M/s Palco Distributors, Paschim Medinipur V. J.CI.T Range - 1, Paschim Medinipur

ITA 83/KOL/2013

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 100064 (ITAT-KOLKATA)
• Duration Of Justice: 2 year(s) 10 month(s) 5 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 20-11-2015
• Appeal Filed By: Assessee
• Bench Allotted: C
• Next Hearing Date: 09-09-2015
• Assessment Year: 2009-2010
• Appeal Filed On: 15-01-2013
• Court: TRIBUNAL
• Department Lawyers: SARBANI MUKHERJEE
• Assessee Lawyers: S M SURANA
• Section: 69C; 143(3); 142(1); 133A

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH: KOL KATA [BEFORE SHRI MAHAVIR SINGH, JM & SHRI M. BALAGANES H, AM] I.T.A NO. 83/KOL/2013 ASSESSMENT YEAR: 2009-10 M/S. PALCO DISTRIBUTORS VS. JOINT COMMISSIONER OF INCOME-TAX, (PAN: AAIFP3309B) RANGE-1, PASCHIM MEDINIPUR. ( APPELLANT ) ( RESPONDENT ) DATE OF HEARING: 16.11.2015 DATE OF PRONOUNCEMENT: 20.11.2015 FOR THE APPELLANT: SHRI SUNIL SURANA, FCA & SHRI S. M. SURANA, ADVOCATE FOR THE RESPONDENT: SMT. SARBANI MUKHERJEE, JCIT , SR. DR ORDER PER SHRI MAHAVIR SINGH, JM: THIS APPEAL BY ASSESSEE IS ARISING OUT OF ORDER OF CIT(A)-XXXVI, KOLKATA IN APPEAL NO. 461/CIT(A)-XXXVI/KOL/JCIT,R-1,MIDNAPORE/ 11-12 DATED 19.12.2012. ASSESSMENT WAS FRAMED BY JCIT, RANGE-1, MIDNAPORE U /S. 143(3) OF THE INCOME-TAX ACT, 1961 (HEREINAFTER REFERRED TO AS THE ACT) FO R AY 2009-10 VIDE ITS ORDER DATED 30.12.2011. 2. AT THE OUTSET, LD. COUNSEL FOR THE ASSESSEE STAT ED THAT HE IS NOT INTERESTED IN PROSECUTING GROUND NOS. 1 TO 7 AND ALSO GROUND NOS. 12 TO 16. ON QUERY FROM THE BENCH, LD. SR. DR HAS NOT RAISED ANY OBJECTION. HENCE, AL L THESE GROUNDS ARE DISMISSED AS NOT PRESSED. 3. THE ONLY ISSUE REMAINS FOR ADJUDICATION IN THIS APPEAL IS AGAINST THE ORDER OF CIT(A) CONFIRMING THE ACTION OF AO IN MAKING ADDITI ON OF STOCK VALUATION OF RS.27,72,083/-. FOR THIS, ASSESSEE HAS RAISED FOLL OWING GROUND NOS. 8 TO 11: 8. THE CIT(A) IS WRONG TO DISMISS THE GROUNDS RAI SED AGAINST THE ADDITIONS MADE ON ALLEGED DISCREPANCIES IN STOCK WHICH THE AO HIMS ELF ADMITTED TO HAVE BEEN PROVED TO BE CORRECT WITH EVIDENCES; 9. THE CIT(A) FAILED TO OBSERVE (THOUGH POINTED OUT ) THAT THE AO RECORDED 'THE ASSESSEE PRODUCED STOCK REGISTER, PURCHASE BIL LS, CASH BOOK AND OTHER BOOKS OF ACCOUNTS STOCK OF RS. 1,08,72,271/- FOUND AND INVENTORISED IN THE COURSE OF SURVEY WAS RECONCILED WITH STOCK REGISTER AS WELL A S CORRESPONDING PURCHASE BILLS PRODUCED' AND WITH THE BACKDROP OF SUCH FINDING (PA RA I B OF THE ASSTT ORDER) ALL THE ADDITIONS MADE FOR ALLEGED STOCK DISCREPANCY SHOULD HAVE BEEN DECLARED TO BE WRONG AS THE ACTION CONTRADICTS WITH THE ACCEPTED B OOK RESULTS; 10. THE CIT(A) IS WRONG TO UPHOLD THE ADDITION RS. 85,700/- U/S. 69C OF THE ACT AS THE FOUR ITEMS IN QUESTION HAVE BEEN PROVED WITH SU PPORTING BILLS AND THAT THE A/R AGREED TO THE ADDITION IS FALSE; 11. THE CIT(A) FAILED TO OBSERVE THAT PART ( STOCK VALUING RS. 21,72,083/-) OF THE FULLY EXPLAINED STOCK OF RS. 1,08,72,271/- COULD NO T BE UNEXPLAINED WARRANTING 2 ITA NO. 83/KOL/2013 M/S. PALCO DISTRIBUTORS