DCIT, Agra V. M/s Plastograph India Ltd, New Delhi

ITSSA 5/AGR/2008

• Counselvise Citation: [2010] 124 COUNSELVISE.COM (IT) 9400 (ITAT-AGRA)
• Duration Of Justice: 1 year(s) 9 month(s) 6 day(s)
• Appeal Type: Income Tax (Search & Seizure) Appeal
• Pronouncement Date: 22-04-2010
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Next Hearing Date: 22-04-2010
• Assessment Year: misc
• Appeal Filed On: 16-07-2008
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: S K MISHRA
• Assessee Lawyers: SHRI

Judgement Text

1 ITSSA 05-08 IN THE INCOME TAX APPELLATE TRIBUNAL AGRA BENCH : AGRA. ( BEFORE SHRI R.K. GUPTA AND SHRI P.K. BANSAL ) ITA(SS) NO. 05/AG./2008 BLOCK PERIOD : 1.4.1996 TO 10.12.2002. THE DCIT, CENTRAL CIRCLE, VS. M/S. PLASTOGRAPH IN DIA P. LTD, AGRA. 6/8, BEHIND POLICE STATION, ALIPUR, DELHI. (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI S.K. MISHRA, SR. D/R RESPONDENT BY : SHRI PANKAJ GARGH, ADV OCATE ORDER PER R.K. GUPTA, J.M. THIS IS AN APPEAL BY THE DEPARTMENT AGAINST THE OR DER OF LD. CIT (A)-II, AGRA RELATING TO BLOCK PERIOD 1.4.1996 TO 10.12.2002. 2. THE DEPARTMENT IS OBJECTING IN ALLOWING RELIEF O F RS. 4,04,023/- OUT OF THE ADDITION OF RS. 5,72,049/- MADE ON ACCOUNT OF SHORTAGE OF ST OCK FOUND AT THE TIME OF SEARCH. 3. THE BRIEF FACTS OF THE CASE IN THIS REGARD ARE T HAT A SEARCH UNDER SECTION 132(1) WAS CARRIED OUT AT THE ASSESSEES BUSINESS PREMISES ON 10.12.2002. DURING THE COURSE OF SEARCH, CASH OF RS. 68,000/- WAS FOUND AS PER ANNEX URE-C OF THE PANCHNAMA. CERTAIN DISCREPANCIES WERE NOTED IN THE STOCK WHICH WAS INV ENTORISED. IN FACT, THE STOCK OF DIFFERENT TYPES OF FILM AND THE PRINTING INK WAS FO UND SHORT ON BEING COMPARED WITH THE STOCK SHOWN IN THE BOOKS OF ACCOUNT AND THE STOCK A S PER INVENTORY PREPARED DURING THE SEARCH. DURING THE ASSESSMENT PROCEEDINGS, THE ASS ESSEE WAS REQUIRED TO EXPLAIN THESE 2 DISCREPANCIES/SHORTAGE OF STOCK. THE DETAILED WRIT TEN SUBMISSIONS WERE FILED. IT WAS SUBMITTED THAT THE STOCK AS PER STOCK REGISTER TALL Y WITH THE ACCOUNTS BOOK. THE STOCK OF FINISHED GOODS AS PER INVENTORY PREPARED DURING THE SEARCH TALLY WITH THE STOCK REGISTER AS THEY ARE IN ONE ROOM ONLY. THE STOCK AS PER BOOKS O F ACCOUNT AND STOCK REGISTER HAVE BEEN BROUGHT FORWARD IN THE ACCOUNTS BOOK, STOCK REGISTE R AND EXCISE REGISTER OF THE SUBSEQUENT PERIOD. ALL THE PURCHASES AND SALES OF THE SUBSEQU ENT PERIOD ARE FULLY VOUCHED AND VERIFIABLE AND ARE RECORDED IN THE STOCK REGISTER A ND EXCISE REGISTER. IT WAS FURTHER SUBMITTED THAT DURING THE SEARCH NOT A SINGLE PAPER WAS FOUND FROM WHICH IT CAN BE SAID THAT THERE IS UNDISCLOSED SALE BY WHICH THE STOCK F OUND DURING THE SEARCH WAS LESS THAN THE STOCK AS PER STOCK REGISTER. HOWEVER, THE ASSESSING OFFICER DID NOT ACCEPT THE EXPLANATION OF THE ASSESSEE. BY OBSERVING HIS OWN OBSERVATION, HE MADE AN ADDITION