DCIT, New Delhi V. M/s Madan Jewellers Pvt. Ltd., New Delhi

ITA 944/DEL/2011

• Counselvise Citation: [2012] 140 COUNSELVISE.COM (IT) 65418 (ITAT-DELHI)
• Duration Of Justice: 1 year(s) 6 month(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-08-2012
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: E
• Next Hearing Date: 09-08-2012
• Assessment Year: 2007-2008
• Appeal Filed On: 18-02-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: RAJIV RANKA
• Assessee Lawyers: R K KHIWANI
• Section: 133A

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL (DELHI BENCH `E : NEW DELHI) BEFORE SHRI U.B.S. BEDI, JUDICIAL MEMBER AND SHRI B.C. MEENA, ACCOUNTANT MEMBER ITA NO.944/DEL./2011 (ASSESSMENT YEAR : 2007-08) DCIT, CIRCLE 6(1), VS. MADAN JEWELLERS PVT. LTD. , NEW DELHI. 2623, BANK STREET, KAROL BAGH, NEW DELHI. (PAN/GIR NO.AAACM1224F) AND C.O. NO.82/DEL./2011 (IN ITA NO.944/DEL./2011) (ASSESSMENT YEAR : 2007-08) MADAN JEWELLERS PVT. LTD., VS. DCIT, CIRCLE 6(1), 2623, BANK STREET, NEW DELHI. KAROL BAGH, NEW DELHI. (PAN/GIR NO.AAACM1224F) (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI R.K. KHIWANI, CA REVENUE BY : SHRI RAJIV RANKA, SR.DR ORDER PER U.B.S. BEDI, J.M. THE APPEAL OF THE DEPARTMENT AND THE CROSS OBJECTIO N OF THE ASSESSEE IS DIRECTED AGAINST THE ORDER PASSED BY THE CIT (A)-IX, NEW DEL HI, DATED 27.10.2010, RELEVANT TO ASSESSMENT YEAR 2007-08. 2. IN THE APPEAL OF THE REVENUE THE ONLY GROUND C HALLENGED IS WITH REGARD TO RESTRICTING THE ADDITION ON ACCOUNT OF SURRENDERED AMOUNT FOR STOCK DISCREPANCIES RECORDED DURING THE SURVEY TO RS.4,01,180/- AS AGAI NST RS.1,30,02,143/- MADE BY THE ASSESSING OFFICER WHILE GIVING RELIEF OF RS.1,26,01 ,963/- AND IN C.O. OF THE ASSESSEE I.T.A. NO.944/DEL./2011 & C.O. NO.82/DEL./2011 (A.Y. : 2007-08) 2 SUSTENANCE OF ADDITION OF RS.4,01,180/-, CLAIMED AS REDUCTION IN SURRENDERED AMOUNT DUE TO INCORRECT DETERMINATION OF THE SURRENDERED AMOUN T ON ACCOUNT OF DIFFERENCE HAS BEEN CHALLENGED. 3. FACTS INDICATE THAT THE RETURN WAS FILED BY THE ASSESSEE ON 29-10-2007 AT AN INCOME OF RS.1,51,11,4201- FOR THE A.Y. 2007-08. THE CASE WAS PROCESSED U/S 143(1) OF THE ACT. THE CASE WAS TAKEN UP FOR SCRUTI NY THROUGH CASS AND A STATUTORY NOTICE U/S 143(2) DATED 24-6-2008 WAS ISSUED TO THE ASSESSEE. THE ASSESSEE COMPANY IS ENGAGED IN THE BUSINESS OF TRADING AND M ANUFACTURING OF JEWELLERY OF GOLD, DIAMONDS, PRECIOUS METALS, GEMS AND STONES. D URING THE YEAR UNDER