Dy. CIT, Circle-1, Nashik V. Govind J Dande and Sons, Nashik

ITA 873/PUN/2012

• Counselvise Citation: 87324514 RSA 2012
• Duration Of Justice: 1 year(s) 7 month(s) 20 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 24-12-2013
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 12-12-2013
• Assessment Year: 2008-2009
• Appeal Filed On: 04-05-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: P L PATHADE
• Section: 14A

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH A, PUNE BEFORE SHRI SHAILENDRA KUMAR YADAV, JUDICIAL MEMBER, AND SHRI R.K. PANDA, ACCOUNTANT MEMBER ITA NO.873/PN/2012 A.Y. 2009-10 JT. CIT, RANGE-1, NASHIK APPELLANT VS. GOVIND J DANDE AND SONS SARAF BAZAR, SHIVAJI ROAD, NASHIK PAN: AAGFG6627F RESPONDENT APPELLANT BY : SHRI P.L. P ATHADE RESPONDENT BY : SHRI NIK HIL PATHAK DATE OF HEARING: 12.12.2013 DATE OF ORDER : 24.12.2013 ORDER PER SHAILENDRA KUMAR YADAV, J.M: THIS APPEAL HAS BEEN FILED BY THE REVENUE AGAINST THE ORDER OF COMMISSIONER OF INCOME TAX (APPEAL)-I, [SHORT CI T(A)-I] NASHIK, DATED 29.02.2012 FOR A.Y. 2009-10 ON THE FO LLOWING GROUNDS. 1. WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LD.CIT(A)-I, NASHIK WAS JUSTIFIED IN ALLO WING THE ASSESSEE'S CLAIM OF MELTING LOSS OF GOLD TO THE EXT ENT OF @ 1.05% OF THE QUANTITY OF 22 CARET GOLD. 2. WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LD.CIT(A)-I, NASHIK WAS JUSTIFIED IN ALLO WING THE ADDITION TO THE EXTENT OF RS. 25,000/- WHICH WAS D ISALLOWED AS NO PROOF OF EXPENSES WAS PRODUCED BY THE ASSESSE E EXCEPT THE SELF MADE VOUCHERS. 3. THE APPELLANT PRAYS THE ORDER OF THE ASSESSING OFFICER MAY BE RESTORED. 4. THE APPELLANT PRAYS TO ADDUCE SUCH FURTHER EVIDENCE TO SUBSTANTIATE HIS CASE. 2 5. THE APPELLANT PRAYS LEAVE TO ADD, ALTER, CLARI FY, AMEND AND OR WITHDRAW ANY GROUNDS OF APPEAL AS AND WHEN T HE OCCASION DEMANDS. 2. THE ASSESSEE IS A PARTNERSHIP FIRM ENGAGED IN TH E BUSINESS OF TRADING IN GOLD ORNAMENTS, SILVER UTENSILS, ETC. THE ASSESSEE HAS FILED A RETURN OF INCOME DECLARING TOTAL INCOME OF RS.70,50,520/- ON 28.09.2009. THE ASSESSING OFFICE R HAS ASSESSED INCOME OF THE ASSESSEE AT RS.88,13,390/- A S UNDER: PARTICULARS AMOUNT (RS.) RETURNED INCOME 70,50,520 ADDITION ON ACCOUNT OF DISALLOWANCE OF MELTING L OSS 32,78,460 ADDITION ON ACCOUNT OF DISALLOWANCE U/S. 14A 2,06,423 ADDITION O' ACCOUNT OF DISALLOWANCE U/S 94(7) 33 , 209 ADHOC ADDITION ON ACCOUNT OF DISALLOWANCE OF EXPENSES 50,000 DEDUCTION ON ACCOUNT OF MISTAKE IN VALUATION OF CLOSING STOCK LEADING TO OVERVALUATION OF STOCK ( - )18,05,225 ASSESSED INCOME 88,13,387 MATTER WAS CARRIED BEFORE FIRST APPELLATE AUTHORIT Y, WHEREIN CIT(A) GRANTED RELIEF TO THE EXTENT OF RS.14,18,078 /-, WHICH HAS BEEN OPPOSED BEFORE US ON BEHALF OF REVENUE, INTER ALIA STATED THAT CIT(A) WAS NOT JUSTIFIED IN ALLOWING THE LOSS TO THE EXTENT OF @ 1.05 OF QUANTITY OF 22 CARET. ON THE OTHER HAND, LEARNED AUTHORIZED REPRESENTATIVE SUPPORTED THE ORDER OF CI T(A). 3. AFTER GOING THROUGH THE RIVAL SUBMISSIONS AND MA TERIAL ON RECORD, WE FIND THAT THE SHORTAGE AT DIFFERENT PERC ENTAGE HAS BEEN CLAIMED BY THE ASSESSEE IN DIFFERENT YEARS AND THE ASSESSING OFFICER HAS ALSO ALLOWED DIFFERENT PERCENTAGE OF SH ORTAGE IN DIFFERENT YEARS. DURING THE YEAR THE ASSESSEE HAS C LAIMED SHORTAGE OF 3149.712 GMS @ 2.05% OF THE SALE OF ORN AMENTS. THE SAID SHORTAGE DEPENDS UPON THE PURITY OF GOLD ORNAM ENTS PURCHASED BY THE ASSESSEE DURING VARIOUS YEARS AND HENCE THE PERCENTAGE CANNOT REMAIN IDENTICAL. IN THE A.Y. 20 01-02, THE