PER ASSESSEES VERSION THIS VALUATION HAS BEEN DONE AT M.R.P. SO, THE PROFIT IS (RS. 1,50,68,111/- MINUS RS.76,31,780/-) RS. 74,36,331/- . PERCENTAGE OF PROFIT = RS. 74,36,331/- X 100 = 9 7.43 RS.76,31,780/- BUT THE ASSESSEE SHOWED PROFIT OF ONLY 14.35% OF TH E C.P. AS SUCH, IT IS EVIDENT THAT THE ASSESSEE SUPPRESSED SALE PRICE IF ASSESSEES CO NTENTION IS ACCEPTED. THEREFORE, THE BOOKS OF ACCOUNTS OF THE ASSESSEE IS REJECTED AND G ROSS PROFIT IS CALCULATED AT 97.43% OF COST PRICE FOR THE PERIOD FROM 01.10.2004 TO 31.03. 2005 AS BELOW : STOCK AS ON 0110.2004 RS. 76,31,780/- PURCHASE RS. 2,63,67,646 /- RS. 3,39,99,426/- 97.43% PROFIT ON RS.3,39,99,426/- COMES TO RS. 3,31,28,704 /- SALE PRICE OF PURCHASE & STOCK AS ON 01.10.2004 RS. 6,71,28,130/- OUT OF WHICH CLOSING STOCK RS. 98,36,224 /- SALE PRICE COMES TO RS. 5,72,91,906/- SALE PRICE SHOWN BY THE ASSESSEE RS. 2,90,43, 472 /- SUPPRESSED SALE RS. 2,82,48,434 /- INTEREST ON CONCEALED AMOUNT OF INVESTMENT OF RS.17 ,21,960/- @ 8% PER ANNUM IS CALCULATED AND ADDED BACK TO THE TOTAL INCOME. 3 3. THE ASSESSEE APPEALED TO THE LD. C.I.T.(A) AGAI NST SUCH COMPUTATION OF CONCEALED SALES BY THE A.O. THE SUBMISSIONS MADE BY THE ASSE SSEE AND AS ARE MENTIONED IN THE APPELLATE ORDER ARE REPRODUCED BELOW :- 1. THE ASSESSEE FILED HIS RETURN ON 05.10.2005 DIS CLOSING THE TOTAL INCOME OF RS. 2,27,900/- AGAINST WHICH TAX WAS PAID RS.5,25,443/- AND AFTER SETTING OF TAXES PAYABLE RS. 2,89,163/- REFUND OF RS. 2,36,280/- WAS CLAIMED . THE ASSESSEE IS DEALING IN IMFL (INDIA MADE FOREIGN LIQUOR), WHICH IS A HIGHLY CONT ROLLED COMMODITY BY THE GOVT. THE LEARNED ASSESSING OFFICER (L.A.O.) ISSUED NOTIC E TIME-TO-TIME ASKING FOR VARIOUS INFORMATION AND CONFIRMATION OF DEBTORS, CREDITORS, STOCK ETC. WHICH WAS COMPLIED WITH BY THE ASSESSEE. EVEN THE L.A.0. CROSS VERIFIED THE DEBTORS FOR SALES AND CREDITORS FOR SUPPLIERS AND THE SAME TALLIED WITH THE BOOKS OF AC COUNT MAINTAINED BY THE ASSESSEE. HOWEVER, THE L.A.O. SENT A NOTICE ON 24.12.2007 FOR APPEARING BEFORE HIM ON 28.12.2007. A WAS SENT BY THE ASSESSEE AND THE SAME WAS RECEIVED BY THE LAO ON 26.12.2007 FOR ADJOURNMENT AS DETAILS ASKED BY HIM COULD NOT BE PREPARED AND SUBMITTED BEFORE HIM DUE TO ACCOUNTANT OF THE ASSES SEE, NOT AVAILABLE FOR ATTENDING THE OFFICE BEING ON LEAVE. MORE SO, WITHIN SUCH A SHORT TIME IT WAS NOT POSSIBLE TO COLLECT ALL THE INFORMATION AND SUBMIT THE SAME BEFORE THE L.A. 0. AND SUCH PARTICULARS WERE FILED ON 15.01.2008. HOWEVER, EVEN