Das Plaza, Malda V. ITO-Ward-1, Malda, Malda

ITA 791/KOL/2012

• Counselvise Citation: [2015] 121 COUNSELVISE.COM (IT) 0543 (ITAT-KOLKATA)
• Duration Of Justice: 3 year(s) 1 month(s) 22 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 08-07-2015
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: Not Allotted
• Assessment Year: 2008-2009
• Appeal Filed On: 17-05-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ANIL KR
• Keywords: Unexplained investment; Business income
• Section: 133A

Judgement Text

I.T.A. NO . 791 / KOL ./20 1 2 ASSESSMENT YEAR: 200 8 - 20 0 9 PAGE 1 OF 4 IN THE INCOME TAX APPELLATE TRIBUNAL, KOLKATA B BENCH, KOLKATA BEFORE SHRI P.K. BANSAL , ACCOUNTANT MEMBER AND SHRI MAHAVIR SINGH , JUDICIAL MEMBER I.T.A. NO. 791 / KOL / 20 1 2 ASSESSMENT YEAR : 200 8 - 20 0 9 DAS PLAZA,................................. ....... ............ ........ . APPELLANT RABINDRA AVENUE, MALDA [PAN : AA E F D 091 8 L ] - VS. - I NCOME TAX OFFICER ,.. ......................... ... ....... ..... . RESPONDE NT WARD - 1 , MALDA , NETAJI COMMERCIAL MARKET, MALDA APPEARANCES BY: SHRI SUBASH AGARWAL, ADVO CATE, FOR THE ASSESSEE SHRI ANIL KR. PANDE , JCIT, SR. D.R., FOR THE DEPARTMENT DATE OF CONCLUDING THE HEARING : JULY 02 , 2 01 5 DATE OF PRONOUNCING THE ORDER : JU LY 08 , 201 5 O R D E R PER P.K. BANSAL : THIS A PPEAL HA S BEEN FILED BY THE ASSESSE E AGA INST THE ORDER OF LD. COMMISSIONER OF INCOME TAX (APPEALS) , JALPAIG URI D ATED 07 . 0 3 .20 1 2 FOR THE ASSESSMENT YEAR 200 8 - 0 9. 2. IN THE APPEAL FILED , ORIGINALLY THE ASSESSEE HAS TAKEN AS MANY AS SEVEN GROUNDS OF APPEAL. SINCE THE GROUNDS TAKEN BY THE ASSESSEE WERE ARGUMENTATIVE, THEREFORE, THE ASSESSEE WAS GIVEN OPPORTUNITY TO AMEND THE GROUNDS OF APPEAL AT THE TIME OF LAST HEARING. ACCORDINGLY, THE ASSESSEE HAS FILED THE REVISED GROUNDS OF APPEAL, WHICH READ AS UNDER: - (1) FOR THAT ON THE FACTS AND IN THE CIRC UMSTANCES OF THE CASE, LD. CIT(A) ERRED IN CONFIRMING THE ADDITION OF RS.7,17,217/ - MADE BY THE AO ON ACCOUNT OF ALLEGED UNEXPLAINED INVESTMENT IN STOCK. (2) FOR THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, LD. CIT(A) ERRED IN CONFIRMING THE AD DITION OF I.T.A. NO . 791 / KOL ./20 1 2 ASSESSMENT YEAR: 200 8 - 20 0 9 PAGE 2 OF 4 RS.42,677/ - AND RS.65,048/ - MADE BY THE AO ON ACCOUNT OF ALLEGED UNACCOUNTED EXCESS STOCK OF BELTS AND BAGS RESPECTIVELY. 