Shri Ramesh. D. Badlani, Jalgaon V. ITO Wd 1[3] Jalgaon, Jalgaon

ITA 717/PUN/2012

• Counselvise Citation: [2013] 140 COUNSELVISE.COM (IT) 72104 (ITAT-PUNE)
• Duration Of Justice: 1 year(s) 4 month(s) 25 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 05-09-2013
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 03-09-2013
• Assessment Year: 2004-2005
• Appeal Filed On: 10-04-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: Y K BHASKAR
• Assessee Lawyers: PRAMOD SINGATE
• Section: 143(3); 133A; 263

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCHES A, PUNE BEFORE SHRI SHAILENDRA KUMAR YADAV, JUDICIAL MEMBER AND SHRI G.S. PANNU, ACCOUNTANT MEMBER ITA NO.717/PN/2012 (ASSESSMENT YEAR: 2004-05) SHRI RAMESH DEVENMAL BADLANI PROP. OF SHIV AGRO INDUSTRIES, PLOT NO. M-179/2, MIDC AREA, JALGAON 425 003 PAN : AAQPB9672H . APPELLANT VS. INCOME TAX OFFICER, WARD 1 (3), JALGAON. . RESPONDENT APPELLANT BY : MR. PRAMOD SINGATE RESPONDENT BY : MR. Y. K. BHASKAR DATE OF HEARING : 03-09-2013 DATE OF PRONOUNCEMENT : 05-09-2013 ORDER PER G. S. PANNU, AM THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST AN ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS) II, NASHIK D ATED 16.09.2011 WHICH, IN TURN, HAS ARISEN FROM AN ORDER DATED 15.12.2009 PASSED BY THE ASSESSING OFFICER, UNDER SECTION 143(3) READ WITH SECTION 263 OF THE INCOME-TAX ACT, 1961 (IN SHORT THE ACT), PERTAINING TO THE ASSESS MENT YEAR 2004-05. 2. IN THIS APPEAL, THE SOLITARY ISSUE RAISED BY THE ASSESSEE IS WITH REGARD TO AN ADDITION OF RS.3,81,476/- SUSTAINED BY THE CIT(A ) ON ACCOUNT OF EXCESS STOCK FOUND AT THE TIME OF SURVEY ACTION UNDER SECT ION 133A OF THE ACT. BRIEFLY PUT THE BACKGROUND OF THE DISPUTE CAN BE SUMMARIZED AS FOLLOWS. THE APPELLANT IS AN INDIVIDUAL INTER-ALIA CARRYING ON TWO BUSINESSES I.E. EXTRACTION OF COTTON SEED OIL UNDER THE NAME AND STYLE OF M/S. SH IV AGRO INDUSTRIES AND TRADING IN STATIONERY, CUTLERY, ETC. UNDER THE NAME AND STYLE OF M/S. RAJKAMAL GENERAL STORES. FOR THE ASSESSMENT YEAR 2004-05, AS SESSEE FILED A RETURN OF ITA NO.717/PN/2012 A.Y. 2004-05 INCOME DECLARING TOTAL INCOME OF RS.61,610/- WHICH WAS SUBJECT TO SCRUTINY ASSESSMENT UNDER SECTION 143(3) OF THE ACT DATED 31 .08.2006 WHEREBY THE TOTAL INCOME WAS DETERMINED AT RS.3,61,690/-. SUBSE QUENTLY, THE CIT-II, NASHIK PASSED AN ORDER UNDER SECTION 263 OF THE ACT DATED 26.03.2009 SETTING-ASIDE THE ASSESSMENT ORDER DATED 31.08.2006 AND DIRECTING FRESH ASSESSMENT ON THE ISSUE OF EXCESS STOCK OF RS.3,81, 476/- FOUND AT THE TIME OF SURVEY ACTION CARRIED OUT UNDER SECTION 133A OF THE ACT ON 17.10.2003. IN THE SUBSEQUENT IMPUGNED ASSESSMENT MADE BY THE ASSESSIN G OFFICER UNDER SECTION 143(3) READ WITH SECTION 263 OF THE