Mahesh Kumar S/o Sh. Laxminarayan, BALOTRA V. ITo, BALOTRA

ITA 900/JODH/2007

• Counselvise Citation: [2011] 140 COUNSELVISE.COM (IT) 54341 (ITAT-JODHPUR)
• Duration Of Justice: 3 year(s) 8 month(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-08-2011
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Next Hearing Date: 20-07-2011
• Assessment Year: 2003-2004
• Appeal Filed On: 26-12-2007
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: G R KOKANI
• Assessee Lawyers: U C JAIN
• Section: 143(3); 133A

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL (JODHPUR BENCH JODHPUR) BEFORE SHRI RAJPAL YADAV, JUDICIAL MEMBER AND SHRI K.D. RANJAN, ACCOUNTANT MEMBER I.T.A. NO.900/JU/2007 ASSESSMENT YEAR: 2003-04 MAHESH KUMAR S/O LAXMINARAYAN VS. INCOME TAX OFF ICER C/O ASHOK KUMAR BANSAL, CA BALOTRA AGARWAL COLONY, BALOTRA PAN NO.ACQPG 4184 R (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI U.C. JAIN, AR RESPONDENT BY : SHRI G.R. KOKANI, DR ORDER PER RAJPAL YADAV, JM: ASSESSEE IS IN APPEAL BEFORE US AGAINST THE ORDER O F LEARNED CIT(A) DATED 5 TH NOVEMBER, 2007 PASSED FOR ASSESSMENT YEAR 2003-04. THE GRIEVANCE OF THE ASSE SSEE IS THAT LEARNED CIT(A) HAS ERRED IN CONFIRMING THE AD DITION OF `9,37,466/- OUT OF THE ADDITION OF `12,98,908/- MAD E BY THE ASSESSING OFFICER ON ACCOUNT OF EXCESS STOCK/CASH F OUND AT THE TIME OF SURVEY. IN OTHER GROUNDS, ASSESSEE HAS TAKEN ARGUMENTS IN SUPPORT OF THIS GROUND. IT HAS PLEADE D THAT AT THE TIME OF SURVEY, IT HAS SUBMITTED DETAILS OF INV ENTORY AND NO DEFICIENCY WAS FOUND WITH RESPECT TO QUANTITY OF THE 2 STOCK. IT ALSO PLEADED THAT ASSESSMENT ORDER FRAME D U/S 143(3) IS BAD IN LAW. 2. THE BRIEF FACTS OF THE CASE ARE THAT ASSESSEE IS AN INDIVIDUAL. HE IS RUNNING A PROPRIETARY CONCERN NA MELY M/S RAMSWAROOP LAXMI NARAYAN WHICH IS ENGAGED IN TRADIN G OF GREY CLOTH AFTER GETTING IT PROCESSED. HE HAS FILE D HIS RETURN OF INCOME ON 19.11.2003 DECLARING TOTAL INCOME AT `1,08,730/-. A SURVEY U/S 133A OF THE INCOME-TAX A CT WAS CARRIED OUT ON THE BUSINESS PREMISES OF THE ASSESSE E ON 17.12.2002. ACCORDING TO THE ASSESSING OFFICER, TH ERE WAS AN EXCESS STOCK. THE TOTAL STOCK VALUED BY THE SUR VEY TEAM WAS `36,37,515/- WHEREAS THE VALUE OF STOCK AVAILAB LE IN THE BOOKS WAS WORKED OUT AT `23,38,607/-. ACCORDING TO THE ASSESSING OFFICER, THE DIFFERENCE OF `12,98,908/- W AS ADMITTED BY THE ASSESSEE TO BE OFFERED FOR TAXATION . HOWEVER, WHILE FILING THE RETURN ASSESSEE DID NOT I NCLUDE THIS AMOUNT IN HIS TOTAL INCOME. THE ASSESSING OFFICER HAS CONFRONTED THE ASSESSEE WITH REGARD TO NON INCLUSIO N OF VALUE OF SUCH EXCESS STOCK. THE ASSESSEE HAS CONTE NDED THAT HE HAS RECEIVED GOODS HAVING VALUE OF `4,62,13 1/- BEFORE THE DATE OF SURVEY BUT THE BILLS WERE RECEIV ED AFTER