DCIT-2(1), Ujjain V. Shri Santosh Agrawal, Ujjain

ITA 650/Ind/2019

• Counselvise Citation: [2021] 108 COUNSELVISE.COM (IT) 2505 (ITAT-INDORE)
• Duration Of Justice: 2 year(s) 30 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-06-2021
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: SMC
• Assessment Year: 2007-2008
• Appeal Filed On: 29-05-2019
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: GIRISH AGRAWAL; NISHA LAHOTIA ARS
• Keywords: Set aside
• Section: 143(3); 44AB; 263

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL INDORE BENCH, INDORE (CONDUCTED THROUGH VIRTUAL COURT) BEFORE SHRI MANISH BORAD, ACCOUNTANT MEMBER& MS. MADHUMITA ROY, JUDICIAL MEMBER I.T.A. NO.650/IND/2019 (ASSESSMENT YEAR: 2007-08) DEPUTY COMMISSIONER OF INCOME TAX-2(1), AAYAKAR BHAWAN, UJJAIN VS. SHRI SANTOSH AGRAWAL, PROP. M/S. SANTOSH ENTERPRISES, 46, AZAD NAGAR, UJJAIN PAN NO.AESPA1841B ( APPELLANT ) .. ( RESPONDENT ) APPELLANT BY : SHRI HARSHIT BARI, SR. DR RESPONDENT BY: SHRI GIRISH AGRAWAL & MISS NISHA LAHOTIA, ARS DATE OF HEARING 08.04.2021 DATE OF PRONOUNCEMENT 28 .06.2021 O R D E R PER MS. MADHUMITA ROY - JM: THE INSTANT APPEAL FILED BY THE REVENUE IS DIRECTED AGAINST THE ORDER DATED 05.02.2019 PASSED BY THE LD. CIT(A), UJJAIN A RISING OUT OF THE ORDER DATED 29.09.2017 PASSED BY THE ACIT-2(1), UJJAIN UN DER SECTION 143(3)/254 OF THE INCOME TAX ACT, 1961 (HEREINAFTER REFERRED TO A S THE ACT) FOR A.Y. 2007- 08. 2. WE HAVE HEARD THE RESPECTIVE PARTIES AND PERUSED THE RELEVANT MATERIALS AVAILABLE ON RECORD. ITA NO.650/IND/2019 DCIT VS. SHRI SANTOSH AGRAWAL ASST.YEAR 2007-08 - 2 3. THE ISSUE INVOLVED IN THIS PARTICULAR CASE IS RE LATING TO ADDITION OF RS. 8,09,567/- ON ACCOUNT OF UNDER VALUATION OF CLOSING STOCK OF TEA BAGS. THE SAID ADDITION WAS DELETED BY THE LD. CIT(A). HENCE, THE INSTANT APPEAL BEFORE US. 4. THE ASSESSEE IS A WHOLESALE DEALERS OF TEA BAGS WHOSE ASSESSMENT UNDER SECTION 143(3) WAS COMPLETED UPON ASSESSING INCOME AT RS. 6,52,300/-. SUBSEQUENTLY AN ORDER DATED 27.03.2012 UNDER SECTIO N 263 WAS ISSUED DIRECTING THE AO TO CALL FOR THE DETAILS OF THE TEA PURCHASE, TEA SOLD, CLOSING STOCK, THE EXTENT OF DAMAGE AND THE MANNER OF ITS Q UANTIFICATION BY THE INSURANCE AUTHORITIES. THE LD. AR WAS FURTHER DIRE CTED TO EXAMINE THE DETAILS AND TO CONCLUDE THE SAID PROCEEDING. THE LD. AO CO NCLUDED THE SAID PROCEEDING ON 31.01.2013 ASSESSING THE INCOME AT RS . 