Bharat Marble Company, Kolkata V. DCIT, Circle - 34, Kolkata, Kolkata

ITA 96/KOL/2010

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 78434 (ITAT-KOLKATA)
• Duration Of Justice: 4 year(s) 6 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-07-2014
• Appeal Filed By: Assessee
• Bench Allotted: B
• Assessment Year: 2006-2007
• Appeal Filed On: 15-01-2010
• Court: TRIBUNAL
• Department Lawyers: A K DAS
• Assessee Lawyers: S MODI
• Keywords: Tax effect
• Section: 133A

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, BENCH A , KOLKATA [BEFORE HONBLE SRI P.K.BANSAL, AM & HONBLE SRI MAHAVIR SINGH, JM] ITA NO.96/KOL/2010 ASSESSEMNT YEAR : 2006-07 BHARAT MARBLE CO. -VS- D.C.I.T., CIRCLE-34, KOLKATA KOLKATA (PAN:AAFFB 5465 Q) ITA NO.228/KOL/2010 ASSESSMENT YEAR : 2006-07 ( CROSS OBJECTOR ) - (RESPONDENT) D.C.I.T., CIRCLE-34, . BHARAT MARBLE CO. KOLKATA -VERSUS- KOLKATA (PAN:AAFFB 5465 Q) FOR THE ASSESSEE SHRI S.MODI, C.A. FOR THE DEPARTMENT SHRI A.K.DAS, JCIT, SR.DR DATE OF HEARING : 30.07.2014 DATE OF PRONOUNCEMENT : 30.07.2014. ORDER PER SHRI P.K.BANSAL, AM THESE CROSS APPEALS ARE FILED BY THE ASSESSEE AS WE LL AS THE REVENUE AGAINST THE ORDER OF THE LD. CIT(A)-XX, KOLKATA DATED 16.11 .2009 FOR A.YR.2006-07. 2. IN THE CASE OF REVENUES APPEAL WE NOTED THAT T HE TAX EFFECT INVOLVED IN THIS CASE IS LESS THAN RS. 3 LAKHS, LIMIT FIXED BY THE C BDT FOR FILING APPEAL BEFORE ITAT. IN THIS REGARD THE LD. COUNSEL OF THE ASSESSEE REFERRE D TO THE INSTRUCTION NO.3/2011 DATED 09.02.2011 ISSUED BY THE CBDT. THE LD. COUNSEL OF T HE ASSESSEE ALSO BROUGHT TO OUR NOTICE PARA 5 OF THE SAID INSTRUCTION AS UNDER :- 5. THE ASSESSING OFFICER SHALL CALCULATE THE TAX EFFECT SEPARATELY FOR EVERY ASSESSMENT YEAR IN RESPECT OF THE DISPUTED ISSUES IN THE CASE OF EVERY ASSESSEE. IF, IN THE CASE OF AN ASSESSE, THE DISPUTED ISSUES ARISE IN MORE THAN ONE ASSESSMENT YEAR, APPEAL, CAN BE FILED IN RESPECT OF SUCH ASSESSMENT YEAR OR YEARS IN WHIC H THE TAX EFFECT IN RESPECT OF THE DISPUTED ISSUES EXCEEDS THE MONETARY LIMIT SPECIFIE D IN PARA 3. NO APPEAL SHALL BE FILED IN RESPECT OF AN ASSESSMENT YEAR OR YEARS IN WHICH THE TAX EFFECT IS LESS THAN THE ITA NO.96/KOL/2010& 228/KOL/2010 BHARAT MARBLE CO.. A.YR.2006-07 2 MONETARY LIMIT SPECIFIED IN PARA 3. IN OTHER WORDS, HENCEFORTH, APPEALS CAN BE FILED ONLY WITH REFERENCE TO THE TAX EFFECT IN