The Income-tax Officer, MANSA V. M/s. Kissan Electricals Pvt. Ltd, MANSA

ITA 626/ASR/2014

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 0757 (ITAT-AMRITSAR)
• Duration Of Justice: 1 year(s) 7 month(s) 5 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 18-05-2016
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Next Hearing Date: 17-05-2016
• Assessment Year: 2010-2011
• Appeal Filed On: 13-10-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: P N ARORA; PARSHOTAM K SINGLA ADVS

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AMRITSAR BENCH; AMRITSAR BEFORE SH. A.D.JAIN, HONBLE JUDICIAL MEMBER AND SH. T.S. KAPOOR, HONBLE ACCOUNTANT MEMBER [ I.T.A NO.626 (ASR)/2014 ASSESSMENT YEARS: 2010-11 ITO, WARD-1(4) MANSA. VS. M/S. KISSAN ELECTRICAL PVT. LTD. MANSA. PAN:AADCK5588M (APPELLANT) (RESPONDENT) I.T.A NO.603 (ASR)/2014 ASSESSMENT YEARS: 2010-11 ASST. CIT CIRCLE-I, BATHINDA VS. M/S MUNISH KUMAR BANSAL CONTRACTOR, 19358 ST.4 BIBIWALA RAOD, BATHINDA PAN: AAKFM5866E (APPELLANT) (RESPONDENT) APPELLANT BY: SH. UMESH TAKYAR (DR) RESPONDENT BY: SH. P.N.ARORA & SH. PARSHOTAM K. SINGLA (ADVS.) DATE OF HEARING: 17.05. 2016 DATE OF PRONO UNCEMENT: 18.05.2016 ORDER PER BENCH: THESE ARE TWO APPEALS FILED BY REVENUE AGAINST THE SEPARATE ORDERS OF LEARNED CIT(A), BOTH DATED 17.07.2014 FOR ASST. YEAR 2010-11 RELATING TO TWO DIFFERENT ASSESSEES, SINCE, THE COMMON ISSUE WAS INVOLVED IN THESE APPEALS AND THESE WERE HEARD TOGETHER, THEREFORE, F OR THE SAKE OF CONVENIENCE A COMMON AND CONSOLIDATED ORDER IS BEIN G PASSED. ITA NOS.626 & 603 (ASR)/2014 ASST. YEAS: 2010- 11 2 2. THE REVENUE IN THESE APPEALS IS AGGRIEVED BY THE ACTION OF LEARNED CIT(A), BY WHICH HE HAD DELETED THE ADDITION WHICH THE ASSESSING OFFICER HAD MADE ON ACCOUNT OF DIFFERENCE IN STOCK FIGURES AS PER STOCK STATEMENTS SUBMITTED TO BANK AND AS PER THE STOCK F IGURES IN TRADING ACCOUNT OF THE ASSESSEES. 3. AT THE OUTSET, THE LEARNED AR SUBMITTED THAT THE ISSUE IS SQUARELY COVERED IN FAVOUR OF ASSESSEE AND IN THIS RESPECT F ILED A COPY OF ITAT, AMRITSAR ORDER IN THE CASE OF ACIT VS. M/S RAM KUMAR BANSAL IN ITA NO.456 & 461(ASR)/2014 AND THEREFORE, IT WAS PRAYED THAT BEING COVERED MATTERS IN FAVOUR OF ASSESSEE THE APPEALS OF REVENU E BE DISMISSED. 