ASSESSMENT, A SURVEY U/S 133A WAS CONDUCTED ON 15-2 -2007 AND 16-2-2007 ON THE ASSESSEE'S PREMISES WHERE DISCREPANCIES WERE FOUND IN STOCK AND CASH. 4. DURING THE COURSE OF THE ASSESSMENT PROCEEDINGS, T HE LD. AO NOTED THAT AS AGAINST THE DECLARED AMOUNT OF RS.1 ,30,01 ,843/-, THE ASSESSEE HAD ACTUALLY OFFERED AN AMOUNT OF RS.1 ,26,01 ,963/- WHICH WAS SHORT OF THE SURRENDERED AMOUNT BY A SUM OF RS.3,98,8801/-. BEFORE THE LD. A.O., THE ASSES SEE CONTENDED THAT THE REDUCTION IN THE SURRENDERED AMOUNT WAS DUE TO CERTAIN ERRORS IN DETERMINING THE DIFFERENCES IN QUANTITIES IN THE STOCK. HOWEVER, THE AO REJECTED T HE EXPLANATION AND HELD THAT THE ENTIRE AMOUNT AS SURRENDERED BY THE ASSESSEE AT RS. 1,30,01 ,843/- UNDER VARIOUS HEADS DURING THE PROCEEDINGS U/S 133A OF THE ACT, IS TO B E TAKEN AS UNDISCLOSED INCOME AND CONSEQUENTLY ADDED BACK THE SAME TO THE TOTAL I NCOME OF THE ASSESSEE. 5. ASSESSEE TOOK UP THE MATTER IN APPEAL AND SUBMIT TED IN WRITING BEFORE FIRST APPELLATE AUTHORITY AS UNDER: '1. THE SURRENDER WAS HONORED BY THE ASSESSEE SUB JECT TO THE MATHEMATICAL CALCULATIONS OF DIFFERENTIAL STOCK DETERMINATION. THE CORRECT SURRENDER AMOUNT OF RS.1,26,01,962.63 WAS RECORDED IN THE BOOKS OF ACCOUNTS AND THE REDUCTION IN THE SURRENDERED AMOUN T WAS RS. 3, 99, 880/-. THE SAME IS REFLECTED IN THE 'PROFIT AND LOSS ALC' IN THE REVENUE AS 'OTHER INCOMES' THE DETAILS OF WHICH ARE PROVIDED IN THE 'SCHEDULE L '. 2. THUS THE NET PROFIT OF RS. 1,49,62, 170/- AS PER P & L ALC INCLUDED AN AMOUNT OF RS.1,26,01,962.63 TOWARDS THE SURRENDER IN THE SURV EY CONDUCTED ON 15-2-2007. EFFECTIVELY THE RETURNED INCOME OF RS.1,51, 11,420/- INCLUDED IN SURRENDERED INCOME OF RS.1,26,01,962.63 AS AGAINST THE SURRENDER OF I.T.A. NO.944/DEL./2011 & C.O. NO.82/DEL./2011 (A.Y. : 2007-08) 3 RS.1,30,01,843/- IN THE SURVEY. 3. SUBSEQUENT TO THE SURVEY OPERATION AND THE SURR ENDER THEREIN, THE ASSESSEE ALSO PAID THE ADDITIONAL AMOUNT OF ADVANCE TAX DUE BEFORE THE 31 ST MARCH 2007, CREDIT FOR WHICH HAS BEEN ALLOWED. 4. HOWEVER THE AO HAS COMMITTED THE CARELESS ERROR OF MAKING THE ADDITION OF RS.1,30,01,843/- TO THE DECLARED INCOME OF RS.1,51, 11,420/- (AS PER P & L) WHICH ALREADY INCLUDED THE DECLARED AMOUNT OF RS.1,26,01,962.63 OUT OF THE SURRENDERED INCOME, THOUGH THE ORDER SUGGESTS T HAT THE AO INTENDED NOT TO ACCEPT THE CORRECTION IN THE DIFFER ENTIAL STOCKS DUE TO MATHEMATICAL ERROR AMOUNTING TO RS.3,99,880/- BUT F URTHER ON HE HAS GONE OVERBOARD TO GO IN EXCESS-OF THE SURRENDERED AMOUNT, OUT OF WHICH THE AMOUNT OF RS.1,30,02, 143/- IS ALREADY INCLUDED IN THE DECLARED INCOME.' 