ACIT, Jabalpur V. Shri Vikash Kumar Singhai,

ITA 76/JAB/2012

• Counselvise Citation: [2014] 120 COUNSELVISE.COM (IT) 5608 (ITAT-JABALPUR)
• Duration Of Justice: 1 year(s) 7 month(s) 4 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-03-2014
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Assessment Year: 2008-2009
• Appeal Filed On: 23-08-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: VED PRAKASH MISHRA
• Assessee Lawyers: G N PUROHIT; ABHISHEK OSWAL
• Keywords: Corroborative evidences

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, JABALPUR BENCH, JABALPUR BEFORE SHRI BHAVNESH SAINI, JUDICIAL MEMBER AND SHRI T.S. KAPOOR, ACCOUNTANT MEMBER ITA NO.76/JAB/2012 ASSESSMENT YEAR: 2008-09 ASSTT. COMMISSIONER OF INCOME TAX, VS. SHRI VIKAS H KUMAR SINGHAI, CIRCLE 1 (1), JABALPUR. PROP. SINGHAI INDUSTRIES , SHOP NO.17, NEW GALLA MANDI, SAGAR (M.P.) (PAN AMLPS 4764 L) (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI VED PRAKASH MISHRA, D.R. RESPONDENT BY : SHRI G.N. PUROHIT, SR. ADVOCATE & SHRI ABHISHEK OSWAL, ADVOCATE DATE OF HEARING : 27.03.2014 DATE OF PRONOUNCEMENT : 28.03.2014 ORDER PER T.S. KAPOOR, ACCOUNTANT MEMBER: THIS IS AN APPEAL FILED BY THE REVENUE AGAINST THE ORDER OF LD. CIT(A) DATED 19.12.2011. 2 ITA NO.76/JAB/2012 A.Y. 2008-09 2. THE ONLY GROUND TAKEN BY THE REVENUE IS THE GRIE VANCE CAUSED TO IT BY THE ACTION OF LD. CIT(A) BY WHICH HE HAD DELETED THE AD DITION OF RS.48,70,700/- ON ACCOUNT OF QUANTITATIVE AND VALUE DIFFERENCE IN STO CK OF WHEAT. 3. THE LD. DEPARTMENTAL REPRESENTATIVE SUBMITTED TH AT THE ASSESSING OFFICER HAD MADE THE ADDITION ON FINDING DIFFERENCE IN VALU E OF STOCK IN THE BOOKS OF ACCOUNT OF THE ASSESSEE AND IN THE STOCK STATEMENTS GIVEN TO BANKER AND, THEREFORE, THE LD. CIT(A)S ACTION IN DELETING THE ADDITION IS NOT JUSTIFIED. 4. LD. AUTHORIZED REPRESENTATIVE, ON THE OTHER HAND , SUBMITTED THAT THE ASSESSEE IN ORDER TO AVAIL THE BANK FACILITY FROM B ANK SUBMITTED INFLATED FIGURES TO BANK WHICH WERE NEVER PHYSICALLY VERIFIED BY THE BA NKER AND THE STOCK WAS NOT PLEDGED BUT IT WAS HYPOTHECATED ONLY. FURTHER CONT INUING HIS ARGUMENT, LD. AUTHORISED REPRESENTATIVE SUBMITTED THAT BOOKS WERE NOT REJECTED AND THE STOCK AS PER BOOKS OF ACCOUNT WERE SHOWN TO SALES TAX AUTHOR ITIES WHICH WAS IN AGREEMENT WITH THE BOOKS OF ACCOUNTS. THEREFORE, THE LD. CIT (A) HAD RIGHTLY DELETED THE ADDITION. 