M/s. Meico Boards P. Ltd., RAJKOT-GUJARAT V. The Assistant Commissioner of Income Tax, Central Circle-1, RAJKOT-GUJARAT

ITSSA 10/RJT/2012

• Counselvise Citation: [2012] 121 COUNSELVISE.COM (IT) 8590 (ITAT-RAJKOT)
• Duration Of Justice: 6 month(s) 7 day(s)
• Appeal Type: Income Tax (Search & Seizure) Appeal
• Pronouncement Date: 14-12-2012
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: DB
• Next Hearing Date: 04-12-2012
• Assessment Year: 2007-2008
• Appeal Filed On: 06-06-2012
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: AVINASH KUMAR

Judgement Text

, IN THE INCOME TAX APPELLATE TRIBULAL; RAJKOT BENCH, RAJKOT. . . , . . , BEFORE SHRI T. K. SHARMA, JM AND SHRI B. R. JAIN AM IT (SS) NO. 1 0 /RJT/201 2 / ASSESSMENT YEAR 200 7 - 08 . M/S. MEICO BOARDS P. LTD., GANDHIDHAM. C/O. KALPESH S. DOSHI & CO., CHARTERED ACCOUNTANTS, 411, COSMO COMPLEX, MAHILA COLLEGE CIRCLE,RAJKOT. - 1 PAN : AACCM 6893 L ( / APPELL ANT) THE ASSTT. C.I.T., CENTRAL CIRCLE - 1, RAJKOT. / RESPONDENT / ASSESSEE BY SHRI KALPESH DOSHI, C. A. / REVENUE BY SHRI AVINASH KUMAR, D . R. . / DATE OF HEARING 04 - 12 - 20 12 / DATE OF PRONOUNCEMENT 14 - 1 2 - 2012 / ORDER . . , / T. K. SHARMA, J. M. : THIS APPEAL BY THE ASSESSEE IS A GAINST THE ORDER DATED 0 2 - 0 3 - 201 2 OF CIT (A) - IV, AHMEDABAD C ONFIRM ING THE PENALTY OF RS. 3 3 , 0 00 / - LEVIED BY AO U/S. 271(1)(C) OF THE I.T. ACT , 1961 FOR THE ASSESSMENT YEAR 200 7 - 08. 2. BRIEFLY STATED , THE FACTS AR E THAT THE ASSESSEE IS A COMPANY ENGAGE D IN THE BUSINESS OF MANUFACTURING AND TRADING OF PLYWOOD, BLACK BOARD AND VENEERS. A SEARCH U/S.132 OF THE ACT WAS CARRIE D AT THE PREMISES OF ONE OF THE DIRECTOR OF THE COMPANY ON 11 - 10 - 2006. SIMULTANEOUS LY , A SURVEY U/S.133A OF THE ACT WAS ALSO CARRIED OUT AT THE BUSINESS PREMISES OF THE ASSESSEE. SUBSEQUENTLY, VIDE ORDER DATED 30 - 12 - 2008, AO FRAMED THE ASSESSMENT U/S.153 C OF THE I.T. ACT,1961 WHEREIN, HE MADE G.P. ADDITION OF RS. 97,630/ - ON UNACCOUNTED SALES IT(SS) 10/RJT/2012 2 ON THE BASIS OF DEFICIT IN THE STOCK FOUND DURING THE SURVEY AS DISCUSSED IN PARA - 9.2 AND 9.3 OF THE ASSESSMENT ORDER. THE RELEVANT PORTION OF PARA - 9.2 AND 9.3. REA DS AS UNDER: - 9.2. . I HAVE DULY CONSIDERED TH E ASSESSEE S SUBMISSION. THE STOCK TAKING ON THE DATE OF SURVEY WAS DONE AS NARRATED AND DICTATED BY ASSESSEE S PERSONAL AND THE SAME BEARS SIGNATURE OF ASSESSEE S PERSONAL. SO FAR AS QUANTITY AND VALUATION A ND CONCERNED, DEPARTMENT OFFICERS DO NOT HAVE ANY ACCESS OR RECOURSE TO THIS ASPECT OF BUSINESS. IT IS THE ASSESSEE OR HIS PERSONAL WHO CAN BEST JUSTIFY THE SAME AND THAT WAS DONE AWAY AS ON THE DATE OF SURVEY. TILL THE DATE OF REPLY TO SHOW CAUSE NOTICE , THE ASSESSEE HAS NOT RAISED ANY OBJECTION SO FAR AS INVENTORY OF STOCK IS CONCERNED. IT IS ONLY AT THIS JUNCTURE THAT THE ASSESSEE SPEAKS SOMETHING WITHOUT BASIS AND JUST