3. GROUND NO. 1 RELATES TO THE SUSTENANCE OF THE ADDITION OF RS.7,17,217/ - BY THE CIT(APPEALS) ON ACCOUNT OF UNACCOUNTED ST OCK. THE FACTS RELATING TO THIS GROUND ARE THAT THERE HAD BEEN SURVEY IN THE CASE OF THE ASSESSEE UNDER SECTION 133A ON 29.08.2007. DURING THE COURSE OF THE SURVEY, STOCK TO THE E XTENT OF RS. 7,17,217/ - WAS FOUND, WHICH WAS UNDISCLOSED IN THE OPINION OF THE REVENUE. THE VALUE OF THE STOCK WAS TAKEN AFTER WRITTEN THE PERCENTAGE OF THE GROSS PROFIT @ 20%. THE ASSESSEE SUBMITTED THAT THE VALUE WAS NOT CORRECTLY TAKEN AND HAS MADE THE CALCULATION ON THE BASIS OF AVERAGE COST METHOD AS HAS BEEN REGULARLY FOLLOWED BY THE ASSESSEE. THE ASSESSING OFFICER WAS NOT SATISFIED AS IN HIS OPINION THE AVERAGE PRICES OF THE ITEMS WERE SHOWN MUCH BELOW THE RATE DISCLOSED IN THE OPENING STOCK AND, THEREFORE, HE MADE THE ADDITION OF RS.7,17,217/ - . THE ASSESSEE WENT IN APPEAL BEF ORE THE CIT(APPEALS). THE CIT(APPEALS) TOOK THE VIEW THAT THE ASSESSEE RUNS A SHOPPING MALL OF VARIOUS ITEMS INCLUDING GARMENTS, BAGS, FOOTWEARS, JEWELLERY AND SO ON THE DISCOVERY OF THE SURVEY PARTY, AS HIGHLIGHTED BY THE ASSESSING OFFICER IN HIS ORDER, M ADE IT CLEAR THAT THE ASSESSEE DID NOT MAINTAIN HIS BOOKS OF ACCOUNT PROPERLY. THE STOCK WAS INVENTORISED AT RS.40,17,716/ - WHILE AS PER THE RECORDS OF THE ASSESSEE, THE VALUE OF STOCK WAS RS.27,85,000/ - AS ON THE DATE OF THE SURVEY. THE CIT(APPEALS) ALSO NOTED THAT THE ASSESSEE HAD SHOWN THE TOTAL SALES OF RS.39,51,315/ - AND, THEREFORE, TOOK THE VIEW THAT THE TURNOVER OF A SHOPPING MALL FOR THE WHOLE YEAR CANNOT BE RS.40,00,000/ - AND, THEREFORE, HE CONFIRMED THE ORDER OF ASSESSING OFFICER. 4. WE HAVE HEA RD THE RIVAL SUBMISSIONS AND CAREFULLY CONSIDERED THE SAME ALONG WITH THE ORDER OF TAX AUTHORITIES BELOW. WE NOTED THAT IT IS A CASE WHERE THE ADDITION HAS BEEN MADE ON THE BASIS OF THE VALUE TAKEN FOR THE STOCK BY THE SURVEY PARTY AS ON THE DATE OF SURVEY I.E. 29.08.2007. THE VALUE HAS BEEN TAKEN BY THE SURVEY PARTY AT MRP RATE WHILE THE ASSESSEE I.T.A. NO . 791 / KOL ./20 1 2 ASSESSMENT YEAR: 200 8 - 20 0 9 PAGE 3 OF 4 WAS VALUING THE STOCK AT THE END OF THE EACH YEAR AT AN AVERAGE COST. THIS FACT HAS NOT BEEN DENIED BY THE REVENUE. SALES SHOWN BY THE ASSESSEE HAS DULY BEEN ACCE PTED BY THE REVENUE, BUT THE CIT(APPEALS) JUST OBSERVED THAT THE AMOUNT OF SALE OF THE SHOPPING MALL FOR ALL THE YEAR CANNOT BE RS.40,00,000/ - . WITHOUT BRING ING ANY COGENT MATERIAL OR EVIDENCE ON RECORD, THERE HAD BEEN SURVEY BUT NO EVIDENCE WAS BROUGHT ON RE CORD THAT THE SALES OF THE ASSESSEE WERE MUCH HIGHER THAN WHAT HAD BEEN RECORDED IN THE BOOKS OF ACCOUNT. THE ASSESSING OFFICER, WE NOTED, WHILE MAKING THE ADDITION ALLOWED A DISCOUNT TO THE ASSESSEE OUT OF THE MRP OF THE INVENTORY AT THE RATE OF 20%. THE BASIS OF REDUCTION OF MRP BY 20% HAS NOT BEEN GIVEN. EVEN OTHERWISE, WE ARE OF THE VIEW THAT THE CLOSING STOCK HAS TO