ACT, AN AMOUNT OF RS.3,81,476/- HAS BEEN ADDED TO THE TOTAL INCOME ON THE GROUND TH AT ASSESSEE HAD NOT DECLARED ADDITIONAL INCOME ON ACCOUNT OF EXCESS STO CK OF RS.3,81,476/- FOUND DURING THE SURVEY. AGAINST SUCH ADDITION, WHICH HAS BEEN FURTHER SUSTAINED BY THE CIT(A), ASSESSEE IS IN APPEAL BEFORE US. 3. THE CASE MADE OUT BY THE REVENUE IS THAT WITH RE GARD TO THE EXCESS STOCK OF COTTON SEED, COTTON CAKE AND COTTON OIL FO UND AT THE TIME OF SURVEY, AN AMOUNT OF RS.3,81,476/-, WAS NOT OFFERED BY THE ASS ESSEE IN THE RETURN OF INCOME FILED FOR THE ASSESSMENT YEAR UNDER CONSIDER ATION. NOTABLY, IN THE COURSE OF SURVEY ACTION UNDER SECTION 133A OF THE A CT CARRIED OUT AT THE BUSINESS PREMISES OF THE ASSESSEE ON 17.10.2003 CER TAIN DISCREPANCIES WERE NOTICED WHICH, INTER-ALIA, INCLUDED EXCESS STOCK OF RS.3,81,476/- IN THE PROPRIETARY CONCERN OF M/S. SHIV AGRO INDUSTRIES RE LATING TO COTTON SEED, COTTON CAKE AND COTTON OIL. THE ASSESSEE EXPLAINED BEFORE THE LOWER AUTHORITIES THAT AFTER INCLUDING THE QUANTITIES OF EXCESS STOCK FOUN D AT THE TIME OF SURVEY ON ACCOUNT OF COTTON SEED, COTTON CAKE AND COTTON OIL, THE CLOSING STOCK AS ON 31.03.2004 WAS TAKEN AT RS.12,72,126.42/-. AS PER T HE ASSESSEE, THE AFORESAID STOCK POSITION WAS INCLUSIVE OF THE VALUE OF EXCESS STOCK FOUND AND DECLARED IN SURVEY ACTION OF RS.3,81,476/-. THE ASS ESSEE POINTED OUT THAT IN THE MANUFACTURING, TRADING PROFIT & LOSS (P&L) ACCO UNT FOR THE PERIOD FROM 01.04.2003 TO 31.03.2004 OF M/S. SHIV AGRO INDUSTRI ES ADDITIONAL INCOME ON THIS COUNT AMOUNTING TO RS.3,81,476/- WAS SEPARATEL Y CREDITED IN SUCH P&L ITA NO.717/PN/2012 A.Y. 2004-05 ACCOUNT, A COPY OF WHICH HAS BEEN ENCLOSED IN THE P APER BOOK AT PAGE 31. THE STAND OF THE ASSESSEE WAS THAT AFTER HAVING INC LUDED SUCH VALUE OF EXCESS STOCK IN THE CLOSING STOCK AND IN THE PURCHASES ACC OUNT, SAME AMOUNT WAS SEPARATELY CREDITED AS AN ADDITIONAL INCOME IN THE P&L ACCOUNT, AND THUS THE RELEVANT INCOME WAS OFFERED TO TAX. THE CIT(A) HAS NOTICED THAT THE CLOSING STOCK AS ON 31.03.2004 HAS BEEN SHOWN BY THE ASSESS EE AT RS.12,72,126.42/- IN THE BALANCE SHEET WHEREAS IN THE MANUFACTURING, TRADING P&L ACCOUNT THE SAME HAS BEEN SHOWN AT RS.8,75,286/- THEREBY REFLEC TING A DIFFERENCE OF RS.3,81,476/-. THE CIT(A) ALSO NOTICED THAT IN THE P&L ACCOUNT, ASSESSEE DEBITED THE STOCK OF RS.3,81,476/- IN PURCHASES AS WELL AS IN THE CLOSING STOCK WHICH ACCORDING TO HIM NULLIFIED THE ADDITIONAL INC OME OFFERED BY THE ASSESSEE. THEREFORE, A SEPARATE ADDITION ON ACCOUNT OF EXCESS STOCK OF RS.3,81,476/- WAS RIGHTLY MADE BY THE ASSESSING OFFICER. 