THOUGH THE LETTER OF A SSESSEE WAS ACCEPTED/ACKNOWLEDGED BY THE L.A.O ON 26.12.2007 HE IGNORED THE SAME AND COMPLETED THE ASSESSMENT APPARENTLY ON 31.12.2007 IN HASTE. IN THE UNDATED ASSESSMENT ORDER RECEIVED BY THE ASS ESSEE ON 22.01.2008 IT WAS NOTED THAT THE ACCOUNT OF THE ASSESSEE WERE REJECTED BY T HE L.A.0. AND PROCEEDED TO COMPLETE THE ASSESSMENT MAKING A HUGE ESTIMATED PROFIT AND D EMAND. THE ASSESSEES ACCOUNTS WERE DULY AUDITED U/S. 44AB OF THE I.T.ACT WITH THE REGULAR BOOKS OF ACCOUNT MAINTAINED BY THE ASSESSEE. IT APPEARS THAT L.A.0. MADE HIS PROFIT ESTIMATION ON THE BASIS OF M.R.P. (MAXIMUN RETAIL PRICE) WHICH IS SAL ES, PRICE APPLICABLE TO THE RETAILER ONLY. THE ASSESSEE IS NOT A RETAILER, HE IS A DISTR IBUTOR/WHOLE SELLER AND HAVING NO COUNTER SALES. THE ASSESSEE IS MAINTAINING BONDED WARE HOUSE IN TH E STATE WHERE THE GOODS ARE COMPLETELY SUBJECT TO CONTROL BY THE STATE EXCISE A UTHORITY ONLY AND THE ASSESSEE HAS NO CONTROL OVER THE SAME. SUCH STOCKS ARE TO BE VALUED AT THE PURCHASE PRICE BOUGHT FROM THE SUPPLIERS. SUCH STOCKS ARE RELEASED BY THE EXCI SE DEPARTMENT ONLY AFTER PAYMENT OF THE EXCISE DUTY ETC. BY THE ASSESSEE. AGAIN THE ASSESSEE SOME TIME PURCHASES FROM THE WHO LESALER/OTHER DEALERS. THE WHOLE PROCESS OF THIS TYPE OF BUSINESS HAS NOT BEEN UNDER STOOD BY THE L.A.0. AND HE PROCEEDED ON THE BASIS OF THE SURVEY MADE ON 30.09.2004 BY TH E PERSONNEL OF I.T. DEPARTMENT WHO VALUED THE STOCK ON THE BASIS OF MR.P. PRINTED ON T HE BOTTLE, WHICH IS NOT AT ALL ACCEPTABLE TO THE ASSESSEE. THE ASSESSEE SELLS HIS PRODUCTS AT A RATE FIXED BY THE MANUFACTURES/SUPPLIERS, WHICH IS MUCH BELOW THE MRP . THE SURVEY TEAM PREPARED STATEMENTS OF STOCK AT THE TIME OF SURVEY CONDUCTED ON 30.092004 AT THE SAME MRP RATE, WHICH STATEMENT EVE N THOUGH ALLEGED BY THE L.A.0. WAS NOT SIGNED BY THE ASSESSEE NOR HE DELEGATED HIS POWER TO ANY ONE TO SIGN ON BEHALF OF HIM. 4 2. THE L.A.O. JUST TOOK THE DIFFERENCE BETWEEN TH E SURVEYED MRP OF RS.1,50,68,111/- ON 30.09.2004 AND COST PRICE DECLARED BY THE ASSESS RS.76,31,780/- AS THE SUPPRESSED PROFIT AND APPLIED SAME TO DETERMINE SUPPRESSED PRO FIT @ 97.43%, THE REASONING OF WHICH IS NEITHER UNDERSTOOD NOR ACCEPTABLE. 