Sree Shanthosh Steels Pvt. Ltd., CHENNAI V. ACIT, CHENNAI

ITA 805/CHNY/2016

• Counselvise Citation: [2017] 130 COUNSELVISE.COM (IT) 8051 (ITAT-CHENNAI)
• Duration Of Justice: 9 month(s) 25 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 25-01-2017
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: C
• Assessment Year: 2011-2012
• Appeal Filed On: 31-03-2016
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Keywords: Unexplained cash credit; Set aside
• Section: 32; 147; 131; 68; 246; 69; 145; 27; 148; 54; 37; 6; 56; 263; 63; 132; 12; 28; 144; 10; 90; 154; 2; 11; 15; 271(1)(b); 139; 92; 133A

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH, CHENNAI . . . , . , BEFORE SHRI N.R.S. GANESAN, JUDICIAL MEMBER AND SHRI A. MOHAN ALANKAMONY, ACCOUNTANT MEMBER ./ ITA NO. : 805/MDS/2016 / ASSESSMENT YEAR :2011-12 M/S. SREE SHANTHOSH STEELS PVT. LTD., C/O SUBBARAYA AIYAR PADMANABHAN & RAMAMANI, ADVOCATES, NEW NO.114 (OLD NO.248), ROYAPETTAH HIGH ROAD, ROYAPETTAH, CHENNAI 600014. PAN : AAJCS6974R V. THE ASSTT. COMMISSIONER OF INCOME TAX, CORPORATE CIRCLE 6(2), CHENNAI. ( /APPELLANT) ( /RESPONDENT) /APPELLANT BY : SHRI SAROJ KUMAR PARIDA, ADVOCATE /RESPONDENT BY : SHRI A.V. SREEKANTH, JCIT /DATE OF HEARING : 10.01.2017 /DATE OF PRONOUNCEMENT : 25.01.2017 / O R D E R PER N.R.S. GANESAN, JUDICIAL MEMBER : THIS APPEAL OF THE ASSESSEE IS DIRECTED AGAINST T HE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS)-15, CHENNA I DATED 05.01.2016 AND PERTAINS TO THE ASSESSMENT YEAR 2011 -12. 2 I.T.A. NO. 805/MDS/2016 2. SHRI SAROJ KUMAR PARIDA, THE LD. COUNSEL FOR TH E ASSESSEE SUBMITTED THAT THE FIRST ISSUE ARISES FOR CONSIDERA TION IS ADDITION OF 21,59,850/-. ACCORDING TO THE LD. COUNSEL, ON THE DATE OF SEARCH OPERATION, THE REVENUE AUTHORITIES ACCOUNTED THE CA SH ONLY AT THE HEAD OFFICE AND THE CASH AVAILABLE AT OTHER PLACES WAS NOT TAKEN INTO ACCOUNT. THE SHORTFALL OF CASH AT THE HEAD OF FICE ALONE WAS COMPARED WITH CASH BALANCE AS PER THE BOOKS OF ACCO UNT AND THE ADDITION WAS MADE UNDER SECTION 68 OF THE INCOME TA X ACT, 1961 (IN SHORT THE ACT), AS UNEXPLAINED INCOME. ACCOR DING TO THE LD. COUNSEL, SHORTFALL IN CASH CANNOT BE ASSESSED AS UN EXPLAINED CASH CREDIT. CASH WAS IN FACT AVAILABLE AT OTHER CENTRE S OF THE ASSESSEES BUSINESS. THEREFORE, THE ADDITION ON ACCOUNT OF SH ORTFALL IN CASH CANNOT BE SUSTAINED. 3. ON THE CONTRARY, SHRI A.V. SREEKANTH, THE LD. DE PARTMENTAL REPRESENTATIVE SUBMITTED THAT THERE WAS A SURVEY IN THE PREMISES OF THE ASSESSEE ON 11.03.2011 UNDER SECTION 133A OF TH E ACT. THE CASH BALANCE AS ON 11.03.2011 WAS 80,40,957/-. THE EXPENSES INCURRED BY THE ASSESSEE TOWARDS DEVELOPMENT EXPENS ES WAS 40,74,210/-, THE CASH AS PER THE BOOKS OF SISTER CO NCERN WAS 14,17,327/-. THE ASSESSING OFFICER IN FACT FOUND T HE DIFFERENCE OF 3 I.T.A. NO. 805/MDS/2016 21,59,850/- AS UNEXPLAINED CASH CREDIT UNDER SECTIO N 68 OF THE ACT. IN THE ABSENCE OF ANY OTHER DETAILS, THE CIT (APPEALS) CONFIRMED THE ORDER OF THE ASSESSING OFFICER. 4. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS ON EITH ER SIDE AND PERUSED THE MATERIAL AVAILABLE ON RECORD. THERE WAS A DIFFERENCE BETWEEN THE ACTUAL CASH FOUND DURING THE COURSE OF SEARCH OPERATION AND THE CASH BOOK FOUND. THE ACTUAL CASH FOUND DURING THE COURSE OF SEARCH OPERATION WAS 3,89,570/-. THE CASH AS PER THE BOOKS OF ACCOUNTS OF SISTER CONCERN WAS 14,17,327/-. THE CASH USED FOR DEVELOPMENT EXPENDITURE TOWARDS EDIAN CHAVADI STOCKYARD WAS 40,74,210/-. THE DIFFERENCE BETWEEN THE ACTUAL CASH FOUND AND THE BALANCE IN THE CASH BOOK COULD N OT BE RECONCILED BY THE ASSESSEE. IN THE ABSENCE OF ANY EXPLANATION FOR THE DIFFERENCE IN THE BOOKS OF ACCOUNTS, THIS TRIBU NAL IS OF THE CONSIDERED OPINION, THE ADDITION MADE BY THE ASSESS ING OFFICER HAS TO BE SUSTAINED. THEREFORE, THE CIT (APPEALS) HAS RIGHTLY CONFIRMED THE ORDER OF THE ASSESSING OFFICER. THIS TRIBUNAL DO NOT FIND ANY REASON TO INTERFERE WITH THE ORDER OF THE LOWER AUT HORITY. 4 I.T.A. NO. 805/MDS/2016 5. THE NEXT GROUND OF APPEAL IS WITH REGARD TO ADDI TION OF 5,68,385/- TOWARDS CLOSING STOCK DIFFERENCES. 6. SHRI SAROJ KUMAR PARIDA, THE LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT DURING THE COURSE OF SURVEY OPERATIO N THERE WAS NO ACTUAL WEIGHT OF THE STOCK WAS TAKEN IN TO CONSIDER ATION. SINCE THERE WAS A MIXED STEEL ITEMS, THE REVENUE AUTHORIT IES COUNTED THE NUMBERS PHYSICALLY. ACCORDING TO THE LD. COUNSEL, DETERMINATION OF WEIGHT OF THE STOCK ON THE BASIS OF PHYSICAL ACCOUN TING WILL NOT BE ACCURATE AT ALL. ACCORDING TO THE LD. COUNSEL, THE ASSESSEE HAS SOLD 35204 METRIC TONS (MT) OF THE STOCK DURING THE YEAR UNDER CONSIDERATION. THE ASSESSING OFFICER ESTIMATED THE AVERAGE OF STOCK AT 12.53 MT. THE SHORTAGE ESTIMATED BY THE A SSESSING OFFICER WAS LESS THAN 0.034%. HENCE, THIS ADDITION HAS TO BE DELETED. 7. ON THE CONTRARY, SHRI A.V. SREEKANTH, THE LD. D. R., SUBMITTED THAT THE DIFFERENCE IN STOCK WAS 12.53 MT. THE ASS ESSEE CLAIMED BEFORE THE LOWER AUTHORITIES THAT THE DIFFERENCE IN STOCK WAS TOO MEAGER WHEN COMPARED TO THE TOTAL TURNOVER OF 35204 MT. THE ASSESSING OFFICER IGNORING THE SMALLNESS OF THE DIF FERENCE IN THE STOCK, MADE ADDITION OF 5,69,385/-. 5 I.T.A. NO. 805/MDS/2016 8. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS ON EITH ER SIDE AND PERUSED THE MATERIAL AVAILABLE ON RECORD. THE ASSE SSEE CLAIMS THAT THE DIFFERENCE IN STOCK WAS ONLY 12.53 MT WHICH IS LESS THAN 0.034% OF THE TOTAL STOCK OF THE STEEL. IT IS NOT IN DISP UTE. STEEL SOLD BY THE ASSESSEE WAS 35204 MT AND THE SHORTAGE OF STOCK IS ONLY 12.53 MT. THIS TRIBUNAL IS OF THE CONSIDERED OPINI ON THAT IN THIS KIND OF BUSINESS, SHORTAGE OF STOCK CANNOT BE AVOID ED. TAKING INTO CONSIDERATION OF THE 0.034% OF THE DIFFERENCE IN ST OCK OF STEEL, THE NATURE OF BUSINESS AND THE SMALLNESS OF THE SHORTAG E, THIS TRIBUNAL IS OF THE CONSIDERED OPINION ADDITION OF 5,69,385/- IS NOT CALLED FOR. ACCORDINGLY THE ORDER OF THE LOWER AUTHORITIES ARE SET ASIDE AND THE ADDITION OF 5,69,385/- IS DELETED. 9. IN THE RESULT THE APPEAL OF THE ASSESSEE IS PART LY ALLOWED. ORDER PRONOUNCED ON 25 TH JANUARY, 2017 AT CHENNAI. SD/- SD/- ( . ) ( . . . ) (A. MOHAN ALANKAMONY) (N.R.S. GANESAN) / ACCOUNTANT MEMBER /JUDICIAL MEMBER /CHENNAI, /DATED, THE 25 TH JANUARY, 2017. 6 I.T.A. NO. 805/MDS/2016 JR. ! ' ! /COPY TO: 1. /APPELLANT 2. /RESPONDENT 3. #$% ( )/CIT(A)-15, CHENNAI 4. #$% /CIT, 5. ! /DR 6. &' /GF.