OF RS. 5,72,049/- ON ACCOUNT OF SHORTAGE OF STOCK FOUND AT THE TIME O F SEARCH. THE CONTENTION RAISED BEFORE THE ASSESSING OFFICER WERE REITERATED BEFORE THE LD . CIT (A). THE DETAILS OF STOCK AS PER BOOKS OF ACCOUNT AND AS PER STOCK REGISTER WERE FIL ED, ITEM-WISE DETAILS WERE ALSO FILED. IT WAS FURTHER SUBMITTED THAT STATEMENT OF SHRI BHAGWA N SINGH, ACCOUNTANT AND SHRI MANOJ SHARMA, DIRECTOR OF THE ASSESSEE COMPANY WAS RECORD ED BY DDIT (INV.), AGRA BUT NO SPECIFIC QUESTION WAS RAISED ABOUT THE DISCREPANCY IN STOCK. IT WAS FURTHER SUBMITTED THAT STOCK AND EXCISE REGISTERS WERE SEIZED FIRST AND WE RE NOT WITH THE ACCOUNTANT WHILE THE INVENTORY WAS PREPARED, THEREFORE, THEY COULD NOT F IND OUT THE DIFFERENCE IN STOCK AS PER STOCK REGISTER AND STOCK AS INVENTORISED BY THE SEA RCH PARTY TO EXPLAIN THE SAME. PART OF THE DIFFERENCE IS DUE TO THE FACT THAT AT THE TIME OF SEARCH SLITTING MACHINES WERE INVENTORISED. ON EACH MACHINE THERE WAS ONE ROLL OF MATERIAL IN PROCESS. THIS MATERIAL ON THE MACHINE WAS FOR CUTTING, WHICH WAS NOT TAKEN IN TO CONSIDERATION AND, THEREFORE, 3 SHORTAGE OF STOCK IS NOTICED BY THE ASSESSING OFFIC ER. HOWEVER, IN FACT, THERE IS NO SHORTAGE OF STOCK. THE LD. CIT (A) WAS SATISFIED W ITH THE EXPLANATION. AFTER CONSIDERING THE DETAILS AND OTHER SUBMISSIONS, THE LD. CIT (A) NOTED THAT THE ADDITION MADE ON ACCOUNT OF SHORTAGE OF STOCK IS NOT JUSTIFIED AS THE ADDITI ON SHOULD HAVE BEEN MADE ON ACCOUNT OF GROSS PROFIT ON THE STOCK SOLD WHICH WAS NOT FOUND AT THE PREMISES. HE HAS CALCULATED THE GROSS PROFIT AT RS. 1,80,812/- ON THE SHORTAGE OF S TOCK AND THE ASSESSING OFFICER WAS DIRECTED TO TAKE UNDISCLOSED GROSS PROFIT AT RS. 1, 80,812/- AGAINST ADDITION OF RS. 5,72,049/-. 4. AFTER CONSIDERING THE ORDERS OF THE ASSESSING OF FICER AND LD. CIT (A) ON WHICH RELIANCE IS PLACED BY RESPECTIVE PARTIES, WE FOUND THAT LD. CIT (A) WAS REASONABLE IN HOLDING THAT IF THERE WAS A SHORTAGE OF STOCK, THEN GROSS PROFIT RATE SHOULD HAVE BEEN APPLIED INSTEAD OF MAKING THE ADDITION OF WHOLE OF THE AMOUNT ON ACCOUNT OF SHORTAGE OF STOCK. PURCHASE OF MATERIAL WAS NOT DOUBTED AND TH ERE WAS SHORTAGE OF STOCK ONLY. IF IT IS PRESUMED THAT ASSESSEE HAS SOLD THE MATERIAL OUTSID E THE BOOKS, THEN IN THAT CASE ONLY GROSS PROFIT HAS TO BE ADDED AND NOT THE ENTIRE AMO UNT OF SHORTAGE OF STOCK BECAUSE PURCHASES ARE NOT DOUBTED. IN VIEW OF THESE FACTS AND CIRCUMSTANCES, WE CONFIRM THE ORDER OF THE LD. CIT (A) IN THIS REGARD. 5. IN THE RESULT, THE APPEAL OF THE DEPARTMENT IS D ISMISSED. 6. THE ORDER IS PRONOUNCED IN THE OPEN COURT ON 22. 04.2010 SD/- SD/- ( P.K. BANSAL ) ( R.K. GUPTA ) ACCOUNTANT MEMBER JUDICIAL MEMBER AGRA, DATED : 26/04/2010. D/- 4 COPY FORWARDED TO :- THE APPELLANT THE RESPONDENT THE CIT THE CIT (A) CONCERNED. THE D/R, ITAT AGRA. GUARD FILE (ITSSA 05/AG/2008) BY ORDER, AR ITAT AGRA.