SHRI Ram Trading Company, Bhopal V. THE DCIT 2(2), Bhopal

ITSSA 134/IND/2016

• Counselvise Citation: [2018] 122 COUNSELVISE.COM (IT) 3578 (ITAT-INDORE)
• Duration Of Justice: 1 year(s) 6 month(s) 7 day(s)
• Appeal Type: Income Tax (Search & Seizure) Appeal
• Pronouncement Date: 12-01-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Next Hearing Date: 20-06-2017
• Assessment Year: misc
• Appeal Filed On: 05-07-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: LALCHAND
• Assessee Lawyers: S K KHANDELWAL
• Section: 132

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL INDORE BENCHE, INDORE BEFORE SHRI KUL BHARAT, JUDICIAL MEMBER AND SHRI MANISH BORAD, ACCOUNTANT MEMBER IT(SS)A NO.134/IND/2016 BLOCK PERIOD : 01.04.1988 TO 28.01.1999 M/S. SHRI RAM TRADING COMPANY, JAGDISH PRASAD KHANDELWAL, 32, KANNOD ROAD, ASHTA, BHOPAL / VS. D CIT - 2 ( 2 ) [14] , BHOPAL (APPELLANT) (REVENUE ) P.A. NO. NOT AVAILABLE APPELLANT BY SHRI S.K. KHANDELWAL CA , REVENUE BY SHRI LAL CHAND, CIT - DR DATE OF HEARING: 14.12.2017 DATE OF PRONOUNCEMENT: 12.01.2018 / O R D E R PER MANISH BORAD, A.M: THIS APPEAL OF ASSESSEE PERTAINING TO BLOCK PERIOD 01.04.1988 TO 28.01.1999 IS DIRECTED AGAINST THE ORDER OF LD. COMMISSIONER OF INCOME TAX(APPEALS)-2, BHOPAL, (IN SHORT CIT(A)), DATED 15.03.2016 WHICH IS ARISING OUT OF THE ORDER U/S 158BC R.W.S. 254 OF THE INCOME TAX ACT 1961(HEREINAFTER CALLED AS THE ACT ) FRAMED ON 31.01.2001 BY DCIT INVESTIGATION CIRCLE-2, BHOPAL. RAM TRADING CO. 2 2 . BRIEFLY STATED FACTS AS CULLED OUT ON THE RECORDS ARE THAT THE ASSESSEE IS PARTNERSHIP FIRM ENGAGED IN WHOLESALE T RADING IN GRAINS, PULSES AND OIL SEEDS ETC. SEARCH U/S 132 OF THE ACT WAS CONDUCTED AT THE ASSESSEES BUSINESS AND RESIDENTIAL PREMISES ON 28.01.1999 WHICH WAS CONCLUDED ON 18.03.1999. IN RESPONSE TO N OTICE U/S 158BC OF THE ACT DATED 30.07.1999, THE ASSESSEE FIL ED RETURN OF INCOME ON 21.08.1999. DURING THE COURSE OF ASSESSME NT PROCEEDINGS MAJOR THRUST OF THE AO WAS TOWARDS EXAM INING OF STOCK RECORDS OF VARIOUS ITEMS DEALT IN BY ASSESSEE. IT W AS OBSERVED THAT THE ASSESSEE WAS MAINTAINING QUANTITATIVE STOCK REC ORDS IN THE STOCK REGISTER AS WELL AS SEPARATELY MAINTAINED LED GER FOR EACH ITEM. SOME VARIATIONS WERE OBSERVED IN THE QUANTITY AS PE R PHYSICAL VERIFICATION VS. STOCK AS PER LEDGER. AFTER MAKING VARIOUS ADDITIONS INCOME ASSESSED AT RS.5,70,484/-. 3. SUBSEQUENTLY, THE ASSESSEE PREFERRED AN APPEAL B EFORE THE LD. CIT(A) BUT PARTLY SUCCEEDED. THEREAFTER CROSS APPEA LS WERE FILED BEFORE THE TRIBUNAL AND ISSUES RAISED IN THESE CROS S APPEALS WERE SET ASIDE BY THE TRIBUNAL VIDE ORDER DATED 03.11.20 09 TO THE FILE OF LD. CIT(A) FOR FRESH ADJUDICATION AS REQUIREMENTS O F RULE 46A WERE HELD NOT HAVE BEEN COMPLIED WITH. 4. IN THE SET ASIDE PROCEEDINGS THE LD. CIT(A) ADJU DICATED THE ISSUES IN THE LIGHT OF EVIDENCES FILED BY THE ASSESSEE AND PARTLY ALLOWED THE APPEAL. 