3. THE ASSESSEE IS IN THIS BUSINESS FOR OVER TWO DE CADES AND ALL ALONG THE VALUATION OF CLOSING STOCK WAS MADE AT COST AS PER ACCOUNTING PRACTICE AND PRINCIPLES AND ACCEPTED BY THE INCOME TAX DEPTT. AS WELL. THE L.A. 0. MADE THE VALUATION OF CLOSING STOCK AT SALES PRICE (MRP) WHICH IS NOT ACCEPTABLE TO ANY ONE AND THE SAME WAS OBJECTED BY THE ASSESS. THE ASSESSEE FURTHER SUBMITTED AS FOLLOWS: (1) YOUR ASSESSEE PRAYED FOR AN ADJOURNMENT OF THE HEARING OF THE CASE FIXED ON 28.12.2007 BEFORE THE DCII, WHICH WAS ACKNOWLEDGED BY HIM ON 26.12.2007. HOWEVER, THE LEARNED DCIT IGNORED THE LETTER AND NOT EVEN RE CORDED IN THE ASSESSMENT ORDER AND COMPLETED THE ASSESSMENT IMMEDIATELY ON 31.12.2007. THUS DENIED JUSTICE TO THE ASSESSEE. COPY OF LETTER ENCLOSED. (2) I AM ENCLOSING COMPARATIVE FIGURES OF SALES A ND PROFIT FOR THE LAST SIX YEARS UP TO THE ASSESSMENT YEAR 2005-06 WHICH WILL GIVE THE TRE ND OF PROFIT AND ACCEPTED BY THE DEPARTMENT. COPY ENCLOSED. (3) I AM ALSO ENCLOSING ORDERS OF ASSESSED INCOME FOR YEAR 1999-2000 AND 2002-03 IN SUPPORT OF MY RETURN AND ASSESSMENT ACCEPTED BY THE DEPARTMENT. (4) I AM A WHOLE-SELLER AND NOT A RETAIL DEALER AND HAVE NO COUNTER SALE. (5) THE LEARNED ASSESSING OFFICER HAS CONFUSED THE MRP (MAXIMUM RETAIL PRICE) WITH MY PRICING OF STOCK AT COST AS ALSO THAT MRP I S NOT APPLICABLE TO ME. (6) THE LABELS ON THE BOTTLES DISCLOSE THE MRP, W HICH IS RECOVERABLE BY THE RETAILERS ONLY, NOT BY WHOLESELLERS LIKE ME. (7) COPY OF EXCISE LICENSE ENCLOSED SHOWING ME AS WHOLESELLER (BONDED WAREHOUSE) NOT A RETAILER. (8) UNFORTUNATELY A SURVEY WAS CONDUCTED BY THE I NCOME TAX DEPARTMENT WHO TOOK A STOCK IN MY PREMISES. THE ABOVE SURVEY WAS CONDUCTE D IN MY ABSENCE. WHILE I AM VALUING MY STOCK AT COST OVER THE YEARS AND I PROTE STED TO SUCH TYPE OF VALUATION AT SALES PRICE IN VIOLATION OF ACCOUNTING PRACTICE. A COPY O F SAID LETTER DATED 11.10.2004 IS ENCLOSED. (9) I RAISED BILLS AT WHOLESELLERS PRICE, WHICH WAS ACCEPTED BY ALL MY DEALERS AND THE LEARNED ASSESSING OFFICER CROSS VERIFIED THE SAME, WHICH WAS NOT AT MRP RATE BUT AT THE RATE APPLICABLE IN CASE OF WHOLESELLER LIKE ME. (10) PECULIARLY ENOUGH THE LEARNED ASSESSING OFFIC ER STATED IN HIS ORDER THAT ASSESSEES LETTER DATED 11.10.2004 STATED THAT THE VALUATION O F STOCK WAS TAKEN ON MRP INSTEAD OF COST PRICE. HE ALSO INFORMED THAT STOCKS WERE TAKEN BY HIM AT COST PRICE. IF THE 5 ASSESSEES EXPLANATION IS ACCEPTED THEN IT IS EVIDE NT THAT THE ASSESS SUPPRESSED THE SALE FOR FOLLOWING REASON TO ME THIS IS A VERY CONFUSING REMARK, WHEREAS IN T HE LETTER THE ASSESSEE CLEARLY STATED THAT STOCKS ARE TO BE VALUED AT COST. FURTHER, THE SURVEY WAS RELATED TO STOCKS ONLY AND NOT ON SALES. HENCE, THE CONCLUSION OF LEARNED ASSE SSING OFFICER THAT I AGREED TO HIS PRESUMPTION IS TOTALLY WRONG/INCORRECT. (11) ON THE BASIS OF PRESUMPTION, THE LEARNED ASS ESSING OFFICER VALUED MY STOCK AT SALES PRICE (MRP) (NOT AT COST) AND THUS ARRIVED AT A FANTASTIC PROFIT AND COMPLETED THE ASSESSMENT. ALONG WITH THE ABOVE SUBMISSIONS, THE ASSESSEE ALSO SUBMITTED A CHART BEFORE THE LD. C.I.T.