BE TAKEN AT THE END OF THE YEAR NOT IN THE MIDDLE OF THE YEAR. IF ANY ADDITION HAS TO BE MADE THAT HAS TO BE MADE ONLY DIFFERENCE IN THE V ALUE AS AT THE END OF THE YEAR. THE ASSESSEE HAS VALUED THE STOCK AT AN AVERAGE COST. THIS FACT HAS NOT BEEN DENIED BY THE LD. D.R. FROM THE ASSESSMENT ORDER WE NOTED THAT THE ASSESSING OFFICER WHILE MAKING THE ADDITION GOT OBSERVED THAT THE ASSESESE SHOW E D THE OPENING STOCK IN EACH QUANTITY AND ITS AVERAGE RATE IS MUCH LOWER THAN THE CURRENT PURCHASE RATE IN RESPECT OF SOME PURCHASE BILLS OF THE CURRENT YEAR. THIS OBSERVATION OF THE ASSESSING OFFICER CANNOT BE THE BASIS FOR MAKING THE ADDITION AS THE PRICE OF THE GOODS CANNOT BE STATIC. COST MEANS AT WHAT PRICE THE ASSESSEE HAS BOUGHT THE GOODS. IF THE VALUE OF THE OPENING STOCK IS LESSER, THE STOCK HAS TO BE VALUED AT A PRICE AT WHICH IT WAS BOUGHT ACCORDING TO THE METHOD VALUATION FOLLOWED BY THE ASSESSEE . IT IS NOT A CASE OF THE REVENUE THAT THERE IS A CHANGE IN THE METHOD OF VALUATION FOLLOWED BY THE ASSESSEE. WE, THEREFORE, SET ASIDE THE ORDER OF CIT(APPEALS) AND DELETE THE ADDITION IN THIS REGARD. 5. GROUND NO. 2 RELATES TO THE SUSTENANCE OF THE ADDIT ION OF RS.42,677 AND RS.65,048/ - ON ACCOUNT OF ALLEGED UNACCOUNTED EXCESS STOCK OF BELTS AND BAGS. THE ADDITIONS ALSO HAVE BEEN MADE ON THE BASIS OF THE SURVEY WHEN IT WAS NOTED BY THE SURVEY TEAM THAT THERE IS AN EXCESS STOCK OF BELTS AND BAGS OF RS. 42,6 77 AND RS.65,048/ - . IN THIS CASE ALSO, WE NOTED I.T.A. NO . 791 / KOL ./20 1 2 ASSESSMENT YEAR: 200 8 - 20 0 9 PAGE 4 OF 4 THAT THE ADDITION OF EXCESS STOCK HAS BEEN VALUED ON ESTIMATE BASIS NOT ON ACTUAL COST. STOCK HAS BEEN VALUED BY DEDUCTING THE ESTIMATED GROSS PROFIT FROM THE PRINTED PRICE. WHILE DISPOSING OF THE GROUND NO. 1, WE HAVE ALREADY HELD THAT THIS CANNOT BE A METHOD AS HAS BEEN FOLLOWED BY THE ASSESSEE. THE ASSESSEE IS FOLLOWING THE METHOD OF VALUATION OF THE STOCK AT AVERAGE COST. WE, THEREFORE, IN VIEW OF THE FINDING IN RESPECT OF THE GROUND NO. 1 DELETE THIS ADD ITION ALSO. 6 . IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE STANDS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON JU LY 08 , 201 5 . SD/ - SD/ - MAHAVIR SINGH P.K. BANSAL ( JUDICIAL MEMBER) ( ACCOUNTANT MEMBER) KOLKATA, THE 8 TH D AY OF JU LY , 201 5 COPIES TO : (1) DAS PLAZA, RABINDRA AVENUE, MALDA (2) INCOME TAX OFFICER, WARD - 1, MALDA, NETAJI COMMERCIAL MARKET, MALDA (3) COMMISSIONER OF INCOME - TAX (APPEALS) (4) COMMISSIONER OF INCOME TAX ( 5 ) TH E DEPARTMENTAL REPRESENTATIVE ( 6 ) GUARD FILE BY ORDER ASSISTANT REGISTRAR INCOME TAX APPELLATE TRIBUNAL KOLKATA B ENCHES, KOLKATA LAHA/SR. P.S .