5. BEING AGGRIEVED THE ASSESSEE IS NOW IN APPEAL BE FORE THE TRIBUNAL RAISING VARIOUS GROUNDS OF APPEAL. RAM TRADING CO. 3 6. THE LD. COUNSEL FOR THE ASSESSEE REFERRED AND RE LIED ON THE SUBMISSIONS MADE BEFORE THE LD. CIT(A) AND FURTHER ADDED THAT THE LD. CIT(A) FAILED TO COMPARE PHYSICAL STOCK WITH TH E STOCK REGISTER. 7. ON THE OTHER HAND, LD. DR SUPPORTED THE ORDER OF THE LOWER AUTHORITIES. 8. WE HAVE HEARD RIVAL CONTENTIONS AND PERUSED RECO RD PLACED BEFORE US. GROUND NO.1: 1. THE LD. CIT(A) ERRED IN SUSTAINING AND ENHANCIN G ADDITION OF RS.111920/- ON ACCOUNT OF PROFIT ON SALE OF SOYABEA N ON ACCOUNT OF EXCESS STOCK. THE LD. CIT(A) FAILED TO A PPRECIATE ALL FACTS AND FIGURES BEFORE HIM. THE LD. CIT(A) FAIL T O COMPARE PHYSICAL STOCK WITH STOCK REGISTER. 9. BRIEF FACTS RELATES TO THIS GROUND ARE THAT THE ADDITION WAS MADE BY THE AO ON ACCOUNT OF VARIATION OF STOCK OF SOYAB EAN. SUBSEQUENTLY, IN THE SET ASIDE PROCEEDINGS THE LD. CIT(A) EXAMINED THE RECONCILIATION OF STOCK OF SOYABEAN FILED BY TH E ASSESSEE AND SUSTAINED THE ADDITION AT RS.111920/- FOR THE STOCK OF 135.660 QTL. 10. WE FURTHER OBSERVE THAT THE ASSESSEE MAINTAINED REGULAR QUANTITATIVE RECORDS IN THE STOCK REGISTER WHICH IS UPDATED AS SOON AS STOCK IS RECEIVED IN OR SOLD OR SENT OUT ON CONS IGNMENT BASIS. SEPARATE LEDGERS ARE ALSO PREPARED FOR EACH ITEMS, IN WHICH ENTRIES ARE MADE ONLY UPON RECEIPT OF ACCOUNTS FROM THE CON SIGNEES. WE FIND THAT THE FINDINGS OF LD. CIT(A) WAS BASED ON T HE LEDGER OF STOCK ITEMS AND NOT ON THE STOCK REGISTER. WE FIND SUBSTA NCE IN THE SUBMISSIONS OF LD. COUNSEL THAT THE STOCK REGISTER IS A PRIMARY DOCUMENT WHICH IS UPDATED AS SOON AS THERE IS A MOV EMENT OF STOCK RAM TRADING CO. 4 AND THEREFORE, STOCK FOUND AS PER PHYSICAL VERIFICA TION SHOULD HAVE BEEN COMPARED WITH THE STOCK REGISTER. 11. WE, THEREFORE, IN THE GIVEN FACTS AND CIRCUMSTA NCES OF THE CASE AS WELL AS APPRECIATING THE FACTS THAT IF ON COMPAR ISON OF PHYSICAL STOCK TAKE WITH QUANTITY WISE STOCK REGISTER, THERE REMAINS NO VARIATIONS IN THE STOCK AND ACCORDINGLY DELETE THE ADDITION OF RS.1,11,920/-. ACCORDINGLY, GROUND NO.1 IS ALLOWED. GROUND NO.2: 2. THE LD. CIT(A) ERRED IN SUSTAINING ADDITION OF R S.2438/- ON ACCOUNT OF PROFIT ON SALE OF CHANA ON ACCOUNT OF SH ORTAGE OF STOCK. THE LD. CIT(A) FAILED TO APPRECIATE ALL FACT S AND FIGURES BEFORE HIM. THE LD. CIT(A) FAILED TO COMPARE PHYSIC AL STOCK WITH STOCK REGISTER. 12. THIS GROUND RELATES TO SHORTAGE OF STOCK OF CHA NA AND LD. CIT(A) CONFIRMED THE ADDITION OF RS. 2438/- APPLYING GROSS PROFIT RATE @ 2.50% ON THE UNACCOUNTED SALES OF CHANA OF RS. 9750 6.75. WE FIND THAT THE CHANA STOCK AS PER LEDGER ACCOUNT WAS 118. 19 QTL. WHEREAS STOCK AS PER PHYSICAL INVENTORY WAS AT RS.N IL AND THIS SHORTAGE OF STOCK HAS NOT BEEN DISPUTED BY THE ASSE SSEE. THE APPELLANT IS AGGRIEVED ONLY WITH THE RATE OF CHANA PER QTL. APPLIED BY THE LD. CIT(A). WE HOWEVER, FIND NO INFIRMITY IN THE FINDINGS OF LD. CIT(A) CALCULATING GROSS PROFIT @ 2.5% ON UNAC COUNTED SALES CALCULATED AFTER APPLYING PER QTL. RATE OF RS.825/- . IN THE RESULT ADDITION OF RS.2,438/- STANDS CONFIRMED, GROUND NO. 2 OF ASSESSEE IS DISMISSED. GROUND NO.3: 3. THE LD. CIT(A) ERRED IN SUSTAINING AND ENHANCING ADDITION OF RS.67580/- ON ACCOUNT OF PROFIT ON SALE OF GUR ON ACCOUNT OF RAM TRADING CO. 5 EXCESS STOCK. THE LD. CIT(A) FAILED TO APPRECIATE A LL FACTS AND FIGURES BEFORE HIM. THE LD. CIT(A) FAIL TO COMPARE PHYSICAL STOCK WITH STOCK REGISTER. 