SHRI ANIL KUMAR GOYAL, Neemuch V. THE ITO, Neemuch

ITA 772/IND/2014

• Counselvise Citation: 77222714 RSA 2014
• Duration Of Justice: 1 year(s) 12 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-12-2015
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: DB
• Assessment Year: 2006-2007
• Appeal Filed On: 09-12-2014
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: G S GAUTAM
• Assessee Lawyers: SANJEEV GOYAL
• Section: 133A; 131

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.772/IND/2014 A.Y. : 2006-07. SHRI ANIL KUMAR GOYAL, ITO, NEEMUCH UJJAIN VS. APPELLANT RESPONDENT PAN NO. ADOPG3511D A PPELLANT S BY : SHRI SANJEEV GOYAL, C.A. RESPONDENT BY : SHRI G.S.GAUTAM, DR O R D E R THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER OF CIT(A), UJJAIN, DATED 0.02.2014 FOR THE ASSESSME NT YEAR 2006-07. DATE OF HEARING : 09.11 .2015 . DATE OF PRONOUNCEMENT : 21 . 1 2 .2015 SHRI ANIL KUMAR GOYAL, NEEMUCH VS. ITO,NEEMUCH, I. T.A.NO. 772/IND/2014- A.Y. 2006-07 2 2 2. FOLLOWING GROUNDS HAVE BEEN TAKEN BY THE ASSESSEE : - (1) BECAUSE THE ADDITION MADE FOR SHARE PROFIT U/S 69A OF RS. 2,50,659/- BASED ON THE TRANSACTION BETWEEN M/S. GOLD STAR AND MR. MUKSH M.CHOKSI IS NOT CORRECT BOTH ON FACTS AND IN LAW. (2) BECAUSE THE ADDITION MADE ON ACCOUNT OF VALUATION OF CLOSING STOCK OF RS. 25,382/- IS NOT CORRECT BOTH ON FACTS AND IN LAW. 3. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE I S AN INDIVIDUAL. THE ASSESSEE IS DOING THE WHOLESALE TRA DING OF GRAINS AND OIL SEEDS IN THE NAME OF M/S. GOYAL & CO MPANY. THE RETURN OF INCOME DECLARING TOTAL INCOME OF RS. 4,04,153/- HAS BEEN FILED ON 31.10.2006. THE AO MADE THE ADDIT ION OF RS. 2,50,659/- ON ACCOUNT OF UNDISCLOSED INCOME FROM SH ARE TRANSACTIONS; RS. 25,382/- ON ACCOUNT OF CLOSING ST OCK. SHRI ANIL KUMAR GOYAL, NEEMUCH VS. ITO,NEEMUCH, I. T.A.NO. 772/IND/2014- A.Y. 2006-07 3 3 GROUND NO. 2 : 4. THE LD. AUTHORIZED REPRESENTATIVE SUBMITTED THAT TH E ADDITION IN RESPECT OF CLOSING STOCK CAN BE MADE AT COST OR MARKET VALUE WHICHEVER IS LOWER AND, IN THIS CASE, IF THE CLOSING STOCK IS ADDED, IT HAS TO BE TREATED AS OPE NING STOCK OF THE NEXT YEAR. THE LD. AUTHORIZED REPRESENTATIVE SU BMITTED THAT IF THE ASSESSEE HAS VALUED AT COST, BUT THE AO HAS ADOPTED THE MARKET VALUE, BUT IF THE ADDITION IS MA DE, IT MUST BE OPENING STOCK FOR EARLIER YEARS. HE RELIED UPON THE DECISION OF V.K.J.BUILDERS AND CONTRACTORS PVT.LTD., VS. CIT , (2009) 318 ITR 204 ( S. C.). 