THE DATE OF SURVEY AND AS SUCH PURCHASES COULD NOT BE ENTERED INTO BOOKS. THE CREDIT OF THIS AMOUNT SHOU LD BE GIVEN TO HIM FOR WORKING OUT THE TOTAL VALUE OF THE STOCK AVAILABLE IN THE BOOKS. SIMILARLY, ASSESSEE SUBMIT TED THAT GOODS HAVING VALUE OF `4,75,535/- WAS READY FOR DIS PATCH 3 AND SALE BILLS ALSO ISSUED TO THE PURCHASER OF GOOD S, BUT INCLUDED IN THE INVENTORY BY SURVEY TEAM WITHOUT GI VING ANY CREDIT IN THE STOCK WITH THE BOOKS. APART FROM THE SE TWO ITEMS, ASSESSEE HAS POINTED OUT TO THE ASSESSING OF FICER THAT VALUE OF PACKING MATERIAL AT `31,152/- DESERVES TO BE GIVEN CREDIT TO THE ASSESSEE. SIMILARLY, GP WAS INCLUDED IN THE TOTAL VALUE WHICH OUGHT TO BE REDUCED OR EQUAL AMOU NT SHOULD BE INCLUDED IN THE VALUE OF STOCK AVAILABLE WITH THE ASSESSEE. THIS AMOUNT HAS BEEN WORKED OUT AT `2,13 ,158/-. THE ASSESSEE ALSO CONTENDED THAT HE HAS INCURRED AN EXPENDITURE OF `1,17,132/- FOR GETTING JOB WORK ON THE CLOTHS BUT THE SAME WERE NOT ENTERED IN THE BOOKS AS BILLS OF JOB CHARGES WERE RECEIVED AFTER THE DATE OF THE SURVEY. THE LEARNED ASSESSING OFFICER DID NOT ACCEPT THE CONTEN TION OF THE ASSESSEE AND MADE THE ADDITION OF `12,98,098/- IN THE TOTAL INCOME OF THE ASSESSEE. 2.1 DISSATISFIED WITH THE ADDITION ASSESSEE CARRIED THE MATTER IN APPEAL BEFORE LEARNED CIT(A). LEARNED CI T(A) HAS ACCEPTED THE STAND OF THE ASSESSEE WITH REGARD TO T HREE ITEMS NAMELY CREDIT OF PACKING MATERIAL AMOUNTING T O `31,152/-, GP INCLUDED IN THE INVENTORY AT `2,13,15 8/- AND EXPENSES INCURRED ON JOB CHARGES AT `1,17,132/-. T HE REST OF THE TWO ITEMS RELATING TO PURCHASE OF GOODS AND SAL E OF GOODS WERE NOT ACCEPTED BY THE LEARNED CIT(A). 2.2 LEARNED COUNSEL FOR THE ASSESSEE WHILE IMPUGNIN G THE ORDER OF LEARNED CIT(A) SUBMITTED THAT DURING THE C OURSE OF 4 SURVEY TWO INVOICES BEARING NOS.725 AND 837 WERE FO UND AND INVENTORIED BY THE SURVEY TEAM. THESE INVOICES RELATE TO PURCHASE OF GOODS FROM M/S SANGAM SALES AGENCY WHO DISPATCHED THREE BILLS THROUGH INVOICE NO. 725 AND VIDE MTR NO.11233 DATED 12.12.2002. HE TOOK US THROUGH PAGES NOS. 62,63,64 & 65 OF THE PAPER BOOK. AT PAGE 65, COPY OF INVOICE IS AVAILABLE. IN THIS INVOICE LR NO.11233X 3 IS MENTIONED. IT IS DATED 26.11.2002. GOODS WERE DIS PATCHED ON 11.11.2002 AND THIS FACT IS MENTIONED IN THE DIS PATCH BILL AVAILABLE ON PAGE NO.63. THE GOODS HAVE BEEN DISPA TCHED THROUGH SHIV DUTTA FREIGHT CARRIERS. BILL OF SHRI SHIV DUTTA IS PLACED AT PAGE 64 OF THE PAPER BOOK. A CUMULATIVE READING OF ALL THESE DOCUMENTS WOULD INDICATE THAT GOODS PU RCHASED FROM SANGAM SALES AGENCY WAS NOT ENTERED BY THE ASS ESSEE IN ITS BOOKS OF ACCOUNT. HOWEVER, ONE INVOICE WAS FOUND AT THE TIME OF SURVEY. THE GOODS WERE RECEIVED PRIOR TO THE DATE OF SURVEY AND VALUE OF SUCH STOCK IS NOT ENTER