(A) SHOWING COMPARATIVE MRP V/S. COST PRICE F OR DIFFERENT ITEMS SOLD BY HIM; COPIES OF SOME PURCHASE BILLS; OFFICIAL COMPANY PRI CE LIST FOR SOME BRANDS OF MC DOWELL & CO. AND MOHAN MEAKINS LTD. CONSIDERING THE ASSESS EES SUBMISSION, THE LD. C.I.T.(A) OBSERVED THAT THE ASSESSEE WAS NOT GIVEN SUFFICIENT TIME AND OPPORTUNITY TO EXPLAIN HIS CASE IN RESPONSE TO TWO SHOW CAUSE NOTI CES ISSUED BY THE A.O. THEREFORE, WITH A VIEW TO AFFORD OPPORTUNITY TO THE ASSESSEE, THE LD. C.I.T.(A) FORWARDED THE SUBMISSIONS OF THE ASSESSEE ALONG WITH OTHER DOCUME NTARY EVIDENCES FILED BEFORE HIM TO THE A.O. TO VERIFY THE CLAIM OF THE ASSESSEE THAT V ALUATION OF STOCK DURING THE SURVEY WAS DONE ON MRP, WHEREAS IT SHOULD HAVE BEEN DONE AT CO ST PRICE. THE A.O. SUBMITTED HIS REMAND REPORT DATED 08/12/2008 STATING THAT THE STO CKS WERE VALUED BY THE SURVEY TEAM AT MRP WHILE THE ASSESSEE RIGHTLY VALUED THE STOCK AT COST PRICE . 3.1. ON EXAMINATION OF THE ABOVE REPORT OF THE A.O ., THE LD. C.I.T.(A) OBSERVED THAT AFTER VERIFICATION OF THE EVIDENCES PRODUCED BY THE ASSESSEE BEFORE THE A.O. DURING REMAND PROCEEDINGS, THE A.O. HAS ACCEPTED THAT THE SURVEY TEAM VALUED THE STOCK AT MRP AND THE ASSESSEE HAS RIGHTLY VALUED IT AT COST PRICE. IN VIEW OF THESE FACTS, THE LD. C.I.T.(A) DELETED THE ADDITION OF RS.2,82,48,434/- MADE BY THE A.O. ALLEGING CONCEALED SALES. HENCE THIS APPEAL BY THE DEPARTMENT ON THE ABOVE ISSUE. 4. AT THE TIME OF HEARING, THE LD. DEPARTMENTAL RE PRESENTATIVE RELIED ON THE ORDER OF THE A.O. HE FURTHER SUBMITTED THAT THE LD. C.I.T.( A) BY MERELY CONSIDERING THE REMAND REPORT OF THE A.O. AND WITHOUT APPRECIATING THE MER ITS OF THE CASE HAS DELETED THE ADDITION. THERE WERE INHERENT INFIRMITY IN THE ASSE SSEES ACCOUNTS WHICH WOULD BE EVIDENT FROM THE FACTS THAT EVEN THE AUDITORS IN TH EIR REPORT IN FORM 3CD DID NOT 6 INDICATE QUANTITATIVE DETAILS OF STOCK-IN-TRADE AND ALSO GROSS PROFIT EARNED BY THE ASSESSEE. THE LD. C.I.T.(A) WHILE DELETING THE ADDI TION HAS FAILED TO CONSIDER THE FACT THAT SUCH TYPE OF DEFECTIVE AND INCOMPLETE ACCOUNTS COUL D NOT BE RELIED UPON. HE, THEREFORE, PRAYED FOR QUASHING THE ORDER OF THE LD. C.I.T.(A) ON THIS ISSUE. 