3 ITA NO.76/JAB/2012 A.Y. 2008-09 5. WE HAVE HEARD THE RIVAL PARTIES AND GONE THROUGH THE MATERIAL PLACED ON RECORD. WE FIND THAT THE LD. CIT(A) HAS VERY ELABO RATELY DEALT WITH THE ISSUE AND DECIDED THE ISSUE IN FAVOUR OF THE ASSESSEE BY HOLD ING AS UNDER :- 4.3 THE COUNSEL IN HIS WRITTEN REPLY STATED THAT T HE BOOKS OF ACCOUNT OF E ASSESSEE WERE NOT REJECTED BY THE AO AND THERE IS NO OTHER REASON EXCEPT THE VARIATION IN THE STOCK SHOWN IN THE BOOK S OF ACCOUNTS AND STOCK REPORTED TO THE BANK FOR OBTAINING THE OVERDR AFT FACILITY. THE STOCK DECLARED THE BANK WAS ON ESTIMATED BASIS TO M ATCH THE OVERDRAFT OBTAINED FROM THE BANK WITHOUT REFERENCE TO THE ACT UAL STOCK AS PER REGISTER OR BOOKS OF ACCOUNTS. THE COUNSEL CITED SO ME DECIDED CASES IN FAVOUR OF THE ASSESSEE, HOWEVER THE AO DID NOT AGRE E WITH THE SAME AND MADE THE ADDITION. THE COUNSEL FURTHER CONTENDE D THAT THE STATEMENT OF STOCK AND AS SUBMITTED TO THE BANK IS FOR THE PURPOSE OF OVERDRAFT LIMIT ENJOYED BY THE ASSESSEE ON THE BASI S OF HYPOTHECATION OF STOCK. IT IS NOT A CASE OF PLEDGING OF STOCK WHE RE THE GOODS ARE LODGED IN THE GODOWN UNDER LOCK AND KEYS OF THE BAN K. THERE IS NO PHYSICAL VERIFICATION OF STOCK CARRIED OUT BY THE B ANK AND HENCE THERE IS NO EVIDENCE FROM RECORD THAT THE ASSESSEE WAS IN ACTUAL POSSESSION OF THE STOCK REPORTED TO THE BANK. THIS TYPE OF PRA CTICE IS RAMPANT IN THE LINE OF TRADE AS IN THE GRAIN SEASON THE REQUIR EMENT OF FUNDS IS VERY HIGH. THE COUNSEL CONTENDED FURTHER THAT THE C HARTERED ACCOUNTANT AUDITING THE BOOKS HAS NOT MADE ANY ADV ERSE COMMENT ON THE METHOD OF ACCOUNTING OF THE ASSESSEE. THE ASSES SEE HAD MAINTAINED ITEM WISE QUANTITATIVE DETAILS OF ITEM T RADED, PURCHASE AND SALES WERE FULLY SUPPORTED BY VOUCHERS. THAT IT IS NOT THE CASE OF THE DEPARTMENT THAT THE ASSESSEE WAS IN ACTUAL POSSESSI ON OF ALLEGED EXCESS STOCK REPORTED TO THE BANK OR ANY EVIDENCE O N RECORD TO SHOW THAT THERE WERE UNACCOUNTED PURCHASES THAT COULD RE SULT IN EXCESS STOCK IN POSSESSION OF THE ASSESSEE. THE AO HAS MAD E THE ADDITION SOLELY ON THE BASIS OF THE STOCK REPORTED TO THE BA NK AND THE ONUS WAS ON THE AO TO .PROVE THAT THE ASSESSEE WAS ACTUALLY IN POSSESSION OF SUCH EXCESS STOCK REPORTED TO THE BANK. IT WAS FURT HER CONTENDED THAT STATEMENTS SUBMITTED TO THE SALES TAX DEPARTMENT AN D THE COMMERCIAL AND CIVIL SUPPLIERS DEPARTMENT WILL JUSTIFY AND TAL LY WITH THE STOCK SHOWN THE BOOKS OF ACCOUNTS. THE EXCESS REPORTING O F STOCK IS ONLY FOR 4 ITA NO.76/JAB/2012 A.Y. 2008-09 THE PURPOSE OF AVAILING OVERDRAFT