15,81,353/- INCLUDING ADDITION OF RS. 8,09,567/- ON ACCOUNT OF UNDER VALU ATION OF CLOSING STOCK. RELEVANT TO MENTION THAT THE BOOKS OF ACCOUNT FOR T HE IMPUGNED YEAR WERE DULY AUDITED UNDER SECTION 44AB OF THE ACT; NO ADVERSE R EMARKS AND/OR OBSERVATION TO THAT EFFECT IS FORTHCOMING FROM THE SAID AUDIT R EPORT. HOWEVER, SUCH ADDITION OF RS. 8,09,567/- WAS FURTH ER CONFIRMED BY THE LD. CIT(A) UPON WHICH AN APPEAL BEFORE THE LD. TRIB UNAL WAS PREFERRED. AFTER CAREFULLY CONSIDERATION OF THE MATTER THE LD. TRIBUNAL HAS BEEN PLEASED TO SET-ASIDE THE ISSUE TO THE FILE OF THE LD. AO WITH A DIRECTION UPON HIM TO VERIFY THE CLAIM OF THE ASSESSEE AND TO DECIDE THE MATTER KEEPING IN VIEW THE DECISION OF THE HONBLE APEX COURT IN THE CASE OF V.K.J. BUI LDERS & CONTRACTOR PVT. LTD. VS. CIT, REPORTED IN 318 ITR 204(SC). 5. IT APPEARS FROM THE RECORDS THAT THE DETAIL OF C LOSING STOCK, PURCHASES AND SALES WERE DULY SUBMITTED BEFORE THE LD. AO DUR ING THE COURSE OF PROCEEDING UNDER SECTION 143(3) R.W.S. 263 OF THE A CT. IT IS THE CASE OF THE ITA NO.650/IND/2019 DCIT VS. SHRI SANTOSH AGRAWAL ASST.YEAR 2007-08 - 3 ASSESSEE THAT THE OPENING STOCK OF THE IMPUGNED YEA R INCLUDING THE 7517 KG OF DAMAGED STOCK OF TEA BAGS REMAINED UNSOLD EVEN DURI NG THE YEAR. THE STOCK WAS DAMAGED IN A.Y. 2006-07 DUE TO HEAVY RAINS. IN ORDER TO SUBSTANTIATE THE SAME, THE NEWS PAPER CUTTING WERE DULY SUBMITTED BE FORE THE LD. AO TO CORROBORATE SUCH FACT OF HEAVY RAINS DURING THAT TI ME BY THE ASSESSEE. THE QUALITY OF DAMAGED STOCK WAS VERY LOW AND THEREFORE , THE SAME COULD NOT BE SOLD AS THE PLEA TAKEN BY THE ASSESSEE. IT IS RELE VANT TO MENTION THAT INSURANCE CLAIM OF THE DAMAGED STOCK LODGED WITH NEW INDIA IN SURANCE COMPANY LTD. SETTLED IN 2006-07 AT AN AMOUNT OF RS. 85,000/- AS AND THE SAME WAS RECEIVED TOWARDS SETTLEMENT OF CLAIM FROM THE NEW INDIA INSU RANCE COMPANY IN A.Y. 2006-07 THE ENTIRE DETAILS WHEREOF WERE DULY PLACED BEFORE THE AUTHORITIES BELOW ALONG WITH THE DETAILS OF SALES PURCHASES AND THE CLOSING STOCK FOR A.Y. 2007-08 INCLUDING THE DAMAGE STOCK OF 7517 KG FROM A.Y. 2006-07. THE SAID DAMAGE STOCK WAS SOLD ON 02.11.2016 I.E. A.Y. 2017- 18 @ RS. 6 PER KG TO RAMCHANDRA SUVASRA. DETAILS OF THE ABOVE IS APPEAR ING AT PAGE 33 OF THE PAPER BOOK AS FILED BEFORE US. IN FACT, CONSIDERIN G THE ENTIRE ASPECT OF THE MATTER THE LD. CIT(A) OBSERVED THE FOLLOWING WHILE DELETING THE ADDITION:- 3.1 THE APPELLANT WAS ENGAGED IN THE BUSINESS OF WHOLESAL E TEA. THE APPELLANT HAD AUDITED ITS BOOKS OF ACCOUNT. THE APPELLANT HAS PLEADED T HAT THERE WAS HEAVY RAIN FALL IN A.Y. 2006-07. DUE TO HEAVY RAIN FALL, SOME TEA BAGS WERE DA MAGED AND THE VALUATION OF THE SAME HAS BEEN TAKEN BY THE APPELLANT AT RS. 6/KG. THE AO HAS MENTIONED IN ITS ORDER THAT THE APPELLANT HAD FAILED TO SUBSTANTIATE ITS CLAIM. IN ABSENCE OF ANY CORROBORATIVE EVIDENCE, THE AO HAD MADE THE ADDITION TO THE APPELLANTS INCO ME. 3.2 THIS IS FACT IN THIS CASE THAT THE HONBLE BENCH OF I TAT, INDORE HAD SET ASIDE THE SAID ISSUE TO THE AOS FILE. THE APPELLANT HAS SUBMITTED THE COPY OF FIRE INSURANCE CLAIM FORM AND CLAIM RECEIVED FORM DURING THE APPELLATE PROCEEDINGS . FURTHER, THE APPELLANT