PERCENTAGE OF SHORTAGE WAS CLAIMED BY THE ASSESSEE AND FINALLY 3 ALLOWED BY ITAT PUNE @ 0.98%. IN THE A.YRS. 2003-0 4 AND 2007- 08, THE ASSESSING OFFICER HIMSELF HAS ALLOWED SHORT AGE @ 1.76% AND 0.45% RESPECTIVELY. IN THE YEAR UNDER CONSIDER ATION, THE ASSESSEE HAS CLAIMED THE SAID SHORTAGE @ 2.05%. THE ASSESSEE HAS ALSO MAINTAINED QUANTITATIVE RECORD TO SUPPORT THE PERCENTAGE OF SHORTAGE. CIT(A) CONSIDERING THE ABOV E DISCUSSION AND TOTALITY OF THE FACTS, ACCEPTED TO THE EXTENT O F 1.05% AS AGAINST CLAIMED BY THE ASSESSEE AT 2.05%. THEREFOR E, THE SHORTAGE WAS ALLOWED ON THE SALE OF JEWELLERY OF RS .1,53,447.949 GMS @ 1.05% AT 1611.20 GMS. THE DISALLOWABLE SHORTA GE WAS THEREFORE 1538.51 GMS (3149.71 GMS - 1611.20 GMS). THE RESULTANT DISALLOWANCE OF SHORTAGE @ RS.1219.21 PER GM WORKS OUT TO RS.18,60,382/- AS AGAINST WORKED OUT BY THE ASSESSING OFFICER AT RS.32,78,460/-. THUS, ASSESSEE WAS GRANT ED RELIEF BY CIT(A) OF RS.14,18,078/-. THE ASSESSING OFFICER HAS MADE NET DISALLOWANCE AFTER CONSIDERING MISTAKE IN CLOSING S TOCK VALUATION AT RS.14,73,235/-. THEREFORE, THE DISALLOWANCE MADE BY THE ASSESSING OFFICER WAS CONFIRMED TO THE EXTENT OF 55 .157/- AND THE ASSESSEE GOT RELIEF OF RS.L4,L 8,078/-. THIS REASO NED FACTUAL FINDING OF CIT(A) NEED NO INTERFERENCE FROM OUR SID E WHEREBY HE HAS ALLOWED THE RESULTING LOSS OF THE GOLD TO THE E XTENT OF @ 1.05% OF QUANTITY 22 CARET OF GOLD. WE UPHOLD THE SAME. 4. NEXT ISSUE IS WITH REGARD TO ADDITION TO THE EX TENT OF RS.25,000/- ON ACCOUNT OF DISALLOWANCE OF SALES PRO MOTION EXPENSES, REPAIRS AND MAINTENANCE AND SALES INCENTI VE EXPENSES. THE ASSESSING OFFICER HAS MADE THE ADDITION OF RS.5 0,000/- VIDE PARA 6 OF HIS ORDER. THE ASSESSING OFFICER HAS DISA LLOWED THE EXPENSES TO THE EXTENT OF RS.50,000/- STATING THAT THE EXPENSES TOWARDS SALES PROMOTION RS.11,84,949/-, REPAIRS AND MAINTENANCE RS.1,73,162/- AND SALES INCENTIVE RS.3, 95,979/- HAVE BEEN MOSTLY INCURRED IN CASH AND ARE SUPPORTED BY SELF MADE VOUCHERS. THE STAND OF THE ASSESSEE THAT IT H AS PROPERLY MAINTAINED INTERNAL VOUCHERS WHEREVER EXTERNAL BILL S AND 4 VOUCHERS ARE NOT AVAILABLE, WHICH WERE DULY SIGNED BY THE RECIPIENTS. IT WAS FURTHER CLAIMED THAT HE HAS MAIN TAINED REGULAR BOOKS OF ACCOUNT IN THE DUE COURSE OF BUSINESS AND AUDITED THE SAME. THE AUDITOR HAS NOT POINTED OUT ANY DISCREPA NCY IN RESPECT OF THE SUPPORTING VOUCHERS FOR THE ABOVE ME NTIONED EXPENSES. CIT(A) HAVING CONSIDERED THE SAME OBSERVE D THAT ASSESSING OFFICER HAS MADE ADHOC ADDITION WITHOUT POINTING OUT DEFECT IN SPECIFIC ENTRIES OF EXPENDITURE. THE BOOK S OF ACCOUNT HAVE BEEN REGULARLY MAINTAINED IN THE COURSE OF BUS INESS AND THE SAME ARE AUDITED ONE. THE ASSESSING OFFICER HAS MAD E THE ADDITION STATING THAT THE ASSESSEE HAS INCURRED EXP ENDITURE IN CASH WHICH IS NOT JUSTIFIED. CONSIDERING ALL THE FA CTS AND CIRCUMSTANCES, THE PERSONAL ELEMENTS INVOLVED IN TH E ADDITION WAS RESTRICTED TO RS.25,000/-. THIS RELIEF OF RS.2 5,000/- GRANTED BY CIT(A) BY GIVING COGENT REASONING NEEDS NO INTER FERENCE FROM OUR SIDE. WE UPHOLD THE SAME. 5. IN THE RESULT, APPEAL FILED BY REVENUE IS DISMIS SED. PRONOUNCED IN THE OPEN COURT ON THIS THE DAY 24 TH OF DECEMBER, 2013. SD/- SD/- (R.K. PANDA) (SHAILENDRA KUMAR YADAV ) ACCOUNTANT MEMBER JUDICIAL MEMBER PUNE, DATED: 24 TH DECEMBER 2013 GCVSR COPY TO:- 1) DEPARTMENT 2) ASSESSEE 3) THE CIT(A)-I, NASHIK 4) THE CIT-I, NASHIK 5) THE DR, A BENCH, I.T.A.T., PUNE. 6) GUARD FILE //TRUE COPY// BY ORDER SENIOR PRIVATE SECRETARY, I.T.A.T., PUNE