5. THE ASSESSEES LEARNED A/R, ON THE OTHER HAND, RELIED ON THE ORDER OF THE LD. C.I.T.(A) AND REITERATED HIS SUBMISSIONS MADE BEFOR E HIM. HE ALSO INDICATED THAT THE OBJECTION RAISED BY THE DEPARTMENT IN RESPECT OF AU DIT REPORT WAS NOT CORRECT. HE STATED THAT THE VALUATION OF CLOSING STOCK HAS BEEN ANNEXE D TO THE AUDIT REPORT VIDE ANNEXURE-E OF THE SAID REPORT. FURTHER, RATE OF G.P. HAS BEEN CLEARLY MENTIONED AND THAT THE ASSESSEES BUSINESS BEING A TRADING ONE, NO G.P. HA S BEEN SEPARATELY SHOWN LIKE EARLIER YEARS. HE FURTHER POINTED OUT THAT THE ASSESSEE FI LED BEFORE THE AUTHORITIES BELOW A CHART SHOWING G.P. AND N.P. RATE FOR THE LAST SIX YEARS, WHICH WERE ALL ACCEPTED BY THE DEPARTMENT EVEN IN SCRUTINY ASSESSMENT. FINALLY, R EFERRING TO THE REMAND REPORT OF THE A.O., THE LD. A/R SUBMITTED THAT THE A.O. AFTER CAR EFULLY SCRUTINIZING THE PURCHASE BILLS ALONG WITH PRICE LIST ETC. HIMSELF HAS ADMITTED THA T THE ASSESSEE RIGHTLY VALUED THE STOCK AT COST PRICE. HE, THEREFORE, SUBMITTED THAT ONCE IT IS FOUND THAT THE ASSESSEE HAS RIGHTLY VALUED THE STOCK AT COST AND THE SURVEY TEAM HAS WR ONGLY TAKEN SUCH VALUE AT MRP, THEN THERE REMAINS NO GROUND TO MAKE ADDITION ON PRESUMP TION BASIS. HE, THEREFORE, SUBMITTED THAT THE ORDER OF THE LD. C.I.T.(A) ON TH IS ISSUE SHOULD BE SUSTAINED AND THAT OF A.O. BE ANNULLED. 6. WE HAVE HEARD THE PARTIES AND PERUSED THE MATER IAL PLACED BEFORE US. FROM THE ORDER OF THE LD. C.I.T.(A) WE FIND THAT THE A.O. IS SUED TWO SHOW CAUSE NOTICES, WHICH WERE REMAINED UNCOMPLIED WITH. THE REASON FOR SUCH NON-COMPLIANCE WAS THAT THE A.O. DID NOT AFFORD REASONABLE TIME GAP FOR FURNISH ING REPLY BY THE ASSESSEE AS THE ASSESSMENT WAS A TIME BARRING MATTER. THE ASSESSEE EXPLAINED HIS CASE BEFORE THE LD. C.I.T.(A) AND ALSO FILED SOME DOCUMENTS IN SUPPORT OF HIS CLAIM THAT THE VALUE OF CLOSING STOCK SHOULD BE AT COST AND NOT AT MRP TAKEN BY THE A.O. ON THE BASIS OF SURVEY REPORT. TO MEET THE PRINCIPLE OF NATURAL JUSTICE AND CONSID ERING THE VOLUME OF ADDITION, THE LD. C.I.T.(A) CALLED FOR A REMAND REPORT FROM THE A.O. THE A.O. IN HIS REMAND REPORT SUBMITTED TO THE LD. C.I.T.