M/s Plaza Enterprises(Khadim's Sowroom), Malda V. ITO,Ward(2), Malda, Malda

ITA 799/KOL/2012

• Counselvise Citation: [2014] 120 COUNSELVISE.COM (IT) 7922 (ITAT-KOLKATA)
• Duration Of Justice: 2 year(s) 6 month(s) 20 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 08-12-2014
• Appeal Filed By: Assessee
• Bench Allotted: B
• Next Hearing Date: 18-08-2014
• Assessment Year: 2006-2007
• Appeal Filed On: 18-05-2012
• Court: TRIBUNAL
• Department Lawyers: S CHATTOPADHYAY ROY
• Assessee Lawyers: V N PUROHIT
• Keywords: Unexplained investment; Deemed to accrue or arise in india

Judgement Text

, B , IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH: KOLKATA ( ) BEFORE , /AND , ) [BEFORE SHRI MAHAVIR SINGH, JM & SHRI SHAMIM YAHYA , AM ] / I.T.A NO. 7 99 /KOL/20 1 2 / ASSESSMENT YEAR : 200 6 - 0 7 M/S. PLAZA ENTERPRISES V INCOME T AX OFFICER, WARD - 2 (KHADIM S SHOWROOM), VILL & NETAJI COMM. MARKET, 1 ST FLOOR, RATHBARI P.O. KALICHAK, DIST. MALDA PIN 732 201 P.O. & DIST. MALDA 732 101 (PAN:AA IFP 4675 N ) ( /APPELLANT ) ( / RESPONDENT ) DATE OF HEARING: 1 3 . 1 1 .201 4 DATE OF PRONOUNCEMENT: 08 . 1 2 .201 4 FOR THE APPELLANT : SHRI V.N. PUROHIT, FCA FOR THE RESPONDENT : S MT. S. CHATTOPADHYAY (ROY) , JCIT / ORDER PER SHRI MAHAVIR SINGH, JM : THIS APPEAL BY ASSESSEE IS ARISING OUT OF ORDER OF CIT (A) - XX, JALPAIGURI IN APPEAL NO. 3 2 4 / MLD/CIT(A)/JAL/ 0 8 - 0 9 DATED 1 5 . 12 .20 08 . ASSESSMENT W AS FRAMED BY ITO WARD - 2, MALDA U/S. 145(3)/ 1 4 3(3) OF THE INCOME - TAX ACT, 1961 (HEREINAFTER REFERRED TO AS THE ACT ) FOR ASSESSMENT YEAR 200 6 - 0 7 VIDE HIS ORDER DATED 14 .11.200 8 . 2. THE ONLY ISSUE IN THIS APPEAL OF ASSESSEE IS AGAINST THE ORDER OF CIT(A) CONFIRMING THE ADDITION MADE BY ASSESSING OFFICER BEIN G UNEXPLAINED STOCK BEING DIFFERENCE BETWEEN STOCK AS PER THE ACCOUNTS AND STOCK STATEMENT SUBMITTED TO BANK AS ON 31 ST MARCH 2006. FOR THIS, ASSESSEE HAS RAISED FOLLOWING GROUND NO.1: - 1. THAT FOR THE FACTS AND UNDER THE CIRCUMSTANCES OF THE CASE THE C.I .T.(A) HAS ERRED IN CONFIRMING THE ADDITION OF RS.18,29,391/ - BEING DIFFERENCE BETWEEN STOCK AS PER AUDITED ACCOUNTS AND AS PER STOCK STATEMENT AS ON 31 - 03 - 06 GIVEN TO BANK. 3. WE HAVE HEARD THE RIVAL CONTENTIONS AND GONE THROUGH THE FACTS AND CIRCUMSTANCES OF THE CASE. BRIEFLY STATED FACTS ARE THAT THE ASSESSEE FILED RETURN OF INCOME FOR THE RELEVANT ASSESSMENT YEAR 2006 - 07 ON 03 - 11 - 2006 ALONG WITH AUDITED ACCOUNTS AND AUDITED R EPORT. THE ASSESSEE IS IN THE BUSINESS OF TRADING OF SHOES AND FOOT WEAR OF KHADIMS . HE IS EXCLUSIVELY DEALER OF KHADIMS . 