MADAN LAL, Alwar V. ITO, Alwar

ITA 791/JPR/2013

• Counselvise Citation: 79123114 RSA 2013
• Duration Of Justice: 2 year(s) 22 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 16-11-2015
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: SMC
• Assessment Year: 2008-2009
• Appeal Filed On: 25-10-2013
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: RAJ MEHRA JCIT DR DHK
• Assessee Lawyers: R N MEHARWAL
• Keywords: Tax effect

Judgement Text

VK;DJ VIHYH; VF/KDJ.K] T;IQJ U;K;IHB] T;IQJ IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCHES (SMC), JAIPUR JH VKJ-IH-RKSYKUH] U;KF;D LNL; DS LE{K BEFORE: SHRI R.P. TOLANI, JUDICIAL MEMBER VK;DJ VIHY LA-@ ITA NO. 791/JP/2013 FU/KZKJ.K O'K Z@ ASSESSMENT YEAR : 2008-09 SHRI MOHAN LAL PROP. M/S. RAM DAYAL SHYAM LAL 15, NEW ANAJ MANDI, KHERILI (ALWAR ) CUKE VS. THE ITO WARD- 1 (2) ALWAR LFKK;H YS[KK LA-@THVKBZVKJ LA-@ PAN/GIR NO .: AAVPL 0207 D VIHYKFKHZ@ APPELLANT IZR;FKHZ@ RESPONDENT FU/KZKFJRH DH VKSJ LS@ ASSESSEE BY : SHRI R.N. MEHARWAL JKTLO DH VKSJ LS@ REVENUE BY :SHRI RAJ MEHRA, JCIT -DR LQUOKBZ DH RKJH[K@ DATE OF HEARING : 13/11/2015 ?KKS'K .KK DH RKJH[K@ DATE OF PRONOUNCEMENT : 16 /11/2015 VKNS'K@ ORDER PER R.P. TOLANI, JM THIS IS AN APPEAL FILED BY THE ASSESSEE AGAINST TH E ORDER OF THE LD. CIT(A), ALWAR; DATED 25-07-2013 FOR THE ASSESSMENT YEAR 2008-09 WHEREIN FOLLOWING GROUNDS HAVE BEEN RAISED BY THE A SSESSEE. 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, LD. AO ,WARD- 1(2) ALWAR ERRED IN APPLYING AN D LD. CIT(A) HOLDING THE APPLICATION OF SECTION 145(3) AN D THEREBY REJECTING TRADING RESULTS WITHOUT ANY BASIS AND THUS LIABLE TO BE QUASHED. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, LD. AO ,WARD- 1(2) ALWAR ERRED IN ADDING RS. 70,000/- IN TRADING RESULTS AND ALSO LD. CIT(A) ERRED IN FUR THER ITA NO.791/JP/2013 SHRI MOHAN LAL VS. ITO WARD- 1(2), ALWAR . 2 ENHANCING THE ADDITION BY RS. 1,85,738/- AND THUS T HE ENTIRE TRADING ADDITION OF RS. 2,5,738/- IS WITHOUT ANY BA SIS, GROSSLY UNJUSTIFIED AND LIABLE TO BE DELETED ENTIRELY. 2.1 BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE D EALS IN FOOD GRAINS AND OIL SEEDS ETC. DURING THE COURSE OF ASSESSMENT PROC EEDINGS, THE AO MADE AN ADDITION OF RS. 70,000/- TOWARDS TRADING ADDITIO N BY FOLLOWING OBSERVATIONS. ABOVE FACTS SHOW THAT THE ASSESSEE HAS VALUED THE CLOSING STOCK ON ESTIMATE BASIS. DURING THE ASSESSM ENT PROCEEDINGS, THE ASSESSEE DID NOT PRODUCE QUALITATI VE TALLY OF TOCK ITEMS OR THE STOCK REGISTER FOR VERIFICATION. THE BOOKS RESULTS ARE THEREFORE, NOT SUBJECT TO PROPER VERIFI CATION AND AS SUCH I AM NOT SATISFIED WITH CORRECTNESS AND COM PLETENESS OF THE ACCOUNTS MAINTAINED BY THE ASSESSEE. HENCE, PROVISIONS OF SECTION 145(3) OF THE I.T. ACT, 1961 ARE INVOKED IN THIS CASE AND A LUMPSUM ADDITION OF RS. 70,000/- IS MADE TO THE TOTAL INCOME OF THE ASSESSEE FOR SAKE OF ANY POSSIBLE LEAKAGE OF INCOME. 