5. FURTHER SUBMISSIONS WERE ALSO MADE DURING THE PR OCEEDINGS BEFORE FIRST APPELLATE AUTHORITY AND CIT(A) WHILE CONSIDERING THE SUBMISSI ONS OF THE ASSESSEE IN THE LIGHT OF MATERIAL AVAILABLE ON RECORD HAS CONCLUDED TO RESTR ICT THE ADDITION TO RS.4,01,180/- AS AGAINST RS.1,30,02,143/- MADE BY THE ASSESSING OFFI CER AS PER PARQAS.4.1 TO 4.3 AS UNDER: 4.2 I HAVE CAREFULLY CONSIDERED THE SUBMISSION OF THE APPELLANT AND THE FINDINGS RECORDED BY THE AO AS PER THE ASSESSMENT O RDER. IT IS SEEN THAT OUT OF THE TOTAL DECLARATION OF ADDITIONAL INCOME OF RS.1, 30,02,843/- AT THE TIME OF THE SURVEY PROCEEDINGS, THE APPELLANT HAD ACCOUNTED FOR A SUM OF RS.1 ,26,01 ,963/- IN ITS BOOKS OF ACCOUNTS AND ACCORDINGLY THE SAME W AS INCLUDED IN THE RETURNED INCOME OF RS.1 ,51,11,4201-. THE APPELLANT HAD REDUCED THE AMOUNT OF DECLARATION BY A SUM OF RS.3,98,8801- ON ACCOUNT OF CERTAIN CALCULATION ERRORS WHILE WORKING OUT THE DECLARED AMOUNT AT THE TIME O F THE SURVEY. THE EXPLANATION FURNISHED BY THE APPELLANT IN ORDER TO JUSTIFY THE REDUCTION IN THE AMOUNT OF THE DECLARATION WAS REJECTED BY THE LD.ASSESSING OFFICE R AS PER THE ASSESSMENT ORDER. HOWEVER, INSTEAD OF MAKING AN ADDITION OF TH E SHORT FALL IN THE DECLARED AMOUNT, THE AO PROCEEDED TO ADD BACK THE TOTAL AMOU NT OF DECLARATION I.E. RS.1 ,30,02,1431- MADE AT THE TIME OF THE SURVEY. WHILE DOING SO, THE LD.ASSESSING OFFICER DID NOT REALIZE THAT OUT OF THE SAME A SUM OF RS.1 ,26,01 ,963/- ALREADY STOOD ACCOUNTED FOR BY THE APPELLANT IN ITS BOOKS O F ACCOUNTS AND RESULTANTLY WAS A PART OF RETURNED I NCOME OF RS.1 ,51,11,4201-. IF THE AO WAS NOT CONVINCED WITH THE APPELLANT'S SUBMISSION DURING THE ASSESSME NT PROCEEDINGS, AS REGARDS THE CALCULATION ERRORS AT THE TIME OF THE S URVEY, HE SHOULD HAVE ADDED BACK THE DIFFERENCE IN THE AMOUNT DECLARED AN D ACCOUNT FOR BY THE APPELLANT I.E. ASUMOFRS.4,00,180/- (1,30,02,143 - 1 ,26,01,963) ONLY. THUS, THE AO HAS ERRONEOUSLY ADDED BACK THE WHOLE AMOUNT OF RS.1 ,30,02,1431- TO THE INCOME RETURNED BY THE APPELLANT DISREGARDING T HE FACT THAT AN AMOUNT OF RS1,26,01 ,963/- WASALREADYACCOUNT FOR. THE ADDITION OF RS.1 ,30,02,143/-, THEREFORE, CANNOT BE SUSTAINED SUBJECT TO THE FINDI NGS GIVEN IN THE SUBSEQUENT PARAS. 