T. Janaki, Erode V. DCIT, Salem

ITA 861/CHNY/2015

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 95919 (ITAT-CHENNAI)
• Duration Of Justice: 4 month(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-08-2015
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 30-01-2017
• Assessment Year: 2007-2008
• Appeal Filed On: 17-04-2015
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: K N DHANDA
• Assessee Lawyers: G BASKAR
• Section: 143(3)

Judgement Text

, B/ SMC , IN THE INCOME TAX APPELLATE TRIBUNAL B/SMC BENCH, CHENNAI . , BEFORE SHRI CHANDRA POOJARI, ACCOUNTANT MEMBER ./ I.T.A.NO.861 /MDS./2015 ( / ASSESSMENT YEAR :2007-08) MS.T.JANAKI , 111-N, ARANMANAI NAGAR, AYAKATTUR, CAVERY, R.S.PALLIPALAYAM, ERODE 638 007. VS. THE DCIT, CENTAL CIRCLE,3,GANDHI ROAD, SALEM 636 007. PAN ACCPJ 6834 B ( / APPELLANT ) ( / RESPONDENT ) ! ' # / APPELLANT BY : MR.G.BASKAR, ADVOCATE $% ! ' # / RESPONDENT BY : MR.K.N.DHANDAPANI,JCIT,DR & ' ' ( ) / DATE OF HEARING : 30.01.2017 *+ ' ( ) /DATE OF PRONOUNCEMENT : 02.02.2017 / O R D E R PER CHANDRA POOJARI, ACCOUNTANT MEMBER: THIS APPEAL IS FILED BY THE ASSESSEE, AGGRIEVED B Y THE ORDER OF THE LEARNED COMMISSIONER OF INCOME TAX(A)-18, CHENN AI DATED 29.01.2015 PERTAINING TO ASSESSMENT YEAR 2007-0 8. ITA NO. 861/MDS/2015 2 2. THE ASSESSEE IS IN APPEAL BEFORE US IS WITH REG ARD TO SUSTAINING THE ADDITION TOWARDS DEFICIT STOCK. 3. THE FACTS OF THE ISSUE ARE THAT THE ASSESSEE IS DERIVING INCOME FROM MANUFACTURE AND SALE OF CLOTH. THERE WAS A SEA RCH ACTION IN THE CASE OF ASSESSEES HUSBAND R.THANGAVELU ON 27.09.20 06, CONSEQUENT TO WHICH THE ASSESSEES CASE CAME UNDER PURVIEW OF SEC.153C OF THE ACT. THE ASSESSEE FILED RETURN OF INCOME FOR ASSESSMENT YEAR 2007-08 ADMITTING INCOME OF ` 5,27,320/-. SUBSEQUENTLY, THE AO COMPLETED THE ASSESSMENT U/S. 143(3) R.W.S.153B OF THE ACT ON 30.12.2008 MAKING AN ADDIT ION TOWARDS GROSS PROFIT @ 5.2% ON DEFICIT STOCK OF ` 14,40,071/- WHICH WORKS OUT TO ` 74,881/-. AGGRIEVED, THE ASSESSEE CARRIED THE APP EAL BEFORE THE LD.CIT(A). 3.1. BEFORE LD.CIT(A), THE LD.A.R MADE THE FOLLOWI NG POINTS: I) PARA III OF PAGE 2 OF AOS LETTER DATED 25.08.20 08 HAS WRONGLY TREATED VALUE OF ` 7,27,101/- OF PHYSICAL STOCK OF LUNGIES FOUND AS 7,27,101/- METRES. ITA NO. 861/MDS/2015 3 II) ` 65,23,544/- IS VALUE OF SALES MADE AND ` 67,32,217/- IS COST OF YARN ACOCRIDNG TO PURCHASES BILLS, ACCORDING TO LISTS (COPIES FILED ALREADY) PREPARED BY THE DEPARTMENT ON 27.09. 2006, DATE OF SEARCH. THESE HAVE BEEN INCORRECTLY TAKEN BY AO AS METRES, WHILE ARRIVING AT BOOK STOCK. III) ITEM 28 OF 11,603/- HAS BEEN INCLUDED AS LAST ITEM AT PAGE 1 AND AGAIN AS FIRST ITEM AT PAGE 2 OF DEPARTMENTS L IST OF PURCHASE BILLS. IV) BASIS FOR ` 2,92,540/- TREATED AS OPENING STOCK FOR ARRIVING A T BOOK STOCK HAS NOT BEEN GIVEN, THROUGH REQUESTED FO R. ADDITION OF 74,884/- MADE CONSEQUENT TO ABOVE MISTA KES MAY PLEASE BE DIRECTLY TO BE TOTALLY DELETED. ALTERNATELY, EVEN GRANTING WITHOUT CONCEDING THAT I F AT ALL THERE WERE UNACCOUNTED SALES OF 14,40,071/- ONLY NET PROF IT @ 3.64% THEREON SHOULD HAVE BEEN ASSESSED AND NOT GROSS PRO FIT @ 5.2%. 