2 ITA NO.799/K/2012 M/S. PLAZA ENTERPRISE AY 2006 - 07 DURING THE COURSE OF ASSESSMENT PROCEEDINGS, ASSESSEE PRODUCED COMPLETE BOOKS OF ACCOUNT, LEDGER, PURCHASED BILLS AND BANK STATEME NT AND WHICH WERE EXAMINED BY THE ASSESSING OFFICER. DURING THE COURSE OF EXAMINATION OF BOOKS OF ACCOUNT , AO NOTICED THAT ASSESSEE IS MAINTAINING CASH CREDIT LIMIT VIDE BANK ACCOUNT NO. CC - 200224 WITH UNION BANK OF INDIA, KALIACHAK BRANCH, DIST. MALDA. TH E ASSESSEE HAS DECLARED THE CLOSING STOCK OF SHOES AND FOOT WEARS AT A VALUE OF RS.7 , 74,725/ - IN ITS BOOKS OF ACCOUNT. BUT THE AO NOTICED FROM CASH CREDIT ACCOUNT THAT THE CLOSING STOCK AS PER THE STATEMENT GIVEN TO BANK THE VALUE DECLARED IS RS.26,04,116/ - . THE AO REQUIRED THE ASSESSEE TO EXPLAIN THE DIFFERENCE. THE ASSESSEE E XPLAINED BEFORE THE AO VIDE LET TER DATED 10 - 11 - 2008 AS UNDER: - WE HAVE RECEIVED YOUR SHOW CAUSE NOTICE DATED 24/10/2008 IN WHICH WE HAVE BEEN ASKED TO EXPLAIN THE DIFFERENCE IN THE V ALUE OF CLOSING STOCK AS ON 31/03/2006 BETWEEN THE STOCK OF TRADING A/C AND THE FIGURE SENT BY MANAGER, UBI, KALIACHAK. IN THIS REGARD WE SUBMIT AS FOLLOWS: - 1) THAT OUR ENTIRE PURCHASES ARE VOUCHED AND SUPPORTED BY PURCHASE BILLS. NO DISCREPANCY WAS DETECTE D BY YOUR KIND HONOUR IN CROSS VERIFYING THE PURCHASES. 2) THAT OUR SALES ARE ALSO FULLY VERIFIABLE AND NO DISCREPANCY HAS BEEN DETECTED IN CROSS VERIFYING THE SALES. 3) THAT THE STOCK STATEMENT SUBMITTED TO THE BANK WAS INFLATED TO AVAIL THE MORE CREDIT FACILIT IES FROM THE BANK. IT IS A PREVAILING PRACTICE IN THE BUSINESS. THE STOCK WAS ONLY HYPOTHECATED AND NOT PLEDGED THEREFORE NO ADVERSE INFERENCE SHOULD BE DRAWN BY A STATEMENT GIVEN TO YOUR KIND HONOUR BY A THIRD PARTY. SIR, THEREFORE IN VIEW OF NO DISCREPA NCY IN PURCHASES AND SALES AND PREVAILING PRACTICE TO INFLATE THE VALUE OF STOCK TO AVAIL MORE CREDIT FACILITIES FROM THE BANK NO ADVERSE INFERENCE SHOULD BE DRAWN ON THIS POINT, FOR WHICH WE SHALL BE THANKFUL TO YOU. THE AO NOTED THAT THERE IS EXCESS S TOCK TO THE TUNE OF RS.18,17,106/ - AND HE WAS NOT CONVINCED WITH THE REPLY OF THE ASSESSEE. ACCORDINGLY, HE MADE ADDITION BY OBSERVING AS UNDER: - ON PERUSAL OF STOCK STATEMENT FURNISHED BY THE SR. MANAGER, UNITED BANK OF INDIA KALIACHAK BRANCH IT IS FOUND THAT THE VALUE OF CLOSING STOCK AS ON 31/03/2006 SHOULD BE RS.,26,04,116/ - BUT AS PER ASSESSEE AUDITED ACCOUNTS THE CLOSING STOCK AS ON 31/03/2006 WAS ONLY RS.774,725/ - . A SHOW CAUSE LETTER WAS ISSUED TO THE ASSESSEE AND REQUESTED TO RECONCILE THE SAID DI FFERENCE OTHERWISE THE VALUE OF EXCESS STOCK WILL BE ADDED TO THE TOTAL INCOME AS AN UNEXPLAINED INVESTMENT U/S. 69B. THE ASSESSEE HAS NOT RECONCILED THE DIFFERENCES FOUND IN STOCK