M/s. Silver star Seafoods Ltd, Alappuzha V. ITO, Alappuzha

ITA 763/COCH/2013

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 96731 (ITAT-COCHIN)
• Duration Of Justice: 1 year(s) 10 month(s) 10 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 08-10-2015
• Appeal Filed By: Assessee
• Bench Allotted: DB
• Next Hearing Date: 06-10-2015
• Assessment Year: 2004-2005
• Appeal Filed On: 28-11-2013
• Court: TRIBUNAL
• Department Lawyers: K P GOPAKUMAR
• Assessee Lawyers: C B M WARRIER
• Keywords: Unexplained expenditure; Depreciation
• Section: 144

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL COCHIN BENCH C OCHIN BEFORE S/SHRI B.P. JAIN, AM AND GEORGE GEOR GE K., JM I.T.A. NO. 763/COCH/2013 ASSESSMENT YEAR : 2004-05 M/S. SILVER STAR, SEAFOODS LTD., ANWAR PALACE, CHANDIROOR, CHERTHALA, ALAPPUZHA-688 547 PAN: AAECS 5858F] VS. THE INCOME TAX OFFICER, WARD-1, ALAPPUZHA. (ASSESSEE -APPELLANT) (REVENUE-RESPONDENT) ASSESSEE BY SHRI C.B.M. WARRIER, CA REVENUE BY SHRI K.P. GOPAKUMAR, SR. DR DATE OF HEARING 06/10/2015 DATE OF PRONOUNCEMENT 08/10/2015 O R D E R PER B.P.JAIN, ACCOUNTANT MEMBER: THIS APPEAL BY THE ASSESSEE ARISES FROM THE ORDER O F THE LD. CIT(A)-V, KOCHI DATED 27/09/2013 FOR THE ASSESSMENT YEAR 2004 -05. 2. THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS OF AP PEAL: 1. THE APPELLANT IS M/S. SILVER STAR SEAFOODS LTD. , ANWAR PALACE, CHANDIROOR, ALAPPUZHA AND IN REGARD TO THE ASSESSM ENT YEAR 2004- 05, THE INCOME TAX OFFICER, WARD-1, ALAPPUZHA HAS MADE AN ADDITION OF RS.24,10,195/- ON ACCOUNT OF DIFFERENCE IN THE STOCK AS PER THE STATEMENT OF ACCOUNT AND THE COMMISSIONER OF INCOM E TAX(APPEALS)-V, HAS GONE WRONG IN CONFIRMING THE S AME. I.T.A. NO.763/COCH/2013 2 2. THE APPELLANT HAS NOT SUPPRESSED ANY SALE AND T HE DIFFERENCE IN THE OPENING STOCK AND CLOSING STOCK ARE DUE TO INAD VERTENT MISTAKES AND THE ASSESSMENT OF RS.24,10,195/- IS NOT BASED O N ANY OTHER EVIDENCE. 3. THE COMMISSIONER OF INCOME TAX (APPEALS) HAS G ONE WRONG IN CONFIRMING THE ADDITION WITHOUT ANY EVIDENCE OF SUP PRESSED SALE. 4. FOR THE ABOVE REASONS AND OTHER ARGUMENTS THO SE MAY BE PUT FORWARD AT THE TIME OF HEARING THE APPELLANT MAY SU BMIT THAT THE ADDITION OF RS.24,10,195/- MAY BE CANCELLED. 3. THE BRIEF FACTS OF THE CASE AS EMANATING FROM THE ORDER OF THE ASSESSING OFFICER ARE REPRODUCED HEREINBELOW FOR THE SAKE OF CONVENIENCE: AS PER THE INCOME AND EXPENDITURE ACCOUNT FILED AL ONG WITH THE RETURN OF INCOME, THE OPENING STOCK IS 24.1 LAKH AN D CLOSING STOCK IS 17.20 LAKH WHERE ONLY A SALES OF RS.85,000/- IS SEE N ACCOUNTED. THE ASSESSEE IS SEA FOOD DEALER AND BEING A PERISHABLE ITEM, IT IS UNBELIEVABLE THAT THE OPENING STOCK IS CARRIED FORW ARDED AS CLOSING STOCK. LAST YEAR THE SALES OF THE ASSESSEE WAS 2.7 