THE RELEVANT AS SESSMENT YEAR. HOWEVER, IN CASE OF A COMPOSITE ORDER OF ANY HIGH COURT OR APPELLATE AUTH ORITY, WHICH INVOLVES MORE THAN ONE ASSESSMENT YEAR AND COMMON ISSUES IN MORE THAN ONE ASSESSMENT YEAR, APPEAL SHALL BE FILED IN RESPECT OF ALL SUCH ASSESSMENT YEARS EV EN IF THE TAX EFFECT IS LESS THAN THE PRESCRIBED MONETARY LIMITS IN ANY OF THE YEAR(S), I F IT IS DECIDED TO FILE APPEAL IN RESPECT OF THE YEAR (S) IN WHICH TAX EFFECT EXCEEDS THE M ONETARY LIMIT PRESCRIBED. IN CASE WHERE A COMPOSITE ORDER/JUDGEMENT INVOLVES MORE THAN ONE ASSESSEE, EACH ASSESSEE SHALL BE DEALT WITH SEPARATELY. 2.1. IN VIEW OF THE ABOVE, THE LD. COUNSEL OF THE A SSESSEE SUBMITTED THAT THOUGH THIS IS A COMPOSITE ORDER THE TAX EFFECT IN THIS APPEAL IS LESS THAN RS.3 LAKHS, THE LIMIT FIXED BY THE CBDT FOR FIXING THE APPEAL BEFORE ITAT. IN T HIS REGARD, THE LD. COUNSEL OF THE ASSESSEE FURTHER PLACED RELIANCE UPON THE DECISION OF ITAT, HYDERABAD BENCH IN THE CASE OF ITO VS SHRI M.SUBBA KRISHNA KUMAR IN ITA NO .1264 AND 1265/HYD/11 VIDE ORDER DATED 3.10.2011. IN THIS CASE IT WAS HELD THA T WE HAVE HEARD THE PARTIES. IT IS AN UNDISPUTED FAC T THAT THE TAX EFFECT IN EACH OF THESE APPEALS OF THE REVENUE IS LESS THAN RS.3 LAKHS. WE FIND IN VIEW OF THE INSTRUCTION NO.3 OF 2011 [F.NO.279/MISC.142/2007-ITJ], DATED 9 TH FEBRUARY, 201 ISSUED BY THE CBDT, THE PRESENT APPEALS OF THE REVENUE INVOLVING TAX EF FECT OF LESS THAN RS.3LAKHS, ARE NOT MAINTAINABLE AND ACCORDINGLY THESE APPEALS OF THE R EVENUE ARE DISMISSED IN LIMINE. 2.2. IN VIEW OF THE ABOVE SAID SUBMISSIONS THE LD. COUNSEL OF THE ASSESSEE SUBMITTED THAT THE APPEAL FILED BY THE REVENUE IS NOT MAINTAI NABLE. THE LD. DR COULD NOT CONTRADICT THE ABOVE SUBMISSIONS OF THE LD. COUNSEL OF THE ASSESSEE. ACCORDINGLY IN VIEW OF THE CBDT INSTRUCTION AND PRECEDENTS CITED A BOVE WE HOLD THAT THE APPEAL FILED BY THE REVENUE IN THIS CASE IS NOT MAINTAINABLE ON ACCOUNT OF TAX EFFECT. ACCORDINGLY THIS APPEAL FILED BY THE REVENUE STANDS DISMISSED. 3. IN THE RESULT THE APPEAL FILED BY THE REVENUE ST AND DISMISSED. 