2.2 AGGRIEVED, THE ASSESSEE PREFERRED FIRST APPEAL; LD. CIT(A) CALLED FOR REMAND REPORT FROM THE AO WHICH INDICATED VARIOUS O THER DISCREPANCIES; REMAND REPORT WAS PROVIDED TO THE ASSESSEE FOR REJO INDER. AFTER TAKING INTO CONSIDERATION OF THE MATERIAL AVAILABLE ON REC ORD, REMAND REPORT AND REJOINDER, THE LD. CIT(A) ENHANCED THE CLOSING STOC K VALUATION AND DIRECTED THE AO TO GIVE BENEFIT THEREOF TO ASSESSEE IN THE OPENING STOCK NEXT ASSESSMENT YEAR I.E. 2009-10 BY FOLLOWING OBSE RVATIONS. 4.7 I HAVE GONE THROUGH THE WRITTEN SUBMISSION AN D FIND THAT THE AO WAS JUSTIFIED IN INVOKING THE PROV ISIONS OF ITA NO.791/JP/2013 SHRI MOHAN LAL VS. ITO WARD- 1(2), ALWAR . 3 SECTION 145(3) OF THE I.T. ACT. HOWEVER, IN VIEW OF THE DISCUSSION ABOVE, I AM OF THE OPINION THAT THERE IS NO JUSTIFICATION IN MAKING THE ADDITION ON LUMP SUM BA SIS WHEN THE ACCURATE FIGURES FOR VALUATION OF CLOSING STOCK ARE AVAILABLE. THESE FIGURES OF VALUATION HAVE NOT BEEN CONTROVERTED BY THE APPELLANT WITH THE HELP OF ANY OTHER EVIDENCE. THE COMMENTS GIVEN BY THE APPELLANT ARE G ENERAL IN NATURE. ACCORDINGLY, I HAVE NO HESITATION IN HOL DING THAT THE ADDITION MADE ON ESTIMATE BUSINESS ON ACCOUNT OF UNDER VALUATION OF STOCK NEEDS TO BE ENHANCED FROM RS. 70 ,000/- TO RS. 2,55,738/-. THE AO IS HOWEVER, DIRECTED TO GIVE RELIEF TO THE APPELLANT IN THE OPENING STOCK OF THE NEXT ASSE SSMENT YEAR I.E. 2009-10. 2.3 AGGRIEVED, THE ASSESSEE IS IN SECOND APPEAL. 2.4 THE LD. COUNSEL FOR THE ASSESSEE FILED THE WRIT TEN SUBMISSION MADE ORAL SUBMISSIONS TO THE EFFECT THAT :- (I) ASSESSEE'S BOOKS OF ACCOUNT ARE AUDITED. (II) THE ASSESSEE WAS FOLLOWING CONSISTENT PRACTICE OF VALUATION OF CLOSING STOCK AT MARKET RATE AND NO SP ECIFIC DEFECTS HAVE BEEN POINTED OUT (III) LD. CIT(A) RELIED ON MARKET RATE SUPPLIED BY KRISHI UPAJ MANDI SAMITI WHEREAS THE ASSESSEE HAS VALUED THE STOCK ON THE BASIS OF OWN PURCHASE AND SALE BILLS F OR MARCH AND APRIL WHICH WERE MORE RELIABLE (IV) THERE WERE HUGE DIFFERENCE IN THE RATES OF SAR SON, GUAR AND GUARGUM. THE ADDITION MADE IS UNJUSTIFIED WHICH MAY BE DELETED. 2.5 THE LD. DR ON THE OTHER HAND CONTENDS THAT THE AO HAS GIVEN CATEGORICAL FINDINGS THAT STOCK HAS BEEN VALUED BY THE ASSESSEE ON ITA NO.791/JP/2013 SHRI MOHAN LAL VS. ITO WARD- 1(2), ALWAR . 