AY 2009-10 ADDITION PARTICULARLY WHEN EACH AND EVERY ITEM OF S TOCK HAS GOT FULL DETAILS AS PER THE SUPPORTING BILLS AND VOUCHERS AND ADMITTEDLY WI TH PROPER RECORDING FOUND AT THE TIME OF SURVEY (NO ADVERSE APPRAISAL REPORT OR NOTE S LEFT BY THE SURVEY OFFICIALS) AND AS SUCH UPHOLDING OF THE WRONG ADDITION IS ABSOLUTE LY UNJUSTIFIED(GROUND NO.5); 4. BRIEFLY STATED FACTS ARE THAT THE ASSESSEE FIRM IS ENGAGED IN THE BUSINESS OF HARDWARE, MACHINERY AND CLEARING HANDLING AGENT IN MIDNAPORE, WEST BENGAL. THE ASSESSEE HAS MAINTAINED COMPLETE BOOKS OF ACCOUNT A ND ALL THE TRANSACTIONS ARE RECORDED IN THE BOOKS OF ACCOUNT IN REGULAR COURSE OF BUSINE SS. A SURVEY U/S. 133A OF THE ACT WAS CONDUCTED ON 5 TH AND 6 TH SEPTEMBER, 2008 AT THE BUSINESS PREMISES OF THE AS SESSEE BY THE DEPARTMENT. DURING THE COURSE OF SURVEY, STOCK INV ENTORY OF THE ASSESSEES STOCK WAS PREPARED AND ACCORDING TO THE SAME, THE TOTAL STOCK FOUND DURING THE COURSE OF SURVEY I.E. ON PHYSICAL STOCK TAKING WAS RS.1,08,72,271/-. THE AO WHILE FRAMING ASSESSMENT U/S. 143(3) OF THE ACT, IN VIEW OF THE SURVEY MATERIAL, NOTED THAT THE STOCK AS PER BOOKS OF ACCOUNT I.E. RS.1,08,72,721/- IS THE SAME STOCK, WH ICH WAS FOUND DURING THE COURSE OF SURVEY AMOUNTING TO RS.1,08,72 ,271/-. THE ASSESSE E HAS ALSO PRODUCED STOCK REGISTERS, PURCHASE BILLS AND CASH BOOK AND OTHER BOOKS OF ACC OUNT. THE AO HAS RECORDED THE FINDING QUA THAT AS UNDER: IN RESPECT OF STOCKS OF RS.1,08,72,271/-, THE ASS ESSEE WAS ASKED SIMILARLY TO RECONCILE THE SAME WITH STOCK REGISTER BY PRODUCING STOCK REGISTE R ON THE DATE OF SURVEY AND TO PRODUCE CORRESPONDING PURCHASE BILLS AND SALES MEMOS IN RES PECT OF THOSE COMMODITIES VIDE THIS OFFICE LETTER NO. JCIT/MID/R-1/11-12/142(1) DATED 2 0.12.11 ALONG WITH NOTICE U/S. 142(1) DATED 20.12.11. THE ASSESSEE PRODUCED STOCK REGIST ER, PURCHASE BILLS AND CASH BOOK AND OTHER BOOKS OF ACCOUNTS. STOCK OF RS.1,08,72,271/- FOUND AND INVENTORISED IN THE COURSE OF SURVEY WAS RECONCILED WITH STOCK REGISTER AS WELL A S CORRESPONDING PURCHASE BILLS PRODUCED. BUT THE AO WAS OF THE VIEW THAT IN RESPECT TO 526 I TEMS VALUING AT RS.21,72,083/- THE ASSESSEE COULD NOT PRODUCE PURCHASE BILLS AND ACCOR DING TO HIM, THE SOURCE OF ACQUISITION OF THESE PURCHASES IS UNEXPLAINED. HENCE, HE INVOKI NG THE PROVISIONS OF SECTION 69C OF THE ACT MADE ADDITION ON ACCOUNT OF UNEXPLAINED EXP ENDITURE FOR STOCK. AGGRIEVED, ASSESSEE PREFERRED APPEAL BEFORE CIT(A), WHO ON IDE NTICAL REASONING CONFIRMED THE ADDITION AND DISMISSED THE GROUND RAISED BY THE ASS ESSEE BY OBSERVING IN PARA 6.1 AS UNDER: 6.1 THE LD. A/R SUBMITTED THAT THE ITEMS LISTED D URING SURVEY WAS MORE THAN TWO THOUSAND CONTAINING THEREIN NUMBER OF ITEMS WITH ME ASUREMENT, RATE ETC. AND THIS LIST WAS NOT POSSIBLE TO BE PREPARED WITHOUT CONSULTING RELE VANT BILLS & VOUCHERS. THE AO HAS PUT HIS EFFORTS TO FIND OUT THE GENUINITY OF PURCHASE O F EACH AND EVERY ITEM FROM THE LIST PREPARED DURING SURVEY OPERATION. THE VALUE OF ITE MS AGAINST WHICH PROPER BILLS & VOUCHERS WERE FOUND OR PRODUCED, THE AO ALLOWED THE SAME. HOWEVER, IN