4. NOW IN ASSESSEES APPEAL THE ONLY EFFECTIVE GROU ND TAKEN BY THE ASSESSEE READS AS UNDER :- 2. THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF T HE CASE THE LEARNING CIT (APPEALS) HAS ERRED IN CONFIRMING THE ADDITION OF RS.25,59,24 2/- AS ESTIMATED PROFIT ON ALLEGED UNDISCLOSED SALES OF THE ASSESSEE. ITA NO.96/KOL/2010& 228/KOL/2010 BHARAT MARBLE CO.. A.YR.2006-07 3 5. THE BRIEF FACTS RELATING TO THIS GROUND ARE THAT A SURVEY U/S 133A OF THE ACT WAS CONDUCTED ON 16.11.2005 AT THE BUSINESS PREMISES OF THE ASSESSEE. THE AO NOTED THAT DURING THE COURSE OF SURVEY THE STOCK WAS VALUED AT RS.1,22,64,407/-. THE STOCK ACTUALLY RECORDED IN THE BOOKS OF ACCOUNT WAS RS.5, 35,33,482/- WHICH WAS VALUED AT RS.1,22,64,407/-. THE AO IN THE ABSENCE OF ANY SATI SFACTORY EXPLANATION REGARDING THE SHORTAGE OF STOCK DURING THE COURSE OF THE SURVEY THE AO CONCLUDED THAT THE SHORTAGE OF THE STOCK WAS SOLD BY THE ASSESSEE OUTSIDE THE B OOKS WHICH WERE NOT RECORDED IN ITS BOOKS OF ACCOUNT. THE AO THEREFORE WORKED OUT THE U NRECORDED SALES AT RS.3,65,60,596/- AND APPLIED GROSS PROFIT @ 7% THER EON AND THUS ADDED AN AMOUNT OF RS.25,59,242/- TO THE INCOME OF THE ASSESSEE AS UND ISCLOSED PROFIT. THE ASSESSEE WENT IN APPEAL BEFORE THE LD. CIT(A).BEFORE THE LD. CIT( A) THE LD. AR CONTENDED THAT THERE WAS NO SHORTAGE IN STOCK. THE ACCOUNTS WERE DULY AU DITED. NO MATERIAL SUGGESTING UNRECORDED SALES WAS FOUND DURING THE COURSE OF SUR VEY. THE LD. CIT(A) SUSTAINED THE ORDER OF THE AO. 6. BEFORE US THE LD. AR REITERATED THE SUBMISSIONS MADE BEFORE THE LD. CIT(A) AND VEHEMENTLY CONTENDED THAT THE AO HAS ALREADY WORKED OUT THE GROSS PROFIT RATE OF 7% AT THE TIME OF SURVEY SHOWING AN INCOME OF RS.6,57, 596/- AND THEREFORE ADDITION OF RS.25,59,242/- WAS MADE MERELY ON THE BASIS OF ESTI MATE WHICH SHOULD NOT BE SUSTAINED. THE STOCK OF RS.4,12,69,075 IN FACT WAS LYING IN ASSESSEES SISTER CONCERNS GODOWN. THE ASSESSEE HAS GIVEN PAN NUMBER, NAME AND ADDRESS OF THE SISTER CONCERN. DURING THE COURSE OF SURVEY ALL THE DOCUMENTS AND B OOKS WERE SURVEYED AND NO EVIDENCE WAS FOUND WHICH SUGGESTED THAT THEY WERE O UTSIDE THE BOOKS OF ACCOUNT. 7. THE LD. DR, ON THE OTHER HAND, VEHEMENTLY RELIED ON THE ORDERS OF THE TAX AUTHORITIES BELOW. 8. WE HAVE HEARD THE RIVAL SUBMISSIONS AND CAREFULL Y CONSIDERED THE SAME ALONG WITH THE ORDERS OF THE TAX AUTHORITIES BELOW. WE NO TED THAT IN THIS CASE IT IS NOT DISPUTED THAT THERE WAS SHORTAGE OF STOCK TO THE EX TENT OF RS.4,12,69,075/- AS FOUND BY THE SURVEY TEAM DURING THE COURSE OF SURVEY BEING C ARRIED AT THE BUSINESS PREMISES OF ITA NO.96/KOL/2010& 228/KOL/2010 BHARAT MARBLE CO.. A.YR.2006-07 4 THE