DCIT CIRCLE-3, Ranchi V. M/s Alka Jwellers, Ranchi

ITA 89/RAN/2017

• Counselvise Citation: [2019] 117 COUNSELVISE.COM (IT) 9662 (ITAT-RANCHI)
• Duration Of Justice: 1 year(s) 10 month(s) 24 day(s)
• Appeal Type: Income Tax (Transfer Pricing) Appeal
• Pronouncement Date: 05-04-2019
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Assessment Year: 2013-2014
• Appeal Filed On: 11-05-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: A K MOHANTY
• Assessee Lawyers: P C PAUL

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, RANCHI BENCH, RANCHI BEFORE SHRI N.S SAINI, ACCOUNTANT MEMBER AND PAVAN KUMAR GADALE, JUDICIAL MEMBER ITA NO.89 /RAN/201 6 7 ASSESSMENT YEAR : 2013 - 14 DCIT, CIRCLE - 3, RANCHI VS. M/S. ALKA JEWELLERS, RANDHIR PRASAD STREET,UPPER BAZAR, RANCHI PAN/GIR NO. AAVFA 7160 J (APPELLANT ) .. ( RESPONDENT ) ASSESSEE BY: SHRI P.C. PAUL, CA REVENUE BY : SHRI A.K.MOHANTY, JCIT DATE OF HEARING : 30 /05 / 201 8 DATE OF PRONOUNCEMENT : 26 /0 6 / 2018 O R D E R PER N. S.SAINI, AM THIS IS AN APPEAL FILED BY THE REVENUE A GAINST THE ORDER OF THE CIT(A) , RANCHI , DATED 10.2 .2017 FOR THE ASSESSMENT YEAR 2013 - 14. 2. THE SOLE ISSUE INVOLVED IN THIS APPEAL IS THAT THE CIT(A) ERRED IN DELETING THE ADDITION OF RS.65,54,331/ - ON ACCOUNT OF INVESTMENT IN STOCK. 2 ITA NO.89/RAN/20167 ASSESSMENT YEAR: 2013 - 14 2. THE FACTS IN BRIEF ARE THAT THE ASSESSING OFFICER OBSERVED THAT FROM THE VALUATION DONE BY THE GOVERNMENT AUTHORISED VALUER AS ON THE DATE OF SURVEY THE TOTAL STOCK LYING WITH THE ASSESSEE IS VALUED AT RS.74,87,454/ - . T HE STOCK DISCLOSED IN THE ITR IS RS.9,54,331/ - . THE PARTNER OF THE ASSESSEE FIRM WAS ASKED TO SUBMIT THE DETAILS OF STOCK DISCLOSED IN THE ITR DURING THE RECORDING OF STATEMENT ON OATH ON 6.1.2016 AND THAT VALUED BY THE VALUER. THE REPLY IN THIS REGARD W AS NOT FORTHCOMING TO THE ASSESSING OFFICER. THE ASSESSEE WAS ALSO ASKED TO SUBMIT THE DETAILS/ BASIS OF RS.9,54,331/ - FILED IN THE ITR AS DISCLOSED IN THE STOCK. 3. THE PARTNER OF THE ASSESSEE FIRM, SHRI SHANKAR PRASAD WAS CONFRONTED WITH THE ABOVE FACTS , WHILE RECORDING OF STATEMENT ON THE DATE OF SURVEY ON 6.1.2016. ACCORDING TO THE VALUATION DONE BY THE GOVERNMENT APPROVED VALUER, THE STOCK I.E. THE STOCK LYING WITH THE ASSESSEE AS ON THE DATE OF SURVEY WAS AT RS.74,87,454/ - . THE AMOUNT DECLARED IN TH E ITR IS RS.9,54,331/ - . THERE WAS A RESULTING DIFFERENCE IN STOCK OF RS.65,33,123/ - . NO EXPLANATION IN THIS REGARD HAS BEEN SUBMITTED TILL DATE. IN VIEW OF ABOVE, THE ASSESSING OFFICER DISALLOWED RS.65,33,123/ - BEING THE DIFFERENCE IN STOCK ( RS.74,87,45 4 RS.9,54,331) AND TREATED AS UNDISCLOSED INCOME OF THE ASSESSEE. 