TO OBJECT A PARTICULAR SHOW CAUSE NOTICE. HAD THERE BEEN THE SITUATION AS STATED AT THIS JUNCTURE, THE ASSESSEE COULD POINT OUT THE THINGS LONG BACK. THE ASSESSEE S REPLY IS ALSO QUITE VAGUE AND WITHOUT ANY SPECIFIC INSTANCE OF IRREGULARITY IN THE INVENTORY OR STOCK AS PER BOOKS OF ACCOUNTS. THE ASSESSEE HAS NOT MENTIONED ANY SUCH SPEC IFIC INSTANCE IN THE REPLY. THUS, SO FAR AS STOCK DIFFERENCE WAS FOUND IN NEGATIVE, I.E. MINUS RS.23,81,225/ - , IT IS A GLARING MATTER THAT ASSESSEE MUST BE INDULGING IN UNACCOUNTED SALES THOUGH THE BOOKS OF ACCOUNTS ARE STATED TO BE MAINTAINED AS PER THE STOCK REGISTER IN RG - 1 AS PER CENTRAL EXCISE RULES AND FURTHER, AUDITED BY CHARTERED ACCOUNTANT. 9.3. THUS GROSS PROFIT ON UNACCOUNTED SALES AS WORKED OUT ABOVE DURING SURVEY OF RS.23,81,225/ - , WORKS OUT TO RS.97,630/ - . THE RATE OF GROSS PROFIT FOR THE YE AR UNDER CONSIDERATION IS 4.5%. HENCE, THE GROSS PROFIT OF RS.97,630/ - IS ADDED TO THE RETURNED INCOME. PENALTY PROCEEDINGS U/S.271(1)(C) OF THE ACT FOR CONCEALMENT OF INCOME ARE INITIATED FOR THE SAME. 3. THE AFORESAID ADDITION OF RS.97,630/ - MADE BY T HE AO IS CONFIRMED BY THE LEARNED CIT(A) AND TRIBUNAL. SUBSEQUENTLY, AO LEVIED THE PENALTY OF RS. 32,862/ - BEING 100% OF TAX EVADED ON G.P. ADDITION OF RS.97,630/ - ON UNACCOUNTED SALES ON THE BASIS OF DEFICIT IN THE STOCK FOUND DURING SURVEY AMOUNTING TO R S.23,81,225/ - . ON FURTHER APPEAL, THE LD. CIT(A) VIDE ORDER DATED 02 - 03 - 2012 CONFIRMED THE PENALTY OF RS.33,000/ - . 4. AGGRIEVED BY THIS ORDER , THE ASSESSEE IS IN APPEAL BEFORE THE TRIBUNAL. IT(SS) 10/RJT/2012 3 5. AT THE TIME OF HEARING BEFORE US , ON BEHALF OF ASSESSEE , SHR I K ALPESH DOSHI, C.A. APPEARED AND FILED PAPER - BOOK CONTAINED 71 PAGES AND MADE THE FOLLOWING SUBMISSIONS: - - THE ADDITION OF RS.97,630/ - AS GROSS PROFIT ON UNDISCLOSED SALES WAS CONFIRMED AFTER THE ORDER OF THE HON BLE ITAT. - DURING THE COURSE OF SURVEY THE AO FOUND LOWER STOCK AS PER BOOKS AS COMPARED TO PHYSICAL STOCK OF RS.23,81,225/ - . - THE DIFFERENCE WAS DUE TO THE FACT THAT THE SOME OF THE GOODS WERE IN TRANSIT AND THE SAME WAS NOT FOUND PHYSICALLY. - THE DETAILS OF STOCK AS PER BOOKS OF ACCOUNT IS AT PAGE NO.7 OF THE PAPER BOOK. - THE STOCK OF RS.22,62,927/ - WAS YET TO BE RECEIVED AT PLANT, HOWEVER SAME WAS WRONGLY CONSIDERED AS PART OF STOCK AS PER BOOKS OF ACCOUNT. - THE A MAINTAINS STOCK REGISTER AS PER THE PROVISION OF THE CENTRAL EXCISE ACT & ARE AUDITED. - THE A HAS NOT CONCEALED ANY PARTICULARS OF THE INCOME AND HAS NOT PROVIDED ANY INACCURATE PARTICULARS OF INCOME. - THE DISALLOWANCE IS ALSO ON PRESUMPTION AND SURMISES. - RELIANCE CAN BE PLACED ON THE DECISION OF M/S. SAVANI HANDLING & T RANSPORT CO. A.Y. 2003 - 04 71/RJT/2009. - FURTHER, RELIANCE IS PLACED ON THE FOLLOWING JUDGEMENTS: CIT VS. VALMIK H. PATEL. (280 ITR 487 GUJ) CIT VS.SANGRUR VANASPATI MILLS LTD.