4 ESTIMATE BASIS AND NO QUALITATIVE TALLY OF THE STO CK WAS FURNISHED. THEREFORE, THERE IS NO MERIT IN THE ARGUMENTS OF TH E LD. COUNSEL THAT THE ASSESSEE HAD VALUED ITS STOCK ON MARKET VALUE AND B ASED ON ITS QUALITY. THE LD. CIT(A) AFTER CONSIDERING THE REMAND REPORT AND ASSESSEE'S REJOINDER AND BY DETAILED FINDINGS OF FACT HAS DEMO NSTRATED THAT STOCK WAS UNDERVALUED. THE ADDITION DOES NOT RESULT INTO ANY MAJOR TAX EFFECT INASMUCH AS LD. CIT(A) HAS BEEN MOST REASONABLE IN DIRECTING THAT THE BENEFIT OF INCREASED VALUATION OF CLOSING STOCK BE GIVEN TO THE ASSESSEE IN SUBSEQUENT YEAR AS OPENING STOCK. 2.6 I HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE MATERIALS AVAILABLE ON RECORD. AS THE FACTS EMERGE, ASSESSEE HAS FAILED TO PRODUCE THE QUALITATIVE DETAILS OF THE STOCK WHICH IT VEHEM ENTLY CLAIMS TO BE MAINTAINED BY HIM. SINCE ASSESSEE'S STOCK DETAILS W ERE UNVERIFIABLE, REJECTION OF BOOKS OF ACCOUNT AND ADDITION FOR LIMI TED PURPOSE OF STOCK VALUATION IS JUSTIFIED. THE LD. CIT(A) WHILE HEARIN G THE APPEAL OF THE ASSESSEE IS VESTED WITH POWER U/S 251 OF THE ACT. THERE WERE FURTHER DISCREPANCIES IN THE STOCK WHICH WERE SOUGHT TO BE EXAMINED THROUGH REMAND REPORT AND REJOINDER OF THE ASSESSEE, WHICH NECESSITATED ENHANCEMENT OF CLOSING STOCK VALUATION. IN MY CONSI DERED VIEW, THE LD. CIT(A) HAS GIVEN ELABORATE FACTUAL FINDINGS WHICH C OULD NOT BE ITA NO.791/JP/2013 SHRI MOHAN LAL VS. ITO WARD- 1(2), ALWAR . 5 EFFECTIVELY CONTROVERTED BY THE ASSESSEE EXCEPT RAI SING AN ARGUMENT THAT VALUATION OF STOCK IS DONE ON MARKET PRICE ON THE B ASIS OF QUALITY, WHEREAS THE FINDINGS OF THE LOWER AUTHORITIES ARE TO THE EF FECT THAT THE ASSESSEE COULD NOT PRODUCE ANY QUALITATIVE DETAILS. THUS ASS ESSEE'S ARGUMENTS ARE NOT SUBSTANTIATED BY ITS ON RECORD. THE LD. CIT(A) HAS PASSED THE REASONED ORDER BY GIVING BENEFIT TO THE ASSESSEE TO INCREASE THE OPENING STOCK IN THE NEXT YEAR. IN VIEW OF THESE FACTS AND CIRCUMSTANCES OF THE CASE, I FIND NO INFIRMITY IN THE ORDER OF THE LD. C IT(A) WHICH IS UPHELD. 3.0 IN THE RESULT, APPEAL OF THE ASSESSEE IS DISM ISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 16/11/20 15. SD/- VKJ-IH-RKSYKUH (R.P.TOLANI) U;KF;D LNL;@ JUDICIAL MEMBER TK;IQJ@ JAIPUR FNUKAD@ DATED:- 16 /11/ 2015 *MISHRA VKNS'K DH IZFRFYFI VXZSF'KR@ COPY OF THE ORDER FORWARDED TO: 1. VIHYKFKHZ@ THE APPELLANT- SHRI MOHAN LAL, ALWAR 2. IZR;FKHZ@ THE RESPONDENT- THE ITO, WARD- 1 (2), ALWAR 3. VK;DJ VK;QDRVIHY@ CIT(A). 4. VK;DJ VK;QDR@ CIT, 5. FOHKKXH; IZFRFUF/K] VK;DJ VIHYH; VF/KDJ.K] T;IQJ@ DR, ITAT, JAIPUR 6. XKMZ QKBZY@ GUARD FILE (ITA NO. 791/JP/2013) VKNS'KKUQLKJ@ BY ORDER, LGK;D IATHDKJ@ ASSISTANT. REGISTRAR