4. ON APPEAL, THE CIT(A) DELETED THE ADDITION BY OBSERVING AS UNDER: 3 ITA NO.89/RAN/20167 ASSESSMENT YEAR: 2013 - 14 7.19 NOW COMING TO THE ISSUE OF ADDITION OF RS.65,33,123/ - . I FIND THAT THE APPELLANT HAD PREPARED TWO BALANCE SHEET - ONE TILL THE DATE OF SURVEY I.E. FROM 1.4.12 TO 13.2.13 AND ANOTHER FROM 14.2.13 TO 31.3.13. IN THE BALANCE SHEET OF 13.2.13 THE APPELLANT HAD SH OWN THE FOLLOWING STOCK OF GOLD ITEMS IN ITS BOOKS: PARTICULARS Q T.(IN GM) AMOUNT(RS) PARTICULARS QT (IN GM) AMOUNT(RS) TO PURCHASES TO GROSS PROFIT 8815.700 21092746.00 2546583.20 BY SALES BY CLOSING STOCK 6162.910 2652.790 1,7292184.20 6347,145.00 TOTAL 8815.700 23639,329.20 8815.700 23639329.20 7.20 SIMILARLY, THE APPELLANT HAD ALSO SHOWN THE FOLLOWING STOCK OF SILVER ITEMS IN HIS BOOKS AS ON 13.3.2013: PARTICULARS QT.(IN GM) AMOUNT(RS) PARTICULARS QT (IN GM) AMOUNT(RS) TO PURCHASES TO GROSS PROFIT 48563.00 1430616.00 453139.83 BY SALES BY CLOSING STOCK 37537.850 11025.150 1558954.83 324801.00 TOTAL 48563.00 1883755.83 48563.00 1883755.83 7.21 ACCORDINGLY, THE TOTAL STOCK (AS PER APPELLANTS BOOKS OF ACCOUNT) ON THE DATE OF SURVEY WAS : CLOSING STOCK OF GOLD ITEMS : RS.63,47,145.00 CLOSING STOCK OF SILVER ITEMS : RS. 3,24,801.00 RS.66,71,946.00 THEREFORE, CONSIDERING THE VALUATION MADE BY THE REGISTERED VALUER OF RS. 74,87,454/ - THE EXCESS STOCK ON THE DATE OF SURVEY WAS RS. 74,87,454/ - ( - ) RS. 66,71,946/ - = RS.8, 15,508/ - . THIS FIGURE HAS BEEN ARRIVED AT CONSIDERING THE STOCK ON THE DATE OF SURVEY AS PER BOOKS OF RS. 66,71,946/ - WHICH HAS NOT BEEN CHALLENGED BY THE LD. ASSESSING OFFICER (IN FACT THE LD. ASSESSING. OFFICER HAS MA DE NO REFERENCE TO THIS FIGURE IN THE ASSESSMENT ORDER THOUGHT THE AUDITED BALANCE SHEET WAS AVAILABLE WITH HER). CONSIDERING THE ABOVE FIGURES IT IS CLEAR THAT THE FIGURE OF RS. 9,54,331/ - WAS NOT AN OUTCOME OF THE SURVEY PROCEEDINGS. 7.23] THE LD. ASSESS ING OFFICER HAS STATED SEVERAL TIMES IN THE ASSESSMENT ORDER THAT THE APPELLANT DID NOT PROVIDE THE BASIS OF THE DISCLOSURE OF INCOME MADE IN THE INCOME TAX RETURN FILED. IN THIS 4 ITA NO.89/RAN/20167 ASSESSMENT YEAR: 2013 - 14 REGARD PERUSAL OF THE STOCK STATEMENT OF THE APPELLANT AS ON 31.03.2013 ATTAC HED WITH THE AUDIT REPORT SHOWS DIAMOND JEWELLERY OF RS. 8,00,890/ - . THE NARRATION IS 'DIAMOND DISCLOSED'. IT MAY BE RECALLED THAT THE VALUE OF DIAMOND JEWELLERY IS THE SAME AS VALUED BY THE REGISTERED VALUER. THIS ALSO INCLUDES RS. 1,52,562/ - AS 'GOLD DISCLOSED' AND RS. 8791 - AS 'SILVER DISCLOSED' MAKING THE DISCLOSURE OF THE APPELLANT AT RS. 9,54,331/ - . THIS IS JUST TO REITERATE THAT THE DETAILS WERE AVAILABLE WITH THE LD. ASSESSING OFFICER. FOR CROSS VERIFICATION OF THE FIGURES SHE HA D ALL THE BILLS AND VOUCHERS TILL THE DATE OF SURVEY IMPOUNDED AND THOSE AFTER BEING SUBMITTED ON THE DATE OF HEARING ON 11.02.2016. 