4. THE LEARNED DR, ON THE OTHER HAND, THOUGH PLACED HIS RELIANCE ON THE ORDER OF ASSESSING OFFICER BUT CONCEDED THAT IF THE ISSUES ARE COVERED IN FAVOUR OF ASSESSEE THEN THE APPEALS NEEDS TO BE DISMISSED. 5. WE HAVE HEARD THE RIVAL PARTIES AND HAVE GONE TH ROUGH THE MATERIAL PLACED ON RECORD. WE FIND THAT ASSESSING O FFICER IN THE ASSESSMENT PROCEEDINGS MADE HUGE ADDITIONS TO THE I NCOMES OF ASSESSEES BY TAKING FIGURES OF CLOSING STOCK AS SUB MITTED TO BANK INSTEAD OF FIGURES ADOPTED BY ASSESSEE IN ITS TRADING ACCOU NTS. THE LEARNED CIT(A), HOWEVER, ALLOWED RELIEF TO THE ASSESSEES AF TER PLACING HIS RELIANCE ON THE ORDER OF TRIBUNAL IN THE CASE OF ASST. CIT VS. M/S ISHAR INFRASTRUCTURE DEVELOPERS PVT. LTD. IN ITA NO.479(A SR)/2014 WHEREIN UNDER SIMILAR FACTS AND CIRCUMSTANCES THE HONBLE TRIBUNA L HAD DECIDED THE ITA NOS.626 & 603 (ASR)/2014 ASST. YEAS: 2010- 11 3 ISSUE IN FAVOUR OF ASSESSEE. THE LEARNED CIT(A) HAS RECORDED SIMILAR FINDINGS IN BOTH CASES WHILE ALLOWING RELIEF TO THE ASSESSEE. FOR THE SAKE OF CONVENIENCE THE FINDINGS RECORDED BY LEARNED CIT (A) IN THE CASE OF M/S MUNISH KUMAR BANSAL IN ITA NO.603(ASR)/2014 ARE REP RODUCED BELOW. A. I AM CONVINCED WITH THE ARGUMENTS OF THE A/R OF THE APPELLANT THAT THE BANK DOES NOT ATTACH MUCH SIGNIFICANCE TO THE STOCK STATEMENTS BECAUSE THE CASH CREDIT LIMIT WAS EXTENDED TO THE APPELLANT ON THE HYPOTHECATION OF THE STOCK IN WHICH THE CONTROL AND POSSESSION OF THE STOCK REMAINED WITH THE APPELLANT AND THE INTEREST OF THE BANK WAS COVERED BY COLLATERAL SECURITY PROVIDED BY THE APPELLANT TO THE BANK. B. THE AO IN THE PRESENT CASE HAS TRIED TO PROVE TH AT THE STOCK WAS PHYSICALLY VERIFIED BY RECORDING THE STATEMENT OF BANK MANAGER IN THE CASE OF M/S MUNISH KUMAR BANSAL CONTRACTOR. BUT IN MY OPINION U NLESS THE AO PROVES THAT THE STOCK WAS PHYSICALLY VERIFIED IN THE CASE OF THE APPELLANT, NO ADDITION CAN BE UPHELD. C. THE ONLY CONCLUSION WHICH CAN BE DRAWN FROM THE ABO VE STATED FACTS IS THAT NO INSPECTION/PHYSICAL VERIFICATION OF THE STO CK WAS CARRIED OUT BY THE BANK IN THE CASE OF THE APPELLANT ON 31-03-2009 AND THE AO ERRED IN MAKING ADDITION ON ACCOUNT OF DISCREPANCY OF STOCK AS RECORDED IN THE STOCK STATEMENT AND AS REFLECTED IN THE BOOKS OF AC COUNT BY SOLELY RELYING ON THE STOCK STATEMENT AS ON 31-03-2009 AND THE AO HAS FAILED TO BRING ANY EVIDENCE ON RECORD TO JUSTIFY THE ADDITION. THI S CONCLUSION IS BASED ON THE FACT THAT IT WAS NOT POSSIBLE