3.2. ON APPEAL, THE LD.CIT(A) OBSERVED THAT THE LD . ASSESSING OFFICER HAS DONE THE EXERCISE OF RECONCILIATION OF STOCK AS PER BOOKS OF ACCOUNT AND PHYSICAL VERIFICATION THEREBY ARRIVI NG AT THE FIGURE OF ITA NO. 861/MDS/2015 4 DEFICIT STOCK AT ` 14,40,071/-. ACCORDING TO LD.CIT(A), THE LD.A.R IS AGAINS THE ADOPTION OF GROSS PROFIT INSTEAD OF ET P ROFIT ON THE DEFICIT STOCK. FURTHER, LD.CIT(A) OBSERVED THAT THE CONTION S OF THE LD.A.R IS NOT ACCEPTABLE AS ALL THE EXPENDITURE RELATING TO T HE ASSESSEES BUSINESS HAS ALREADY BEEN DEBITED IN THE P&L A/C A ND HENCE GROSS PROFIT HAVE BEEN ARRIVED AT. THEREFORE, LD.CIT(A) C ONFIRMED THE ACTION OF LD. ASSESSING OFFICER. AGAINST THIS, THE ASSESSE E IS IN APPEAL BEFORE US. 4. BEFORE US, LD.A.R SUBMITTED THAT THE AO HAD WRONGLY TREATED THE VALUE OF ` 7,27,101/- OF PHYSICAL STOCK OF LUNGIES FOUND AS 7,27,101 METERS. FURTHER, LD.A.R REITERATED THE POINTED MADE BEFORE THE LD.CIT(A). 5. ON THE OTHER HAND, LD.D.R RELIED ON THE ORDER O F LOWER AUTHORITIES. 6. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE MATERIAL ON RECORD. THE AO WORKED OUT THE DEFICIT STOCK AT ` 14,40,071/- AND HE HAS COMPUTED THE INCOME OF ASSESSEE AT 5.2% OF THE DEFICIT STOCK. NOW THE CONTENTION OF ASSESSEES COUNSEL IS THAT TH E LD.CIT(A) NOT ADJUDICATED ALL THE GROUNDS RAISED BEFORE HIM AND A LSO DEFICIT STOCK ITA NO. 861/MDS/2015 5 WAS INCORRECTLY ARRIVED AT. IN OUR OPINION, THE F IGURE ARRIVED AT BY THE LOWER AUTHORITIES AT ` 14,40,071/- AFTER RECONCILIATION OF THE PHYSICAL STOCK FIGURES WITH THAT OF STOCK REFLECTED IN THE B OOKS ACCOUNT OF THE ASSESSEE AND THE AO PROPERLY EXAMINED THE FACTS OF THE CASE AND MADE AN ESTIMATION OF INCOME OF ASSESSEE AT 5.2% OF DEFICIT STOCK, WHICH IS VERY REASONABLE IN THAT LINE OF BUSINESS OF ASSESSEE. FURTHER, IT IS TO BE NOTED THAT DECISION OF THE LD. CIT(A) HAS NOT TO BE SCRUTINIZED SENTENCE BY SENTENCE MERELY TO FIND OUT WHETHER ALL FACTS HAVE BEEN SET OUT IN HIS ORDER OR WHETHER SOME INCI DENTAL FACT WHICH APPEARS ON THE RECORD HAS NOT BEEN NOTICED BY THE L D.CIT(A) IN HIS ORDER. IF THE TRIBUNAL, ON A FAIR READING OF THE O RDER OF THE LD.CIT(A), FINDS THAT IT HAS TAKEN INTO ACCOUNT ALL RELEVANT M ATERIAL AND HAS NOT TAKEN INTO ACCOUNT ANY IRRELEVANT MATERIAL IN BASIN G HIS CONCLUSIONS, THE DECISION OF THE LD.CIT(A) IS NOT LIABLE TO BE I NTERFERED WITH, UNLESS, OF COURSE, THE CONCLUSIONS ARRIVED AT BY THE LD.CIT (A) ARE PERVERSE. IT IS NOT NECESSARY FOR THE LD.CIT(A) TO STATE IN H IS ORDER SPECIFICALLY OR IN EXPRESS WORDS THAT HE HAS TAKEN INTO ACCOUNT TH E CUMULATIVE EFFECT OF THE CIRCUMSTANCES OR HAS CONSIDERED THE TOTALITY OF THE FACTS, AS IF THAT WERE A MAGIC FORMULA; IF THE ORDER OF THE LD. CIT(A) SHOWS THAT ITA NO. 861/MDS/2015 6 HE HAS, IN FACT, DONE SO, THERE IS NO REASON TO INT ERFERE WITH THE DECISION OF THE LD.CIT(A). 7. IN THE PRESENT CASE, THE LD.CIT(A) HAS TAKEN N OTE OF ALL THE RELEVANT CIRCUMSTANCES WHICH APPEARED ON RECORD AND AFTER APPRECIATION OF THE FACTS OF THE CASE, HE CAME TO C ONCLUSION THAT THE DEFICIT IN THE STOCK IS AT ` 14,40,071/- AND INCOME ON IT TO BE ESTIMATED AT 5.2% , WHICH IS VERY REASONABLE AND TH E SAME IS CONFIRMED. THE GROUND RAISED BY THE ASSESSEE IS REJ ECTED. 7. IN THE RESULT, THE APPEAL OF ASSESSEE IS DISMIS SED. ORDER PRONOUNCED ON 02 ND FEBRUARY, 2017 AT CHENNAI. SD/- ( ) ( CHANDRA POOJARI ) /ACCOUNTANT MEMBER CHENNAI, DATED THE 02 ND FEBRUARY, 2017 . K S SUNDARAM. , ' $(-. /.( / COPY TO: 1 . ! / APPELLANT 3. & 0( () / CIT(A) 5. .3 4 $(5 / DR 2. $% ! / RESPONDENT 4. & 0( / CIT 6. 4 6 7 ' / GF