HAS ALSO SUBMITTED SUPPORTIVE DOCUMENTS I.E. COPY OF LEDGER A CCOUNT REGARDING ITS CLAIM. IT IS CLEAR FROM THE SAID DOCUMENTS THAT THE STOCK OF TEA BA G OF THE APPELLANT WAS DAMAGED AND DUE TO THE SAID REASONS, THE VALUATION OF THE SAID STOCK WAS TAKEN IN LESSER PRICE THAN THAT OF ITS ACTUAL PRICE. FURTHER, THE APPELLANT HAD SOLD THE SAID STOCK AT RATE OF 6 RS/KG TO RAMCHANDRA SUVASRA. THE APPELLANT HAD ALSO FI LED THE CONFIRMATION OF THE SAID PERSON WHEREIN HE HAD ACCEPTED TO PURCHASE THE SAID DAMAGED S TOCK @ 6 RS/KG. 3.3 HENCE, IN VIEW OF THE ABOVE FACTS AND CIRCUMSTANCES OF THE CASE, THE APPELLANT HAS JUSTIFIED ITS CLAIM AFTER SUBMITTING RELEVANT DOCUMENT S REGARDING ITS CLAIM. HENCE, ITA NO.650/IND/2019 DCIT VS. SHRI SANTOSH AGRAWAL ASST.YEAR 2007-08 - 4 THE ADDITION SO MADE BY THE AO BY DISALLOWING UNDER VALUAT ION OF CLOSING STOCK IS HEREBY DELETED AND ACCORDINGLY, THIS GROUND OF APPEAL IS HEREBY ALL OWED. 6. THUS, IT APPEARS THAT IN VIEW OF THE SPECIAL FAC TS AND CIRCUMSTANCES OF THE CASE PARTICULARLY THE DAMAGED STOCK DUE TO HEAV Y RAINFALL SOLD ON 02.11.2016 AND FURTHER THAT THE CLAIM OF SUCH DAMAG ED STOCK AND SUBSEQUENT SETTLEMENT WHICH TOOK PLACE BETWEEN THE ASSESSEE AN D THE NEW INDIA INSURANCE COMPANY LTD. IN A.Y. 2006-07 SUPPORTED BY CORROBORA TIVE EVIDENCE KEEPS NO OPTION FOR DISALLOWANCE AND ADDITION THEREOF AS MAD E BY THE LD. AO IS, THEREFORE, NOT SUSTAINABLE. TAKING INTO CONSIDERAT ION THIS PARTICULAR ASPECT OF THE MATTER WE DO NOT FIND ANY AMBIGUITY IN THE ORDE R PASSED BY THE LD. CIT(A) FOR DELETING THE ADDITION SO AS TO WARRANT INTERFER ENCE. HENCE, THE REVENUES APPEAL IS DISMISSED. 7. IN THE RESULT, THE APPEAL FILED BY THE REVENUE I S DISMISSED. THIS ORDER PRONOUNCED IN OPEN COURT ON 28 /0 6/2021 SD/- SD/- SD SDSD/- SD/- (MANISH BORAD) (MADHUMITA ROY) ACCOUNTANT MEMBER JUDICIAL MEMBER AHMEDABAD; DATED 28/06/2021 TANMAY, SR. PS TRUE COPY / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. / CONCERNED CIT 4. () / THE CIT(A)- 5. , ! ', #$%% / DR, ITAT, INDORE 6. &' () / GUARD FILE. / BY ORDER, (DY./ASSTT.REGISTRAR) ITAT, INDORE ITA NO.650/IND/2019 DCIT VS. SHRI SANTOSH AGRAWAL ASST.YEAR 2007-08 - 5 1. DATE OF DICTATION 08.06.2021 2. DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE DICTATING MEMBER 08.06.2021 3. OTHER MEMBER 4. DATE ON WHICH THE APPROVED DRAFT COMES TO THE SR.P. S./P.S .06.2021 5. DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE THE D ICTATING MEMBER FOR PRONOUNCEMENT .06.2021 6. DATE ON WHICH THE FAIR ORDER COMES BACK TO THE SR.P .S./P.S .06.2021 7. DATE ON WHICH THE FILE GOES TO THE BENCH CLERK .06.2021 8. DATE ON WHICH THE FILE GOES TO THE HEAD CLERK ... 9. THE DATE ON WHICH THE FILE GOES TO THE ASSISTANT RE GISTRAR FOR SIGNATURE ON THE ORDER.. 10. DATE OF DESPATCH OF THE ORDER