BY THE BANK STAFF TO COUNT/WEIGH THE STOCK WORTH CRORE OF RUPEES AND LYING IN OPEN AT VA RIOUS PLACES IN DIFFERENT STATES. THE HONBLE MADRAS HIGH COURT IN THE CASE O F CIT VS. N. SWAMY (REPRODUCED SUPRA) HELD THAT THE MERE FACT THAT ASS ESSEE HAD MADE SUCH A STATEMENT TO THE BANK BY ITSELF CANNOT BE TREATED A S HAVING RESULTED IN AN IRREBUTABLE PRESUMPTION AGAINST THE ASSESSEE AND TH E BURDEN OF SHOWING THAT THE ASSESSEE HAD UNDISCLOSED INCOME IS ON THE REVENUE. SIMILARLY, THE HONBLE PUNJAB & HARYANA HIGH COURT HAS HELD IN THE CASE OF SANTOSH BOX FACTORY THAT IT IS FOR THE REVENUE TO BRING MATERIA L ON RECORD TO SHOW THAT THE APPELLATE IN FACT POSSESSED LARGER QUANTITY OF STOCK THEN THE STOCK RECORDED IN THE BOOKS OF ACCOUNT. AS DISCUSSED SUPRA, I FIND THAT THE AO HAS FAILED T O BRING ANY MATERIAL ON RECORD, EXCEPT THE STOCK STATEMENT SUBMITTED TO THE BANK, TO JUSTIFY THE ADDITION. THE FACTS AND CIRCUMSTANCES OF THE CASE OF ASSESSEE APPELLANT ARE SIMILAR AS IN THE CASE OF M/S ISHAR INFRASTRUCTURE DEVELOPE RS PVT. LTD. BATHINDA, THEREFORE, THE ADDITION OF RS.28736186/- MADE IN TH IS CASE IS ALSO NOT IN ORDER. HENCE, ADDITION MADE OF RS.28736186/- IS DEL ETED AND THIS GROUND OF APPEAL OF THE ASSESSEE APPELLANT IS ALLOWED. ITA NOS.626 & 603 (ASR)/2014 ASST. YEAS: 2010- 11 4 3.4 THE FACT AND CIRCUMSTANCES OF THE CASE OF ASSE SSEE APPELLANT ARE SIMILAR AS IN THE CASE OF M/S ISHAR INFRASTRUCTURE DEVELOPERS PVT. LTD. BATHINDA AND EURO INFRASTRUCTURE & POWER LIMITED, B ATHINDA, THEREFORE, THE ADDITION OF RS.4,68,61,481/- MADE IN THIS CASE IS ALSO NOT IN ORDER. HENCE, THE SAME IS DELETED AND THESE GROUNDS OF APP EAL OF THE ASSESSEE APPELLANT ARE ALLOWED. 6. BEFORE US, THE LEARNED AR HAS PLACED HIS RELIANC E ON THE ORDER OF TRIBUNAL IN THE CASE OF M/S RAM KUMAR BANSAL IN ITA NO.459 & 461(ASR)/2014 WHEREIN UNDER SIMILAR FACTS AND CIRCU MSTANCES THE TRIBUNAL HAD DISMISSED THE APPEAL FILED BY REVENUE. THE OPERATIVE PART OF THE HONBLE TRIBUNAL IN THE CASE OF M/S RAM KUMA R BANSAL AS CONTAINED IN PARA 7 TO 11 ARE REPRODUCED BELOW. 