ACIT, V. M/s Classic Automobiles,

ITA 77/RAN/2013

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 85460 (ITAT-RANCHI)
• Duration Of Justice: 1 year(s) 3 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 26-11-2014
• Appeal Filed By: Department
• Bench Allotted: DB
• Assessment Year: 2009-2010
• Appeal Filed On: 03-08-2013
• Court: TRIBUNAL
• Department Lawyers: S K PODDAR LD
• Assessee Lawyers: CHOUDHURY ORAM JCITL

Judgement Text

1 ITA NO.77/RAN/13 & CO NO.14/RAN/13 M/S. CLASSIC AUTOMOBILES INCOME TAX APPELLATE TRIBUNAL, CIRCUIT BENCH, RANCHI BEFORE HON'BLE SHRI H.L. KARWA, PRESIDENT , AND HON'BLE SHRI B.R. BASKARAN, ACCOUNTANT M EMBER ITA NO . 77 /RAN/2013 A.Y 2009 - 10 A.C.I.T, CIRCLE - 1, DHANBAD VS. M/S. CLASSIC AUTOMOBILES, D BAD PAN : AABFC 3052D ( DEPARTMENT ) ( RESPONDENT ) C.O NO. 14/RAN/13 [ARISING OUT OF ITA NO .77/RAN/2013 A.Y 2009 - 10 ] M/S. CLASSIC AUTOMOBILES, D BAD VS. A.C.I.T, CIRCLE - 1, DHANBAD (CROSS OBJECTOR) (DEPARTMENT) FOR THE APPELLANT /ASSESSEE : SH RI S.K PODDAR , ADVOCATE, LD.AR FOR THE RESPOND ENT /DEPARTMENT : SHRI CHOUDHURY ORAM, JCIT/LD.DR DATE OF HEARING : 2 6 - 11 - 2014 DATE OF PRONOUNCEMENT: 2 6 - 11 - 201 4 ORDER SHRI B.R. BASKARAN, ACCOUNTANT MEMBER : THE APPEAL FILED BY THE REVEN UE AND THE CROSS OBJECTION FILED BY THE ASSESSEE ARE DIRECTED AGAINST THE ORDER DATED 14.5.2013 PASSED BY LD CIT(A), JHARKHAND AND THEY RELATE TO THE ASSESSMENT YEAR 2009 - 10. THE REVENUE IS AGGRIEVED BY THE DECISION OF LD CIT(A) IN DELETING THE ADDITION O F RS.1,87,53,557/ - RELATING TO THE DIFF ERENCE IN THE STOCK VALUE BETWEEN THE BOOKS AND THE STATEMENT FILED WITH THE BANK . THE ASSESSEE HAS FILED THE CROSS OBJECTION TO SUPPORT THE ORDER OF LD CIT(A). 2. WE HEARD THE PARTIES AND PERUSED THE RECORD. WE NO TICE THAT THE ASSESSEE HAS SHOWN A STOCK OF RS .8.33 CRORES IN THE AUDITED FINANCIAL STATEMENT FILED BEFORE THE BANK. HOWEVER IN THE RETURN OF INCOME, THE STOCK WAS SHOWN AT 2 ITA NO.77/RAN/13 & CO NO.14/RAN/13 M/S. CLASSIC AUTOMOBILES RS.6.45 CRORES AND HENCE THE AO ADDED THE DIFFERENCE OF RS.1.88 CRORES TO THE TOTA L INCOME OF THE ASSESSEE. IN THE APPELLATE PROCEEDINGS, THE LD CIT(A) ACCEPTED THE CONTENTIONS OF THE ASSESSEE THAT THE FINANCIAL STATEMENTS GIVEN TO THE BANK ARE INFLATED AND HENCE DELETED THE DISALLOWANCE. 3. THE ASSESSEE IS A DEALER OF VEHICLES OF M/S TATA MOTORS LTD. IT HAD AVAILED A CC LIMIT FROM STATE BANK OF INDIA AND ACCORDINGLY SUBMITTED THE AUDITED FINANCIAL STATEMENTS TO THE BANK, WHICH WAS IN VARIANCE TO THE ONE FILED ALONG WITH THE RETURN OF INCOME. THE SUBMISSION OF THE ASSESSEE IS THAT THE FINANCIAL STATEMENTS SUBMITTED TO THE BANK WAS ADJUSTED TO COMPLY WITH THE REQUIREMENTS OF THE BANK AND HENCE IT SHOULD NOT BE RELIED UPON . IT IS PERTINENT TO NOTE THAT THE PURCHASES MADE BY THE ASSESSEE FROM M/S TATA MOTORS LTD DURING THE YEAR UNDER CONSIDERATION WAS RS.27.80 CRORES AND THE SAME WAS