M/S. KALA MANDIR, Indore V. THE ITO-2(3), Indore

ITA 720/IND/2015

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 5715 (ITAT-INDORE)
• Duration Of Justice: 3 month(s) 16 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 02-03-2016
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: SMC
• Next Hearing Date: 24-02-2016
• Assessment Year: 2005-2006
• Appeal Filed On: 16-11-2015
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: R A VERMA
• Assessee Lawyers: C P RAWKA
• Section: 133A

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, INDORE BENCH, INDORE (SINGLE MEMBER CASE) BEFORE SHRI D.T. GARASIA, JUDICIAL MEMBER I.T.A.NO.720/IND/2015 A.Y. : 2005-06 M/S. KALA MANDIR, ITO, INDORE. VS. 2(3), INDORE. APPELLANT RESPONDENT PAN NO. AADFK2887Q A PPELLANT S BY : SHRI C.P.RAWKA, C. A. RESPONDENT BY : SHRI R.A.VERMA, DR O R D E R THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER OF CIT(A)-I, INDORE, DATED 25.08.2015 FOR THE ASSES SMENT YEAR 2005-06. 2. GROUND NO. 3 IS NOT PRESSED. HENCE, THIS GROUND IS DISMISSED AS NOT PRESSED. DATE OF HEARING : 24 .02. 20 16 DATE OF PRONOUNCEMENT : 02 .0 3 . 201 6 M/S.KALA MANDIR, INDORE VS. ITO 2(3), INDORE I.T. A.NO. 720/IND./2015 A.Y. 2005-06 2 2 3. GROUND NO.2 IS EFFECTIVE GROUND WHICH READS AS UNDE R :- THAT THE LD. CIT(A) HAS ERRED IN CONFIRMING THE ADDITION OF RS. 2,09,159 MADE BY THE ASSESSING OFFICER ON ACCOUNT OF ALLEGED EXCESS STOCK AND HAS FURTHER ERRED IN NOT DELETING THE SAME. 4. THE SHORT FACTS OF THE CASE ARE THAT THE ASSESSEE I S A CLOTH TRADER OF SAREE AND DRESS MATERIAL. 5. DURING THE COURSE OF HEARING OF THE APPEAL, THE AO FOUND THAT THE ASSESSEE HAS SUBMITTED CLOSING STOCK AND VALUE SUBMITTED TO BANK AND THE VALUE SUBMITTED AS PER TH E INCOME TAX RETURN. THERE WAS A DIFFERENCE IN CLOSING STOCK AND ITS VALUE. THEREFORE, THE AO TRIED TO FURNISH THE OPENI NG AND CLOSING STOCK OF THE PERIOD UNDER CONSIDERATION AND THE ASSESSEE WAS REQUESTED TO PRODUCE THE STOCK REGISTE R. AFTER EXAMINING THE RECORD, THERE WAS A SURVEY U/S 133A A ND DURING THE SURVEY IT WAS FOUND THAT THE STOCK VALUE D AT RS. 86,10,653/- WHILE THE STOCK AS PER BOOKS WAS RS. 69 ,13,613/- . AFTER REDUCING THE GROSS PROFIT ELEMENT, THE DIFF ERENCE IN M/S.KALA MANDIR, INDORE VS. ITO 2(3), INDORE I.T. A.NO. 720/IND./2015 A.Y. 2005-06 3 3 STOCK WAS AT RS. 8,76,075/-. FOR THE DIFFERENCE, TH E ASSESSEE CONTENDED THAT DISCOUNT WAS GIVEN AT 10% AND HENCE, IF 10% DISCOUNT IS GIVEN, THERE IS NO DIFFERENCE IN THE ST OCK. THE CONTENTION OF THE ASSESSEE WAS NOT SUPPORTED BY ANY DOCUMENTARY EVIDENCE AND THE SALE BILL DID NOT INDI CATE THE DISCOUNT. THE STATEMENT OF PARTNER WAS RECORDED WHE REIN HE HAS STATED THAT THEY ARE GIVING DISCOUNT FROM 10% T O 20%. HOWEVER, THE AO WAS OF THE VIEW THAT 10% DISCOUNT I S NOT POSSIBLE THROUGH THE ENTIRE YEAR. THEREFORE, THE AO HAS TAKEN THE DISCOUNT AT 7%. THEREFORE, HE IS JUSTIFIED IN H IS ACTION AND THE AO HAS CONFIRMED THE ADDITION OF RS. 2,09,159/- . THE LD. CIT(A) HAS DISMISSED THE APPEAL. 