7. WE FURTHER FIND THAT THE AMRITSAR BENCH OF THE TRIBUNAL, VIDE ITS CONSOLIDATED ORDER DATED 26.03.2015, IN THE CASE O F RAM KUMAR BANSAL IN ITA NO.457(ASR)/2013 FOR THE A.Y. 2009-10 HAD NO TED DOWN THE FOLLOWING GROUNDS OF APPEAL: 1. THAT IN THE FACTS AND CIRCUMSTANCES OF THE CAS E THE LD. CIT(A) HAS ERRED BOTH IN LAW AND ON FACTS IN NOT AP PRECIATING THAT ON THE FACE OF THE FACT THAT THE ASSESSEE HAD HIMSELF SUPPLIED A FIGURE OF RS.2,99,50,000/- AS ITS CLOSIN G STOCK AS AT 31.03.2010 TO ITS BANK, THE ONUS OF PROVING TO T HE DEPARTMENT THAT THE CLOSING STOCK AS DISCLOSED IN I TS I.T. RETURN AT RS.12,13,814/- WAS THE CORRECT FIGURES, HAD SQUARELY SHIFTED ON IT, WHICH IT HAS FAILED TO DISC HARGE. 2. THAT IN THE FACTS AND CIRCUMSTANCES OF THE CASE THE LD. CIT(A) HAS ERRED BOTH IN LAW AND ON FACTS IN OPINIO NED THAT THE AO HAS FAILED TO BRING ANY EVIDENCE ON RECORD T O JUSTIFY THE ADDITION BECAUSE IT WAS NOT POSSIBLE BY THE BA NK STAFF TO COUNT OR WEIGH THE STOCK WORTH CRORES OF RUPEES LYI NG IN OPEN AT VARIOUS PLACES. HE HAS HELD THAT THE AO HAS FAIL ED TO BRING MATERIAL ON RECORD TO SHOW THAT THE APPELLANT IN FA CT POSSESSED LARGER QUANTITY OF STOCK THAN THE STOCK R ECORDED IN THE BOOKS OF ACCOUNT AND THAT A MERE REFERENCE TO T HE DRAWING POWER REGISTER WAS NOT SUFFICIENT EVIDENCE. 3. THAT IN THE FACTS AND CIRCUMSTANCES OF THE CASE THE LD. CIT(A) HAS ERRED BOTH IN LAW AND ON FACTS IN DELETI NG THE ADDITION MADE BY THE AO ON THE BASIS OF DIFFERENCE IN THE VALUE OF BOOK DEBT AS PER DRAWING POWER REGISTER OF THE ITA NOS.626 & 603 (ASR)/2014 ASST. YEAS: 2010- 11 5 BANK VIS--VIS VALUE OF BOOK DEBTS AS PER BALANCE S HEET FILED BEFORE THE DEPARTMENT. 8. SIMILARLY, WE FIND THAT THE HONBLE TRIBUNAL IN THE CASE OF ISHAR INFRASTRUCTURE AND DEVELOPERS PVT. LTD., IN ITA NO. 198(ASR)/2013 FOR THE AY 2009-10, HAD NOTED DOWN THE GROUNDS OF APPEAL A S UNDER: 1. THAT IN THE FACTS AND CIRCUMSTANCES OF THE CAS E THE LD. CIT(A) HAS ERRED BOTH IN LAW AND ON FACTS IN NOT AP PRECIATING THAT ON THE FACE OF THE FACT THAT THE ASSESSEE HAD HIMSELF SUPPLIED A FIGURE OF RS.6,39,30,292/- AS ITS CLOSIN G STOCK AS AT 31.03.2009 TO ITS BANK, THE ONUS OF PROVING TO T HE DEPARTMENT THAT THE CLOSING STOCK AS DISCLOSED IN I TS I.T. RETURN AT RS.4,66,13,761/- WAS THE CORRECT FIGURE S, HAD SQUARELY SHIFTED ON IT, WHICH IT HAS FAILED TO DISC HARGE. 