LIMIT AND FOR NO OTHER PURPOSE. RELIANCE PLACED OF THE JUDGMENTS OF VARIOUS HON'BLE HIGH COURTS AND THE DECISION OF THE BILASPUR ITAT IN THE CASE OF SH RI MOHANLAL SHRIMAL IN ITA NO.L06/BLPR/2009 DATED 14.10.2011 WH EREIN IT WAS HELD THAT ADDITION MADE ON STOCK REPORTED TO THE BA NK IS NOT JUSTIFIED AND HAS DELETED THE ENTIRE ADDITION. DECISION: I HAVE PERUSED THE MATERIAL ON RECORD AND THE SUBMI SSIONS OF THE COUNSEL CAREFULLY. THE APPELLANT TO SUBSTA NTIATE HIS CLAIM THAT THE FIGURES GIVEN TO THE BANK WERE ARBITRARY PRODUC ED BEFORE ME THE DAY TO DAY STOCK REGISTER ALONG WITH CASH BOOKS AND LEDGER, CERTIFIED COPIES OF THE ASSESSMENTS WITH ANNEXURES MADE BY TH E SALES TAX DEPTT. AND FORM NO.8, SUBMITTED TO THE COMMERCIAL T AX DEPTT. A STATEMENT OF MONTHLY STOCK IN CHART FORM WAS ALSO S UBMITTED. FROM THE CHART PRESENTED BEFORE ME, THE FIGURES OF MONTHLY STOCK AS PER THE REGISTER AND THE FIGURES GIVEN TO THE BANK ARE AT COMPLETE VARIANCE IN QUANTITY AND VALUE. THIS IS TH E CASE EVERY MONTH. THE SALES TAX ASSESSMENT ORDER WITH ANNEXURES SHOWS THAT THE SALES TAX DEPTT. AT ANNEXURES A HAS CERTIFIED CLOSING STO CK AT 382.3 QUINTALS AS SHOWN BY THE PELLANT IN HIS BOOKS OF ACCOUNTS. T HE FORM 8, SUBMITTED TO THE MMERCIAL TAX ALSO SHOWS THE VALUE OF THE CLOSING STOCK AT RS.4,20,629/- WHICH MATCHES WITH THE FIGUR ES OF THE BOOKS OF ACCOUNTS OF THE APPELLANT, 'HE ANNUAL ASSESSMENT FO RM OF THE KRISHI UPAJ MANDI, SAGAR SHOWS A CLOSING STOCK OF 382-3 QU INTALS. THE SUPPORTING EVIDENCE PRODUCED, CLEARLY INDICATES THAT THE CLOSING STOCK OF THE APPELLANT IS AS SHOWN IN HIS B OOKS OF ACCOUNTS, AND THE AUDIT REPORTS. IN VIEW OF THE ABOVE, THE ADDITIONS MADE ON ACCOUNT OF DIFFERENCE INCLOSING STOCK OF RS.48,70,700/- IS HER EBY DELETED. GROUNDS OF APPEAL ARE ALLOWED. 5 ITA NO.76/JAB/2012 A.Y. 2008-09 6. WE FIND THAT THE LD. CIT(A) HAS DEALT WITH THE I SSUE AND WE ARE IN AGREEMENT WITH THE FINDING OF LD. CIT(A) AND WE DO NOT FIND A NY INFIRMITY IN THE ORDER PASSED BY THE LD. CIT(A). IN VIEW OF THE ABOVE, APPEAL FI LED BY THE REVENUE IS DISMISSED. (ORDER PRONOUNCED IN THE OPEN COURT ON 28.03.2014) SD/- SD/- (BHAVNESH SAINI) (T.S. KAPOOR) JUDICIAL MEMBER ACCOUNTANT MEMBER DATE: 28 TH MARCH, 2014 PBN/* COPY OF THE ORDER FORWARDED TO :- 1) APPELLANT 2) RESPONDENT 3) CIT (APPEALS) CONCERNED 4) CIT CONCERNED 5) D.R., ITAT, JABALPUR BENCH, JABALPUR 6) GUARD FILE. BY ORDER, SR. PRIVATE SECRETARY INCOME TAX APPELLATE TRIBUNAL, CAMP AT JABALPUR