THOUGH HAS FURNISHED AN EXPLANATION ON 10/11/2008 BUT, THE SAME WAS NOT CON SIDERED AS DISCUSSED IN EARLIER PARA. ON COMPARISON OF STOCK STATEMENT FURNISHED BY THE UBI, KALIACHAK BRANCH AND THE STOCK SHOWED IN ASSESSEE STOCK REGISTER AS WELL AS AUDITED ACCOUNTS IT IS FOUND THAT ASSESSEE HAVING A EXTRA STOCK OF R S .18,29,391/ - AND T HE SAME WERE NOT RECORDED IN THE ASSESSEE BOOKS OF ACCOUNTS IS HEREBY TREATED AS UNEXPLAINED INVESTMENT IN TERMS OF SECTION 69B OF THE INCOME TAX ACT, 1961 AND THE SAME IS ADDED TO THE TOTAL INCOME OF THE ASSESSEE AS DEEMED INCOME FOR THE PREVIOUS YEAR 200 5 - 06. PENALTY PROCEEDING U/S. 271(1) IS INITIATED IN THIS REGARD. 3 ITA NO.799/K/2012 M/S. PLAZA ENTERPRISE AY 2006 - 07 AGGRIEVED, ASSESSEE PREFERRED APPEAL BEFORE CIT(A) WHO ALSO CONFIRMED THE ACTION OF THE AO. AGGRIEVED, NOW ASSESSEE IS IN APPEAL BEFORE US. 4 . WE HAVE HEARD THE RIVAL CONTENTIONS AND GONE THROUGH THE FACTS AND CIRCUMSTANCES OF THE CASE. WE FIND THAT THE ASSESSEE IS A DEALER OF SHOES AND FOOTWEAR OF KHADIM AND MAINTAINING REGULAR BOOKS OF ACCOUNTS. THE PURCHASES AND SALES ARE FULLY VOUCHED. IT IS ALSO A FACT THAT THERE IS DIFFERENCE OF RS .18,29,391/ - IN THE STOCK STATEMENTS AS MAINTAINED BY THE ASSESSEE IN ITS BOOKS OF ACCOUNTS AND THE STOCK STATEMENT SUBMITTED TO THE BANK. BUT, ON QUERY FROM THE BENCH, LD. SENIOR DR COULD NOT STATE THAT IS THERE ANY DIFFERENCE IN QUANTITY OR QUALITY I.E. VALUE. HE ONLY STATED THAT FROM THE ORDERS OF THE LOWER AUTHORITIES IT IS NOT AT ALL CLEAR, THAT THERE IS DIFFERENCE IN QUANTITY BUT THERE IS CERTAINLY DIFFERENCE IN VALUE. ONCE THIS IS THE POSITION, WE ARE OF THE VIEW THAT THIS ISSUE IS COVERED IN FAVOUR OF ASSESSEE AND AGAINST REVENUE BY THE DECISION OF HON'BLE MADRAS HIGH COURT IN THE CASE OF CIT V. PADMAVATI COTTON MILLS (1991) 236 ITR 340 (MAD) WHEREIN IT IS HELD THAT THAT IF THE DIFFERENCE IN VALUE NO ADDITION CAN BE MADE BECAUSE THERE IS NO DIFFERE NCE IN QUANTITY. IN TERM OF THE ABOVE, WE DELETE THE ADDITION AND ALLOW THIS ISSUE OF ASSESSEE S APPEAL. 5. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALLOW ED. ORDER PRONOUNCED IN OPEN COURT ON 0 8 /12/2014 . S D / - S D / - , , ( SHAMIM YAHYA ) (MAHAVIR SINGH) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED : 8 T H DECE MBER , 2014 JD.(SR.P.S.) - COPY OF THE ORDER FORWARDED TO: 1 . / A PPELLANT M/S. PLAZA ENTERPRISES, VILL & P.O. KALICHAK, DIST. MALDA, PIN. 732 201. 2 / RESPONDENT ITO, WARD - 2, NETAJI COMM. MARKET, 1 ST FL, RATHBARI, P.O. & DIST. MALDA, PIN. 732 101 3 . ( )/ THE CIT(A), KOLKATA 4. 5. / CIT KOLKATA / DR, KOLKATA BENCHES, KOLKATA / TRUE COPY, / BY ORDER, /ASSTT. REGISTRAR .