ASSESSEE AS ON 16.11.2005. AT THE TIME OF SURVE Y THE ASSESSEE DID NOT EXPLAIN THAT THE STOCK WAS LYING AT THE ASSESSEES SISTERS CONC ERN OR COULD NOT SATISFY THE SURVEY TEAM IN RESPECT OF THE DEFICIENCY IN THE STOCK. THE REFORE, IN OUR OPINION, THE ONLY PRINCIPLE IS THAT THE ASSESSEE HAS SOLD THE STOCK O UTSIDE THE BOOKS OF ACCOUNT. WE NOTED THAT AS ON 16.11.2005 BY WORKING OUT THE GROSS PROF IT @7% THE VALUE OF THE STOCK WAS DIFFERENT AND A SUM OF RS.3,65,60,596/- WAS TREATED AS UNDISCLOSED SALE BUT THE GROSS PROFIT @7% ON THE SALE OF RS.93,94,233/- WAS ESTIMA TED AT RS.6,57,596/-. THESE SALES ARE OUTSIDE THE BOOKS OF ACCOUNT. IN OUR OPINION TH E GROSS PROFIT CANNOT REMAIN THE SAME. IF IT IS OUTSIDE THE BOOKS OF ACCOUNT THE ASS ESSEE HAS NOT BILLED TO THE PARTY EVEN THE PURCHASER WOULD HAVE NOT SHOWN AND NOT RECORDED THE SAME AND THE PURCHASER WOULD ALSO LIKE TO BUY THE STOCK OUTSIDE THE BOOKS OF ACCOUNT AT A LOWER RATE. THE ASSESSEE WILL GET THE PAYMENT IN CASH AND HE HAS NO T TO WAIT FOR THE CREDIT AND ALSO KEEPING THE CASH DISCOUNT IN MIND. AS IT IS SAID IN TRADING OPERATION THAT NINE IN CASH IS BETTER THAN THIRTEEN IN CREDIT. ESTIMATE IS ALW AYS AN ESTIMATE. THEREFORE WE ALSO NOTED THAT IN CASE THE ASSESSEE HAS EARNED INCOME H E WOULD HAVE EITHER CONSUMED IT OR WOULD HAVE INVESTED IN SOME MOVABLE OR IMMOVABLE NO SUCH EVIDENCE HAS BEEN BROUGHT ON RECORD. IN THE AFORESAID FACTS AND CIRCU MSTANCES WE ARE OF THE VIEW THAT IT IS FAIR AND REASONABLE TO ESTIMATE THE PROFIT @4%. WE ACCORDINGLY SET ASIDE THE ORDER OF THE LD. CIT(A) AND DIRECT THE AO TO ESTIMATE THE PROFIT ON SUCH UNDISCLOSED SALE OF RS.3,65,60,596/- @ 4%. TO THAT EXTENT ORDER OF CIT IS CONFIRMED. 9. IN THE RESULT THE APPEAL OF THE ASSESSEE IS PART LY ALLOWED. 10. IN THE RESULT THE APPEAL OF THE REVENUE STANDS DISMISSED AND THE APPEAL OF THE ASSESSEE IS PARTLY ALLOWED. ORDER PRONOUNCED IN THE COURT ON 30.07.2014. SD/- SD/- [MAHAVIR SINGH ] [P.K.BANSAL] JUDICIAL MEMBER ACCOUNTANT MEMBER DATE: 30.07.2014. R.G.(.P.S.) ITA NO.96/KOL/2010& 228/KOL/2010 BHARAT MARBLE CO.. A.YR.2006-07 5 COPY OF THE ORDER FORWARDED TO: 1. M/S.BHARAT MARBLE COMPANY, 129, RADHA BAZAR STREET, KOLKATA-700001. 2 D.C.I.T., CIRCLE-34, KOLKATA 3 . CIT KOLKATA 4 . CIT(A)-XX, KOLKATA. 5. CIT(DR), KOLKATA BENCHES, KOLKATA. TRUE COPY, BY ORDER, DEPUTY /ASST. REGISTRAR , ITAT, KOLKATA BENCHES