4. WE HAVE CAREFULLY CONSIDERED THE OBJECTIONS RAIS ED BY THE REVENUE BEFORE US, WHICH ARE THE SAME THAT HAVE BEEN CONSID ERED IN THE IMPUGNED ORDERS. WE FIND THAT THE FACTS IN THE PRESENT CASE HAVE NOT BEEN APPROPRIATELY APPRECIATED BY THE LOWER AUTHORITIES. FIRSTLY, THE CIT(A) HAS GROSSLY ERRED IN APPRECIATING THE FACTS IN THEIR PROPER PERSPECTIVE, AS THE FOLLOWING DISCUSSION WOULD SHOW. THE CIT(A) HAS OBSERVED IN PARA 6 OF HI S ORDER THAT THE CLOSING STOCK AS ON 31.03.2004 DEPICTED IN THE MANUFACTURIN G, TRADING P&L ACCOUNT IS RS.8,75,286/- AND ON THE OTHER HAND IN THE BALANCE SHEET IT HAS BEEN SHOWN AT RS.12,72,125.75/-. NOTABLY, APART FROM DEPICTING THE CLOSING STOCK OF COTTON SEED CAKE AND COTTON OIL OF RS.2,78,930.37/- AND RS .2,95,356.30/- (TOTALING TO RS.8,75,286/-) RESPECTIVELY ON THE CREDIT SIDE OF T HE P&L ACCOUNT, THE ASSESSEE HAS DECLARED ON THE DEBIT SIDE OF THE P&L ACCOUNT, THE CLOSING STOCK OF COTTON SEED OF RS.3,97,839.75/- AS A DEDUCTION W HILE COMPUTING THE AMOUNT OF RAW MATERIAL CONSUMPTION. CONSIDERED IN THIS LIG HT THE TOTAL CLOSING STOCK CREDITED TO THE P&L ACCOUNT IS RS.12,72,126/- I.E. COTTON SEED RS.3,97,839.75/-; COTTON SEED CAKE RS.2,78,930.37 /-; AND, COTTON OIL RS.5,95,356.30/-, WHICH DULY CORRESPONDS TO THE FIG URE SHOWN IN THE BALANCE ITA NO.717/PN/2012 A.Y. 2004-05 SHEET. THEREFORE, THE ASSERTION OF THE CIT(A) THAT THE CLOSING STOCK STATED IN THE P&L ACCOUNT IS IN VARIANCE WITH THE STOCK SHOWN IN THE BALANCE SHEET IS ERRONEOUS. SECONDLY, THE REVENUE MAY BE CORRECT IN SAYING THAT BY TAKING EXCESS STOCK FOUND AT THE TIME OF SURVEY OF RS.3,81 ,476/- TO THE PURCHASES ACCOUNT ON THE DEBIT SIDE OF THE P&L ACCOUNT AND AL SO INCLUDING IT IN THE CLOSING STOCK HAS NULLIFIED THE ADDITION SO HOWEVER , A FURTHER CREDIT ENTRY OF RS.3,81,476/- MADE IN THE CREDIT SIDE OF THE P&L AC COUNT UNDER HEADING GOODS DECLARED IN SEARCH, CLEARLY BRINGS OUT THE ADDITIONAL INCOME OFFERED TO TAX WHICH CORRESPONDS TO THE EXCESS STOCK FOUND AT THE TIME OF SURVEY. UNDER THESE CIRCUMSTANCES, IN OUR VIEW, THE FURTHER ADDIT ION OF RS.3,81,476/- SUSTAINED BY THE CIT(A) ALLEGED TO BE ON ACCOUNT OF EXCESS STOCK FOUND DURING THE SURVEY IS MERELY A DOUBLE ADDITION, WHICH IS CL EARLY UNTENABLE. WE HOLD SO. 5. IN VIEW OF THE ABOVE DISCUSSION, WE SET-ASIDE TH E ORDER OF THE CIT(A) AND DIRECT THE ASSESSING OFFICER TO DELETE THE ADDI TION OF RS.3,81,476/-. 6. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWED AS ABOVE. ORDER PRONOUNCED IN THE OPEN COURT ON 05 TH SEPTEMBER, 2013. SD/- SD/- (SHAILENDRA KUMAR YADAV) (G . S. PANNU) JUDICIAL MEMBER ACCOUNT ANT MEMBER PUNE, DATED : 05 TH SEPTEMBER, 2013 SUJEET COPY OF THE ORDER IS FORWARDED TO : - 1) THE ASSESSEE; 2) THE DEPARTMENT; 3) THE CIT(A)-II, NASHIK; 4) THE CIT-II, NASHIK; 5) THE DR, A BENCH, I.T.A.T., PUNE; 6) GUARD FILE. BY ORDER //TRUE COPY// SR. PRIVATE SECRETARY I.T.A.T., PUNE