ALSO CONFIRMED BY THE ABOVE SAID COMPANY. HOWEVER, IN THE FINANCIAL STATEMENTS FURNISHED TO THE BANK, THE PURCHASES WAS SHOWN AT RS.32.13 CRORES , WHICH SHOWS THAT THE SAME WAS NOT CORRECT . IN FACT, THES E DETAILS WERE REMANDED TO THE ASSESSING OFFICER BY LD CIT(A) DURING THE COURSE OF APPELLATE PROCEEDINGS AND THE AO HAS ALSO CONFIRMED THAT THE PURCHASES MADE BY THE ASSESSEE DURING THE FINANCIAL YEAR 2008 - 09 ARE CORRECT AND FURTHER REPORTED THAT HE DID NO T FIND ANY DISCREPANCY. THE BANK MANAGER ALSO CONFIRMED THAT THE BANK DID NOT CARRY OUT PHYSICAL VERIFICATION OF THE STOCK AVAILABLE AT THE YEAR END . ACCORDINGLY, THE LD CIT(A) DELETED THE ADDITION WITH THE FOLLOWING OBSERVATIONS: - (PARA 8 OF THE CIT(A) 8. I HAVE CONSIDERED THE FACTS OF THE CASE. IN THE CASE OF THE APPELLANT, THE MAIN SUPPORT TO THE PLEA OF THE APPELLANT IS THAT IT IS AN AUTHORIZED DEALER OF M/S. T ATA MOTORS LIMITED AND PRESUMPTION CAN SAFELY BE MADE THAT THE CORRECT FIGURES OF PURCHA SES CAN BE O B TAINED FROM M/S. TATA MOTORS LIMITED AS THIS CONCERN CANNOT BE SUSPECTED TO HAVE SOLD CARS OR MUVS OUTSIDE BOOKS OF ACCOUNT OR TO ANY PERSON WHO IS NOT AN AUTHORIZED DEALER. THEREFORE, IT CAN BE PRESUMED THAT THE FIGURE OF PURCHASES OF THE APP ELLANT ARE AT RS.27,80,48,502/ - AS PER VERIFICATION MADE IN THE REMAND PROCEEDINGS AND NOT AT 3 ITA NO.77/RAN/13 & CO NO.14/RAN/13 M/S. CLASSIC AUTOMOBILES RS.32,13,30,069/ - AS DISCLOSED TO THE BANK . FURTHER, FROM A COMPARISON OF BALANCE SHEET FURNISHED TO THE BANK AND THAT FURNISHED TO THE INCOME - TAX DEPAR T MENT, IT IS SEEN THAT IN THE BALANCE SHEET FURNISHED TO THE BANK, SEVERAL OTHER DETAILS HAVE BEEN OMITTED E.G THE APPELLANT IS HAVING A LOAN OF RS.26.99 LAKHS FROM S TANDARD CHARTERED BANK. FURTHER, IT IS HAVING BANK ACCOUNTS WITH ICICI BANK, HDFC BANK, INDUSLAND BANK AND BANK OF BARODA. HOWEVER, NONE OF THE ABOVE DETAILS ARE APPEARING IN THE BALANCE SHEET FURNISHED TO THE BANK . MOREOVER, AS PER THE BALANCE SHEET FURNISHED TO THE BANK AS ON 31 - 03 - 2008, CLOSING STOCK DISCLOSED IS AT RS.[48463568 + 4337186]=RS. 5,28, 00,754 / - , WHEREAS, IN THE BALANCE SHEET FILED WITH THE DEPARTMENT, THE CLOSING STOCK DISCLOSED AS ON 31.03.2008 IS AT RS. [64543290+4337186]=RS. 6,88,80,476/ - . THUS, SUBSTANTIALLY HIGHER CLOSING STOCK HAS BEEN DISCLOSED IN THE BALANCE SHEET FILED WITH THE D EPARTMENT AS COMPARED TO THAT FILED WITH THE BANK. AS ON 31.03.2008, THE BALANCE STANDING IN THE CASH CREDIT ACCOUNT WAS AT RS.4,54,37,752/ - ONLY. THEREFORE, THE REQUIREMENT OF THE BANK COULD BE SATISFIED WITH A LESSER STOCK. FROM THE STATEMENT OF THE BRA NCH MANAGER RECORDED BY THE ASSESSING OFFICER, IT IS CLEAR THAT NO PHYSICAL VERIFICATION OF THE CLOSING STOCK WAS CARRIED OUT BY THE BANK ON 31.03.2009. ACCORDINGLY, IN VIEW OF FINDING REGARDING CORRECTNESS OF THE PURCHASES IN THE REMAND REPORT, THE FACT O F SUBSTANTIALLY HIGHER CLOSING STOCK BEING