4.3 DURING THE COURSE OF THE APPELLATE PROCEEDINGS, THE LD. AR SUBMITTED I.T.A. NO.944/DEL./2011 & C.O. NO.82/DEL./2011 (A.Y. : 2007-08) 4 THAT IT IS READY TO FOREGO THE CLAIM OF REDUCTION O N THE AMOUNT OF DECLARATION MADE AT THE TIME , OF THE SURVEY SUBJECT TO THE DROPPING OF THE CONCEA LMENT PENALTY PROCEEDINGS INITIATED BY THE AO. IT IS A WE LL SETTLED POSITION OF LAW THAT SUCH KIND OF CONDITIONAL OFFER CANNOT BE ACCEP TED. HOWEVER, SINCE THE APPELLANT HAS HIMSELF STATED THAT IT IS PREPARED TO FOREGO THE CLAIM OF THE REDUCTION, THE ADDITION MADE BY THE LD. AO TO THE I NCOME OF THE APPELLANT IS RESTRICTED TO THE CLAIM OF REDUCTION/SHORTFALL OF I NCOME AS SHOWN IT. THE APPELLANT, THEREFORE, GETS A RELIEF OF RS.1 ,26,01,963/- I.E. THE AMOUNT WHICH WAS ACCOUNTED FOR IN THE BOOKS OF ACCOUNT AND RESULTANT LY DECLARED IN THE RETURN OF INCOME. THE GROUND NOS. 2 TO 4 ARE ACCORDINGLY DISP OSED OFF. 6. AGGRIEVED BY THIS ORDER OF THE CIT(A), DEPARTMEN T HAS COME UP AGAINST RELIEF GRANTED WHEREAS ASSESSEE HAS COME IN CROSS OBJECTIO N AGAINST SUSTENANCE OF ADDITION OF RS.4,01,180/- AND RAISED/ARGUED THEIR RESPECTIVE PL EAS IN SUPPORT OF APPEAL/CROSS OBJECTION. 7. WE HAVE HEARD BOTH THE SIDES, CONSIDERED THE MAT ERIAL ON RECORD AND FIND THAT THE BASIS AND REASONING AS GIVEN BY THE CIT(A), FOR ALL OWING RELIEF OF RS.1,26,01,963/- AS AGAINST ADDITION OF RS.1,30,02,143/- MADE BY THE AS SESSING OFFICER ARE SOUND AND CONVINCING. NEITHER ANY INFIRMITY OR FLAW HAS BEEN POINTED OUT NOR NOTICED AND OTHERWISE ORDER OF CIT(A) IS FOUND TO BE JUST AND PROPER IN V IEW OF THE FACTS AND CIRCUMSTANCES OF THE CASE. THE RELEVANT MATERIAL IS FOUND TO HAVE B EEN APPROPRIATELY CONSIDERED BY THE CIT(A), WHILE CONCLUDING TO RESTRICT SUCH ADDITION TO RS.4,01,180/- WHILE GIVING RELIEF OF RS.1,26,01,963/-. IN THE ABSENCE OF ANY CONTRARY M ATERIAL HAVING BEEN PLACED BY EITHER OF THE SIDES OR ADVANCING ANY CONVINCING ARGUMENT IN R ELATION TO THEIR RESPECTIVE MATTERS, WE UPHOLD THE IMPUGNED ORDER AND DISMISS THE APPEAL OF THE REVENUE AS WELL AS CROSS OBJECTION OF THE ASSESSEE. 8. AS A RESULT, BOTH THE APPEAL OF THE REVENUE AND THE CROSS OBJECTION OF THE ASSESSEE ARE DISMISSED. ORDER PRONOUNCED IN OPEN COURT ON 31.08.2012. SD/- SD/- (B.C. MEENA) ACCOUNTANT MEMBER (U.B.S. BEDI ) JUDICIAL MEMBER DATED : AUG. 31, 2012 SKB I.T.A. NO.944/DEL./2011 & C.O. NO.82/DEL./2011 (A.Y. : 2007-08) 5 COPY OF THE ORDER FORWARDED TO:- 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A)-IX, NEW DELHI. 5. CIT(ITAT) DEPUTY REGISTRAR, ITAT