7.24] THE BASIC IDEA OF COMPARING THE STOCK VALUE ON THE DATE OF SURVEY WITH THE INCOME DISCLOSED BY THE APPELLANT IS ITSE LF FLAWED. THIS IS NOT COMMENSURATE WITH ANY ACCOUNTING PRINCIPLES. AS STATED ABOVE, THE CORRECT WAY SHOULD HAVE BEEN TO CHECK THE VERACITY OF THE STOCK SHOWN BY THE APPELLANT IN ITS BOOKS AS ON THE DATE OF SURVEY, AND AFTER REDUCING THE GP (BASED ON THE I MPOUNDED BILLS OF PURCHASES THE DIFFERENCE BETWEEN THE COST AND THE PRICE AT WHICH IT WAS VALUED) FROM THE STOCK VALUED, TO COMPARE THE TWO THE LD. ASSESSING OFFICER HAD THE BENEFIT OF HAVING IN HER POSSESSION ALL THE BILLS AND VOUCHERS TILL THE DATE OF SU RVEY (IMPOUNDED) AND TILL 31.03.2013 (PROVIDED DURING THE COURSE OF ASSESSMENT PROCEEDINGS). THE BOOK STOCK OF THE APPELLANT SHOULD HAVE BEEN SUBJECTED TO VERIFICATION BASED ON THE EXAMINATION OF THE BILLS OF PURCHASE AND SALES. RATHER THE LD. ASSESSING OF FICER CHOSE TO CLAIM THAT SINCE THE APPELLANT DID NOT PROVIDE BASIS OF ITS DISCLOSURE THE DIFFERENCE BETWEEN THE INCOME DISCLOSED AND THE STOCK VALUED ON THE DATE OF SURVEY WAS THE INCOME (UNDISCLOSED) OF THE APPELLANT. 7.25 EVEN OTHERWISE, IT IS SEEN THA T THE APPELLANT HAD DISCLOSED MORE THAN THE DIFFERENCE BETWEEN THE BOOK STOCK AND THE STOCK VALUED. CONSIDERING THE VALUATION MADE BY THE REGISTERED VALUER OF RS.74,87,454/ - , THE EXCESS STOCK ON THE DATE OF SURVEY WAS RS.74,87,454/ - ( - ) RS.66,71.946 = RS. 8,15,508. AGAINST THIS THE APPELLANT HAD MADE A DISCLOSURE OF RS.9,54,331/ - . IN THE FACTS AND CIRCUMSTANCES OF THE CASE, PRIMA FACIE, THE DISCLOSURE WAS MORE THAN THE DIFFERENT (CONSIDERING THAT THE AO DID NOT CONTEST THE BOOK STOCK AS ON 13.2.2013) 7.26 BASED ON THE ANALYSIS OF THE FACTS AND CIRCUMSTANCES OF THE CASE, THE ADDITIONS MADE BY THE AO CANNOT BE SUSTAINED. GROUNDS OF APPEALS ARE ALLOWED. 5 ITA NO.89/RAN/20167 ASSESSMENT YEAR: 2013 - 14 5. AFTER CONSIDERING THE RIVAL SUBMISSIONS AND PERUSING THE ORDERS OF LOWER AUTHORITIES, WE FIND THAT THE FINDINGS OF THE CIT(A) THAT ASSESSEE HAD DISCLOSED MORE THAN THE DIFFERENCE BETWEEN THE BOOK STOCK AND THE STOCK VALUED WAS NOT CONTROVERTED BY LD D.R. L D LD D.R. ALSO COULD NOT POINT OUT ANY SPECIFIC ERROR IN THE ORDER OF THE CIT(A). HENCE, WE FIND NO GOOD REASON TO INTERFERE WITH THE ORDER OF THE CIT(A), WHICH IS HEREBY CONFIRMED AND DISMISS THE GROUNDS OF APPEAL OF THE REVENUE. 6 . IN THE RESULT, APPEAL FILED BY REV ENUE IS DISMISSED. ORDER P RONOUNCED ON 26 /06/2018 UNDER RULE 34(4) OF ITAT RULES BY PUTTING IN THE NOTICE BOARD AT RANCHI S D/ - SD/ - (PAVAN KUMAR GADALE) (N.S SAINI) JUDICIAL MEMBER A CCOUNTANT MEMBER RANCHI; DATED 26 /0 6 /201 8 B.K.PARIDA, SPS COPY OF THE ORDER FORWARDED TO : BY ORDER, SR.PS, ITAT, CAMP AT RANCHI 1. DCIT, CIRCLE - 3, RANCHI 2. THE RESPONDENT: M/S. ALKA JEWELLERS, RANDHIR PRASAD STREET,UPPER BAZAR, RANCHI 3. THE CIT(A), RANCHI 4. PR. CIT , RANCHI 5. DR, ITAT, RANCHI 6. GUARD FILE. //TRUE COPY//