(303 ITR 53) (PUNJAB HC) CIT MADRAS VS. KHODAY ESWARSA AND SONS. (83 IT R 369) (SC) CIT VS. RAHULJEE & CO. (167 CTR (DEL) 286) KANBAY SOFTWARE VS. DCIT (ITAT PUNE). ON THE BASIS OF ABOVE, THE COUNSEL OF THE ASSESSEE PLEADED THAT PENALTY OF RS.97,630/ - CONFIRMED BY THE LD. CIT(A) IN THE IMPUGNED ORDER BE CANCELLED. IT(SS) 10/RJT/2012 4 6. ON THE OTHER HAND, SHRI AVINASH KUMAR, THE LD. D. R. VEHEMENTLY SUPPORTED THE ORDER OF LD. CIT(A). HE POINTED OUT THAT AT THE TIME OF SURVEY, DIFFERENCE IN QUANTITY OF STOCK WAS FOUND. IT IS UNBELIEVABLE THAT SUCH HUGE DEFICIT IN STOCK WAS NOT IN THE KN OWLEDGE OF DIRECTORS OF THE ASSESSEE. FOR SUCH HUGE DEFICIT OF STOCK THE ONLY LEGAL INFERENCE WHICH CAN BE DRAWN IS THAT THE SAME HAS BEEN SOLD OUTSIDE OF THE BOOKS OF ACCOUNT, THEREFORE, PROFIT ELEMENT OF SUCH UNACCOUNTED SALE REPRESENTS THE CONCEALED I NCOME OF THE ASSESSEE. HE ACCORDINGLY SUBMITTED THAT PENALTY IN THIS CASE IS RIGHTLY LEVIED, THEREFORE, SAME BE UPHELD. 7. HAVING HEARD BOTH SIDES, WE HAVE CAREFULLY GONE THROUGH THE ORDERS OF AUTHORITIES BELOW. IT IS PERTINENT TO NOTE THAT DEFICIT IN ST OCK RS.23,81,225/ - WHICH IS MORE THAN 32% WAS CALCULATED ON THE DATE OF SURVEY , AS NARRATED AND D I CT AT ED BY ASSESSEE S PERSONNEL AND SAME BEARS THE SIGNATURE OF ASSESSEE S PERSONNEL. BEFORE THE SURVEY TEAM, ASSESSEE COULD NOT RECONCILE THE SAME. EVEN BEF ORE THE AO OR BEFORE THE LD. CIT(A) OR TRIBUNAL IN QUANTUM APPEAL ALSO, ASSESSEE COULD NOT FURNISH ANY PLAUSIBLE EXPLANATION. THE G.P. ADDITION OF RS. 97,630/ - ON ACCOUNT OF UNACCOUNTED SALE ON THE BASIS OF DEFICIT STOCK FOUND IS CONFIRMED BY THE LD. CIT(A ) AS WELL AS THE TRIBUNAL. IN THE IMPUGNED ORDER, AFTER CONSIDERING THE EACH AND EVERY CONTENTION OF THE ASSESSEE, LD. CIT(A) HAS HELD THAT PENALTY OF RS.33,000/ - IN THIS CASE WAS RIGHTLY LEVIED. WE THEREFORE, DECLINED TO INTERFERE. 8. IN THE RESULT, TH E APPEAL OF THE ASSESSEE IS DISMISSED. THIS ORDER PRONOUNCED IN OPEN COURT ON THE DATE MENTIONED HEREINABOVE. SD/ - SD/ - ( B. R. JAIN ) ( . . / T. K. SHARMA) / ACCOUNTANT MEMBER / JUDICIAL MEMBER / ORDER DATE 14 - 12 - 2012. /RAJKOT . NVA/ - IT(SS) 10/RJT/2012 5 / COPY OF ORDER FORWARDED TO: - 1. / APPELLANT - . M/S. MEICO BOARDS P. LTD., GANDHIDHAM. 2. / RESPONDENT - THE ASSTT. C.I.T., CENTRAL CIRCLE - 1, RAJKOT. 3. / CONCERNED CIT (CENTRAL) - II, AHMEDABAD. 4. - / CIT (A) - IV, AHMEDABAD. . 5. , , / DR, ITAT, RAJKOT 6. / GUARD FILE. / BY ORDER , TRUE COPY. A S STT. REGISTRAR , INCOME TAX APPELLATE TRIBUNAL, RAJKOT. IT(SS) 10/RJT/2012 6 1.DATE OF DICTATION : 0 5 - 12 - 2012/14 - 12 - 2012. 2.DATE OF PLACING T HE DRAFT. : 3.DATE OF APPROVAL OF DRAFT. : 4.DATE OF RETURN FROM JM : 5.DATE OF PRONOUNCEMENT : 6.DATE OF SENDING TO BENCH CLERK : 7.DATE OF RECEIPT BY BENCH CLERK : 8.DATE OF PLACING IT FOR ENDORSEMENT : 9.DATE OF ENDORSEMENT : 10.DATE OF DI SPATCH :