CRORE AT AN OPENING STOCK OF ONLY 78 LAKHS (AS PER COPY OF ANNU AL RETURN FILED WITH ROC). SO THE MINIMUM UNACCOUNTED SALES OF THE ASSESSEE THIS YEAR SHOULD BE 1 CRORE. THE GP DISCLOSED BY THE AS SESSEE LAST YEAR IS 4.48%. THE EXPENSES CLAIMED BY THE ASSESSEE THIS Y EAR IS MUCH HIGHER IN RESPECT OF ESTABLISHMENT EXPENSES AS COMP ARED TO LAST YEAR. CONSIDERING THIS, I AM TAKING THE PROFIT FRO M UNACCOUNTED SALES AS RS.5,00,000/-. THE CLOSING STOCK AS PER FORM 3CD ATTACHED TO THE RETURN OF INCOME FOR A.Y. 2003-04 IS NIL AS ON 31.3.2003 WHER EAS IT IS RS.24,10,195/- AS PER INCOME AND EXPENDITURE ACCOUNT ATTACHED WITH THE RETURN OF INCOME FOR A.Y. 2004-05. THE AS SESSEE HAS FILED COPY OF ANNUAL RETURN FILED WITH REGISTRAR OF COMPA NIES AND HAS FILED A CLARIFICATION FOR THE STOCK DIFFERENCE STATING TH AT RAW MATERIAL CONSUMED IS NOTHING BUT OPENING STOCK PLUS PURCHASE MINUS CLOSING STOCK AND IT WAS BY AN OVERSIGHT THAT THE S AID PROFIT AND LOSS ACCOUNT AND BALANCE SHEET WERE FILED ALONG WITH THE RETURN OF INCOME. BUT THE REPLY OF THE ASSESSEE IS NOT ACCEPTABLE SINCE THERE ARE MANY MORE DIFFERENCES IN PROFIT & L OSS ACCOUNT AND I.T.A. NO.763/COCH/2013 3 BALANCE SHEET FILED ALONG WITH THE RETURN AND THE C OPIES FILED WITH ROC LIKE GROSS PROFIT, DEPRECIATION ETC. WITH THE F INAL NET PROFIT SAME IN BOTH. I AM MAKING AN ADDITION OF RS.24,10,195 I N THIS REGARD. THE TOTAL ADDITION COMES TO RS.28,10,195. 4. THE LD. CIT(A) CONFIRMED THE ACTION OF THE ASSESSING OF FICER. 5. THE LD. COUNSEL FOR THE ASSESSEE, SHRI C.B.M. WARRI ER ARGUED THAT THE ASSESSMENT FOR THE ASSESSMENT YEAR 2003-04 HAS BEE N MADE UNDER SECTION 144 OF THE ACT AND ALL THE DEFICIENCIES IN THAT YEAR HA S BEEN TAKEN CARE OF BY THE ASSESSMENT MADE BY THE ASSESSING OFFICER UNDER SECT ION 144 OF THE ACT. THEREFORE, WHETHER THIS CLOSING STOCK WAS THERE OR NOT FOR THE YEAR ENDING 31/03/2003 RELEVANT TO THE ASSESSMENT YEAR 2003-04 WILL NOT AFFECT THE PROFITABILITY OF THE IMPUGNED YEAR, I.E., ASSESSMEN T YEAR 2004-05. IN FACT, THE ASSESSEE HAD DECLARED CONSUMPTION OF RAW MATERIAL W HICH IS OPENING STOCK PLUS PURCHASE MINUS CLOSING STOCK DURING THE YEAR ENDING 31/03/2003 RELEVANT TO THE ASSESSMENT YEAR 2003-04 AND IT HAS NO CHANCE TO DEC LARE THE CLOSING STOCK IN THE PROFIT AND LOSS ACCOUNT. IT IS ONLY BY MISTAKE THA T THE OPENING STOCK IN THE IMPUGNED YEAR AMOUNTING TO RS.24,10,195/- HAS BEEN DECLARED. ACCORDINGLY, THE ORDER OF THE LD. CIT(A) IS LIABLE TO BE REVERSE D. 6. THE LD. DR, ON THE OTHER HAND, RELIED UPON TH E ORDER OF BOTH THE AUTHORITIES BELOW. I.T.A. NO.763/COCH/2013 4 7. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUS ED THE FACTS OF THE CASE. AT THE OUTSET, THE BENCH MADE A QUERY TO THE LD. COUNS EL FOR THE ASSESSEE WHY THE AUDITED ACCOUNTS FOR THE YEAR ENDING 31/03/2003 PER TAINING TO THE ASSESSMENT YEAR 2003-04 ALONGWITH THE AUDIT REPORT IN FORM 3CD IS NOT ON RECORD. THE BENCH WAS INTERESTED IN VERIFYING THE SAME. THE LD. AR RESPONDED THAT HE CONSIDERED THAT EVEN IF THERE IS NO AUDIT REPORT OR UNAUDITED ACCOUNTS ON RECORD, THE ASSESSMENT FOR THE ASSESSMENT YEAR 2003-04 MADE UNDER SECTION 144 OF THE ACT HAS TAKEN CARE OF ALL THE DEFICIENCIES IN THAT YEAR WHICH SHALL NOT HAVE IMPACT ON THE PROFITABILITY OF THE IMPUGNED YEAR. THIS AR GUMENT OF THE ASSESSEE DOES NOT HOLD GOOD ON FACTS AS WELL AS ON LAW. EVEN IF TH E ASSESSEE HAS DECLARED CONSUMPTION OF RAW MATERIAL WHICH IS OPENING STOCK PLUS PURCHASE MINUS CLOSING STOCK, THEN IN SUCH CIRCUMSTANCES, FORM 3CD IN THE AUDITABLE CASE GIVES ALL THE DETAILS. THE DETAILS WERE NOT PLACED ON RECORD. IT WAS ALSO ARGUED THAT THERE WAS A MISTAKE MADE BY THE AUDITOR IN FORM 3CD. IT IS N OT UNDERSTANDABLE WHY FORM 3CD HAS NOT BEEN GOT AMENDED FROM THE AUDITOR DURIN G THE COURSE OF ASSESSMENT PROCEEDINGS OR BEFORE THE FIRST APPELLAT E AUTHORITY, I.E., LD. CIT(A) OR EVEN BEFORE US. NOTHING HAS BEEN PLACED IN THE FOR M OF RECTIFIED OR AMENDED FORM 3CD. THE ARGUMENT THAT THE ASSESSMENT MADE UN DER SECTION 144 HAS TAKEN CARE OF ALL THE DEFICIENCIES OF THE ASSESSMEN T YEAR 2003-04 CANNOT CHANGE THE FIGURE OF CLOSING STOCK WHICH IS DECLARED AS NI L IN FORM 3CD AS REPORTED BY THE AUDITOR. THE REPORT OF THE AUDITOR IS NOT UNDE R CHALLENGE BEFORE ANY OF THE AUTHORITIES BELOW OR EVEN BEFORE US OR ANY OTHER AU THORITIES. IN SUCH I.T.A. NO.763/COCH/2013 5 CIRCUMSTANCES AND FACTS OF THE CASE, THE UNAUDITED PAPERS RELIED UPON BY THE LD. AR CANNOT HELP THE ASSESSEE. ACCORDINGLY, THE AUDI T REPORT IN FORM 3CD IN WHICH THE CLOSING STOCK HAS BEEN DECLARED AS NIL IS TO BE TREATED AS CORRECT AND DECLARATION OF OPENING STOCK AT RS.24,10,195/- DURI NG THE IMPUGNED YEAR IS UNEXPLAINED EXPENDITURE WHICH HAS RIGHTLY BEEN ADDE D AS INCOME DURING THE IMPUGNED YEAR BY THE ASSESSING OFFICER AND HAS RIGH TLY BEEN CONFIRMED BY THE LD. CIT(A). ACCORDINGLY, WE DO NOT FIND ANY INFIRM ITY IN THE ORDER OF THE LD. CIT(A). THUS ALL THE GROUNDS RAISED BY THE ASSESSE E ARE DISMISSED. 8. IN THE RESULT, THE APPEAL FILED BY THE ASSES SEE IS DISMISSED. PRONOUNCED IN THE OPEN COURT ON 08-10-2015. SD/- SD/- (GEORGE GEORGE K.) (B.P. JAIN) JUDICIAL MEMBER ACC OUNTANT MEMBER PLACE: KOCHI DATED: 8TH OCTOBER, 2015 GJ COPY TO: 1. M/S. SILVER STAR, SEAFOODS LTD., ANWAR PALACE, C HANDIROOR, CHERTHALA, ALAPPUZHA-688 547. 2. THE INCOME TAX OFFICER, WARD-1, ALAPPUZHA. 3. THE COMMISSIONER OF INCOME-TAX(APPEALS)-V, KOCHI 4. THE COMMISSIONER OF INCOME-TAX, TRIVANDRUM. 5. D.R., I.T.A.T.,COCHIN. 6. GUARD FILE. BY ORDER (ASSISTANT REGISTRAR) I.T.A.T., COC HIN I.T.A. NO.763/COCH/2013 6