2. THAT IN THE FACTS AND CIRCUMSTANCES OF THE CASE THE LD. CIT(A) HAS ERRED BOTH IN LAW AND ON FACTS IN OPINIO NED THAT THE AO HAS FAILED TO BRING ANY EVIDENCE ON RECORD T O JUSTIFY THE ADDITION BECAUSE IT WAS NOT POSSIBLE BY THE BA NK STAFF TO COUNT OR WEIGH THE STOCK WORTH CRORES OF RUPEES LYI NG IN OPEN AT VARIOUS PLACES. HE HAS HELD THAT THE AO HAS FAIL ED TO BRING MATERIAL ON RECORD TO SHOW THAT THE APPELLANT IN FA CT POSSESSED LARGER QUANTITY OF STOCK THAN THE STOCK R ECORDED IN THE BOOKS OF ACCOUNT AND THAT A MERE REFERENCE TO T HE DRAWING POWER REGISTER WAS NOT SUFFICIENT EVIDENCE. 8.1. WE FIND THAT GROUNDS OF APPEALS TAKEN BY THE R EVENUE IN THE PRESENT APPEALS ARE SIMILAR TO THE GROUNDS OF APPEA L WHICH HAS ALREADY BEEN ADJUDICATED BY THE HONBLE TRIBUNAL IN ITS ORD ER DATED 26.03.2015. 9. THE AMRITSAR BENCH OF THE TRIBUNAL IN ITS ORDER DATED 26.03.2015 HAD TAKEN THE CASE OF ISHAR INFRASTRUCTURE & DEVELO PERS PVT. LTD., AS A LEAD CASE AND HAS DECIDED THE ISSUE IN FAVOUR OF TH E ASSESSEE BY HOLDING AS FOLLOWS: 32. THE DECISIONS RELIED UPON BY THE LD. CIT(A) OF THE HONBLE PUNJAB & HARYANA HIGH COURT, IN THE CASES OF M/S.SA NTOSH BOX FACTORY, M/S. SIDHU RICE MILLS AND IN THE CASE OF M/S. DEVI DAYAL RICE MILLS ARE SQUARELY APPLICABLE TO THE F ACTS OF THE PRESENT CASE AS THE REVENUE AS THE REVENUE HAS NOT BROUGHT ON RECORD DURING THE ASSESSMENT PROCEEDINGS OR BEFORE THE LD. CIT(A) OR EVEN BEFORE US THAT PHYSICAL VERIFICATION OF THE STOCK HAS ACTUALLY BEEN DONE AND ACCORDINGLY STOCK STATEMENTS SO SUBMITTED BEFORE THE BANK AUTHORITIES AND DP REGISTER CANNOT BE RELIED U PON. 33. IN THE CASE OF CIT VS. VEERDIP ROLLER (P) LTD. (2010) 323 ITR 341 (GUJ), THE FACTS ARE THAT THE AO MADE ADDITION ON ACCOUNT OF DIFFERENCE IN THE VALUE OF CLOSING STOCK FURNISHED TO THE BANK AND THE VALUE OF THE STOCK FOUND IN THE BOOKS OF ACCOUN T FURNISHED TO THE INCOME TAX AUTHORITIES INFLATED STOCK WAS HYPOTHE TICAL AND NOT ITA NOS.626 & 603 (ASR)/2014 ASST. YEAS: 2010- 11 6 PLEDGED AND THE BANK OFFICIALS HAD NOT VERIFIED TH E STATEMENT SHOWING INFLATED STOCK SO PRODUCED BY THE ASSESSEE . THE ADDITION ON ACCOUNT OF DIFFERENCE FURNISHED TO THE BANK AS P ER BOOKS OF ACCOUNT U/S 69B OF THE ACT CAN NOT BE SUSTAINED. CO NSEQUENTLY, THE APPEAL WAS DISMISSED BY THE HONBLE GUJRAT HIGH COU RT AGAINST THE SAID DECISION, THE REVENUE WENT IN APPEAL BEFORE TH E HONBLE SUPREME COURT AND THE HONBLE SUPREME COURT VIDE IT S ORDER DATED 13.12.2008 DISMISSED THE SLP FILED BY THE DEPARTME NT. 34. SIMILAR DECISIONS HAVE BEEN MADE BY VARIOUS CO URTS OF LAW REFERRED TO HEREINABOVE: I) CIT VS. SIDHU RICE & GENERAL MILLS REPORTED