DISCLOSED TO THE DEPARTMENT IN THE PROCEEDING ASSESSMENT YEAR, NO DISCREPANCY OR DEFECT BEING FOUND IN THE BOOKS OF ACCOUNT PRODUCED OR IN THE COMPLETE ITEMWISE DETAILS OF OPENING STOCK, PURCHASES, SALES AND CL OSING STOCK FURNISHED AND OTHER FACTS AS MENTIONED ABOVE, THE SUBMISSION OF THE APPELLANT THAT THE FIGURES SUBMITTED TO THE BANK WERE NOT HE ACTUAL FIGU R ES BUT IMAGINARY FIGURES JUST TO SATISFY THE REQUIREMENT OF THE BANK FOR CONTINUANCE OF THE CC LIMIT A PPEARS ACCEPTABLE. ACCORDINGLY, THE ADDITION IS DELETED. 4. ON A CAREFUL PERUSAL OF THE ORDER OF LD CIT(A), WE NOTICE THAT THE ASSESSING OFFICER HIMSELF HAS ACCEPTED THE FACT THAT THERE WAS NO DISCREPANCY IN THE PURCHASES AND HENCE THERE WAS NO POS SIBILITY TO MAKE PURCHASES/SALES OUTSIDE THE BOOKS OF ACCOUNT. HENCE WE ARE OF THE VIEW THAT THE LD CIT(A) HAS DELETED THE IMPUGNED ADDITION AFTER CONSIDERING ALL THE RELEVANT FACTS AND ACCORDINGLY WE CONFIRM HIS ORDER. ACCORDINGLY, WE DISMISS THE APPEAL FILED BY THE REVENUE. 4 ITA NO.77/RAN/13 & CO NO.14/RAN/13 M/S. CLASSIC AUTOMOBILES 5. SINCE WE HAVE DISMISSED THE APPEAL OF THE REVENUE, THE CROSS OBJECTION FILED BY THE ASSESSEE SHALL NOT SURVIVE. 6. IN THE RESULT, THE APPEAL FILED BY THE REVENUE AND THE CROSS OBJECTION FILED BY THE ASSESSEE ARE DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 2 6 - 11 - 2014 SD/ - SD/ - [ H.L. KARWA ] [ B.R. BASKARAN ] PRESIDENT ACCOUNTANT MEMBER DATE: 2 6 .11.2014 PLACE : RANCH I PP, SPS COPY OF THE ORDER FORWARDED TO: 1. THE APPELLANT : ACIT,CIR - 1, D BAD . 2 THE RESPONDENT: M/S. CLASSIC AUTOMOBILES, SHASTRI NAGAR,D BAD 3. .THE CIT, 4.THE CIT(A), 5.DR, ITAT CIRCUIT BENCH, RANCHI 6. GUARD FILE. TRUE COPY, BY ORDER, ASSTT. REGISTRAR 5 ITA NO.77/RAN/13 & CO NO.14/RAN/13 M/S. CLASSIC AUTOMOBILES 1. DATE OF DICTATION ............. 2 6 - 11 - 2014 DICTATED ON MEMBER S LAPTOP. HENCE, SHORTHAND PAGES NOT AVAILABLE ....................... 2. DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE DI CTATING MEMBER ........................OTHER MEMBER ....... 2 7 - 11 - 2014 ........................ 3. DATE ON WHICH THE APPROVED DRAFT COMES TO THE SR. P.S./P.S. ..................... 4. DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE THE DICTATING MEMBER FOR PRO NOUNCEMENT................... 2 6 - 11 - 14 .................................................................. 5. DATE ON WHICH THE FAIR ORDER COMES BACK TO THE SR. P.S./P.S ................ 6. DATE ON WHICH THE FILE GOES TO THE BENCH CLERK ...................... ................. 7. DATE ON WHICH THE FILE GOES TO THE HEAD CLERK ......................................... 8. THE DATE ON WHICH THE FILE GOES TO THE ASSISTANT REGISTRAR FOR SIGNATURE ON THE ORDER .......................................................... ....................................... 9. DATE OF DESPATCH OF THE ORDER ..............................................................