6. THE LD. AUTHORIZED REPRESENTATIVE SUBMITTED THAT TH E ASSESSEES CONTENTION THAT THE ASSESSEE IS GIVING 1 0% TO 25% DISCOUNT TO ALL THE CUSTOMERS. THE AO HAS TAKEN THE DISCOUNT AT 7%. IF THE AO ACCEPT THE CONTENTION OF THE ASSES SEE THAT THE ASSESSEE HAS GIVEN 10% DISCOUNT, THEN NO ADDITION I S CALLED FOR IN RESPECT OF VALUATION OF CLOSING STOCK. THE L D. AUTHORIZED REPRESENTATIVE CONTENDED THAT REASONABLE ESTIMATE S HOULD BE M/S.KALA MANDIR, INDORE VS. ITO 2(3), INDORE I.T. A.NO. 720/IND./2015 A.Y. 2005-06 4 4 MADE ON DISCOUNT ON SALES AND ADDITION MAY BE DELET ED OR IF NOT DELETED, THE ADDITION MAY BE REDUCED. 7. ON THE OTHER HAND THE LD. DR SUBMITTED THAT THE LD. CIT(A) IN HIS ORDER HAS CATEGORICALLY STATED THAT A S PER THE BOOKS, THE STOCK WAS VALUED AT RS. 69,13,613/-, WHI LE DURING THE COURSE OF SURVEY, STOCK WAS VALUED AT RS. 86,10 ,653/-. AFTER REDUCING THE GROSS PROFIT ELEMENT, THE STOCK WAS VALUED AT RS. 8,76,075/-. THE DIFFERENCE IS OF 10% DISCOUN T ONLY. IF ON THE SALE 10% DISCOUNT IS GIVEN, THEN THERE IS NO AD DITION IS CALLED FOR. THE ASSESSEE COULD NOT PRODUCE ANY EVID ENCE IN SUPPORT OF CLAIM OF HIS 10% DISCOUNT. THE AO HAS CA TEGORICALLY HELD THAT FROM THE NEWSPAPERS, SOME DISCOUNT SALES WERE ORGANIZED FOR VERY LIMITED PERIOD AND HE HAS RESTRI CTED THE DISCOUNT ON SALE AT 7%. THEREFORE, EVEN THE LD. CIT (A) IS JUSTIFIED. 8. HAVING HEARD BOTH THE PARTIES AND LOOKING TO THE FA CTS AND CIRCUMSTANCES OF THE CASE, I FOUND THAT THE AO WAS OF THE VIEW THAT 10% DISCOUNT IS NOT OFFERED ON SALE THROU GH THE ENTIRE YEAR, BUT DISCOUNT SALES WERE ORGANIZED FOR VERY LIMITED PERIOD. IN THESE CIRCUMSTANCES, HE WAS OF THE VIEW THAT 10% M/S.KALA MANDIR, INDORE VS. ITO 2(3), INDORE I.T. A.NO. 720/IND./2015 A.Y. 2005-06 5 5 DISCOUNT IS VERY EXCESSIVE AND HE HAS ESTIMATED THE DISCOUNT AT 7% ON THE SALES AND MADE THE ADDITION OF RS. 2,0 9,159/-, WHICH IS ON HIGHER SIDE. THEREFORE, IN THE INTEREST OF JUSTICE AND FAIR PLAY, I DELETE THE ADDITION OF RS. 50,000/ - OUT OF RS. 2,09,159/- AND CONFIRM THE REST OF THE ADDITION I.E . RS. 1,59,159/- IS CONFIRMED ON ESTIMATE BASIS. 9. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS PARTLY ALLOWED. THIS ORDER HAS BEEN PRONOUNCED IN THE OP EN COURT ON 2 ND MARCH, 2016, SD/- ( D.T.GARASIA) JUDICIAL MEMBER DATED : 2 ND MARCH, 2016. CPU* 24.1.3