5. I HAVE HEARD THE RIVAL CONTENTIONS OF BOTH THE PART IES. LOOKING TO THE FACTS AND CIRCUMSTANCES OF THE CASE, I FIND THAT THE ASSESSEE HAS NO OBJECTION IF THE STOCK IS VALUE D AT MARKET OR AT COST, BUT HE HAS CONTENDED ONLY THAT IF THE A DDITION IS MADE THEN THE CLOSING STOCK WILL BE OPENING STOCK O F THE NEXT YEAR. I FIND THAT THE ISSUE IN CONTROVERSY IS COVER ED BY THE DECISION OF V.K.J.BUILDERS AND CONTRACTORS PVT.LTD. VS. CIT SHRI ANIL KUMAR GOYAL, NEEMUCH VS. ITO,NEEMUCH, I. T.A.NO. 772/IND/2014- A.Y. 2006-07 4 4 (SUPRA), WHEREIN IT IS CLEARLY HELD THAT IF ANY VAL UATION IS MADE IN CLOSING STOCK, THEN EFFECT OF THE SAME HAS TO BE GIVEN IN THE OPENING STOCK OF THE NEXT YEAR. THEREFORE, I DIRECT THE AO TO RECTIFY THE SAME ACCORDINGLY. GROUND NO. 2 IS ALLO WED. GROUND NO.1 : 6. THE AO HAS MADE THE ADDITION OF RS. 2,50,659/- ON ACCOUNT OF SHARE PROFIT U/S 69A. THE AO HAS RECEIVE D INFORMATION FROM CIT, UJJAIN, AND SURVEY WAS CONDUC TED U/S 133A OF THE ACT IN THE CASE OF M/S. MAHASAGAR SECUR ITIES P.LTD., IN WHICH SHRI MUKESH CHOKSI WAS DIRECTOR. I N THE SURVEY, IT WAS REVEALED THAT SHRI MUKESH CHOKSI WAS ACCOMMODATING ENTRIES OF LONG TERM CAPITAL GAINS AN D THE ASSESSEE IS ONE OF THE BENEFICIARIES. THEREFORE, TH E NOTICE WAS GIVEN AND THE AO HAS MADE THE ADDITION BY HOLDING T HAT THE ASSESSEE HAS SHOWN SPECULATION PROFIT FROM M/S. GOL D STAR FINVEST PRIVATE LIMITED, MUMBAI, WHEREIN MR.MUKESH CHOKSI IS A DIRECTOR. THEREFORE, THE AO MADE THE ADDITION. 7. THE MATTER CARRIED TO THE LD. CIT(A) AND THE LD. C IT(A) DISMISSED THE APPEAL OF THE ASSESSEE ON THIS GROUND . SHRI ANIL KUMAR GOYAL, NEEMUCH VS. ITO,NEEMUCH, I. T.A.NO. 772/IND/2014- A.Y. 2006-07 5 5 8. DURING THE COURSE OF HEARING OF THE APPEAL, THE LD. AUTHORIZED REPRESENTATIVE CONTENDED BEFORE ME THAT HE HAS MADE A VALID TRANSACTION WITH M/S. GOLD STAR FINVES T PRIVATE LIMITED. THE LD. AUTHORIZED REPRESENTATIVE CONTENDE D THAT THE ASSESSEE HAS NOT GIVEN ANY CASH TO MR.MUKESH CHOKSI AND THERE IS NO EVIDENCE FOR PAYMENT OF CASH TO MR.MUKE SH CHOKSI AND ONLY STATEMENT WAS RECORDED U/S 131, WHICH WAS NOT GIVEN TO THE ASSESSEE. 9. I HAVE HEARD THE RIVAL CONTENTIONS OF BOTH THE PART IES. LOOKING TO THE FACTS AND CIRCUMSTANCES OF THE CASE, I FIND THAT WHILE MAKING THE ADDITION, STATEMENT OF MR.MUKESH C HOKSI WAS NOT GIVEN TO THE ASSESSEE AND THE ASSESSEE WAS NOT GIVEN ANY OPPORTUNITY TO CROSS-EXAMINE MR.CHOKSI, BUT SIM PLY STATEMENT WAS RECORDED AND RELIED UPON BY THE ASSES SING OFFICER. BEFORE RELYING THE STATEMENT, THE ASSESSEE SHOULD HAVE BEEN GIVEN A PROPER OPPORTUNITY TO EXPLAIN REGARDIN G THE STATEMENT RECORDED U/S 131 OF MR. MUKESH CHOKSI. TH EREFORE, I REVERSE THE FINDING OF LD. CIT(A) AND I DIRECT TH E AO TO GIVE PROPER OPPORTUNITY TO THE ASSESSEE AND IF THE ASSES SEE DEEMS SHRI ANIL KUMAR GOYAL, NEEMUCH VS. ITO,NEEMUCH, I. T.A.NO. 772/IND/2014- A.Y. 2006-07 6 6 FIT, IS AT LIBERTY TO CALL FOR CROSS EXAMINATION OF MR. MUKESH CHOKSI AND THE AO IS DIRECTED TO DECIDE THE MATTER AS PER LAW. GROUND NO. 1 IS ALLOWED FOR STATISTICAL PURPOSES. 10. IN THE RESULT, THE APPEALS IS PARTLY ALLOWED FOR STATISTICAL PURPOSES. THIS ORDER HAS BEEN PRONOUNCED IN THE OP EN COURT ON 21 ST DECEMBER, 2015. SD/- ( D.T.GARASIA) JUDICIAL MEMBER DATED : 21 ST DECEMBER, 2015. CPU* 16.15