ED IN THE PURCHASE ACCOUNT BY THE ASSESSEE. THEREFORE, THE C REDIT OF THESE GOODS BE GIVEN TO THE ASSESSEE. IN AN IDENTI CAL WAY, ASSESSEE HAS DEMONSTRATED THE OUTCOME OF INVOICE NO .837. SIMILARLY, LEARNED COUNSEL FOR THE ASSESSEE DREW OU R ATTENTION TOWARDS PAGES NOS.78 TO 82 OF THE PAPER B OOK WHEREIN SALE BILLS HAVE BEEN PREPARED BY THE ASSESS EE BUT GOODS WERE NOT DISPATCHED TILL THE DATE OF SURVEY. THE GOODS WERE ACCOUNTED BY THE SURVEY TEAM WITHOUT GIVING CR EDIT TO THE SALES MADE BY THE ASSESSEE. HE POINTED OUT THA T IF 5 ASSESSING OFFICER HAS ANY DOUBT THEN HE COULD HAVE VERIFY THE CLAIM OF ASSESSEE WITH THE CONCERNED PARTY. AP ART FROM THIS DISCREPANCY, THERE IS NO OTHER EVIDENCE POSSES SED BY THE ASSESSING OFFICER. THE STATEMENT RECORDED U/S 133A IS NOT RECORDED UNDER OATH AND HENCE DOES NOT CARRY AN Y PRESUMPTION OF TRUTH WHICH COULD BOUND THE ASSESSEE . HE PRAYED THAT ADDITION BE DELETED. 2.3 ON THE OTHER HAND, LEARNED DR RELIED UPON THE O RDERS OF THE AUTHORITIES BELOW. HE POINTED OUT THAT ASSESSE E FAILED TO BRING THESE FACTS BEFORE THE SURVEY TEAM. THE LEAR NED CIT(A) HAS MADE REFERENCE ABOUT CERTAIN SALE BILLS DATED 07.12.2002 AND 09.12.2002. IF THE SALE BILLS WERE PREPARED ON THESE DATES THEN HOW GOODS REMAINED WITH THE ASS ESSEE UPTO THE DATE OF SURVEY. 2.4 WE HAVE DULY CONSIDERED THE RIVAL CONTENTION AN D GONE THROUGH THE RECORD CAREFULLY. THE QUANTITATIVE DET AILS FOR THE COMPLETE YEARS OF THE ASSESSEE WERE PLACED IN THE SUBMISSIONS FILED BEFORE THE CIT(A). THEY READ AS UNDER:- DETAIL OF INVENTORY IN MTR. (QUANTITY) ARE AS UNDER :- UPTO 17.12.2002 (DATE OF SURVEY) OPENING STOCK 259555.50 MTS. ADD: PURCHASE MTS. 769058.65 MTS. ADD: PURCHASES OF CLOTH BUT INVOICES ARE TO BE RECE- IVED.: 47559.50 MTS. 1076062.650 LESS: SOLD UPTO 17.12.2002 773646.900 LESS: GOODS SOLD, BILL ISSUED BUT 6 COULD NOT DISPATCHED.: 34968.900 738678.000 PHYSICAL INVENTORY AS PREPARED BY SURVEY OFFICER.: 337384.650 FROM 18.12.2002 TO 31.03.2003 OPENING STOCK: 337384.650 MTS. ADD: PURCHASES FROM 18.12.2002 TO 31.12.2003: 102567.100 439951.750 LESS: SALES 286764.000 CLOSING STOCK AT THE END OF YEAR: 153187.750 2.5 THESE DETAILS WERE SUBMITTED BEFORE THE ASSESSI NG OFFICER ALSO BUT LEARNED ASSESSING OFFICER DID NOT POINT OUT ANY DEFICIENCY IN THE QUANTITY OF DETAILS. THE DIS PUTE IS WHETHER ASSESSEE HAS PURCHASED THE GOODS WHICH REAC HED TO HIS BUSINESS PREMISES AND THE DOCUMENTS ENABLING THE ASSESSEE TO ACCOUNT SUCH GOODS IN THE BOOKS DID NOT REACH UPTO THE DATE OF SURVEY. SIMILARLY, THE GOODS WERE SOLD, BILLS WERE PREPARED BUT GOODS WERE NOT ACTUALLY LIFTED BY THE CONCERNED PARTY. THESE ARE THE TWO BASIC ISSUES RE QUIRED TO BE ADJUDICATED BY US. THE COMPLETE DETAILS OF BILL S HAVE BEEN PLACED BY THE ASSESSEE FROM