13. THIS GROUND IS ON ACCOUNT OF SHORTAGE OF STOCK OF GUR WHEREIN LD. CIT(A) SUSTAINED THE ADDITION OF RS.67,580/- BY APPLYING RATE ON RS.1,000/- PER QTL. WE OBSERVE THAT THE APPELLA NT HAS COMMONLY SUBMITTED THAT PHYSICAL STOCK SHOULD HAVE BEEN COMPARED WITH THE STOCK REGISTER REGULARLY MAINTAIN ED BY THE ASSESSEE AND FURTHER STOCK FOUND AT THE TIME OF SEA RCH WAS COMBINED STOCK OF VARIOUS CONCERNS AND THESE GROUP CONCERNS COLLECTIVELY CLAIMED STOCK OF 1930.90 PER QTLS. AND THERE REMAINED UNEXPLAINED STOCK OF 204.41 QTLS ONLY. FURTHER THE ALLEGED EXCESS STOCK 204.41 QTLS STANDS DECLARED BY THE SISTER CON CERN M/S. GAYATRI TRADING COMPANY, AND DULY ASSESSED VIDE ASS ESSMENT ORDER U/S 158BD/143(3) DATED 31.03.2003 AND THUS TH E ALLEGED EXCESS STOCK STANDS ALREADY DECLARED, WE THEREFORE, IN THE GIVEN FACTS AND CIRCUMSTANCES OF THE CASE, ARE OF THE VIE W THAT LD. CIT(A) ERRED IN SUSTAINING THE ADDITION OF RS.67,580/- AND THE SAME NEEDS TO BE DELETED. IN THE RESULT GROUND NO.3 OF THE ASS ESSEE IS ALLOWED. GROUND NO.4: 4. THE LD. CIT(A) ERRED IN SUSTAINING ADDITION OF R S.18032/- ON ACCOUNT OF PROFIT ON SALE OF WHEAT ON ACCOUNT OF SH ORTAGE OF STOCK. THE LD. CIT(A) FAILED TO APPRECIATE ALL FACT S AND FIGURES BEFORE HIM. THE LD. CIT(A) FAILED TO COMPARE PHYSIC AL STOCK WITH STOCK REGISTER. 14. THIS GROUND RELATES TO SHORTAGE OF STOCK OF WH EAT. DURING THE COURSE OF SEARCH THERE WAS NO PHYSICAL STOCK OF WHE AT FOUND AT THE BUSINESS PREMISES BUT THE STOCK AS PER THE LEDGER W AS 901.61 QTL. RAM TRADING CO. 6 WHICH LEAD TO THE ADDITION BY THE AO. THE LD. CIT(A ) SUSTAINED THIS ADDITION FOR WANT OF EVIDENCE OF THE CLAIM OF THE A SSESSEE THAT THE ALLEGED STOCK OF 901.61 QTL. WAS LYING WITH AARTIYA . REVENUE HAS ALSO NOT DISPUTED THAT IN THE STOCK REGISTER REGULA RLY MAINTAINED BY THE ASSESSEE, THE ALLEGED UNEXPLAINED STOCK OF 901. 61 QTLS. WAS SHOWN AS ISSUED AS IT WAS SENT ON CONSIGNMENT TO TH E AARTIYA, WHEREAS, THE INDIVIDUAL LEDGER ACCOUNT IS MADE ONLY AT THE TIME OF ACTUAL SALE. 15. WE THEREFORE, IN THE GIVEN FACTS AND CIRCUMSTAN CES OF THE CASE AND APPRECIATING THE FACT THAT THE LOWER AUTHO RITIES SHOULD HAVE MADE/CONFIRM THE ADDITION TAKING BASIS OF STOC K REGISTER RATHER THAN THE LEDGER ACCOUNT OF EACH STOCK ITEM, ARE OF THE VIEW LD. CIT(A) ERRED IN CONFIRMING THE ADDITION OF RS.1 8,032/- WHICH NEEDS TO BE DELETED. ACCORDINGLY GROUND NO.4 OF THE ASSESSEE IS ALLOWED. 16 . IN THE RESULT, THE APPEAL OF THE ASSESSEE IS PARTL Y ALLOWED. ORDER WAS PRONOUNCED IN THE OPEN COURT ON 12 .01. 2018. SD/- (KUL BHARAT) SD/- (MANISH BORAD) JUDICIAL MEMBER ACCOUNTANT MEMBER INDORE; DATED : 12/ 01/2018 CTX? P.S/. . . COPY TO: ASSESSEE/AO/PR. CIT/ CIT (A)/ITAT (DR)/GUA RD FILE. BY ORDER PRIVATE SECRETARY/DDO, INDORE