IN 2 81 ITR 428 (P&H) II) CIT VS. SANTOSH BOX FACTORY (P) LTD.., 44 IT RE PS. 472 (P&H) III) CIT VS. N. SWAMY REPORTEDE IN 241 ITR 363 (MAD RAS) I) ITO VS. DEVI DAYAL RICE MILLS REPORTED IN 75 TTJ 24 (ITAT, AMRITSAR BENCH. II) CIT VS. SIROHI STEEL ROLLING MILLS, REPORTED IN 200 CTR 595 (ALL.) III) ASHOK KUMAR VS. ITO, REPORTED IN 201 CTR 178 ( J & K) IV) CIT VS. DAS INDUSTRIES, REPORTED IN 303 ITR 199 (AL L.) V) CIT VS. SRI PADMAVATHI COTTON MILLS, REPORTED IN 23 6 ITR 340 (MAD.) VI) JAI SHARDA RICE MILLS. VS ITO REPORTED IN 36 ITD 25 4 (ITAT, ASR.) VII) CIT VS. RIDDHI STEEL AND TUBES (P) LTD. REPORTED I N 220 TAXMAN 148 (GUJ.) VIII) CIT VS. APCOM COMPUTERS P. LTD. REPORTED IN (2007) 292 ITR 630 (MAD.). 35. IN THE FACTS AND CIRCUMSTANCES, THE ARGUMENTS M ADE BY THE LD. DR IN HIS WRITTEN SUBMISSIONS AND COUNTER SUBMI SSIONS CANNOT HELP THE REVENUE AND ACCORDINGLY, WE FIND NO INFIRM ITY IN THE ORDER OF THE LD. CIT(A) IN THE CASE OF M/S. ISHAR INFRAST RUCTURE DEVELOPERS (P LTD. IN ITA NO.198(ASR)/2013 IN THE IMPUGNED YEA R. 10. THE TRIBUNAL HAD RECORDED ITS FINAL CONCLUSION IN PARA 41, WHICH IS REPRODUCED AS UNDER: 41 IN THE RESULT, ALL THE SIX APPEAL OF THE REVENU E ITA NOS. 198 (ASR)/2013, ITA NO.536(ASR)/2013, 199(ASR)/2013, IT A NO.200(ASR)/2013 ITA NO.571(ASR)/2013 AND IN ITA NO.457(ASR)/2013 AND C.O. OF THE ASSESSEE BEARING NO.16(ASR)/2014 ARE DISMISSED. 11. FINDING GROUNDS OF APPEAL TAKEN BY THE REVENUE ARE PARI-MATERIA TO THE ISSUES ALREADY DECIDED BY THE TRIBUNAL IN IT S ORDER DATED ITA NOS.626 & 603 (ASR)/2014 ASST. YEAS: 2010- 11 7 26.03.2015, RESPECTFULLY FOLLOWING THE SAME, THE G ROUNDS OF APPEAL TAKEN BY THE REVENUE ARE DISMISSED. THE FACTS AND CIRCUMSTANCES OF THE PRESENT APPEALS FILED BY REVENUE ARE PARI MATERIA TO THE ORDER OF TRIBUNAL RELIED UPON THE LEARNED A R, THEREFORE, RESPECTFULLY FOLLOWING THE ABOVE TRIBUNA L ORDER, WE DO NOT FIND ANY INFIRMITY IN THE ORDER OF LEARNED CIT(A), THERE FORE, THE APPEALS FILED BY REVENUE ARE DISMISSED. 7. IN THE RESULT, THE APPEALS FILED BY THE REVENUE ARE DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 18 TH MAY, 2016. SD/- SD/- (A.D. JAIN) (T. S. KAPOOR) JUDICIAL MEMBER ACCOUNTANT ME MBER DATED: 18.05.2016. /PK/ PS. COPY OF THE ORDER FORWARDED TO: (1) THE ASSESSEE: (2) THE (3) THE CIT(A), (4) THE CIT, (5) THE SR DR, I.T.A.T., TRUE COPY BY ORDER