PAGE NO.30 UPTO 56 . WE HAVE PERUSED THESE DETAILS. HOWEVER, WE DO NOT FIN D THE INCLUSION OF BILLS BEARING NO.2439 TO 2441 RELATED TO INVOICE NO.725. THE INVOICE WAS FOUND AT THE TIME OF SURVE Y AND IT WAS NOTICED BY THE SURVEY TEAM. ACCORDING TO THE A SSESSING OFFICER CREDIT OF THIS INVOICE WAS DULY ACCOUNTED I N THE BOOKS BUT ASSESSEE HAS DEMONSTRATED THAT IT WAS NOT ACCOU NTED. 7 SIMILARLY, CERTAIN OTHER BILLS WERE RECEIVED BY THE ASSESSEE AFTER THE SURVEY. THE MOMENT, ASSESSEE TOOK THIS P LEA, LEARNED ASSESSING OFFICER OUGHT TO HAVE VERIFIED TH ESE DETAILS FROM THE CONCERNED PARTY. HE CANNOT CONSID ER THE DETAILS SUBMITTED BY THE SURVEY TEAM AS A GOSPEL TR UTH. THE ASSESSEE WITH THE HELP OF TRANSPORT RECEIPTS, INVOI CE ISSUED BY THE SELLER OF THE GOODS AND THE BILL DEPICTING D ISPATCH OF GOODS HAS DEMONSTRATED THAT GOODS WERE DISPATCHED W ELL BEFORE THE DATE OF SURVEY. THE POSSIBILITY OF THEI R ARRIVAL AT THE PREMISES OF THE ASSESSEE CANNOT BE RULED OUT. SIMILAR IS THE CIRCUMSTANCE WITH REGARD TO SALE OF GOODS BY TH E ASSESSEE. THE ONLY CIRCUMSTANCE ASSIGNED BY THE LE ANED CIT(A) IS THAT IF BILLS WERE PREPARED ON 7 TH DECEMBER & 9 TH DECEMBER THEN HOW THE GOODS WERE LYING WITH THE ASS ESSEE. THIS IS A QUESTION, WHICH HAS TO BE ADJUDICATED ON THE BASIS OF CIRCUMSTANTIAL EVIDENCE, WITH CERTAINTY IT CANNO T BE HELD THAT GOODS MUST HAVE BEEN DISPATCHED BY THE ASSESSE E OR THEY WERE LYING. THE ASSESSING OFFICER COULD HAVE VERIFIED THIS ISSUE FROM THE PURCHASER OF THE GOODS WITH THE HELP OF TRANSPORT RECEIPTS ETC. LEARNED ASSESSING OFFICER DID NOT CONSIDER IT APPROPRIATE TO INVESTIGATE THE ISSUE WI TH THAT ANGLE. ASSESSEE HAS SUBMITTED THE DETAILS OF PARTY TO WHOM GOODS WERE SOLD AND THE DETAILS FROM TRANSPORTER WH EN GOODS WERE LIFTED. ON PAGE 81 OF THE PAPER BOOK AS SESSEE HAS PLACED ON RECORD AN EVIDENCE FROM DOORS TRANSPO RT COMPANY INDICATING THE DELIVERY OF GOODS ON 19.12.2 002. 8 TAKING INTO CONSIDERATION ALL THESE FACTS WE ARE OF THE VIEW THAT LEARNED CIT(A) OUGHT TO HAVE NOT CONFIRMED THE ADDITION ON ACCOUNT OF EXCESS STOCK AVAILABLE WITH THE ASSES SEE. WE ALLOW THE APPEAL OF THE ASSESSEE AND DELETE THE ADD ITION OF `9,37,466/-. 3. IN RESULT, APPEAL OF THE ASSESSEE IS ALLOWED. THE ORDER IS PRONOUNCED IN THE OPEN COURT ON 29.08.2011. SD/- SD/- ( K.D. RANJAN ) ( RAJPAL YAD AV ) ACCOUNTANT MEMBER JUDICIAL MEMBER DT.29.08.2011. NS COPY FORWARDED TO:- 1. MAHESH KUMAR S/O SHRI LAXMINARAYAN, C/O SHRI ASH OK KUMAR BANSAL, AGARWAL COLONY, BALOTRA. 2. INCOME TAX OFFICER,BALOTRA 3. THE CIT 4. THE CIT (A) 5. THE DR TRUE COPY. BY ORDER (ITAT), JUDHPUR DATE OF HEARING 20.07.2011 DATE OF DICTATION 26.08.2011 DATE OF ORDER SIGNED BY THE HON'BLE MEMBER. 30.08.2011 DATE OF ORDER SENT TO THE CONCERNED BENCH 30.08.2011