(A) IN CLEAR TERMS HAS I NDICATED THAT THE STOCKS WERE VALUED BY 7 THE SURVEY TEAM AT MRP WHILE THE ASSESSEE RIGHTLY V ALUED THE STOCK AT COST PRICE. IT WOULD BE PERTINENT TO REPRODUCE THE SAID REMAND REP ORT AS UNDER :- IN COURSE OF HEARING FOR PREPARING REMAND REPORT, THE ASSESSEE APPEARED BEFORE THE UNDERSIGNED AND EXPLAINED THAT STOCK FOUND IN SURVE Y OPERATION WAS VALUED AT COST PRICE WHILE IT WAS VALUED BY SURVEY TEAM AT M.R.P. (MAXIM UM RETAIL PRICE). THE ASSESSEE IS A WHOLE-SELLER OF INDIAN MADE FOREIGN LIQUOR. THERE FORE, THE ASSESSEE DOES NOT SELL HIS GOODS AT MRP. THE ASSESSEE ALSO STATED THAT ONLY TH E RETAILERS SELL THE LIQUOR AT MRP. IN SUPPORT OF HIS CONTENTION HE PRODUCES SOME OF THE P RICE LISTS OF COMPANY WHICH SPECIFY THE PRICE TO BE CHARGED BY WHOLE SELLER AND THE PRI CE TO BE CHARGED BY RETAILER. ON EXAMINATION OF THESE EVIDENCES, IT IS FOUND THAT TH E ASSESSEES SALE PRICE IS FIXED BY THE MANUFACTURER. IN ABSENCE OF ANY EXPLANATION SUBMITT ED BY THE ASSESSEE IN COURSE OF HEARING FOR THE ASSESSMENT YEAR 2005-06 THE SALE PR ICE WAS CALCULATED AT MRP (MAXIMUM RETAIL PRICE). THE ASSESSEE SUBMITTED A COMPARISON OF VALUATION OF STOCK FOUND ON THE DAY OF SURVEY SHOWING PRICE AT WHICH THE ASSESSEE VALUED THE STOC K VIS--VIS THE VALUATION MADE BY SURVEY OFFICIALS. ON EXAMINATION OF THE COMPARATIVE VALUATION IT IS F OUND THAT THE VALUATION BY SURVEY TEAM WAS MADE AT MRP. IN SUPPORT OF HIS CONTENTION THE ASSESSEE SUBMITTED SOME OF THE BILLS ALONG WITH PRICE LIST WHICH WERE EXAMINED FOU ND THAT THE STOCKS WERE VALUED BY THE SURVEY TEAM AT MRP WHILE THE ASSESSEE RIGHTLY VALUE D THE STOCK AT COST PRICE . [EMPHASIS SUPPLIED] THEREFORE, ONCE THE ASSESSING AUTHORITY ADMITS THAT THE ASSESSEE HAS RIGHTLY VALUED THE STOCK AT COST PRICE, IN OUR CONSIDERED OPINION, THE DEPARTMENT HAS NO CASE IN SUPPORT OF UPHOLDING THE ADDITION MADE BY THE A.O. ALLEGING SU PPRESSED SALES, WHICH WAS SOLELY BASED ON THE PRESUMPTION THAT THE ASSESSEE WRONGLY VALUED THE STOCK AT COST INSTEAD OF MRP. IN THAT VIEW OF THE MATTER, THE DELETION OF ADDITION OF RS.2,82,48,434/- BY THE LD. C.I.T.(A) IS SUSTAINED AND THE REVENUES GROUND S IN THIS REGARD ARE DISMISSED. 7. IN THE RESULT, THE APPEAL OF THE REVENUE IS DIS MISSED. 2 1 !3 4 3$ 25 THIS ORDER IS PRONOUNCED IN OPEN COURT ON 30.6.10. SD/- SD/- [D.K. TYAGI] [C.D. RAO] JUDICIAL MEMBER ACCOUNTANT MEMBE R ( (( (! ! ! !) )) ) DATE: 30 -06-2010 8 ' ' ' ' / ITA NO. 611 (KOL) OF 2009 1 / .##6 76&8- COPY OF THE ORDER FORWARDED TO : 1. *+ / THE APPELLANT : D.C.I.T., CIRCLE-28, KOLKATA. 2 .*+ / THE RESPONDENT : DINESH KHANNA, 54, TOLLYGUNGE CIRC ULAR ROAD, KOLKATA- 700 053. 3. #1$ () : THE CIT(A)-XIV, KOLKATA. 4. #1$/ THE CIT, KOL- 4. =# .#$ / DR, ITAT, KOLKATA BENCHES, KOLKATA 5. GUARD FILE . 6 .#/ TRUE COPY, 1$3/ BY ORDER, (DKP) ? @ / DEPUTY REGISTRAR .