RESPECT OF THE IMPUGNED 526 ITEMS, AFTER THROUGH SCRUTINY AND COMP ARE, THE AO DID NOT FIND ANY 3 ITA NO. 83/KOL/2013 M/S. PALCO DISTRIBUTORS AY 2009-10 SUPPORTING BILLS OR VOUCHERS, NOR THE APPELLANT WAS ABLE TO PRODUCE THE SAME DURING ASSESSMENT PROCEEDINGS. DURING APPELLATE PROCEEDIN GS TOO, THE POSITION REMAINED THE SAME. THEREFORE, ONCE THERE WERE NO SUPPORTING BIL LS & VOUCHERS TO AUTHENTICATE THE PURCHASES CLAIMED TO HAVE BEEN MADE BY THE APPELLAN T FROM DECLARED SOURCE, PROVISIONS OF SEC. 69C OF THE ACT CLEARLY ATTRACT IN RESPECT OF S UCH TYPE OF TRANSACTION AND THE EXPENDITURE SHALL BE DEEMED TO BE THE INCOME OF THE APPELLANT FOR THE RELEVANT YEAR. IN THAT VIEW OF THE MATTER, THE AO HAS RIGHTLY DISALLO WED THE EXPENDITURE OF RS.21,72,083/- U/S. 69C OF THE ACT AND ADDED THE SAME TO THE APPEL LANTS TOTAL INCOME. THE ADDITION IS, THEREFORE, UPHELD. THIS GROUND OF THE APPELLANT IS DISMISSED. AGGRIEVED, NOW ASSESSEE IS IN SECOND APPEAL BEFORE TRIBUNAL. 5. WE HAVE HEARD RIVAL SUBMISSIONS AND GONE THROUGH FACTS AND CIRCUMSTANCES OF THE CASE. FROM THE OBSERVATION OF THE AO, AS MENTIONED IN THE ASSESSMENT ORDER THAT THE STOCK AS PER BOOKS OF ACCOUNT I.E. RECORDED IN STOCK REG ISTER IS AT RS.1,08,72,271/-, WHICH IS RECONCILED WITH THE STOCK FOUND PHYSICALLY DURING T HE COURSE OF SURVEY AT RS.1,08,72,271/-. THERE IS NO DIFFERENCE IN ITEMS AS RECORDED IN THE BOOKS OF ACCOUNT AND AS FOUND DURING THE COURSE OF SURVEY AND THERE IS NO DIFFERENCE IN VALUE AS WELL. ONLY PREMISE OF THE AO FOR MAKING ADDITION IS THAT ASSESSEE COULD NOT PROD UCE PURCHASE BILLS FOR A SUM OF RS.21,72,083/- HAVING 526 ITEMS. WE FIND THAT THE ITEMS ARE PROPERLY RECORDED MEANS THE ASSESSEE HAS EXPLAINED THE SOURCE OF ACQUISITION I. E. FROM ITS BOOKS OF ACCOUNT BEING PAYMENT FOR PURCHASES WERE MADE AND WHICH WERE INVE NTORISED IN THE STOCK REGISTER. HENCE, THIS CANNOT BE UNACCOUNTED. THE ONLY FLAW I N THE ASSESSEES CASE IS THAT IT IS NOT HAVING SUPPORTED BY PURCHASE BILLS. BUT THAT CANNO T BE THE REASON FOR MAKING ADDITION U/S. 69C OF THE ACT FOR THE REASON THAT THE ASSESSEE HAS ALREADY INCURRED EXPENDITURE, WHICH IS EXPLAINED IN THE BOOKS OF ACCOUNT OF THE ASSESSEE. ACCORDINGLY, WE ARE OF THE CONSIDERED VIEW THAT IN CASE THIS ADDITION IS MADE THAT WILL T ANTAMOUNT TO DOUBLE ADDITION OF THE SAME ITEMS, WHICH IS IMPERMISSIBLE IN LAW. HENCE, WE DE LETE THE ADDITION AND ALLOW THIS ISSUE OF ASSESSEES APPEAL. APPEAL OF ASSESSEE IS PARTLY ALLOWED. 6. IN THE RESULT, THE APPEAL OF ASSESSEE IS PARTLY ALLOWED. 7. ORDER IS PRONOUNCED IN THE OPEN COURT ON 20.11.2 015 SD/- SD/- (M. BALAGANESH) (MAHAVIR SINGH) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED : 20TH NOVEMBER, 2015 JD. SR. P.S 4 ITA NO. 83/KOL/2013 M/S. PALCO DISTRIBUTORS AY 2009-10 COPY OF THE ORDER FORWARDED TO: 1 . APPELLANT M/S. PALCO DISTRIBUTORS, 501, JUDGES CO URT ROAD, P.O. MIDNAPORE, DIST. PASCHIM MEDINIPUR, PIN-721101 2 RESPONDENT JCIT, RANGE-1, PASCHIM MEDINIPUR 3 . THE CIT(A), KOLKATA 4. 5. CIT KOLKATA DR, KOLKATA BENCHES, KOLKATA / TRUE COPY, BY ORDER, ASSTT. REGISTRAR .